ELMT 8-K
Elmet Group Co. (ELMT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Item 1.01. Entry into a Material Definitive Agreement.
Department of War Transaction
On September 11, 2026, The Elmet Group Co., a Delaware corporation (the “Company,” “we,” “us” or “our”) entered into a definitive investment agreement (the “Investment Agreement”) with the United States Department of War (“Department of War” or “DoW”) providing for an equity investment in the Company and related investor rights. The Company expects to receive an approximate package of investments and commitments from DoW of $450 million to expand and modernize the Company’s tungsten mining, processing, and manufacturing capabilities, including the planned upgrade and restart of the Springer ammonium paratungstate (“APT”) plant and associated tungsten mine in Nevada, as well as to increase midstream processing capacity and expand and upgrade general infrastructure across the Company’s Coldwater, Lewiston and Euclid facilities.
Critical materials, such as tungsten, are some of the most strategically important components in advanced technology systems spanning commercial, industrial, and defense applications. However, global production of tungsten is highly concentrated in China. The Company intends to use this investment to build on its operational foundation to catalyze domestic production, strengthen U.S. supply chain resiliency, and secure critical supply chains for high-growth industries.
On September 11, 2026, the Company entered into the Investment Agreement (the transactions contemplated thereby, the “DoW Transactions”) with the Department of War. The Investment Agreement contemplates the concurrent execution of a number of additional agreements, and the Investment Agreement and the additional agreements entered into are each described herein (the “DoW Transaction Documents”). The DoW Transactions closed on September 14, 2026 (the “Initial Closing Date”).
The DoW Transaction Documents are contractual arrangements between the Company and the DoW. References in this filing to the DoW Transactions, the Department of War or other U.S. government entities are not intended to, and should not be construed to, imply that the DoW or any other U.S. Government entity endorses, recommends, sponsors, approves, certifies, guarantees, manages, or controls the Company, its affiliates, its securities, its products, its facilities, or any project described therein. Except for the express rights and obligations set forth in the applicable agreements, the DoW Transactions do not create a partnership, joint venture, agency, fiduciary, or similar relationship between the Company and the DoW, and do not obligate any U.S. Government entity to provide additional funding, assistance, permits, approvals, purchases, or other support.
Investment Agreement
Pursuant to the Investment Agreement, the Company has agreed to sell and issue, and the Department of War has agreed to purchase and acquire, up to an aggregate of $450 million of shares of Class A Preferred Stock (as defined below) in a private placement, which will consist of (i) an initial issuance of 200,000 shares of Class A Preferred Stock and Warrants (as defined below) to purchase up to 7,567,341 shares of the Company’s Common Stock, par value $0.001 per share (the “Common Stock”), for a purchase price of $200 million and (ii) additional issuances (each, a “Tranche”) of up to 50,000 shares of Class A Preferred Stock per Tranche at a purchase price of $1,000 per share of Class A Preferred Stock, respectively, for an additional aggregate of up to 250,000 shares of Class A Preferred Stock, at an aggregate purchase price of up to $250 million across all Tranches (the “Total Subsequent Funding Commitment Amount”). Beginning six months following the Initial Closing Date, each Tranche will be available for purchase by the DoW during a six-month commitment period, with successive Tranches becoming available at six-month intervals (each, a “Commitment Period”). The issuance of each Tranche shall be subject to (i) the delivery by the Company of at least thirty (30) days’ prior written notice to the DoW prior to the applicable funding date (a “Subsequent Issuance Notice”), (ii) a minimum funding amount of $25,000,000 per Subsequent Issuance Notice, (iii) specification of the number of shares of Class A Preferred Stock to be issued and the intended use of the proceeds of such funding, and (iv) the satisfaction or waiver by the DoW in its sole discretion of certain closing conditions set forth in the Investment Agreement, including certain use-of-proceeds-specific conditions, and other customary closing conditions. If the Company does not exercise its right to draw the full amount of the Total Subsequent Funding Commitment Amount during the aggregate Commitment Period, any portion of the Total Subsequent Funding Commitment Amount not drawn shall be forfeited.
The Investment Agreement contains certain representations, warranties and covenants of each of the Company and the DoW, including covenants by the Company related to use of proceeds in connection with funding of specified projects agreed upon by the Company and the DoW (the “Projects”).
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The foregoing description of the Investment Agreement does not purport to be complete and is qualified in its entirety by reference to the Investment Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference. The Investment Agreement has been included as an exhibit to this Current Report on Form 8-K to provide information regarding its terms. It is not intended to provide any other factual information about the Company, the DoW or any other party. The Investment Agreement contains representations and warranties that the parties thereto made to each other as of a specific date. The assertions embodied in the representations and warranties in the Investment Agreement were made solely for purposes of the Investment Agreement and the transactions and agreements contemplated thereby among the respective parties thereto and may be subject to important qualifications and limitations agreed to by the parties thereto in connection with negotiating the terms thereof and are not intended to, and do not, confer upon any person other than the parties thereto any rights or remedies thereunder, including the right to rely upon the representations and warranties set forth therein. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject to a contractual standard of materiality different from those generally applicable to stockholders or may have been used for the purpose of allocating risk among the parties to the Investment Agreement rather than establishing matters as facts.
Description of Securities and Certain Related Rights
Class A Redeemable Preferred Stock
On September 14, 2026 (the “Effective Date”), pursuant to the terms of the Investment Agreement, the Company issued and sold to the Department of War 200,000 shares of the Company’s Class A Redeemable Preferred Stock, par value $0.001 per share (the “Class A Preferred Stock”), and filed the related Certificate of Designations (the “Class A Certificate of Designations”) with the Secretary of State of the State of Delaware to establish and fix the terms thereof. The Class A Preferred Stock has an initial stated value of $1,000 per share. Shares of Class A Preferred Stock accrue cumulative dividends at a rate of 5.5% per year (the “Dividend Rate”), compounding quarterly and payable solely in-kind through an increase to the stated value of each share of Class A Preferred Stock (each such dividend, a “PIK Dividend”). The terms of the Class A Preferred Stock do not restrict the payment of cash dividends by the Company; provided, however, that the Company is prohibited from paying cash dividends pursuant to the Investor Rights Agreement (as defined below). Additionally, the holders of Class A Preferred Stock shall be entitled to receive accruing PIK Dividends in preference to any dividend on the Common Stock or any other Junior Securities (as defined in the Class A Certificate of Designations) at the Dividend Rate on the then-current stated value of each outstanding share of Class A Preferred Stock.
In the event of (i) a bankruptcy, liquidation, winding up or dissolution of the Company (ii) the sale, license, lease or transfer of substantially all of the Company’s assets, (iii) a consolidation or merger or (iv) a Change of Control (as defined in the Class A Certificate of Designations) (each of clauses (i) through (iv), a “Liquidation Event”), holders of the Class A Preferred Stock will be entitled to be paid out of the Company’s assets legally available therefor and to the extent permitted by Delaware law, a cash amount per share of Class A Preferred Stock equal to the then-current stated value, plus any accrued and uncompounded dividends, to, but not including, the date of such Liquidation Event, subject to the rights of any senior securities of the Company (such amount, the “Liquidation Preference”). The Class A Preferred Stock shall rank senior to all classes of the Company’s common stock with respect to the distribution of assets upon such Liquidation Event.
Upon exercise of the Penny Warrant (as defined and discussed below), the economic value of the Penny Warrant will be determined based on the 30-trading-day volume-weighted average price of the Common Stock, and a portion of such value will be applied to reduce the Liquidation Preference of the Class A Preferred Stock based on the applicable level of appreciation in the Common Stock price from the Initial Closing Date (the “Shared Upside Penny Warrant Recognition Mechanism”). As the economic value attributable to the Penny Warrant increases, the corresponding reduction in the Liquidation Preference upon exercise thereof likewise increases. The applicable reduction percentage of the Liquidation Preference ranges from 0% to 65%, as set forth in the Penny Warrant.
Any reduction of the Liquidation Preference pursuant to this mechanism shall be allocated pro rata among the then-outstanding shares of Class A Preferred Stock and shall be applied only to the extent of the then-outstanding Liquidation Preference.
Upon a Liquidation Event, upon the occurrence and during the continuance of an Event of Default (as defined in the Class A Certificate of Designations), or at any time after the ten (10) year anniversary of the Initial Closing Date, each holder of Class A Preferred Stock may elect, in its sole discretion, to require the Company to redeem all, or a portion of, its outstanding shares of Class A Preferred Stock (a “Redemption”) at a price per share equal to the then applicable Liquidation Preference as of the applicable redemption date, giving effect to any reduction pursuant to the Shared Upside Penny Warrant Recognition Mechanism (as described above and as set forth in the Class A Certificate of Designations) (the “Redemption Price”). Additionally, the Company shall have the right to redeem the Class A Preferred Stock at any time and from time to time, in part or in whole, on a pro rata basis at a price per share equal to the then applicable Redemption Price.
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The Class A Preferred Stock shall be entitled to vote together with the holders of Common Stock as a single class on all matters submitted to a vote of the holders of Common Stock. The aggregate number of votes to which the Class A Preferred Stock shall be entitled as a class shall, as of the Initial Closing Date, equal 19.9% of the total voting power of all voting securities of the Company outstanding as of the Initial Closing Date (determined immediately after giving effect to the issuance of the Class A Preferred Stock and the Warrants (as defined below) as if such Warrants had been exercised in full for shares of Common Stock at the Initial Closing Date) (the “Voting Cap”). The aggregate voting power of the Class A Preferred Stock shall be adjusted (and reduced) proportionally, from time to time, to the extent any Warrants are exercised for shares of Common Stock, so that the aggregate voting power represented by the Class A Preferred Stock, together with the shares of Common Stock issued upon exercise of the Warrants, does not exceed the Voting Cap. Upon any redemption of the Class A Preferred Stock by the Company, the Company shall take all actions within its control necessary to grant the holders of Class A Preferred Stock equivalent voting rights to preserve the aggregate voting position of such holders immediately prior to such redemption, taking into account any Warrants (as defined below) then held by such holders.
For so long as the Department of War, or any permitted DoW transferee (collectively, the “DoW Investors”), beneficially own any shares of Class A Preferred Stock, the holders of outstanding shares of Class A Preferred Stock, voting separately as a single class, shall have the exclusive right to (i) appoint and elect one individual (the “Independent Director”) to the Company’s board of directors (the “Board of Directors”) and (ii) separately designate one additional representative (the “DoW Board Observer”) to attend all meetings of the Board of Directors (and any committees thereof) in a non-voting observer capacity, subject to certain requirements and exceptions. For so long as the DoW Investors have a right to designate the Independent Director, the Board of Directors (or any committee thereof) shall appoint the Independent Director for membership on the Audit Committee and Compensation Committee of the Company in accordance with Nasdaq Stock Market (“Nasdaq”) rules and U.S. Securities and Exchange Commission (the “SEC”) rules and regulations. If the Independent Director is not permitted by Nasdaq rules and SEC rules and regulations to be a member of the Audit Committee or the Compensation Committee, the Independent Director shall attend all meetings of the Audit Committee or the Compensation Committee, as applicable, in a strictly non-voting observer capacity. The removal of the Independent Director or the DoW Board Observer shall be only upon the written request of the DoW.
Penny Warrant and Strike Price Warrant
On the Initial Closing Date, as required under the Investment Agreement, the Company issued a warrant (the “Penny Warrant”) to the Department of War. The Penny Warrant is exercisable by the initial holder thereof at any time and from time to time after the date that is twelve (12) months after the Initial Closing Date for a period of ten (10) years from the Initial Closing Date for up to 5,675,506 shares of Common Stock, at an initial exercise price of $0.001 per share. The number of shares to be issued under the terms of the Penny Warrant is subject to adjustment in connection with certain transactions, including payments of stock dividends on the Common Stock, and stock splits and combinations of the Common Stock (each, an “Adjustment”). Any exercise of the Penny Warrant (including any mandatory exercise) will reduce the Liquidation Preference of the Class A Preferred Stock as provided in the Class A Certificate of Designations and set forth above.
On the Initial Closing Date, the Company also issued an additional warrant (the “Strike Price Warrant” and together with the Penny Warrant, the “Warrants”) to the Department of War. The Strike Price Warrant is exercisable by the initial holder thereof at any time and from time to time after the date that is twelve (12) months after the Initial Closing Date for a period of ten (10) years from the Initial Closing Date for up to 1,891,835 shares of Common Stock, at an initial exercise price of $15.92 per share, representing the last-reported sale price of the Common Stock on the last trading day prior to execution of the Investment Agreement and consistent with the Nasdaq “Minimum Price” requirement. The exercise price of the Strike Price Warrant and the number of shares issuable under the Penny Warrants is subject to adjustment in connection with an Adjustment.
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The Warrants are subject to mandatory exercise, on a cashless basis, upon expiration, a Liquidation Event, a Change of Control (as defined in the Class A Certificate of Designations), or, at the Company’s election, any time following September 14, 2029, if the Common Stock’s volume weighted average price (“VWAP”) exceeds 400% of the exercise price of the Strike Price Warrant for 20 consecutive trading days. The Company must provide 20 calendar days’ prior notice, allowing the holder to exercise for cash.
Any portion of the Warrants that remains unexercised upon their expiration shall be automatically exercised by means of a “cashless” exercise as set forth in the Warrants.
No fractional shares of Common Stock are to be issued upon the exercise of the Warrants. In lieu of a fractional share of Common Stock, the Company will, upon exercise, pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the last reported sale price of the Common Stock.
Subject to applicable laws, the Warrants may not be offered for sale, sold, transferred, assigned, pledged or disposed of without the Company’s consent (not to be unreasonably withheld, conditioned or delayed), subject to certain exceptions.
Except as provided in the Warrants, the holder of a Warrant, solely in its capacity as holder of a Warrant, does not have the rights of a holder of Common Stock, including any voting rights, prior to the issuance to the holder of the Common Stock which it is then entitled to receive upon the due exercise of a Warrant.
Registration Rights Agreement
On the Initial Closing Date, as required under the Investment Agreement, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Department of War. The Registration Rights Agreement provides that the Company will, among other things, prepare and file with the SEC a resale registration statement (a “Shelf Registration Statement”) on Form S-3, or if not available to the Company, on another appropriate form, including Form S-1, or an amendment or supplement to an existing registration statement on Form S-3, for the shares of Common Stock into which the Warrants are exercisable. The deadline for the Company to file the Shelf Registration Statement with the SEC is 60 days after the Initial Closing Date.
Pursuant to the Registration Rights Agreement, the Department of War will have certain “demand” and “piggyback” registration rights and indemnification rights customary for transactions of this type, and the Company will under certain circumstances have the right to defer the registration and/or suspend the use of a registration statement or prospectus.
Investor Rights Agreement
On the Initial Closing Date, as required by the Investment Agreement, the Company also entered into an Investor Rights Agreement (the “Investor Rights Agreement”) with the Department of War.
The Investor Rights Agreement provides, among other things, that the Company shall provide the DoW Investors, so long as the DoW Investors continue to own any Class A Preferred Stock and/or at least 25% of the Warrants (or the Common Stock issued upon exercise of the Warrants) (the “Minimum Ownership Condition”), the right to purchase all or any portion of new equity securities of the Company or any of the Company’s subsidiaries, prior to the issuance and sale of such securities, under the same terms and conditions such securities would be offered to other purchasers, subject to certain exceptions and limitations. The Company must provide the DoW Investors with written notice at least sixty (60) days prior to the proposed issuance. In addition, without limiting the DoW’s right of first offer set forth above, for so long as the DoW Investors continue to satisfy the Minimum Ownership Condition, if the Company issues, sells, or authorizes the issuance or sale of any new equity securities of the Company or any of the Company’s subsidiaries, the Company shall offer the DoW within sixty (60) days prior to such issuance, the right to purchase up to their Percentage Interest (as defined in the Investors Rights Agreement) of such new securities, to enable the DoW Investors to maintain their then current holdings percentage determined on a fully diluted as-converted basis following such issuance. If the DoW Investors exercise such right of first offer or preemptive rights, as applicable, and their participation would result in their aggregate voting power of the Company to exceed 19.9%, the Company shall, within sixty (60) calendar days of such date, use commercially reasonable efforts to obtain stockholder approval, if required, to issue the securities in excess of 19.9% in accordance with the requirements of Nasdaq.
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Pursuant to the Investor Rights Agreement, prior to the Company offering any product(s) produced or derived by, associated with, attributable to or otherwise regarding the Company from certain projects agreed upon between the Company and the DoW (the “Project Products”) to any other party, the DoW Investors shall have the exclusive right to negotiate for the purchase, acquisition or exclusive offtake of such products (a “Product Contract”) at arm’s length and pricing terms consistent with then-prevailing market conditions, subject to certain exceptions. If the DoW Investors elect not to exercise its rights to Project Products the Company will satisfy rated orders in accordance with 15 C.F.R Part 700 and will allocate and sell all remaining Project Products in accordance with the following order of priority, each as defined in the Investor Rights Agreement: (i) first, to the United States Defense Primes; (ii) second, the suppliers of the Defense Industrial Base; (iii) third, to U.S. Businesses; (iv) fourth, to U.S. Allies; and (v) fifth, to any other Person that is not a Restricted Entity. The Company may sell Project Products to a lower priority tier in the event that (a) no higher-priority requester has submitted a purchase request within 30 days of capacity availability or (b) a higher-priority requester has submitted an offer, and a lower-priority requester subsequently offers superior commercial terms. None of the foregoing restrictions will preclude the Company from sales to any non-Restricted Entity so long as the Company has sufficient capacity to satisfy its obligations under any Product Contract.
For so long as the DoW Investors continue to satisfy the Minimum Ownership Condition, without the prior written consent of the DoW, the Company and its subsidiaries shall not, among other actions: (i) voluntarily liquidate, dissolve or wind-up the Company or any of its subsidiaries; (ii) authorize, create or issue any additional equity securities, or any securities convertible into or exercisable for any equity securities, of the Company having rights, preferences or privileges senior to, or in parity with the Class A Preferred Stock; (iii) change the authorized number of directors of the Board of Directors (or the number of votes provided to each director); (iv) enter into any transactions with an affiliate of the Company pursuant to which the Company shall make any payment, sell, lease, transfer, or dispose of any of this properties or assets to, or purchase any property or assets from, or enter or amend any transaction or arrangement with, or for the benefit of, such affiliate of the Company involving aggregate value in excess of $120,000; (v) dispose of, license, transfer, abandon, or fail to maintain, prosecute or defend any material technology or intellectual property, subject to customary exceptions for ordinary-course customer licenses, strategic transactions approved by the Board of Directors, and non-material intellectual property or technology; (vi) declare, pay, or make any (a) dividends or distributions on any Common Stock or other equity securities (other than the Class A Preferred Stock), and (b) repurchases, redemptions, or other acquisitions of Common Stock or other equity securities; (vii) change the authorized number of shares of Class A Preferred Stock; (viii) create, incur, assume, or suffer to exist any Indebtedness (as defined in the Investor Rights Agreement), other than Permitted Indebtedness (as defined in the Investor Rights Agreement) subject to certain net leverage ratio criteria; (iv) make any loan or advance to, or own any stock or other securities of, any subsidiary or other corporation, partnership, or other entity unless it is a wholly-owned subsidiary of the Company following such transaction; (x) make any loan or advance to any person, including, any employee or director except advances and similar expenditures in the ordinary course of business or under the terms of the Company’s equity incentive plan or successor plan; (xi) affect any Change of Control (as defined in the Investor Rights Agreement); or (xii) make any Restricted Payments (as defined in the Investor Rights Agreement), each subject to certain exceptions, conditions and exempt issuances.
Furthermore, the Investor Rights Agreement restricts the Company, without the DoW’s prior written approval, from being owned or controlled by, transferring property to, or otherwise doing business with any Restricted Entity (as defined in the agreement), subject to specified exceptions. The Company and its subsidiaries must also maintain commercially reasonable compliance procedures and use reasonable best efforts to maintain a shareholder rights plan or similar arrangement designed to prevent a Restricted Entity, or a group including a Restricted Entity, from acquiring 10% or more of the Company’s outstanding Common Stock. See “Restricted Entity Compliance Plan” below for more information on the shareholder rights plan adopted by the Company to comply with the terms of the Investor Rights Agreement.
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At any time after the DoW Investors no longer own any Class A Preferred Stock but continue to own at least 25% of the Warrants (or the Common Stock issued upon exercise of the Warrants), the DoW will have the right to (i) designate for nomination to the Board of Directors one independent third-party director, who meets certain qualification as set forth in the Investor Rights Agreement and (ii) designate one additional representative to attend all meetings of the Board of Directors (and any committees thereof) in a non-voting observer capacity, subject to certain requirements and exceptions. For so long as the DoW Investors have a right to designate an Independent Director, the Board of Directors (or any committee thereof) will appoint the Independent Director for membership on the Audit Committee and Compensation Committee of the Company in accordance with Nasdaq rules and SEC rules and regulations. If the Independent Director is not permitted by Nasdaq rules and SEC rules and regulations to be a member of the Audit Committee or the Compensation Committee, the Independent Director shall attend all meetings of the Audit Committee or the Compensation Committee, as applicable, in a strictly non-voting observer capacity. The removal of the DoW Board Observer will only be permitted upon the written request of the DoW. The removal of the Independent Director will only be permitted in accordance with the Company’s Second Amended and Restated Certificate of Incorporation and Delaware law.
Additionally, the Investor Rights Agreement allows the DoW Investors or an Authorized Government Official to submit a written notice on its behalf (an “Activation Notice”) to the Company exercising its ability to, on commercially reasonable, arm’s-length terms, including pricing terms substantially consistent with then-prevailing market conditions, designate up to one hundred percent (100%) of production capacity of the Projects, and to the extent reasonably necessary to satisfy such requirement, the corresponding production, processing, storage, loading, transportation coordination, inventory management and deliver capacity associated with the applicable Projects (collectively, the “Emergency Allocation Right”). An Activation Notice is only permitted to be issued if an Authorized Government Official (as defined in the Investor Rights Agreement) determines in writing that the Project Products are required to support national defense, war, armed conflict, military contingency operations, industrial mobilization, emergency preparedness, or response to a national emergency, and that exercise of the Emergency Allocation Right is necessary or advisable to ensure timely availability of the applicable Project Products.
The receipt of an Activation Notice supersedes the Company’s obligations to third-party customers with respect to the affected production capacity of the Projects, except to the extent prohibited by applicable law, provided that (1) the Company uses its best efforts to obtain any exemption, license, or waiver required to eliminate such prohibition and promptly notifies the DoW Investors of any such prohibition and the actions being taken to remove it; (2) the Company ceases entering into new commitments that would conflict with the volumes specified in the Activation Notice; (3) the Company takes all actions reasonably necessary to redirect, defer, unwind, cancel, swap, or reassign previously committed volumes so as to maximize delivery to the DoW Investors or its designee(s); (4) the Company prioritizes performance for the DoW Investors in all production, storage, handling, and logistics scheduling; (5) the Company does not assert that conflicting commercial commitments excuse performance to the extent such commitments were entered into contrary to the Investor Rights Agreement; and (6) the Company provides an initial response acknowledging the Activation Notice within 24 hours and a preliminary implementation plan within 3 Business Days. The Company’s obligations under the Investor Rights Agreement shall not be conditioned upon, or delayed by, the Company’s acknowledgment or provision of an implementation plan.
Furthermore, the DoW Investors, subject to certain qualifiers, will reimburse the Company reasonable and documented out-of-pocket costs incurred as a direct result of an Activation Notice. The Company may request up to $250,000 for any single expense or up to $2,500,000 in aggregate per issued activation notice. In the event that resulting out-of-pocket expense are in excess of either of the aforementioned amount the Company may request additional reimbursements to be approved by an Authorized Government Official, which approval may or may not be granted.
The foregoing descriptions of the Class A Certificate of Designations, the Penny Warrant, the Strike Price Warrant, the Investment Agreement, the Registration Rights Agreement, the Investor Rights Agreement, the transactions contemplated thereby and the securities issued or issuable pursuant thereto are only summaries and do not purport to be complete and are qualified in their entirety by reference to the full text of the relevant agreements, copies of which are attached to this Current Report on Form 8-K as Exhibit 3.1, Exhibits 4.1 and 4.2 and Exhibits 10.1-10.3, respectively, and which are incorporated herein by reference.
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Restricted Entity Compliance Plan
On September 14, 2026, the Company entered into a Restricted Entity Compliance Plan (the “Restricted Entity Compliance Plan” or the “Plan”) with Continental Stock Transfer & Trust Company, as rights agent. In connection therewith, the Board of Directors declared a dividend of one preferred share purchase right (“Right”) for each outstanding share of the Company’s Common Stock. The dividend is payable on September 24, 2026, to stockholders of record as of the close of business on such date (the “Record Date”). In addition, one Right will automatically attach to each share of Common Stock issued between the Record Date and the Distribution Date (as defined below). The terms used in this section but not otherwise defined herein shall have the meaning ascribed to such terms in the Plan.
The Board of Directors adopted the Plan in connection with the entry into by the Company of the DoW Transaction Documents, pursuant to which, among other things, the Company agreed to use its reasonable best efforts to maintain in effect the Plan or a substantially similar arrangement to prevent any Restricted Entity (as defined in the Investor Rights Agreement) from acquiring beneficial ownership of 10% or more of the Company’s outstanding Common Stock.
Other than with respect to Restricted Entities, the Plan does not impact the ability of any person from acquiring shares of the Company’s Common Stock or making offers to acquire, merge or combine with the Company.
The following is a general description of the terms of the Rights, the Class B Preferred Stock (as defined below) and the Plan. This description is qualified in its entirety by the full text of the Certificate of Designations of the Class B Preferred Stock (the “Class B Certificate of Designations”) and the Plan, which are included as Exhibits 3.2 and 4.3, respectively, to this Current Report on Form 8-K and incorporated herein by reference.
The Rights. The Board of Directors authorized the issuance of one Right with respect to each share of Common Stock outstanding on the Record Date. The Rights will initially trade with, and will be inseparable from, the Common Stock. The Rights will accompany any new shares of Common Stock issued after the Record Date until the earlier of the Distribution Date, the Redemption Date or the Expiration Date of the Rights, as described below.
Exercise Price. Each Right will allow its holder to purchase from the Company one one-thousandth of a share of Class B Junior Participating Preferred Stock, par value $0.001 per share (“Class B Preferred Stock”), for $86.00 per share, subject to adjustment under certain conditions (the “Purchase Price”), once the Rights become exercisable.
Exercisability. The Rights will not be exercisable until:
| ● | 10 business days after the public announcement that a Restricted Entity has become an “Acquiring Person” (as defined in the Plan) by obtaining beneficial ownership of 10% or more of the outstanding Common Stock, or, if earlier; |
| ● | 10 business days (or a later date determined by the Board of Directors before any person or group becomes an Acquiring Person) after a Restricted Entity Commences (as defined in the Plan) a tender or exchange offer which, if completed, would result in that person or group becoming an Acquiring Person. |
The date when the Rights become exercisable is referred to as the “Distribution Date.” Until the Distribution Date, the Company’s Common Stock certificates or, in the case of uncertificated shares, notations in the book-entry account system, will evidence the Rights. Until the Distribution Date (or earlier redemption, exchange, termination or expiration of the Rights), the surrender for transfer of any certificates for Common Stock or book-entry shares will also constitute the transfer of the associated Rights. After the Distribution Date, the Rights will separate from the Common Stock and be evidenced by Right certificates that the Company will mail to all eligible holders of Common Stock. Any Rights held by an Acquiring Person will be void and may not be exercised.
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Consequences of a Person or Group Becoming an Acquiring Person.
| ● | Flip In. If a person or group becomes an Acquiring Person, all holders of Rights except the Acquiring Person or any associate or affiliate thereof may, upon exercise of a Right, purchase for the Purchase Price shares of Common Stock with a market value of two times the Purchase Price, based on the market price of the Common Stock prior to such acquisition. If the Company does not have a sufficient number of shares of Common Stock available, the Company may under certain circumstances substitute Class B Preferred Stock or other securities or property for the Common Stock into which the Rights would have otherwise been exercisable. |
| ● | Exchange. After a person or group becomes an Acquiring Person, the Board of Directors may extinguish all or a portion of the Rights by exchanging one share of Common Stock, or such greater number as shall be sufficient to ensure that immediately following such exchange, the beneficial ownership of each Acquiring Person, together with its Affiliates and Associates, shall be less than 10% of the outstanding Common Stock, for each Right, other than Rights held by the Acquiring Person. |
Class B Preferred Stock Provisions.
Each one one-thousandth of a share of Class B Preferred Stock, if issued:
| ● | will not be redeemable. |
| ● | will entitle the holder to quarterly dividend payments equal to the dividend paid on one share of Common Stock. |
| ● | will entitle the holder upon liquidation to receive either $1.00 or an amount equal to the payment made on one share of Common Stock, whichever is greater. |
| ● | will have one vote and vote together with the Common Stock, except as required by law. |
| ● | if shares of Common Stock are exchanged via merger, consolidation, or a similar transaction, will entitle the holder to a payment equal to the payment made on one share of Common Stock. |
| ● | The value of one one-thousandth interest in a share of Class B Preferred Stock should approximate the value of one share of Common Stock. |
Expiration. The Rights will expire upon the termination, in accordance with the terms thereof, of the Investor Rights Agreement and any other material agreements between the Company or its Subsidiaries, on the one hand, and the DoW or other U.S. government agencies, as applicable, on the other, requiring the adoption or maintenance of the Plan (the “Final Expiration Date”), unless the Rights are earlier redeemed or exchanged by the Board of Directors as described below.
Redemption. The Board of Directors may redeem all but not less than all of the then-outstanding Rights at a redemption price of $0.001 per Right at any time before the earlier of the Final Expiration Date and the first date of public announcement that any person or group becomes an Acquiring Person. Once the Rights are redeemed, the only right of the holders of Rights will be to receive the redemption price of $0.001 per Right. The redemption price will be adjusted in the event of a stock split or stock dividends of the Common Stock.
Anti-Dilution Provisions. The Purchase Price, the number of shares of Class B Preferred Stock issuable and the number of outstanding Rights are subject to adjustment from time to time as set forth in the Plan to prevent dilution that may occur as a result of certain events, including among others, a stock dividend, a stock split, or a reclassification of the Class B Preferred Stock or Common Stock. No adjustments to the Purchase Price of less than 1% will be made.
Amendments. The terms of the Plan may be amended by the Board of Directors without the consent of the holders of the Rights except that after a person or group becomes an Acquiring Person, the Board of Directors may not amend the Plan in a way that adversely affects holders of the Rights.
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Blue Moon Springer Project
Springer Project Binding Letter Agreement
On September 11, 2026, the Company entered into a binding letter agreement (the “Springer Agreement”) with Blue Moon Metals Inc., (“Blue Moon”), Blue Moon (Springer) Inc., a company organized under the laws of the State of Delaware and an affiliate of Blue Moon (“BM US”), and EQ Resources Limited, a company organized under the laws of Victoria, Australia (“EQ,” and together with the Company, Blue Moon, and BM US, the “Parties”), regarding a series of strategic transactions associated with Blue Moon’s Springer Tungsten Complex (“Springer”), located in Pershing County, Nevada. The transactions contemplated under the Springer Agreement include: (i) the formation of a joint venture entity (the “JV Entity”) among the Parties to restart, expand and operate the ammonium paratungstate plant located at Springer (the “APT Plant”), (ii) an equity investment by the Company into Blue Moon, (iii) the Company’s receipt of board representation in both Blue Moon and the JV Entity; (iv) a supply agreement for EQ and Blue Moon tungsten concentrate offtakes to the Springer APT Plant at market pricing, (v) a tungsten prepayment facility provided by the Company to Blue Moon, to be repaid through a credit against sales of concentrate from Springer, and (vi) a site sharing agreement between Blue Moon and the JV Entity, covering the land, buildings, utilities, water, and services arrangements between the JV Entity and Blue Moon (collectively, the “Springer Transactions”). The Parties expect to close the Springer Transactions within the next twelve calendar months.
The successful execution and consummation of the Springer Transactions are subject to numerous factors and conditions discussed under “General” below. The currently contemplated terms of the definitive agreements relating to the Springer Transactions are as follows:
APT Plant Joint Venture
The Parties intend to form the JV Entity to restart, expand and operate the APT Plant, with the Company initially owning a 70% equity interest in the JV Entity, Blue Moon owning 20%, and EQ owning the remaining 10% interest. In connection with the JV Entity formation, Blue Moon will cause BM US to grant an irrevocable and exclusive 99-year use and operating agreement to use and operate the APT Plant, all equipment and associated infrastructure contributed to the JV Entity at a value to be determined in the definitive agreement. The Company will provide an initial capital contribution of approximately $75 million to the JV Entity to bring the APT Plant into a fully operational posture and EQ will contribute its industry know-how, including overseeing engineering and project management, provision of ore sorting technology and certain off-take commitments. In the case of cost overrun in excess of the $75 million contributed by the Company, the Company and EQ will contribute up to an addition $25 million, in proportion to their respective JV Entity ownership interests, after which the Parties will contribute as needed on a pro-rata ownership basis. The initial board of directors for the JV Entity will be comprised of seven members, including four directors chosen by the Company, two directors chosen by Blue Moon, and one director chosen by EQ. The Company will operate and control the JV Entity.
Equity Investment in Blue Moon
The Company has agreed to purchase, and Blue Moon has agreed to issue and sell, new equity in Blue Moon comprised of 3,500,000 units (the “Units”), within forty-five (45) calendar days of September 14, 2026, with each Unit to be comprised of one common share of Blue Moon (“BM Share”) and one common share purchase warrant (“BM Warrant”) at a price per unit of CAD 10.00 (the “BM Investment”). Subject to regulatory approval, each BM Warrant shall have an exercise price equal to CAD 10.80 per common share. The BM Warrants will be exercisable for three years from the date of issuance. As part of the BM Investment, the Company and Blue Moon will enter into an investor rights agreement providing the Company with customary pro-rata equity participation rights in future Blue Moon financings and the board representation rights described below. The BM Investment is a binding commitment between the Company and Blue Moon.
Proceeds of the BM Investment will be limited to use solely in connection with the development of the projects being undertaken at Springer, with all mine and mill proceeds to be earmarked for tungsten development purposes only. Blue Moon will not apply any portions of the BM Investment proceeds to activities unrelated to Springer without the prior written consent of the Company. The Company will have audit rights to confirm Blue Moon’s compliance with the use of proceeds restrictions.
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Board Representation
In connection with the BM Investment, the Company will receive the right to nominate one director (the “Company Nominee”) to Blue Moon’s board of directors. The Company’s board nomination right will continue for so long as the Company holds at least forty percent (40%) of the Blue Moon equity acquired by the Company in the BM Investment. If the Company Nominee resigns, is not elected, or the seat is otherwise vacant, the company may appoint a non-voting board observer to the board of Blue Moon until such time as the seat is filled by a new Company Nominee.
EQ and Blue Moon Offtake Agreements
Each of Blue Moon and EQ will enter into offtake agreements with the JV Entity (the “Blue Moon Offtake Agreement” and the “EQ Offtake Agreement,” respectively) to govern the purchase of tungsten concentrate by the JV Entity. The Blue Moon Offtake Agreement will obligate the JV Entity to use its best efforts to take tungsten concentrate produced from the mill and mine at Springer (the “Springer Concentrate”).
Tungsten Prepayment Facility
As part of the BM Investment, the Company will provide Blue Moon’s group with a prepayment facility in the aggregate principal amount of approximately $50 million (the “Tungsten Prepayment Facility”), to be funded in two tranches as follows: (i) the first tranche, in the amount of $25 million (“Tranche 1”, shall be funded at the closing of the Tungsten Prepayment Facility; (ii) the second tranche, in the amount of $25,000,000 (“Tranche 2”), will be funded upon completion of milestones to be set forth in the definitive agreements, aligned with Blue Moon’s readiness covenants relating to Springer’s mine, mill, and flotation circuit, and, if test work is favorable, ore sorting progress. Tranche 2 will be funded only upon satisfactory completion of the construction milestones applicable to Tranche 1, as mutually determined by the Parties. The Tungsten Prepayment Facility will be repaid through a twenty-five percent (25%) credit against sales of Springer Concentrate until the outstanding balances of Tranche 1 and Tranche 2 have both been fully retired, and no interest shall accrue on amounts outstanding thereunder except in the event of default. Security on the Tungsten Prepayment Facility will be covered by a dedicated bank account and over Springer Concentrate.
In connection with the Tungsten Prepayment Facility, the Company has agreed to issue Blue Moon warrants to purchase an aggregate of $25 million of shares of the Company’s Common Stock (the “Elmet Warrants”) within five business days of September 14, 2026. The Elmet Warrants will have a strike price equal to the greater of a five-day VWAP as of September 21, 2026, or the Nasdaq minimum price as determined under Nasdaq Rule 5635 at the time of issuance. The Elmet Warrants will expire three years from the date of issuance and will become exercisable starting six months from the date of issuance. We intend to enter into a securities purchase agreement with Blue Moon, pursuant to which the Elmet Warrants will be issued.
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Springer Site Plan
The Springer Agreement contemplates Blue Moon and its U.S. affiliates (the “BM Group”) maintaining complete ownership and operation of the mine and mill at Springer, including holding all permits to operate at the site. The BM Group will additionally retain ownership of certain ancillary assets on behalf of the JV Entity, including, but not limited to, utilities interconnections, water rights, and tailings facilities. Blue Moon and the JV Entity will enter into a site master plan (the “Site Master Plan”), which will provide for, among other things, land allocation, buildings, roads and logistics, utilities and interconnections, water supply and storage, waste and tailings, lay down and receiving areas, solar, natural gas and other power generation, a potential scrap processing plant, and future expansion plans. The Site Master Plan will be subject to the approval of all Parties and will govern the development of Springer. The costs of preparation of the Site Master Plan will be shared between the JV Entity and Blue Moon based on the relative percentage of the APT Plant and its associated facilities to the entirety of Springer.
General
The Springer Agreement additionally contained customary representations and warranties of the Parties and will remain binding on the Parties until the earliest of (i) execution and delivery of the definitive documentation for the Transactions, (ii) mutual written agreement of the Parties to terminate the Springer Agreement, (iii) the definitive documentation for the Transactions having not been executed by the applicable Outside Date (as such term is defined in the Springer Agreement), and (iv) a material breach by any Party of its obligations under the Springer Agreement that remains uncured for a thirty (30) day period following written notice thereof. The closing of the Transactions (the “Springer Closing”) is conditioned upon several factors, including receipt of applicable third party and regulatory approvals, the accuracies of the representations and warranties of the Parties as of the applicable Springer Closing, the performance of each of the Parties under the Springer Agreement in all material respects, the satisfactory completion of due diligence by the Parties, the negotiation and execution of the definitive documentation for the Transactions, and the absence of a material adverse effect (as such term is defined in the Springer Agreement) having occurred with respect to a Party that is continuing as of the date of the Springer Closing.
The foregoing description of the Springer Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Springer Agreement, a copy of which is attached hereto as Exhibit 10.4, and the terms of which are incorporated herein by reference. The Springer Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of such agreements or other specific dates. The assertions embodied in those representations, warranties and covenants were made for purposes of the contracts among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating such agreements. Investors are not third-party beneficiaries under the Springer Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective affiliates.
DLA Offtake Agreement
On September 11, 2026, the Company, through its wholly owned subsidiary, Elmet Technologies LLC, entered into an exclusive offtake agreement (the “DLA Offtake Agreement”) with The United States Defense Logistics Agency (the “DLA”) relating to an exclusive offtake arrangement for tungsten ores and concentrates and sodium tungstate. Pursuant to the DLA Offtake Agreement, the Company shall sell, upon the DLA’s request, a minimum of $150 million worth of tungsten ore and concentrate and sodium tungstate (the “Minimum Offtake Amount”) over the course of a five-year base ordering period, subject to an additional two-year option period, with such option being exercised at the DLA’s discretion. Delivery orders will be submitted to the Company through a request-for-proposal process, with each order subject to the Company’s review and acceptance. Each order shall then be delivered to the DLA within 48 months of the issuance of each respective delivery order. Upon the procurement of the Minimum Offtake Amount, the DLA, in its sole discretion, may purchase up to a maximum of $1.85 billion worth of additional tungsten ore and concentrate and sodium tungstate throughout the ordering period.
The DLA shall have the right to determine the source of the tungsten ore and concentrate and sodium tungstate, for which certain pre-determined sources have been agreed upon. The tungsten material supplied shall meet certain material and packaging specifications and will be subject to certain sampling and testing requirements prior to procurement of the tungsten material to the DLA.
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The foregoing descriptions of the DLA Offtake Agreement and the transactions contemplated thereby are only summaries and do not purport to be complete and are qualified in their entirety by reference to the full text of the DLA Offtake Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.5, and which is incorporated herein by reference.
Item 3.02. Unregistered Sale of Equity Securities.
On the Initial Closing Date, the Company issued 200,000 shares of Class A Preferred Stock and the Warrants to the Department of War. The offer and sale of the shares of Class A Preferred Stock and Warrants pursuant to the Investment Agreement, were made in reliance upon an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) thereof. Any shares of Common Stock deliverable upon exercise of the Warrants will be issued in reliance upon the exemption from registration in Section 3(a)(9) or Section 4(a)(2) of the Securities Act, respectively. Detailed descriptions of the Class A Preferred Stock and the Warrants are included in, and are incorporated into this Item 3.02 by reference to, Item 1.01 above.
Item 3.03. Material Modification to Rights of Security Holders.
On the Initial Closing Date, the Company issued 200,000 shares of Class A Preferred Stock to the Department of War. Holders of the Class A Preferred Stock have preferential rights on the distribution of the Company’s assets upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company over holders of Common Stock and any other series of preferred stock issued by the Company in the future. Furthermore, pursuant to the Class A Certificate of Designations and the Investor Rights Agreement, the DoW Investors, for as long as they are holders of Class A Preferred Stock, shall have the exclusive right to elect, as a separate class, one of the nine directors of the Company. Accordingly, holders of Common Stock shall cease to have the right to vote for or elect such director and will vote for and elect only eight of the nine directors.
In connection with the adoption of the Restricted Entity Compliance Plan, the Board of Directors approved the Class B Certificate of Designations designating 540,000 shares of Class B Preferred Stock. Pursuant to the Class B Certificate of Designations, the Board of Directors authorized the issuance of one Right with respect to each share of Common Stock outstanding on the Record Date. The Rights will initially trade with, and will be inseparable from, the Common Stock. The Rights will accompany any new shares of Common Stock issued after the Record Date until the earlier of the Distribution Date, the redemption date or the expiration date of the Rights, as described in Item 1.01 above. Each Right will allow its holder to purchase from the Company one one-thousandth of a share of Class B Preferred Stock, for $86.00, subject to adjustment under certain conditions, once the Rights become exercisable.
More detailed descriptions of the Class A Preferred Stock and the Class B Preferred Stock are included in, and are incorporated into, this Item 3.03 by reference to Item 1.01.
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Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.
Bonus Award Agreement with Scott Knoll
On September 9, 2026, the Company and Scott Knoll, Executive Vice President, Corporate Strategy and member of the Board of Directors of the Company, entered into a Supplemental Market Capitalization Cash Bonus Award Agreement (the “Bonus Award Agreement”) pursuant to which Mr. Knoll shall be entitled to a special, one-time, performance-based cash bonus in recognition of his work developing and supporting strategic opportunities related to the DoW Transactions up to an aggregate of $3,000,000.
The cash bonus award will be based upon the Company’s average market capitalization over any consecutive ten trading day period between September 9, 2026 and April 23, 2027 (the “Measurement Period”). The cash bonus award shall be considered earned upon the end of the Measurement Period and is contingent upon Mr. Knoll’s continued employment with the Company through the end of the Measurement Period.
The foregoing description of the Bonus Award Agreement is only a summary and does not purport to be complete and is qualified in its entirety by reference to the full text of the Bonus Award Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.6, and which is incorporated herein by reference.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On the Initial Closing Date, the Company filed the Class A Certificate of Designations with the Secretary of State of the State of Delaware to establish and fix the terms of the Class A Preferred Stock. The Class A Certificate of Designations became effective upon filing.
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Additionally, in connection with the adoption of the Restricted Entity Compliance Plan, the Board of Directors approved the Class B Certificate of Designations designating 540,000 shares of Class B Preferred Stock. The Company filed the Class B Certificate of Designations on September 14, 2026 with the Secretary of State of the State of Delaware and the Class B Certificate of Designations became effective on such date.
The full texts of the Class A Certificate of Designations and Class B Certificate of Designations are attached hereto as Exhibit 3.1 and Exhibit 3.2 and are incorporated herein by reference. More detailed descriptions of the Class A Preferred Stock and the Class B Preferred Stock are set forth in Item 1.01 of this Current Report on Form 8-K and are incorporated herein by reference. Such descriptions are qualified in their entirety by reference to the Class A Certificate of Designations and Class B Certificate of Designations.
Item 7.01. Regulation FD Information.
Press Releases
On September 14, 2026, the Company issued a press release announcing the DoW Transactions, the Restricted Entity Compliance Plan and the DLA Offtake Agreement. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.
On September 14, 2026, the Company issued a press release announcing the Springer Transactions. A copy of the press release is attached hereto as Exhibit 99.2 and incorporated by reference herein.
On September 14, 2026, the Company hosted an investor call where a presentation was given, a copy of the presentation is attached hereto as Exhibit 99.3.
The Company undertakes no duty or obligation to publicly update or revise the information contained in this report, although it may do so from time to time as its management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.
The information furnished in Item 7.01 of this Current Report on Form 8-K under the heading “Press Releases” as well as Exhibits 99.1-99.3, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless the Company specifically states that the information is to be considered “filed” under the Exchange Act or specifically incorporates it by reference into a filing under the Securities Act or the Exchange Act.
Risk Factors
The Company’s business, prospects, financial condition and results of operations, as well as the price of the Common Stock, can be affected by a number of factors, whether currently known or unknown, including those described in the section entitled “Risk Factors” our Registration Statement on Form S-1 (File No. 333-294725), as amended and supplemented (the “IPO Registration Statement”), and declared effective by the SEC on April 22, 2026 and Part II, Item 1A. “Risk Factors” in our Quarterly Reports on Form 10-Q for the quarters ended April 3, 2026 and July 3, 2026 (the “Form 10-Qs”). When any one or more of these risks materialize from time to time, the Company’s business, prospects, financial condition and results of operations, as well as the price of the Common Stock, can be materially and adversely affected.
The Company is supplementing the risk factors previously disclosed in the Company’s IPO Registration Statement and Form 10-Qs with the risk factors relating to the Transactions set forth below.
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Risks Related to the DoW Transactions
While we have executed the DoW Transaction Documents with the Department of War and received funding thereunder, there can be no assurances that the authorization of and continued support for the transactions contemplated by the DoW Transaction Documents will not be modified, challenged or impaired in the future, which would have a material adverse effect on our business, prospects, financial condition and results of operations.
The DoW Transaction Documents contain representations by the DoW regarding its authority to enter into the DoW Transaction Documents and the availability of funds for the Initial Closing. Those representations were made solely for purposes of the Investment Agreement and should not be construed as a legal opinion, a representation by any other U.S. Government entity, or an endorsement of the Company, its securities, or its projects. The Parties’ respective obligations under the DoW Transaction Documents are subject to the terms of those agreements and applicable law. A dispute or legal or administrative challenge concerning the interpretation, validity, enforceability, or performance of the DoW Transaction Documents could materially adversely affect our business, prospects, financial condition and results of operations. No U.S. Government entity other than the DoW is a party to, or assumes obligations under, the DoW Transaction Documents. The DoW Transaction Documents contain affirmative covenants requiring the Company to take certain actions and negative covenants restricting the Company from taking certain actions. A failure by the Company to comply with those covenants could constitute an event of default under the DoW Transaction Documents. In that event, subject to the applicable terms of the DoW Transaction Documents, the DoW may exercise the remedies provided therein, which may include termination of one or more of the DoW Transaction Documents and redemption of the Class A Preferred Stock, any of which could materially adversely affect the Company’s business, results of operations and financial position.
The DoW Transaction Documents require the Company to make substantial investments in and commitments to specific aspects of our business, including, among others, the Springer Transactions. The Company received $200 million at the Initial Closing and expects to rely in part on the additional funding commitment provided for in the Investment Agreement to implement certain planned projects and its related business strategy. The Investment Agreement contemplates up to $250 million of additional preferred stock purchases during specified funding periods following the Initial Closing, subject to the Company’s exercise of its funding rights and the satisfaction or waiver of applicable closing conditions. Those conditions include, among other things, continuing congressional authorization or reauthorization for the contemplated investments and the availability of appropriations. If the subsequent closing does not occur when expected, including because applicable conditions are not satisfied or waived, the Company may need to seek alternate financing or modify the timing, scope, or sequencing of its planned projects. There can be no assurance that alternative financing would be available on acceptable terms, in a timely manner or at all. If the Company cannot obtain alternate financing when needed, it may be required to reduce costs, or delay, cancel, or scale back development projects. Further, historically, market prices for critical materials, such as tungsten, and their downstream products have been subject to a high degree of volatility. Because many of our products may be designed to satisfy DoW specifications and requirements, our products may not find customers in the commercial marketplace, and our profitability may be materially adversely impacted if we are unable to identify alternative sales channels, which could have a material adverse impact on our business, prospects, financial condition and results of operations.
Our operations are subject to extensive federal, state, local and other regulatory requirements. If applicable laws or regulations are interpreted or enforced in a manner adverse to us, we may be subject to enforcement actions, penalties, exclusion, and other material limitations on our operations. Our obligations under, and the performance or termination of, the DoW Transaction Documents may affect our operations and strategic plans. The DoW Transaction Documents do not assure us of access to sources of supply, the receipt of permits and approvals, or action or assistance by any government entity except as expressly provided therein. We remain responsible for obtaining all permits, approvals, supply arrangements, and authorizations required for our operations and projects. A modification, termination or failure of performance under one or more of the DoW Transaction Documents could adversely affect our business, financial condition, and results of operations, and any remedies available to us would be subject to the applicable agreements and applicable law.
In addition, our performance under the DoW Transaction Documents may subject us to additional contractual and compliance requirements that could constrain our future business or otherwise adversely affect our financial results. We may be subject to heightened scrutiny of our business activities with both government and non-government customers, government audits, investigations, congressional scrutiny, inquiries about conflicts of interest, civil or criminal enforcement by the Department of Justice (including actions under the False Claims Act), exclusion or limitation on future government-funded opportunities, suspension, debarment, and other administrative remedies.
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An event of default or Liquidation Event under the DoW Transaction Documents could require us to redeem all, or a portion of, the outstanding Class A Preferred Stock, which could have a material adverse effect on our business, liquidity, financial condition and results of operations.
Upon the occurrence of an event of default or Liquidation Event under the DoW Transaction Documents, each of the holders of Class A Preferred Stock may, in its sole discretion, require the Company to redeem all, or any portion, of its outstanding shares of Class A Preferred Stock in accordance with the terms of the Class A Certificate of Designations. Any such redemption obligation could require the Company to use a significant portion of its available cash or obtain additional financing, which may not be available on favorable terms or at all. If the Company fails to pay the applicable redemption price when due, such failure will constitute an event of default under the DoW Transaction Documents. The resulting reduction in our liquidity and available capital, or an event of default under the DoW Transaction Documents, could materially adversely affect our ability to fund our operations and meet our other obligations and could have a material adverse effect on our business, financial condition and results of operations.
The DoW Transaction Documents contain affirmative and negative covenants that may restrict our ability and the ability of our subsidiaries to take actions management believes are important to our long-term strategy, and therefore could have a material adverse effect on our business, prospects, financial condition, or results of operations.
The DoW Transaction Documents contain affirmative covenants requiring us to take certain actions and negative covenants restricting our ability to take certain actions. The affirmative covenants impose obligations on us with respect to, among other things, (i) own or hold valid licensed rights to use all intellectual property and technology material to the Projects; (ii) maintain, prosecute and defend all material registrations and applications included in the intellectual property material to the Projects, and use commercially reasonable efforts to preserve the confidentiality of all material trade secrets and know-how included in the intellectual property material to the Projects; and (iii) comply in all material respects with all applicable export control and technology-transfer laws. The negative covenants in the DoW Transaction Documents restrict us with respect to, among other things, (i) authorize, create or issue any additional equity securities, or any securities convertible into or exercisable for any equity securities, of the Company having rights, preferences or privileges senior to, or in parity with the Class A Preferred Stock; (ii) change the authorized number of directors of the Board of Directors (or the number of votes provided to each director); (iii) enter into any transactions with an affiliate of the Company pursuant to which the Company shall make any payment, sell, lease, transfer, or dispose of any of this properties or assets to, or purchase any property or assets from, or enter or amend any transaction or arrangement with, or for the benefit of, such affiliate of the Company involving aggregate value in excess of $120,000; (iv) knowingly issuing Common Stock to Restricted Entities (as defined in the Investor Rights Agreement) and person(s) from foreign jurisdictions other than certain permitted jurisdictions; (v) being owned or controlled by, transferring property to, or otherwise doing business with any Restricted Entity in violation of applicable law, subject to specified exceptions; and (vi) making any Restricted Payments (as defined in the Investor Rights Agreement).
Compliance with the affirmative and negative covenants contained in the DoW Transaction Documents could restrict our ability to take actions that management believes are important to our long-term strategy. If strategic transactions we wish to undertake are prohibited by the DoW Transaction Documents, our ability to execute our long-term strategy could be materially adversely affected, which could in turn have a material adverse effect on our business, prospects, financial condition, or results of operations.
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The exercise of the Penny Warrant and Strike Price Warrant into shares of Common Stock would dilute the ownership position of existing common stockholders, and the subsequent sale of a substantial number of such shares of Common Stock in the public market, or the perception of such sales, could cause our stock price to decline.
The shares of Common Stock into which the Penny Warrant and Strike Price Warrant are initially exercisable collectively represent 24.84% of the Company’s issued and outstanding Common Stock as of the Initial Closing Date, without giving effect to the issuance of such shares. The Penny Warrant and Strike Price Warrant are exercisable at any time and from time to time after the date that is twelve (12) months after the Initial Closing Date, and the initial exercise prices of the Penny Warrant and Strike Price Warrant are equal to $0.001 and $15.92, respectively. At any time after the three-year anniversary of the Initial Closing Date, if the VWAP of the Company’s Common Stock exceeds 400% of the exercise price of the Strike Price Warrant for 20 consecutive trading days, the Warrants will be subject to a mandatory exercise, on a cashless basis, provided, that, the Company provides 20 calendar days’ prior notice, allowing the holders of the Warrants to exercise for cash. Any portion of the Warrants that remains unexercised upon their expiration shall be automatically exercised by means of a “cashless” exercise as set forth in the Warrants. As such, existing common stockholders may experience substantial dilution of their ownership positions.
Furthermore, the sale of a substantial number of shares of our Common Stock in the public market, or the perception that these sales might occur, including of the shares issuable upon exercise of Warrants, could depress the market price of our Common Stock and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our Common Stock.
The financial, tax and accounting treatment of the DoW Transactions contemplated by the DoW Transaction Documents remains uncertain and subject to change.
Given both the novelty and complexity of the DoW Transactions, the Company’s initial analysis of the financial, tax and accounting implications of its commitments and obligations under the DoW Transaction Documents has not been completed and may take considerable time and require significant attention from management. Additionally, no assurance can be provided that this initial assessment will not require adjustment or amendment over time due to changes in tax law or regulations, accounting practices and requirements and unforeseen developments in the course of providing services and receiving cash flows relating to the DoW Transactions. The DoW Transaction Documents are also highly integrated, and certain of the obligations under each DoW Transaction Document are contingent upon or impacted by the terms and obligations of the others. If one or more of the DoW Transaction Documents, or one or more elements of the DoW Transactions, were to be altered, amended or terminated, management would need to assess the financial, tax and accounting implications of such changes, which could be significant, together with any related remedies available to the Company and the present condition of its business and operations. We are unable to predict, and may not be able to anticipate, either these changes or the impact thereof. Any of the foregoing may have a material adverse effect on our business, prospects, financial condition and results of operations, including, but not limited to, material changes to our financial outlook, recharacterizations, restatements or other modifications of our financial statements or adjustments to previously provided estimates or guidance.
Risks Related to the Blue Moon Springer Project
The Springer Transactions will require substantial investments by the Company, and we may not realize the anticipated benefits from these investments.
The Company will be making substantial investments in connection with the Springer Transactions, specifically the JV Entity and the BM Investment. The Company may not realize the anticipated strategic, operational or financial benefits of these investments, and the costs required to develop and operate the JV Entity, including but not limited to, the APT Plant, may exceed our expectations. We may also encounter difficulties in managing the JV Entity, aligning the interests of the JV Entity partners, achieving anticipated synergies and efficiencies, and retaining key personnel and business relationships. If the JV Entity and its operations or the BM Investment does not perform as anticipated, or if we are unable to realize the expected benefits of such investments, our business, financial condition and results of operations could be materially and adversely affected.
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Risks Related to the DLA Offtake Agreement
The Company may not realize the anticipated benefits of the DLA Offtake Agreement if it is unable to satisfy contractual requirements, achieve planned production levels, or deliver tungsten ore or concentrate or sodium tungstate in accordance with applicable specifications and timelines.
The Company’s ability to generate revenue and achieve the strategic benefits contemplated by the DLA Offtake Agreement depends on its ability to successfully develop, finance, construct, and operate its production facilities or contract for supply of tungsten ore and concentrate and sodium tungstate to meet contractual requirements, including volume commitments, delivery schedules, quality standards, and other performance obligations. Delays in project execution, permitting, financing, supply chain disruptions, technical challenges, or operational difficulties could impair the Company’s ability to fulfill its obligations under the DLA Offtake Agreement and could result in reduced purchases, contractual penalties, termination, or loss of anticipated commercial opportunities with the U.S. government or other industry participants.
The Defense Logistics Agency may modify, suspend, delay, or terminate the DLA Offtake Agreement, and government funding, policy priorities, or procurement decisions may change.
Offtake agreements with U.S. government entities may be subject to federal procurement requirements, appropriations, agency priorities, and contractual provisions that provide the government with certain rights not typically available in commercial agreements. Changes in government policy, legislation, administration priorities, funding availability, national security priorities, or procurement requirements could adversely affect the continuation, timing, scope, or economic terms of the DLA Offtake Agreement. Any reduction, delay, modification, or termination of the agreement could materially impact the Company’s expected revenues, business plans, and financial condition.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. Forward-looking statements may be identified by the use of the words such as “estimate,” “plan,” “shall,” “may,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “will,” “target,” or similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding the forward-looking aspects of the DoW Transactions, including Subsequent Issuances, the intended use of proceeds of the DoW Transactions, the timing and consummation of future phases of the DoW Transactions, the Company’s and the Department of War’s future obligations related to the DoW Transactions, and the expected impact of the DoW Transactions on the Company’s business and the broader industry; the availability of government appropriations, funding and support for the DoW Transactions and the DLA Offtake Agreement; the availability of additional or replacement funding for our development projects and operations; the financial, tax and accounting assessment and treatment of the various obligations and commitments under the DoW Transaction Documents; our engagement with the industry and the government and outcomes related to this engagement; the price and market for critical materials, such as tungsten, the continued demand for critical materials, such as tungsten, and the market for critical materials, specifically tungsten, generally; future demand for tungsten and other critical materials; estimates and forecasts of the Company’s results of operations and other financial and performance metrics; the forward-looking aspects of the Springer Transactions, the formation of the JV Entity; the timing, size and completion of the BM Investment; representation of the Company on the board of directors of Blue Moon; the use of proceeds by Blue Moon received from the BM Investment; the entry into the Blue Moon Offtake Agreement and the EQ Offtake Agreement; the DLA Offtake Agreement and the Company and the DLA’s future obligations relating to the DLA Offtake Agreement; the Company’s market capitalization and the correlating eligibility of Mr. Knoll’s cash bonus award pursuant to the Bonus Award Agreement; and the potential cash payments to Mr. Knoll in connection with the Bonus Award Agreement. Such statements are all subject to risks, uncertainties and changes in circumstances that could significantly affect the Company’s future financial results and business.
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These forward-looking statements are based on various assumptions, whether or not identified in this Current Report on Form 8-K, and on the current expectations of our management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond our control. These forward-looking statements are subject to a number of risks and uncertainties, including, but not limited to, risks related to the timing and achievement of expected business milestones, including with respect to the Springer Transactions; the availability of appropriations from the legislative branch of the federal government and the ability of the Department of War to obtain funding and support for the DoW Transactions; the determination by the legislative, judicial or executive branches of the federal government that any aspect of the DoW Transactions was unauthorized, void or voidable; our ability to obtain additional or replacement financing, as needed; our ability to effectively assess, determine and monitor the financial, tax and accounting treatment of the DoW Transactions, together with our and the Department of War’s obligations thereunder; our ability to effectively use the proceeds and utilize the other anticipated benefits of the DoW Transactions as contemplated thereby; the ability of the JV Entity to bring the APT Plant into a fully operational posture and achieve the expected anticipated production from the APT Plant; the effective and proper use of the proceeds from the BM Investment by Blue Moon; changes in government policies, priorities, funding availability, or procurement requirements in connection with the DLA Offtake Agreement; delays in project development or production; difficulties achieving targeted production volumes or product specifications; the Company’s ability to effectively comply with the broader legal and regulatory requirements and heightened scrutiny associated with government partnerships and contracts; limitations on the Company’s ability to transact with non-U.S. customers; changes in trade and other policies and priorities in U.S. and foreign governments, including with respect to tariffs; fluctuations, variability and uncertainty in demand and pricing in the market for critical materials, including tungsten; volatility in the price of our Common Stock; and those risk factors discussed in the Company’s filings with the SEC, including the Company’s IPO Registration Statement, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other documents filed by the Company with the SEC.
If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that we do not presently know or that we currently believe are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect our expectations, plans or forecasts of future events and views as of the date of this Current Report on Form 8-K. We anticipate that subsequent events and developments will cause our assessments to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, unless required by applicable law. These forward-looking statements should not be relied upon as representing our assessment as of any date subsequent to the date of this Current Report on Form 8-K. Accordingly, undue reliance should not be placed upon the forward-looking statements.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are being filed or furnished, as applicable, herewith:
| * | Furnished herewith. |
| + | Certain portions of this exhibit (indicated by “[*]”) have been omitted pursuant to Item 601(a)(6) of Regulation S-K. |
| † | Certain portions of this exhibit (indicated by “[**]”) have been omitted pursuant to Item 601(b)(10)(iv). The Company hereby agrees to furnish supplementally an unredacted copy of the exhibit to the SEC upon its request. |
| # | Certain annexes, schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted attachment to the SEC on a confidential basis upon request. |
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SIGNATURE
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.
| Dated: September 14, 2026 | The Elmet Group Co. | |
| By: | /s/ Peter V. Anania | |
| Name: | Peter V. Anania | |
| Title: | Chief Executive Officer and Chairman | |
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Exhibit 3.1
| CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF CLASS A REDEEMABLE PREFERRED STOCK OF THE ELMET GROUP CO. |
TABLE OF CONTENTS
| Page | |||
| 1. | Designation | 1 | |
| 2. | Defined Terms | 1 | |
| 3. | Rank | 6 | |
| 4. | Dividends | 6 | |
| 4.1 | Accrual of Dividends | 6 | |
| 4.2 | Payment of Dividends | 7 | |
| 4.3 | Dividend Calculations | 7 | |
| 5. | Liquidation | 7 | |
| 5.1 | Liquidation | 7 | |
| 5.2 | Insufficient Assets | 7 | |
| 5.3 | Notice Requirement | 7 | |
| 5.4 | Reduction of Liquidation Preference upon Exercise of Penny Warrants | 8 | |
| 6. | Voting | 8 | |
| 6.1 | Voting Together with Common Stock | 8 | |
| 6.2 | Adjustment upon Exercise of Warrants | 9 | |
| 6.3 | Voting Rights upon Redemption | 9 | |
| 7. | Redemption. | 9 | |
| 7.1 | Holder Redemption Right | 9 | |
| 7.2 | Corporation Redemption Right | 9 | |
| 7.3 | Redemption Price | 10 | |
| 7.4 | Redemption Procedures | 10 | |
| 7.5 | Deposit of Redemption Price | 10 | |
| 7.6 | Effect of Redemption | 10 | |
| 8. | Board Representation. | 10 | |
| 9. | Reissuance of Class A Preferred Stock | 12 | |
| 10. | Event of Default Remedies | 12 | |
| 11. | Notices | 12 | |
| 12. | Share Exchanges and Reclassifications | 12 | |
| 13. | Amendments and Waiver | 12 | |
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| 14. | Written Consents | 13 | |
| 15. | Payment for Consents | 13 | |
| 16. | Withholding | 13 | |
| 17. | Transfers | 13 | |
| 18. | Transfer Agent; Registrar. | 13 | |
| 18.1 | General | 13 | |
| 18.2 | Maintenance of the Register | 13 | |
| 18.3 | Removal | 14 | |
| 19. | Severability | 14 | |
| 20. | Transfer Taxes | 14 | |
| 21. | Other Rights; Fiduciary Duties | 14 | |
| 22. | Governing Law | 14 | |
| 23. | No Other Rights | 14 | |
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CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF CLASS A REDEEMABLE PREFERRED STOCK OF THE ELMET GROUP CO.
Pursuant to Section 151 of the Delaware General Corporation Law (as amended, supplemented, or restated from time to time, the “DGCL”), The Elmet Group Co., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), in accordance with the provisions of Section 103 of the DGCL, DOES HEREBY CERTIFY:
FIRST: That, the Second Amended and Restated Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”) authorizes the issuance of up to 20,000,000 shares of Preferred Stock, par value $0.001 per share, of the Corporation (“Preferred Stock”) in one or more series and expressly vests the Board of Directors of the Corporation (the “Board”) with the authority to provide, out of the unissued shares of Preferred Stock, for one or more series of Preferred Stock and, with respect to each such series, to fix the number of shares constituting such series and the designation of such series, the voting powers, if any, of the shares of such series, and the preferences and relative, participating, optional, or other special rights, if any, and any qualifications, limitations, or restrictions thereof, of the shares of such series;
SECOND: That, pursuant to the authority vested in the Board by the Certificate of Incorporation, the Board on September 10, 2026, adopted the following resolution designating a new series of Preferred Stock as “Class A Redeemable Preferred Stock”:
NOW, THEREFORE, BE IT RESOLVED, that, pursuant to the authority vested in the Board in accordance with the provisions of Article IV of the Certificate of Incorporation and the provisions of Section 151 of the DGCL, a series of Preferred Stock of the Corporation designated as “Class A Redeemable Preferred Stock” is hereby authorized, and the designations, rights, preferences, powers, restrictions, and limitations of the Class A Redeemable Preferred Stock shall be as follows:
1. Designation. There shall be a series of Preferred Stock that shall be designated as “Class A Redeemable Preferred Stock” (the “Class A Preferred Stock”) and the number of shares constituting such series (“Shares”) shall be 450,000 with a Stated Value (as defined below) of $1,000 per Share. The rights, preferences, powers, restrictions, and limitations of the Class A Preferred Stock shall be as set forth herein. The Class A Preferred Stock shall be issued in book-entry form on the Corporation’s share ledger, subject to the rights of holders to receive certificated Shares under the DGCL.
2. Defined Terms. For purposes hereof, the following terms shall have the following meanings:
“Business Day” means any day which is not a Saturday, Sunday or other day on which commercial banks in Washington, D.C. or New York, New York are authorized or required by applicable Law to close.
“Certificate of Designations” means this Certificate of Designations, Preferences and Rights of Class A Redeemable Preferred Stock of the Corporation, as it may be amended from time to time.
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“Change of Control” has the meaning set forth in the Investor Rights Agreement as of the Initial Closing Date.
“Common Stock” means the common stock of the Corporation, par value $0.001 per share.
“Definitive Transaction Documents” means, collectively, the Investment Agreement, the Investor Rights Agreement, the Warrants, the Registration Rights Agreement and the other transaction documents entered into by and among the Corporation and the DOW in connection with the transactions contemplated hereby, as amended, modified, or supplemented from time to time.
“Dividend Rate” means 5.5% per annum.
“DOW” means the United States Department of War.
“DOW Investors” has the meaning ascribed to it in the Investor Rights Agreement.
“Equity Securities” means any and all (a) shares, interests, participations, or other equivalents (however designated) of capital stock or other voting securities of a corporation, any and all equivalent or analogous ownership (or profit) or voting interests in a Person (other than a corporation), (b) securities convertible into or exchangeable for shares, interests, participations, or other equivalents (however designated) of capital stock or voting securities of (or other ownership or profit or voting interests in) such Person, and (c) any and all warrants, rights, or options to purchase any of the foregoing, whether voting or nonvoting, and, in each case, whether or not such shares, interests, participations, equivalents, securities, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination.
“Event of Default” has the meaning set forth in the Investor Rights Agreement as of the Initial Closing Date.
“Fiscal Quarter” means each period of 13 weeks, commencing on or within 7 days of the first day of a Fiscal Year, and consistent with the definition of “Fiscal Year.”
“Fiscal Year” means a 52-week, 364-day fiscal year of the Corporation for accounting and tax purposes, commencing the day following the end of the preceding fiscal year. The Corporation reserves the right to declare a 53-week “stub” year once during each seven-year period to maintain year end dates with proximity to December 31. For purposes of the Corporation’s consolidated financial statements, those Subsidiaries having a fiscal year end different from that of the Corporation are consolidated using financial statements for periods that are within three months of the Corporation’s fiscal year end, with adjustments for material transactions, if any.
“Governmental Authority” means any (a) nation or government, state, commonwealth, province, territory, county, municipality, district, or other jurisdiction of any nature, or any political subdivision thereof, (b) federal, state, local, municipal, foreign, or other government, or (c) governmental or quasi-governmental authority of any nature (including any relevant domestic, foreign, multinational or international body, governmental division, department, agency, board, bureau, commission, instrumentality, official, organization, regulatory body, or other entity and any court, arbitrator, or other tribunal) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any executive official thereof.
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“Governmental Authorization” means any consent, license, permit, certificate, identification number, approval, exemption, variance product registration or other registration issued or granted by or filed with any Governmental Authority pursuant to applicable Law.
“Holder” means any person who holds Preferred Stock.
“Indebtedness” has the meaning set forth in the Investor Rights Agreement as of the Initial Closing Date.
“Initial Closing Date” means the date this Certificate of Designations is first filed with the Secretary of State of Delaware.
“Insolvency Event” means:
| (a) | any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation; |
| (b) | an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Corporation, or a substantial part of the property or assets of the Corporation, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state, or foreign bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator, or similar official for the Corporation, or a substantial part of the property or assets of the Corporation, or (iii) the winding-up or liquidation of the Corporation, and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; or |
| (c) | the Corporation shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state, or foreign bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in clause (b) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator, or similar official for the Corporation, or a substantial part of the property or assets of the Corporation, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) become unable or admit in writing its inability or fail generally to pay its debts as they become due. |
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“Investment Agreement” means that certain Investment Agreement, dated as of September 11, 2026, by and between the Corporation and the DOW, as amended, modified, or supplemented from time to time.
“Investor Rights Agreement” means that certain Investor Rights Agreement, dated the date hereof, by and between the Corporation and the DOW, as amended, modified, or supplemented from time to time.
“Junior Securities” means, collectively, the Common Stock and any other class of or series of capital stock, existing or hereafter authorized, the terms of which do not expressly provide that such class or series ranks pari passu with or senior to the Class A Preferred Stock as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution, or winding up of the affairs of the Corporation.
“Law” means all codes, laws, common laws, statutes, Governmental Authorizations, treaties, ordinances, rules, regulations, orders, writs, judgments or injunctions of Governmental Authority, including any amendments thereto.
“Minimum Ownership Condition” means the condition that the DOW Investors continue to beneficially own any Class A Preferred Stock.
“Original Issuance Price” means, with respect to any Share, the price per Share at which such Share was issued at the applicable closing.
“Original Issue Date” means, with respect to a Share, the date on which such Share is first issued by the Corporation.
“Parity Securities” means any class or series of capital stock, the terms of which expressly provide that such class ranks pari passu with the Class A Preferred Stock as to dividend rights and rights on the distribution of assets on any voluntary or involuntary bankruptcy, liquidation, dissolution, or winding up of the affairs of the Corporation.
“Penny Warrants” means the Warrants representing 75% of the Warrants, exercisable at $0.001 per share as of the date hereof.
“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, an estate, an unincorporated association and a Governmental Authority or any department, agency, or political subdivision thereof.
“Securities Act” means the Securities Act of 1933, as amended.
“Senior Securities” means any class or series of capital stock, the terms of which expressly provide that such class ranks senior to the Class A Preferred Stock as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution, or winding up of the affairs of the Corporation.
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“Shared Upside Penny Warrant Recognition Mechanism” means the mechanism for reducing the Liquidation Preference of the Class A Preferred Stock upon the exercise of Penny Warrants as set forth in Section 5.4.
“Stated Value” means, with respect to any Share on any given date, an amount equal to the Original Issuance Price of such Share.
“Strike Price Warrants” means the Warrants representing 25% of the Warrants exercisable at $15.92 per share as of the date hereof.
“Subsidiary” means, with respect to any specified Person, any: (a) corporation, 50% or more of the voting or capital stock of which is, as of the time in question, directly or indirectly, owned by such Person; or (b) partnership, joint venture, association, or other entity in which such Person, directly or indirectly, owns 50% or more of the equity economic interest thereof or has the power to elect or direct the election of more than 50% of the members of the governing body of such partnership, joint venture, association, or other entity.
“Tax” and ”Taxes” means any and all U.S. federal, state, or local or non-U.S. taxes, fees, levies, duties, tariffs, imposts, and other similar charges imposed by any Governmental Authority, including (a) taxes or other charges in the nature of a tax imposed on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation, or net worth; (b) other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; and (c) customs duties, tariffs, and similar charges (together with, in the case of clauses (a) through (c), any and all interest, penalties and additions to tax).
“Transfer” means (a) any direct or indirect sale, lease, assignment, encumbrance, pledge, grant of a security interest, hypothecation, disposition or other transfer (by operation of law or otherwise), either voluntary or involuntary, or entry into any contract, option or other arrangement or understanding with respect to any sale, lease, assignment, encumbrance, pledge, hypothecation, disposition or other transfer (by operation of law or otherwise), of any capital stock or interest in any capital stock or (b) in respect of any capital stock or interest in any capital stock, to enter into any swap or any other agreement, transaction or series of transactions that hedges or transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of such capital stock or interest in capital stock, whether any such swap, agreement, transaction or series of transactions is to be settled by delivery of securities, in cash or otherwise. The Class A Preferred Stock will be subject to certain transfer restrictions as set forth in the Investor Rights Agreement.
“Warrant Shares” means the shares of Common Stock underlying the Warrants.
“Warrants” means the warrants issued to the DOW, comprised of the Strike Price Warrants and the Penny Warrants.
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Additional Terms:
| TERM | SECTION |
| Accumulated Stated Value | Section 4.1 |
| Audit Committee | Section 8(f) |
| Board | Recitals |
| Certificate of Incorporation | Recitals |
| Class A Preferred Stock | Section 1 |
| Compensation Committee | Section 8(f) |
| Compounded Dividends | Section 4.2 |
| Corporation | Preamble |
| DOW Board Observer | Section 8(a) |
| DOW Director | Section 8(a) |
| DGCL | Preamble |
| Dividend | Section 4.1 |
| Intrinsic Value | Section 5.4 |
| Liquidation | Section 5.1 |
| Liquidation Event | Section 5.1 |
| Liquidation Preference | Section 5.1 |
| Preferred Stock | Recitals |
| Reference Price | Section 5.4 |
| Redemption | Section 7 |
| Redemption Date | Section 7.3 |
| Redemption Price | Section 7.3 |
| Register | Section 18.2 |
| Shares | Section 1 |
| Share Price Appreciation | Section 5.4 |
| Transfer Agent | Section 18.1 |
3. Rank. With respect to the distribution of assets upon a Liquidation Event of the Corporation and payment of dividends, all Shares of the Class A Preferred Stock shall rank (a) senior to all Junior Securities, (b) pari passu with any Parity Securities issued from time to time, and (c) junior to all Senior Securities and to the Corporation’s Indebtedness; provided that without the prior written consent of the Holders of a majority of the then-issued and outstanding Class A Preferred Stock, the Corporation shall not authorize, create, or issue any new Equity Securities of the Corporation, or reclassify, alter, or amend any existing Equity Securities ranking pari passu with, or senior to, the Class A Preferred Stock with respect to the distribution of assets upon a Liquidation Event.
4. Dividends.
4.1 Accrual of Dividends. From and after the Original Issue Date of any outstanding Share, cumulative dividends (each, a “Dividend”) on each such outstanding Share shall accrue, whether or not there are funds legally available for the payment of dividends, on a daily basis in arrears at the Dividend Rate on the sum of (a) the Stated Value plus (b) once compounded, any Compounded Dividends thereon (with respect to the relevant outstanding Share, the Stated Value plus accumulated Compounded Dividends, the “Accumulated Stated Value”).
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4.2 Payment of Dividends. All unpaid Dividends on an outstanding Share shall compound quarterly on the last day of each Fiscal Quarter of the Corporation (“Compounded Dividends”) and shall be automatically added to the then current Accumulated Stated Value of such outstanding Share.
4.3 Dividend Calculations. Holders of the Class A Preferred Stock shall be entitled to receive accruing cumulative dividends in preference to any dividend on the Common Stock or any other Junior Securities, at the Dividend Rate on the Accumulated Stated Value of each outstanding Share, which shall compound quarterly and shall accrue daily commencing on the Original Issue Date, and shall be deemed to accrue from such date whether or not earned or declared and whether or not there are profits, surplus or other funds of the Corporation legally available for the payment of dividends.
5. Liquidation.
5.1 Liquidation. Upon (a) the occurrence of any Insolvency Event of the Corporation, (b) a sale, license, lease, or transfer of all or substantially all of the Corporation’s assets, (c) a consolidation or merger of the Corporation with another entity, or (d) a Change of Control of the Corporation (each of clauses (a) through (d) a “Liquidation Event”), the Holders of Shares then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, pari passu with any payment to the holders of any Parity Securities and subject to the rights of Senior Securities (if any), and the Corporation’s creditors, but before any distribution or payment out of the assets of the Corporation shall be made to the holders of Junior Securities by reason of their ownership thereof, an amount in cash per Share equal to the Accumulated Stated Value of such Share, plus any accrued but unpaid Dividends thereon that have not yet been compounded (such amount, the “Liquidation Preference”). For the avoidance of doubt, the Class A Preferred Stock shall rank senior to all classes of Common Stock with respect to the distribution of assets upon a Liquidation Event.
5.2 Insufficient Assets. If upon any Liquidation Event the remaining assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the Holders of the Shares the Liquidation Preference to which they are entitled under Section 5.1, then (a) the Holders of the Shares shall share ratably in any distribution of the remaining assets and funds of the Corporation in proportion to the respective full preferential amounts which would otherwise be payable in respect of the Class A Preferred Stock or any Parity Securities in the aggregate upon such Liquidation Event if all amounts payable on or with respect to such Shares were paid in full, taking into account the Liquidation Preference payable under Section 5.1 in respect of such Class A Preferred Stock, and (b) the Corporation shall not make or agree to make, or set aside for the benefit of the holders of Junior Securities, any payments to the holders of Junior Securities.
5.3 Notice Requirement. In the event of any Liquidation Event, the Corporation shall, within 10 days of the date the Board approves such Liquidation Event, or no later than 20 days prior to any stockholders’ meeting called to approve such Liquidation Event, or within 20 days of the commencement of any involuntary proceeding, whichever is earlier, give each Holder written notice of the proposed Liquidation Event. Such written notice shall describe the material terms and conditions of such proposed Liquidation Event, including a description of the stock, cash, and property to be received by the Holders upon consummation of the proposed Liquidation Event and the date of delivery thereof. If any material change in the facts set forth in the initial notice shall occur, the Corporation shall promptly give written notice to each Holder of such material change.
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5.4 Reduction of Liquidation Preference upon Exercise of Penny Warrants. Upon any exercise of Penny Warrants, the Liquidation Preference of the Class A Preferred Stock shall be reduced in accordance with the Shared Upside Penny Warrant Recognition Mechanism set forth in this Section 5.4. For purposes of this Section 5.4, (i) “Reference Price” means the 30 trading day volume-weighted average price of the Common Stock immediately preceding the applicable exercise date, (ii) “Intrinsic Value” means the excess, if any, of the Reference Price over the exercise price of the applicable Penny Warrants, multiplied by the number of Penny Warrants so exercised and (iii) “Share Price Appreciation” means, expressed as a percentage, the amount by which the Reference Price exceeds $15.92 per share, divided by $15.92 per share (such amount, which represents the value of the Common Stock on the Initial Closing Date, as equitably adjusted for any subdivision, combination, or reverse split of equity or similar event effecting the Common Stock). Upon each such exercise, a portion of the Intrinsic Value shall be applied to reduce the Liquidation Preference of the Class A Preferred Stock, determined by reference to the level of Share Price Appreciation reflected in the Reference Price, as follows: (a) 0% of the portion of the Intrinsic Value representing less than 100% Share Price Appreciation; (b) 45% of the portion representing 100% to 150% Share Price Appreciation; (c) 47.5% of the portion representing 150% to 200% Share Price Appreciation; (d) 50% of the portion representing 200% to 250% Share Price Appreciation; (e) 52.5% of the portion representing 250% to 300% Share Price Appreciation; (f) 55% of the portion representing 300% to 350% Share Price Appreciation; (g) 57.5% of the portion representing 350% to 400% Share Price Appreciation; (h) 60% of the portion representing 400% to 450% Share Price Appreciation; (i) 62.5% of the portion representing 450% to 500% Share Price Appreciation; and (j) 65% of the portion representing greater than 500% Share Price Appreciation. Any reduction of the Liquidation Preference pursuant to this Section 5.4 shall be allocated pro rata among the then-outstanding Shares and shall be applied only to the extent of the then-outstanding Liquidation Preference. For the avoidance of doubt, nothing in this Section 5.4 shall limit the Holders’ ownership of Common Stock received upon exercise of the Penny Warrants or their participation in the future appreciation of the Corporation. For illustrative purposes, an example calculation of the Shared Upside Penny Warrant Recognition Mechanism set forth in this Section 5.4 is included in Appendix I hereto.
6. Voting.
6.1 Voting Together with Common Stock. The Holders of the Class A Preferred Stock shall be entitled to vote together with the holders of the Common Stock as a single class on all matters submitted to a vote of the holders of Common Stock. The aggregate number of votes to which the Holders of the Class A Preferred Stock shall be entitled shall, as of the Initial Closing Date, equal 19.9% of the total voting power of all voting securities of the Corporation outstanding as of the Initial Closing Date (determined immediately after giving effect to the issuance of the Class A Preferred Stock and the Warrants as if such Warrants had been exercised in full for shares of Common Stock on the Initial Closing Date), such that the Holders of the Class A Preferred Stock shall have, in the aggregate, a number of votes equal to 19.9% of the total voting power of the Corporation as of the Initial Closing Date. Each share of Class A Preferred Stock shall have a number of votes per share that represents a ratable portion of the aggregate number of votes that the Holders of the Class A Preferred Stock shall be entitled to pursuant to this Section 6 (calculated such that the number of votes per share of Class A Preferred Stock as of any record date shall be an amount equal to the aggregate number of votes that the Holders of the Class A Preferred Stock shall be entitled to cast as of such record date divided by the total number of shares of Class A Preferred Stock outstanding as of such record date).
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6.2 Adjustment upon Exercise of Warrants. The aggregate voting power to which the Holders of the Class A Preferred Stock set forth in Section 6.1 are entitled to and the corresponding number of votes per share of Class A Preferred Stock shall, in each case, be adjusted (and reduced) proportionally, from time to time, to the extent that the Holders exercise any Warrants for shares of Common Stock, so that the aggregate voting power represented by the Class A Preferred Stock, taken together with the shares of Common Stock issued to such Holders upon exercise of the Warrants, does not exceed the aggregate voting power attributable to such Holders as of the Initial Closing Date. Each such adjustment shall be effective concurrently with the applicable exercise of Warrants. The Corporation shall furnish to each Holder, promptly following any such adjustment (but in any event not later than three (3) Business Days thereafter), a written notice setting forth in reasonable detail such adjustment and the revised aggregate voting power of the Class A Preferred Stock. For the avoidance of doubt, any adjustment (and reduction) of the aggregate voting power and corresponding number of votes per share of Class A Preferred Stock effected pursuant to this Section 6.2 shall be permanent and irrevocable, and shall not be reversed or otherwise affected by any subsequent Transfer or other disposition of shares of Common Stock received by a Holder upon exercise of Warrants. As promptly as reasonably practicable following any such adjustment, but in any event not later than five (5) Business Days thereafter, the Corporation shall furnish to the Holders of the Class A Preferred Stock a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.
6.3 Voting Rights upon Redemption. If the Corporation redeems all or any portion of the Class A Preferred Stock pursuant to Section 7, the Corporation shall take all actions within its control necessary to grant to the Holders of the Class A Preferred Stock equivalent voting rights, whether pursuant to a new or amended certificate of designation or another similar mechanism, in each case so as to preserve, to the greatest extent practicable, the aggregate voting position of such Holders of the Class A Preferred Stock immediately prior to such Redemption, taking into account the Warrants then held by such Holders.
7. Redemption.
7.1 Holder Redemption Right. Upon a Liquidation Event, upon the occurrence and during the continuance of an Event of Default, or at any time after the 10 year anniversary of the Initial Closing Date, each Holder of Shares may elect, in its sole discretion, to require the Corporation to redeem all (or any portion) of its outstanding Shares (a “Redemption”) at a price per Share equal to the then applicable Redemption Price (as defined below) per Share. If the Corporation fails to pay the applicable Redemption Price when due, such failure shall constitute an Event of Default.
7.2 Corporation Redemption Right. The Corporation shall have the right to redeem the Class A Preferred Stock at any time and from time to time, in part or in whole, on a pro rata basis at a price per Share equal to the then applicable Redemption Price.
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7.3 Redemption Price. The redemption price (the “Redemption Price”) per Share shall equal the then applicable Liquidation Preference as of the applicable redemption date (each such date, a “Redemption Date”), giving effect to any reduction pursuant to the Shared Upside Penny Warrant Recognition Mechanism set forth in Section 5.4.
7.4 Redemption Procedures. In order to effectuate a Redemption pursuant to Section 7.1, the applicable Holder of Shares shall deliver written notice to the Corporation specifying the Redemption Date (which shall be not less than 30 nor more than 60 days after the date of such notice) and the number of Shares to be redeemed. In order to effectuate a Redemption pursuant to Section 7.2, the Corporation shall deliver written notice to the holders of the Shares specifying the Redemption Date (which shall be not less than 30 nor more than 60 days after the date of such notice) and the number of Shares to be redeemed. On the Redemption Date, the Corporation shall pay in cash the applicable Redemption Price for each Share being redeemed representing such Shares. In the event the Corporation fails to pay the applicable Redemption Price on the Redemption Date, the Holders of Shares subject to such Redemption shall be entitled to all customary remedies available at law or in equity.
7.5 Deposit of Redemption Price. The aggregate Redemption Price shall be due and payable in cash in immediately available funds on the applicable Redemption Date. Prior to 11:00 a.m., Eastern Time, on the Redemption Date, the Corporation shall deposit with an escrow agent to be mutually agreed upon by the parties, or shall pay directly to any Holder, money sufficient to pay the Redemption Price of and accumulated and unpaid Dividends on all Shares to be redeemed. If the Corporation complies with the provisions of the preceding sentence, Dividends shall cease to accumulate on the redeemed Shares on the Redemption Date. If Shares called for redemption shall not be so paid because of the failure of the Corporation to comply with this Section 7.5, the Corporation shall pay an additional amount equal to the Dividends that would have accrued on the unpaid amount from the Redemption Date until actually paid, at the Dividend Rate.
7.6 Effect of Redemption. All Shares redeemed shall no longer be deemed outstanding as of the applicable Redemption Date and all rights with respect thereto shall cease, other than the right to receive the Redemption Price.
8. Board Representation.
(a) For so long as the Minimum Ownership Condition is satisfied, the Holders of outstanding shares of Class A Preferred Stock entitled to vote thereon, voting separately as a single class, shall have the exclusive right to appoint and elect one (1) individual to the Board (the “DOW Director”) and to separately designate one (1) additional representative to attend all meetings of the Board (and any committees thereof) in a strictly non-voting observer capacity (the “DOW Board Observer”). The initial DOW Director and initial DOW Board Observer shall be appointed and designated, respectively, by DOW after the date hereof, and each is hereby deemed approved by the Board and shall be appointed and designated, respectively, to the Board on the date of such appointment.
(b) The removal of the DOW Director or DOW Board Observer shall be only upon the written request of the DOW; provided that the Board may exclude or terminate the rights of the DOW Board Observer if the Board or a committee thereof determines in good faith that such person no longer satisfies the requirements set forth in this Section 8. In the event that the DOW Director for any reason ceases to serve as a member of the Board during his or her term of office, the resulting vacancy on the Board shall be filled by the DOW.
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(c) The DOW Board Observer shall not be a director and shall not have voting rights. The DOW Board Observer shall execute and comply with a confidentiality agreement and such other policies and procedures as the Corporation reasonably requires for Board observers. The Corporation may withhold any materials from, or exclude the DOW Board Observer from, any meeting or portion thereof if the Board or any committee thereof, in consultation with the Corporation’s legal counsel, determines in good faith that such withholding or exclusion is necessary or advisable to preserve attorney-client privilege or work-product protection, comply with applicable Law, avoid a conflict of interest, protect competitively sensitive information or comply with confidentiality obligations to third parties.
(d) The DOW Director shall be entitled to advancement of expenses and indemnification in the same manner and to the same extent as the other non-executive members of the Board under the Corporation’s organizational documents, the DGCL and any indemnification agreements. Applicable pre-existing director minimum ownership requirements of certain policies of the Board shall be deemed satisfied in respect of the DOW Director, by the shares of Preferred Stock or Warrants (including the Warrant Shares) held by the DOW. The Corporation acknowledges and agrees that it is the indemnitor of first resort (i.e., its obligations to the DOW Director are primary and any obligation of the DOW to advance expenses or to provide indemnification for the same expenses or liabilities incurred by the DOW Director are secondary) to the fullest extent permitted by applicable Law and the Corporation’s organizational documents.
(e) The DOW Director shall comply with the corporate governance principles and practices of the Corporation as in effect from time to time and applicable to directors generally and shall be subject to the same fiduciary duties under Delaware law as the other members of the Board. The DOW Director shall be entitled to reimbursement of reasonable and documented out-of-pocket expenses in the same manner and to the same extent as the other non-executive members of the Board, subject to the Corporation expense reimbursement policies as in effect from time to time.
(f) The size of the Board shall not exceed nine members and the size of each of the Audit Committee of the Board (the “Audit Committee”) and Compensation Committee of the Board (the “Compensation Committee”) shall not exceed three members, except as otherwise permitted by this Certificate of Designations or required by applicable Law. For so long as the DOW Investors have a right to designate an Independent Director, the Board or any committee thereof shall appoint the DOW Director for membership on the Audit Committee and Compensation Committee, if permitted by stock exchange rules and the rules and regulations of the SEC. If the DOW Director is not permitted by stock exchange rules and the rules and regulations of the SEC to be a member of the Audit Committee or the Compensation Committee, the DOW Director shall attend all meetings of the Audit Committee or the Compensation Committee, as applicable, in a strictly non-voting observer capacity be a non-voting observer capacity.
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9. Reissuance of Class A Preferred Stock. Shares that have been issued and reacquired by the Corporation in any manner, including shares purchased or redeemed or exchanged, or converted, shall (upon compliance with any applicable provisions of the Laws of the State of Delaware) have the status of authorized but unissued shares of Preferred Stock of the Corporation undesignated as to series and may be designated or re-designated, and issued or reissued, as the case may be, as part of any series of Preferred Stock of the Corporation; provided, that any issuance of such shares as Class A Preferred Stock must be in compliance with the terms hereof.
10. Event of Default Remedies. If an Event of Default occurs and is continuing, the Dividend Rate shall automatically increase by 2.00% per annum until such Event of Default is no longer continuing, including as a result of cure or waiver of such Event of Default. The exercise of the remedy contained in this Section 10 by the Holders shall not prevent the exercise of any other right or remedy by the Holders in respect of any Event of Default.
11. Notices. All notices, consents, waivers and other communications under this Certificate of Designations must be in writing and will be deemed given to a party when delivered by e-mail, in each case marked to the attention of the individual (by name or title) designated in the Investment Agreement (or to such e-mail address as a party may designate by notice to the other party).
12. Share Exchanges and Reclassifications. Without the prior written consent of the Holders of a majority of the then outstanding Shares, the Corporation shall not effect or validate any consummation of a binding share exchange or reclassification involving the Class A Preferred Stock unless (x) the Shares remain outstanding, and (y) such shares remaining outstanding have such rights, preferences, privileges and voting powers, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the Holders thereof than the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of Class A Preferred Stock immediately prior to such transaction, taken as a whole, including, without limitation, the priority or rank of the Class A Preferred Stock with respect to the distributions.
13. Amendments and Waiver. No provision of this Certificate of Designations may be amended, modified, or waived, whether by merger, consolidation, re-domestication, reorganization, recapitalization, reclassification, conversion or otherwise, except by an instrument in writing executed by the Corporation and the Holders of a majority of the then outstanding Shares (in addition to any other approval required by the DGCL), and any such written amendment, modification or waiver will be binding upon the Corporation and each Holder of Class A Preferred Stock; provided that any amendment, whether by merger, consolidation, re-domestication, reorganization, recapitalization, reclassification, conversion or otherwise, to (a) decrease the Stated Value or Accumulated Stated Value or Dividend Rate of any Share of Class A Preferred Stock, (b) adversely affect the redemption rights or the Liquidation Preference of the Class A Preferred Stock, or (c) otherwise amend any other terms of the Class A Preferred Stock in a manner that would have a disproportionate adverse effect on any Holder of the Class A Preferred Stock as compared to other Holders of the Class A Preferred Stock shall require the consent of Holders of each Share of Class A Preferred Stock so affected. The Holders of Class A Preferred Stock shall have all remedies available at law or in equity for a breach of this Certificate of Designations, including the right to seek specific performance. Any action by the Corporation without the consent of Holders of the Shares required by this Section 13 is expressly ultra vires and shall be void ab initio and any action or attempted action, any contracts, amendments or other documentation thereof or related thereto are expressly null and void.
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14. Written Consents. Any action requiring a vote or consent of the Holders of a majority of the then outstanding Shares or each affected Holder may be taken without a meeting, without prior notice and without a vote, if a consent in writing setting forth the action so taken is signed by the requisite Holders and delivered to the Corporation. The Corporation shall provide to each Holder a copy of or notice of each proposed written consent not less than five Business Days prior to the proposed date of effectiveness, and promptly following effectiveness give written notice to each Holder; provided that failure to give notice shall not impair the validity of the consent or action.
15. Payment for Consents. The Corporation shall not pay or cause to be paid, directly or indirectly, any consideration to or for the benefit of any Holder for or as an inducement to any consent, amendment, modification or waiver unless such consideration is offered to be paid to all Holders and is paid to all Holders that approve such consent, amendment, modification or waiver.
16. Withholding. The Corporation and any applicable paying or transfer agent shall be entitled to withhold the amount of any Taxes required to be withheld by applicable law from any payments or deemed payments made on or with respect to the Class A Preferred Stock or Common Stock or other securities issued in connection with the Class A Preferred Stock.
17. Transfers. Any Holder may Transfer shares of Class A Preferred Stock so long as such Transfer is permitted under the Investor Rights Agreement (subject to applicable securities laws). Subject to the requirements of this Section 17, upon satisfaction of the requirements of this Certificate of Designations to effect a Transfer of any Class A Preferred Stock, the Corporation will cause such Transfer or exchange to be registered as soon as reasonably practicable but in no event later than the 3rd Business Day after the date of such satisfaction.
18. Transfer Agent; Registrar.
18.1 General. The duly appointed transfer agent and registrar for the Class A Preferred Stock shall be Continental Stock Transfer & Trust Company (together with its successors and assigns, the “Transfer Agent”). The Corporation designates its principal U.S. executive offices, and any office of the Transfer Agent in the continental United States, as an office or agency where Class A Preferred Stock may be presented for registration of transfer.
18.2 Maintenance of the Register. The Corporation will keep, or cause there to be kept, a record (the “Register”) of the names and addresses of the Holders, the number of shares of Class A Preferred Stock held by each Holder and the transfer, exchange, repurchase and Redemption of the Class A Preferred Stock. Absent manifest error, the entries in the Register will be conclusive and the Corporation and the Transfer Agent may treat each Person whose name is recorded as a Holder in the Register as a Holder for all purposes. The Register will be in written form or in any form capable of being converted into written form reasonably promptly.
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18.3 Removal. The Corporation may, in its sole discretion, remove the Transfer Agent in accordance with the agreement between the Corporation and the Transfer Agent; provided that the Corporation shall appoint a successor transfer agent who shall accept such appointment prior to the effectiveness of such removal. Upon any such removal or appointment, the Corporation shall send notice thereof to the Holders of the Class A Preferred Stock.
19. Severability. If any provision of this Certificate of Designations is invalid, illegal, or unenforceable, the balance of this Certificate of Designations shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. Any waiver by the Corporation or any Holder of Shares of a breach of any provision of this Certificate of Designations shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designations.
20. Transfer Taxes. The Corporation shall pay any and all documentary, stamp, and similar issue or transfer Taxes that may be payable in respect of any issuance or delivery of shares of Class A Preferred Stock; provided that the Corporation shall not be required to pay any Tax that may be payable in respect of any transfer involved in the issuance or delivery of shares in a name other than that of the Holder of the Shares to be so issued or delivered, and no such issuance or delivery shall be made unless and until the Person requesting such issuance has paid to the Corporation the amount of any such Tax or has established, to the satisfaction of the Corporation, that such Tax has been paid.
21. Other Rights; Fiduciary Duties. The Holders of the Shares, in their capacity as such, shall not have any designations, preferences, rights, powers, duties or obligations, other than as set forth in the Certificate of Incorporation (including this Certificate of Designations) or as provided by applicable law.
22. Governing Law. This Certificate of Designations and the rights and obligations of the parties hereunder shall be governed by, and construed and interpreted in accordance with the Federal Law of the United States (“Federal Law”). To the extent that Federal Law does not specify the appropriate rule of decision for a particular matter at issue, it is the intention and agreement of the parties hereto that the Law of the State of Delaware (without giving effect to its conflict of laws principles) shall be adopted as the governing rule of decision.
23. No Other Rights. The shares of Class A Preferred Stock shall not have any powers, preferences, or relative, participating, optional, or other special rights, or any qualifications, limitations, or restrictions, other than as set forth herein or as provided by applicable law.
[Signature page follows]
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designations, Preferences and Rights to be executed this 14th day of September, 2026.
| THE ELMET GROUP CO. | |||
| By: | /s/ Peter V. Anania | ||
| Name: | Peter V. Anania | ||
| Title: | Chief Executive Officer and Chairman | ||
Appendix I
Shared Upside Penny Warrant Recognition Mechanism
Illustrative Netting (assuming a Reference Price of $17.17)
[Appendix I]
Exhibit 3.2
FORM OF
CERTIFICATE OF DESIGNATIONS
of
Class B JUNIOR PARTICIPATING PREFERRED STOCK
of
THE ELMET GROUP CO.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
The Elmet Group Co., a corporation organized and existing under the General Corporation Law of the State of Delaware (hereinafter called the “Corporation”), hereby certifies that the following resolution was adopted by the Board of Directors of the Corporation as required by Section 151 of the General Corporation Law at a meeting duly called and held on September 10, 2026:
RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of this Corporation (hereinafter called the “Board of Directors” or the “Board”) in accordance with the provisions of the Certificate of Incorporation, the Board of Directors hereby creates a series of Preferred Stock, par value $0.001 per share, of the Corporation (the “Preferred Stock”), and hereby states the designation and number of shares, and fixes the relative rights, preferences, and limitations thereof as follows:
Class B Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be designated as “Class B Junior Participating Preferred Stock” (the “Class B Preferred Stock”) and the number of shares constituting the Class B Preferred Stock shall be 540,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Class B Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Class B Preferred Stock.
Section 2. Dividends and Distributions.
(a) Subject to the rights of the holders of any shares of any Series of Preferred Stock (or any similar stock) ranking prior and superior to the Class B Preferred Stock with respect to dividends, the holders of shares of Class B Preferred Stock, in preference to the holders of Common Stock, par value $0.001 per share (the “Common Stock”), of the Corporation, and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Class B Preferred Stock, in an amount per share (rounded to the nearest cent) equal to, subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Class B Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Class B Preferred Stock were entitled immediately prior to such event under the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution (or effect an adjustment, as appropriate) on the Class B Preferred Stock as provided in Section 2(a) immediately after it declares a dividend or distribution on the Common Stock (or effects a subdivision or combination or consolidation of the outstanding shares of Common Stock).
(c) Dividends shall begin to accrue and be cumulative on outstanding shares of Class B Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue and be cumulative from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Class B Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest.
(d) Dividends paid on the shares of Class B Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Class B Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Class B Preferred Stock shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set forth, each share of Class B Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Class B Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
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(b) Except as otherwise provided herein, in any other Certificate of Designations creating a Class of Preferred Stock or any similar stock, or by law, the holders of shares of Class B Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.
(c) Except as set forth herein, or as otherwise provided by law, holders of Class B Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or distributions payable on the Class B Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Class B Preferred Stock outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Class B Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Class B Preferred Stock, except dividends paid ratably on the Class B Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Class B Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Class B Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any shares of Class B Preferred Stock, or any shares of stock ranking on a parity with the Class B Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.
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(b) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under Section 4(a), purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Class B Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation, or in any other Certificate of Designations creating a series of Preferred Stock or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (a) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Class B Preferred Stock unless, prior thereto, the holders of shares of Class B Preferred Stock shall have received $1,000.00 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Class B Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to be distributed per share to holders of shares of Common Stock or (b) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Class B Preferred Stock, except distributions made ratably on the Class B Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Class B Preferred Stock were entitled immediately prior to such event under the proviso in clause (a) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Class B Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Class B Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
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Section 8. No Redemption. The shares of Class B Preferred Stock shall not be redeemable.
Section 9. Rank. The Class B Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of the Corporation’s Preferred Stock.
Section 10. Fractional Shares. The Class B Preferred Stock may be issued in fractions of a share that shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Class B Preferred Stock.
Section 11. Amendment. The Certificate of Incorporation of the Corporation shall not be amended in any manner that would materially alter or change the powers, preferences or special rights of the Class B Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Class B Preferred Stock, voting together as a single class.
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IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf of the Corporation by its Chief Executive Officer and attested by its Secretary this September 14, 2026.
| /s/ Peter V. Anania | |
| Chief Executive Officer and Chiarman |
Attest:
| /s/ Chris Chandler | |
| Executive Vice President, | |
| General Counsel and Secretary |
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Exhibit 4.1
PENNY WARRANT TO PURCHASE COMMON STOCK
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN ACQUIRED FOR INVESTMENT AND WITHOUT A VIEW TO DISTRIBUTION AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER STATE SECURITIES LAWS. NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT OR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION THEREIN MAY BE MADE EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS AS SET FORTH IN AN INVESTOR RIGHTS AGREEMENT BETWEEN THE ISSUER OF THIS WARRANT AND THE PARTY REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE ISSUER. THE SECURITY REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.
WARRANT NO. 1 TO PURCHASE 5,675,506 SHARES
OF COMMON STOCK
OF THE ELMET GROUP CO.
Issue Date: September 14, 2026
1. Definitions. Unless the context otherwise requires, when used herein the following terms shall have the meanings indicated.
“Average Share Price” means the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding a specified date.
“Board” means the board of directors of the Corporation, including any duly authorized committee thereof.
“Business Day” means any day which is not a Saturday, Sunday or a day on which banking institutions are not open in Washington, D.C. or New York, New York.
“Certificate of Designation” means the certificate of designation of the Corporation, dated as of the date hereof.
“Certificate of Incorporation” means the Certificate of Incorporation of the Corporation, or such successor certificate or articles of incorporation, articles of association or similar organizational document.
“Change of Control” has the meaning set forth in the Investor Rights Agreement as of the Initial Closing Date.
“Common Stock” means the common stock of the Corporation, par value $0.001 per share.
“Controlled” means the possession of the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether through the ownership of voting securities or ownership interests, by contract or otherwise.
“Conversion Limitation Adjustment Event” means the consummation of (a) any share exchange, stock sale, consolidation or merger of the Corporation, or other transaction pursuant to which a majority of the Common Stock will be converted into cash, securities or other property or assets or pursuant to which any Person or group of Persons will have the right to appoint a majority of the Board, (b) any issuance of Common Stock or other securities convertible into Common Stock pursuant to which any Person or group of Persons will have the right to appoint a majority of the Board, or (c) any sale, lease or other transfer in one transaction or a series of transactions of any material portion of the consolidated assets of the Corporation and its subsidiaries, taken as a whole, other than the transfer of assets of the Corporation to one or more of the Corporation’s wholly owned subsidiaries.
“Corporation” means The Elmet Group Co., a Delaware corporation.
“Definitive Transaction Documents” means, collectively, the Investment Agreement, the Investor Rights Agreement, this Warrant, the Strike Price Warrant, the Registration Rights Agreement and the other transaction documents entered into by and among the Corporation and the DOW in connection with the transactions contemplated hereby, as amended, modified, or supplemented from time to time.
“DOW” means the United States Department of War. Any actions specified to be taken by the DOW hereunder may only be taken by such Person and not by any other Warrantholder.
“DOW Investors” means, collectively, (i) the DOW and (ii) any DOW Permitted Transferee that owns any Preferred Stock, Common Stock or Warrants.
“DOW Permitted Transferee” means any Qualified Governmental Authority.
“Equity Securities” means any and all (a) shares, interests, participations, or other equivalents (however designated) of capital stock or other voting securities of a corporation, any and all equivalent or analogous ownership (or profit) or voting interests in a Person (other than a corporation), (b) securities convertible into or exchangeable for shares, interests, participations, or other equivalents (however designated) of capital stock or voting securities of (or other ownership or profit or voting interests in) such Person, and (c) any and all warrants, rights, or options to purchase any of the foregoing, whether voting or nonvoting, and, in each case, whether or not such shares, interests, participations, equivalents, securities, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination.
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“Ex-Dividend Date” means, with respect to any issuance, dividend or distribution, the first date on which shares of the Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question, from the Corporation or, if applicable, from the seller of Common Stock on such exchange or market (in the form of due bills or otherwise) as determined by such exchange or market.
“Exercise Price” means, with respect to this Warrant, $0.001.
“Expiration Time” has the meaning set forth in Section 3.
“Fair Market Value” means, with respect to any Warrant, the greater of the value as determined by (a) the sixty (60) trading day volume-weighted average price (“VWAP”) of the Common Stock of the Corporation on the NASDAQ (NASDAQ: ELMT), with such VWAP commencing upon notice of such election, or (b) the value established by a third-party appraiser mutually selected by the Corporation and the Warrantholder, as requested by the Warrantholder pursuant to Section 23.
“Governmental Authority” means any (a) nation or government, state, commonwealth, province, territory, county, municipality, district, or other jurisdiction of any nature, or any political subdivision thereof, (b) federal, state, local, municipal, foreign, or other government, or (c) governmental or quasi-governmental authority of any nature (including any relevant domestic, foreign, multinational or international body, governmental division, department, agency, board, bureau, commission, instrumentality, official, organization, regulatory body, or other entity and any court, arbitrator, or other tribunal) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any executive official thereof.
“Governmental Authorization” means any consent, license, permit, certificate, identification number, approval, exemption, variance product registration or other registration issued or granted by or filed with any Governmental Authority pursuant to applicable Law.
“Initial Closing Date” means the date hereof.
“Insolvency Event” means:
(a) any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation;
(b) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Corporation, or a substantial part of the property or assets of the Corporation, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state, or foreign bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator, or similar official for the Corporation, or a substantial part of the property or assets of the Corporation, or (iii) the winding-up or liquidation of the Corporation, and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; or
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(c) the Corporation shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state, or foreign bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in clause (b) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator, or similar official for the Corporation, or a substantial part of the property or assets of the Corporation, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) become unable or admit in writing its inability or fail generally to pay its debts as they become due.
“Investment Agreement” means that certain Investment Agreement, dated as of September 11, 2026, by and between the Corporation and the DOW, as amended, modified, or supplemented from time to time.
“Investor Rights Agreement” means that certain Investor Rights Agreement, dated the date hereof, by and between the Corporation and the DOW, as amended, modified, or supplemented from time to time.
“Last Reported Sale Price” of the Common Stock on any date means the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions for the NASDAQ or any principal U.S. national or regional securities exchange on which the Common Stock is traded. If the Common Stock is not listed for trading on a U.S. national or regional securities exchange on the relevant date, the “Last Reported Sale Price” shall be the last quoted bid price per share for the Common Stock in the over-the-counter market on the relevant date as reported by OTC Markets Group Inc. or a similar organization. If the Common Stock is not so quoted, the “Last Reported Sale Price” shall be the average of the mid-point of the last bid and ask prices per share for the Common Stock on the relevant date from each of at least three nationally recognized independent investment banking firms selected by the Corporation for this purpose.
“Law” means all codes, laws, common laws, statutes, Governmental Authorizations, treaties, ordinances, rules, regulations, orders, writs, judgments or injunctions of Governmental Authority, including any amendments thereto.
“Liquidation Event” shall mean (a) the occurrence of any Insolvency Event of the Corporation, (b) a sale, license, lease or transfer of all or substantially all of the Corporation’s assets, (c) a consolidation or merger of the Corporation with another entity or (d) a Change of Control of the Corporation.
“Mandatory Exercise Event” has the meaning set forth in Section 10.
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“NASDAQ” means any of the NASDAQ Global Select Market, the NASDAQ Global Market and the NASDAQ Capital Market.
“Original Issue Date” means the date hereof.
“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, an estate, an unincorporated association or a Governmental Authority or any department, agency or political subdivision thereof.
“Preferred Stock” means the shares of the Company’s Class A Redeemable Preferred Stock, par value $0.001 per share.
“Qualified Governmental Authority” means any U.S. federal Governmental Authority, division, department, organization, instrumentality or similar entity or body Controlled by the United States that can deliver a valid and duly executed Internal Revenue Service Form W-9 or otherwise demonstrate that it is a “United States person” for U.S. federal income tax purposes.
“Registration Rights Agreement” means that certain Registration Rights Agreement, dated as of the date hereof, by and between the Corporation and the DOW.
“Regulatory Law” means, to the extent applicable and required to permit the Warrantholder to exercise this Warrant for shares of Common Stock and to own such Common Stock without the Warrantholder, collectively, any Law that is designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or lessening of competition through merger or acquisition or restraint of trade or that affect foreign investment, outbound investment, foreign exchange, national security or national interest of any jurisdiction.
“Securities Act” means the Securities Act of 1933, as amended.
“Shares” has the meaning set forth in Section 2.
“Strike Price Warrant” means the Warrant representing 25% of the warrants to purchase exercisable at $15.92 per share as of the date hereof.
“Trading Day” means a Business Day on which NASDAQ (or any other national securities exchange on which the Common Stock is listed at such time) is open for business.
“Transfer Agent” means the Corporation’s transfer agent and registrar for the Common Stock, and any successor appointed in such capacity.
“Warrant” means this warrant to purchase Common Stock.
“Warrantholder” has the meaning set forth in Section 2.
2. Number of Shares; Exercise Price. This certifies that the DOW (together with any permitted transferee or assignee, as applicable, including the restrictions included in Section 7, the “Warrantholder”) is entitled, upon the terms and subject to the conditions hereinafter set forth, to acquire from the Corporation, in whole or in part, after the expiration or termination of any applicable Regulatory Law, if any, up to an aggregate of 5,675,506 fully paid and nonassessable shares of Common Stock, at a purchase price per share of Common Stock equal to the Exercise Price. The number of shares of Common Stock (the “Shares”) are subject to adjustment as provided herein, and all references to “Common Stock,” and “Shares” herein shall be deemed to include any such adjustment or series of adjustments.
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3. Exercise of Warrant; Term; Limitation on Share Transfers.
(a) Subject to Section 2, to the extent permitted by applicable laws and regulations, the right to purchase the Shares represented by this Warrant is exercisable, in whole or in part, by the Warrantholder, at any time and from time to time, after September 14, 2027 but in no event later than 5:00 p.m., New York City time on the tenth anniversary of the Original Issue Date (the “Expiration Time”), by (a) delivery of the Notice of Exercise annexed hereto, duly completed and executed on behalf of the Warrantholder; provided, that the Warrantholder shall not be required to deliver the original Warrant in order to effect an exercise hereunder and no ink original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required, and (b) payment of the Exercise Price for the Shares thereby purchased (i) by wire transfer of immediately available funds to an account designated by the Corporation; or (ii) by having the Corporation withhold, from the shares of Common Stock that would otherwise be delivered to the Warrantholder upon such exercise, shares of Common Stock issuable upon exercise of the Warrant equal in value to the aggregate Exercise Price as to which this Warrant is so exercised based on the Last Reported Sale Price of the Common Stock on the Trading Day on which this Warrant is exercised and the Notice of Exercise is delivered to the Corporation pursuant to this Section 3. The date on which the last of such items set forth herein is delivered to the Corporation (as determined in accordance with the notice provisions hereof) is an “Exercise Date.” Notwithstanding anything in the Warrant to the contrary, to the extent that (x) there has not been an exercise of the Warrant by the Warrantholder pursuant to this Section 3(a) and (y) the Last Reported Sale Price of the Common Stock price is in excess of the Exercise Price, unless Warrantholder provides written notice to the Corporation to the contrary, any portion of the Warrant that remains unexercised at the Expiration Time shall be exercised automatically in whole (not in part) upon the Expiration Time by means of a cashless exercise pursuant to this Section 3(a).
Execution and delivery of the Notice of Exercise shall have the same effect as cancellation of the original Warrant and issuance of new Warrant evidencing the right to purchase the remaining number of Shares, if any.
(b) Limitations on Share Transfers. Subject to the Investor Rights Agreement, any Shares issued in connection with the exercise of the Warrant may be sold only pursuant to an effective registration statement under the Securities Act or pursuant to an exemption from registration under the Securities Act.
(c) Conditional Exercise. Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with an offering by the Corporation, a Change of Control, a Liquidation Event or other transaction, such exercise may, at the election of the Warrantholder, be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.
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4. Issuance of Shares; Authorization; Listing.
(a) Upon exercise of this Warrant, the Corporation shall, as promptly as practicable (but in any event within three (3) Business Days thereafter), deliver to the Warrantholder in book-entry form as recorded on the books and records of the Transfer Agent such aggregate number of shares of Common Stock specified by the Warrantholder in the Notice of Exercise and to which the Warrantholder is entitled pursuant to the exercise hereof. The Corporation hereby represents and warrants that any Shares issued upon the exercise of this Warrant in accordance with the provisions of Section 3 will be duly and validly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges (other than liens or charges created by the Warrantholder, income and franchise taxes incurred in connection with the exercise of the Warrant or taxes in respect of any transfer occurring contemporaneously therewith). The Corporation agrees that the Shares so issued will be deemed to have been issued to the Warrantholder as of the close of business on the date on which this Warrant and payment of the Exercise Price are delivered to the Corporation in accordance with the terms of this Warrant, notwithstanding that the stock transfer books of the Corporation may then be closed. The Corporation will at all times reserve and keep available, out of its authorized but unissued Common Stock, solely for the purpose of providing for the exercise of this Warrant, the aggregate number of shares of Common Stock then issuable upon exercise of this Warrant at any time. The Corporation shall take all such actions as may be necessary to assure that all such shares of Common Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Common Stock may be listed (except for official notice of issuance which shall be immediately delivered by the Corporation upon each such issuance). The Corporation shall not close its books against the transfer of any of its capital stock in any manner which would prevent the timely conversion of the Shares.
(b) The Corporation shall use commercially reasonable efforts to cause the Shares issuable upon exercise of this Warrant to be approved for listing on the NASDAQ on or about the Original Issue Date, subject to notice of issuance of such Shares.
5. No Fractional Shares. The Corporation shall not issue any fractional shares of Common Stock upon exercise of the Warrant. Instead, the Corporation shall pay a cash adjustment to the exercising Warrantholder based upon the Last Reported Sale Price on the Trading Day immediately prior to the Exercise Date.
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6. Charges; Issuance Taxes and Expenses and Withholding.
(a) Issuance of Shares to the Warrantholder upon the exercise of this Warrant shall be made without charge to the Warrantholder for any issuance tax (to the extent permitted under applicable law) or other incidental expense in respect of the issuance of such Shares, all of which issuance taxes and other expenses shall be paid by the Corporation. Notwithstanding the foregoing, the Warrantholder and the Corporation shall cooperate to minimize any such transfer taxes to the extent permitted by law, including by providing any necessary documentation thereof.
(b) Notwithstanding any other provision of this Warrant, the Corporation and its respective representatives, as applicable, shall be entitled to deduct and withhold from any amount payable pursuant to this Warrant and any taxes as may be required to be deducted and withheld from such amounts under applicable tax law.
7. Transfer/Assignment.
(a) Without the prior written consent of the Corporation (such consent not to be unreasonably withheld, conditioned or delayed), the Warrantholder may not sell, assign, transfer, pledge or dispose of all or any portion of the Warrant or any rights thereunder, to any Person if not permitted under the Investor Rights Agreement. The Corporation shall be entitled to refuse to register any attempted transfer not in compliance with this Section 7, and any attempted sale, assignment, transfer, pledge or disposition in violation of this Section 7 shall be null and void. For the avoidance of doubt, no Common Stock issued in respect of the Warrant will be subject to the restrictions set forth in this Section 7 in connection with open-market transactions.
(b) If this Warrant is to be transferred, the Warrantholder shall surrender this Warrant to the Corporation, whereupon the Corporation will forthwith issue and deliver upon the order of the Warrantholder a new Warrant (in accordance with Section 7(d)), registered as the Warrantholder may request, representing the right to purchase the number of Shares being transferred by the Warrantholder and, if less than the total number of Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 7(d)) to the Warrantholder representing the right to purchase the number of Shares not being transferred.
(c) Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Warrantholder at the principal office of the Corporation, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the number of Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Shares as is designated by the Warrantholder at the time of such surrender; provided, however, no warrants for fractional shares of Common Stock shall be given.
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(d) Issuance of New Warrant. Whenever the Corporation is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(b) or Section 7(c), the Shares designated by the Warrantholder which, when added to the number of shares of Common Stock underlying the other new Warrant issued in connection with such issuance, does not exceed the number of Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the issue date indicated on the face of this Warrant and (iv) shall have the same rights and conditions as this Warrant.
(e) Buy-In. In addition to any other rights or remedies available to the Warrantholder hereunder or otherwise at law or in equity, if after the exercise of this Warrant pursuant to Section 3, the Corporation fails to deliver the Shares in book-entry form within the three (3) Business Day period in accordance with Section 4, and if after such failure, the Warrantholder is required by its broker to purchase (in an open market transaction or otherwise), or the Warrantholder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Warrantholder of the Shares that the Warrantholder was entitled to receive upon such exercise (a “Buy-In”), then (i) the Corporation shall pay in cash to the Warrantholder the amount by which (x) the Warrantholder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Shares that the Corporation was required to deliver to the Warrantholder in connection with such exercise, by (B) the price at which the sell order giving rise to such purchase obligation was executed, and (ii) at the option of the Warrantholder, either reinstate the portion of this Warrant and equivalent number of Shares for which such exercise was not honored (and refund the Exercise Price therefor, to the extent paid by the Warrantholder), or deliver to the Warrantholder the number of Shares that would have been issued had the Corporation timely complied with its delivery obligations hereunder. The Warrantholder shall provide the Corporation written notice indicating the amounts payable to the Warrantholder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Corporation. Nothing herein shall limit the Warrantholder’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 Corporation’s failure to timely deliver the Shares upon exercise of this Warrant.
(f) This Warrant, and any new Warrant issued pursuant to this Section 7, shall contain the notations set forth on the face of this Warrant (in addition to any additional legends or notations as may be required under applicable securities laws).
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(g) Each register and book-entry for the Shares shall contain notations in the following form (in addition to any additional legends or notations as may be required under applicable securities laws):
(i) THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS SECURITY HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND WITHOUT A VIEW TO DISTRIBUTION AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT, OR UNDER STATE SECURITIES LAWS. NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS SECURITY OR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION THEREIN MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
(ii) THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS SECURITY HAVE BEEN ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS AS SET FORTH IN AN INVESTOR RIGHTS AGREEMENT BETWEEN THE ISSUER OF THIS SECURITY AND THE PARTY REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE ISSUER. THE SECURITY REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.
8. 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 day that is a Business Day.
9. Adjustments to Number of Shares. In order to prevent dilution of the exercise rights granted under Section 3 hereof, the number of Shares issuable upon exercise of the Warrant shall be subject to adjustment, without duplication, from time to time as provided in this Section 9, except that the Corporation shall not make any adjustment to the Exercise Price if the Warrantholder participates, at the same time and upon the same terms as all holders of Common Stock and solely as a result of holding the Warrant, in any transaction described in this Section 9, without having to exercise the Warrant, as if the Warrantholder held a number of shares of Common Stock that would be issuable upon exercise of the Warrant in accordance with Section 3.
(a) Subdivisions and Combinations. In case the outstanding shares of Common Stock shall be subdivided (whether by stock split, recapitalization or otherwise) into a greater number of shares of Common Stock or combined (whether by consolidation, reverse stock split or otherwise) into a lesser number of shares of Common Stock, then the number of Shares issuable upon exercise of the Warrants immediately prior to such subdivision or combination shall be proportionately increased (in the case of a subdivision) or proportionately decreased (in the case of a combination). Such adjustment shall become effective retroactively to the close of business on the day upon which such subdivision or combination becomes effective.
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(b) Stock Dividends or Distributions. If the Corporation shall issue shares of Common Stock as a dividend or distribution on all or substantially all shares of Common Stock (other than as set forth in Section 9(f)), the number of Shares issuable upon exercise of the Warrants immediately prior to any such dividend or distribution shall be proportionately increased. Any adjustment under this Section 9(b) shall become effective immediately after the open of business on the Ex-Dividend Date for such dividend or distribution, as applicable. If any dividend or distribution of the type described in this Section 9(b) is declared but not so paid or made, the number of Shares shall be immediately readjusted, effective as of the date the Board determines not to pay such dividend or distribution, to the number of Shares that would then be in effect if such dividend or distribution had not been declared or announced.
(c) Distributions of Rights, Options or Warrants. If the Corporation shall distribute to all or substantially all holders of its Common Stock any rights, options or warrants (other than rights, options or warrants distributed in connection with a stockholders’ rights plan, in which case the provisions of Section 9(g) shall apply) entitling them to purchase, for a period of not more than 45 calendar days from the announcement date for such distribution, shares of the Common Stock at a price per share less than the Average Share Price immediately preceding the announcement date for such distribution, the number of Shares issuable upon exercise of the Warrants shall be increased based on the following formula:
| WS1 | = | WS0 | x | OS0 + X | |
| OS0 + Y |
where,
WS1 = the number of Shares issuable upon exercise of the Warrants immediately after the open of business on the Ex-Dividend Date for such distribution;
WS0 = the number of Shares issuable upon exercise of the Warrants immediately prior to the open of business on the Ex-Dividend Date for such distribution;
OS0 = the number of shares of the Common Stock outstanding immediately prior to the open of business on the Ex-Dividend Date for such distribution;
X = the total number of shares of the Common Stock issuable pursuant to such rights, options or warrants; and
Y = the number of shares of the Common Stock equal to the aggregate price payable to exercise such rights, options or warrants, divided by the Average Share Price immediately preceding the announcement date of such distribution.
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Any increase made under this Section 9(c) shall be made successively whenever any such rights, options or warrants are distributed and shall become effective immediately after the open of business on the Ex-Dividend Date for such distribution. To the extent that shares of the Common Stock are not delivered after the expiration of such rights, options or warrants, the number of Shares shall be decreased to the number of Shares that would then be in effect had the increase with respect to the distribution of such rights, options or warrants been made on the basis of delivery of only the number of shares of the Common Stock actually delivered. If such rights, options or warrants are not so distributed, the number of Shares shall be decreased to the number of Shares that would then be in effect if such record date for such distribution had not occurred.
(d) Distributions of Equity Securities, Indebtedness, other Securities, Assets or Property. If the Corporation distributes shares of its Equity Securities, evidences of its indebtedness, other assets or property, including cash and cash equivalents, of the Corporation or rights, options or warrants to acquire its Equity Securities or other securities to all or substantially all holders of Common Stock, excluding:
(i) dividends or distributions as to which adjustment is required to be effected pursuant to Section 9(b) or (c) above;
(ii) rights issued to all holders of the Common Stock pursuant to a rights plan, where such rights are not presently exercisable, trade with the Common Stock and the plan provides that the Warrantholder will receive such rights along with any Common Stock received upon exercise of the Warrant; and
(iii) Spin-Offs described below in this Section 9(d),
then the number of Shares issuable upon exercise of the Warrants shall be increased based on the following formula:
| WS1 | = | WS0 | x | SP0 | |
| SP0 - FMV |
where,
WS1 = the number of Shares issuable upon exercise of the Warrants immediately after the open of business on the Ex-Dividend Date for such distribution;
WS0 = the number of Shares issuable upon exercise of the Warrants immediately prior to the open of business on the Ex-Dividend Date for such distribution;
SP0 = the Average Share Price immediately preceding the Ex-Dividend Date for such distribution; and
FMV = the fair market value (as determined by the Board in good faith) of the shares of Equity Securities, evidences of indebtedness, securities, assets or property distributed with respect to each outstanding share of the Common Stock immediately prior to the open of business on the Ex-Dividend Date for such distribution.
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Any increase made under the portion of this Section 9(d) above shall become effective immediately after the open of business on the Ex-Dividend Date for such distribution. If such distribution is not so paid or made, the number of Shares shall be decreased to be the number of Shares that would then be in effect if such distribution had not been declared.
With respect to an adjustment pursuant to this Section 9(d) where there has been a Spin-Off, the number of Shares issuable upon exercise of the Warrants shall be increased based on the following formula:
| WS1 | = | WS0 | x | FMV + MP0 | |
| MP0 |
where,
WS1 = the number of Shares issuable upon exercise of the Warrants immediately after the end of the Valuation Period (as defined below);
WS0 = the number of Shares issuable upon exercise of the Warrants immediately prior to the end of the Valuation Period;
FMV = the average of the Last Reported Sale Prices of the Equity Securities or similar equity interest distributed to holders of the Common Stock applicable to one share of the Common Stock (determined by reference to the definition of Last Reported Sale Price as if references therein to Common Stock were to such Equity Securities or similar equity interest) over the first 10 consecutive Trading Day period after, and including, the Ex-Dividend Date of the Spin-Off (the “Valuation Period”); and
MP0 = the average of the Last Reported Sale Prices of the Common Stock over the Valuation Period.
Any adjustment to the number of Shares under the preceding paragraph of this Section 9(d) shall be made immediately after the close of business on the last Trading Day of the Valuation Period. If the Exercise Date for the Warrants to be exercised occurs on or during the Valuation Period, then, notwithstanding anything to the contrary herein, the Corporation will, if necessary, delay the settlement of such exercise until the second (2nd) Business Day after the last Trading Day of the Valuation Period.
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(e) Adjustment for Reorganization Events. If there shall occur any reclassification, statutory share exchange, reorganization, recapitalization, consolidation or merger involving the Corporation with or into another Person in which the Common Stock (but not the Warrant) is converted into or exchanged for securities, cash or other property, or any other similar transaction (other than any transaction covered by Section 9(d)), in each case in which the holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) securities, cash or other property with respect to or in exchange for Common Stock (excluding a merger solely for the purpose of changing the Corporation’s jurisdiction of incorporation), including a Conversion Limitation Adjustment Event (without limiting the rights of the Warrantholder or the Corporation with respect to any Conversion Limitation Adjustment Event) (a “Reorganization Event”), then following any such Reorganization Event, the Warrant shall remain outstanding and be exercisable into the number, kind and amount of securities, cash or other property which the Warrantholder would have received in such Reorganization Event had such holder exercised the Warrant for the applicable number of Shares immediately prior to the effective date of the Reorganization Event using the Exercise Price applicable immediately prior to the effective date of the Reorganization Event; and, in such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions in this Section 9 set forth with respect to the rights and interest thereafter of the Warrantholder, to the end that the provisions set forth in this Section 9 (including provisions with respect to changes in and other adjustments of the number of Shares) shall thereafter be applicable, as nearly as reasonably practicable, in relation to any shares of stock or other property thereafter deliverable upon exercise of the Warrant. The provisions of this Section 9(e) shall similarly apply to successive Reorganization Events. In the case of any Reorganization Event, the successor Person (if other than the Corporation) resulting from such Reorganization Event shall duly execute and deliver to the Warrantholder a supplement (in form and substance reasonably satisfactory to the Warrantholder) acknowledging such successor’s obligations under this Section 9(e). Notwithstanding anything to the contrary contained herein, with respect to any Reorganization Event, the Warrantholder shall have the right to elect, prior to the consummation of such Reorganization Event, to give effect to the exercise rights contained in Section 3 in lieu of giving effect to the provisions of this Section 9(e) with respect to this Warrant. Without limiting the Corporation’s obligations with respect to a Conversion Limitation Adjustment Event, the Corporation (or any successor) shall, no less than twenty (20) calendar days prior to the occurrence of any Reorganization Event, provide written notice to the Warrantholder of the expected occurrence of such event and of the kind and amount of the cash, securities or other property that each Warrant is expected to be exercised for under this Section 9(e). Failure to deliver such notice shall not affect the operation of this Section 9(e). The Corporation shall not enter into any agreement for a transaction constituting a Reorganization Event unless, to the extent that the Corporation is not the surviving corporation in such Reorganization Event, or will be dissolved in connection with such Reorganization Event, proper provision shall be made in the agreements governing such Reorganization Event for the exercise of the Warrant into stock of the Person surviving such Reorganization Event or such other continuing entity in such Reorganization Event.
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(f) Other Events. If any event of the type contemplated by the provisions of this Section 9 but not expressly provided for by such provisions (including the granting of phantom stock rights or other rights with equity features) occurs, and the Board in good faith determines that an appropriate adjustment to the number of Shares issuable upon exercise of this Warrant shall be made so as to protect the rights of the Warrantholder, then such adjustment shall be made in a manner consistent with the provisions of this Section 9; provided, that no such adjustment pursuant to this Section 9(f) shall decrease the number of Shares issuable upon exercise of this Warrant as otherwise determined pursuant to this Section 9.
(g) Stockholders’ Rights Plan. To the extent that any stockholders’ rights plan adopted by the Corporation is in effect upon exercise of the Warrant, the Warrantholder will receive, in addition to any Common Stock due upon exercise, the appropriate number of rights, if any, under the applicable rights agreement (as the same may be amended from time to time). However, if, prior to any exercise, the rights have separated from the shares of the Common Stock in accordance with the provisions of the applicable stockholders’ rights plan, the number of Shares will be adjusted at the time of separation as if the Corporation distributed to all holders of the Common Stock, shares of Equity Securities, evidences of indebtedness, securities, assets or property as described in Section 9(d) above, subject to readjustment in the event of the expiration, termination or redemption of such rights.
(h) Adjustment at the Discretion of the Board. Solely for purposes of preventing dilution, to the extent permitted by applicable law and subject to the applicable rules of any exchange on which any of the Corporation’s securities are then listed, the Corporation also may (but is not required to) increase the number of Shares to avoid or diminish income tax to holders of Common Stock or rights to purchase shares of Common Stock in connection with a dividend or distribution of shares (or rights to acquire shares) or similar event. Whenever the number of Shares is increased pursuant to the preceding sentence, the Corporation shall deliver to the Warrantholder a notice of the increase at least fifteen (15) days prior to the date the increased number of Shares takes effect, and such notice shall state the increased number of Shares and the period during which it will be in effect. Notwithstanding the foregoing, such adjustments pursuant to this Section 9(h) shall require the prior written consent of the Warrantholders to the extent that such adjustment would require stockholder approval under the rules of NASDAQ or another U.S. national securities exchange.
(i) Rounding; Par Value; De-minimis Adjustments. All calculations under this Section 9 shall be made to the nearest 1/10,000th of a cent or to the nearest 1/10,000th of a share, as the case may be. No adjustment in the Exercise Price shall reduce the Exercise Price below the then par value of the Common Stock. The Corporation shall not be required to make any adjustment pursuant to this Section 9 if the amount of such adjustment would be less than 1% of the then applicable Exercise Price or number of Shares into which this Warrant will be exercisable in effect immediately before the event that would otherwise have given rise to such adjustment. Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment.
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(j) Notwithstanding anything to the contrary in this Section 9, the Exercise Price or the number of Shares shall not be adjusted:
(i) upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Corporation’s securities and the investment of additional optional amounts in shares of Common Stock under any plan;
(ii) upon the issuance of any Equity Securities pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Corporation or any of the Corporation’s subsidiaries;
(iii) upon the issuance of any shares of the Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in clause (i) of this subsection and outstanding as of the Original Issue Date;
(iv) upon the repurchase of any shares of Common Stock pursuant to an open market share repurchase program or other buy back transaction, including structured or derivative transactions, that is not a tender or exchange offer; or
(v) solely for a change in the par value of the Common Stock.
(k) Certificate as to Adjustment.
(i) As promptly as reasonably practicable following any adjustment of the number of Shares, but in any event not later than five (5) Business Days thereafter, the Corporation shall furnish to the Warrantholder in accordance with the notice requirements set forth in Section 21 of the Warrant a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.
(ii) As promptly as reasonably practicable following the receipt by the Corporation of a written request by the Warrantholder, but in any event not later than five (5) Business Day thereafter, the Corporation shall furnish to such holder a certificate of an executive officer certifying the number of Shares or the amount, if any, of other shares of stock, securities or assets then issuable to such holder upon exercise of the Warrant.
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(l) Adjustments Requiring Stockholder Approval. To the extent that any adjustment under this Section 9 would require stockholder approval under the rules of NASDAQ or another U.S. national securities exchange on which the Comon Stock is then listed, the Company agrees to use its reasonable best efforts at its first annual meeting or any subsequent meeting of stockholders to obtain the approval of the Company’s stockholders for such adjustment in accordance with the requirements of the NASDAQ and applicable Law, including, that (i) the Board shall recommend to the Company’s stockholders approval of such adjustment and (ii) the Company shall solicit proxies from its stockholders 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 adjustment.
10. Mandatory Exercise.
(a) The Warrant shall be subject to mandatory exercise upon the earliest to occur of any of the following events (each, a “Mandatory Exercise Event”):
(i) on the Trading Day immediately prior to the Expiration Time;
(ii) immediately prior to any Liquidation Event;
(iii) immediately prior to the consummation of any Change of Control transaction; and
(iv) the Corporation may, at any time following September 14, 2029, require the exercise of all or any portion of the outstanding Warrant upon written notice to the Warrantholder if the VWAP of the Common Stock exceeds 400% of the Exercise Price (as defined in the Strike Price Warrant) for at least twenty (20) consecutive Trading Days immediately preceding such notice.
(b) Subject to Section 10(c), each Mandatory Exercise Event shall be self-executing by operation of this Warrant pursuant to the cashless exercise mechanic set forth in Section 3(a).
(c) The Corporation shall provide written notice to the Warrantholder no less than twenty (20) calendar days prior to any Mandatory Exercise Event to permit the Warrantholder to exercise for cash in connection with such Mandatory Exercise Event.
(d) Exercise of this Warrant (including upon any Mandatory Exercise Event), in whole or in part, shall reduce the accreted value of the Class A Redeemable Preferred Equity in the manner described in the Certificate of Designations.
11. No Impairment. The Corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in taking of all such action as may be necessary or appropriate in order to protect the rights of the Warrantholder.
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12. No Rights as Stockholders. This Warrant (other than as provided in the other Definitive Transaction Documents) does not entitle the Warrantholder to any voting rights or other rights as a stockholder of the Corporation prior to the date of exercise hereof.
13. Governing Law. This Warrant and the rights and obligations of the parties hereunder shall be governed by, and construed and interpreted in accordance with, the Federal Law of the United States (“Federal Law”). To the extent that Federal Law does not specify the appropriate rule of decision for a particular matter at issue, it is the intention and agreement of the parties hereto that the Law of the State of New York (without giving effect to its conflict of laws principles) shall be adopted as the governing rule of decision.
14. Jurisdiction Involving Non-Government Entities. By execution and delivery of this Warrant, the Corporation irrevocably and unconditionally:
(a) submits for itself and its property in any action, claim, demand, charge, complaint, audit, investigation, arbitration, inquiry, litigation, suit, or other proceeding by or before any Governmental Authority (each, a “Proceeding”) against it arising out of or in connection with this Warrant, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of (i) the courts of the United States for the Southern District of New York, (ii) any other federal court of competent jurisdiction in any other jurisdiction where it or any of its property may be found, and (iii) appellate courts from any of the foregoing;
(b) consents that any such Proceeding may be brought in or removed to such courts, and waives any objection, or right to stay or dismiss any Proceeding, that it may now or hereafter have to the venue of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agrees not to plead or claim the same; and
(c) agrees that, subject to any and all rights of appeal provided by applicable Law, judgment against it in any such Proceeding shall be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment or otherwise as provided by applicable Law, a certified or exemplified copy of which judgment shall be conclusive evidence of the fact and amount of such party’s obligation.
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15. Jurisdiction Involving Governmental Entities. By execution and delivery of this Warrant, the DOW Investors, to the maximum extent permitted by applicable Law, irrevocably and unconditionally acknowledge that this Warrant is an express contract within the meaning of 28 U.S.C. § 1491(a), and each submits for itself in any claim arising from, related to, or in connection with this Warrant to the jurisdiction of (a) the U.S. Court of Federal Claims; (b) any other federal court or tribunal of competent jurisdiction; and (c) appellate courts from any of the foregoing.
16. WAIVER OF JURY TRIAL. THE PARTIES HERETO EACH HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY PROCEEDING (A) ARISING UNDER THIS WARRANT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS WARRANT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS WARRANT EACH HEREBY AGREE AND CONSENT THAT ANY SUCH PROCEEDING SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT THE PARTIES TO THIS WARRANT MAY FILE A COPY OF THIS WARRANT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
17. Binding Effect. This Warrant shall be binding upon any successors or assigns of the Corporation.
18. Amendment and Waiver. Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Warrant shall be effective unless such modification, amendment or waiver is approved in writing by the Corporation and the DOW Investors.
19. Severability. If any term, covenant, condition or provision of this Warrant or the application thereof to any Person or circumstance shall, at any time or to any extent, be invalid or unenforceable, the remainder of this Warrant, or the application of such term or provision to Persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term, covenant, condition and provision of this Warrant shall be valid and be enforced to the fullest extent permitted by applicable Law.
20. Prohibited Actions. The Corporation agrees that it will not take any action which would entitle the Warrantholder to an adjustment of the number of Shares if the total number of shares of Common Stock issuable after such action upon exercise of this Warrant, together with all shares of Common Stock then outstanding and all shares of Common Stock then issuable upon the exercise of all outstanding options, warrants, conversion and other rights, would exceed the total number of shares of Common Stock then authorized by its Certificate of Incorporation.
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21. Notices. All notices, consents, waivers and other communications under this Warrant must be in writing and will be deemed given to a party when delivered by e-mail to the e-mail addresses set forth below, in each case marked to the attention of the individual (by name or title) designated below (or to such e-mail address as a party may designate by notice to the other party):
if to the DOW:
United States Department of War
| Address: | 1000 Defense Pentagon, | |
| Washington, DC 20301-1000 | ||
| Attention: | Office of the Deputy Assistant Secretary of War (Industrial Base Resilience) | |
| E-mail: | [*] |
if to the Corporation:
The Elmet Group Co.
| Address: | 280 Fore Street, Suite 301 | |
| Portland, Maine 04101 | ||
| Attention: | Office of General Counsel | |
| E-mail: | [*] |
with a simultaneous copy (which will not constitute notice) to:
Akin Gump Strauss Hauer & Feld LLP
| Address: | One Bryant Park | |
| Bank of America Tower | ||
| New York, New York 10036-6745 | ||
| Attention: | [*] | |
| E-mail: | [*] |
22. Warrant Register. The Corporation shall keep and properly maintain at its principal office books for the registration of this Warrant and any transfers thereof. The Corporation may deem and treat the Person in whose name this Warrant is registered on such register as the Warrantholder thereof for all purposes, and the Corporation shall not be affected by any notice to the contrary, except any assignment, division, combination, or other transfer of this Warrant effected in accordance with the provisions of this Warrant.
23. Valuation Dispute Resolution. In the case of any dispute as to the determination of the Fair Market Value of any Common Stock, Warrant, or other property, the calculation of the number of Shares or any other computation required to be made hereunder, if the Warrantholder and the Corporation are unable to settle such dispute within ten (10) Business Days, then either party may elect to submit the disputed matter(s) for resolution by an accounting firm of nationally recognized standing as may be mutually agreed upon by the Warrantholder and the Corporation. Such firm’s determination shall be binding upon all parties absent demonstrable error. The fees and expenses of the accounting firm shall be borne by the Corporation.
24. Remedies. The Corporation acknowledges that the rights of any DOW Investor under this Warrant is unique and recognizes and affirms that in the event of a breach of this Warrant by the Corporation, money damages may be inadequate and such DOW Investor would have no adequate remedy at Law. Each DOW Investor shall be entitled to seek (and the other party shall not oppose on the basis that injunctive relief or specific performance is not available due to availability of an adequate remedy at Law) an injunction or injunctions to prevent breaches of this Warrant and to enforce specifically the terms and provisions of this Warrant, without the necessity of showing any actual damages or that monetary damages would not afford an adequate remedy, and without the necessity of posting any bond or other security, this being in addition to any other remedy to which it is entitled at Law or in equity.
25. Entire Agreement. This Warrant, together with the other Definitive Transaction Documents, contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous arrangements or undertakings with respect thereto.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Corporation has caused this Warrant to be duly executed by a duly authorized officer.
Dated: September 14, 2026
| THE ELMET GROUP CO. | |||
| By: | /s/ Peter V. Anania | ||
| Name: | Peter V. Anania | ||
| Title: | Chief Executive Officer and Chairman | ||
| Accepted and agreed: | |||
| UNITED STATES DEPARTMENT OF WAR | |||
| By: | /s/ Michael Duffey | ||
| Name: | HON Michael Duffey | ||
| Title: | Undersecretary of War for Acquisition & Sustainment | ||
Form of Notice of Exercise
Date:________________
| TO: | The Elmet Group Co. (the “Corporation”) |
| RE: | Election to Purchase Common Stock |
The undersigned, pursuant to the provisions set forth in the Warrant, originally issued by the Corporation to the United States Department of War on September 14, 2026, hereby elects to exercise the Warrant with respect to the number of shares of Common Stock set forth below. The undersigned, in accordance with Section 3 of the Warrant, hereby elects to pay the aggregate Exercise Price for such shares of Common Stock in the manner indicated below (check one):
☐ Cash Exercise. The undersigned hereby tenders payment of the Aggregate Exercise Price set forth below by wire transfer of immediately available funds to the account designated by the Corporation.
☐ Cashless (Net-Share) Exercise. The undersigned hereby elects to exercise this Warrant on a cashless basis pursuant to Section 3(a)(ii) of the Warrant and directs the Corporation to withhold, from the shares of Common Stock otherwise issuable upon this exercise, a number of shares of Common Stock having a value (based on the Last Reported Sale Price on the Trading Day on which this Notice of Exercise is delivered) equal to the Aggregate Exercise Price, and to deliver to the undersigned only the net number of shares of Common Stock remaining after such withholding.
Number of Shares of Common Stock to be Exercised: ____________________
Aggregate Exercise Price (if Cash Exercise): ___________________
Net Shares to be Delivered (if Cashless Exercise): ___________________
[To be calculated by the Corporation based on the Last Reported Sale Price on the Exercise Date].
The undersigned hereby represents and warrants that the undersigned is the registered holder of the Warrant and that the foregoing exercise is being made in compliance with all applicable securities laws and the terms of the Investor Rights Agreement.
| Holder: | ||
| By: | ||
| Name: | ||
| Title: |
Exhibit 4.2
STRIKE PRICE WARRANT TO PURCHASE COMMON STOCK
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN ACQUIRED FOR INVESTMENT AND WITHOUT A VIEW TO DISTRIBUTION AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER STATE SECURITIES LAWS. NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT OR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION THEREIN MAY BE MADE EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS AS SET FORTH IN AN INVESTOR RIGHTS AGREEMENT BETWEEN THE ISSUER OF THIS WARRANT AND THE PARTY REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE ISSUER. THE SECURITY REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.
WARRANT NO. 1 TO PURCHASE 1,891,835 SHARES
OF COMMON STOCK
OF THE ELMET GROUP CO.
Issue Date: September 14, 2026
1. Definitions. Unless the context otherwise requires, when used herein the following terms shall have the meanings indicated.
“Average Share Price” means the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding a specified date.
“Board” means the board of directors of the Corporation, including any duly authorized committee thereof.
“Business Day” means any day which is not a Saturday, Sunday or a day on which banking institutions are not open in Washington, D.C. or New York, New York.
“Certificate of Designation” means the certificate of designation of the Corporation, dated as of the date hereof.
“Certificate of Incorporation” means the Certificate of Incorporation of the Corporation, or such successor certificate or articles of incorporation, articles of association or similar organizational document.
“Change of Control” has the meaning set forth in the Investor Rights Agreement as of the Initial Closing Date.
“Common Stock” means the common stock of the Corporation, par value $0.001 per share.
“Controlled” means the possession of the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether through the ownership of voting securities or ownership interests, by contract or otherwise.
“Conversion Limitation Adjustment Event” means the consummation of (a) any share exchange, stock sale, consolidation or merger of the Corporation, or other transaction pursuant to which a majority of the Common Stock will be converted into cash, securities or other property or assets or pursuant to which any Person or group of Persons will have the right to appoint a majority of the Board, (b) any issuance of Common Stock or other securities convertible into Common Stock pursuant to which any Person or group of Persons will have the right to appoint a majority of the Board, or (c) any sale, lease or other transfer in one transaction or a series of transactions of any material portion of the consolidated assets of the Corporation and its subsidiaries, taken as a whole, other than the transfer of assets of the Corporation to one or more of the Corporation’s wholly owned subsidiaries.
“Corporation” means The Elmet Group Co., a Delaware corporation.
“Definitive Transaction Documents” means, collectively, the Investment Agreement, the Investor Rights Agreement, this Warrant, the Penny Warrant, the Registration Rights Agreement and the other transaction documents entered into by and among the Corporation and the DOW in connection with the transactions contemplated hereby, as amended, modified, or supplemented from time to time.
“DOW” means the United States Department of War. Any actions specified to be taken by the DOW hereunder may only be taken by such Person and not by any other Warrantholder.
“DOW Investors” means, collectively, (i) the DOW and (ii) any DOW Permitted Transferee that owns any Preferred Stock, Common Stock or Warrants.
“DOW Permitted Transferee” means any Qualified Governmental Authority.
“Equity Securities” means any and all (a) shares, interests, participations, or other equivalents (however designated) of capital stock or other voting securities of a corporation, any and all equivalent or analogous ownership (or profit) or voting interests in a Person (other than a corporation), (b) securities convertible into or exchangeable for shares, interests, participations, or other equivalents (however designated) of capital stock or voting securities of (or other ownership or profit or voting interests in) such Person, and (c) any and all warrants, rights, or options to purchase any of the foregoing, whether voting or nonvoting, and, in each case, whether or not such shares, interests, participations, equivalents, securities, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination.
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“Ex-Dividend Date” means, with respect to any issuance, dividend or distribution, the first date on which shares of the Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question, from the Corporation or, if applicable, from the seller of Common Stock on such exchange or market (in the form of due bills or otherwise) as determined by such exchange or market.
“Exercise Price” means, with respect to this Warrant, $15.92.
“Expiration Time” has the meaning set forth in Section 3.
“Fair Market Value” means, with respect to any Warrant, the greater of the value as determined by (a) the sixty (60) trading day volume-weighted average price (“VWAP”) of the Common Stock of the Corporation on the NASDAQ (NASDAQ: ELMT), with such VWAP commencing upon notice of such election, or (b) the value established by a third-party appraiser mutually selected by the Corporation and the Warrantholder, as requested by the Warrantholder pursuant to Section 23.
“Governmental Authority” means any (a) nation or government, state, commonwealth, province, territory, county, municipality, district, or other jurisdiction of any nature, or any political subdivision thereof, (b) federal, state, local, municipal, foreign, or other government, or (c) governmental or quasi-governmental authority of any nature (including any relevant domestic, foreign, multinational or international body, governmental division, department, agency, board, bureau, commission, instrumentality, official, organization, regulatory body, or other entity and any court, arbitrator, or other tribunal) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any executive official thereof.
“Governmental Authorization” means any consent, license, permit, certificate, identification number, approval, exemption, variance product registration or other registration issued or granted by or filed with any Governmental Authority pursuant to applicable Law.
“Initial Closing Date” means the date hereof.
“Insolvency Event” means:
(a) any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation;
(b) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Corporation, or a substantial part of the property or assets of the Corporation, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state, or foreign bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator, or similar official for the Corporation, or a substantial part of the property or assets of the Corporation, or (iii) the winding-up or liquidation of the Corporation, and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; or
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(c) the Corporation shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state, or foreign bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in clause (b) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator, or similar official for the Corporation, or a substantial part of the property or assets of the Corporation, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) become unable or admit in writing its inability or fail generally to pay its debts as they become due.
“Investment Agreement” means that certain Investment Agreement, dated as of September 11, 2026, by and between the Corporation and the DOW, as amended, modified, or supplemented from time to time.
“Investor Rights Agreement” means that certain Investor Rights Agreement, dated the date hereof, by and between the Corporation and the DOW, as amended, modified, or supplemented from time to time.
“Last Reported Sale Price” of the Common Stock on any date means the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions for the NASDAQ or any principal U.S. national or regional securities exchange on which the Common Stock is traded. If the Common Stock is not listed for trading on a U.S. national or regional securities exchange on the relevant date, the “Last Reported Sale Price” shall be the last quoted bid price per share for the Common Stock in the over-the-counter market on the relevant date as reported by OTC Markets Group Inc. or a similar organization. If the Common Stock is not so quoted, the “Last Reported Sale Price” shall be the average of the mid-point of the last bid and ask prices per share for the Common Stock on the relevant date from each of at least three nationally recognized independent investment banking firms selected by the Corporation for this purpose.
“Law” means all codes, laws, common laws, statutes, Governmental Authorizations, treaties, ordinances, rules, regulations, orders, writs, judgments or injunctions of Governmental Authority, including any amendments thereto.
“Liquidation Event” shall mean (a) the occurrence of any Insolvency Event of the Corporation, (b) a sale, license, lease or transfer of all or substantially all of the Corporation’s assets, (c) a consolidation or merger of the Corporation with another entity or (d) a Change of Control of the Corporation.
“Mandatory Exercise Event” has the meaning set forth in Section 10.
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“NASDAQ” means any of the NASDAQ Global Select Market, the NASDAQ Global Market and the NASDAQ Capital Market.
“Original Issue Date” means the date hereof.
“Penny Warrant” means the Warrant representing 75% of the warrants to purchase Common Stock, exercisable at $0.001 per share as of the date hereof.
“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, an estate, an unincorporated association or a Governmental Authority or any department, agency or political subdivision thereof.
“Preferred Stock” means the shares of the Company’s Class A Redeemable Preferred Stock, par value $0.001 per share.
“Qualified Governmental Authority” means any U.S. federal Governmental Authority, division, department, organization, instrumentality or similar entity or body Controlled by the United States that can deliver a valid and duly executed Internal Revenue Service Form W-9 or otherwise demonstrate that it is a “United States person” for U.S. federal income tax purposes.
“Registration Rights Agreement” means that certain Registration Rights Agreement, dated as of the date hereof, by and between the Corporation and the DOW.
“Regulatory Law” means, to the extent applicable and required to permit the Warrantholder to exercise this Warrant for shares of Common Stock and to own such Common Stock without the Warrantholder, collectively, any Law that is designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or lessening of competition through merger or acquisition or restraint of trade or that affect foreign investment, outbound investment, foreign exchange, national security or national interest of any jurisdiction.
“Securities Act” means the Securities Act of 1933, as amended.
“Shares” has the meaning set forth in Section 2.
“Trading Day” means a Business Day on which NASDAQ (or any other national securities exchange on which the Common Stock is listed at such time) is open for business.
“Transfer Agent” means the Corporation’s transfer agent and registrar for the Common Stock, and any successor appointed in such capacity.
“Warrant” means this warrant to purchase Common Stock.
“Warrantholder” has the meaning set forth in Section 2.
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2. Number of Shares; Exercise Price. This certifies that the DOW (together with any permitted transferee or assignee, as applicable, including the restrictions included in Section 7, the “Warrantholder”) is entitled, upon the terms and subject to the conditions hereinafter set forth, to acquire from the Corporation, in whole or in part, after the expiration or termination of any applicable Regulatory Law, if any, up to an aggregate of 1,891,835 fully paid and nonassessable shares of Common Stock, at a purchase price per share of Common Stock equal to the Exercise Price. The number of shares of Common Stock (the “Shares”) and the Exercise Price are subject to adjustment as provided herein, and all references to “Common Stock,” “Shares” and “Exercise Price” herein shall be deemed to include any such adjustment or series of adjustments.
3. Exercise of Warrant; Term; Limitation on Share Transfers.
(a) Subject to Section 2, to the extent permitted by applicable laws and regulations, the right to purchase the Shares represented by this Warrant is exercisable, in whole or in part, by the Warrantholder, at any time and from time to time, after September 14, 2027 but in no event later than 5:00 p.m., New York City time on the tenth anniversary of the Original Issue Date (the “Expiration Time”), by (a) delivery of the Notice of Exercise annexed hereto, duly completed and executed on behalf of the Warrantholder; provided, that the Warrantholder shall not be required to deliver the original Warrant in order to effect an exercise hereunder and no ink original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required, and (b) payment of the Exercise Price for the Shares thereby purchased (i) by wire transfer of immediately available funds to an account designated by the Corporation; or (ii) by having the Corporation withhold, from the shares of Common Stock that would otherwise be delivered to the Warrantholder upon such exercise, shares of Common Stock issuable upon exercise of the Warrant equal in value to the aggregate Exercise Price as to which this Warrant is so exercised based on the Last Reported Sale Price of the Common Stock on the Trading Day on which this Warrant is exercised and the Notice of Exercise is delivered to the Corporation pursuant to this Section 3. The date on which the last of such items set forth herein is delivered to the Corporation (as determined in accordance with the notice provisions hereof) is an “Exercise Date.” Notwithstanding anything in the Warrant to the contrary, to the extent that (x) there has not been an exercise of the Warrant by the Warrantholder pursuant to this Section 3(a) and (y) the Last Reported Sale Price of the Common Stock price is in excess of the Exercise Price, unless Warrantholder provides written notice to the Corporation to the contrary, any portion of the Warrant that remains unexercised at the Expiration Time shall be exercised automatically in whole (not in part) upon the Expiration Time by means of a cashless exercise pursuant to this Section 3(a).
Execution and delivery of the Notice of Exercise shall have the same effect as cancellation of the original Warrant and issuance of new Warrant evidencing the right to purchase the remaining number of Shares, if any.
(b) Limitations on Share Transfers. Subject to the Investor Rights Agreement, any Shares issued in connection with the exercise of the Warrant may be sold only pursuant to an effective registration statement under the Securities Act or pursuant to an exemption from registration under the Securities Act.
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(c) Conditional Exercise. Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with an offering by the Corporation, a Change of Control, a Liquidation Event or other transaction, such exercise may, at the election of the Warrantholder, be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.
4. Issuance of Shares; Authorization; Listing.
(a) Upon exercise of this Warrant, the Corporation shall, as promptly as practicable (but in any event within three (3) Business Days thereafter), deliver to the Warrantholder in book-entry form as recorded on the books and records of the Transfer Agent such aggregate number of shares of Common Stock specified by the Warrantholder in the Notice of Exercise and to which the Warrantholder is entitled pursuant to the exercise hereof. The Corporation hereby represents and warrants that any Shares issued upon the exercise of this Warrant in accordance with the provisions of Section 3 will be duly and validly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges (other than liens or charges created by the Warrantholder, income and franchise taxes incurred in connection with the exercise of the Warrant or taxes in respect of any transfer occurring contemporaneously therewith). The Corporation agrees that the Shares so issued will be deemed to have been issued to the Warrantholder as of the close of business on the date on which this Warrant and payment of the Exercise Price are delivered to the Corporation in accordance with the terms of this Warrant, notwithstanding that the stock transfer books of the Corporation may then be closed. The Corporation will at all times reserve and keep available, out of its authorized but unissued Common Stock, solely for the purpose of providing for the exercise of this Warrant, the aggregate number of shares of Common Stock then issuable upon exercise of this Warrant at any time. The Corporation shall take all such actions as may be necessary to assure that all such shares of Common Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Common Stock may be listed (except for official notice of issuance which shall be immediately delivered by the Corporation upon each such issuance). The Corporation shall not close its books against the transfer of any of its capital stock in any manner which would prevent the timely conversion of the Shares.
(b) The Corporation shall use commercially reasonable efforts to cause the Shares issuable upon exercise of this Warrant to be approved for listing on the NASDAQ on or about the Original Issue Date, subject to notice of issuance of such Shares.
5. No Fractional Shares. The Corporation shall not issue any fractional shares of Common Stock upon exercise of the Warrant. Instead, the Corporation shall pay a cash adjustment to the exercising Warrantholder based upon the Last Reported Sale Price on the Trading Day immediately prior to the Exercise Date.
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6. Charges; Issuance Taxes and Expenses and Withholding.
(a) Issuance of Shares to the Warrantholder upon the exercise of this Warrant shall be made without charge to the Warrantholder for any issuance tax (to the extent permitted under applicable law) or other incidental expense in respect of the issuance of such Shares, all of which issuance taxes and other expenses shall be paid by the Corporation. Notwithstanding the foregoing, the Warrantholder and the Corporation shall cooperate to minimize any such transfer taxes to the extent permitted by law, including by providing any necessary documentation thereof.
(b) Notwithstanding any other provision of this Warrant, the Corporation and its respective representatives, as applicable, shall be entitled to deduct and withhold from any amount payable pursuant to this Warrant and any taxes as may be required to be deducted and withheld from such amounts under applicable tax law.
7. Transfer/Assignment.
(a) Without the prior written consent of the Corporation (such consent not to be unreasonably withheld, conditioned or delayed), the Warrantholder may not sell, assign, transfer, pledge or dispose of all or any portion of the Warrant or any rights thereunder, to any Person if not permitted under the Investor Rights Agreement. The Corporation shall be entitled to refuse to register any attempted transfer not in compliance with this Section 7, and any attempted sale, assignment, transfer, pledge or disposition in violation of this Section 7 shall be null and void. For the avoidance of doubt, no Common Stock issued in respect of the Warrant will be subject to the restrictions set forth in this Section 7 in connection with open-market transactions.
(b) If this Warrant is to be transferred, the Warrantholder shall surrender this Warrant to the Corporation, whereupon the Corporation will forthwith issue and deliver upon the order of the Warrantholder a new Warrant (in accordance with Section 7(d)), registered as the Warrantholder may request, representing the right to purchase the number of Shares being transferred by the Warrantholder and, if less than the total number of Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 7(d)) to the Warrantholder representing the right to purchase the number of Shares not being transferred.
(c) Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Warrantholder at the principal office of the Corporation, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the number of Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Shares as is designated by the Warrantholder at the time of such surrender; provided, however, no warrants for fractional shares of Common Stock shall be given.
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(d) Issuance of New Warrant. Whenever the Corporation is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(b) or Section 7(c), the Shares designated by the Warrantholder which, when added to the number of shares of Common Stock underlying the other new Warrant issued in connection with such issuance, does not exceed the number of Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the issue date indicated on the face of this Warrant and (iv) shall have the same rights and conditions as this Warrant.
(e) Buy-In. In addition to any other rights or remedies available to the Warrantholder hereunder or otherwise at law or in equity, if after the exercise of this Warrant pursuant to Section 3, the Corporation fails to deliver the Shares in book-entry form within the three (3) Business Day period in accordance with Section 4, and if after such failure, the Warrantholder is required by its broker to purchase (in an open market transaction or otherwise), or the Warrantholder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Warrantholder of the Shares that the Warrantholder was entitled to receive upon such exercise (a “Buy-In”), then (i) the Corporation shall pay in cash to the Warrantholder the amount by which (x) the Warrantholder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Shares that the Corporation was required to deliver to the Warrantholder in connection with such exercise, by (B) the price at which the sell order giving rise to such purchase obligation was executed, and (ii) at the option of the Warrantholder, either reinstate the portion of this Warrant and equivalent number of Shares for which such exercise was not honored (and refund the Exercise Price therefor, to the extent paid by the Warrantholder), or deliver to the Warrantholder the number of Shares that would have been issued had the Corporation timely complied with its delivery obligations hereunder. The Warrantholder shall provide the Corporation written notice indicating the amounts payable to the Warrantholder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Corporation. Nothing herein shall limit the Warrantholder’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 Corporation’s failure to timely deliver the Shares upon exercise of this Warrant.
(f) This Warrant, and any new Warrant issued pursuant to this Section 7, shall contain the notations set forth on the face of this Warrant (in addition to any additional legends or notations as may be required under applicable securities laws).
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(g) Each register and book-entry for the Shares shall contain notations in the following form (in addition to any additional legends or notations as may be required under applicable securities laws):
(i) THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS SECURITY HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND WITHOUT A VIEW TO DISTRIBUTION AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT, OR UNDER STATE SECURITIES LAWS. NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS SECURITY OR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION THEREIN MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
(ii) THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS SECURITY HAVE BEEN ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS AS SET FORTH IN AN INVESTOR RIGHTS AGREEMENT BETWEEN THE ISSUER OF THIS SECURITY AND THE PARTY REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE ISSUER. THE SECURITY REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.
8. 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 day that is a Business Day.
9. Adjustments to Exercise Price and Number of Shares. In order to prevent dilution of the exercise rights granted under Section 3 hereof, the Exercise Price and the number of Shares issuable upon exercise of the Warrant shall be subject to adjustment, without duplication, from time to time as provided in this Section 9, except that the Corporation shall not make any adjustment to the Exercise Price if the Warrantholder participates, at the same time and upon the same terms as all holders of Common Stock and solely as a result of holding the Warrant, in any transaction described in this Section 9, without having to exercise the Warrant, as if the Warrantholder held a number of shares of Common Stock that would be issuable upon exercise of the Warrant in accordance with Section 3.
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(a) Subdivisions and Combinations. In case the outstanding shares of Common Stock shall be subdivided (whether by stock split, recapitalization or otherwise) into a greater number of shares of Common Stock or combined (whether by consolidation, reverse stock split or otherwise) into a lesser number of shares of Common Stock, then the Exercise Price in effect at the opening of business on the day following the day upon which such subdivision or combination becomes effective shall be adjusted to equal the product of the Exercise Price in effect on such date and a fraction the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such subdivision or combination, and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such subdivision or combination. Such adjustment shall become effective retroactively to the close of business on the day upon which such subdivision or combination becomes effective.
(b) Stock Dividends or Distributions. If the Corporation shall issue shares of Common Stock as a dividend or distribution on all or substantially all shares of Common Stock (other than as set forth in Section 9(e)) the Exercise Price shall be adjusted based on the following formula.
| EP1 | = | EP0 | x | OS0 | |
| OS1 |
where,
EP1 = the Exercise Price in effect immediately after the open of business on the Ex-Dividend Date for such dividend or distribution, as the case may be;
EP0 = the Exercise Price in effect immediately prior to the open of business on the Ex-Dividend Date for such dividend or distribution, as the case may be;
OS0 = the number of shares of Common Stock outstanding immediately prior to the open of business on the Ex-Dividend Date for such dividend or distribution, as the case may be; and
OS1 = the number of shares of Common Stock that would be outstanding immediately after giving effect to such dividend, distribution, as the case may be.
Any adjustment made under this Section 9(b) shall become effective immediately after the open of business on such Ex-Dividend Date for such dividend or distribution, as applicable. If any dividend or distribution of the type described in this Section 9(b) is declared but not so paid or made, the Exercise Price shall be immediately readjusted, effective as of the date the Board determines not to pay such dividend or distribution, to the Exercise Price that would then be in effect if such dividend or distribution had not been declared or announced.
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(c) Distributions of Rights, Options or Warrants. If the Corporation shall distribute to all or substantially all holders of its Common Stock any rights, options or warrants (other than rights, options or warrants distributed in connection with a stockholders’ rights plan, in which case the provisions of Section 9(g) shall apply) entitling them to purchase, for a period of not more than 45 calendar days from the announcement date for such distribution, shares of the Common Stock at a price per share less than the Average Share Price immediately preceding the announcement date for such distribution, the Exercise Price shall be decreased based on the following formula:
| EP1 | = | EP0 | x | OS0 + X | |
| OS0 + Y |
where,
EP1 = the Exercise Price in effect immediately after the open of business on the Ex-Dividend Date for such distribution;
EP0 = the Exercise Price in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution;
OS0 = the number of shares of the Common Stock outstanding immediately prior to the open of business on the Ex-Dividend Date for such distribution;
X = the number of shares of the Common Stock equal to the aggregate price payable to exercise such rights, options or warrants, divided by the Average Share Price immediately preceding the announcement date for such distribution; and
Y = the total number of shares of the Common Stock issuable pursuant to such rights, options or warrants.
Any decrease made under this Section 9(c) shall be made successively whenever any such rights, options or warrants are distributed and shall become effective immediately after the open of business on the Ex-Dividend Date for such distribution. To the extent that shares of the Common Stock are not delivered after the expiration of such rights, options or warrants, the Exercise Price shall be increased to the Exercise Price that would then be in effect had the increase with respect to the distribution of such rights, options or warrants been made on the basis of delivery of only the number of shares of the Common Stock actually delivered. If such rights, options or warrants are not so distributed, the Exercise Price shall be increased to the Exercise Price that would then be in effect if such record date for such distribution had not occurred.
For purposes of this Section 9(c), in determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of the Common Stock at a price per share less than such Average Share Price immediately preceding the announcement date for such distribution, and in determining the aggregate offering price of such shares of the Common Stock, there shall be taken into account any consideration received by the Corporation for such rights, options or warrants and any amount payable upon exercise or conversion thereof, the value of such consideration, if other than cash, as reasonably determined by the Corporation in good faith.
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(d) Distributions of Equity Securities, Indebtedness, other Securities, Assets or Property. If the Corporation distributes shares of its Equity Securities, evidences of its indebtedness, other assets or property, including cash and cash equivalents, of the Corporation or rights, options or warrants to acquire its Equity Securities or other securities to all or substantially all holders of Common Stock, excluding:
(i) dividends or distributions as to which adjustment is required to be effected pursuant to Section 9(b) or (c) above;
(ii) rights issued to all holders of the Common Stock pursuant to a rights plan, where such rights are not presently exercisable, trade with the Common Stock and the plan provides that the Warrantholder will receive such rights along with any Common Stock received upon exercise of the Warrant; and
(iii) Spin-Offs described below in this Section 9(d),
then the Exercise Price shall be decreased based on the following formula:
| EP1 | = | EP0 | x | SP0 - FMV | |
| SP0 |
where,
EP1 = the Exercise Price in effect immediately after the open of business on the Ex-Dividend Date for such distribution;
EP0 = the Exercise Price in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution;
SP0= the Average Share Price immediately preceding the Ex-Dividend Date for such distribution; and
FMV = the fair market value (as determined by the Board in good faith) of the shares of Equity Securities, evidences of indebtedness, securities, assets or property distributed with respect to each outstanding share of the Common Stock immediately prior to the open of business on the Ex-Dividend Date for such distribution.
Any decrease made under the portion of this Section 9(d) above shall become effective immediately after the open of business on the Ex-Dividend Date for such distribution. If such distribution is not so paid or made, the Exercise Price shall be increased to be the Exercise Price that would then be in effect if such distribution had not been declared.
Notwithstanding the foregoing, if “FMV” (as defined above) is equal to or greater than “SP0” (as defined above), in lieu of the foregoing decrease, each holder of Shares may elect to receive at the same time and upon the same terms as holders of shares of Common Stock without having to exercise the Warrant, the amount and kind of the Equity Securities, evidences of the Corporation’s indebtedness, other assets or property of the Corporation or rights, options or warrants to acquire its Equity Securities or other securities of the Corporation that such holder would have received as if such holder owned a number of shares of Common Stock into which the Warrant were exercisable at the Exercise Price in effect on the Ex-Dividend Date for the distribution. If the Board determines the “FMV” (as defined above) of any distribution for purposes of this Section 9(d) by reference to the actual or when-issued trading market for any securities, it shall in doing so consider the prices in such market over the same period used in computing the Average Share Price immediately preceding the Ex-Dividend Date for such distribution.
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With respect to an adjustment pursuant to this Section 9(d) where there has been a payment of a dividend or other distribution on the Common Stock in shares of Equity Securities of any class or series, or similar equity interests, of or relating to a subsidiary or other business unit of the Corporation that will be, upon distribution, listed on a U.S. national or regional securities exchange (a “Spin-Off”), the Exercise Price shall be decreased based on the following formula:
| EP1 | = | EP0 | x | MP0 | |
| FMV + MP0 |
where,
EP1=Exercise Price in effect immediately after the end of the Valuation Period (as defined below);
EP0 = the Exercise Price in effect immediately prior to the end of the Valuation Period;
FMV = the average of the Last Reported Sale Prices of the Equity Securities or similar equity interest distributed to holders of the Common Stock applicable to one share of the Common Stock (determined by reference to the definition of Last Reported Sale Price as if references therein to Common Stock were to such Equity Securities or similar equity interest) over the first 10 consecutive Trading Day period after, and including, the Ex-Dividend Date of the Spin-Off (the “Valuation Period”); and
MP0 = the average of the Last Reported Sale Prices of the Common Stock over the Valuation Period.
Any adjustment to the Exercise Price under the preceding paragraph of this Section 9(d) shall be made immediately after the close of business on the last Trading Day of the Valuation Period. If the Exercise Date for the Warrant to be exercised occurs on or during the Valuation Period, then, notwithstanding anything to the contrary herein, the Corporation will, if necessary, delay the settlement of such exercise until the second (2nd) Business Day after the last Trading Day of the Valuation Period.
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(e) Adjustment for Reorganization Events. If there shall occur any reclassification, statutory share exchange, reorganization, recapitalization, consolidation or merger involving the Corporation with or into another Person in which the Common Stock (but not the Warrant) is converted into or exchanged for securities, cash or other property, or any other similar transaction (other than any transaction covered by Section 9(d)), in each case in which the holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) securities, cash or other property with respect to or in exchange for Common Stock (excluding a merger solely for the purpose of changing the Corporation’s jurisdiction of incorporation), including a Conversion Limitation Adjustment Event (without limiting the rights of the Warrantholder or the Corporation with respect to any Conversion Limitation Adjustment Event) (a “Reorganization Event”), then following any such Reorganization Event, the Warrant shall remain outstanding and be exercisable into the number, kind and amount of securities, cash or other property which the Warrantholder would have received in such Reorganization Event had such holder exercised the Warrant for the applicable number of Shares immediately prior to the effective date of the Reorganization Event using the Exercise Price applicable immediately prior to the effective date of the Reorganization Event; and, in such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions in this Section 9 set forth with respect to the rights and interest thereafter of the Warrantholder, to the end that the provisions set forth in this Section 9 (including provisions with respect to changes in and other adjustments of the Exercise Price) shall thereafter be applicable, as nearly as reasonably practicable, in relation to any shares of stock or other property thereafter deliverable upon exercise of the Warrant. The provisions of this Section 9(e) shall similarly apply to successive Reorganization Events. In the case of any Reorganization Event, the successor Person (if other than the Corporation) resulting from such Reorganization Event shall duly execute and deliver to the Warrantholder a supplement (in form and substance reasonably satisfactory to the Warrantholder) acknowledging such successor’s obligations under this Section 9(e). Notwithstanding anything to the contrary contained herein, with respect to any Reorganization Event, the Warrantholder shall have the right to elect, prior to the consummation of such Reorganization Event, to give effect to the exercise rights contained in Section 3 in lieu of giving effect to the provisions of this Section 9(e) with respect to this Warrant. Without limiting the Corporation’s obligations with respect to a Conversion Limitation Adjustment Event, the Corporation (or any successor) shall, no less than twenty (20) calendar days prior to the occurrence of any Reorganization Event, provide written notice to the Warrantholder of the expected occurrence of such event and of the kind and amount of the cash, securities or other property that each Warrant is expected to be exercised for under this Section 9(e). Failure to deliver such notice shall not affect the operation of this Section 9(e). The Corporation shall not enter into any agreement for a transaction constituting a Reorganization Event unless, to the extent that the Corporation is not the surviving corporation in such Reorganization Event, or will be dissolved in connection with such Reorganization Event, proper provision shall be made in the agreements governing such Reorganization Event for the exercise of the Warrant into stock of the Person surviving such Reorganization Event or such other continuing entity in such Reorganization Event.
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(f) Other Events. If any event of the type contemplated by the provisions of this Section 9 but not expressly provided for by such provisions (including the granting of phantom stock rights or other rights with equity features) occurs, and the Board in good faith determines that an appropriate adjustment to the Exercise Price shall be made so as to protect the rights of the Warrantholder, then such adjustment shall be made in a manner consistent with the provisions of this Section 9; provided, that no such adjustment pursuant to this Section 9(f) shall increase the Exercise Price as otherwise determined pursuant to this Section 9.
(g) Stockholders’ Rights Plan. To the extent that any stockholders’ rights plan adopted by the Corporation is in effect upon exercise of the Warrant, the Warrantholder will receive, in addition to any Common Stock due upon exercise, the appropriate number of rights, if any, under the applicable rights agreement (as the same may be amended from time to time). However, if, prior to any exercise, the rights have separated from the shares of the Common Stock in accordance with the provisions of the applicable stockholders’ rights plan, the Exercise Price will be adjusted at the time of separation as if the Corporation distributed to all holders of the Common Stock, shares of Equity Securities, evidences of indebtedness, securities, assets or property as described in Section 9(d) above, subject to readjustment in the event of the expiration, termination or redemption of such rights.
(h) Adjustments to Number of Shares. Concurrently with any adjustment to the Exercise Price under this Section 9, the number of Shares for which the Warrant is exercisable will be adjusted such that the number of Shares for the Warrant in effect immediately following the effectiveness of such adjustment will be equal to the number of Shares for the Warrant in effect immediately prior to such adjustment, multiplied by a fraction, (i) the numerator of which is the Exercise Price in effect immediately prior to such adjustment and (ii) the denominator of which is the Exercise Price in effect immediately following such adjustment.
(i) Adjustment at the Discretion of the Board. Solely for purposes of preventing dilution, the Corporation shall be permitted to decrease the Exercise Price by any amount for a period of at least 20 Business Days if the Board determines in good faith that such decrease would be in the best interest of the Corporation. In addition, to the extent permitted by applicable law and subject to the applicable rules of any exchange on which any of the Corporation’s securities are then listed, the Corporation also may (but is not required to) decrease the Exercise Price to avoid or diminish income tax to holders of Common Stock or rights to purchase shares of Common Stock in connection with a dividend or distribution of shares (or rights to acquire shares) or similar event. Whenever the Exercise Price is decreased pursuant to either of the preceding two sentences, the Corporation shall deliver to the Warrantholder a notice of the decrease at least fifteen (15) days prior to the date the decreased Exercise Price takes effect, and such notice shall state the decreased Exercise Price and the period during which it will be in effect. Notwithstanding the foregoing, such adjustments pursuant to this Section 9(i) shall require the prior written consent of the Warrantholders to the extent that such adjustment would require stockholder approval under the rules of NASDAQ or another U.S. national securities exchange.
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(j) Rounding; Par Value; De-minimis Adjustments. All calculations under this Section 9 shall be made to the nearest 1/10,000th of a cent or to the nearest 1/10,000th of a share, as the case may be. No adjustment in the Exercise Price shall reduce the Exercise Price below the then par value of the Common Stock. The Corporation shall not be required to make any adjustment pursuant to this Section 9 if the amount of such adjustment would be less than 1% of the then applicable Exercise Price or number of Shares into which this Warrant will be exercisable in effect immediately before the event that would otherwise have given rise to such adjustment. Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment.
(k) Notwithstanding anything to the contrary in this Section 9, the Exercise Price or the number of Shares shall not be adjusted:
(i) upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Corporation’s securities and the investment of additional optional amounts in shares of Common Stock under any plan;
(ii) upon the issuance of any Equity Securities pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Corporation or any of the Corporation’s subsidiaries;
(iii) upon the issuance of any shares of the Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in clause (i) of this subsection and outstanding as of the Original Issue Date;
(iv) upon the repurchase of any shares of Common Stock pursuant to an open market share repurchase program or other buy back transaction, including structured or derivative transactions, that is not a tender or exchange offer; or
(v) solely for a change in the par value of the Common Stock.
(l) Certificate as to Adjustment.
(i) As promptly as reasonably practicable following any adjustment of the Exercise Price, but in any event not later than five (5) Business Days thereafter, the Corporation shall furnish to the Warrantholder in accordance with the notice requirements set forth in Section 21 of the Warrant a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.
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(ii) As promptly as reasonably practicable following the receipt by the Corporation of a written request by the Warrantholder, but in any event not later than five (5) Business Day thereafter, the Corporation shall furnish to such holder a certificate of an executive officer certifying the Exercise Price then in effect and the number of Shares or the amount, if any, of other shares of stock, securities or assets then issuable to such holder upon exercise of the Warrant.
(m) Adjustments Requiring Stockholder Approval. To the extent that any adjustment under this Section 9 would require stockholder approval under the rules of NASDAQ or another U.S. national securities exchange on which the Comon Stock is then listed, the Company agrees to use its reasonable best efforts at its first annual meeting or any subsequent meeting of stockholders to obtain the approval of the Company’s stockholders for such adjustment in accordance with the requirements of the NASDAQ and applicable Law, including, that (i) the Board shall recommend to the Company’s stockholders approval of such adjustment and (ii) the Company shall solicit proxies from its stockholders 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 adjustment.
10. Mandatory Exercise.
(a) The Warrant shall be subject to mandatory exercise upon the earliest to occur of any of the following events (each, a “Mandatory Exercise Event”):
(i) on the Trading Day immediately prior to the Expiration Time;
(ii) immediately prior to any Liquidation Event;
(iii) immediately prior to the consummation of any Change of Control transaction; and
(iv) the Corporation may, at any time following September 14, 2029, require the exercise of all or any portion of the outstanding Warrant upon written notice to the Warrantholder if the VWAP of the Common Stock exceeds 400% of the Exercise Price for at least twenty (20) consecutive Trading Days immediately preceding such notice.
(b) Subject to Section 10(c), each Mandatory Exercise Event shall be self-executing by operation of this Warrant pursuant to the cashless exercise mechanic set forth in Section 3(a).
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(c) The Corporation shall provide written notice to the Warrantholder no less than twenty (20) calendar days prior to any Mandatory Exercise Event to permit the Warrantholder to exercise for cash in connection with such Mandatory Exercise Event.
11. No Impairment. The Corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in taking of all such action as may be necessary or appropriate in order to protect the rights of the Warrantholder.
12. No Rights as Stockholders. This Warrant (other than as provided in the other Definitive Transaction Documents) does not entitle the Warrantholder to any voting rights or other rights as a stockholder of the Corporation prior to the date of exercise hereof.
13. Governing Law. This Warrant and the rights and obligations of the parties hereunder shall be governed by, and construed and interpreted in accordance with, the Federal Law of the United States (“Federal Law”). To the extent that Federal Law does not specify the appropriate rule of decision for a particular matter at issue, it is the intention and agreement of the parties hereto that the Law of the State of New York (without giving effect to its conflict of laws principles) shall be adopted as the governing rule of decision.
14. Jurisdiction Involving Non-Government Entities. By execution and delivery of this Warrant, the Corporation irrevocably and unconditionally:
(a) submits for itself and its property in any action, claim, demand, charge, complaint, audit, investigation, arbitration, inquiry, litigation, suit, or other proceeding by or before any Governmental Authority (each, a “Proceeding”) against it arising out of or in connection with this Warrant, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of (i) the courts of the United States for the Southern District of New York, (ii) any other federal court of competent jurisdiction in any other jurisdiction where it or any of its property may be found, and (iii) appellate courts from any of the foregoing;
(b) consents that any such Proceeding may be brought in or removed to such courts, and waives any objection, or right to stay or dismiss any Proceeding, that it may now or hereafter have to the venue of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agrees not to plead or claim the same; and
(c) agrees that, subject to any and all rights of appeal provided by applicable Law, judgment against it in any such Proceeding shall be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment or otherwise as provided by applicable Law, a certified or exemplified copy of which judgment shall be conclusive evidence of the fact and amount of such party’s obligation.
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15. Jurisdiction Involving Governmental Entities. By execution and delivery of this Warrant, the DOW Investors, to the maximum extent permitted by applicable Law, irrevocably and unconditionally acknowledge that this Warrant is an express contract within the meaning of 28 U.S.C. § 1491(a), and each submits for itself in any claim arising from, related to, or in connection with this Warrant to the jurisdiction of (a) the U.S. Court of Federal Claims; (b) any other federal court or tribunal of competent jurisdiction; and (c) appellate courts from any of the foregoing.
16. WAIVER OF JURY TRIAL. THE PARTIES HERETO EACH HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY PROCEEDING (A) ARISING UNDER THIS WARRANT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS WARRANT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS WARRANT EACH HEREBY AGREE AND CONSENT THAT ANY SUCH PROCEEDING SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT THE PARTIES TO THIS WARRANT MAY FILE A COPY OF THIS WARRANT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
17. Binding Effect. This Warrant shall be binding upon any successors or assigns of the Corporation.
18. Amendment and Waiver. Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Warrant shall be effective unless such modification, amendment or waiver is approved in writing by the Corporation and the DOW Investors.
19. Severability. If any term, covenant, condition or provision of this Warrant or the application thereof to any Person or circumstance shall, at any time or to any extent, be invalid or unenforceable, the remainder of this Warrant, or the application of such term or provision to Persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term, covenant, condition and provision of this Warrant shall be valid and be enforced to the fullest extent permitted by applicable Law.
20. Prohibited Actions. The Corporation agrees that it will not take any action which would entitle the Warrantholder to an adjustment of the Exercise Price if the total number of shares of Common Stock issuable after such action upon exercise of this Warrant, together with all shares of Common Stock then outstanding and all shares of Common Stock then issuable upon the exercise of all outstanding options, warrants, conversion and other rights, would exceed the total number of shares of Common Stock then authorized by its Certificate of Incorporation.
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21. Notices. All notices, consents, waivers and other communications under this Warrant must be in writing and will be deemed given to a party when delivered by e-mail to the e-mail addresses set forth below, in each case marked to the attention of the individual (by name or title) designated below (or to such e-mail address as a party may designate by notice to the other party):
| if to the DOW: | |
| United States Department of War | |
| Address: | 1000 Defense Pentagon, |
| Washington, DC 20301-1000 | |
| Attention: | Office of the Deputy Assistant Secretary of War (Industrial Base Resilience) |
| E-mail: | [*] |
| if to the Corporation: | |
| The Elmet Group Co. | |
| Address: | 280 Fore Street, Suite 301 |
| Portland, Maine 04101 | |
| Attention: | Office of General Counsel |
| E-mail: | [*] |
| with a simultaneous copy (which will not constitute notice) to: | |
| Akin Gump Strauss Hauer & Feld LLP | |
| Address: | One Bryant Park |
| Bank of America Tower | |
| New York, New York 10036-6745 | |
| Attention: | [*] |
| E-mail: | [*] |
22. Warrant Register. The Corporation shall keep and properly maintain at its principal office books for the registration of this Warrant and any transfers thereof. The Corporation may deem and treat the Person in whose name this Warrant is registered on such register as the Warrantholder thereof for all purposes, and the Corporation shall not be affected by any notice to the contrary, except any assignment, division, combination, or other transfer of this Warrant effected in accordance with the provisions of this Warrant.
23. Valuation Dispute Resolution. In the case of any dispute as to the determination of the Fair Market Value of any Common Stock, Warrant, or other property, the calculation of the Exercise Price or any other computation required to be made hereunder, if the Warrantholder and the Corporation are unable to settle such dispute within ten (10) Business Days, then either party may elect to submit the disputed matter(s) for resolution by an accounting firm of nationally recognized standing as may be mutually agreed upon by the Warrantholder and the Corporation. Such firm’s determination shall be binding upon all parties absent demonstrable error. The fees and expenses of the accounting firm shall be borne by the Corporation.
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22. Remedies. The Corporation acknowledges that the rights of any DOW Investor under this Warrant is unique and recognizes and affirms that in the event of a breach of this Warrant by the Corporation, money damages may be inadequate and such DOW Investor would have no adequate remedy at Law. Each DOW Investor shall be entitled to seek (and the other party shall not oppose on the basis that injunctive relief or specific performance is not available due to availability of an adequate remedy at Law) an injunction or injunctions to prevent breaches of this Warrant and to enforce specifically the terms and provisions of this Warrant, without the necessity of showing any actual damages or that monetary damages would not afford an adequate remedy, and without the necessity of posting any bond or other security, this being in addition to any other remedy to which it is entitled at Law or in equity.
25. Entire Agreement. This Warrant, together with the other Definitive Transaction Documents, contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous arrangements or undertakings with respect thereto.
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IN WITNESS WHEREOF, the Corporation has caused this Warrant to be duly executed by a duly authorized officer.
| Dated: September 14, 2026 | |||
| THE ELMET GROUP CO. | |||
| By: | /s/ Peter V. Anania | ||
| Name: | Peter V. Anania | ||
| Title: | Chief Executive Officer and Chairman | ||
| Accepted and agreed: | |||
| UNITED STATES DEPARTMENT OF WAR | |||
| By: | /s/ Michael Duffey | ||
| Name: | HON Michael Duffey | ||
| Title: | Undersecretary of War for Acquisition & Sustainment | ||
Form of Notice of Exercise
Date:____________
| TO: | The Elmet Group Co. (the “Corporation”) |
| RE: | Election to Purchase Common Stock |
The undersigned, pursuant to the provisions set forth in the Warrant, originally issued by the Corporation to the United States Department of War on September 14, 2026, hereby elects to exercise the Warrant with respect to the number of shares of Common Stock set forth below. The undersigned, in accordance with Section 3 of the Warrant, hereby elects to pay the aggregate Exercise Price for such shares of Common Stock in the manner indicated below (check one):
| ☐ | Cash Exercise. The undersigned hereby tenders payment of the Aggregate Exercise Price set forth below by wire transfer of immediately available funds to the account designated by the Corporation. |
| ☐ | Cashless (Net-Share) Exercise. The undersigned hereby elects to exercise this Warrant on a cashless basis pursuant to Section 3(a)(ii) of the Warrant and directs the Corporation to withhold, from the shares of Common Stock otherwise issuable upon this exercise, a number of shares of Common Stock having a value (based on the Last Reported Sale Price on the Trading Day on which this Notice of Exercise is delivered) equal to the Aggregate Exercise Price, and to deliver to the undersigned only the net number of shares of Common Stock remaining after such withholding. |
Number of Shares of Common Stock to be Exercised: _______________
Aggregate Exercise Price (if Cash Exercise): _______________
Net Shares to be Delivered (if Cashless Exercise): _______________
[To be calculated by the Corporation based on the Last Reported Sale Price on the Exercise Date].
The undersigned hereby represents and warrants that the undersigned is the registered holder of the Warrant and that the foregoing exercise is being made in compliance with all applicable securities laws and the terms of the Investor Rights Agreement.
| Holder: | __________________ |
| By: | __________________ |
| Name: | __________________ |
| Title: | __________________ |
Exhibit 4.3
Restricted Entity Compliance Plan
THE ELMET GROUP CO.
and
Continental Stock Transfer & Trust Company,
as Rights Agent
Dated as of September 14, 2026
TABLE OF CONTENTS
| Section 1. | Definitions | 1 |
| Section 2. | Appointment of Rights Agent | 6 |
| Section 3. | Issue of Right Certificates | 6 |
| Section 4. | Form of Right Certificates | 8 |
| Section 5. | Countersignature and Registration | 8 |
| Section 6. | Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates | 9 |
| Section 7. | Exercise of Rights; Purchase Price; Expiration Date of Rights | 9 |
| Section 8. | Cancellation and Destruction of Right Certificates | 11 |
| Section 9. | Availability of Preferred Shares | 11 |
| Section 10. | Preferred Shares Record Date | 12 |
| Section 11. | Adjustment of Purchase Price, Number of Shares or Number of Rights | 12 |
| Section 12. | Certificate of Adjusted Purchase Price or Number of Shares | 18 |
| Section 13. | [RESERVED] | 18 |
| Section 14. | Fractional Rights and Fractional Shares | 18 |
| Section 15. | Rights of Action | 19 |
| Section 16. | Agreement of Right Holders | 19 |
| Section 17. | Right Certificate Holder Not Deemed a Stockholder | 20 |
| Section 18. | Concerning the Rights Agent | 20 |
| Section 19. | Merger or Consolidation or Change of Name of Rights Agent | 21 |
| Section 20. | Duties of Rights Agent | 22 |
| Section 21. | Change of Rights Agent | 25 |
| Section 22. | Issuance of New Right Certificates | 25 |
| Section 23. | Redemption | 26 |
| Section 24. | Exchange | 26 |
| Section 25. | Notice of Certain Events | 28 |
| Section 26. | Notices | 29 |
| Section 27. | Supplements and Amendments | 29 |
| Section 28. | Successors | 30 |
| Section 29. | Benefits of this Agreement | 30 |
| Section 30. | Severability | 30 |
| Section 31. | Determinations and Actions by the Board of Directors, etc | 30 |
| Section 32. | Governing Law | 31 |
| Section 33. | Counterparts | 31 |
| Section 34. | Descriptive Headings; Interpretation | 31 |
| Section 35. | Force Majeure | 31 |
| LIST OF EXHIBITS |
| Exhibit A | - | Form of Certificate of Designations |
| Exhibit B | - | Form of Right Certificate |
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Restricted Entity Compliance Plan
This RESTRICTED ENTITY COMPLIANCE PLAN, dated as of September 14, 2026 (this “Agreement”), between The Elmet Group Co., a Delaware corporation (the “Company”), and Continental Stock Transfer & Trust Company, as rights agent (the “Rights Agent”).
R E C I T A L S:
WHEREAS, the Company is party to that certain Investment Agreement, dated as of September 11, 2026, and that certain Investor Rights Agreement, dated as of September 14, 2026 (as amended, modified or supplemented from time to time, the “Investor Rights Agreement”), in each case by and between the Company and the United States Department of War (“DOW”), pursuant to which DOW has agreed to make, and the Company has agreed to accept, a strategic investment in the Company (the “DOW Arrangement”);
WHEREAS, as a condition to entering into, and as an ongoing condition to the performance by DOW of, the DOW Arrangement, the Company has agreed, among other things, that it will not knowingly be owned or controlled by, and will implement commercially reasonable measures to prevent beneficial ownership of the Common Shares above certain threshold amounts by, any Restricted Entity (as defined in the Investor Rights Agreement);
WHEREAS, the Board of Directors of the Company (the “Board of Directors”) has determined that the DOW Arrangement is an important and valuable asset of the Company and that the Company’s ability to secure and maintain the benefits of the DOW Arrangement is essential to the Company’s business, operations, strategic plan and prospects, and in furtherance of the objective of maintaining the benefits of the DOW Arrangement, the Company is entering into this Agreement;
WHEREAS, the Board of Directors has authorized and declared a dividend of one preferred share purchase right (a “Right”) for each Common Share (as hereinafter defined) of the Company outstanding as of the close of business on September 24, 2026 (the “Record Date”), each Right representing the right to purchase one one-thousandth of a Preferred Share (as hereinafter defined), upon the terms and subject to the conditions herein set forth, and, subject to the terms hereof and any adjustment as provided herein, has further authorized and directed the issuance of one Right with respect to each Common Share that shall become outstanding between the Record Date and the earliest of the Distribution Date, the Redemption Date and the Expiration Date (as such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. Definitions. For purposes of this Agreement, the following terms have the meanings indicated:
“Acquiring Person” shall mean any Person (x) that is a Restricted Entity and (y) who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 10% or more of the Common Shares of the Company then outstanding, but shall not include (i) the Company, (ii) any Subsidiary of the Company, or (iii) any employee benefit plan of the Company or any Subsidiary of the Company (including any entity holding Common Shares for or pursuant to the terms of any such plan, but only to the extent related to such plan); provided, however, that
(i) if, as of the date hereof or prior to the first public announcement of the adoption of this Agreement, any such Person is the Beneficial Owner of 10% or more of the Common Shares outstanding, such Person shall not be deemed to be or to become an “Acquiring Person” unless and until such time as such Person shall, after such date, become the Beneficial Owner of one or more additional Common Shares (other than pursuant to a dividend or distribution paid or made by the Company on the outstanding Common Shares or pursuant to a split or subdivision of the outstanding Common Shares (collectively, a “Common Stock Distribution”)), unless, upon becoming the Beneficial Owner of such additional Common Shares, such Person is not then the Beneficial Owner of 10% or more of the Common Shares then outstanding;
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(ii) no Person shall become an “Acquiring Person” solely as the result of an acquisition of Common Shares by the Company that, by reducing the Common Shares outstanding, increases the proportion of the Common Shares Beneficially Owned by such Person to 10% or more of the Common Shares then outstanding;
(iii) if the Board of Directors determines in good faith that a Person who would otherwise be an “Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph (a), has become such inadvertently, and such Person as promptly as practicable (as determined in good faith by the Board of Directors) divests a sufficient number of Common Shares so that such Person would no longer be an “Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph (a), then such Person shall not be deemed to be or have been an “Acquiring Person” for any purposes of this Agreement; provided, however, that if such Person again becomes the Beneficial Owner of 10% or more of the Common Shares then outstanding, such Person shall be deemed to be an Acquiring Person, subject to the exceptions set forth in this definition.
“Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect on the date of this Agreement; provided, however, that no director or officer of the Company shall be deemed an Affiliate or Associate of any other director or officer of the Company solely as a result of his or her being a director or officer of the Company.
A Person shall be deemed the “Beneficial Owner” of and shall be deemed to “beneficially own” and to have “Beneficial Ownership” of any securities:
(i) that such Person or any of such Person’s Affiliates or Associates beneficially owns, directly or indirectly, within the meaning of Rule 13d-3 of the General Rules and Regulations under the Exchange Act;
(ii) which such Person or any of such Person’s Affiliates or Associates has, directly or indirectly (A) the right or the obligation to acquire (whether such right is exercisable, or such obligation is required to be performed immediately, after the passage of time, upon the occurrence of a contingency (whether or not such contingency is in the control of such Person) or otherwise) pursuant to any agreement, arrangement or understanding, whether or not in writing (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities), or upon the exercise of conversion rights, exchange rights, rights (other than these Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to Beneficially Own, any securities issuable upon the exercise or exchange of Rights, whether or not such Rights are then exercisable or exchangeable, and regardless of whether such Rights are held by such Person or by any other Person; or
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(iii) which are beneficially owned (within the meaning of the preceding subsections of this definition), directly or indirectly, by any other Person or any of such Person’s Affiliates or Associates with which such Person or any of such Person’s Affiliates or Associates has any agreement, arrangement or understanding, whether or not in writing (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities) for the purpose of acquiring, holding, voting or disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to the contrary, the phrase “then outstanding,” when used with reference to a Person’s Beneficial Ownership of securities of the Company, shall mean the number of such securities then issued and outstanding together with the number of such securities not then actually issued and outstanding that are issuable by the Company and that such Person would be deemed to beneficially own hereunder.
“Agreement” shall have the meaning set forth in the Preamble.
“Board of Directors” shall have the meaning set forth in the Recitals.
“Book Entry” shall mean an uncertificated book entry for any Common Share or Preferred Share.
“Business Day” shall mean any day other than a Saturday, a Sunday, or a day on which banking institutions in New York are authorized or obligated by law or executive order to close.
“close of business” on any given date shall mean 5:00 P.M., New York time, on such date; provided, however, that, if such date is not a Business Day, it shall mean 5:00 P.M., New York time, on the next succeeding Business Day.
“Commence” (and the correlative words “Commenced” and “Commencement”) means the date that a tender offer or exchange offer or other transaction by any Person is first published or sent or given within the meaning of Rule 14d-2(a) of the Exchange Act.
“Common Shares” shall mean the shares of common stock, par value $0.001 per share, of the Company.
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“control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Distribution Date” shall have the meaning set forth in Section 3(a) hereof.
“DOW” shall have the meaning set forth in the Recitals.
“DOW Arrangement” shall have the meaning set forth in the Recitals.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Expiration Date” shall have the meaning set forth in Section 7(a) hereof.
“Final Expiration Date” shall mean the close of business on the date on which the Specified Period expires. The Company shall provide the Rights Agent with prompt written notice of the occurrence of the Final Expiration Date.
“Investor Rights Agreement” shall have the meaning set forth in the Recitals.
“Nasdaq” shall mean The Nasdaq Stock Market LLC.
“NYSE” shall mean the New York Stock Exchange.
“Ownership Statements” means, with respect to any Book Entry Common Share, current ownership statements issued to the record holders thereof in lieu of a certificate representing such Common Share.
“Person” shall mean any individual, firm, partnership (general or limited), corporation, limited liability company, association, trust, limited liability partnership, joint venture, unincorporated organization or other entity, and shall include any successor (by merger or otherwise) of such entity, as well as any syndicate or group deemed to be a Person under Section 13(d)(3) of the Exchange Act and Rule 13d-5(b)(1) of the Exchange Act.
“Preferred Shares” shall mean shares of Class B Junior Participating Preferred Stock, par value $0.001 per share, of the Company having the rights and preferences set forth in the Form of Certificate of Designations attached to this Agreement as Exhibit A.
“Purchase Price” shall have the meaning set forth in Section 4 hereof, as adjusted in accordance with this Agreement and as in effect from time to time.
“Record Date” shall have the meaning set forth in the Recitals.
“Redemption Date” shall have the meaning set forth in Section 7(a) hereof.
“Redemption Price” shall have the meaning set forth in Section 23(a) hereof.
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“Restricted Entity” means any Person that is, or is owned or controlled, directly or indirectly, by, (i) a Person then appearing upon the “Denied Persons List,” the “Entity List,” or the “Unverified List,” as maintained by the U.S. Department of Commerce; (ii) a Person on the U.S. Office of Foreign Assets Control “Specially Designated Nationals and Blocked Persons List,” the “Sectoral Sanctions Identifications List,” the “Non-SDN Chinese Military-Industrial Complex Companies List,” the “Foreign Sanctions Evaders List,” or any similar list of restricted Persons maintained by a Governmental Authority of the United States, including Persons resident in embargoed countries, territories, or regions; (iii) a “foreign entity of concern” as defined by 15 U.S.C. § 4651(8) or 42 U.S.C. § 18741(a)(5) or a “foreign adversary” as defined by 15 CFR § 791.4; (iv) the government, including any political subdivision, agency, or instrumentality thereof, or any national, of (A) any country, territory, or region against which the United States maintains comprehensive economic sanctions or embargos from; (B) The People’s Republic of China; or (C) a country determined to be a country of risk in accordance with U.S. Department of Energy Order DOE O 486.1A(5)(d), as amended, supplemented or replaced from time to time (https://www.energy.gov/science/countries-risk); (v) a Person that the Company knows or reasonably determines is acting or purporting to act, directly or indirectly, on behalf of, or a Person (wherever organized, in the case of an entity) owned or controlled by, any of the Persons listed in sub-clauses (i)-(iv) above, such that the Person is subject to the same prohibitions or restrictions as any of the Persons listed in sub-clauses (i)-(iv) above; or (vi) a Person with whom dealings are expressly prohibited on account of any economic sanctions laws, regulations, or directives, of the United States, if the investment in such Person would knowingly cause the Company to be in violation of such laws, regulations, or directives. With respect to any Person that is a company with a class of securities registered under the Exchange Act (or subject to a comparable non-U.S. reporting regime), for purposes of this definition of Restricted Entity, ownership does not include passive non-controlling beneficial ownership by any single person or any “Group” (as defined in Section 13(d)(3) of the Exchange Act and Rule 13d-5 thereunder) of less than 10% in the aggregate for all such persons or “Groups”; provided, however, that a Person shall cease to be a Restricted Entity at such time as the Person no longer satisfies any of the criteria set forth in clauses (i) through (vi) above (including by reason of removal from the applicable list, termination of the applicable sanctions program or designation, or otherwise).
“Right” shall have the meaning set forth in the Recitals.
“Right Certificate” shall have the meaning set forth in Section 3(a) hereof.
“Rights Agent” shall have the meaning set forth in the Preamble.
“Security” shall have the meaning set forth in Section 11(d)(i) hereof.
“Shares Acquisition Date” shall mean the first date of public announcement by the Company that an Acquiring Person has become such.
“Signature Guarantee” shall have the meaning set forth in Section 6 hereof.
“Specified Period” shall mean the period expiring upon the termination, in accordance with the terms thereof, of the Investor Rights Agreement and any other material agreements in place between the Company and its Subsidiaries, on the one hand, and DOW or other U.S. government agencies, as applicable, on the other, requiring the adoption or maintenance of this Agreement.
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“Subsidiary” of any Person shall mean any corporation, partnership or other entity of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by such Person.
“Trading Day” shall have the meaning set forth in Section 11(d) hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company and the holders of the Rights (who, in accordance with Section 3 hereof, shall, prior to the Distribution Date, also be the holders of the Common Shares of the Company) in accordance with the express terms and conditions (and no implied terms and conditions) hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such co-Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the close of business on the tenth Business Day after the Shares Acquisition Date or, if the tenth Business Day after the Shares Acquisition Date occurs before the Record Date, the close of business on the Record Date and (ii) the close of business on the tenth Business Day (or such later date as may be determined by action of the Board of Directors prior to such time as any Person becomes an Acquiring Person) after the date of the Commencement by any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company or any entity holding Common Shares of the Company for or pursuant to the terms of any such plan) of a tender or exchange offer the consummation of which would result in any Person becoming an Acquiring Person (including any such date that is after the date of this Agreement and prior to the issuance of the Rights) (the earlier of such dates being herein referred to as the “Distribution Date“), (x) the Rights will be evidenced (subject to the provisions of Section 3(b) hereof) by the certificates for Common Shares of the Company (or by Book Entry Common Shares of the Company) registered in the names of the holders thereof (which certificates shall also be deemed to be Right Certificates) and not be separate Right Certificates or book entry, and (y) the Right Certificates and the right to receive Right Certificates will be transferred with the transfer of Common Shares of the Company. As soon as practicable after the Distribution Date, the Company will prepare and execute, the Rights Agent will countersign, and the Company will send or cause to be sent (and the Rights Agent will, if requested, send) by first-class, insured, postage-prepaid mail, to each record holder of Common Shares of the Company as of the close of business on the Distribution Date (other than any Acquiring Person or any Associate or Affiliate of an Acquiring Person), at the address of such holder shown on the records of the Company, a Right Certificate, in substantially the form of Exhibit B hereto (a “Right Certificate”), evidencing one Right for each Common Share so held, subject to adjustment as provided herein; provided, however, that notwithstanding anything to the contrary herein, the Company may choose to use book entry in lieu of physical certificates, in which case “Rights Certificates” shall be deemed to mean the uncertificated book entry representing the related Rights. As of and after the Distribution Date, the Rights will be evidenced solely by such Right Certificates.
(b) For the avoidance of doubt, until the Distribution Date (or the earlier of the Redemption Date or the Expiration Date), the surrender for transfer of any certificate for Common Shares or the transfer of any Book Entry Common Shares of the Company outstanding on the Record Date shall also constitute the transfer of the Rights associated with the Common Shares of the Company represented thereby.
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(c) Certificates for Common Shares (or Book Entry Common Shares) that become outstanding (including, without limitation, reacquired Common Shares referred to in the penultimate sentence of this Section 3(c)) after the Record Date but prior to the earliest of the Distribution Date, the Redemption Date or the Expiration Date shall have impressed on, printed on, written on or otherwise affixed to them a legend in substantially the following form:
This certificate also evidences and entitles the holder hereof to certain rights as set forth in the Restricted Entity Compliance Plan between The Elmet Group Co., a Delaware corporation (the “Company”), and Continental Stock Transfer & Trust Company (or any successor rights agent), dated as of September 14, 2026, as it may be amended from time to time (the “Agreement”), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of the Company. Under certain circumstances, as set forth in the Agreement, such Rights (as defined in the Agreement) will be evidenced by separate certificates and will no longer be evidenced by this certificate. The Company will mail to the holder of this certificate a copy of the Agreement without charge after receipt of a written request therefor. As set forth in the Agreement, Rights that are or were acquired or beneficially owned (as defined in the Agreement) by any Person (as defined in the Agreement) who becomes an Acquiring Person (as defined in the Agreement) or an Associate or Affiliate (each as defined in the Agreement) thereof become null and void.
With respect to any Book Entry Common Share of the Company, such legend shall be included in the Ownership Statement in respect of such Common Share or in a notice to the record holder of such Common Share in accordance with applicable law. With respect to such certificates containing the foregoing legend, or any Ownership Statement or notice containing the foregoing legend delivered to holders of Book Entry Common Shares, until the earliest of the Distribution Date, the Redemption Date or the Expiration Date, the Rights associated with the Common Shares of the Company represented by such certificates or such Book Entry Common Shares shall be evidenced by such certificates or such Book Entry Common Shares (including any Ownership Statement) alone, and the surrender for transfer of any such certificate or the transfer of any Book Entry Common Share shall also constitute the transfer of the Rights associated with the Common Shares of the Company represented thereby. In the event that the Company purchases or acquires any Common Shares of the Company after the Record Date but prior to the Distribution Date, any Rights associated with such Common Shares of the Company shall be deemed cancelled and retired so that the Company shall not be entitled to exercise any Rights associated with the Common Shares of the Company that are no longer outstanding. Notwithstanding this Section 3(c), the omission of a legend shall not affect the enforceability of any part of this Agreement or the rights of any holder of the Rights.
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Section 4. Form of Right Certificates. The Right Certificates (and the forms of election to purchase Preferred Shares and of assignment to be printed on the reverse thereof) shall be substantially in the form set forth in Exhibit B hereto, and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any applicable rule or regulation made pursuant thereto or with any applicable rule or regulation of any stock exchange or the Financial Industry Regulatory Authority, or to conform to usage. Subject to the provisions of Section 22 hereof, the Right Certificates shall entitle the holders thereof to purchase such number of one one-thousandths of a Preferred Share as shall be set forth therein at the price per one one-thousandth of a Preferred Share set forth therein (the “Purchase Price”), but the number of such one one-thousandths of a Preferred Share and the Purchase Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right Certificates shall be executed on behalf of the Company by (a) its Chief Executive Officer, its President, any of its Executive Vice Presidents or any of its Senior Vice President and (b) its Chief Financial Officer, its Chief Accounting Officer, its Secretary or any of its Assistant Secretaries, in each case, either manually or by facsimile signature or other customary means of electronic transmission (e.g., “PDF”), shall have affixed thereto the Company’s seal or an electronic version thereof, and shall be attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature or other customary means of electronic transmission (e.g., “PDF”). The Right Certificates shall be countersigned, either manually or by facsimile signature or other customary means of electronic transmission (e.g., “PDF”), by the Rights Agent and shall not be valid for any purpose unless countersigned. In case any officer of the Company who shall have signed any of the Right Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by the Rights Agent and issued and delivered by the Company with the same force and effect as though the individual who signed such Right Certificates had not ceased to be such officer of the Company; and any Right Certificate may be signed on behalf of the Company by any individual who, at the actual date of the execution of such Right Certificate, shall be a proper officer of the Company to sign such Right Certificate, although at the date of the execution of this Agreement any such individual was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its principal office, books for registration and transfer of the Right Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced on its face by each of the Right Certificates and the date of each of the Right Certificates.
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Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject to the provisions of Section 14 hereof, at any time after the close of business on the Distribution Date, and at or prior to the close of business on the earlier of the Redemption Date or the Expiration Date, any Right Certificate or Right Certificates (other than Right Certificates representing Rights that have become null and void pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant to Section 24 hereof) may be transferred, split up, combined or exchanged for another Right Certificate or Right Certificates entitling the registered holder to purchase a like number of one one-thousandths of a Preferred Share as the Right Certificate or Right Certificates surrendered then entitled such holder to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Right Certificate or Right Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Right Certificate or Right Certificates to be transferred, split up, combined or exchanged at the office or offices of the Rights Agent designated for such purpose, accompanied by a signature guarantee from an eligible guarantor institution participating in a signature guarantee program approved by the Securities Transfer Association (a “Signature Guarantee”), and such other documentation as the Rights Agent may reasonably request. The Right Certificates are transferrable only on the registry books of the Rights Agent. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Right Certificate until the registered holder shall have properly completed and duly executed the certificate contained in the form of assignment on the reverse side of such Right Certificate, shall have provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) thereof and of the Rights evidenced thereby and the Affiliates and Associates of such Beneficial Owner (or former Beneficial Owner) thereof as the Company or the Rights Agent shall reasonably request and paid a sum sufficient to cover any tax or charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates as required hereunder. Thereupon, the Rights Agent shall countersign and deliver to the Person entitled thereto a Right Certificate or Right Certificates, as the case may be, as so requested, registered in such name or names as may be designated by the surrendering registered holder. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates. The Rights Agent shall promptly forward any such sum collected by it to the Company or to such Persons as the Company shall specify by written notice.
Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate, and the identity of the Beneficial Owner (or former Beneficial Owner) or Associates or Affiliates thereof (including a Signature Guarantee and such other documentation as the Company or the Rights Agent shall reasonably request) and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them and reimbursement to the Company (at the Company’s request) and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will issue, execute and deliver a new Right Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated. Notwithstanding any other provisions hereof, the Company and the Rights Agent may amend this Agreement to provide for uncertificated Rights in addition to or in place of Rights evidenced by Rights Certificates.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) The registered holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein), in whole or in part, at any time after the Distribution Date, upon surrender of the Right Certificate, with the form of election to purchase on the reverse side thereof duly executed, to the Rights Agent at the office or offices of the Rights Agent designated for such purpose, accompanied by a Signature Guarantee and such other documentation as the Rights Agent may reasonably request, together with payment of the Purchase Price for each one one-thousandth of a Preferred Share as to which the Rights are exercised, at or prior to the earliest of (i) the time at which the Rights are redeemed as provided in Section 23 hereof (the “Redemption Date”), (ii) the time at which such Rights are exchanged as provided in Section 24 hereof, or (iii) the Final Expiration Date (such date, the “Expiration Date”).
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(b) The Purchase Price for each one one-thousandth of a Preferred Share purchasable pursuant to the exercise of a Right shall initially be $86.00, and shall be subject to adjustment from time to time as provided in Section 11 hereof, and shall be payable in lawful money of the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable Rights, with the form of election to purchase duly executed, accompanied by payment of the Purchase Price for the Preferred Shares to be purchased and an amount equal to any applicable transfer tax required to be paid by the holder of such Right Certificate in accordance with Section 9 hereof by certified check, cashier’s check or money order payable to the order of the Company, the Rights Agent shall thereupon promptly (i) (A) requisition from any transfer agent of the Preferred Shares (or make available if the Rights Agent is the transfer agent) certificates for the number of one one-thousandths of a Preferred Share as are to be purchased and the Company hereby irrevocably authorizes any such transfer agent to comply with all such requests, or (B) if the Company shall have elected to deposit the total number of Preferred Shares issuable upon exercise of the Rights with a depositary agent, requisition from the depositary agent depositary receipts representing such number of one one-thousandths of a Preferred Share as are to be purchased (in which case certificates for the Preferred Shares represented by such receipts shall be deposited by the transfer agent of the Preferred Shares with such depositary agent) and the Company hereby directs such depositary agent to comply with all such requests; (ii) when appropriate, requisition from the Company the amount of cash (if any) to be paid in lieu of issuance of fractional shares in accordance with Section 14(b) hereof; (iii) after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder; and (iv) when appropriate, after receipt, deliver such cash to or upon the order of the registered holder of such Right Certificate to such Person or Persons as may be designated by such holder. In the event that the Company is obligated to issue securities of the Company other than Preferred Shares (including Common Shares) of the Company pursuant to Section 11(a) hereof, the Company will make all arrangements necessary so that such other securities are available for distribution by the Rights Agent.
(d) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder of Rights or other securities upon the occurrence of any purported transfer or exercise as set forth in Section 6 hereof or this Section 7 unless such registered holder shall have (i) completed and signed the certification following the form of election to purchase set forth on the reverse side of the Right Certificate surrendered for such transfer or exercise, (ii) tendered the Purchase Price (and an amount equal to any applicable transfer tax required to be paid by the holder of such Right Certificate in accordance with Section 9 hereof) to the Company in the manner set forth in Section 7(c) hereof, (iii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company or the Rights Agent shall reasonably request, and (iv) provided a written representation to the Company that such holder did not acquire such Rights or other securities from any Person who is, was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person. For the avoidance of doubt, any Rights that are or were acquired or beneficially owned by any Acquiring Person (or any Associate or Affiliate of such Acquiring Person) shall be null and void without any further action, and any holder of such Rights shall thereafter have no right to exercise such Rights under any provision of this Agreement or otherwise.
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(e) In case the registered holder of any Right Certificate shall exercise fewer than all the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent to the registered holder of such Right Certificate or to such holder’s duly authorized assigns, subject to the provisions of Section 14 hereof.
Section 8. Cancellation and Destruction of Right Certificates. All Right Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or to any of its agents, be delivered to the Rights Agent for cancellation or in cancelled form, or, if delivered or surrendered to the Rights Agent, shall be cancelled by it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. At the expense of the Company, the Rights Agent shall deliver all cancelled Rights Certificates to the Company, or shall, at the written request of the Company, destroy or cause to be destroyed such cancelled Rights Certificates, and in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Preferred Shares.
(a) The Company covenants and agrees that it will cause to be reserved and kept available out of its authorized and unissued Preferred Shares or any Preferred Shares held in its treasury the number of Preferred Shares that will be sufficient to permit the exercise in full of all outstanding Rights in accordance with Section 7 hereof. The Company covenants and agrees that it will take all such action as may be necessary to ensure that all Preferred Shares (or Common Shares and other securities, as the case may be) delivered upon exercise of Rights shall, at the time of delivery of the certificates for such Preferred Shares (or Common Shares and other securities, as the case may be) (subject to payment of the Purchase Price), be duly authorized, validly issued, fully paid and non-assessable shares.
(b) The Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges that may be payable in respect of the issuance or delivery of the Right Certificates or of any Preferred Shares upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax that may be payable in respect of any transfer or delivery of Right Certificates to a Person other than, or the issuance or delivery of certificates or depositary receipts for the Preferred Shares in a name other than that of, the registered holder of the Right Certificate evidencing Rights surrendered for exercise or to issue or to deliver any certificates or depositary receipts for Preferred Shares upon the exercise of any Rights until any such tax shall have been paid (any such tax being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Company’s reasonable satisfaction that no such tax is due.
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Section 10. Preferred Shares Record Date. Each Person in whose name any certificate for Preferred Shares or other securities is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the Preferred Shares or other securities represented thereby on, and such certificate shall be dated, the date upon which the Right Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and any applicable transfer taxes) was made; provided, however, that, if the date of such surrender and payment is a date upon which the Preferred Shares or other securities transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such shares on, and such certificate shall be dated, the next succeeding Business Day on which the Preferred Shares or other securities transfer books of the Company are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Right Certificate shall not be entitled to any rights of a holder of Preferred Shares for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights. The Purchase Price, the number of Preferred Shares covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of this Agreement (A) declare a dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the outstanding Preferred Shares into a smaller number of Preferred Shares or (D) issue any shares of its capital stock in a reclassification of the Preferred Shares (including any such reclassification in connection with a share exchange, consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a), the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of capital stock issuable upon exercise of a Right as of the record date for such dividend or the effective date of such subdivision, combination or reclassification, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive, upon payment of the Purchase Price then in effect, the aggregate number and kind of shares of capital stock which, if such Right had been exercised immediately prior to such date (regardless of whether the Preferred Shares transfer books of the Company were then open), such holder would have been entitled to receive upon such dividend, subdivision, combination or reclassification; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of one Right. If an event occurs that would require an adjustment under both this Section 11(a) and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.
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(ii) Subject to Section 24 hereof, in the event any Person becomes an Acquiring Person, each holder of a Right other than any Acquiring Person (or any Associate or Affiliate of such Acquiring Person) shall thereafter have a right to receive, upon exercise thereof at a price equal to the then current Purchase Price per number of one one-thousandths of a Preferred Share (as may be adjusted pursuant to Section 11(a)) for which a Right is then exercisable, in lieu of such Preferred Shares, such number of Common Shares of the Company as shall equal the result obtained by dividing (A) the then current Purchase Price per number of one one-thousandths of a Preferred Share (as may be adjusted pursuant to Section 11(a)) for which a Right is then exercisable by (B) 50% of the then current per share market price of the Common Shares of the Company (determined pursuant to Section 11(d) hereof) on the date of the occurrence of such event. In the event that any Person shall become an Acquiring Person and the Rights shall then be outstanding, the Company shall not take any action, except as permitted by this Agreement, which if at the time such action is or would be taken it is reasonably foreseeable that such action will diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights.
From and after the occurrence of such event, any Rights that are or were acquired or beneficially owned by any Acquiring Person (or any Associate or Affiliate of such Acquiring Person) shall be null and void without any further action, and any holder of such Rights shall thereafter have no right to exercise such Rights under any provision of this Agreement or otherwise. The Rights Agent shall not have liability to any holder of any Rights or Right Certificates or other Person as a result of the Company’s or the Rights Agent’s failure to make any determinations with respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder. No Right Certificate shall be issued pursuant to Section 3 hereof that represents Rights beneficially owned by an Acquiring Person whose Rights would be null and void pursuant to the preceding sentence or any Associate or Affiliate thereof; no Right Certificate shall be issued at any time upon the transfer of any Rights to an Acquiring Person whose Rights would be null and void pursuant to the preceding sentence or any Associate or Affiliate thereof or to any nominee of such Acquiring Person, Associate or Affiliate or with respect to any Common Shares otherwise deemed to be beneficially owned by any of the foregoing; and any Right Certificate delivered to the Rights Agent for transfer to an Acquiring Person (or any Associate or Affiliate of such Acquiring Person) or other Person whose Rights would be null and void pursuant to the preceding sentence shall be cancelled.
(iii) In the event that there shall not be sufficient Common Shares (including Common Shares issued but not outstanding and authorized but unissued (and unreserved)) to permit the exercise in full of the Rights in accordance with subparagraph (ii) above, the Company shall take all such action as may be necessary to authorize additional Common Shares for issuance upon exercise of the Rights. In the event the Company shall, after good faith effort, be unable to take all such actions as may be necessary to authorize such additional Common Shares, the Company shall issue Common Shares to the extent shares thereof are available in connection with the exercise of the Rights and to the extent sufficient Common Shares are not available therefore shall substitute for each Common Share that would otherwise be issuable upon exercise of a Right, a number of Preferred Shares or fraction thereof such that the current per share market price of one Preferred Share multiplied by such number or fraction is equal to the current per share market price of one Common Share as of the date of issuance of such Preferred Shares or fraction thereof.
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(b) In case the Company shall issue rights, options or warrants to all holders of Preferred Shares entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Preferred Shares (or shares having the same rights, privileges and preferences as the Preferred Shares (“equivalent preferred shares”)) or securities convertible into Preferred Shares or equivalent preferred shares at a price per Preferred Share or equivalent preferred share (or having a conversion price per share, if a security convertible into Preferred Shares or equivalent preferred shares) less than the then current per share market price of the Preferred Shares (as defined in Section 11(d)(ii)), then on the record date for such issuance, the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Preferred Shares outstanding on such record date plus the number of Preferred Shares which the aggregate offering price of the total number of Preferred Shares and/or equivalent preferred shares so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current market price and the denominator of which shall be the number of Preferred Shares outstanding on such record date plus the number of additional Preferred Shares and/or equivalent preferred shares to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible); provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of one Right. In case such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent. Preferred Shares owned by or held for the account of the Company or any Subsidiary of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed; and, in the event that such rights, options or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price that would then be in effect if such record date had not been fixed.
(c) In case the Company shall make a distribution to all holders of the Preferred Shares (including any such distribution made in connection with a share exchange, consolidation or merger in which the Company is the continuing or surviving corporation) of evidences of indebtedness or assets (other than a regular quarterly cash dividend or a dividend payable in Preferred Shares) or subscription rights, options or warrants (excluding those referred to in Section 11(b) hereof), the Purchase Price to be in effect after the record date for such issuance shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the then-current per share market price of the Preferred Shares (as defined in Section 11(d)) on such record date, less the fair market value (as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent) of the portion of the assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to one Preferred Share and the denominator of which shall be such then-current per share market price of the Preferred Shares (as defined in Section 11(d)) on such record date; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company to be issued upon exercise of one Right. In case such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent. Preferred Shares owned by or held for the account of the Company or any Subsidiary of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustments shall be made successively whenever such a record date is fixed; and, in the event that such distribution is not so made, the Purchase Price shall again be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed.
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(d) (i) Except as otherwise expressly set forth herein, for the purpose of any computation hereunder, the “current per share market price” of any security (a “Security”) on any date shall be deemed to be the average of the daily closing prices per share of such Security for the 30 consecutive Trading Days immediately prior to but not including such date; provided, however, that, in the event that the current per share market price of the Security is determined during a period following the announcement by the issuer of such Security of (A) a dividend or distribution on such Security payable in shares of such Security or Securities convertible into such shares (other than the Rights), or (B) any subdivision, combination or reclassification of such Security and prior to but not including the expiration of 30 Trading Days after but not including the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification, then, and in each such case, the current per share market price shall be appropriately adjusted to reflect the current market price per share equivalent of such Security after such ex-dividend or record date. The closing price for each day shall be the last sale price, regular way, reported at or prior to 4:00 P.M. Eastern time or, in case no such sale takes place on such day, the average of the bid and asked prices, regular way, reported as of 4:00 P.M. Eastern time, in either case, as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or Nasdaq or, if the Security is not listed or admitted to trading on the NYSE or Nasdaq, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Security is listed or admitted to trading or, if the Security is not listed or admitted to trading on any national securities exchange, the last quoted price reported at or prior to 4:00 P.M. Eastern time or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported as of 4:00 P.M. Eastern time by the OTC Bulletin Board or such other system then in use, or, if on any such date the Security is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Security selected by the Board of Directors. The term “Trading Day” shall mean a day on which the principal national securities exchange on which the Security is listed or admitted to trading is open for the transaction of business, or, if the Security is not listed or admitted to trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the “current per share market price” of the Preferred Shares shall be determined in accordance with the method set forth in Section 11(d)(i). If the Preferred Shares are not publicly traded, the “current per share market price” of the Preferred Shares shall be conclusively deemed to be the current per share market price of the Common Shares as determined pursuant to Section 11(d)(i) hereof (appropriately adjusted to reflect any stock split, reverse stock split, stock dividend or similar transaction occurring after the date hereof), multiplied by one thousand. If neither the Common Shares nor the Preferred Shares are publicly held or so listed or traded, “current per share market price” shall mean the fair value per share as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent.
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(e) No adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Purchase Price; provided, however, that any adjustments which by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest one one-millionth of a Preferred Share or one ten-thousandth of any other share or security as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the day prior to the Expiration Date.
(f) If, as a result of an adjustment made pursuant to this Section 11, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock of the Company other than Preferred Shares, thereafter the number of such other shares so receivable upon exercise of any Right and the Purchase Price thereof shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Shares contained in this Section 11, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of one one-thousandths of a Preferred Share purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in Section 11(a)(i) hereof, upon each adjustment of the Purchase Price as a result of the calculations made in Section 11(b) and 11(c) hereof, each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one one-thousandths of a Preferred Share (calculated to the nearest one one-millionth of a Preferred Share) obtained by (A) multiplying (x) the number of one one-thousandths of a share covered by a Right immediately prior to this adjustment by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price and (B) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any adjustment of the Purchase Price, to adjust the number of Rights in substitution for any adjustment in the number of one one-thousandths of a Preferred Share purchasable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable for the number of one one-thousandths of a Preferred Share for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Right Certificates have been issued, shall be at least ten (10) days later than the date of the public announcement. If Right Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(a)(i), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Right Certificates on such record date Right Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Right Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Right Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein, and shall be registered in the names of the holders of record of Right Certificates on the record date specified in the public announcement.
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(j) Irrespective of any adjustment or change in the Purchase Price or in the number of one one-thousandths of a Preferred Share issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price and the number of one one-thousandths of a Preferred Share which were expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the Purchase Price below one one-thousandth of the then par value, if any, of the Preferred Shares issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may duly authorize and validly issue fully paid and non-assessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuing to the holder of any Right exercised after such record date of the Preferred Shares and other capital stock or securities of the Company, if any, issuable upon such exercise over and above the Preferred Shares and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to receive such additional shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that the Board of Directors shall determine, in its sole discretion, to be advisable in order that any consolidation or subdivision of the Preferred Shares, issuance wholly for cash of any Preferred Shares at less than the current market price, issuance wholly for cash of Preferred Shares or securities that by their terms are convertible into or exchangeable for Preferred Shares, dividends on Preferred Shares payable in Preferred Shares or issuance of rights, options or warrants referred to in Section 11(b) hereof, hereafter made by the Company to holders of the Preferred Shares shall not be taxable to such stockholders.
(n) In the event that, at any time after the date of this Agreement and prior to the Distribution Date, the Company shall (i) declare or pay any dividend on the Common Shares payable in Common Shares, or (ii) effect a subdivision, combination or consolidation of the Common Shares (by reclassification or otherwise than by payment of dividends in Common Shares) into a greater or lesser number of Common Shares, then, in any such case, (A) the number of one one-thousandths of a Preferred Share purchasable after such event upon proper exercise of each Right shall be determined by multiplying the number of one one-thousandths of a Preferred Share so purchasable immediately prior to such event by a fraction, the numerator of which is the number of Common Shares outstanding immediately before such event and the denominator of which is the number of Common Shares outstanding immediately after such event, and (B) each Common Share outstanding immediately after such event shall have issued with respect to it that number of Rights that each Common Share outstanding immediately prior to such event had issued with respect to it. The adjustments provided for in this Section 11(n) shall be made successively whenever such a dividend is declared or paid or such a subdivision, combination or consolidation is effected.
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Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an adjustment is made as provided in Section 11 hereof, the Company shall promptly (a) prepare a certificate setting forth such adjustment and a brief, reasonably detailed statement of the facts accounting for such adjustment, (b) file with the Rights Agent and with each transfer agent for the Common Shares or the Preferred Shares a copy of such certificate and (c) if such adjustment occurs at any time after the Distribution Date, mail a brief summary thereof to each holder of a Right Certificate in accordance with Section 25 hereof.
Section 13. [RESERVED].
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to distribute Right Certificates that evidence fractional Rights. In lieu of such fractional Rights, the Company shall pay to the registered holders of the Right Certificates with regard to which such fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole Right. For purposes of this Section 14(a), the current market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. The closing price for any day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case, as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or Nasdaq or, if the Rights are not listed or admitted to trading on the NYSE or Nasdaq, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading or, if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by OTC Bulletin Board or such other system then in use or, if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board of Directors. If on any such date no such market maker is making a market in the Rights, the fair value of the Rights on such date as determined in good faith by the Board of Directors shall be used and such determination shall be described in a statement filed with the Rights Agent and delivered to the registered holders of the Right Certificates, which shall be conclusive for all purposes.
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(b) The Company shall not be required to issue fractions of Preferred Shares (other than fractions which are integral multiples of one one-thousandth of a Preferred Share) upon exercise of the Rights or to distribute certificates that evidence fractional Preferred Shares (other than fractions that are integral multiples of one one-thousandth of a Preferred Share). Fractions of Preferred Shares in integral multiples of one one-thousandth of a Preferred Share may, at the election of the Company, be evidenced by depositary receipts, pursuant to an appropriate agreement between the Company and a depositary selected by it; provided that such agreement shall provide that the holders of such depositary receipts shall have all the rights, privileges and preferences to which they are entitled as beneficial owners of the Preferred Shares represented by such depositary receipts. In lieu of fractional Preferred Shares that are not integral multiples of one one-thousandth of a Preferred Share, the Company shall pay to the registered holders of Right Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one Preferred Share. For the purposes of this Section 14(b), the current market value of a Preferred Share shall be the closing price of a Preferred Share (as determined pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right, by the acceptance of the Right, expressly waives such holder’s right to receive any fractional Rights or any fractional shares upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this Agreement, excepting the rights of action given to the Rights Agent under Section 18 hereof, are vested in the respective registered holders of the Right Certificates (and, prior to the Distribution Date, the registered holders of the Common Shares); and any registered holder of any Right Certificate (or, prior to the Distribution Date, of the Common Shares), without the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution Date, of the Common Shares), may, in such holder’s own behalf and for such holder’s own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, such holder’s right to exercise the Rights evidenced by such Right Certificate in the manner provided in such Right Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach by the Company of this Agreement, and will be entitled to specific performance of the obligations under, and injunctive relief against actual or threatened violations of the obligations of the Company.
Section 16. Agreement of Right Holders. Every holder of a Right, by accepting the same, consents and agrees with the Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are transferable (subject to the provisions of this Agreement) only on the registry books of the Rights Agent if surrendered at the office or offices of the Rights Agent designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and certificates properly completed and fully executed, accompanied by a Signature Guarantee, and such other documentation as the Rights Agent may reasonably request;
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(c) the Company and the Rights Agent may deem and treat the Person in whose name the Right Certificate (or, prior to the Distribution Date, the associated Common Shares certificate (or Book Entry Common Shares)) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificate or the associated Common Shares certificate (or Ownership Statements or other notices provided to holders of Book Entry Common Shares) made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, the Rights Agent shall not have any liability to any holder of a Right or other Person (without limiting any of the rights of the Rights Agent under Section 18) as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation; provided, however, the Company must use its best efforts to have any such order, decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder, as such, of any Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the Preferred Shares or any other securities of the Company that may at any time be issuable on the exercise or exchange of the Rights represented thereby, nor shall anything contained herein or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 25 hereof), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate shall have been exercised or exchanged in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to the Rights Agent such compensation as shall be agreed to in writing by the Company and the Rights Agent for all services rendered by it hereunder, and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or expense (including, without limitation, the reasonable fees and expenses of legal counsel) incurred without gross negligence, bad faith or willful misconduct on the part of the Rights Agent (each as determined by a final, nonappealable judgment of a court of competent jurisdiction), for anything done or omitted by the Rights Agent in connection with the execution, acceptance, administration, exercise and performance of its duties under this Agreement, including the costs and expenses of defending against any claim in connection herewith, directly or indirectly, or of enforcing this right of indemnification shall also be paid by the Company. The provisions of this Section 18 and Section 20 below shall survive the exercise or expiration of the Rights, the termination of this Agreement and the resignation, replacement or removal of the Rights Agent.
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The Rights Agent shall be fully authorized and protected and shall incur no liability for, or in respect of any action taken, suffered or omitted by it in connection with, its administration of this Agreement in reliance upon any Right Certificate or certificate for the Preferred Shares or Common Shares or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons, or otherwise upon the advice of counsel as set forth in Section 20. Notwithstanding anything in this Agreement to the contrary, in no event will the Rights Agent be liable for special, punitive, indirect, incidental or consequential loss or damage of any kind whatsoever (including, but not limited to, lost profits), even if the Rights Agent has been advised of the likelihood of such loss or damage and regardless of the form of action. The Rights Agent shall not be deemed to have knowledge of any event of which it was supposed to receive notice thereof hereunder, and the Rights Agent shall be fully protected and shall incur no liability for failing to take any action in connection therewith, unless and until it has received such notice in writing, and all notices or other instruments required by this Agreement to be delivered to the Rights Agent must, in order to be effective, be received by the Rights Agent as specified in Section 26 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may effect a share exchange, be consolidated, or any Person resulting from any merger, share exchange or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the stock transfer or corporate trust powers of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided that such Person would be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned; and, in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and, in all such cases, such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and at such time any of the Right Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned; and, in case at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name; and, in all such cases, such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement.
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Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the advice or opinion of such counsel shall be full and complete authorization and protection to the Rights Agent, and the Rights Agent shall have no liability for or in respect of any action taken or omitted by it in the absence of bad faith and in accordance with such advice or opinion.
(b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by any one of the Chief Executive Officer, the President, any Executive Vice President, any Senior Vice President, the Chief Financial Officer, the Chief Accounting Officer, the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in the absence of bad faith by it under the provisions of this Agreement in reliance upon such certificate. The Rights Agent shall have no duty to act without such certificate as set forth in this Section 20(b).
(c) The Rights Agent shall be liable hereunder to the Company and any other Person only for its own gross negligence, bad faith or willful misconduct (which gross negligence, bad faith or willful misconduct must be determined by a final, non-appealable judgment of a court of competent jurisdiction). Notwithstanding anything to the contrary, any liability of the Rights Agent under this Agreement shall be limited to the amount of fees (but not including any reimbursed costs) paid by the Company to the Rights Agent during the twelve (12) months immediately preceding the event for which recovery from the Rights Agent is being sought.
(d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due authorization and execution hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Right Certificate; nor shall it be responsible for any change in the exercisability of the Rights (including the Rights becoming null and void pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights (including the manner, method or amount thereof) provided for in Section 3, 11, 13, 23 or 24 hereof, or the ascertaining of the existence of facts that would require any such change or adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after actual notice that such change or adjustment is required); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any Preferred Shares to be issued pursuant to this Agreement or any Right Certificate or as to whether any Preferred Shares will, when issued, be duly authorized, validly issued, fully paid and non-assessable.
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(f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the Chief Executive Officer, the President, any Executive Vice President, any Senior Vice President, the Chief Financial Officer, the Chief Accounting Officer, the Secretary or any Assistant Secretary of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered by it in the absence of bad faith in accordance with instructions of any such officer or for any delay in acting while waiting for those instructions. The Rights Agent shall be fully authorized and protected in relying upon the most recent written advice or instructions received by any such officer. Any application by the Rights Agent for written instructions from the Company may, at the option of the Rights Agent, set forth in writing any action proposed to be taken or omitted by the Rights Agent under this Agreement and the date on and/or after which such action shall be taken or such omission shall be effective. The Rights Agent shall not be liable for any action taken by, or omission of, the Rights Agent in accordance with a proposal included in any such application on or after the date specified in such application (which date shall not be less than three (3) Business Days after the date any officer of the Company actually receives such application unless any such officer shall have consented in writing to an earlier date) unless, prior to taking any such action (or the effective date in the case of an omission), the Rights Agent shall have received written instructions in response to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent may, to the extent not otherwise prohibited by applicable law, buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not the Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company or any other Person resulting from any such act, default, neglect or misconduct, absent gross negligence or bad faith in the selection and continued employment thereof (which gross negligence or bad faith must be determined by a final, non-appealable judgment of court of competent jurisdiction).
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(j) No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder (other than internal costs incurred by the Rights Agent in providing services to the Company in the ordinary course of its business as Rights Agent and for which the Rights Agent shall be compensated pursuant to Section 18) or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it.
(k) The Rights Agent shall have no responsibility to the Company, any holders of Rights or any other Person for interest or earnings on any moneys held by the Rights Agent pursuant to this Agreement.
(l) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of election to purchase, as the case may be, has either not been completed or indicates an affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not take any further action with respect to such requested exercise or transfer without first consulting with the Company.
(m) The Rights Agent shall not be required to take notice or be deemed to have notice of any event of condition hereunder, including any event or condition that may require action by the Rights Agent, unless the Rights Agent shall be specifically notified in writing of such event or condition by the Company, and all notices or other instruments required by this Agreement to be delivered to the Rights Agent must, in order to be effective, be received by the Rights Agent as specified in Section 26 hereof, and in the absence of such notice so delivered, the Rights Agent may conclusively assume no such event or condition exists.
(n) The Rights Agent may rely on and be fully authorized and protected in acting or failing to act upon (a) any guaranty of signature by an “eligible guarantor institution” that is a member or participant in the Securities Transfer Agent Medallion Program or other comparable “signature guarantee program” or insurance program in addition to, or in substitution for, the foregoing; or (b) any law, act, regulation or any interpretation of the same.
(o) In the event the Rights Agent believes any ambiguity or uncertainty exists hereunder or in any notice, instruction, direction, request or other communication, paper or document received by the Rights Agent hereunder, the Rights Agent, may (upon written notice to the Company of such ambiguity or uncertainty), in its sole discretion, refrain from taking any action, and shall be fully protected and shall not be liable in any way to the Company, the holder of any Right Certificate or any other Person for refraining from taking such action, unless the Rights Agent receives written instructions signed by the Company which eliminates such ambiguity or uncertainty to the satisfaction of Rights Agent.
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Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon 30 days’ notice in writing delivered to the Company and, in the event that the Rights Agent or one of its Affiliates is not also the transfer agent for the Company, to each transfer agent of the Common Shares or Preferred Shares by registered or certified mail, and to the holders of the Right Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights Agent upon 30 days’ notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Shares or Preferred Shares by registered or certified mail, and to the holders of the Right Certificates by first-class mail. In the event any transfer agency relationship in effect between the Company and the Rights Agent terminates, the Rights Agent will be deemed to have resigned automatically and be discharged from its duties under this Agreement as of the effective date of such termination, and the Company shall be responsible for sending any required notice. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of 30 days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (which holder shall, with such notice, submit such holder’s Right Certificate for inspection by the Company), then the registered holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be (a) a legal business entity organized and doing business under the laws of the United States or of any State thereof, in good standing, which is authorized under such laws to exercise corporate trust, stock transfer or stockholder services powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least US$50 million or (b) an affiliate of a legal business entity described in clause (a) of this sentence. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose, but such predecessor Rights Agent shall not be required to make any additional expenditure or assume any additional liability in connection with the foregoing. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Shares or Preferred Shares, and mail a notice thereof in writing to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right Certificates evidencing Rights in such form as may be approved by the Board of Directors to reflect any adjustment or change in the Purchase Price and the number or kind or class of shares or other securities or property purchasable under the Right Certificates made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale of Common Shares following the Distribution Date and prior to the earlier of the Redemption Date and the Expiration Date, the Company (i) shall with respect to Common Shares so issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement, granted or awarded prior to the Distribution Date, or upon the exercise, conversion or exchange of securities, notes or debentures issued by the Company prior to the Distribution Date and (ii) may, in any other case, if deemed necessary or appropriate by the Board of Directors, issue Right Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided, however, that (i) the Company shall not be obligated to issue any such Right Certificates if, and to the extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse tax consequences to the Company or the Person to whom such Right Certificate would be issued, and (ii) no Right Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof.
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Section 23. Redemption.
(a) The Board of Directors may, in its sole and absolute discretion, at any time prior to the earlier of the Expiration Date or the Shares Acquisition Date, redeem all but not less than all the then outstanding Rights at a redemption price of $0.001 per Right, appropriately adjusted to reflect any stock split, reverse stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the “Redemption Price”). The redemption of the Rights by the Board of Directors may be made effective at such time, on such basis and with such conditions as the Board of Directors, in its sole discretion, may establish. The Company may, at its option, pay the Redemption Price in cash, Common Shares (based on the then-current market price (determined pursuant to Section 11 hereof) at the time of redemption) or any other form of consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors ordering the redemption of the Rights pursuant to Section 23(a), and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price for each Right held. The Company shall promptly give public notice of any such redemption; provided, however, that the failure to give, or any defect in, any such notice shall not affect the validity of such redemption. Within 10 days after such action of the Board of Directors ordering the redemption of the Rights, the Company shall mail a notice of redemption to all the holders of the then outstanding Rights at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the Common Shares. Any notice that is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price will be made. Neither the Company nor any of its Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 23 or in Section 24 hereof, and other than in connection with the purchase of Common Shares prior to the Distribution Date.
Section 24. Exchange.
(a) The Board of Directors may, at its option, at any time after any Person becomes an Acquiring Person, exchange all or part of the then outstanding Rights (which shall not include Rights that have become null and void pursuant to the provisions of Section 11(a)(ii) hereof) for Common Shares at an exchange ratio of one Common Share per Right, appropriately adjusted to reflect any adjustment in the number of Rights pursuant to Section 11(a)(i), or such greater number of Common Shares as shall be sufficient to ensure that, immediately following such exchange, the Beneficial Ownership of each Acquiring Person, together with its Affiliates and Associates, shall be less than 10% of the outstanding Common Shares. The exchange of Rights by the Board of Directors may be made effective at such time, on such basis and with such conditions as the Board of Directors in its sole discretion may establish. Without limiting the foregoing, in connection with effecting an exchange pursuant to this Section 24, the Board of Directors may direct the Company to enter into a trust agreement in such form and with such terms as the Board of Directors shall then approve and issue to the trust created by such trust agreement all or some (as designated by the Board of Directors) of the securities to be exchanged for the Rights pursuant to this Section 24, and all Persons entitled to receive such securities pursuant to the exchange shall be entitled to receive all or some (as designated by the Board of Directors) of such securities (and any dividends or distributions made thereon after the date on which such securities are deposited in the trust) from such trust and upon compliance with the relevant terms of the trust agreement.
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(b) Immediately upon the action of the Board of Directors ordering the exchange of any Rights pursuant to paragraph (a) of this Section 24 and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive Common Shares (or equivalent preferred share) as determined by the Board in connection with such exchange. The Company shall promptly give public notice of any such exchange; provided, however, that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. The Company shall promptly mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent. Any notice that is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the number of Common Shares (or equivalent preferred shares) for which each Right shall be exchanged, the method by which the exchange of the Common Shares for Rights will be effected, and, in the event of any partial exchange, the number of Rights that will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights that have become null and void pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of Rights. Upon declaring an exchange of Rights pursuant to this Section 24, or as promptly as reasonably practicable thereafter, the Company may implement such procedures as it deems appropriate, in its sole discretion, for the purpose of ensuring that the Common Shares (or such other consideration) issuable upon an exchange pursuant to this Section 24 is not received by holders of Rights that have become null and void pursuant to the provisions of Section 11(a)(ii) hereof. Prior to effecting an exchange and registering Common Shares (or other such securities) in any Person’s name, including any nominee or transferee of a Person, the Company may require, as a condition thereof, that any holder of Rights provide evidence, including, without limitation, the identity of the Beneficial Owners thereof and their Affiliates and Associates (or former Beneficial Owners thereof and their Affiliates and Associates) as the Company shall reasonably request in order to determine if such Rights are null and void. Any Common Shares or other securities issued at the direction of the Board of Directors in connection herewith shall be validly issued, fully paid, and nonassessable Common Shares or of such other securities (as the case may be).
(c) In the event that there shall not be sufficient Common Shares (including Common Shares issued but not outstanding and authorized but unissued (and unreserved)) to permit any exchange of Rights as contemplated in accordance with this Section 24, the Company shall take such action as may be necessary to authorize additional Common Shares for issuance upon exchange of the Rights. In the event the Company shall, after good faith effort, be unable to take all such action as may be necessary to authorize such additional Common Shares, the Company shall issue Common Shares to the extent shares thereof are available in connection with the exercise of the Rights and to the extent sufficient Common Shares are available therefore shall substitute for each Common Share that would otherwise be issuable upon exchange of a Right, a number of Preferred Shares or fraction thereof such that the current per share market price of one Preferred Share multiplied by such number or fraction is equal to the current per share market price of one Common Share as of the date of issuance of such Preferred Shares or fraction thereof.
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(d) The Company shall not be required to issue fractions of Common Shares or to distribute certificates that evidence fractional Common Shares. In lieu of such fractional Common Shares, the Company shall pay to the registered holders of the Right Certificates with regard to which such fractional Common Shares would otherwise be issuable an amount in cash equal to the same fraction of the current market value of a whole Common Share. For the purposes of this paragraph (d), the current market value of a whole Common Share shall be the closing price of a Common Share (as determined pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall, at any time after the Distribution Date, propose (i) to pay any dividend payable in stock of any class to the holders of the Preferred Shares or to make any other distribution to the holders of the Preferred Shares (other than a regular quarterly cash dividend), (ii) to offer to the holders of the Preferred Shares rights or warrants to subscribe for or to purchase any additional Preferred Shares or shares of stock of any class or any other securities, rights or options, (iii) to effect any reclassification of the Preferred Shares (other than a reclassification involving only the subdivision of outstanding Preferred Shares), (iv) to effect the liquidation, dissolution or winding up of the Company, or (v) to declare or pay any dividend on the Common Shares payable in Common Shares or to effect a subdivision, combination or consolidation of the Common Shares (by reclassification or otherwise than by payment of dividends in Common Shares), then, in each such case, the Company shall give to each holder of a Right Certificate, in accordance with Section 26 hereof, a notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, or distribution of rights or warrants, or the date on which such share exchange, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the holders of the Common Shares and/or Preferred Shares, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least 10 days prior to the record date for determining holders of the Preferred Shares for purposes of such action, and, in the case of any such other action, at least 10 days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the Common Shares and/or Preferred Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof shall occur, then the Company shall, as soon as practicable thereafter, give to each holder of a Right Certificate, in accordance with Section 26 hereof, a notice of the occurrence of such event, which notice shall describe such event and the consequences of such event to holders of Rights under Section 11(a)(ii) hereof.
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Section 26. Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right Certificate to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows:
The Elmet Group Co.
2 Portland Fish Pier, Suite 214
Portland, Maine 04101
Attention: General Counsel
Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows:
Continental Stock Transfer & Trust Company
One State Street, 30th Floor
New York, NY 10004
Attn: Compliance Department
Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Right Certificate shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. The Company, by action of the Board of Directors, may from time to time, in its sole and absolute discretion, supplement or amend this Agreement without the approval of any holders of Rights in order to cure any ambiguity, to correct or supplement any provision contained herein that may be defective or inconsistent with any other provisions herein, to shorten or lengthen any time period hereunder, or to otherwise change, amend, supplement any provisions hereunder or make any other provisions with respect to the Rights that the Company may deem necessary or desirable, any such supplement or amendment to be evidenced by a writing signed by the Company and the Rights Agent; provided, however, that, from and after such time as the Rights cease to be redeemable pursuant to Section 23, this Agreement shall not be amended in any manner that would adversely affect the interests of the holders of Rights (other than Rights that have become void pursuant to Section 11(a)(ii) hereof). For the avoidance of doubt, the Company shall be entitled to adopt and implement such procedures and arrangements (including with third parties) as it may deem necessary or desirable to facilitate the exercise, exchange, trading, issuance or distribution of the Rights (and Preferred Shares) as contemplated hereby and to ensure that an Acquiring Person does not obtain the benefits thereof, and amendments in respect of the foregoing shall not be deemed to adversely affect the interests of the holders of Rights. No supplement or amendment to this Agreement shall be effective unless duly executed by the Rights Agent and the Company. The Rights Agent shall duly execute and deliver any supplement or amendment hereto requested by the Company in writing, provided that the Company has delivered to the Rights Agent a certificate signed by any one of the Chairman of the Board of Directors, the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President, the Treasurer or the Secretary of the Company that states that the proposed supplement or amendment is in compliance with the terms of this Section 27. Notwithstanding anything in this Agreement to the contrary, the Rights Agent may, but shall not be obligated to, enter into any supplement or amendment that adversely affects the Rights Agent’s own rights, duties, immunities or obligations under this Agreement.
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Section 28. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any Person other than the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Shares) any legal or equitable right, remedy or claim under this Agreement. Instead, this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Shares).
Section 30. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated; provided, however, that notwithstanding anything in this Agreement to the contrary, if any such term, provision, covenant or restriction is held by such court or authority to be invalid, void or unenforceable and the Board of Directors determines in its judgment that severing the invalid language from this Agreement would materially and adversely affect the purpose or effect of this Agreement, the right of redemption set forth in Section 23 hereof shall be reinstated and shall not expire until the close of business on the tenth Business Day following the date of such determination by the Board of Directors; further, provided, however, if such excluded provision shall affect the rights, immunities, liabilities, duties or obligations of the Rights Agent, the Rights Agent shall be entitled to resign immediately upon written notice to the Company.
Section 31. Determinations and Actions by the Board of Directors, etc. For all purposes of this Agreement, any calculation of the number of shares of each class of Common Shares or of any other class of capital stock outstanding at any particular time, including for purposes of determining the particular percentage of the outstanding voting power or such outstanding shares of Common Shares of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) (as in effect on the date of this Agreement) under the Exchange Act. The Board of Directors shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board of Directors or to the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to (i) interpret the provisions of this Agreement and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including a determination to redeem or not redeem the Rights or to amend the Agreement). The Rights Agent is entitled always to assume the Board of Directors acted in good faith and shall be fully protected and incur no liability in reliance thereon.
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Section 32. Governing Law. This Agreement, each Right and each Right Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such state applicable to contracts to be made and performed entirely within such state. The Company hereby agrees that any action, proceeding or claim against it arising out of or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any such process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 26 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim.
Section 33. Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall for all purposes be deemed to be an original, but all of which shall constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile or other customary means of electronic transmission (e.g., “PDF”) shall be effective as delivery of a manually executed counterpart hereof.
Section 34. Descriptive Headings; Interpretation. Descriptive headings of the several sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The words “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and clause, section, subsection, paragraph and exhibit references are to the clauses, sections, subsections, paragraphs and exhibits of this Agreement unless otherwise specified. The meaning assigned to each term defined herein shall be equally applicable to both the singular and the plural forms of such term, and words denoting any gender shall include all genders. Where a word or phrase is defined herein, unless the context otherwise requires, each of its other grammatical forms shall have a corresponding meaning.
Section 35. Force Majeure. Notwithstanding anything to the contrary contained herein, the Rights Agent shall not be liable for any delays or failures in performance resulting from acts beyond its reasonable control, including, without limitation, acts of God, acts or provisions or present or future laws or regulations or governmental authority, epidemics, pandemics, terrorist acts, shortage of supply, fire, earthquakes, storms, flood, strikes, work stoppages, breakdowns or malfunctions, interruptions or malfunctions of any utilities, communications, or computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war or civil unrest.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and attested, all as of the day and year first above written.
| Attest: | THE ELMET GROUP CO. | |||
| By: | /s/ Christian T. Chandler | By: | /s/ Peter V. Anania | |
| Name: | Christian T. Chandler | Name: | Peter V. Anania | |
| Title: | Executive Vice President, General Counsel and Secretary | Title: | Chief Executive Officer | |
| Attest: | Continental Stock Transfer & Trust Company | |||
| By: | /s/ Anthony Vacca | By: | /s/ Leicia Savinetti | |
| Name: | Anthony Vacca | Name: | Lecia Savinetti | |
| Title: | Account Manager | Title: | Vice President | |
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EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATIONS
of
Class B JUNIOR PARTICIPATING PREFERRED STOCK
of
THE ELMET GROUP CO.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
The Elmet Group Co., a corporation organized and existing under the General Corporation Law of the State of Delaware (hereinafter called the “Corporation”), hereby certifies that the following resolution was adopted by the Board of Directors of the Corporation as required by Section 151 of the General Corporation Law at a meeting duly called and held on September 10, 2026:
RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of this Corporation (hereinafter called the “Board of Directors” or the “Board”) in accordance with the provisions of the Certificate of Incorporation, the Board of Directors hereby creates a series of Preferred Stock, par value $0.001 per share, of the Corporation (the “Preferred Stock”), and hereby states the designation and number of shares, and fixes the relative rights, preferences, and limitations thereof as follows:
Class B Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be designated as “Class B Junior Participating Preferred Stock” (the “Class B Preferred Stock”) and the number of shares constituting the Class B Preferred Stock shall be 540,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Class B Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Class B Preferred Stock.
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Section 2. Dividends and Distributions.
(a) Subject to the rights of the holders of any shares of any Series of Preferred Stock (or any similar stock) ranking prior and superior to the Class B Preferred Stock with respect to dividends, the holders of shares of Class B Preferred Stock, in preference to the holders of Common Stock, par value $0.001 per share (the “Common Stock”), of the Corporation, and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Class B Preferred Stock, in an amount per share (rounded to the nearest cent) equal to, subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Class B Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Class B Preferred Stock were entitled immediately prior to such event under the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution (or effect an adjustment, as appropriate) on the Class B Preferred Stock as provided in Section 2(a) immediately after it declares a dividend or distribution on the Common Stock (or effects a subdivision or combination or consolidation of the outstanding shares of Common Stock).
(c) Dividends shall begin to accrue and be cumulative on outstanding shares of Class B Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue and be cumulative from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Class B Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest.
(d) Dividends paid on the shares of Class B Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Class B Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof.
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Section 3. Voting Rights. The holders of shares of Class B Preferred Stock shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set forth, each share of Class B Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Class B Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
(b) Except as otherwise provided herein, in any other Certificate of Designations creating a Class of Preferred Stock or any similar stock, or by law, the holders of shares of Class B Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.
(c) Except as set forth herein, or as otherwise provided by law, holders of Class B Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or distributions payable on the Class B Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Class B Preferred Stock outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Class B Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Class B Preferred Stock, except dividends paid ratably on the Class B Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Class B Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Class B Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any shares of Class B Preferred Stock, or any shares of stock ranking on a parity with the Class B Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.
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(b) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under Section 4(a), purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Class B Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation, or in any other Certificate of Designations creating a series of Preferred Stock or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (a) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Class B Preferred Stock unless, prior thereto, the holders of shares of Class B Preferred Stock shall have received $1,000.00 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Class B Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to be distributed per share to holders of shares of Common Stock or (b) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Class B Preferred Stock, except distributions made ratably on the Class B Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Class B Preferred Stock were entitled immediately prior to such event under the proviso in clause (a) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
A-4
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Class B Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Class B Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Class B Preferred Stock shall not be redeemable.
Section 9. Rank. The Class B Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of the Corporation’s Preferred Stock.
Section 10. Fractional Shares. The Class B Preferred Stock may be issued in fractions of a share that shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Class B Preferred Stock.
Section 11. Amendment. The Certificate of Incorporation of the Corporation shall not be amended in any manner that would materially alter or change the powers, preferences or special rights of the Class B Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Class B Preferred Stock, voting together as a single class.
A-5
IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf of the Corporation by its Chief Executive Officer and attested by its Secretary this September 14, 2026.
| [________________] | |
| Attest: | |
| [________________] |
A-6
EXHIBIT B
FORM OF RIGHT CERTIFICATE
| Certificate No. R- | _____ Rights |
NOT EXERCISABLE AFTER THE EXPIRATION DATE OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE AGREEMENT.
RIGHT CERTIFICATE
THE ELMET GROUP CO.
This certifies that _____, or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Restricted Entity Compliance Plan, dated as of September 14 2026 (the “Agreement”), between The Elmet Group Co., a Delaware corporation (the “Company”), and Continental Stock Transfer & Trust Company, as rights agent (the “Rights Agent”), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Agreement) and prior to 5:00 P.M., New York time, on the Expiration Date (as such term is defined in the Agreement) at the principal office of the Rights Agent, or at the office of its successor as Rights Agent, one one-thousandth of a fully paid non-assessable share of Class B Junior Participating Preferred Stock, par value $0.001 per share, of the Company (the “Preferred Shares”), at a purchase price of $86.00 per one one-thousandth of a Preferred Share (the “Purchase Price”), upon presentation and surrender of this Right Certificate with the Form of Election to Purchase duly executed. The number of Rights evidenced by this Right Certificate (and the number of one one-thousandths of a Preferred Share that may be purchased upon exercise hereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price as of September 14, 2026, based on the Preferred Shares as constituted at such date. As provided in the Agreement, the Purchase Price and the number of one one-thousandths of a Preferred Share which may be purchased upon the exercise of the Rights evidenced by this Right Certificate are subject to modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and conditions of the Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Right Certificates. Copies of the Agreement are on file at the principal executive offices of the Company and the offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon surrender at the principal office of the Rights Agent, may be exchanged for another Right Certificate or Right Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of Preferred Shares as the Rights evidenced by the Right Certificate or Right Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not exercised.
B-1
Subject to the provisions of the Agreement, the Rights evidenced by this Right Certificate (i) may be redeemed by the Company at a redemption price of $0.001 per Right or (ii) may be exchanged in whole or in part for shares of the Company’s Common Stock, par value $0.001 per share and/or equivalent preferred shares (as defined in the Agreement), including Preferred Shares. No fractional Preferred Shares will be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions that are integral multiples of one one-thousandth of a Preferred Share, which may, at the election of the Company, be evidenced by depositary receipts), but, in lieu thereof, a cash payment will be made, as provided in the Agreement.
No holder of this Right Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of the Preferred Shares or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Agreement or herein 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 for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in the Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate shall have been exercised as provided in the Agreement.
This Right Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature or portable document format of the proper officers of the Company and its corporate seal. Dated as of __________, ____.
| Attest: | THE ELMET GROUP CO. | |||
| By: | By: | |||
| Name: | Name: | |||
| Title: | Title: | |||
| Countersigned: | ||||
| CONTINENTAL STOCK TRANSFER & TRUST COMPANY | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
B-2
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ___________________hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint _____________________ Attorney, to transfer the within Right Certificate on the books of the within-named Company, with full power of substitution.
Dated:
| Signature | |
| Signature Guaranteed: |
B-3
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate are not Beneficially Owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.
| Dated: | , 2026 |
| Signature: |
Signature Guaranteed:
B-4
[Form of Reverse Side of Right Certificate – continued]
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights represented by the Right Certificate.)
To: The Elmet Group Co.
The undersigned hereby irrevocably elects to exercise _________ Rights represented by this Right Certificate to purchase the Preferred Shares issuable upon the exercise of such Rights and requests that certificates for such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
|
|
| (Please print name and address of transferee) |
If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new Right Certificate for the balance remaining of such Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
|
|
| (Please print name and address of transferee) |
| Dated: | , 2026 |
| Signature: |
Signature Guaranteed:
[Form of Reverse Side of Right Certificate – continued]
B-5
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate are not Beneficially Owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.
| Dated: | , 2026 |
| Signature: |
Signature Guaranteed:
B-6
NOTICE
The signature in the Form of Assignment and Certificate or Form of Election to Purchase and Certificate, as the case may be, must conform to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever.
All Guarantees must be made by a financial institution (such as a bank or broker) which is a participant in the Securities Transfer Agents Medallion Program (“STAMP”), the New York Stock Exchange, Inc. Medallion Signature Program (“MSP”), or the Stock Exchanges Medallion Program (“SEMP”) and must not be dated. Guarantees by a notary public are not acceptable.
In the event the certification set forth above in the Form of Assignment or the Form of Election to Purchase, as the case may be, is not completed, the Company and the Rights Agent will deem the Beneficial Owner of the Rights evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in the Agreement) and such Assignment or Election to Purchase will not be honored.
B-7
Exhibit 10.1
| INVESTMENT AGREEMENT |
by and between
THE ELMET GROUP CO.
and
THE UNITED STATES DEPARTMENT OF WAR
dated as of September 11, 2026
TABLE OF CONTENTS
| Page | ||
| Article 1 CERTAIN DEFINITIONS | 2 | |
| Section 1.01 | Defined Terms | 2 |
| Article 2 INITIAL PREFERRED PURCHASE; INITIAL CLOSING | 10 | |
| Section 2.01 | Initial Preferred Purchase | 10 |
| Section 2.02 | Warrant Issuance | 11 |
| Section 2.03 | Initial Closing | 11 |
| Section 2.04 | Initial Closing Conditions and Deliveries. | 11 |
| Article 3 SUBSEQUENT PREFERRED PURCHASE; SUBSEQUENT CLOSINGS | 13 | |
| Section 3.01 | Subsequent Funding Commitment | 13 |
| Section 3.02 | Subsequent Preferred Purchases | 13 |
| Section 3.03 | Subsequent Closing Conditions and Deliveries | 14 |
| Article 4 REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY | 16 | |
| Section 4.01 | Company Organization | 16 |
| Section 4.02 | Company Authority | 16 |
| Section 4.03 | Company Execution and Delivery; Enforceability | 16 |
| Section 4.04 | Absence of Company Conflict | 16 |
| Section 4.05 | Filings | 17 |
| Section 4.06 | Company Capitalization | 17 |
| Section 4.07 | Preferred Shares | 17 |
| Section 4.08 | The Warrant Stock | 18 |
| Section 4.09 | Reports. | 18 |
| Section 4.10 | No Material Adverse Effect | 18 |
| Section 4.11 | Title to Property and Assets | 19 |
| Section 4.12 | Employee Benefits and Employment | 19 |
| Section 4.13 | Intellectual Property Rights | 20 |
| Section 4.14 | Data Privacy | 21 |
| Section 4.15 | Environmental Matters | 21 |
| Section 4.16 | Real Property | 22 |
| Section 4.17 | Financial Statements | 24 |
| Section 4.18 | No Undisclosed Liabilities; No Breach | 24 |
| Section 4.19 | Offering of Securities | 24 |
| Section 4.20 | Litigation and Other Proceedings | 25 |
| Section 4.21 | Compliance with Laws | 25 |
| Section 4.22 | Compliance with Economic Sanctions | 25 |
| Section 4.23 | Material Customers and Material Suppliers | 25 |
| Section 4.24 | Brokers and Finders | 25 |
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| Section 4.25 | Government Contracts | 26 |
| Section 4.26 | Taxes | 28 |
| Section 4.27 | No Audits | 28 |
| Article 5 DOW REPRESENTATIONS AND WARRANTIES | 28 | |
| Section 5.01 | Authority | 28 |
| Section 5.02 | Funding | 28 |
| Section 5.03 | Outside Counsel and Third-Party Advisors; No Conflicts Determination | 28 |
| Section 5.04 | Investment Representations | 28 |
| Article 6 COVENANTS | ||
| Section 6.01 | Public Disclosure | 29 |
| Section 6.02 | Tax Matters | 29 |
| Section 6.03 | No Conflicts | 29 |
| Section 6.04 | Use of Proceeds; Project Efforts | 30 |
| Section 6.05 | Board Matters | 30 |
| Section 6.06 | Compliance with Laws and Permits | 30 |
| Article 7 MISCELLANEOUS | 31 | |
| Section 7.01 | Survival | 31 |
| Section 7.02 | Governing Law | 31 |
| Section 7.03 | WAIVER OF JURY TRIAL | 31 |
| Section 7.04 | Jurisdiction Involving Company | 31 |
| Section 7.05 | Jurisdiction Involving Governmental Entities | 32 |
| Section 7.06 | Specific Performance | 32 |
| Section 7.07 | Expenses | 32 |
| Section 7.08 | Amendment | 32 |
| Section 7.09 | Notices | 32 |
| Section 7.10 | Waiver | 33 |
| Section 7.11 | No Third-Party Beneficiaries; No Assignment | 33 |
| Section 7.12 | Further Action | 33 |
| Section 7.13 | Severability | 34 |
| Section 7.14 | Entire Agreement | 34 |
| Section 7.15 | Counterparts | 34 |
| Section 7.16 | Construction | 34 |
| Section 7.17 | Disclosure Schedule and Exhibits | 34 |
| Annex/Exhibit List | |
| Annex I | Specified Projects Schedule |
| Annex II | Subsequent Funding Periods Schedule |
| Exhibit A | Form of Certificate of Designations |
| Exhibit B | Form of Investor Rights Agreement |
| Exhibit C | Form of Registration Rights Agreement |
| Exhibit D | Form of Warrant |
| Exhibit E | Form of Certificate of Incorporation |
| Exhibit F | Form of Bylaws |
ii
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (this “Agreement”) is entered into effective as of September 11, 2026, by and between The Elmet Group Co., a Delaware corporation (the “Company”), and the United States Department of War (“DOW”). DOW and the Company are sometimes referred to herein together as the “Parties” and individually as a “Party.”
WITNESSETH
WHEREAS, DOW desires to purchase up to an aggregate of $450,000,000 (the “Total Preferred Purchase Price”) worth of shares of the Company’s Class A Redeemable Preferred Stock (the “Class A Preferred Stock”), having the powers, privileges, preferences and rights, and the qualifications, limitations and restrictions, set forth herein in the certificate of designations of the Company in the form attached hereto as Exhibit A (the “Certificate of Designations”), the investor rights agreement in the form attached hereto as Exhibit B (the “Investor Rights Agreement”), the registration rights agreement in the form attached hereto as Exhibit C (the “Registration Rights Agreement”) and the Delaware General Corporation Law;
WHEREAS, at the Initial Closing (as defined below), the Company shall issue to DOW, and DOW shall subscribe for, purchase and acquire from the Company, in a private placement, 200,000 shares of Class A Preferred Stock, for $200,000,000 (the “Initial Preferred Purchase Price” and, such purchase, the “Initial Preferred Purchase”);
WHEREAS, pursuant to the Subsequent Closings (as defined below) scheduled pursuant to Annex II attached hereto (the “Subsequent Funding Periods Schedule”) and subject to the conditions set forth herein, the Company shall issue to DOW, and DOW shall subscribe for, purchase and acquire from the Company, in a private placement, an aggregate of 250,000 shares of Class A Preferred Stock from time to time during the Commitment Period, for an aggregate price of $250,000,000 (such purchases, collectively, the “Subsequent Preferred Purchases” and together with the Initial Preferred Purchase, the “Preferred Purchase”);
WHEREAS, at the Initial Closing, the Company shall issue to DOW the Penny Warrant (as defined below) to purchase 5,675,506 shares of Common Stock (as defined below) and the Strike Price Warrant (as defined below) to purchase 1,891,835 shares of Common Stock (collectively, the “Warrants”), in each case in the form attached hereto as Exhibit D (such issuance, the “Warrant Issuance”);
WHEREAS, the Parties intend that the Class A Preferred Stock issued at the Initial Closing and each Subsequent Closing are intended to constitute a single series of preferred stock of the Company with identical rights, preferences, privileges and restrictions as set forth in the Certificate of Designations, notwithstanding that (i) such Class A Preferred Stock will be issued at multiple Closings and (ii) the Warrants will be issued solely at the Initial Closing.
WHEREAS, following the consummation of the Preferred Purchase and the Warrant Issuance, the Company shall use the proceeds received from such transactions to fund certain growth initiatives mutually agreed by the Parties as set forth herein; and
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WHEREAS, the Parties desire to agree to be bound by the terms of this Agreement, which is entered into effective as of the date hereof.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
Article
1
CERTAIN DEFINITIONS
Section 1.01 Defined Terms. For purposes of this Agreement, each capitalized term set forth in this Agreement shall have the meaning ascribed to it in this Section 1.01 or the provision of this Agreement in which such term is defined, as applicable.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person at any time during the period for which the determination of affiliation is being made. The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to elect a majority of the board of directors (or other governing body) or to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. For the avoidance of doubt, for purposes of the representations, warranties, covenants and other obligations of the Company set forth in this Agreement, in no such case shall DOW be deemed to be an “Affiliate” of the Company.
“Benefit Plan” means any employee benefit plan, program, policy, practice, or other arrangement (regardless of whether written or unwritten), including without limitation, any “employee benefit plan” within the meaning of Section 3(3) of ERISA (regardless of whether subject to ERISA), and any bonus, incentive, deferred compensation, paid time off, vacation, stock or equity purchase, stock or other compensatory option, severance, employment, change of control or fringe benefit plan, program or policy.
“Breach Event” has the meaning ascribed to it in the Investor Rights Agreement.
“Business Day” means any day which is not a Saturday, Sunday or a day on which banking institutions are not open in Washington, D.C. or New York, New York.
“Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.
“Commitment Period” means the period beginning on the date that is six (6) months from the Initial Closing Date and ending on the earliest of (a) the date that is thirty (30) months from the Initial Closing Date, (b) unless otherwise determined by DOW, (i) the occurrence of a Change of Control (as defined in the Investor Rights Agreement), or (ii) the redemption of all outstanding shares of Class A Preferred Stock, (c) the issuance of an aggregate of 450,000 shares of Class A Preferred Stock or (d) such period as the Company and DOW may mutually agree.
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“Common Stock” means the common stock of the Company, par value $0.001 per share.
“Company Intellectual Property” means all Intellectual Property Rights owned or purported to be owned by the Company or any of its Subsidiaries.
“Company SEC Documents” means all registration statements, prospectuses, forms, reports, certifications, proxy statements, schedules, statements and documents required to be filed or furnished by it with the SEC under the Securities Act or the Exchange Act, as the case may be, including such documents and any other documents filed or furnished by the Company with the SEC since the Lookback Date as have been supplemented, modified or amended since the time of filing.
“Contract” means, with respect to any Person, any written or oral and legally binding contract, lease, sublease, deed, deed of trust, license, sublicense, arrangement, option, plan, mortgage, note, undertaking, indenture, joint venture, instrument or other agreement, commitment or legally binding arrangement to which or by which such Person is a party or otherwise subject or bound.
“Data Protection Laws” means all applicable Laws, regulations, rules, binding regulatory guidance, and official directives relating to privacy, data security, or data protection.
“Default” has the meaning ascribed to it in the Investor Rights Agreement.
“Disclosure Schedule” means the disclosure schedule delivered by the Company to DOW concurrently with the execution of this Agreement.
“DOW Investors” has the meaning ascribed to it in the Investor Rights Agreement.
“Environmental Law” means all applicable Laws as enacted and in effect on the date hereof concerning pollution or protection of the environment or human health and safety (to the extent relating to exposure to Hazardous Substances), including all those relating to the preservation or reclamation of natural resources or the presence, use, production, generation, handling, transportation, treatment, storage, disposal, Release, or cleanup of Hazardous Substances.
“Equity Securities” means any and all (a) shares, interests, participations or other equivalents (however designated) of capital stock or other voting securities of a corporation, any and all equivalent or analogous ownership (or profit) or voting interests in a Person (other than a corporation), (b) securities convertible into or exchangeable for shares, interests, participations or other equivalents (however designated) of capital stock or voting securities of (or other ownership or profit or voting interests in) such Person, and (c) any and all warrants, rights or options to purchase any of the foregoing, whether voting or nonvoting, and, in each case, whether or not such shares, interests, participations, equivalents, securities, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
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“ERISA Event” means (a) the occurrence of a reportable event (as defined in Section 4043 of ERISA (other than an event not subject to the provision for notice under such Section)) with respect to any Plan; (b) the failure to meet the minimum funding standards of Section 412 or 430 of the Code or Section 302 or 303 of ERISA with respect to any Plan (whether or not waived in accordance with Section 412(c) of the Code or Section 302(c) of ERISA) or the failure to make a contribution or installment required under Section 412 or Section 430(j) of the Code with respect to any Plan or the failure to make any required contribution to a Plan that is a Multiemployer Plan; (c) a determination that any Plan is in “at risk” status (as defined in Section 430 of the Code or Section 303 of ERISA); (d) a determination that any Plan that is a Multiemployer Plan is in “critical” or “endangered” status under Section 432 of the Code or Section 305 of ERISA; (e) the filing of a notice of intent to terminate a Plan or the treatment of an amendment to a Plan as a termination under Section 4041 of ERISA; (f) the institution by the Pension Benefit Guaranty Corporation (“PBGC”) of proceedings to terminate any Plan, or the occurrence of any event or condition that might constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Plan; (g) the imposition of liability on the Company, any of its Subsidiaries, or any of their Affiliates, pursuant to Section 4062(e) or 4069(a) of ERISA or by reason of the application of Section 4212(c) of ERISA; (h) the withdrawal of the Company, any of its Subsidiaries or any of their Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan or the receipt by the Company, any of its Subsidiaries or any of their Affiliates of a notice from any Multiemployer Plan that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (i) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent, upon the Company or any of its Subsidiaries; (j) the imposition of a Lien pursuant to Section 430(k) of the Code or pursuant to ERISA with respect to any Plan; or the occurrence of any development similar to any of the foregoing under applicable non-U.S. Laws with respect to any Plan.
“Event of Default” has the meaning ascribed to it in the Investor Rights Agreement.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder.
“Fiscal Year” means the fiscal year of the U.S. Government, currently established by 31 U.S.C. § 1102.
“Government Bid” means any quotation, bid or proposal that is individually valued at more than $5,000,000 or otherwise material to the Company for awards of new Government Contracts submitted by the Company for which award has not yet been made.
“Government Contract” means any written Contract that is material to the business of the Company and its Subsidiaries, taken as a whole, between the Company, on the one hand, and any (a) Governmental Authority, (b) prime contractor of a Governmental Authority in its capacity as a prime contractor, or (c) higher-tier subcontractor with respect to any contract of a type described in clause (a) or clause (b), on the other hand, in effect as of the date of this Agreement.
“Governmental Authority” means any (a) nation or government, state, commonwealth, province, territory, county, municipality, district, or other jurisdiction of any nature, or any political subdivision thereof, (b) federal, state, local, municipal, foreign, or other government, or (c) governmental or quasi-governmental authority of any nature (including any relevant domestic, foreign, multinational or international body, governmental division, department, agency, board, bureau, commission, instrumentality, official, organization, regulatory body, or other entity and any court, arbitrator, or other tribunal) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any executive official thereof.
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“Governmental Authorization” means any approval, consent, ratification, license, permit, certificate, identification number, approval, exemption, variance product registration or other registration issued or granted by or filed with any Governmental Authority pursuant to applicable Law.
“Hazardous Substances” means (i) any substance, material, or waste that is regulated under any Environmental Law due to its toxic, hazardous, dangerous or deleterious properties or characteristics, (ii) petroleum and its refined products, (iii) polychlorinated biphenyls, (iv) per- and polyfluoroalkyl substances; and (v) friable asbestos and asbestos-containing materials, lead, radon, and radioactive materials and substances.
“Intellectual Property Rights” or “Intellectual Property” means all intellectual property and property rights throughout the world, and all right, title and interest in and to the following worldwide: (a) all patents, patent applications, patent disclosures, and inventions and all improvements thereto (whether or not patentable or reduced to practice), and all reissues, continuations, continuations-in-part, revisions, divisional, extensions, and reexaminations in connection therewith, (b) trademarks, service marks, domain names, trade dress, corporate names, trade names, and other indicia of source, and all registrations, applications and renewals in connection therewith (together with the goodwill associated therewith), (c) copyrights and all works of authorship (whether or not copyrightable), and all registrations, applications and renewals in connection therewith, (d) Software, (e) Internet domain names, (f) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data and information, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), and all other information that derives economic value from not being generally known (collectively the “Proprietary Information”), (g) moral rights, and (h) rights of privacy and publicity.
“Law” means all domestic or foreign codes, laws, common laws, statutes, Governmental Authorizations, ordinances, rules, regulations, orders, writs, judgments or injunctions of Governmental Authority, including any amendments thereto.
“Liens” means any charge, lien, mortgage, deed of trust, pledge, hypothecation, security interest, option, right of first refusal, restriction on transfer or voting, defect of title, easement, servitude, restrictive covenant or other similar restriction, encroachment or other survey defect, adverse claim of ownership or use, encumbrance, deed to secure debt, lease, license, or other restriction or limitation of any kind or character, except that any non-exclusive licenses of Intellectual Property granted in the Ordinary Course of Business shall not constitute a Lien.
5
“Lookback Date” means April 22, 2026.
“Material Adverse Effect” means a material adverse effect on the business, results of operation or financial condition of the Company and its consolidated Subsidiaries taken as a whole; provided, however, that a Material Adverse Effect shall not be deemed to include the effects of (A) changes in general business, economic or market conditions (including changes generally in prevailing interest rates, credit availability and liquidity, currency exchange rates and price levels or trading volumes in the United States or foreign securities or credit markets), national or international political conditions or any outbreak or escalation of hostilities, declared or undeclared acts of war or terrorism, in each case generally affecting the industries in which the Company and its Subsidiaries operate, (B) changes or proposed changes in generally accepted accounting principles in the United States (“GAAP”) or authoritative interpretations thereof, (C) changes affecting the financial, banking or securities markets (including any disruption thereof and any decline in the price of any security or any market index), (D) changes or proposed changes in securities and other laws of general applicability or related policies or interpretations of Governmental Authorities, (E) any “act of God,” including, but not limited to, weather, natural disasters, earthquakes, epidemics, pandemics and disease outbreaks (in the case of each of these clauses (A)—(E), other than changes or occurrences to the extent that such changes or occurrences have or would reasonably be expected to have a materially disproportionate adverse effect on the Company and its consolidated Subsidiaries taken as a whole relative to comparable companies), (F) changes or proposed changes in U.S. or non-U.S. tariff levels or policies or U.S. or non-U.S. international trade policies, (G) changes in the market price or trading volume of the Common Stock, or any other Equity Securities or debt securities of the Company or its consolidated Subsidiaries (it being understood and agreed that the exception set forth in this clause (G) does not apply to the underlying reason giving rise to or contributing to any such change), (H) instance of cyberterrorism directly affecting the Company and its consolidated subsidiaries, or (I) any failure by the Company to meet its internal financial projections, estimates or budgets (it being understood and agreed that the exception set forth in this clause (I) does not apply to the underlying reason giving rise to or contributing to any such change).
“Multiemployer Plan” means a “multiemployer plan,” within the meaning of Section 4001(a)(3) of ERISA.
“OFAC” means U.S. Department of Treasury’s Office of Foreign Assets Control.
“Open Source Materials” means (i) any Software that contains, or is derived in any manner (in whole or in part) from, any Software that is distributed as free software or open source software (for example, Software distributed under the GNU General Public License, the GNU Lesser General Public License, or the Apache Software License), or pursuant to open source, copyleft or similar licensing and distribution models; and (ii) any Software that requires as a condition of use, modification and/or distribution of such Software that such Software or other Software incorporated into, derived from or distributed with such Software (A) be disclosed or distributed in source code form, (B) be licensed for the purpose of making derivative works at no or minimal charge or (C) be redistributable at no or minimal charge.
6
“Order” means any judicial or administrative judgment, decision, decree, order, settlement, injunction, writ, stipulation, determination or award.
“Ordinary Course of Business” means the ordinary course of business of the Company and its Subsidiaries, consistent in all material respects with past practice.
“Penny Warrant” means the warrant in the form attached hereto as Exhibit D representing 75% of the Warrants exercisable at $0.001 per share as of the date hereof.
“Permits” mean all franchises, licenses, registrations, approvals, authorizations, accreditations, certificates, permits or other rights and privileges issued by any Governmental Authority.
“Permitted Liens” means (a) statutory Liens for the payment of Taxes that are either (i) not yet delinquent or (ii) being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with applicable accounting principles; (b) mechanics’, workmen’s, materialmen’s, suppliers’, warehouse and other like Liens (i) arising or created in the Ordinary Course of Business for amounts not yet delinquent, or (ii) that are being contested in good faith and by appropriate proceedings in accordance with any applicable Laws; (c) Liens and other encumbrances that would be disclosed by a current title search of the applicable Owned Real Property or Leased Real Property; (d) Liens to which the fee simple interest (or any superior leasehold interest) in any Leased Real Property is subject, provided that such Liens were not caused by the Company or its Subsidiaries in breach of the applicable lease to which the applicable Leased Real Property is subject; (e) Liens that would be disclosed by an accurate survey of the applicable Owned Real Property or Leased Real Property; (f) zoning, entitlement, building and other land use regulations imposed by any Governmental Authority having jurisdiction over the applicable real property which are not violated in any material respect by the current use, occupancy or operation of such real property; (g) Liens arising under any Real Property Leases to which any applicable Leased Real Property is subject; and (h) all Liens arising pursuant to the provisions of the organizational documents of the Company or its Subsidiary, in respect of obligations that are not yet due.
“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, an estate, an unincorporated association or a Governmental Authority or any department, agency or political subdivision thereof.
“Personal Information” means information that identifies a particular individual, including information defined as “personal information,” “personal data,” “personally identifiable information” or any similar term under applicable Data Protection Laws that is directly collected or maintained by the Company in the Ordinary Course of Business.
“Plan” means any Benefit Plan providing benefits to any current or former employee, officer, director or other individual service provider of the Company or any of its Subsidiaries or any beneficiary or dependent thereof that is sponsored or maintained by the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries contributes or is obligated to contribute.
7
“Proceeding” means any action, arbitration, hearing, lawsuit, legal proceeding, litigation, grievance, charge, complaint, administrative enforcement proceeding, examination, inquiry, mediation, or other proceeding (whether administrative, judicial, civil, criminal or investigative, whether formal or informal, whether public or private) or, to the knowledge of the Company or any of its Subsidiaries, any audit or investigation commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority.
“Project” means the projects and matters set forth on Annex I hereto (as may be amended or modified after the date hereof by mutual agreement of the Company and DOW after the date hereof.
“Proper Application” means the submission of an application by a party for a permit, license, or other approval, in a timely manner, accompanied by all relevant application and administration charges and fees payable by the relevant party.
“Qualified Governmental Authority” means any U.S. federal Governmental Authority, division, department, organization, instrumentality or similar entity or body controlled, directly or indirectly, by the United States that can deliver a valid and duly executed Internal Revenue Service Form W-9 or otherwise demonstrate that it is a “United States person” for U.S. federal income tax purposes.
“Release” means any releasing, spilling, discharging, disposing, leaking, pumping, injecting, pouring, emitting or leaching into the environment, including ambient air, surface water, groundwater, land surface or subsurface strata.
“Remedial Action” means any or all actions, to the extent required under Environmental Law, to (i) clean up, remove, treat, or otherwise address any Hazardous Substances, (ii) prevent the Release or threat of Release, or minimize the further Release, of any Hazardous Substances, (iii) perform pre-remedial studies and investigations or post-remedial monitoring and care, or (iv) correct or otherwise address any non-compliance with Environmental Law or Permits required under Environmental Law.
“Representatives” of a Person shall mean any officer, director or employee of such Person or any investment banker, attorney, accountant or other advisor, agent or representative of such Person.
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, and any successor statute thereto, and the rules and regulations of the SEC promulgated thereunder.
“Software” means all computer software (in object code or source code format), data and databases, and related documentation and materials.
“Strike Price Warrant” means the warrant in the form attached hereto as Exhibit D representing 25% of the Warrants exercisable at $15.92 per share as of the date hereof.
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“Subsidiary” means, with respect to any specified Person, any: (a) corporation, fifty percent (50%) or more of the voting or capital stock of which is, as of the time in question, directly or indirectly, owned by such Person; or (b) partnership, joint venture, association, or other entity in which such Person, directly or indirectly, owns fifty percent (50%) or more of the equity economic interest thereof or has the power to elect or direct the election of more than fifty percent (50%) of the members of the governing body of such partnership, joint venture, association or other entity.
“Tax Returns” means all returns, declarations, reports, and information statements and returns required to be filed with a Governmental Authority relating to Taxes, including original returns and filings, amended returns, claims for refunds, and information returns.
“Taxes” means any and all U.S. federal, state, or local or non-U.S. taxes, fees, levies, duties, tariffs, imposts, and other similar charges imposed by any Governmental Authority, including (a) taxes or other charges in the nature of a tax imposed on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation, or net worth; (b) other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; and (c) customs duties, tariffs, and similar charges (together with, in the case of clauses (a) through (c), any and all interest, penalties and additions to tax).
“Transaction Documents” means this Agreement, the Investor Rights Agreement, the Registration Rights Agreement, the Warrants, and any other agreements, certificates or instruments, including the Certificate of Designations, to be executed or delivered in connection with this Agreement on the Closing Date.
“U.S.” or “United States” means the United States of America.
|
TERM |
SECTION |
| Agreement | Preamble |
| Bylaws | Section 2.04(b)(i)(F) |
| Capitalization Date | Section 4.06 |
| Certificate of Designations | Recitals |
| Certificate of Incorporation | Section 2.04(b)(i)(F) |
| Class A Preferred Stock | Recitals |
| Closing | Section 2.03 |
| Closing Date | Section 3.02(a) |
| Company | Preamble |
| Company Reports | Section 4.09(a) |
| Company Software | Section 4.14(e) |
| Conversion Shares | Section 4.07 |
| DOW | Preamble |
| Federal Law | Section 7.02 |
| Financial Statements | Section 4.18 |
| FOCI | Section 4.25(k) |
| GAAP | Section 1.01 |
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| Initial Closing | Section 2.03 |
| Initial Closing Date | Section 2.03 |
| Initial Closing Preferred Shares | Section 2.01 |
| Initial Preferred Purchase | Recitals |
| Initial Preferred Purchase Price | Recitals |
| Investor Rights Agreement | Recitals |
| IT Systems | Section 4.15 |
| Latest 10-Q | Section 4.06 |
| Leased Real Property | Section 4.17(b) |
| Owned Real Property | Section 4.17(a) |
| Parties or Party | Preamble |
| Permitted Uses | Section 6.04(a) |
| Preferred Purchase | Recitals |
| Preferred Shares | Section 3.02(b) |
| Proceeds | Section 6.04(a) |
| Proprietary Information | Section 1.01 |
| Real Property Leases | Section 4.17(b) |
| Registration Rights Agreement | Recitals |
| Restructuring | Section 4.25 |
| Software | Section 1.01 |
| Subsequent Funding Notice | Section 3.02(a) |
| Total Preferred Purchase Price | Recitals |
| Subsequent Closing | Section 3.02(a) |
| Subsequent Closing Date | Section 3.02(a) |
| Subsequent Closings Preferred Shares | Section 3.02(a) |
| Subsequent Funding Amount | Section 3.02(a) |
| Subsequent Funding Periods Schedule | Recitals |
| Subsequent Preferred Purchase | Recitals |
| Transfer Taxes | Section 6.02 |
| Unlawful Payment | Section 4.25(f) |
| Warrant Issuance | Recitals |
| Warrant Stock | Section 4.08 |
| Warrants | Recitals |
Article
2
INITIAL PREFERRED PURCHASE; INITIAL CLOSING
Section 2.01 Initial Preferred Purchase. At the Initial Closing, upon the terms and subject to the conditions set forth in this Agreement, DOW shall purchase from the Company, and the Company shall sell and issue to DOW, 200,000 shares of Class A Preferred Stock (the “Initial Closing Preferred Shares”), free and clear of all Liens (other than any Liens arising under the Securities Act and applicable state securities Laws and the terms of the Transaction Documents, the Certificate of Incorporation and the Bylaws), in exchange for the Initial Preferred Purchase Price, which shall be paid by DOW to the Company, pursuant to Section 2.04(d)(i).
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Section 2.02 Warrant Issuance. At the Initial Closing, upon the terms and subject to the conditions set forth in this Agreement, the Company shall issue to DOW, without payment by DOW of any additional consideration, the Warrants free and clear of all Liens (other than any Liens arising under the Securities Act and applicable state securities Laws and the terms of the Transaction Documents, the Certificate of Incorporation and the Bylaws).
Section 2.03 Initial Closing. The closing of the transactions contemplated by Section 2.01 and Section 2.02 (the “Initial Closing”) shall occur remotely via the electronic exchange of documents and signatures at 10:00 a.m. Eastern Standard Time on the date hereof, or at such other time and place as the Company and DOW mutually agree (the “Initial Closing Date”).
Section 2.04 Initial Closing Conditions and Deliveries.
(a) The obligation of DOW to consummate the Initial Closing shall be subject to the satisfaction or waiver in writing by DOW, in its sole discretion, of each of the following conditions precedent, in each case, as of the Initial Closing Date:
(i) no Material Adverse Effect shall have occurred and be continuing;
(ii) the representations and warranties of the Company contained in this Agreement and the other Transaction Documents shall be true and correct in all material respects, except to the extent that any such representation or warranty expressly relates to an earlier date, in which case such representation or warranty shall be true and correct in all material respects as of such earlier date; and
(iii) no Law or Order of any Governmental Authority shall be in effect that restrains, enjoins or otherwise prohibits the consummation of the transactions contemplated by this Agreement.
(b) The obligation of the Company to consummate the Initial Closing shall be subject to the satisfaction or waiver in writing by the Company of each of the following conditions precedent, in each case, as of the Initial Closing Date:
(i) the representations and warranties of DOW contained in this Agreement shall be true and correct in all material respects; and
(ii) no Law or Order of any Governmental Authority shall be in effect that restrains, enjoins or otherwise prohibits the consummation of the transactions contemplated by this Agreement.
(c) At the Initial Closing, the Company shall:
(i) deliver, or cause to be delivered, to DOW:
(A) book-entry evidence reasonably acceptable to DOW of the issuance of the Initial Closing Preferred Shares;
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(B) a counterpart to this Agreement, duly executed by the Company;
(C) the Warrants, duly executed by the Company;
(D) a counterpart to the Registration Rights Agreement, duly executed by the Company;
(E) a counterpart to the Investor Rights Agreement, duly executed by the Company;
(F) evidence reasonably acceptable to DOW of the filing of the Certificate of Designations with the Secretary of State of the State of Delaware;
(G) evidence reasonably satisfactory to DOW of submission of the listing of additional shares notification to NASDAQ prior to the Initial Closing;
(H) a certificate, dated as of the Initial Closing Date, signed by an authorized officer of the Company, certifying (i) the certificate of incorporation of the Company, in the form attached hereto as Exhibit E (the “Certificate of Incorporation”) as in effect at the Initial Closing Date; (ii) the bylaws of the Company, in the form attached hereto as Exhibit F (the “Bylaws”) as in effect at the Initial Closing Date; and (iii) the resolutions adopted by the board of directors of the Company approving the Transaction Documents and the transactions contemplated by the Transaction Documents;
(I) a certificate dated as of the Initial Closing Date and executed by a duly authorized officer of the Company, stating that the conditions set forth in Section 2.04(a)(i) and Section 2.04(a)(ii) have been satisfied;
(J) a certificate as to the good standing of the Company issued by the relevant Governmental Authority in the Company’s jurisdiction of formation, organization or incorporation, to be dated not more than five (5) Business Days prior to the Initial Closing Date; and
(K) an opinion from Akin Gump Strauss Hauer & Feld LLP, legal counsel to the Company, dated as of the Initial Closing Date, in form and substance reasonably satisfactory to DOW.
(d) At the Initial Closing, DOW shall:
(i) pay, or cause to be paid to the Company an amount in cash equal to the Initial Preferred Purchase Price by wire transfer of immediately available funds, to an account designated by the Company at least two (2) Business Days prior to the Initial Closing Date;
(ii) deliver, or cause to be delivered, a counterpart to this Agreement, duly executed by DOW;
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(iii) deliver, or cause to be delivered, a counterpart to the Registration Rights Agreement, duly executed by DOW;
(iv) deliver, or cause to be delivered, a counterpart to the Investor Rights Agreement, duly executed by DOW; and
(v) deliver or cause to be delivered a valid and properly executed Internal Revenue Service Form W-9.
Article
3
SUBSEQUENT PREFERRED PURCHASE; SUBSEQUENT CLOSINGS
Section 3.01 Subsequent Funding Commitment. Subject to the terms and conditions set forth in this Agreement, during the Commitment Period, DOW hereby commits to purchase, and the Company shall have the right but not the obligation to sell and issue to DOW, additional shares of Class A Preferred Stock in accordance with, and at the times and the amounts set forth in, the Subsequent Funding Periods Schedule; provided that, unless otherwise agreed in writing by the Parties in their sole discretion, (a) DOW’s aggregate funding commitment pursuant to this Article 3 shall not exceed the “Total Subsequent Funding Commitment Amount” set forth on the Subsequent Funding Periods Schedule and (b) DOW’s funding commitment pursuant to this Article 3 with respect to any “Subsequent Funding Period” shall equal the amount set forth opposite such “Subsequent Funding Period” under the heading “Funding Period Commitment Amount.” Notwithstanding anything herein to the contrary, the Parties acknowledge and agree that, upon not less than thirty (30) days prior written notice to the Company (or such shorter period as may be agreed to by the Parties) the DOW may revise the Subsequent Funding Periods Schedule to accelerate any or all of the “Subsequent Funding Periods” and “Funding Period Commitment Amounts” reflected thereon, so long as such revisions do not extend the Commitment Period or decrease the Total Subsequent Funding Commitment Amount (it being understood that the intent of this sentence is to permit DOW to accelerate (but not to decelerate, extend or reduce) the expected funding timeline reflected on the Subsequent Funding Periods Schedule).
Section 3.02 Subsequent Preferred Purchases.
(a) Subject to the terms and conditions set forth in this Agreement, the closing of any purchase and issuances of additional shares of Class A Preferred Stock contemplated by this Article 3 (each, a “Subsequent Closing”) shall occur remotely via the electronic exchange of documents and signatures at 10:00 a.m. Eastern Standard Time on the date identified in an irrevocable written notice from the Company to DOW (the “Subsequent Funding Notice”), which Subsequent Closing may not be less than thirty (30) days from the date of the Subsequent Funding Notice (the date of such Subsequent Closing, “Subsequent Closing Date” and collectively with the Initial Closing Date, each a “Closing Date”), which Subsequent Funding Notice shall include (i) the portion of the applicable Subsequent Funding Period Commitment Amount to be funded (which amount shall not be less than $25,000,000) to the Company (the “Subsequent Funding Amount”), (ii) the number of shares of Class A Preferred Stock to be issued by the Company to DOW in respect of the Applicable Funding Amount and (iii) the intended use of the Subsequent Funding Amount, including the Project or Projects to which such funds will be allocated in accordance with the Specified Projects Schedule.
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(b) At each Subsequent Closing, subject to the terms and conditions set forth in this Agreement, DOW shall purchase from the Company, and the Company shall sell and issue to DOW, a number of shares of Class A Preferred Stock (the “Subsequent Closing Preferred Shares” and collectively with the Initial Closing Preferred Shares, the “Preferred Shares”), free and clear of all Liens (other than any Liens arising under the Securities Act and applicable state securities Laws and the terms of the Transaction Documents, the Certificate of Incorporation and the Bylaws) equal to the result of (i) the Subsequent Funding Amount set forth in the applicable Subsequent Funding Notice divided by (ii) $1,000.00, in exchange for the Subsequent Funding Amount set forth in the applicable Subsequent Funding Notice, which shall be paid by DOW to the Company, pursuant to Section 3.03(d).
Section 3.03 Subsequent Closing Conditions and Deliveries.
(a) The obligation of DOW to consummate any Subsequent Closing shall be subject to the satisfaction or waiver in writing by DOW, in its sole discretion, of each of the following conditions precedent, in each case, as of the applicable Subsequent Closing Date:
(i) no Material Adverse Effect shall have occurred;
(ii) with respect to the Company or any of its Subsidiaries, no Default or Event of Default has occurred and is continuing;
(iii) the representations and warranties of the Company contained in this Agreement and the other Transaction Documents shall be true and correct in all material respects, except to the extent that any such representation or warranty expressly relates to an earlier date, in which case such representation or warranty shall be true and correct in all material respects as of such earlier date;
(iv) the covenants and agreements required to be performed or complied with by the Company pursuant to this Agreement and each of the other Transaction Documents shall have been performed or complied with in all material respects; provided that this clause (iv) shall not apply to any failure by the Company to meet applicable Project milestones;
(v) with respect to any Subsequent Closing pursuant to a Subsequent Funding Notice that identifies Project 3 as an expected use of proceeds, the Project 3 Condition (as set forth on the Specified Project Schedule) shall be satisfied;
(vi) with respect to any Subsequent Closing pursuant to a Subsequent Funding Notice that identifies Project 4 as an expected use of proceeds, the Project 4 Condition (as set forth on the Specified Project Schedule) shall be satisfied;
(vii) no Breach Event has occurred and is continuing;
(viii) all regulatory approvals and consents required by the Company, its Subsidiaries, their Affiliates and any third-parties applicable to such Subsequent Closing under this Agreement and the other Transaction Documents shall have been obtained or satisfied;
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(ix) no Law or Order of any Governmental Authority shall be in effect that restrains, enjoins or otherwise prohibits the consummation of the transactions contemplated by the applicable Subsequent Closing; and
(x) DOW shall have (i) continuing authorization or reauthorization by the relevant authorities by the United States Congress to make investments such as the ones contemplated by the Subsequent Closings and (ii) the availability of appropriations. For the avoidance of doubt, failure by DOW to fund any applicable Subsequent Closing due to the failure of the condition precedent set forth in this Section 3.03(a)(vii) shall not constitute a breach or default by DOW under this Agreement; provided that DOW shall promptly notify the Company of any anticipated reduction, withdrawal or unavailability of appropriated funding affecting the transactions contemplated by the Transaction Documents and failure of appropriations shall not constitute a Default, Event of Default or other adverse condition by Company under this Agreement.
(b) the obligation of the Company to consummate any Subsequent Closing shall be subject to the satisfaction or waiver in writing by the Company of each of the following conditions precedent, in each case, as of the applicable Subsequent Closing Date:
(i) the representations and warranties of DOW contained in this Agreement shall be true and correct in all material respects as of the applicable Subsequent Closing Date, except to the extent that any such representation or warranty expressly relates to an earlier date, in which case such representation or warranty shall be true and correct in all material respects as of such earlier date;
(ii) DOW shall have performed and complied with, in all material respects, its covenants and agreements required to be performed or complied with by it under this Agreement and each of the other Transaction Documents at or prior to the applicable Subsequent Closing; and
(iii) no Law or Order of any Governmental Authority shall be in effect that restrains, enjoins or otherwise prohibits the consummation of the transactions contemplated by the applicable Subsequent Closing.
(c) At each Subsequent Closing, the Company shall deliver, or cause to be delivered to DOW:
(i) a customary draw certificate, in a form reasonably acceptable to DOW, dated as of the applicable Draw Date, certifying satisfaction of the conditions precedent as applicable for each such Subsequent Closing as set forth in Section 3.03(a)(i) through Section 3.03(a)(vi), which such draw certificate shall attach supporting detail reasonably requested by DOW;
(ii) a certificate dated as of the applicable Subsequent Closing Date and executed by a duly authorized officer of the Company, stating that the conditions set forth in Section 3.03(a)(i) through Section 3.03(a)(vi) have been satisfied;
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(iii) book-entry evidence reasonably acceptable to DOW of the issuance of the applicable Subsequent Closing Preferred Shares; and
(iv) an opinion from Akin Gump Strauss Hauer & Feld LLP, or other legal counsel of the Company, dated as of the applicable Subsequent Closing Date, in form and substance reasonably satisfactory to DOW.
(d) At each Subsequent Closing, DOW shall pay, or cause to be paid to the Company an amount in cash equal to the applicable Subsequent Funding Amount by wire transfer of immediately available funds, to an account designated by the Company at least two (2) Business Days prior to the applicable Subsequent Closing Date.
Article
4
REPRESENTATIONS AND WARRANTIES RELATING TO THE
COMPANY
Except as set forth in (i) the Company SEC Documents and publicly available not less than two (2) Business Days prior to the date hereof or (ii) the corresponding sections of the Disclosure Schedule, the Company hereby represents and warrants to DOW:
Section 4.01 Company Organization. The Company is duly formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation. The Company (a) has all requisite corporate power and authority to own or hold its properties and carry on the business of the Company as it is now being conducted and (b) is duly qualified to do business and is in good standing in each of the jurisdictions in which the ownership or holding of its properties and assets and the conduct of the Company, as applicable, requires it to be so qualified, except where the failure to be so qualified would not have, individually or in the aggregate, a Material Adverse Effect.
Section 4.02 Company Authority. The Company has the requisite power and authority to execute and deliver this Agreement, the Investor Rights Agreement, the Registration Rights Agreement, the Warrants and, to the extent it is a party thereto, any other Transaction Documents and to perform its obligations thereunder, and to consummate the transactions contemplated thereby.
Section 4.03 Company Execution and Delivery; Enforceability. The Company has taken all action necessary to authorize the execution and delivery by it of this Agreement, the Investor Rights Agreement, the Registration Rights Agreement and the Warrants and, to the extent it is a party thereto, any other Transaction Documents, the performance by it of its obligations thereunder and the consummation of the transactions contemplated thereby. No other corporate or equivalent organizational proceedings on the part of the Company are necessary to authorize this Agreement, the Investor Rights Agreement, the Registration Rights Agreement and the Warrants and, to the extent it is a party thereto, any other Transaction Documents or the consummation of transactions contemplated thereby. Each of this Agreement, the Investor Rights Agreement, the Registration Rights Agreement, the Warrants and, to the extent the Company is a party thereto, any other Transaction Documents will, when executed and delivered, have been duly executed and delivered by the Company and, assuming due execution and delivery by the other parties thereto, will, when executed and delivered, constitute a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to bankruptcy, reorganization, insolvency, moratorium and similar laws affecting creditors’ rights generally and to general principles of equity.
Section 4.04 Absence of Company Conflict. None of the execution and delivery of this Agreement, the Investor Rights Agreement, the Registration Rights Agreement, the Warrants or, to the extent it is a party thereto, any other Transaction Documents, the performance by the Company of its obligations thereunder and the consummation of the transactions contemplated thereby will violate or conflict with, constitute a default under or require any consent, waiver or approval under (a) the Company’s organizational documents, (b) any Law applicable to it or (c) any material Contract to which it is a party or by which it or its property is bound, other than, (A) in the case of clauses (b) and (c), such violations, conflicts, defaults, consents, waivers or approvals that would not, individually or in the aggregate, reasonably be expected to (i) cause a Material Adverse Effect, or (ii) prevent or materially delay the Company’s ability to perform its obligations thereunder or consummate the transactions contemplated thereby, or (B) such conflicts or defaults as may have been waived.
16
Section 4.05 Filings. Other than (a) the filing of the Certificate of Designations with the Secretary of State of the State of Delaware, (b) a current report on Form 8-K, if any, required to be filed by the Company with the SEC, (c) any applicable filing, notification or application with NASDAQ, including any required notification of listing of additional shares, (d) such filings and approvals as required to be made or obtained under any state “blue sky” laws or (e) such filings as have been made or obtained prior to the date hereof, no notice to, filing with, exemption or review by, or authorization, consent or approval of, any Governmental Authority is required to be made or obtained by the Company in connection with the consummation of the transactions contemplated hereby, including the issuance by the Company of the Preferred Shares, the Warrants and the issuance by the Company of the Common Stock issuable upon the conversion of the Preferred Shares or the exercise of the Warrants, as applicable.
Section 4.06 Company Capitalization. The authorized capital stock of the Company, and the outstanding capital stock of the Company (including securities convertible into, or exercisable or exchangeable for, capital stock of the Company) as of the Capitalization Date (as defined below) is as set forth in the most recent quarterly report on Form 10-Q (the “Latest 10-Q”) on file with the SEC as of the date hereof (the “Capitalization Date”). The outstanding shares of capital stock of the Company have been duly authorized and are validly issued and outstanding, fully paid and nonassessable. Apart from this Agreement, and with the exception of those securities set forth on Schedule 4.06 of the Disclosure Schedule, the Warrants and the Certificate of Designations and the equity interests of the Company to be issued pursuant to this Agreement, the Warrants and the Certificate of Designations, there are no outstanding options, warrants, rights to subscribe to, purchase rights, calls or commitments of any character whatsoever relating to, or securities or rights convertible into equity interests of the Company or any phantom interests or other rights linked to the value of the foregoing, or Contracts, commitments, understandings or arrangements, by which the Company is or may become bound to issue additional equity interests or options, warrants, rights to subscribe to, purchase rights, calls or commitments of any character whatsoever relating to, or securities or rights convertible into the equity interests of the Company. None of the equity interests of the Company were issued in violation of any preemptive or other subscription or similar right under any provision of applicable Law, the organizational documents of the Company or any Contract to which the Company is or was subject or bound. Except for the Class A Preferred Stock, there are no securities or rights of the Company, or Contracts, commitments, understandings or arrangements by which the Company is bound, obligating the Company to redeem or otherwise acquire any equity interests of the Company. The Company has no outstanding bonds, debentures, notes or other similar obligations, the holders of which have the right to vote (or which are convertible into or exercisable for equity interests of the Company having the right to vote) with the equity holder of the Company on any matter. There are no voting trusts or other agreements or understandings to which the Company is a party with respect to the voting of its equity interests. There are no equity interests or other equity securities issued or authorized by the Company that are senior to or pari passu with the Preferred Shares.
Section 4.07 Preferred Shares. The Preferred Shares, when issued and delivered pursuant to this Agreement at each Closing, (a) will have been duly and validly authorized, and, (b) such Preferred Shares (i) will have been duly and validly issued, fully paid and non-assessable, (ii) will not have been issued in violation of any preemptive rights, (iii) assuming the accuracy of the representations and warranties of DOW in this Agreement, will have been issued in compliance with all applicable federal and state securities laws, (iv) will have the rights, privileges and obligations set forth in the Certificate of Incorporation, the Certificate of Designations, the Bylaws, the Registration Rights Agreement and the Investor Rights Agreement and (v) will be free and clear of any and all Liens, except for such restrictions and limitations set forth in this Agreement, the Certificate of Incorporation, the Certificate of Designations, the Bylaws, the Registration Rights Agreement or in the Investor Rights Agreement or as otherwise imposed by applicable federal or state securities Laws or by or with respect to DOW or any Law applicable to DOW.
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Section 4.08 The Warrant Stock. The Common Stock issuable upon exercise of the Warrants (the “Warrant Stock”) when issued and delivered upon exercise of the Warrants in accordance with the terms of the Warrants (a) will have been duly and validly authorized, and (b) such Warrant Stock (i) will have been duly and validly issued, fully paid and non-assessable, (ii) will not have been issued in violation of any preemptive rights, (iii) assuming the accuracy of the representations and warranties of DOW in this Agreement, will have been issued in compliance with all applicable federal and state securities Laws, (iv) will have the rights, privileges and obligations of Common Stock as set forth in the Certificate of Incorporation, the Bylaws, the Investor Rights Agreement and the Registration Rights Agreement, and (v) will be free and clear of any and all Liens, except for such restrictions and limitations set forth in this Agreement, the Certificate of Incorporation, the Bylaws, the Investor Rights Agreement and the Registration Rights Agreement, or as otherwise imposed by applicable federal or state securities Laws or by or with respect to DOW or any Law applicable to DOW.
Section 4.09 Reports.
(a) Since the Lookback Date, the Company and each of its Subsidiaries has timely filed (subject to any permitted extension) all reports, registrations, documents, filings, statements and submissions, together with any amendments thereto, that it was required to file with the SEC under the Securities Act or the Exchange Act (the foregoing, collectively, the “Company Reports”). As of their respective dates of filing (or if amended prior to the Effective Date, as of the date of such amendment), the Company Reports complied in all material respects with the Securities Act and the Exchange Act, as applicable. Each Company Report, as of its date or if amended prior to the Effective Date, as of the date of such amendment, (A) did not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, and (B) complied as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act. No executive officer of the Company has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002.
(b) The Company (A) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a15(e) of the Exchange Act) to ensure that material information relating to the Company, including the consolidated Subsidiaries of the Company, required to be disclosed by the Company in reports that it files or submits under the Exchange Act is made known to the chief executive officer and the chief financial officer of the Company by others within those entities, and (B) has disclosed, including in the Latest 10-Q, based on its most recent evaluation prior to the Effective Date, to the Company’s outside auditors and the audit committee of the Company Board (x) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule 3a-15(f) of the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (y) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.
Section 4.10 No Material Adverse Effect. Prior to the applicable Closing Date, there has not been, with respect to the Company and its Subsidiaries, taken as a whole, any fact, circumstance, event, change, occurrence, condition or development that constitutes a Material Adverse Effect.
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Section 4.11 Title to Property and Assets. The Company or one of its Subsidiaries owns and has good and marketable title in fee simple to, or a valid leasehold interest or license in or valid right to use, all assets held by it, free and clear of all Liens except for (i) those matters that do not materially interfere with the use made and proposed to be made of such property by the Company and any of the Subsidiaries, (ii) those matters that could not, individually or in the aggregate, be material to the Company and its Subsidiaries on a consolidated basis, taken as a whole, (iii) Permitted Liens or (iv) Liens that do not relate to indebtedness for borrowed money and are not material to the business of the Company and its Subsidiaries on a consolidated basis, taken as a whole, or the operation thereof.
Section 4.12 Employee Benefits and Employment.
(a) Except as would not, individually or in the aggregate, reasonably be expected to be material to the business of the Company, taken as a whole, (i) there does not now exist, nor, to the knowledge of the Company, do any circumstances exist that could result in, any liability of the Company or any of its Subsidiaries with respect to any “employee benefit plan,” within the meaning of Section 3(3) of ERISA (regardless of whether subject to ERISA), that is not a Plan; (ii) no ERISA Event has occurred or is reasonably expected to occur; (iii) the fair market value of the assets of each Plan equals or exceeds the value of all accrued benefits under such Plan (whether or not vested) on a termination basis or, to the extent a deficit exists with respect to any Plan, such deficit has been fully reflected on the Financial Statements and the Interim Financial Information; (iv) all contributions required to be made to any Plan by applicable Law or regulation or by any plan document or other contractual undertaking, and all premiums due or payable with respect to insurance policies funding any Plan, for any period through the date hereof have been timely made or paid in full or, to the extent not required to be made or paid on or before the date hereof, have been fully reflected on the Financial Statements and the Interim Financial Information, in each case, if applicable; (v) each Plan has been administered in accordance with its terms; (vi) there is not now, nor, to the knowledge of the Company, do any circumstances exist that could give rise to, any requirement for the posting of security with respect to a Plan or the imposition of any Lien on the assets of the Company or any of its Subsidiaries under ERISA or the Code; (vii) there are no pending claims, lawsuits or arbitrations which have been asserted or instituted, and, to the knowledge of the Company, no set of circumstances exists which would reasonably give rise to a claim or lawsuit against any Plan, any fiduciaries thereof with respect to their duties to the Plan or the assets of any trust under any Plan which could reasonably be expected to result in direct liability of the Company or any of its Subsidiaries.
(b) Except as would not, individually or in the aggregate, reasonably be expected to be material to the business of the Company and its Subsidiaries on a consolidated basis, taken as a whole, (i) no labor organization or group of employees of the Company or any of its Subsidiaries has a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or filed with the National Labor Relations Board or any other labor relations tribunal or authority; (ii) there are no strikes, work stoppages, slowdowns, lockouts, material labor arbitrations or material labor grievances, or other material labor disputes pending or, to the knowledge of the Company, threatened against or involving the Company or any of its Subsidiaries; and (iii) each of the Company and its applicable Subsidiaries is in compliance with all applicable collective bargaining agreements to which it is a party.
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Section 4.13 Intellectual Property Rights.
(a) Except as would not, individually or in the aggregate, reasonably be expected to be material to the business of the Company and its Subsidiaries on a consolidated basis, taken as a whole, all applications, registrations, and issuances included in Company Intellectual Property are currently subsisting and, to the knowledge of the Company, if issued or registered, is valid.
(b) The Company and its Subsidiaries own and, to the knowledge of the Company, have the valid and enforceable right to use the Company Intellectual Property. Except as would not, individually or in the aggregate, reasonably be expected to be material to the business of the Company and its Subsidiaries on a consolidated basis, taken as a whole, (i) the operation of the business of the Company (including the manufacturing, licensing, marketing, importation, offer for sale, sale or use of any products or services offered or sold) as currently conducted, does not to the knowledge of the Company, infringe, misappropriate, dilute, or otherwise violate any Intellectual Property Rights of any Person; (ii) to the knowledge of the Company, no Person is infringing, misappropriating, diluting, or otherwise violating, nor to the knowledge of the Company has any other Person previously, since the Lookback Date, infringed, misappropriated, diluted, or otherwise violated, any Company Intellectual Property owned by the Company or its Subsidiaries; (iii) neither the Company nor its Subsidiaries have received or made any written claims, letters, demands, complaints, notices, or other allegations of infringement, misappropriation, dilution, or any other violation of Intellectual Property Rights involving the Company Intellectual Property since the Lookback Date; and (iv) there are no claims pending or, to the knowledge of the Company, threatened against the Company or its Subsidiaries contesting the validity, use, ownership or enforceability of any of the Company Intellectual Property owned by the Company or its Subsidiaries.
(c) The Company and its Subsidiaries have taken the reasonable steps to maintain the secrecy of their Proprietary Information relating to the Company and its Subsidiaries and to otherwise protect the Company Intellectual Property and secure ownership of material Intellectual Property Rights developed on their behalf with respect to the Company Intellectual Property. Except as would not, individually or in the aggregate, reasonably be expected to be material to the business of the Company and its Subsidiaries on a consolidated basis, taken as a whole, neither the Company nor any of its Subsidiaries has intentionally or knowingly breached any Contracts or agreements of non-disclosure or confidentiality that have not been cured.
(d) Neither the Company nor any of its Subsidiaries are party to or otherwise bound by any settlement or consent agreement, covenant not to sue, non-assertion assurance, release or other similar agreement that could reasonably be expected, individually or in the aggregate, to materially and adversely affect the Company’s or its Subsidiaries’ rights to own, use, make, transfer, encumber, assign, license, distribute, convey, sell or otherwise exploit the Company Intellectual Property.
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(e) Except as would not, individually or in the aggregate, reasonably be expected to be material to the business of the Company and its Subsidiaries on a consolidated basis, taken as a whole, (i) all of the Software developed by or for the Company or its Subsidiaries (collectively, the “Company Software”) complies with the contractual commitments relating to its use, functionality, or performance; (ii) to the knowledge of the Company, the Company Software does not contain any intentional undisclosed feature, including, without limitation, a time bomb, virus, software lock, drop-dead device, malicious logic, worm, Trojan horse, or spyware, that is capable of (or that allows any untrusted party to be capable of) accessing, modifying, deleting, damaging, disabling, deactivating, interfering with or otherwise harming any computers, networks, data or other electronically stored information, or computer programs or systems; (iii) the Company and its Subsidiaries have not disclosed, delivered, licensed or made available to any escrow agent or other Person, agreed to disclose, deliver, license or make available to any escrow agent or other Person, any source code for any Company Software, except for disclosures to employees or contractors under obligations that prohibit use or disclosure; (iv) no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time, or both) shall, or would reasonably be expected to, result in the disclosure or delivery to any third party of any source code for any Company Software; and (v) to the knowledge of the Company, the Company and its Subsidiaries have not used any Open Source Materials in such a way that will implicate any “copyleft” provisions or obligate the Company or its Subsidiaries under the terms of such licenses to distribute, license or make available to any third party the source code of any of the Company Software at no or minimal charge.
Section 4.14 Data Privacy. The Company and its Subsidiaries are and since the Lookback Date have been in material compliance with all applicable Data Protection Laws, internal policies and contractual obligations governing the privacy and security of technology assets and equipment, computers, systems, networks, hardware, software, website, applications and databases (“IT Systems”) and Personal Information and the protection of such IT Systems and Personal Information from unauthorized use, access, misappropriation or modification, other than violations that do not constitute, and would not reasonably be expected to have, a Material Adverse Effect.
Section 4.15 Environmental Matters. Except as would not, individually or in the aggregate, reasonably be expected to be material to the business of the Company and its Subsidiaries on a consolidated basis, taken as a whole:
(a) neither the Company nor any of its Subsidiaries are in violation of Environmental Law or any Permits issued pursuant to Environmental Law;
(b) neither the Company, nor any of its Subsidiaries, have received any written notice that it is in violation of Environmental Law or subject to any liability arising under Environmental Law, including with respect to any Remedial Action obligation, the subject of which is unresolved;
(c) no Proceedings are pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries, related to a violation of Environmental Law or liability arising under any Environmental Law, including with respect to any Remedial Action;
(d) neither the Company nor any of its Subsidiaries has Released any Hazardous Substances at, on or under any property owned, leased or operated by the Company or any of its Subsidiaries, or, to the knowledge of the Company, at any other location, in violation of Environmental Laws or in quantities or concentrations that require remediation by the Company or its Subsidiaries pursuant to any Environmental Laws;
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(e) neither the Company nor any of its Subsidiaries has disposed of, arranged for the disposal of, or transported any Hazardous Substances in violation of Environmental Laws and in quantities or concentrations that require remediation by the Company or its Subsidiaries pursuant to any Environmental Laws;
(f) neither the Company nor any of its Subsidiaries has contractually assumed any liabilities of third parties that arise under Environmental Law; and
(g) the Company has made available to DOW copies of all material environmental reports and audits in the care, custody or reasonable control of the Company or any of its Subsidiaries pertaining to liabilities arising under Environmental Law, including Remedial Action obligations.
Section 4.16 Real Property.
(a) As used herein, “Owned Real Property” means any land, together with all buildings, facilities, structures, fixtures, building systems and equipment, and all components thereof (including the roof, foundation and structural elements), located, situated or otherwise included in or real property located thereon, that is owned in fee by the Company or any of its Subsidiaries. With respect to the Owned Real Property, the Company confirms the following, in each case subject to Permitted Liens, and, except as would not, individually or in the aggregate, reasonably be expected to be material to the business of the Company, taken as a whole:
(i) the Company or an applicable Subsidiary owns fee simple title to the Owned Real Property;
(ii) except as set forth on Schedule 4.16(ii) of the Disclosure Schedules, to the knowledge of the Company, there is no Person in possession of any Owned Real Property other than the Company or an applicable Subsidiary, and neither the Company nor any of its Subsidiaries has leased, licensed or otherwise granted to any Person the right to use, occupy or purchase such Owned Real Property or any portion thereof;
(iii) such Owned Real Property is not subject to any Liens (other than Permitted Liens), and neither the Company nor any of its Subsidiaries is a party to any contract or option to purchase, sell, assign or otherwise acquire or dispose of, or to grant or create any Lien (other than Permitted Liens) on or affecting such Owned Real Property;
(iv) to the knowledge of the Company, such Owned Real Property is in compliance in all material respects with all applicable Permits, Laws and Orders;
(v) to the knowledge of the Company, except as would not be material to the Company and its Subsidiaries on a consolidated basis, taken as a whole, all buildings, structures, fixtures and improvements located on any Owned Real Property are in good operating condition and repair, free from structural and mechanical defects, and are in suitable and adequate condition for continued use in the Ordinary Course of Business; and
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(vi) to the knowledge of the Company, there is no pending, threatened in writing or proposed Proceeding to condemn or take by the power of eminent domain (or to purchase in lieu thereof), all or any part of such Owned Real Property, and no casualty has occurred with respect to the improvements located on any of the Owned Real Property that has not been repaired or is in the process of repair.
(b) As used herein, “Leased Real Property” means any land, together with all buildings, facilities, structures, fixtures, building systems and equipment, and all components thereof (including the roof, foundation and structural elements), located, situated or otherwise included in or real property located thereon, that is leased, subleased, or licensed by the Company or any of its Subsidiaries; “Real Property Leases” means all real property leases, subleases and licenses pursuant to which the Company or a Subsidiary have a leasehold interest in Leased Real Property, together with all modifications, amendments, supplements, extensions, renewals, guaranties, subordination and non-disturbance agreements and other agreements with respect thereto. With respect to the Leased Real Property, the Company confirms the following, in each case, subject to Permitted Liens and except as would not, individually or in the aggregate, reasonably be expected to be material to the business of the Company and its Subsidiaries on a consolidated basis, taken as a whole:
(i) the Real Property Leases are in full force and effect and are valid and enforceable in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or similar laws in effect which affect the enforcement of creditors’ rights generally or by equitable principles (regardless of whether enforcement is sought at law or in equity);
(ii) to the knowledge of the Company, there are no written or oral leases, subleases or other similar Contracts that remain in effect granting to any Person the right of use or occupancy of any Leased Real Property other than the Company and its Subsidiaries;
(iii) there is no Person in possession of any Leased Real Property other than the Company or an applicable Subsidiary, and neither the Company nor any of its Subsidiaries has assigned, transferred, conveyed or subjected to any Lien (other than Permitted Liens), any interest in a Real Property Lease;
(iv) to the knowledge of the Company, (A) the Company or its applicable Subsidiary holds or has obtained all material Permits in connection with the use and occupancy of such Leased Real Property, and (B) such Leased Real Property is in compliance in all material respects with all applicable Permits, Laws and Orders;
(v) the Company or its applicable Subsidiary is in compliance with all insurance requirements set forth in the applicable Real Property Leases affecting such Leased Real Property; and
(vi) there exist no defaults or breaches on the part of the Company or any of its Subsidiaries under such Real Property Lease nor, to the knowledge of the Company, any state of facts which, with the giving of notice or lapse of time, or both, would constitute a default by any party under such Real Property Lease.
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Section 4.17 Financial Statements. The audited consolidated financial statements and unaudited consolidated interim financial statements of the Company and the consolidated Subsidiaries (including, in each case, any related notes and schedules thereto) included in the Company SEC Documents (collectively, the “Financial Statements”) (i) when filed, complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto and (ii) fairly present in all material respects the consolidated financial position and the consolidated results of operations, cash flows and changes in stockholders’ equity of the Company and its Subsidiaries on a consolidated basis, taken as a whole, as of the dates and for the periods referred to therein in accordance with GAAP applied on a consistent basis during the periods involved (subject, in the case of interim financial statements, to normal and recurring year-end adjustments, none of which would be material, individually or in the aggregate, and the absence of notes, none of which if presented would materially differ from those presented in the audited Financial Statements). Neither the Company nor any of the Subsidiaries is a party to, or has any commitment to become a party to, any “off-balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K promulgated by the SEC), where the purpose or intended effect of such arrangement is to avoid disclosure of any material transaction involving, or material liabilities of, the Company or any Subsidiary in the Company SEC Documents.
Section 4.18 No Undisclosed Liabilities; No Breach. Except as set forth on Schedule 4.18 of the Disclosure Schedule, neither the Company nor any of its Subsidiaries has any liabilities or obligations of any nature (absolute, accrued, contingent or otherwise) which are not properly reflected or reserved against in the Financial Statements to the extent required to be so reflected or reserved against in accordance with GAAP, except for (a) liabilities that have arisen since the filing date of the latest 10-Q in the Ordinary Course of Business (none of which, individually or in the aggregate, would reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole), (b) liabilities incurred in connection with the negotiation, execution and delivery of this Agreement and the other Transaction Documents or (c) liabilities that would not, individually or in the aggregate, be expected to be material to the Company and its Subsidiaries on a consolidated basis, taken as a whole.
Section 4.19 Offering of Securities. Neither the Company nor its Subsidiaries, nor any person acting on its or their behalf, (a) has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of the Class A Preferred Shares or Warrants, (b) has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under any circumstances that would require registration of the Class A Preferred Shares or Warrants under the Securities Act or (c) has issued any securities which would be integrated with the sale of the Class A Preferred Shares and Warrants to DOW for purposes of the Securities Act, nor will the Company or any of its Subsidiaries take any action or steps that would require registration of the Class A Preferred Shares or Warrants under the Securities Act or cause the offering of the Class A Preferred Shares or Warrants to be integrated with other offerings. The offer and sale of Class A Preferred Shares and Warrants by the Company and its Subsidiaries to DOW pursuant to this Agreement will be exempt from the registration requirements of the Securities Act.
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Section 4.20 Litigation and Other Proceedings. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, there is no (A) pending or, to the knowledge of the Company, threatened in writing, claim, action, suit, investigation or proceeding, against the Company or any of its Subsidiaries or to which any of their assets are subject nor is the Company or any of its Subsidiaries subject to any order, judgment or decree or (B) unresolved violation, criticism or exception by the SEC with respect to any Company Report or relating to any SEC examinations or inspections of the Company or any of its Subsidiaries, in each case, that has not previously been disclosed with the SEC in any Company Report.
Section 4.21 Compliance with Laws. Except as would not, individually or in the aggregate, reasonably be expected to be material to the Company and its Subsidiaries on a consolidated basis, taken as a whole, the Company and its Subsidiaries have all permits, licenses, franchises, authorizations, orders and approvals of, and have made all filings, applications and registrations with, Governmental Authorities that are required in order to permit them to own or lease the properties and assets that they presently own or lease and to carry on their business as presently conducted and that are material to the business of the Company or its Subsidiaries.
Section 4.22 Compliance with Economic Sanctions. Neither the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any director, manager, officer, agent, employee or controlled Affiliate of the Company, or any other Person acting on behalf of the Company or the Company’s Subsidiaries, is in violation of any applicable export control, import/customs, economic sanctions, or anti-bribery laws or regulations. Neither the Company nor any of its Subsidiaries will, directly or knowingly indirectly, use any payments received by it pursuant to this Agreement, or lend, contribute or otherwise make available such proceeds to any joint venture partner or other Person or entity, for the purpose of unlawfully financing the activities of or business with any Person that is the subject or target of any U.S. sanctions administered by OFAC, or any country or territory that is the subject of a comprehensive economic sanctions embargo imposed by OFAC (as of the date of this Agreement, Cuba, Iran, North Korea, and Crimea, so-called Donetsk People’s Republic, and so-called Luhansk People’s Republic regions of Ukraine).
Section 4.23 Material Customers and Material Suppliers. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, since the Lookback Date, neither the Company nor any of its Subsidiaries has received any oral or written notice from any top twenty (20) supplier or customer of the Company or its Subsidiaries, as measured by aggregate expenditures or revenues, as applicable, during the twelve (12) months ended as of the Latest 10-Q to the effect that any such supplier or customer will, and to the knowledge of the Company, no such supplier or customer will, stop, materially decrease the rate of, or materially change the terms (whether related to payment, price or otherwise) with respect to, supplying or buying materials, products or services to or from the Company or any of its Subsidiaries.
Section 4.24 Brokers and Finders. Except for as set forth on Schedule 4.24 of the Disclosure Schedule, no broker, finder or investment banker is entitled to any financial advisory, brokerage, finder’s or other fee or commission in connection with this Agreement or the transactions contemplated hereby based upon arrangements made by or on behalf of the Company for which DOW, the Company or any of its Subsidiaries could have any liability.
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Section 4.25 Government Contracts.
(a) the Company is, and at all times since the Lookback Date has been, in material compliance with (i) all material terms and conditions of each Government Contract, including all clauses, provisions and requirements incorporated expressly, by reference or by operation of Law therein, and (ii) all requirements of applicable Laws pertaining to any Government Contract or Government Bid, except where noncompliance would not, individually or in the aggregate, reasonably be expected to be material to the Company and its Subsidiaries on a consolidated basis, taken as a whole.
(b) Except as would not, individually or in the aggregate, reasonably be expected to be material to the Company and its Subsidiaries on a consolidated basis, taken as a whole, since the Lookback Date, the Company has received no written or oral notice of any claims or disputes between the Company, on the one hand, and any Governmental Authority, prime contractor, subcontractor or other Person, on the other hand, arising under or relating to any Government Contract or Government Bid.
(c) Since the Lookback Date, with respect to each Government Contract and Government Bid: (i) all material pricing discounts, credits, and refunds have been properly reported to and credited or paid to the customer as required by such Government Contract; (ii) the Company has no present intention to terminate, discontinue or materially curtail performance of any material Government Contract and the Company has all material Governmental Authorizations and all third-party certifications and approvals required for performance; (iii) neither the Company nor any of its officers or employees have obtained, disclosed, received or used contractor bid or proposal information, source selection information, or other non-public information in violation of applicable Law or any material Government Contract; (iv) neither the Company nor any of its senior management employees has violated in any material respect any applicable Law associated with the employment of (or discussions concerning possible employment with) current or former officials or employees of a Governmental Authority; and (v) there is no material assignment of revenues or anticipated revenues under any Government Contract (including any assignment pursuant to the Assignment of Claims Act, 31 U.S.C. § 3727) for which any notice, filing, consent, acknowledgment or other action required by applicable Law or the applicable Government Contract has not been duly made, obtained or satisfied.
(d) Except as would not, individually or in the aggregate, reasonably be expected to be material to the Company and its Subsidiaries on a consolidated basis, taken as a whole, since the Lookback Date, with respect to each Government Contract and each Government Bid: (i) all of the Company’s representations and certifications executed, acknowledged, or set forth in or pertaining to such Government Contract or Government Bid were accurate and complete as of their effective date, and the Company has complied with all such representations and certifications; (ii) all invoices and claims for payment, reimbursement or adjustment submitted by the Company were either (a) accurate and complete in all material respects as of their respective submission dates or (b) corrected if containing an error or omission when submitted; (iii) the Company has not received any notice of termination for default, cure notice or show cause notice pertaining to such Government Contract; (iv) the Company has not received any formal claims or assessments of penalties or liquidated damages in connection with respect to any Government Contract; (v) the Company’s cost accounting systems and internal controls with respect to Government Contracts have been in compliance in all material respects with all applicable requirements of such Government Contracts and Laws and (vi) neither the Company nor any of its respective directors, officers or employees has been under or subject to any administrative, civil or criminal investigation, or indictment, information, subpoena or administrative proceeding by any Governmental Authority relating to any Government Contract or Government Bid.
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(e) With respect to each Government Contract and each Government Bid, since the Lookback Date, the Company has made all disclosures of any material violation of applicable Law or material misconduct required to be disclosed by FAR 52.203-13 or by the terms of any Government Contract or Government Bid.
(f) Since the Lookback Date, neither the Company nor any of its respective officers, or directors, or, to the knowledge of the Company, employees have (i) used any funds of the Company to offer or provide any unlawful kickback, bribe, gift or gratuity, or (ii) made any unlawful expenditures relating to political activity. The Company has not received notice of any payment identified in (i) or (ii) above (hereinafter referred to as an “Unlawful Payment”), and the Company has such controls as are required by Law to detect and prevent, if possible, any such Unlawful Payments.
(g) Neither the Company nor any of its respective directors or officers or its employees is (or, since the Lookback Date, has been) debarred or suspended, or proposed for debarment or suspension, from doing business with any Governmental Authority or is (or during such period was) the subject of a finding of ineligibility for contracting with any Governmental Authority (excluding for this purpose ineligibility to bid on certain contracts due to generally applicable bidding requirements). Since the Lookback Date, the Company has not been convicted of, or had a civil judgment rendered against it for, violating any Law in connection with any Government Contract or Government Bid.
(h) Since the Lookback Date, to the knowledge of the Company, neither the Company nor any of its respective officers, directors, or employees, has engaged in the performance of any work that has resulted in an unmitigated Organizational Conflicts of Interest as set forth in 48 C.F.R. Subpt. 9.5 that would reasonably be expected to materially impair the Company's ability to compete for, be awarded, or perform any Government Contract material to the Company and its Subsidiaries, taken as a whole.
(i) the Company is in material compliance with cybersecurity, information-security, and incident-reporting obligations arising from its Government Contracts, which may include regimes and frameworks such as DFARS 252.204-7012 and NIST 800-171. To the knowledge of the Company, since the Lookback Date, the Company has not experienced any cybersecurity incident, data breach, or compromise of Controlled Unclassified Information (CUI) that was required to be, but was not, reported to a Governmental Authority within the required period. To the knowledge of the Company, since the Lookback Date, the Company has not been found non-compliant with cybersecurity, information-security, and incident-reporting obligations arising from its Government Contracts.
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(j) the Company has not been subject to any Foreign Ownership, Control, or Influence (“FOCI”) that would require mitigation under the National Industrial Security Program Operating Manual or any related Governmental Authority or Defense Counterintelligence and Security Agency guidance. The transactions contemplated by this Agreement are not expected to create any FOCI that would adversely affect the Company’s eligibility for or ability to maintain any facility clearance, personnel clearance, or access to classified information; provided, however, that the Parties acknowledge that the determination of whether the transactions contemplated hereby create FOCI is subject to review by the Defense Counterintelligence and Security Agency or other applicable Governmental Authority.
Section 4.26 Taxes. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, since the Lookback Date the Company and its Subsidiaries have timely filed (taking into account any applicable extensions) all material Tax Returns of the Company and its Subsidiaries required to be filed and have paid all material Taxes shown thereon to be due, in each case other than Taxes being contested in good faith for which adequate reserves have been established in accordance with applicable accounting principles.
Section 4.27 No Audits. Except as set forth on Schedule 4.27 of the Disclosure Schedule, since the Lookback Date, no audit, examination, investigation, or other proceeding in respect of Taxes has been asserted in writing or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries for any taxable period ending on or prior to the date hereof, other than matters that have been adequately reserved for or resolved or would not, individually or in the aggregate, reasonably be expected to be material to the Company and its Subsidiaries on a consolidated basis, taken as a whole.
Article
5
DOW REPRESENTATIONS AND WARRANTIES
DOW hereby represents and warrants to the Company:
Section 5.01 Authority. The Secretary of War of the United States has authority to enter into the Transaction Documents.
Section 5.02 Funding.
(a) Appropriated funds are available and authorized in Fiscal Year 2026 in accordance with all applicable Laws to fund DOW’s obligated expenditures under the Transaction Documents, including payment in full of the Total Preferred Purchase Price at such times and in such increments as are contemplated hereby.
Section 5.03 Outside Counsel and Third-Party Advisors; No Conflicts Determination. DOW has retained its third-party advisors and legal counsel subject to this Agreement in accordance with all applicable Laws. DOW has vetted the engagement of each of the third-party advisors and legal counsel and has confirmed that such retention does not create any conflicts of interest for DOW or the Company.
Section 5.04 Investment Representations. DOW acknowledges that it has not been formed for the specific purpose of acquiring the Class A Preferred Stock and Warrants. DOW acknowledges that it owns investments in excess of $5,000,000.
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Article
6
COVENANTS
Section 6.01 Public Disclosure. Following the Initial Closing, each Party shall not, and shall cause its respective Affiliates not to, make or issue any public announcement or press release to the general public with respect to this Agreement or the Transaction Documents or the transactions contemplated hereby or thereby without the prior written consent of the other Party hereto; provided, however, that each Party may make any public disclosure it reasonably believes in good faith is required by applicable Law (including disclosure requirements under the Securities Act or Exchange Act, as applicable, or any other securities laws) or any national securities exchange (in which case the disclosing party will use its commercially reasonable efforts to advise the other Party prior to making the disclosure to the extent legally permissible and reasonably practicable under the circumstances). Notwithstanding anything else herein, nothing shall prohibit either Party from making public disclosures materially consistent with previous disclosures made in accordance with this provision.
Section 6.02 Tax Matters. To the extent that any transfer, documentary, sales, use, energy, excise, goods and services, value added, stamp, registration, filing, recording or other similar taxes, duties, charges, fees or other amounts are imposed upon or incurred in connection with the transactions contemplated by the Transaction Documents (“Transfer Taxes”), such Transfer Taxes shall be borne by the Company and the Company shall indemnify and hold DOW and its respective Affiliates harmless from and against any such Transfer Taxes. The Parties shall cooperate, in good faith, to minimize any Transfer Taxes to the extent permitted by Law, including by providing exemption certificates or other required documentation to the extent that the Parties are legally permitted to such certificates or other documentation.
Section 6.03 No Conflicts. Consistent with DOW’s responsibility to maintain the integrity of every transaction, procurement and funding arrangement, DOW will, to the maximum extent practicable and permitted by law, implement appropriate controls and measures to avoid any need to exclude the Company and its Affiliates (including the Company and its Subsidiaries) from, or limit their ability to compete for, any future opportunities, including opportunities for transactions, procurements and other funding arrangements, with, between, or involving DOW because of this Agreement or the other Transaction Documents (including based on any allegation of DOW’s impairment of objectivity or bias as a result of DOW’s or any other Governmental Authority of the United States owning Equity Securities of the Company) or the transactions contemplated hereby and thereby.
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Section 6.04 Use of Proceeds; Project Efforts.
(a) The Company shall use all proceeds received by the Company from the issuance and sale of the Class A Preferred Stock (the “Proceeds”), to fund the Projects in a manner consistent with the development plans and budgets made available to the Investor prior to the receipt of such Proceeds and in no event will Proceeds be used in connection with a Project in an aggregate amount in excess of the applicable “Approved Funding Amount” for such Project set forth on the Specified Projects Schedule without the consent of DOW (the “Permitted Uses”). The Company shall not use, apply, transfer, advance, loan, invest, distribute, pledge, encumber, or otherwise make available any Proceeds for any purpose other than the Permitted Uses without the prior written consent of DOW. No use of Proceeds shall be deemed a Permitted Use merely because it relates generally to, arises in connection with, or may indirectly benefit a Project. Without limiting the foregoing, the Proceeds shall not be used for general working capital, corporate overhead, payroll, bonuses, dividends or distributions, debt repayment or prepayment, other capital expenditures unrelated to a Project, acquisitions, investments, or expenses incurred before Initial Closing, or any other purpose not specifically and affirmatively described as a Permitted Use; provided, however, that the foregoing restriction shall not prohibit the use of Proceeds to reimburse or pay for costs and expenses that were incurred by the Company or any of its Subsidiaries prior to the Initial Closing to the extent such costs and expenses (i) are directly attributable to the development, advancement, or preparation of a Project, (ii) are identified with reasonable specificity in a written request submitted by the Company to DOW, and (iii) are approved by DOW. The Company shall maintain complete and accurate books and records regarding the receipt, holding, and use of all Proceeds. Upon request of DOW, the Company shall promptly provide a reasonably detailed written accounting of all Proceeds, including the amount of Proceeds received, the amount expended, the date and purpose of each expenditure, and such supporting documentation as DOW may reasonably request.
(b) The Company shall use, and cause its Subsidiaries to use, their respective commercially reasonable efforts to advance each Project toward Completion (as defined in the Investor Rights Agreement). The Company shall not be deemed to have breached this Section 6.04(b) solely as a result of any delay in the completion of a Project that is attributable to circumstances outside the Company's reasonable control, provided that the Company shall use its commercially reasonable efforts to mitigate any such delays. The Company shall provide, on or promptly following the date of filing of the Company’s quarterly report on Form 10-Q with the SEC, DOW with quarterly written updates regarding the status of each Project, including progress against the applicable milestones, material developments affecting completion of and budget for such Project.
Section 6.05 Board Matters. For so long as the DOW Investors owns any Preferred Shares, the Company hereby confirms and agrees that it shall not and it shall cause its Subsidiaries not to nominate individuals for election as a member of the board of directors of the Company and any of its Subsidiaries who are not citizens of the United States, the United Kingdom, New Zealand, Australia or Canada without the consent of the DOW Investors, and the Company shall oppose the election of any shareholder nominee for director who is not a United States citizen.
Section 6.06 Compliance with Laws and Permits. From and after the Initial Closing Date, the Company shall and shall cause its Subsidiaries to (i) maintain all material permits and licenses required under applicable Law for its then current operations and to comply with all requirements for such permits and licenses, in all material respects and (ii) comply with all applicable Laws in all material respects.
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Article
7
MISCELLANEOUS
Section 7.01 Survival. The representations and warranties set forth in Article 4 and Article 5 of the Agreement, shall survive for a period of eighteen (18) months after the Initial Closing or each Subsequent Closing as such representations and warranties, covenants and provisions apply to such Initial Closing or Subsequent Closing. All covenants to the extent required to be performed at or after the Initial Closing or each Subsequent Closing, as applicable, shall survive until fully performed in accordance with their terms. Notwithstanding anything herein to the contrary, any termination of this Agreement shall not limit the liability of any Party for any breach of its obligations prior to such termination.
Section 7.02 Governing Law. This Agreement and the rights and obligations of the Parties hereunder shall be governed by, and construed and interpreted in accordance with, the Federal Law of the United States (“Federal Law”). To the extent that Federal Law does not specify the appropriate rule of decision for a particular matter at issue, it is the intention and agreement of the Parties that the Law of the State of New York (without giving effect to its conflict of laws principles) shall be adopted as the governing rule of decision.
Section 7.03 WAIVER OF JURY TRIAL. THE PARTIES EACH HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY PROCEEDING (A) ARISING UNDER THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREE AND CONSENT THAT ANY SUCH PROCEEDING SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
Section 7.04 Jurisdiction Involving Company. By execution and delivery of this Agreement, the Company irrevocably and unconditionally:
(a) submits for itself and its property in any Proceeding against it arising out of or in connection with this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of (i) the courts of the United States for the Southern District of New York, (ii) any other federal court of competent jurisdiction in any other jurisdiction where it or any of its property may be found, and (iii) appellate courts from any of the foregoing;
(b) consents that any such Proceeding may be brought in or removed to such courts, and waives any objection, or right to stay or dismiss any Proceeding, that it may now or hereafter have to the venue of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agrees not to plead or claim the same; and
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(c) agrees that, subject to any and all rights of appeal provided by applicable Law, judgment against it in any such Proceeding shall be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment or otherwise as provided by applicable Law, a certified or exemplified copy of which judgment shall be conclusive evidence of the fact and amount of such Party’s obligation.
Section 7.05 Jurisdiction Involving Governmental Entities. By execution and delivery of this Agreement, DOW, to the maximum extent permitted by Law, irrevocably and unconditionally acknowledges that each of the Transaction Documents is an express contract within the meaning of 28 U.S.C. § 1491(a), and submits for itself in any claim arising from, related to, or in connection with a Transaction Document to the jurisdiction of (a) the U.S. Court of Federal Claims; (b) any other federal court or tribunal of competent jurisdiction; and (c) appellate courts from any of the foregoing.
Section 7.06 Specific Performance. The Company acknowledges that the rights of DOW to consummate the transactions contemplated hereby are unique and recognizes and affirms that in the event of a breach of this Agreement by the Company, money damages may be inadequate and DOW would have no adequate remedy at Law. It is accordingly agreed that DOW shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, without the necessity of showing any actual damages or that monetary damages would not afford an adequate remedy, and without the necessity of posting any bond or other security, this being in addition to any other remedy to which it is entitled at Law or in equity.
Section 7.07 Expenses. Except as otherwise expressly provided in this Agreement or any other Transaction Document, each Party will bear its respective expenses incurred in connection with the preparation, execution and performance of this Agreement and the other Transaction Documents.
Section 7.08 Amendment. This Agreement cannot be modified or amended except in writing duly executed by each Party.
Section 7.09 Notices. All notices, consents, waivers and other communications under this Agreement must be in writing and will be deemed given to a Party when (a) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid) (provided a copy is also sent via email), (b) sent by e-mail or (c) received or rejected by the addressee, if sent by certified mail, return receipt requested (provided a copy is also provided via email), in each case to the following addresses or e-mail addresses and marked to the attention of the individual (by name or title) designated below (or to such other address, e-mail address or individual as a Party may designate by notice to the other Party):
if to DOW:
United States Department of War
| Address: | 1000 Defense Pentagon, Washington, DC 20301-1000 |
| Attention: | Office of the Deputy Assistant Secretary of War |
(Industrial Base Resilience)
| E-mail: | [*] |
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if to the Company:
The Elmet Group Co.
| Address: | 280 Fore Street, Suite 301 |
Portland, Maine 04101
| Attention: | Office of General Counsel |
| E-mail: | [*] |
with a simultaneous copy (which will not constitute notice) to:
Akin Gump Strauss Hauer & Feld LLP
| Address: | One Bryant Park |
Bank of America Tower
New York, New York 10036-6745
| Attention: | [*] |
| E-mail: | [*] |
Section 7.10 Waiver. The rights and remedies of the Parties are cumulative and not alternative. Neither any failure nor any delay by any Party in exercising any right, power or privilege under this Agreement or any of the documents referred to in this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. To the maximum extent permitted by applicable Law, (a) no claim or right arising out of this Agreement or any of the documents referred to in this Agreement can be discharged by one Party, in whole or in part, by a waiver or renunciation of the claim or right unless in a written document signed by the other Party, (b) no waiver that may be given by a Party will be applicable except in the specific instance for which it is given and (c) no notice to or demand on one Party will be deemed to be a waiver of any obligation of that Party or of the right of the Party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.
Section 7.11 No Third-Party Beneficiaries; No Assignment. Except as expressly stated herein, nothing expressed or referred to in this Agreement will be construed to give any Person, other than the Parties, any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement except such rights as may inure to a successor or permitted assignee. Neither Party may assign its rights or delegate its obligations under this Agreement without the prior written consent of the other Party, and any such attempted assignment or delegation without such consent shall be void ab initio and of no effect; provided, however, that subject to applicable Law, any DOW Investor may assign all or a portion of its rights, or delegate all or a portion of its obligations, under this Agreement to one or more Qualified Governmental Authorities without the prior written consent of the Company; provided, further, however, that no such assignment shall release such DOW Investors from any of their respective obligations hereunder.
Section 7.12 Further Action. Upon the request of any Party to this Agreement, and subject to the terms and conditions hereof, except as prohibited by applicable Law, the other Party will (a) execute and deliver, at its own expense, any other documents reasonably acceptable to such Party, and (b) take any other actions as reasonably necessary to carry out the intent of this Agreement.
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Section 7.13 Severability. If any term, covenant, condition or provision of this Agreement or any other Transaction Document or the application thereof to any Person or circumstance shall, at any time or to any extent, be invalid or unenforceable, the remainder of this Agreement or such other Transaction Document (as applicable), or the application of such term or provision to Persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term, covenant, condition and provision of this Agreement or such other Transaction Document (as applicable) shall be valid and be enforced to the fullest extent permitted by applicable Law.
Section 7.14 Entire Agreement. This Agreement (along with the other Transaction Documents and the other documents delivered contemporaneously with or pursuant to this Agreement and the other Transaction Documents) constitutes a complete and exclusive statement of the terms of the agreement between the Parties with respect to its subject matter.
Section 7.15 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument. Facsimile or electronic signatures may be used in place of original signatures on this Agreement. The Parties intend to be bound by the signatures on any facsimile or electronic document, and hereby waive any defenses to the enforcement of the terms of this Agreement based on the use of a facsimile or electronic signature.
Section 7.16 Construction. For purposes of this Agreement, unless otherwise expressly specified herein, the words “hereof”, “herein”, “hereunder” and words of similar import will refer to this Agreement as a whole and not to any particular section or subsection of this Agreement, and reference to a particular section of this Agreement will include all subsections thereof. The word “including” means including without limitation. Definitions will be equally applicable to both the singular and plural forms of the terms defined, and references to the masculine, feminine or neuter gender will include each other gender. All references in this Agreement to any Section, Exhibit or Schedule will, unless otherwise specified, be deemed to be a reference to a Section, Exhibit or Schedule of or to this Agreement, in each case as such may be amended in accordance herewith, all of which are made a part of this Agreement. Unless the context clearly requires otherwise, when used herein “or” shall not be exclusive (i.e., “or” shall mean “and/or”). Any reference herein to “$” or “dollars” means United States dollars.
Section 7.17 Disclosure Schedule and Exhibits. All Exhibits and the Disclosure Schedule attached hereto are hereby incorporated herein by reference and made a part hereof. Certain information set forth in the Disclosure Schedule is included solely for informational purposes and may not be required to be disclosed pursuant to this Agreement. The disclosure of any information shall not be deemed to constitute an acknowledgment that such information is required to be disclosed in connection with the representations and warranties made in this Agreement, nor shall such information be deemed to establish a standard of materiality. Disclosure of any allegations with respect to any alleged breach, violation or default under any contractual or other obligation, or any Law, is not an admission that such breach, violation or default has occurred. A disclosure made in any single section of the Disclosure Schedule shall be deemed to apply to each other section of the Disclosure Schedule solely to the extent that it is readily apparent on the face of such disclosure that such disclosure applies to such other section.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly and validly executed as of the date first set forth above.
| UNITED STATES DEPARTMENT OF WAR | |||
| By: | /s/ Michael Duffey | ||
| Name: | HON Michael Duffey | ||
| Title: | Undersecretary of War for Acquisition & Sustainment | ||
| THE ELMET GROUP CO. | |||
| By: | /s/ Peter V. Anania | ||
| Name: | Peter V. Anania | ||
| Title: | Chief Executive Officer and Chairman | ||
ANNEX I
Specified Projects Schedule
| 1) | NAMED MAC AND OTHER DOW PROJECTS SUPPORTING CAPACITY AND QUALIFICATIONS. |
Approved Funding Amount: $86,000,000 - Each project below will be funded with a defined capital plan which will be approved by the board of directors of the Company (the “Board”).
Specific project categories are: [**]
| 2) | DEFINED COMPANY INFRASTRUCTURE PROJECTS. |
Approved Funding Amount: $77,000,000 – each with a defined capital plan which will be approved by the Board.
| ● | [**] |
| ● | [**] |
| ● | [**] |
| ● | [**] |
| ● | [**] |
| 3) | EXPEDITED UPGRADE AND RESTART OF THE SPRINGER / BLUE MOON APT PLANT AND TUNGSTEN MINE IN NEVADA. |
Approved Funding Amount: $150,000,000.
The development and restart will be defined by a capital and investment plan approved by the Board. The APT Plant Project will be run via a Company majority-owned enterprise, “Elmet APT” aka “Elmet Refining”. The Project will encompass upgrading and restarting the APT plant currently under care and maintenance capable of phase one capacity of 2,000 tons a year. The Project will also encompass a long-term offtake agreement with the Springer Mine which is co-located on the Project site.
The “Project 3 Condition”:
The obligation of DOW to consummate any Subsequent Closing pursuant to a Subsequent Funding Notice that identifies Project 3 as an expected use of proceeds shall be subject to the satisfaction or waiver in writing by DOW, in its sole discretion, of DOW receiving the following documentation, which documentation shall be reasonably satisfactory to DOW (such approval not to be unreasonably withheld, conditioned, or delayed):
[**]
| 4) | [**] |
The “Project 4 Condition”:
The obligation of DOW to consummate any Subsequent Closing pursuant to a Subsequent Funding Notice that identifies Project 4 as an expected use of proceeds shall be subject to the satisfaction or waiver in writing by DOW, in its sole discretion, of DOW receiving substantially final versions of all transaction documents relating to [**], and such transaction documents must be reasonably satisfactory to DOW (such approval not to be unreasonably withheld, conditioned, or delayed).
| 5) | TRANSACTION FEES AND WORKING CAPITAL |
Approved Funding Amount: $37,000,000
Working Capital to fund additional mine expansion, any project overage cost and offtake agreements, transaction fees and work force expansion to service the above projects designed to strengthen United States’s tungsten industrial base.
ANNEX II
Subsequent Funding Periods Schedule
Total Subsequent Funding Commitment Amount: $250,000,000
| Subsequent Funding Period | Funding Period Commitment Amount | Subsequent Closing Preferred Shares |
| Beginning 6 months from the Initial Closing and ending 12 months from the Initial Closing | $50,000,000 | 50,000 |
| Beginning 12 months from the Initial Closing and ending 18 months from the Initial Closing | $50,000,000 | 50,000 |
| Beginning 18 months from the Initial Closing and ending 24 months from the Initial Closing | $50,000,000 | 50,000 |
| Beginning 24 months from the Initial Closing and ending 30 months from the Initial Closing | $50,000,000 | 50,000 |
| Beginning 30 months from the Initial Closing and ending 36 months from the Initial Closing | $50,000,000 | 50,000 |
SCHEDULE 4.06
SCHEDULE 4.16(ii)
SCHEDULE 4.18
SCHEDULE 4.24
SCHEDULE 4.27
Exhibit A
Form of Certificate of Designations
Exhibit B
Form of Investor Rights Agreement
Exhibit C
Form of Registration Rights Agreement
Exhibit D
Form of Warrant
Exhibit E
Form of Certificate of Incorporation
Exhibit F
Form of Bylaws
Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
by and among
THE ELMET GROUP CO.
and
THE UNITED STATES DEPARTMENT OF WAR
dated as of September 14, 2026
TABLE OF CONTENTS
| Page | ||
| Article I Resale Shelf Registration | 1 | |
| Section 1.01 Resale Shelf Registration Statement | 1 | |
| Section 1.02 Effectiveness Period | 2 | |
| Section 1.03 Subsequent Shelf Registration Statement | 2 | |
| Section 1.04 Supplements and Amendments | 2 | |
| Section 1.05 Subsequent Investor Notice | 3 | |
| Section 1.06 Underwritten Offering | 3 | |
| Section 1.07 Take-Down Notice | 5 | |
| Section 1.08 Piggyback Registration | 5 | |
| Section 1.09 Rule 415; Removal | 7 | |
| Section 1.10 Conversion to Form S-3 | 8 | |
| Article II Additional Provisions Regarding Registration Rights | 8 | |
| Section 2.01 Registration Procedures | 8 | |
| Section 2.02 Suspension | 11 | |
| Section 2.03 Expenses of Registration | 12 | |
| Section 2.04 Holdback Agreement | 12 | |
| Section 2.05 Information by Investors | 13 | |
| Section 2.06 Rule 144 | 14 | |
| Section 2.07 Other Registration Rights | 14 | |
| Article III Indemnification | 14 | |
| Section 3.01 Indemnification by Corporation | 14 | |
| Section 3.02 Notification | 15 | |
| Section 3.03 Contribution | 16 | |
| Section 3.04 Survival | 16 | |
| Article IV Transfer, Assumption and Termination of Registration Rights | ||
| Section 4.01 Transfer of Registration Rights | 16 | |
| Section 4.02 Termination of Registration Rights | 16 | |
| Article V Miscellaneous | 17 | |
| Section 5.01 Governing Law | 17 | |
| Section 5.02 Jurisdiction | 17 | |
| Section 5.03 Jurisdiction Involving Governmental Entities | 17 | |
| Section 5.04 WAIVER OF JURY TRIAL | 18 | |
| Section 5.05 Expenses | 18 | |
| Section 5.06 Notices | 18 | |
| Section 5.07 Amendments and Waivers | 19 | |
| Section 5.08 Remedies | 19 | |
| Section 5.09 No Third-Party Beneficiaries | 19 | |
| Section 5.10 Further Assurances | 19 | |
| Section 5.11 Severability | 19 | |
| Section 5.12 Entire Agreement | 20 | |
| Section 5.13 Counterparts | 20 | |
| Section 5.14 Construction | 20 |
| Exhibit List | ||
| Exhibit A – Defined Terms |
i
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of September 14, 2026 by and among The Elmet Group Co., a Delaware corporation (the “Corporation”), and the United States Department of War (the “DOW” and, together with the respective successors of the DOW and any Person that becomes a party hereto pursuant to, and in accordance with, Section 4.01, the “Investors” and each, an “Investor,” and together with the Corporation, the “Parties,” and each, a “Party”). Capitalized terms that are used but not defined elsewhere herein are defined in Exhibit A.
WHEREAS, the Corporation and the DOW are entering into this Agreement for the purpose of granting certain registration and other rights to the Investors; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
Article I
Resale Shelf Registration
Section 1.01 Resale Shelf Registration Statement. Subject to the other applicable provisions of this Agreement, the Corporation shall prepare and file no later than 60 days after the date hereof (the “Initial Filing Deadline”), a registration statement registering the resale from time to time by the Investors, on a delayed or continuous basis pursuant to Rule 415 of the Securities Act, of all of the Registrable Securities on Form S-3 (which registration statement may be in the form of a prospectus supplement to an existing registration statement) (except if the Corporation is not then eligible to register for resale the Registrable Securities on Form S-3, then such registration shall be on another appropriate form, including a resale registration statement registering the resale from time to time by the Investors, including on a delayed or continuous basis pursuant to Rule 415 of the Securities Act, of all of the Registrable Securities on Form S-1, and shall provide for the registration of such Registrable Securities for resale by the Investors in accordance with any reasonable method of distribution elected by the Investors, which method is permissible under the Securities Act pursuant to such applicable registration form) (the “Resale Shelf Registration Statement”), and, unless the Corporation has elected to file the Resale Shelf Registration Statement in the form of a prospectus supplement to an existing registration statement, shall use its reasonable best efforts to cause such Resale Shelf Registration Statement to be declared effective by the SEC as promptly as is reasonably practicable after the filing thereof (it being agreed that, unless the Corporation has elected to file the Resale Shelf Registration Statement in the form of a prospectus supplement to an existing registration statement, the Resale Shelf Registration Statement shall be an automatic shelf registration statement that shall become effective upon filing with the SEC pursuant to Rule 462(e) if Rule 462(e) is available to the Corporation). The Shelf Registration Statement may, at the Corporation’s sole discretion, also cover any other securities of the Corporation that may be sold by the Corporation or any other securityholders so long as inclusion of such other securities of the Corporation does not limit the number of Registrable Securities registered for resale pursuant to such Shelf Registration Statement.
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Section 1.02 Effectiveness Period. Once declared effective, the Corporation shall, subject to the other applicable provisions of this Agreement, use its reasonable best efforts to cause the Resale Shelf Registration Statement to be continuously effective and usable until such time as there are no longer any Registrable Securities (the “Effectiveness Period”).
Section 1.03 Subsequent Shelf Registration Statement. Subject to the other applicable provisions of this Agreement, if any Shelf Registration Statement ceases to be effective under the Securities Act for any reason at any time during the Effectiveness Period (and, at such time, there is not another effective Subsequent Shelf Registration Statement), the Corporation shall use its reasonable best efforts to as promptly as is reasonably practicable cause such Shelf Registration Statement to again become effective under the Securities Act (including obtaining the prompt withdrawal of any order suspending the effectiveness of such Shelf Registration Statement), and shall use its reasonable best efforts to as promptly as is reasonably practicable amend such Shelf Registration Statement in a manner reasonably expected to result in the withdrawal of any order suspending the effectiveness of such Shelf Registration Statement or file an additional registration statement, which may be in the form of a prospectus supplement to an existing registration statement (a “Subsequent Shelf Registration Statement”) registering the resale from time to time by the Investors of their Registrable Securities as of the time of such filing. If a Subsequent Shelf Registration Statement is filed, unless the Corporation has elected to file the Resale Shelf Registration Statement in the form of a prospectus supplement to an existing registration statement, the Corporation shall use its reasonable best efforts to (a) cause such Subsequent Shelf Registration Statement to be declared effective under the Securities Act as promptly as reasonably practicable after the filing thereof (it being agreed that, unless the Corporation has elected to file the Resale Shelf Registration Statement in the form of a prospectus supplement to an existing registration statement, the Subsequent Shelf Registration Statement shall be an automatic shelf registration statement that shall become effective upon filing with the SEC pursuant to Rule 462(e) if Rule 462(e) is available to the Corporation) and (b) keep such Subsequent Shelf Registration Statement continuously effective and usable until the end of the Effectiveness Period. Any such Subsequent Shelf Registration Statement shall be a registration statement on Form S-3 to the extent that the Corporation is eligible to use such form. Otherwise, such Subsequent Shelf Registration Statement shall be on another appropriate form, including Form S-1, and shall provide for the registration of such Registrable Securities for resale by the Investors in accordance with any reasonable method of distribution elected by the Investors, which method is permissible under the Securities Act pursuant to such applicable registration form. The Subsequent Shelf Registration Statement may, at the Corporation’s sole discretion, also cover any other securities of the Corporation that may be sold by the Corporation or any other securityholders so long as inclusion of such other securities of the Corporation does not limit the number of Registrable Securities registered for resale pursuant to such Shelf Registration Statement.
Section 1.04 Supplements and Amendments. The Corporation shall supplement and amend any Shelf Registration Statement if required by the Securities Act or the rules, regulations or instructions applicable to the registration form used by the Corporation for such Shelf Registration Statement.
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Section 1.05 Subsequent Investor Notice. If a Person becomes an Investor in accordance with, and is entitled to the benefits of, this Agreement after a Shelf Registration Statement becomes effective under the Securities Act, the Corporation shall as promptly as is reasonably practicable following receipt of written notice by the Corporation of such Person becoming an Investor and requesting for its name to be included as a selling securityholder in the prospectus related to the Shelf Registration Statement with respect to its Registrable Securities (a “Subsequent Investor Notice”):
(a) if required and permitted by applicable law, file with the SEC a supplement to the related prospectus or a post-effective amendment to the Shelf Registration Statement so that such Investor is named as a selling securityholder in the Shelf Registration Statement and the related prospectus in such a manner as to permit such Investor to deliver a prospectus to purchasers of the Registrable Securities in accordance with applicable law;
(b) if, pursuant to Section 1.05(a), the Corporation shall have filed a post-effective amendment to the Shelf Registration Statement that is not automatically effective, use its reasonable best efforts to cause such post-effective amendment to become effective under the Securities Act as promptly as is reasonably practicable; and
(c) notify such Investor as promptly as is reasonably practicable after the effectiveness under the Securities Act of any post-effective amendment filed pursuant to Section 1.05(a).
Section 1.06 Underwritten Offering.
(a) Subject to any applicable securities laws and the other applicable provisions of this Agreement, after the later of (i) the Resale Shelf Registration Statement becoming effective and (ii) September 14, 2027, any Investor with Registrable Securities included on such Resale Shelf Registration Statement deliver a written notice to the Corporation (the “Underwritten Offering Notice”) specifying that the resale of some or all of the Registrable Securities subject to the Shelf Registration Statement is intended to be conducted through an underwritten offering (an “Underwritten Offering”), including an a “block trade” or a “bought deal” (an “Underwritten Block Trade”); provided that any such Investors may not, without the Corporation’s prior written consent, request an Underwritten Offering the reasonably anticipated gross proceeds of which shall be less than $50 million (unless the participating Investors are proposing to sell all of their remaining Registrable Securities). As promptly as reasonably practicable, but no later than three Business Days after receipt of an Underwritten Offering Notice, the Corporation shall give written notice (the “Underwritten Offering Holder Notice”) of such Underwritten Offering Notice to all other Investors. The Corporation shall include in such Underwritten Offering (x) the Registrable Securities of the requesting Investors and (y) the Registrable Securities of any other Investor which shall have made a written request to the Corporation for inclusion in such Underwritten Offering (which request shall specify the maximum number of Registrable Securities intended to be disposed of by such Investor) within two Business Days after the receipt of the Underwritten Offering Holder Notice. Except as otherwise set forth in Section 1.06(d), the Corporation shall, as promptly as reasonably practicable (and in any event within eight Business Days after the receipt of an Underwritten Offering Notice), use its commercially reasonable efforts to facilitate such Underwritten Offering.
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(b) In the event of an Underwritten Offering, Investors holding a majority of the Registrable Securities participating in an Underwritten Offering upon consultation with the Corporation (not to be unreasonably withheld, conditioned or delayed), shall select the managing underwriter(s) to administer the Underwritten Offering. The Corporation, the Investors or any other stockholders (subject to the Investors’ consent as set forth below) participating in an Underwritten Offering will enter into an underwriting agreement in customary form with the managing underwriter or underwriters selected for such offering. All determinations as to whether to complete any Underwritten Offering and as to the timing, manner, price and other terms of any Underwritten Offering contemplated by this Section 1.06 shall be determined by the Investors holding a majority of the Registrable Securities participating in such Underwritten Offering, and the Corporation shall use its commercially reasonable efforts to cause any Underwritten Offering to occur in accordance with such determinations as promptly as practicable, in each case, subject to any applicable securities laws and the other applicable provisions of this Agreement.
(c) If the managing underwriter or underwriters advise the Corporation and the Investors participating in such Underwritten Offering in writing that in its or their good faith opinion the number of Registrable Securities (and any other securities proposed or requested to be included in such offering by the Corporation or by other securityholders) exceeds the number of securities which can be sold in such offering in light of market conditions or is such so as to adversely affect the success of such offering, the Corporation will include in such offering only such number of securities that can be sold without adversely affecting the marketability of the offering, which securities will be so included in the following order of priority: (i) first, the Registrable Securities of the Investors that have requested such Underwritten Offering pursuant to this Section 1.06, allocated pro rata among such Investors on the basis of the percentage of the Registrable Securities then-owned by such Investors; (ii) second, any other securities of the Corporation that the Corporation desires to include; and (iii) third, subject to the terms of any agreement with other securityholders that have registration rights, the securities that have been requested to be so included by such other securityholders.
(d) If an Investor desires to engage in an Underwritten Block Trade, then notwithstanding the time periods otherwise set forth in this Agreement, such Investor may notify the Corporation of the Underwritten Block Trade not less than five Business Days (unless a longer period is agreed to by such Investor) prior to the day such offering is first anticipated to commence. Subject to any applicable securities laws and the other applicable provisions of this Agreement, the Corporation will as expeditiously as possible use its commercially reasonable efforts to facilitate such Underwritten Block Trade.
(e) The Corporation shall not be required to effect (i) an Underwritten Offering or Underwritten Block Trade within 60 days following the consummation of any Underwritten Offering (including any Underwritten Block Trade) or any public offering by the Company, (ii) more than an aggregate of three Underwritten Offerings and Underwritten Block Trades pursuant to this Section 1.06 in any twelve-month period, or (iii) more than an aggregate of four Underwritten Offerings and Underwritten Block Trades pursuant to this Section 1.06 in total.
(f) At any time prior to the “pricing” of any Underwritten Offering requested under this Agreement, any Investor may revoke or withdraw any Underwritten Offering Notice, in each case by providing written notice to the Corporation. An Underwritten Offering Notice that has been revoked or withdrawn shall not count as one of the permitted Underwritten Offerings; provided, however, that after one such withdrawal, unless such withdrawal is made during any Suspension under Section 2.02, any further withdrawal shall count as one of the permitted Underwritten Offerings under this Agreement.
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Section 1.07 Take-Down Notice. Subject to the other applicable provisions of this Agreement, at any time that any Shelf Registration Statement is effective, if any Investor delivers a notice to the Corporation (a “Take-Down Notice”) stating that such Investor intends to effect the resale of all or part of its Registrable Securities included by it on any Shelf Registration Statement (a “Shelf Offering”) which may or may not be an Underwritten Offering (conducted in accordance with the terms and conditions of Section 1.06), and stating the number of Registrable Securities to be included in such Shelf Offering, then, if then required by the Securities Act to update the Shelf Registration Statement with required information about such Investor, the Corporation shall amend, subject to the other applicable provisions of this Agreement or supplement the Shelf Registration Statement (including by means of one or more prospectus supplements) as may be necessary in order to enable such Registrable Securities to be sold and distributed pursuant to the Shelf Offering. The number of Shelf Offerings that do not constitute an Underwritten Offering shall be unlimited, subject to applicable securities laws.
Section 1.08 Piggyback Registration.
(a) If the Corporation or any holder of Common Stock proposes to file a registration statement under the Securities Act with respect to an offering of Common Stock or securities convertible into, or exchangeable or exercisable for, Common Stock, or to conduct an Underwritten Offering of Common Stock or securities convertible into, or exchangeable or exercisable for, Common Stock, pursuant to a then-effective shelf registration statement (any such event, a “Piggyback Event”), in either case whether or not for sale for its own account other than a Piggyback Event (i) pursuant to Section 1.01 or 1.03 hereof, (ii) on Form S-4, Form S-8 or any successor forms thereto or any successor forms thereto, (iii) filed in connection with an employee stock option or other benefit plan, (iv) for a rights offering or an exchange offer or offering of securities solely to the Corporation’s existing stockholders, (v) for an offering of debt, preferred equity or other securities convertible, exchangeable or exercisable into equity securities of the Corporation, including depositary shares or (vi) for a dividend reinvestment plan, then the Corporation shall give prompt written notice of such Piggyback Event, which notice shall be given no later than 10 days prior to the filing date of the registration statement, preliminary prospectus supplement or any free writing prospectus, as applicable (the “Piggyback Notice”), to the Investors. The Piggyback Notice shall offer such Investors the opportunity to include (or cause to be included) in such Piggyback Event the number of shares of Registrable Securities as each such Investor may request. Subject to Section 1.08(b), the Corporation shall include in each Piggyback Event all Registrable Securities with respect to which the Corporation has received written requests for inclusion therein promptly following delivery of the Piggyback Notice but in any event no later than six days following the receipt of the Piggyback Notice (each, a “Piggyback Request”).
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(b) In the event of a Piggyback Event that is an Underwritten Offering, the Corporation shall use commercially reasonable efforts to cause the managing underwriter or underwriters of the proposed Underwritten Offering to permit Investors who have timely submitted a Piggyback Request following their receipt of a Piggyback Notice in connection with such offering to include in such offering all Registrable Securities included in each Investor’s Piggyback Request on the same terms and subject to the same conditions as such Common Stock included in the offering. Notwithstanding the foregoing, if the managing underwriter or underwriters of such Underwritten Offering advise the Corporation in writing that in its or their good faith opinion the number of securities exceeds the number of securities which can be sold in such offering in light of market conditions or is such so as to adversely affect the success of such offering, the Corporation will include in such offering only such number of securities that can be sold without adversely affecting the marketability of the offering, which securities will be so included in the following order of priority: (i) first, to the extent the Piggyback Event relates to the offer and sale of securities for the Corporation’s account, the securities proposed to be sold by the Corporation for its own account or to the extent the Piggyback Event relates to the offer and sale of securities of the Corporation for the account of a stockholder other than an Investor, the securities to be sold by such stockholder (or such other allocation between Corporation and stockholder securities as may be provided in the agreement with such stockholder); (ii) second, the Registrable Securities of the Investors that have requested to participate in such Underwritten Offering and the shares of Common Stock issuable upon exercise of the Broker’s Warrant that the holders thereof have requested to include in such Underwritten Offering, allocated pro rata among such Investors and the holders of the Broker’s Warrant on the basis of the percentage of the Registrable Securities then owned by such Investors and the holders of the Broker’s Warrant, as applicable; and (iii) third, any other securities of the Corporation that have been requested to be included in such offering. Investors may, prior to the earlier of the (A) effectiveness of the registration statement (if applicable) and (B) the time at which the offering price or underwriter’s discount is determined with the managing underwriter or underwriters, withdraw their request to be included in such registration pursuant to this Section 1.08. The Corporation (whether on its own good faith determination or as the result of a request for withdrawal by persons pursuant to separate written contractual obligations) may withdraw a registration statement filed in connection with a Piggyback Event at any time prior to the effectiveness of such registration statement (or any related Underwritten Offering prior to the pricing thereof).
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Section 1.09 Rule 415; Removal. If at any time the SEC takes the position that the offering of some or all of the Registrable Securities in a registration statement on Form S-1 or Form S-3 filed pursuant to Section 1.01 or 1.03 is not eligible to be made on a delayed or continuous basis under the provisions of Rule 415 under the Securities Act (provided, however, the Corporation shall be obligated (unless it obtains written consent otherwise from the Investor(s)) to use diligent efforts to advocate with the SEC for the registration of all of the Registrable Securities in accordance with (a) any publicly-available written or oral guidance of the SEC staff, or any comments, requirements or requests of the SEC staff and (b) the Securities Act) or requires an Investor to be named as an “underwriter,” the Corporation shall (i) promptly notify each holder of Registrable Securities thereof (or in the case of the SEC requiring an Investor to be named as an “underwriter,” such Investor) and (ii) use reasonable best efforts to persuade the SEC that the offering contemplated by such registration statement is a valid secondary offering and not an offering “by or on behalf of the issuer” as defined in Rule 415 and that none of the Investors is an “underwriter.” Investors shall have the right to select one legal counsel designated thereby to review and oversee any registration or matters pursuant to this Section 1.09, including participation in any meetings or discussions with the SEC regarding the SEC’s position and to comment on any written submission made to the SEC with respect thereto. No such written submission with respect to this matter shall be made to the SEC to which the applicable Investors’ counsel reasonably objects. In the event that, despite the Corporation’s reasonable best efforts and compliance with the terms of this Section 1.09, the SEC refuses to alter its position, the Corporation shall (A) remove from such registration statement such portion of the Registrable Securities (the “Removed Shares”) and/or (B) agree to such restrictions and limitations on the registration and resale of the Registrable Securities as the SEC may require to assure the Corporation’s compliance with the requirements of Rule 415; provided, however, that the Corporation shall not agree to name any Investor as an “underwriter” in such registration statement without the prior written consent of such Investor. In the event of a share removal pursuant to this Section 1.09, the Corporation shall give the applicable Investors at least five Business Days’ prior written notice along with the calculations as to such Investor’s allotment. Any shares to be removed pursuant to Rule 415 shall be removed in the following order: (i) first, securities proposed to be sold by the Corporation for its own account or, if for the account of a stockholder other than an Investor, the securities to be sold by such stockholder (or such other allocation between Corporation and stockholder securities as may be provided in the agreement with such stockholder), and (ii) second, securities of the Investors, allocated among the Investors on a pro rata basis based on the aggregate amount of Registrable Securities held by the Investors. In the event of a share removal of the Investors pursuant to this Section 1.09, the Corporation shall promptly register the resale of any Removed Shares pursuant to Section 1.03 hereof and in no event shall the filing of such registration statement on Form S-1 or subsequent registration on Form S-3 filed pursuant to the terms of this Article I hereof be counted against the Underwritten Offerings and Underwritten Block Trades allowed by any Investor pursuant to Section 1.06(e) hereof. Following the effectiveness of the registration statement registering all the Registrable Securities other than the Removed Shares, and until such time as the Corporation has registered all of the Removed Shares for resale pursuant to Rule 415 on an effective registration statement, the Corporation shall not be able to defer the filing of a registration statement pursuant to Section 2.02 hereof.
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Section 1.10 Conversion to Form S-3. In the event the Corporation files a Resale Shelf Registration Statement on Form S-1, the Corporation shall use commercially reasonable efforts to convert such Resale Shelf Registration Statement on Form S-1 to a Resale Shelf Registration Statement on Form S-3 as soon as reasonably practicable after the Corporation becomes a Seasoned Issuer or a Well-Known Seasoned Issuer, or is otherwise eligible to use Form S-3.
Article II
Additional Provisions Regarding Registration Rights
Section 2.01 Registration Procedures. Subject to the other applicable provisions of this Agreement (including Section 2.02), in the case of each registration or Underwritten Offering of Registrable Securities under this Agreement, the Corporation shall:
(a) prepare and file with the SEC such amendments (including post-effective amendments) and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to keep such registration statement effective for the period specified in Article I and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement in accordance with the Investors’ intended method of resale set forth in such registration statement for such period;
(b) furnish to the legal counsel for the Investors who are including Registrable Securities in such registration (the “Selling Stockholders”) copies of the registration statement and the prospectus included therein (including each preliminary prospectus but excluding copies of any exhibits to, or documents incorporated by reference in, such registration statement or any prospectus) proposed to be filed and provide such legal counsel a reasonable opportunity to review and comment on such registration statement;
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(c) if requested by the managing underwriter or underwriters in connection with an Underwritten Offering, or the Selling Stockholders, include in any prospectus supplement or post-effective amendment such information as the managing underwriter or underwriters, if any, or the Selling Stockholders may reasonably request in order to permit the intended method of resale of such securities and use reasonable best efforts to make any required filings of such prospectus supplement or post-effective amendment as soon as reasonably practicable after the Corporation has received such request;
(d) in the event that the Registrable Securities are being offered in an Underwritten Offering, furnish to the Selling Stockholders participating in such Underwritten Offering and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus and final prospectus (in each case, not including copies of exhibits thereto or documents incorporated by reference therein) as the Selling Stockholders or such underwriters may reasonably request in order to facilitate such Underwritten Offering;
(e) notify the Selling Stockholders at any time when a prospectus relating to the Registrable Securities is required to be delivered under the Securities Act or of the Corporation’s discovery of the occurrence of any event as a result of which the prospectus included in such registration statement, as then in effect, includes a Misstatement, and, subject to Section 2.02, at the request of the Selling Stockholders, prepare promptly and furnish to the Selling Stockholders a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include a Misstatement;
(f) use reasonable best efforts to register and qualify (or exempt from such registration or qualification) the securities covered by such registration statement under such other securities or “blue sky” laws of such jurisdictions within the United States as shall be reasonably requested in writing by the Selling Stockholders; provided, however, that the Corporation shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdictions where it would not otherwise be required to qualify but for this subsection, (ii) take any action that would subject it to general service of process in any such jurisdictions or (iii) subject itself to taxation in any such jurisdictions;
(g) in the event that the Registrable Securities are being offered in an Underwritten Offering, enter into an underwriting agreement, on terms reasonably acceptable to the Corporation, in accordance with the applicable provisions of this Agreement;
(h) in connection with an Underwritten Offering, cause its officers to use their reasonable best efforts support the marketing of the Registrable Securities covered by such offering (including customary assistance with “road shows” or other similar marketing efforts);
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(i) in connection with an Underwritten Offering, furnish, or use reasonable best efforts to cause to be furnished, at the Corporation’s expense, and to the extent required by and in accordance with (and subject to the satisfaction of the other conditions set forth in) the applicable underwriting agreement, (i) on the date that such Registrable Securities are delivered to the underwriters for sale (the “Delivery Date”), (A) an opinion, dated the Delivery Date, of legal counsel for the Corporation, in form and substance as is customarily given to underwriters in an Underwritten Offering, addressed to the underwriters (or their representative(s)), (B) a “negative assurance letter,” dated the Delivery Date, of legal counsel for the Corporation, in form and substance as is customarily given to underwriters in an Underwritten Offering, addressed to the underwriters (or their representative(s)), (ii) on the pricing date for such Underwritten Offering, a “cold comfort” letter, dated as of such pricing date, from the independent certified public accountants of the Corporation and a customary bring down of such letter as of the Delivery Date, in form and substance as is customarily given by independent certified public accountants to underwriters (or their representative(s)) in an Underwritten Offering, addressed to the underwriters (or their representative(s)), and (iii) cause such authorized officers of the Corporation to execute customary certificates as may be reasonably requested by any underwriter or selling stockholder(s) of such Registrable Securities;
(j) use reasonable best efforts to list the Registrable Securities with any securities exchange on which the Common Stock is then listed;
(k) provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement;
(l) promptly make available for inspection by any Selling Stockholders, any underwriter participating in any Underwritten Offering pursuant to any registration statement hereunder, and any attorney, accountant or other agent or representative retained by any such Selling Stockholder or underwriter (collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Corporation (collectively, the “Records”), as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Corporation’s officers, directors and employees to supply all information and participate, upon reasonable prior written notice and during regular business hours, in customary due diligence sessions, in each case, reasonably requested by any such Inspector in connection with such registration statement; provided, however, that, unless the disclosure of such Records is necessary to avoid or correct a misstatement or omission in the registration statement or the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, the Corporation shall not be required to provide any information under this subparagraph (l) if (i) such information is available on EDGAR, (ii) the Corporation believes, after consultation with counsel for the Corporation, that to do so would cause the Corporation to forfeit an attorney-client privilege that was applicable to such information, or (iii) the Corporation has requested and been granted from the SEC confidential treatment of such information or the Corporation reasonably determines in good faith that such Records are confidential and so notifies the Inspectors in writing unless, prior to furnishing any such information, such Selling Stockholder requesting such information agrees, and causes each of its Inspectors, to enter into a confidentiality agreement on terms reasonably acceptable to the Corporation; provided, further, that each Selling Stockholder agrees that it and its Affiliates will not use any information obtained pursuant to this clause (l) for any purpose other than the applicable offering, and will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give prompt notice to the Corporation and allow the Corporation, at its expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential;
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(m) cooperate with the Selling Stockholders and each underwriter or agent participating in the disposition of Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA, including the use of reasonable best efforts to obtain (if required) FINRA’s preclearance or pre-approval of the registration statement and applicable prospectus upon filing with the SEC;
(n) promptly notify the Selling Stockholders (i) when the prospectus or any prospectus supplement or post-effective amendment related to the registration of the Corporation’s Common Stock has been filed and, with respect to such registration statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC or other federal or state governmental authority for amendments or supplements to such registration statement or related prospectus or to amend or to supplement such prospectus or for additional information related to the so-registered Common Stock, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of such registration statement or the initiation of any proceedings for such purpose or (iv) of the receipt by the Corporation of written 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; and
(o) facilitate the removal of the restrictive legend on any Registrable Securities if (i) such Registrable Securities are sold pursuant to an effective registration statement in accordance with the plan of distribution described therein, (ii) such Registrable Securities may be sold by the applicable Investor free of restrictions without regard to Rule 144(b) (or any similar rule) under the Securities Act or (iii) such Registrable Securities have been sold, assigned or otherwise transferred pursuant to Rule 144 or another exemption. The Corporation shall use its commercially reasonable efforts to cooperate with the applicable Investor covered by this Agreement to effect removal of the legend on such Registrable Securities pursuant to this Section 2.01(o). The Corporation shall bear all direct costs and expenses associated with the removal of a legend pursuant to this Section 2.01(o).
Section 2.02 Suspension. The Corporation shall be entitled, as set forth below, to (x) defer any registration of such Registrable Securities and shall have the right not to file and not to cause the effectiveness of any registration covering such Registrable Securities, (y) suspend the use of any prospectus and registration statement covering such Registrable Securities, and (z) require the Investors to suspend any offerings or sales of such Registrable Securities pursuant to a registration statement, if the Corporation provides notice (without notice of the nature or details of such events) to the Investors that it has determined that such registration or offering would (i) require the Corporation to make an Adverse Disclosure, (ii) of the happening of any event described in Section 2.01(e), Section 2.01(n)(ii), Section 2.01(n)(iii), or Section 2.01(n)(iv) or (iii) that it has determined that a Blackout Event has occurred (a “Suspension”). The Corporation shall be entitled to a Suspension on no more than two occasions in any calendar year and for not more than 45 consecutive days or for a total not to exceed 90 days in any 12-month period. If the Corporation defers any registration of Registrable Securities in response to an Underwritten Offering Notice, or requires the Investors to suspend any Underwritten Offering, the Investors shall be entitled to withdraw such Underwritten Offering Notice and if they do so, such request shall not be treated for any purpose as the delivery of an Underwritten Offering Notice pursuant to Section 1.06.
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Section 2.03 Expenses of Registration. All Registration Expenses incurred in connection with any registration shall be borne by the Corporation, provided, for the avoidance of doubt, that each Investor participating in an offering shall pay all applicable underwriting discounts and commissions, brokers’ commissions, stamp duty and stock transfer taxes and similar costs, if any, on the Registrable Securities sold by such Investor.
Section 2.04 Holdback Agreement. If during the Effectiveness Period the Corporation files a registration statement (other than in connection with the registration of securities issuable pursuant to an employee stock option, stock purchase or similar plan or pursuant to a merger, exchange offer or a transaction of the type specified in Rule 145(a) under the Securities Act) with respect to an Underwritten Offering of Common Stock or securities convertible into, or exchangeable or exercisable for, such securities or otherwise informs the Investors that it intends to conduct such an offering utilizing an effective registration statement, the Investors shall, if requested by the managing underwriter or underwriters, enter into a customary “lock-up” agreement relating to the sale, offering or distribution of Registrable Securities, in the form reasonably requested by the managing underwriter or underwriters (in each case on substantially the same terms and conditions as all other stockholders who execute such customary “lock-up” agreements with respect to the Common Stock or securities convertible into, or exchangeable or exercisable for, such securities), covering the period commencing on the date of the prospectus or other offering document pursuant to which such offering may be made and continuing until no more than 60 days from the date of such prospectus or other offering document, or such shorter period as shall be required by any director, executive officer or other stockholder who is required to execute a “lock-up” agreement; provided that such obligation shall only apply where (i) all “Section 16” executive officers, directors and other stockholders that beneficially own at least 10% of the outstanding Common Stock of the Corporation party hereto or to other agreements with the Corporation containing corresponding requirements are similarly bound, and (ii) the terms of the Investors’ lock-up are no more restrictive than the terms of the lock-ups applicable to any other stockholder who has registration rights with respect to the Common Stock or securities convertible into, or exchangeable or exercisable for, such securities (and, if the Corporation agrees to waive any such lock-up for any such other stockholder, the Corporation shall also waive the Investors’ lock-up to the same extent).
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Section 2.05 Information by Investors. The Investor or Investors included in any registration shall furnish to the Corporation such information regarding such Investor or Investors and their Affiliates, the Registrable Securities held by them and the distribution proposed by such Investor or Investors and their Affiliates as the Corporation may reasonably request and as shall be required in connection with any registration, qualification or compliance referred to in this Agreement. It is understood and agreed that the obligations of the Corporation under Article I are conditioned on the timely provisions of the foregoing information by such Investor or Investors and, without limitation of the foregoing, will be conditioned on compliance by such Investor or Investors with the following:
(a) such Investor or Investors will, and will use commercially reasonable efforts to cause their respective Affiliates to, cooperate with the Corporation in connection with the preparation of the applicable registration statement and prospectus and, for so long as the Corporation is obligated to keep such registration statement effective, such Investor or Investors will and will cause their respective Affiliates to, provide to the Corporation, in writing and in a timely manner, for use in such registration statement (and expressly identified in writing as such), all information regarding themselves and their respective Affiliates and such other information as may be required by applicable law to enable the Corporation to prepare or amend such registration statement, any related prospectus and any other documents related to such offering covering the applicable Registrable Securities owned by such Investor or Investors and to maintain the currency and effectiveness thereof;
(b) during such time as such Investor or Investors and their respective Affiliates may be engaged in a distribution of the Registrable Securities, such Investor or Investors will, and they will cause their Affiliates to, comply with all laws applicable to such distribution, including Regulation M promulgated under the Exchange Act, and, to the extent required by such laws, will, and will use commercially reasonable efforts to cause their Affiliates to, among other things (i) not engage in any stabilization activity in connection with the securities of the Corporation in contravention of such laws; (ii) distribute the Registrable Securities acquired by them solely in the manner described in the applicable registration statement and (iii) if required by applicable law, cause to be furnished to each agent or broker-dealer to or through whom such Registrable Securities may be offered, or to the offeree if an offer is made directly by such Investor or Investors or their respective Affiliates, such copies of the applicable prospectus (as amended and supplemented to such date) and documents incorporated by reference therein as may be required by such agent, broker-dealer or offeree;
(c) such Investor or Investors shall, and they shall cause their respective Affiliates to, (i) permit the Corporation and its representatives to examine such documents and records and will supply in a timely manner any information as they may be reasonably requested to provide in connection with the offering or other distribution of Registrable Securities by such Investor or Investors and (ii) execute, deliver and perform under any agreements and instruments reasonably requested by the Corporation or its representatives to effectuate such registered offering, including opinions of counsel and questionnaires;
(d) on receipt of any notice from the Corporation of the occurrence of any of the events specified in Section 2.01(e), Section 2.01(n)(ii), Section 2.01(n)(iii), Section 2.01(n)(iv) or Section 2.02, or that otherwise requires the suspension by such Investor or Investors and their respective Affiliates of the offering, sale or distribution of any of the Registrable Securities owned by such Investor or Investors, such Investors shall, and they shall cause their respective Affiliates to, cease offering, selling or distributing the Registrable Securities owned by such Investor or Investors until the offering, sale and distribution of the Registrable Securities owned by such Investor or Investors may recommence in accordance with the terms hereof and applicable law; and
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(e) In so far as this Section 2.05 applies to the DOW or any successor Investor to the DOW that is an agency or instrumentality of the U.S. Government, the Corporation shall not request, and neither the DOW nor any successor Investor shall provide, any information that would not otherwise be subject to disclosure under the Freedom of Information Act, 5 U.S.C. § 552 (FOIA).
Section 2.06 Rule 144 . With a view to making available the benefits of Rule 144 to the Investors, the Corporation agrees that, for so long as an Investor owns Registrable Securities, the Corporation will use its reasonable best efforts to: (a) make and keep public information available, as those terms are understood and defined in Rule 144, at all times after the date of this Agreement, (b) so long as an Investor owns Registrable Securities, upon request, furnish to the Investor in writing a statement by the Corporation as to its compliance with the reporting requirements of the Exchange Act and (c) take such further action as any Investor may reasonably request, all to the extent required from time to time to enable the Investors to sell Registrable Securities without registration under the Securities Act within the limitations of the exemption provided by Rule 144.
Section 2.07 Other Registration Rights. The Corporation represents and warrants that (a) except for the Broker’s Warrant, it has not granted, and is not subject to, any registration rights and (b) it is not subject to any shelf, demand or piggyback registration rights that are inconsistent with or that in any way violate or subordinate the rights granted to Investors hereby. Following the date hereof, the Corporation shall not grant any shelf, demand or piggyback registration rights that are senior to, or pari passu with or otherwise conflict with the rights granted to the Investors hereunder to any stockholder or any other Person without the prior written consent of (a) the Investors holding a majority of Registrable Securities and (b) the DOW or any DOW Permitted Transferee then holding Registrable Securities.
Article III
Indemnification
Section 3.01 Indemnification by Corporation. To the fullest extent permitted by applicable law, the Corporation will, with respect to any Registrable Securities covered by a registration statement or prospectus, indemnify and hold harmless each Selling Stockholder and, if a Selling Stockholder is a person other than an individual, such Selling Stockholder’s officers, directors, employees, agents, representatives and Affiliates, and each Person, if any, that controls a Selling Stockholder within the meaning of Section 15 of the Securities Act, and each underwriter thereof, if any, and each Person who controls any such underwriter within the meaning of Section 15 of the Securities Act (collectively, the “Corporation Indemnified Parties”), from and against any and all expenses, claims, losses, damages, costs (including costs of preparation and reasonable attorney’s fees and any legal or other fees or expenses actually incurred by such party in connection with any investigation or proceeding), judgments, fines, penalties, charges, amounts paid in settlement and other liabilities, joint or several, (or actions in respect thereof) (collectively, “Losses”) to the extent caused by, resulting from, arising out of or based on a Misstatement or alleged Misstatement, or any violation by the Corporation of the Securities Act, the Exchange Act, any state securities law or any rules or regulations thereunder applicable to the Corporation and (without limiting the preceding portions of this Section 3.01), the Corporation will reimburse each of the Corporation Indemnified Parties for any reasonable and documented out-of-pocket legal expenses and any other reasonable and documented out-of-pocket expenses actually incurred in connection with investigating, defending or, subject to the last sentence of this Section 3.01, settling any such Losses or action, as such expenses are incurred; provided that the Corporation’s indemnification obligations shall not apply to amounts paid in settlement of any Losses or action if such settlement is effected without the prior written consent of the Corporation (which consent shall not be unreasonably withheld, conditioned or delayed), nor shall the Corporation be liable to an Investor in any such case for any such Losses or action to the extent that it arises out of or is based upon a violation or alleged violation of any state or federal law (including any claim arising out of or based on any Misstatement or alleged Misstatement) which occurs in reliance upon and in conformity with written information regarding such Investor furnished to the Corporation by such Investor expressly for use in connection with such registration by any such Investor.
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Section 3.02 Notification. If any Person shall be entitled to indemnification under this Article III (each, an “Indemnified Party”), such Indemnified Party shall give prompt notice to the party required to provide indemnification (each, an “Indemnifying Party”) of any claim or of the commencement of any proceeding as to which indemnity is sought. The Indemnifying Party shall have the right, exercisable by giving written notice to the Indemnified Party as promptly as is reasonably practicable after the receipt of written notice from such Indemnified Party of such claim or proceeding, to assume, at the Indemnifying Party’s expense, the defense of any such claim or litigation, with counsel reasonably satisfactory to the Indemnified Party and, after notice from the Indemnifying Party to such Indemnified Party of its election to assume the defense thereof, the Indemnifying Party will not (so long as it shall continue to have the right to defend, contest, litigate and settle the matter in question in accordance with this paragraph) be liable to such Indemnified Party hereunder for any legal expenses and other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof; provided, however, that an Indemnified Party shall have the right to employ separate counsel in any such claim or litigation, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless the Indemnifying Party shall have failed within a reasonable period of time to assume such defense and the Indemnified Party is or would reasonably be expected to be materially prejudiced by such delay, in which case the fees and expenses of one separate counsel will be at the Indemnifying Party’s expense. The failure of any Indemnified Party to give notice as provided herein shall relieve an Indemnifying Party of its obligations under this Article III only to the extent that the failure to give such notice is materially prejudicial or harmful to such Indemnifying Party’s ability to defend such action. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the prior written consent of each Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed), consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. The indemnity agreements contained in this Article III shall not apply to amounts paid in settlement of any claim, loss, damage, liability or action if such settlement is effected without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed. The indemnification set forth in this Article III shall be in addition to any other indemnification rights or agreements that an Indemnified Party may have. An Indemnifying Party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such Indemnifying Party with respect to such claim, unless in the reasonable judgment of any Indemnified Party a conflict of interest may exist between such Indemnified Party and any other Indemnified Parties with respect to such claim.
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Section 3.03 Contribution. If the indemnification provided for in this Article III is held by a court of competent jurisdiction to be unavailable to an Indemnified Party, other than pursuant to its terms, with respect to any Losses or action referred to therein, then, subject to the limitations contained in this Article III, the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses or action in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party, on the one hand, and the Indemnified Party, on the other, in connection with the actions, statements or omissions that resulted in such Losses or action, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party, on the one hand, and the Indemnified Party, on the other hand, shall be determined by reference to, among other things, whether any action in question, including any Misstatement or alleged Misstatement, has been made (or omitted) by, or relates to information supplied by such Indemnifying Party or such Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent any such action, statement or omission. The Corporation and the Investors agree that it would not be just and equitable if contribution pursuant to this Section 3.03 was determined solely upon pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding sentence of this Section 3.03. Notwithstanding the foregoing, the amount any Investor (other than the DOW, any DOW Permitted Transferee or any successor or transferee Investor to the DOW that is an agency or instrumentality of the U.S. Government) will be obligated to contribute pursuant to this Section 3.03 will be limited to an amount equal to the net proceeds received by such Investor in respect of the Registrable Securities sold pursuant to the registration statement which gives rise to such obligation to contribute. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. For the avoidance of doubt, the contribution requirements of this Section 3.03 shall not apply to the DOW, any DOW Permitted Transferee or any successor or transferee Investor to the DOW that is an agency or instrumentality of the U.S. Government.
Section 3.04 Survival. The indemnification provided for under this Article III shall survive the sale or other transfer of the Registrable Securities and the termination of this Agreement.
Article IV
Transfer, Assumption and Termination of Registration Rights
Section 4.01 Transfer of Registration Rights. The rights under this Agreement shall not be transferred or assigned without the prior written consent of the Corporation (not to be unreasonably withheld, conditioned or delayed); provided, however, that the registration rights granted hereby may be transferred if held by the DOW, to a DOW Permitted Transferee, provided that any such DOW Permitted Transferee shall not be entitled to the rights provided in this Agreement unless such DOW Permitted Transferee of registration rights hereunder agrees to be bound by the terms and conditions hereof and executes and delivers to the Corporation a duly executed Assignment and Joinder Agreement. To the extent the Corporation consents to such transfer or assignment (not to be unreasonably withheld, conditioned or delayed), the transferee or assignee must agree in writing to be bound by, and subject to, this Agreement as an Investor.
Section 4.02 Termination of Registration Rights. The rights of any particular Investor to cause the Corporation to register securities under Article I shall terminate with respect to such Investor upon the date upon which such Investor no longer holds any Registrable Securities. This Agreement shall terminate on the date on which all shares of Common Stock issuable (or actually issued) upon exercise of the Warrants cease to be Registrable Securities.
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Article V
Miscellaneous
Section 5.01 Governing Law. This Agreement and the rights and obligations of the parties hereunder shall be governed by, and construed and interpreted in accordance with, the Federal Law of the United States (“Federal Law”). To the extent that Federal Law does not specify the appropriate rule of decision for a particular matter at issue, it is the intention and agreement of the parties hereto that the Law of the State of New York (without giving effect to its conflict of laws principles) shall be adopted as the governing rule of decision.
Section 5.02 Jurisdiction Involving Non-Government Entities.
(a) By execution and delivery of this Agreement, the Corporation irrevocably and unconditionally:
(i) submits for itself and its property in any Proceeding against it arising out of or in connection with this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of (i) the courts of the United States for the Southern District of New York, (ii) any other federal court of competent jurisdiction in any other jurisdiction where it or any of its property may be found, and (iii) appellate courts from any of the foregoing;
(ii) consents that any such Proceeding may be brought in or removed to such courts, and waives any objection, or right to stay or dismiss any Proceeding, that it may now or hereafter have to the venue of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agrees not to plead or claim the same; and
(iii) agrees that, subject to any and all rights of appeal provided by applicable Law, judgment against it in any such Proceeding shall be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment or otherwise as provided by applicable Law, a certified or exemplified copy of which judgment shall be conclusive evidence of the fact and amount of such Party’s obligation.
Section 5.03 Jurisdiction Involving Governmental Entities. By execution and delivery of this Agreement, the DOW Investors, to the maximum extent permitted by applicable Law, irrevocably and unconditionally acknowledges that this Agreement is an express contract within the meaning of 28 U.S.C. § 1491(a), and each submits for itself in any claim arising from, related to, or in connection with this Agreement to the jurisdiction of (a) the U.S. Court of Federal Claims; (b) any other federal court or tribunal of competent jurisdiction; and (c) appellate courts from any of the foregoing.
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Section 5.04 WAIVER OF JURY TRIAL. THE PARTIES HERETO EACH HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY PROCEEDING (a) ARISING UNDER THIS AGREEMENT OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREE AND CONSENT THAT ANY SUCH PROCEEDING SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
Section 5.05 Expenses. Except as otherwise expressly provided in this Agreement, each Party will bear its respective expenses incurred in connection with the preparation, execution and performance of this Agreement.
Section 5.06 Notices. All notices, consents, waivers and other communications under this Agreement must be in writing and will be deemed given to a party when delivered by e-mail to the e-mail addresses set forth below, in each case marked to the attention of the individual (by name or title) designated below (or to such e-mail address as a party may designate by notice to the other party):
| if to the DOW: | |
| United States Department of War | |
| Address: | 1000 Defense Pentagon, |
| Washington, DC 20301-1000 | |
| Attention: | Office of the Deputy Assistant Secretary of War (Industrial Base Resilience) |
| E-mail: | [*] |
| if to the Corporation: | |
| The Elmet Group Co. | |
| Address: | 280 Fore Street, Suite 301 |
| Portland, Maine 04101 | |
| Attention: | Office of General Counsel |
| E-mail: | [*] |
| with a simultaneous copy (which will not constitute notice) to: | |
| Akin Gump Strauss Hauer & Feld LLP | |
| Address: | One Bryant Park |
| Bank of America Tower | |
| New York, New York 10036-6745 | |
| Attention: | [*] |
| E-mail: | [*] |
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Section 5.07 Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may be amended, modified or waived only with the prior written consent of the Corporation and the Investors holding a majority of the Registrable Securities; provided that no such amendment, modification or waiver that would treat a specific Investor or group of Investors in a manner materially and adversely different than any other Investor or group of Investors will be effective against such Investor or group of Investors without the consent of the holders of a majority of the Registrable Securities that are held by the group of Investors that is materially and adversely affected thereby. The failure or delay of any Person to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will not affect the right of such Person thereafter to enforce each and every provision of this Agreement in accordance with its terms. A waiver or consent to or of any breach or default by any Person in the performance by that Person of his, her or its obligations under this Agreement will not be deemed to be a consent or waiver to or of any other breach or default in the performance by that Person of the same or any other obligations of that Person under this Agreement.
Section 5.08 Remedies. The Corporation acknowledges that the rights of any DOW Investor under this Agreement are unique and recognizes and affirms that in the event of a breach of this Agreement by the Corporation, money damages may be inadequate and such DOW Investor would have no adequate remedy at Law. Each DOW Investor shall be entitled to (and the other party shall not oppose on the basis that injunctive relief or specific performance is not available due to availability of an adequate remedy at Law) an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, without the necessity of showing any actual damages or that monetary damages would not afford an adequate remedy, and without the necessity of posting any bond or other security, this being in addition to any other remedy to which it is entitled at Law or in equity.
Section 5.09 No Third-Party Beneficiaries. Except as expressly stated herein, nothing expressed or referred to in this Agreement will be construed to give any Person, other than the Parties, any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement except such rights as may inure to a successor or permitted assignee.
Section 5.10 Further Assurances. In connection with this Agreement and the transactions contemplated hereby, the Corporation and each Investor agrees to execute and deliver any additional documents and instruments and perform any additional acts that may be necessary or appropriate to effectuate and perform the provisions of this Agreement and the transactions contemplated hereby.
Section 5.11 Severability. If any term, covenant, condition or provision of this Agreement or the application thereof to any Person or circumstance shall, at any time or to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to Persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term, covenant, condition and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by applicable law.
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Section 5.12 Entire Agreement. This Agreement, together with the Certificate of Designation, the Investment Agreement, the Investor Rights Agreement and the Warrants constitutes a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter.
Section 5.13 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument. Facsimile or electronic signatures may be used in place of original signatures on this Agreement. The Parties intend to be bound by the signatures on any facsimile or electronic document, and hereby waive any defenses to the enforcement of the terms of this Agreement based on the use of a facsimile or electronic signature.
Section 5.14 Construction. For purposes of this Agreement, unless otherwise expressly specified herein, the words “hereof,” “herein,” “hereunder” and words of similar import will refer to this Agreement as a whole and not to any particular section or subsection of this Agreement, and reference to a particular section of this Agreement will include all subsections thereof. The word “including” means including without limitation. Definitions will be equally applicable to both the singular and plural forms of the terms defined, and references to the masculine, feminine or neuter gender will include each other gender. All references in this Agreement to any Section, Exhibit or Schedule will, unless otherwise specified, be deemed to be a reference to a Section , Exhibit or Schedule of or to this Agreement, in each case as such may be amended in accordance herewith, all of which are made a part of this Agreement. Unless the context clearly requires otherwise, when used herein “or” shall not be exclusive (i.e., “or” shall mean “and/or”). Any reference herein to “$” or “dollars” means United States dollars.
[Signature pages follow]
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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first above written.
| THE ELMET GROUP CO. | ||
| By: | /s/ Peter V. Anania | |
| Name: | Peter V. Anania | |
| Title: | Chief Executive Officer and Chairman | |
| UNITED STATES DEPARTMENT OF WAR | ||
| By: | /s/ Michael Duffey | |
| Name: | HON Michael Duffey | |
| Title: | Undersecretary of War for Acquisition & Sustainment | |
EXHIBIT A
DEFINED TERMS
1. The following capitalized terms have the meanings indicated:
“Adverse Disclosure” means public disclosure of material non-public information that, in the good faith judgment of the Corporation (after consultation with counsel to the Corporation): (a) would be required to be made so that any registration statement or prospectus would not contain any Misstatement; (b) would not be required to be made at such time but for the filing, effectiveness or continued use of any registration statement or prospectus; and (c) the Corporation has a bona fide business purpose for not disclosing publicly.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person at any time during the period for which the determination of affiliation is being made. The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to elect a majority of the board of directors (or other governing body) or to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
“Blackout Event” means a determination by the Board that such registration or offering: (a) would be detrimental to the Corporation or its security holders for such registration or offering to be effected at such time or would materially interfere with any financing, other offering, acquisition, disposition, reorganization, merger or other transaction involving the Corporation or any of its subsidiaries or (b) would render the Corporation unable to comply with applicable securities laws, including in the event that the Corporation would be required to file any financial statements or other information with the SEC that is not at such time available.
“Board” means the Board of Directors of the Corporation.
“Broker’s Warrant” means the warrants issued to Cantor Fitzgerald & Co. on April 24, 2026 as in effect on the date hereof.
“Business Day” means any day that is not a Saturday, Sunday or other day on which banks are required or authorized by law to be closed in Washington, D.C. or the State of New York.
“Certificate of Designation” means the certificate of designation of the Corporation, dated as of the date hereof.
“Common Stock” means all shares currently or hereafter existing of the Corporation’s common stock, par value $0.001 per share.
“DOW Permitted Transferee” has the meaning set forth in the Investor Rights Agreement.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
A-1
“FINRA” means the Financial Industry Regulatory Authority, Inc.
“Governmental Authority” means any (a) nation or government, state, commonwealth, province, territory, county, municipality, district, or other jurisdiction of any nature, or any political subdivision thereof, (b) federal, state, local, municipal, foreign, or other government, or (c) governmental or quasi-governmental authority of any nature (including any relevant domestic, foreign, multinational or international body, governmental division, department, agency, board, bureau, commission, instrumentality, official, organization, regulatory body, or other entity and any court, arbitrator, or other tribunal) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any executive official thereof.
“Investment Agreement” means that certain Investment Agreement, dated as of September 11, 2026, by and between the Corporation and the DOW.
“Investor Rights Agreement” means that certain Investor Rights Agreement, dated as of the date hereof, by and between the Corporation and the DOW.
“Misstatement” shall mean an untrue statement of a material fact stated in a registration statement, preliminary prospectus, free writing prospectus, press release or prospectus supplement, in each case, related to such registration statement, or any amendment or supplement thereto, or an omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading.
“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, an estate, an unincorporated association or a Governmental Authority or any department, agency or political subdivision thereof.
“register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement or the automatic effectiveness of such registration statement, as applicable.
“Registrable Securities” means, as of any date of determination, any shares of Common Stock held by any Investor as of the date of this Agreement, any shares of Common Stock issued or issuable pursuant to the exercise of the Warrants (without regard to any limitations on exercise of the Warrants) held by any Investor as of the date of this Agreement, and any other securities issued or issuable with respect to any such shares of Common Stock by way of share split, share dividend, distribution, recapitalization, merger, exchange, replacement or similar event or otherwise. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (a) such securities are sold, transferred, disposed of or exchanged pursuant to an effective registration statement or Rule 144 (or any similar provisions then in force), in each case, under the Securities Act, (b) such securities shall have ceased to be outstanding or are repurchased by the Corporation or any subsidiary of the Corporation, or (c) such securities have been transferred in a transaction in which the transferring Investor’s rights under this Agreement are not assigned to the transferee of the securities.
A-2
“Registration Expenses” means all reasonable fees and expenses incurred by the Corporation in the performance of or compliance with this Agreement, including all registration, qualification, listing and filing fees, printing expenses (including expenses of preparing certificates (if any) for Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing prospectuses if the printing of prospectuses is reasonably requested by the managing underwriters or by the Investors), escrow fees, fees and disbursements of counsel and accountants of the Corporation, fees and expenses in connection with complying with state securities or “blue sky” laws including any reasonable fees and disbursements of counsel for the underwriters that are required to be paid by the Corporation pursuant to the applicable underwriting agreement in connection with blue sky qualifications of the Registrable Securities, SEC filing fees, FINRA fees, fees of the listing exchange, fees and expenses of transfer agents and registrars, transfer taxes, all reasonable fees and disbursements of underwriters (other than those described in Section 2.03) that are required to be paid by the Corporation pursuant to the applicable underwriting agreement and reasonable and documented fees and expenses of one outside legal counsel, in addition to any required local counsel, for the Investors retained in connection with each registration or Underwritten Offering contemplated hereby, in an amount not to exceed $200,000 in the aggregate per registration or Underwritten Offering (including any Underwritten Block Trade).
“Rule 144” means Rule 144 promulgated under the Securities Act and any successor provision.
“Rule 462(e)” means Rule 462(e) promulgated under the Securities Act and any successor provision.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, and any successor statute thereto, and the rules and regulations of the SEC promulgated thereunder.
“Shelf Registration Statement” means the Resale Shelf Registration Statement or a Subsequent Shelf Registration Statement, as applicable.
“U.S. Government” means the federal government of the United States of America.
“Warrants” means the warrants issued by the Corporation to the DOW on the date hereof.
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2. The following terms are defined in the Sections of the Agreement indicated:
INDEX OF TERMS
| Term | Section | |
| Agreement | Preamble | |
| Corporation | Preamble | |
| Corporation Indemnified Parties | Section 3.01 | |
| Delivery Date | Section 2.01(i) | |
| DOW | Preamble | |
| Effectiveness Period | Section 1.02 | |
| Indemnified Party | Section 3.02 | |
| Indemnifying Party | Section 3.02 | |
| Initial Filing Deadline | Section 1.01 | |
| Inspectors | Section 2.01(l) | |
| Interruption Period | Section 2.01(n) | |
| Investors | Preamble | |
| Losses | Section 3.01 | |
| Party(ies) | Preamble | |
| Piggyback Event | Section 1.08(a) | |
| Piggyback Notice | Section 1.08(a) | |
| Piggyback Request | Section 1.08(a) | |
| Records | Section 2.01(l) | |
| Removed Shares | Section 1.09 | |
| Resale Shelf Registration Statement | Section 1.01 | |
| Selling Stockholders | Section 2.01(b) | |
| Shelf Offering | Section 1.07 | |
| Subscription Agreement | Recitals | |
| Subsequent Investor Notice | Section 1.05 | |
| Subsequent Shelf Registration Statement | Section 1.03 | |
| Suspension | Section 2.02 | |
| Take-Down Notice | Section 1.07 | |
| Underwritten Block Trade | Section 1.06 | |
| Underwritten Offering | Section 1.06 | |
| Underwritten Offering Holder Notice | Section 1.06 | |
| Underwritten Offering Notice | Section 1.06 |
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Exhibit 10.3
| INVESTOR RIGHTS AGREEMENT |
by and between
THE ELMET GROUP CO.,
and
THE UNITED STATES DEPARTMENT OF WAR
dated as of September 14, 2026
TABLE OF CONTENTS
| Page | ||||
| 1. | Definitions; Interpretation. | 1 | ||
| 2. | Board of Directors | 12 | ||
| 3. | Protective Provisions | 13 | ||
| 4. | Restrictions on Transfer | 18 | ||
| 5. | Drag-Along Rights. | 19 | ||
| 6. | Restricted Entities | 19 | ||
| 7. | Right of First Offer (Securities); Preemptive Rights. | 22 | ||
| 8. | Offtake; Right of First Negotiation | 23 | ||
| 9. | Investment Security and Sanctions Compliance | 25 | ||
| 10. | Emergency Allocation Rights | 25 | ||
| 11. | Information Rights | 28 | ||
| 12. | Inspection Rights | 29 | ||
| 13. | Termination | 29 | ||
| 14. | No Fiduciary Duty | 29 | ||
| 15. | No Conflicting Agreements | 29 | ||
| 16. | Corporate Opportunity | 29 | ||
| 17. | Confidentiality | 30 | ||
| 18. | Amendment and Waiver | 31 | ||
| 19. | Severability | 31 | ||
| 20. | Entire Agreement | 31 | ||
| 21. | Successors and Assigns | 31 | ||
| 22. | Counterparts | 31 | ||
| 23. | Remedies | 31 | ||
| 24. | Notices | 32 | ||
| 25. | Governing Law | 32 | ||
| 26. | Jurisdiction Involving Non-Government Entities | 32 | ||
| 27. | Jurisdiction Involving Governmental Entities | 33 | ||
| 28. | Waiver of Jury Trial | 33 | ||
| 29. | Descriptive Headings | 33 | ||
| 30. | No Strict Construction | 33 |
i
Appendixes
| Appendix I – Completion | |
| Appendix II − Excluded Subsidiaries | |
| Appendix III – Permitted Activities | |
| Appendix IV – Strategic Transaction |
Schedules
| Schedule I – Permitted Indebtedness | |
| Schedule II – Joint Ventures | |
| Schedule III – Disqualified Holders | |
| Schedule IV - Right of First Offer (Securities); Preemptive Rights |
ii
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (the “Agreement”) is made as of September 14, 2026 by and between The Elmet Group Co., a Delaware corporation (the “Company”), and the United States Department of War (“DOW”).
WHEREAS, as of the date hereof, the DOW subscribed for and purchased from the Company shares of the Company’s Class A Redeemable Preferred Stock, par value $0.001 per share (the “Preferred Stock”), and the Company issued Warrants to purchase shares of the Company’s common stock, par value $0.001 per share (“Common Stock”), in each case, pursuant to that certain Investment Agreement, dated as of September 11, 2026, by and between the Company and the DOW (as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof, the “Investment Agreement”); and
WHEREAS, each of the Company and the DOW desires to provide for the terms with respect to certain matters regarding the relationship among the Company and the DOW Investors (as defined below).
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Definitions; Interpretation.
(a) As used in this Agreement, the following terms have the following meanings:
“Acquisition” means a transaction or series of transactions resulting in (i) acquisition of a business, division or any material assets of a Person, (ii) record or beneficial ownership of 50% or more of the Equity Securities of a Person or (iii) merger, consolidation or combination of the Company or a Subsidiary with another Person.
“Affiliate” means, with respect to any Person, any Person that, directly or indirectly, Controls, is Controlled by or is under common Control with such Person specified; provided, however, that in no event shall the Company, any of its Subsidiaries, or any of the Company’s other Affiliates (in each case after giving effect to the transactions contemplated by the Investment Agreement) be deemed to be Affiliates of the DOW Investors or any of their respective Affiliates for purposes of this Agreement.
“Asset Disposition” a sale, transfer or other disposition of property of the Company or a Subsidiary, including any disposition in connection with a sale-leaseback transaction, synthetic lease or statutory division of a limited liability company.
“Borrowing Base” means, as of any date of determination, with respect to borrowings under a credit facility with lenders the majority of which based on commitments are Commercial Lending Institutions, the maximum amount determined or redetermined by the lenders thereunder as the aggregate lending value to be ascribed to the assets of the Company and its Subsidiaries against which such lenders are committed to provide loans or letters of credit to the credit parties thereunder, using customary practices and standards for determining U.S.-based asset-based borrowing base revolving loans and which are generally applied to borrowers in the industry in which the Company operates.
1
“Breach Event” means a breach by the Company of its obligations pursuant to Section 3, 4(a), 6, 7, 8 and 10 which such breach has continued unremedied, unwaived and uncured for 15 Business Days following the earlier of (a) receipt of written notice by the Company from any DOW Investor of such breach or (b) any executive officer of the Company or its Subsidiaries having actual knowledge of the occurrence of such breach.
“Business Day” means any day which is not a Saturday, Sunday or a day on which banking institutions are not open in Washington, D.C. or New York, New York.
“Cash Equivalents” means (i) marketable obligations issued or unconditionally guaranteed by, and backed by the full faith and credit of, the U.S. government, maturing within 24 months of the date of acquisition; (ii) certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust company that is organized under the laws of any Permitted Jurisdiction or any state, province or territory thereof, having capital, surplus and undivided profits in excess of $250,000,000 and whose long-term debt, or whose parent holding company’s long-term debt, is rated A (or such similar equivalent rating or higher) by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act); (iii) repurchase obligations with a term of not more than 180 days for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications described in clause (ii) above; (iv) commercial paper rated A-1 (or better) by S&P or P-1 (or better) by Moody’s, and maturing not more than one year after the date of acquisition; (v) securities with maturities of two years or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America or by any political subdivision or taxing authority thereof, and rated at least A by S&P or A-2 by Moody’s; (vi) shares of mutual funds whose investment guidelines restrict 95% of such funds’ investments to those satisfying the provisions of clauses (i) through (v) above; (vii) money market funds that (A) comply with the criteria set forth in Rule 2a-7 under the Investment Company Act of 1940, as amended, (B) are rated AAA by S&P and Aaa by Moody’s and (C) have portfolio assets of at least $500,000,000.
“Certificate of Designations” means the certificate of designations of the Company, dated as of the date hereof.
“Change of Control” shall mean any transaction or series of related transactions pursuant to or as a result of which (i) any Person or group of related Persons in the aggregate, other than any DOW Investor, acquires or holds securities of the Company possessing more than 50% of the outstanding voting power of the Company or the economic interests of the Company; (ii) any sale, transfer, conveyance, license, lease or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries determined on a consolidated basis, or exclusive license of all or substantially all of the Intellectual Property or Technology material to the Projects; (iii) the adoption of a plan relating to the liquidation or dissolution of the Company; or (iv) the Common Stock is not listed on NASDAQ or another U.S. national securities exchange.
2
“Commercial Lending Institution” means commercial banks engaged in lending to borrowers in the industry in which the Company operates in the ordinary course of their respective businesses and includes any investment bank, insurance company, credit union, savings and loan association and any government-owned entity that from time to time extends credit on terms and conditions similar to any of the foregoing, and includes any assignee of any of the foregoing which is not otherwise a Commercial Lending Institution provided the assignee is either an Affiliate of the assigning Commercial Lending Institution or a fund managed or administered by the assigning Commercial Lending Institution or an Affiliate thereof and, in each case, the assigning Commercial Lending Institution shall remain liable for the obligations so assigned.
“Completion” has the meaning set forth on Appendix I attached hereto.
“Consolidated Net Debt” shall mean, at any date, (i) Indebtedness of the Company and its Subsidiaries on such date, minus (ii) Unrestricted Cash on such date in an aggregate amount not to exceed the Threshold Amount.
“Consolidated Total Assets” means the total assets of the Company and its Subsidiaries as reflected on the consolidated balance sheet included in the Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as applicable, filed with the SEC.
“Control” means the possession of the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether through the ownership of voting securities or ownership interests, by contract or otherwise.
“Credit Agreement” means Amended and Restated Credit Agreement, dated November 6, 2023, by and between Wells Fargo Bank, Elmet Technologies LLC, H.C. Stark Solutions Coldwater LLC and H.C. Stark Solutions Euclid, LLC.
“Default” means an event, condition, or default that, with the giving of notice, the passage of time, or both, would be an Event of Default.
“Disinterested Directors” means with respect to any action, agreement, transaction or other matter, a director who (i) is determined by the Board to be disinterested and independent with respect such action, agreement, transaction or other matter and (ii) does not have a direct or indirect material financial interest in such action, agreement, transaction or other matter, other than an interest (i) held generally by directors, officers or stockholders of the Company as such or (ii) arising solely from such director’s ownership of Equity Securities of the Company or service as a non-employee director of the Company.
“Disqualified Holder” means any Person listed on Schedule III attached hereto; provided that the Board may in good faith update Schedule III on the first day of each Fiscal Year in consultation with the DOW.
“DOW Investors” means, collectively, (i) the DOW and (ii) any DOW Permitted Transferee that owns any Preferred Stock, Common Stock or Warrants.
“DOW Permitted Transferee” means any Qualified Governmental Authority.
3
“EBITDA” means, with respect to any fiscal period and with respect to the Company and its Subsidiaries determined, in each case, on a consolidated basis in accordance with GAAP and Item 10(e) of Regulation S-K: (i) the consolidated net income (or loss), minus (ii) without duplication, the sum of the following amounts for such period to the extent included in determining consolidated net income (or loss) for such period: (A) unusual or non-recurring gains, and (B) interest income, plus (iii) without duplication, the sum of the following amounts for such period to the extent deducted in determining consolidated net income (or loss) for such period: (A) non-cash unusual or non-recurring losses, (B) Interest Expense, (C) income taxes, and (D) depreciation and amortization.
“Equity Securities” means any and all (i) shares, interests, participations or other equivalents (however designated) of capital stock or other voting securities of a corporation, any and all equivalent or analogous ownership (or profit) or voting interests in a Person (other than a corporation), (ii) securities convertible into or exchangeable for shares, interests, participations or other equivalents (however designated) of capital stock or voting securities of (or other ownership or profit or voting interests in) such Person, and (iii) any and all warrants, rights or options to purchase any of the foregoing, whether voting or nonvoting, and, in each case, whether or not such shares, interests, participations, equivalents, securities, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination.
“Event of Default” means (i) the occurrence of any Breach Event, (ii) any failure to redeem the outstanding Preferred Stock (including any payment failure in connection therewith) pursuant to the requirements of the Certificate of Designations or (iii) a breach of sections 3 (Rank), 4 (Dividends), 5 (Liquidation), 6 (Voting), 7 (Redemption), 8 (Board Representation), 12 (Share Exchanges and Reclassifications) and 13 (Amendments and Waiver) of the Certificate of Designations or sections 4 (Issuance of Shares; Authorization; Listing), 7 (Transfer/Assignment), 9 (Adjustments to Exercise Price and Number of Shares), 10 (Mandatory Exercise), 11 (Redemption) and 12 (No Impairment) of the Warrants, subject, (x) in the case of clause (i), to a 5-Business Day cure period (or such longer period as expressly set forth in Section 6) or (y) with respect to clause (iii), to a 30-day cure period, in each case following the earlier of (A) receipt of written notice by the Company from any DOW Investor in respect of such breach or (B) any executive officer of the Company or any of its Subsidiaries having actual knowledge of the occurrence of such breach.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Fiscal Quarter” means each period of 13 weeks, commencing on or within 7 days of the first day of a Fiscal Year, and consistent with the company’s current fiscal year definition.
“Fiscal Year” means a 52-week, 364-day fiscal year of the Company for accounting and tax purposes, commencing the day following the end of the preceding fiscal year. Company reserves the right to declare a 53-week “stub” year once during each seven-year period to maintain year end dates with proximity to December 31. For purposes of the Company’s consolidated financial statements, those Subsidiaries having a fiscal year end different from that of the Company are consolidated using financial statements for periods that are within three months of the Company’s fiscal year end, with adjustments for material transactions, if any.
4
“GAAP” means generally accepted accounting principles in the United States.
“Governmental Authority” means any (i) nation or government, state, commonwealth, province, territory, county, municipality, district, or other jurisdiction of any nature, or any political subdivision thereof, (ii) federal, state, local, municipal, foreign, or other government, or (iii) governmental or quasi-governmental authority of any nature (including any relevant domestic, foreign, multinational or international body, governmental division, department, agency, board, bureau, commission, instrumentality, official, organization, regulatory body, or other entity and any court, arbitrator, or other tribunal) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any executive official thereof.
“Hedge Agreement” means “Hedge Agreement” as defined in the Credit Agreement.
“Indebtedness” means, with respect to any Person, without duplication: (i) any indebtedness (including principal and premium) of such Person, whether or not contingent: (A) in respect of borrowed money; (B) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without duplication, reimbursement agreements in respect thereof); or (C) representing the deferred and unpaid balance of the purchase price of any property due more than twelve months after such property is acquired, except (1) any such balance that constitutes an obligation in respect of a commercial letter of credit, trade and other ordinary-course payables, accrued expenses, and intercompany liabilities, in each case incurred in the ordinary course of business or consistent with industry practice, (2) any earn-out obligations until such obligation is reflected as a liability on the balance sheet (excluding any footnotes thereto) of such Person in accordance with GAAP and is not paid within 60 days after becoming due and payable, and (3) accruals for payroll and other liabilities accrued in the ordinary course of business; (ii) to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the obligations of the type referred to in clause (i) of this definition of a third Person (whether or not such items would appear upon the balance sheet of such obligor or guarantor), other than by endorsement of negotiable instruments for collection in the ordinary course of business or consistent with industry practice; and (iii) to the extent not otherwise included, the obligations of the type referred to in clause (i) of this definition of a third Person secured by a lien on any asset owned by such first Person, whether or not such Indebtedness is assumed by such first Person; provided that the amount of such Indebtedness will be the lesser of (A) the fair market value of such asset at such date of determination and (B) the amount of such Indebtedness of such other Person; provided that Indebtedness shall not include (1) obligations under operating leases or (2) obligations in respect of workers’ compensation claims, self-insurance, and performance, surety, appeal, customs, reclamation or similar bonds incurred in the ordinary course of business.
“Intellectual Property” means all intellectual property and proprietary rights throughout the world, and all right, title and interest in and to the following: (a) all patents, patent applications, patent disclosures, and inventions and all improvements thereto (whether or not patentable or reduced to practice), and all reissues, continuations, continuations-in-part, revisions, divisional, extensions, and reexaminations in connection therewith, (b) trademarks, service marks, domain names, trade dress, corporate names, trade names, and other indicia of source, and all registrations, applications and renewals in connection therewith (together with the goodwill associated therewith), (c) copyrights and all works of authorship (whether or not copyrightable), and all registrations, applications and renewals in connection therewith, (d) Software, (e) Internet domain names, (f) trade secrets, know-how, technologies, databases, processes, techniques, protocols, methods, formulae, algorithms, layouts, designs, specifications and confidential information, (g) moral rights, and (h) rights of privacy and publicity.
5
“Interest Expense” means, for any period, the aggregate of the interest expense of the Company for such period, determined on a consolidated basis in accordance with GAAP.
“Law” means all codes, laws, common laws, statutes, governmental authorizations, treaties, ordinances, rules, regulations, orders, writs, judgments or injunctions of any Governmental Authority, including any amendments thereto.
“Material Debt” means (i) Indebtedness or obligations in respect of one or more Hedge Agreements, in each case of any one or more of the Company or its Subsidiaries in an aggregate principal amount exceeding the Threshold Amount and (ii) Indebtedness under (A) the Credit Agreement, (B) the Domestic Working Capital Revolving Loan Facility, dated March 2, 2020 and amended on April 3, 2026, by and between Mega Industries LLC, The Provident Bank and Ferrite Microwave Technologies, LLC, (C) Demand Commercial Line of Credit Agreement, dated April 14, 2025, by and between Auburn Savings Bank FSB, Poly Labs Solar LLC, Peter V. Anania and Elmet Technologies LLC, (D) EXIM Working Capital Guarantee Program Revolving Loan Facility, dated March 2, 2020, by and between Mega Industries LLC and The Provident Bank or (E) any refinancing of the Indebtedness set forth in this subsection (ii).
“Minimum Common Ownership Condition” means that the DOW Investors own at least 25% of the Warrant Shares (whether held as Warrants or Common Stock as of the applicable reference date) held by the DOW Investors as of the date hereof (as adjusted for any subdivision, combination or reverse split of equity, or similar event).
“Minimum Ownership Condition” means that the DOW Investors (a) own any Preferred Stock or (b) satisfy the Minimum Common Ownership Condition.
“Moody’s” means Moody’s Investors Service, Inc.
“NASDAQ” means any of the NASDAQ Global Select Market, the NASDAQ Global Market and the NASDAQ Capital Market.
“New Securities” means any Equity Securities of the Company or any of its Subsidiaries, or any securities containing options or rights to acquire Equity Securities of the Company or any of its Subsidiaries, other than (i) securities issued pro rata to existing equityholders in connection with any split, dividend or recapitalization by the Company or any of its Subsidiaries or (ii) Exempt Issuances.
“Percentage Interest” means, with respect to the DOW Investors at the time of determination, an amount equal to the quotient determined by dividing (i) the number of shares of Common Stock on a fully diluted as-converted basis held by such DOW Investors (including the exercise of any Warrants held by such DOW Investors), by (ii) the aggregate amount of shares of Common Stock then issued and outstanding on a fully diluted as-converted basis (including the exercise of all Warrants then issued and outstanding).
6
“Permitted Indebtedness” means, without duplication, each of the following: (i) Indebtedness arising under or in connection with the Preferred Stock; (ii) Indebtedness existing on the date hereof listed on Schedule I attached hereto and any Permitted Refinancing thereof, which, for the avoidance of doubt, excludes any Indebtedness under the Credit Agreement or the other facilities described in the definition of “Material Debt;” (iii) Indebtedness incurred under revolving credit, working capital, receivables or supply-chain financing, letter of credit or other bank facilities (including the facilities described in the definition of “Material Debt”) in an aggregate principal amount at any time outstanding not to exceed $100 million, and any Permitted Refinancing thereof; (iv) purchase money Indebtedness and finance or capital lease obligations, and other Indebtedness incurred to finance the acquisition, construction, lease, repair, improvement or expansion of property, plant or equipment (including mining, processing, conversion and manufacturing equipment and facilities and the Projects), in an aggregate principal amount at any time outstanding not to exceed $20 million, and any Permitted Refinancing thereof; (v) Indebtedness owed to, guaranteed by, or supported by, any U.S. Governmental Authority or any U.S. export credit agency pursuant to any governmental loan, grant, guarantee or financing program (including the Defense Production Act (including Title III), and programs of the U.S. Department of Defense, the U.S. Department of War, the U.S. Department of Energy, the U.S. International Development Finance Corporation and the Export-Import Bank of the United States (including the EXIM Working Capital Guarantee Program), and other industrial-base, critical-minerals or defense-related financing programs); (vi) obligations under Hedge Agreements entered into in the ordinary course of business for bona fide hedging purposes (including to manage interest rate, currency exchange or commodity price (including tungsten and other metals and minerals) risk) and not for speculation; (vii) intercompany Indebtedness among the Company and its wholly-owned Subsidiaries and those certain joint ventures enumerated on Schedule II; (viii) Indebtedness in respect of netting services, overdraft protection, cash management, commercial credit or purchasing cards and other treasury or banking arrangements, in each case incurred in the ordinary course of business; (ix) Indebtedness representing the deferred purchase price of property, earn-outs, holdbacks or other obligations incurred in connection with any acquisition or strategic transaction permitted under this Agreement; (x) Indebtedness of the Company or any Subsidiary assumed in connection with, or existing at the time of, any acquisition permitted under this Agreement (so long as such Indebtedness was not incurred in contemplation thereof), and any Permitted Refinancing thereof; (xi) Indebtedness in respect of workers’ compensation claims, self-insurance obligations, unemployment insurance, insurance premium financing and other similar obligations incurred in the ordinary course of business; (xii) guarantees by the Company or any Subsidiary of any Indebtedness otherwise constituting Permitted Indebtedness; and (xiii) Indebtedness under a single credit facility that does not constitute capital markets indebtedness incurred to finance the acquisition, prepayment, deposit, tolling, storage or in-process financing of tungsten raw materials, tungsten concentrates, tungsten oxides and other tungsten intermediates or feedstocks, in an aggregate principal amount up to the greater of (x) $200 million and (y) 105% of the Borrowing Base of such facility, which in no event shall exceed $500 million, including any Permitted Refinancing thereof. For purposes hereof, “Permitted Refinancing” means Indebtedness incurred to refund, refinance, renew, replace, extend or defease Indebtedness, so long as (A) the principal amount thereof is not increased (other than by accrued interest, premiums, fees and expenses and costs of such refinancing), (B) the final stated maturity or weighted average life to maturity is not shortened in any material respect, and (C) such Indebtedness is not secured by additional collateral or guaranteed by additional obligors, in each case other than as otherwise permitted under this Agreement. For the avoidance of doubt, any obligation that does not constitute Indebtedness pursuant to the exclusions set forth in the definition thereof shall not be required to satisfy any basket or limitation set forth in this definition of Permitted Indebtedness.
“Permitted Jurisdiction” means the United States of America, the Commonwealth of Australia, Canada, New Zealand and the United Kingdom of Great Britain and Northern Ireland.
“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, an estate, an unincorporated association or a Governmental Authority or any department, agency or political subdivision thereof.
7
“Pro Forma Basis” means, in connection with any calculation of compliance with any financial covenant or term, the calculation thereof after giving effect on a pro forma basis to the change in such calculation required by the applicable provision hereof, and otherwise on a basis in accordance with GAAP as used in the preparation of the Company’s latest financial statements and otherwise reasonably satisfactory to the DOW. EBITDA shall be calculated on a Pro Forma Basis to give effect to any Acquisition or Asset Disposition, in each case, consummated at any time on or after the first day of the four consecutive Fiscal Quarter period ended on or before the occurrence of such event thereof (the “Reference Period”) as if such Acquisition or Asset Disposition had been consummated on the first day of such Reference Period.
“Project IP” means all Intellectual Property and Technology that is owned, developed, conceived, reduced to practice, or acquired by the Company, any of its Subsidiaries or any joint venture, special-purpose vehicle or other entity through which any Project is conducted, in each case, used in connection with or arising out of the Projects.
“Project Manager” means the Project Manager, or Project Managers, as designated from time to time by the Company, who is or are adequately qualified, experienced and trained to oversee the Projects, with the primary responsibility of overseeing the Projects.
“Projects” has the meaning set forth in the Investment Agreement.
“Registration Rights Agreement” means that certain Registration Rights Agreement, dated as of the date hereof, by and between the Company and the DOW.
“Restricted Entity” means any Person that is, or is owned or controlled, directly or indirectly, by, (i) a Person then appearing upon the “Denied Persons List,” the “Entity List,” or the “Unverified List,” as maintained by the U.S. Department of Commerce; (ii) a Person on the U.S. Office of Foreign Assets Control “Specially Designated Nationals and Blocked Persons List,” the “Sectoral Sanctions Identifications List,” the “Non-SDN Chinese Military-Industrial Complex Companies List,” the “Foreign Sanctions Evaders List,” or any similar list of restricted Persons maintained by a Governmental Authority of the United States, including Persons resident in embargoed countries, territories, or regions; (iii) a “foreign entity of concern” as defined by 15 U.S.C. § 4651(8) or 42 U.S.C. § 18741(a)(5) or a “foreign adversary” as defined by 15 CFR § 791.4; (iv) the government, including any political subdivision, agency, or instrumentality thereof, or any national, of (A) any country, territory, or region against which the United States maintains comprehensive economic sanctions or embargos from; (B) The People’s Republic of China; or (C) a country determined to be a country of risk in accordance with U.S. Department of Energy Order DOE O 486.1A(5)(d), as amended, supplemented or replaced from time to time (https://www.energy.gov/science/countries-risk); (v) a Person that the Company knows or reasonably determines is acting or purporting to act, directly or indirectly, on behalf of, or a Person (wherever organized, in the case of an entity) owned or controlled by, any of the Persons listed in sub-clauses (i)-(iv) above, such that the Person is subject to the same prohibitions or restrictions as any of the Persons listed in sub-clauses (i)-(iv) above; or (vi) a Person with whom dealings are expressly prohibited on account of any economic sanctions laws, regulations, or directives, of the United States, if the investment in such Person would knowingly cause the Company to be in violation of such laws, regulations, or directives. With respect to any Person that is a company with a class of securities registered under the Exchange Act (or subject to a comparable non-U.S. reporting regime), for purposes of this definition of Restricted Entity, ownership does not include passive non-controlling beneficial ownership by any single person or any “Group” (as defined in Section 13(d)(3) of the Exchange Act and Rule 13d-5 thereunder) of less than 10% in the aggregate for all such persons or “Groups”; provided, however, that a Person shall cease to be a Restricted Entity at such time as the Person no longer satisfies any of the criteria set forth in clauses (i) through (vi) above (including by reason of removal from the applicable list, termination of the applicable sanctions program or designation, or otherwise).
8
“S&P” means Standard & Poor’s Financial Services LLC.
“Securities Act” means the Securities Act of 1933, as amended.
“SEC” means the U.S. Securities and Exchange Commission.
“Software” means all computer software (in object code or source code format), data and databases, and related documentation and materials.
“Subsidiary” means, with respect to any specified Person, any: (i) corporation, fifty percent (50%) or more of the voting or capital stock of which is, as of the time in question, directly or indirectly, owned by such Person; or (ii) partnership, joint venture, association, or other entity in which such Person, directly or indirectly, owns fifty percent (50%) or more of the equity economic interest thereof or has the power to elect or direct the election of more than fifty percent (50%) of the members of the governing body of such partnership, joint venture, association or other entity.
“Technology” means all technology, designs, formulae, algorithms, procedures, methods, techniques, know-how, processes, tools, technical data, specifications and research and development, and all tangible and intangible embodiments of the foregoing in any form, in each case owned by the Company or any of its Subsidiaries and used in connection with the Projects.
“Test Period” means, at any date of determination, the most recently completed four consecutive Fiscal Quarters of the Company ending on or prior to such date.
“Threshold Amount” means $10,000,000.
“Total Net Leverage Ratio” means as of any date, the ratio of (i) Consolidated Net Debt to (ii) EBITDA for the applicable Test Period most recently ended as of such date, all determined on a consolidated basis in accordance with GAAP; provided that to the extent any Asset Disposition or any Acquisition or incurrence or repayment of Indebtedness has occurred during the relevant Test Period, the Total Net Leverage Ratio shall be determined for the respective Test Period on a Pro Forma Basis for such occurrences.
9
“Transfer” means (i) any direct or indirect sale, lease, assignment, encumbrance, pledge, grant of a security interest, hypothecation, disposition or other transfer (by operation of law or otherwise), either voluntary or involuntary, or entry into any contract, option or other arrangement or understanding with respect to any sale, lease, assignment, encumbrance, pledge, hypothecation, disposition or other transfer (by operation of law or otherwise), of any capital stock or interest in any capital stock or (ii) in respect of any capital stock or interest in any capital stock, to enter into any swap or any other agreement, transaction or series of transactions that hedges or transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of such capital stock or interest in capital stock, whether any such swap, agreement, transaction or series of transaction is to be settled by delivery of securities, in cash or otherwise.
“U.S.” or “United States” means the United States of America.
“Unrestricted Cash” means on any date, the aggregate amount of unrestricted cash and Cash Equivalents of the Company and its Subsidiaries on such date.
“Warrant Shares” means the shares of Common Stock underlying the Warrants.
“Warrants” means the Warrants as defined in the Investment Agreement.
| TERM | SECTION |
| 2026 Incentive Plan | Section 3(a)(xi) |
| Affiliate Transaction | Section 3(a)(v) |
| Audit Committee | Section 2(f) |
| Agreement | Preamble |
| Beneficial Ownership Reports | Section 6(b) |
| Board | Section 2(a) |
| Common Stock | Recitals |
| Company | Preamble |
| Compensation Committee | Section 2(f) |
| Confidential Information | Section 17(a) |
| DGCL | Section 2(c) |
| DOW | Preamble |
| DOW Board Observer | Section 2(a) |
| DOW Director | Section 2(a) |
| DOW Opt-Out Notice | Section 11 |
| Executive Order | Section 17(c) |
| Exempt Issuances | Section 3(c)(iii) |
| Federal Law | Section 25 |
10
| TERM | SECTION |
| FOIA | Section 17(b) |
| Information | Section 11 |
| Investment Agreement | Recitals |
| Issuance Limitation | Section 7(c) |
| Negotiation Period | Section 8 |
| Plan | Section 66(f) |
| Preferred Stock | Recitals |
| Proceeding | Section 17(a) |
| Product | Section 8 |
| Product Contract | Section 8 |
| Proposed Third-Party Transfer | Section 4(b) |
| Qualified Governmental Authority | Section 4(a) |
| Representatives | Section 17(a) |
| Restricted Entity Event | Section 6(b) |
| Restricted Payments | Section 3(a)(vii) |
| Vote Threshold Date | Section 7(d) |
Whenever used: the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation,” and the words “hereof” and “herein” and similar words shall be construed as references to this Agreement as a whole and not limited to the particular Article, Section, Exhibit, Annex or Schedule in which the reference appears. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Annexes, Exhibits and Schedules mean the Articles, Sections and Annexes of, and Exhibits and Schedules attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. References to “$” or “dollars” means United States dollars. Any reference in this Agreement to any gender shall include all genders. The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. The Annex referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if it were set forth verbatim herein. The headings of the Articles and Sections are for convenience of reference only and do not affect the interpretation of any of the provisions hereof. No rule of construction against the draftsperson shall be applied in connection with the interpretation or enforcement of this Agreement, as this Agreement is the product of negotiation between sophisticated parties advised by counsel.
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2. Board of Directors.
(a) At any time after the DOW Investors no longer own any Preferred Stock but satisfy the Minimum Common Ownership Condition, the DOW shall have the right to (i) designate for nomination to the Company’s board of directors (the “Board”) one independent third-party director (the “DOW Director”) with relevant corporate governance and industry experience who satisfies all requirements applicable to non-employee directors of the Company generally, and (ii) designate one additional representative to attend meetings of the Board (and committees thereof) in a strictly non-voting observer capacity (“DOW Board Observer”) subject to Section 2(b). In the event that DOW Investors transfer any shares of Preferred Stock or Common Stock to a Person (other than a DOW Permitted Transferee) such that, following such transfer, the DOW Investors no longer satisfy the Minimum Common Ownership Condition, the rights set forth in clauses (i) and (ii) above shall automatically terminate and such third-party transferee shall not be entitled to exercise any such rights. From and after the date hereof, and the Company shall take all necessary and desirable actions within its control so that the DOW Director shall be appointed to the Board, including by the Board appointing the DOW Director to fill a vacancy or newly created directorship in the class of directors whose term expires at the next annual meeting of stockholders, pending the DOW Director’s election by the stockholders at such next annual meeting, and the DOW Board Observer shall be designated. Following the appointment of the DOW Director, the Company shall use reasonable best efforts to nominate the DOW Director in the Company’s slate of nominees for election at the next annual meeting of stockholders at which the class of directors in which the DOW Director serves is to be elected, and to provide the same type of recommendation and solicitation support provided to the Company’s other non-management director nominees. Notwithstanding the foregoing, nothing herein shall require the Company to call a special meeting of stockholders to elect the DOW Director.
(b) The DOW Board Observer shall not be a director and shall not have voting rights. The DOW Board Observer shall execute and comply with a customary confidentiality agreement and such other policies and procedures as the Company reasonably requires for Board observers. The Company may withhold any materials from, or exclude the DOW Board Observer from, any meeting or portion thereof if the Board or any committee thereof, in consultation with the Company’s legal counsel, determines in good faith that such withholding or exclusion is necessary or advisable to preserve attorney-client privilege or work-product protection, comply with applicable Law, avoid a conflict of interest, protect competitively sensitive information or comply with confidentiality obligations to third parties.
(c) The removal of the DOW Board Observer shall be only upon the written request of the DOW; provided that the Board may exclude or terminate the rights of the DOW Board Observer if the Board or a committee thereof determines in good faith that such person no longer satisfies the requirements set forth in this Section 2. The DOW Director may be removed in accordance with the Company’s Second Amended and Restated Certificate of Incorporation and the General Corporation Law of the State of Delaware (the “DGCL”). In the event that the DOW Director for any reason ceases to serve as a member of the Board during his or her term of office, then, so long as the Minimum Common Ownership Condition is satisfied, the resulting vacancy on the Board shall be filled by a designee of the DOW Investors.
(d) The DOW Director shall be entitled to advancement of expenses and indemnification in the same manner and to the same extent as the other non-executive members of the Board under the Company’s organizational documents, the DGCL and any indemnification agreements. Applicable pre-existing director minimum ownership requirements of certain policies of the Board shall be deemed satisfied in respect of the DOW Director, by the shares of Preferred Stock or Warrants (including the Warrant Shares) held by the DOW. The Company acknowledges and agrees that it is the indemnitor of first resort (i.e., its obligations to the DOW Director are primary and any obligation of the DOW to advance expenses or to provide indemnification for the same expenses or liabilities incurred by the DOW Director are secondary) to the fullest extent permitted by applicable Law and the Company’s organizational documents.
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(e) The DOW Director shall comply with the corporate governance principles and practices of the Company as in effect from time to time and applicable to directors generally and shall be subject to the same fiduciary duties under Delaware law as the other members of the Board. The DOW Director shall be entitled to reimbursement of reasonable and documented out-of-pocket expenses in the same manner and to the same extent as the other non-executive members of the Board, subject to the Company’s expense reimbursement policies as in effect from time to time.
(f) The size of the Board shall not exceed nine members and the size of each of the Audit Committee of the Board (the “Audit Committee”) and Compensation Committee of the Board (the “Compensation Committee”) shall not exceed three members, except as otherwise permitted by this Agreement. For so long as the DOW Investors have a right to designate a DOW Director, the Board or any committee thereof shall appoint the DOW Director for membership on the Audit Committee and Compensation Committee if permitted by stock exchange rules and the rules and regulations of the SEC. If the DOW Director is not permitted by stock exchange rules and the rules and regulations of the SEC to be a member of the Audit Committee or the Compensation Committee, the DOW Director shall attend all meetings of the Audit Committee or the Compensation Committee, as applicable, in a strictly non-voting observer capacity be a non-voting observer capacity.
(g) Notwithstanding anything to the contrary in this Section 2, no provision of this Section 2 shall be construed to require the Company, the Board, any committee of the Board or any director or officer to take or refrain from taking any action to the extent such action or inaction would be contrary to the Company’s certificate of incorporation or bylaws, the DGCL, the federal securities laws, applicable stock exchange rules, any applicable stockholder rights plan or similar arrangement, or the fiduciary duties of the directors under Delaware law. The parties acknowledge and agree that this Section 2 is intended to constitute a contract entered into by the Company with one or more current or prospective stockholders or beneficial owners of stock of the Company in their capacity as such under Section 122(18) of the DGCL.
3. Protective Provisions.
(a) For so long as the DOW Investors continue to satisfy the Minimum Ownership Condition, the Company shall not, and shall cause its Subsidiaries to not, take any of the following actions described in this Section 3(a) without the prior written consent of the DOW (not to be unreasonably withheld, conditioned or delayed), except as set forth in Section 3(c) or Section 3(e):
(i) with the exception of those Subsidiaries identified on Appendix II, voluntarily liquidate, dissolve or wind-up the Company or any of its Subsidiaries; provided, however, that the foregoing shall not include the liquidation, dissolution or winding up of directly or indirectly wholly-owned Subsidiaries of the Company whose assets are distributed or otherwise transferred (whether by operation of law or otherwise) to the Company or one of its other wholly-owned Subsidiaries;
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(ii) amend, alter or repeal any of the provisions of (A) this Agreement or (B) any other governing documents of the Company that adversely alters any of the rights, preferences or privileges of the Preferred Stock (other than in a de minimis, non-economic respect);
(iii) authorize, create or issue (A) any additional Equity Securities of the Company (or any securities convertible into or exercisable for any Equity Securities of the Company), in each case, having rights, preferences or privileges senior to, or in parity with, the Preferred Stock, (B) any Equity Securities of the Company or its Subsidiaries that are mandatorily redeemable or (C) any preferred stock of any Subsidiary of the Company, in each case other than Exempt Issuances;
(iv) increase or decrease the authorized number of directors of the Board (or the number of votes provided to each director);
(v) make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Company (each of the foregoing, an “Affiliate Transaction”) involving aggregate value in excess of $120,000 unless such Affiliate Transaction is on terms, taken as a whole, that would have been obtained at such time in a comparable transaction by the Company or its Subsidiaries with a person other than an Affiliate of the Company on an arm’s-length basis as approved by a majority of the members of the Board or a majority of the Disinterested Directors; provided that this clause (v) shall not apply to (A) compensation, indemnification, advancement or insurance arrangements for directors, officers, employees or consultants approved by the Board or a committee thereof or (B) transactions solely among the Company and its wholly-owned Subsidiaries;
(vi) sell, assign, license, transfer, abandon, dedicate to the public domain, fail to maintain, prosecute or defend, or otherwise dispose of, any material Technology or Intellectual Property, other than non-exclusive licenses granted to customers, vendors, and business partners (that are not Restricted Entities or non-U.S. Persons) in the ordinary course of business consistent with past practice, and non-exclusive licenses, sublicenses, covenants not to sue, development rights, or escrow arrangements granted in the ordinary course of business consistent with past practice or in connection with strategic, commercial, financing, acquisition, disposition, joint venture or collaboration transactions approved by the Board or a committee thereof, and dispositions, abandonments or failures to maintain, prosecute or defend Intellectual Property or Technology that is not material to any Project;
(vii) declare, pay, or make any (A) dividends or distributions on any Common Stock or other Equity Securities (other than the Preferred Stock), and (B) repurchases, redemptions, or other acquisitions of Common Stock or other Equity Securities (collectively, “Restricted Payments”) (in each case, other than as contemplated by the Plan) unless each of the following conditions is satisfied at the time of, and after giving pro forma effect to, such Restricted Payment: (1) no accrued and unpaid dividends remain outstanding on the Preferred Stock; (2) the Company’s Total Net Leverage Ratio does not exceed 2:00 to 1:00; (3) the aggregate amount of all Restricted Payments made following the date hereof does not exceed $15 million in the aggregate; and (4) no Default or Event of Default has occurred and is continuing; provided that this clause (vii) shall not restrict repurchases or withholding of Equity Securities in connection with the payment of exercise prices or taxes under equity incentive plans approved by the Board or a committee thereof;
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(viii) increase or decrease the authorized number of shares of Preferred Stock;
(ix) create, incur, assume, or suffer to exist any Indebtedness, other than Permitted Indebtedness;
(x) except as set forth in Appendix III, make any loan or advance to, or own any stock or other securities of, any Subsidiary or other corporation, partnership, or other entity unless it is a wholly-owned Subsidiary of the Company following such transaction;
(xi) make any loan or advance to any person, including, any employee or director, except advances and similar expenditures in the ordinary course of business or under the terms of the 2026 Equity Incentive Plan of the Company (the “2026 Incentive Plan”) or successor employee stock or option plan approved by the Board or an applicable Board committee;
(xii) make any investment inconsistent with any investment policy approved by the Board or an applicable Board committee, as such policy may be amended, modified or waived from time to time by the Board or such committee;
(xiii) enter into or be a party to any transaction with any director, officer or employee of the Company or any “associate” (as defined in Rule 12b-2 under the Exchange Act) of any such person involving aggregate value in excess of $120,000, other than transactions constituting compensation, indemnification, advancement or insurance arrangements approved by the Board or a committee thereof;
(xiv) effect any Change of Control; provided that this clause (xiv) shall not prohibit the Board or any committee thereof from (A) considering, evaluating, negotiating, approving, recommending, submitting to stockholders, failing to recommend, changing its recommendation with respect to, or entering into any agreement providing for a Change of Control if the Board or any committee thereof determines in good faith, after consultation with legal counsel, that failure to take such action would reasonably be expected to be inconsistent with the fiduciary duties of the directors under Delaware law, or (B) complying with Rule 14d-9, Rule 14e-2 or Item 1012(a) of Regulation M-A under the Exchange Act; or
(xv) enter into any binding agreement with regard to any of the foregoing other than any agreement or that is entered into in accordance with Section 3(e).
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(b) In addition to the restrictions set forth in Section 3(a), for so long as the DOW Investors continue to satisfy the Minimum Ownership Condition, until Completion, the Company shall not, and shall cause its Subsidiaries to not, take any of the following actions described in this Section 3(b) without the prior written consent of the DOW, except as set forth in Section 3(c) or Section 3(e):
(i) make any Restricted Payments;
(ii) increase or decrease the authorized number of shares of Common Stock; provided that no consent shall be required for any increase approved by the Board or a committee thereof in connection with an Exempt Issuance;
(iii) incur, assume or guarantee any Indebtedness in excess of the Threshold Amount in the aggregate (excluding existing Indebtedness reflected on the Company’s balance sheet as of July 3, 2026 as set forth in the Company’s Quarterly Report on Form 10-Q for the quarter ending July 3, 2026 and filed with the SEC on August 13, 2026, set forth on Schedule I and ordinary course trade payables);
(iv) hire or terminate or materially modify the compensation or benefits (other than in the ordinary course of annual compensation review) of the Chief Executive Officer or the Project Manager, other than as otherwise permitted by this Agreement and other than any termination, suspension or modification of duties or compensation approved by the Board or a committee thereof in good faith in connection with death, disability, resignation, cause, misconduct, poor performance, legal or regulatory compliance, succession planning, or the best interests of the Company and its stockholders;
(v) increase the size of 2026 Incentive Plan or any equity incentive plan or other management incentive arrangement in effect as of the date hereof, other than as expressly set forth in the terms of the 2026 Incentive Plan or any other equity incentive plan (including, for the avoidance of doubt, any evergreen provision contained therein);
(vi) materially change the principal business of the Company, enter into any new material line of business, or discontinue any existing material line of business, other than in connection with the Projects and their respective Completion;
(vii) except as specifically set forth in Appendix IV hereto, enter into any individual strategic transaction, joint venture, partnership or similar arrangement involving the acquisition, disposition, contribution or transfer of assets with a value in excess of $60.0 million; or
(viii) enter into any binding agreement with regard to any of the foregoing other than any agreement that is entered into in accordance with Section 3(e).
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(c) Notwithstanding anything to the contrary in Section 3(a) or Section 3(b), the Company may make the following equity issuances other than to any Restricted Entity, provided, that the Company reasonably and promptly informs the DOW to the extent any such actions would require the DOW’s consent in the absence of this Section 3(c), discusses any such action in good faith with the DOW and provides any additional information regarding such action as reasonably requested by the DOW, subject in each case to applicable Law, confidentiality restrictions, attorney-client privilege, and the fiduciary duties of the directors under Delaware law:
(i) (x) for so long as any Preferred Stock remains outstanding, issuances of Common Stock (or any stock options, restricted stock units or other equity-based incentives that are exercisable for or vest in, as applicable, shares of Common Stock), and (y) thereafter, issuances of any securities, by the Company to employees, officers or directors, consultants, contractors, vendors or other agents of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Company;
(ii) issuances of securities upon the exercise or exchange of or conversion of any securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding as of the date hereof, provided that such securities have not been amended since the date hereof to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with stock splits or combinations) or to extend the term of such securities;
(iii) securities issued as consideration to a third party pursuant to any merger acquisitions or strategic business combination transactions, approved by a majority of the disinterested directors of the Company, provided that (1) such securities are issued as “restricted securities” (as defined in Rule 144 of the Securities Act) or are issued pursuant to an effective registration statement pursuant to the Securities Act, and (2) any such issuance shall only be to a person (or to the equityholders of a person) which is, itself or through its Subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company as determined by the Board and shall provide to the Company additional benefits;
(iv) securities issued pursuant to stock splits, stock dividends, recapitalizations, reclassifications or similar transactions affecting holders of Common Stock generally on a pro rata basis;
(v) issuances of Equity Securities (or rights to acquire Equity Securities) pursuant to the Plan; and
(vi) securities issued upon conversion, exercise or exchange of the Preferred Stock, the Warrants or any securities issued pursuant to clauses (i) through (iv) above.
The issuances described in clauses (i) through 3(c)(vi) of this Section 3(c) are collectively referred to as “Exempt Issuances.”
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(d) For so long as the DOW Investors satisfy the Minimum Ownership Condition, the Company shall, and shall cause each of its Subsidiaries and, to the extent within its control, each joint venture, special-purpose vehicle or other entity through which any Project is conducted to, (i) own or hold valid licensed rights to use all Intellectual Property and Technology material to the Projects; (ii) maintain, prosecute and defend all material registrations and applications included in the Project IP, and use commercially reasonable efforts to preserve the confidentiality of all material trade secrets and know-how included in the Project IP; and (iii) comply in all material respects with all applicable export control and technology-transfer Laws (including the International Traffic in Arms Regulations and the Export Administration Regulations) and not transfer, license or disclose any Project IP or controlled technical data to any non-U.S. person except as authorized under such Law; provided that nothing in this Section 3(d) shall require the Company or any of its Subsidiaries to take any action that the Board, a committee thereof or management acting under authority delegated by the Board determines in good faith would be inconsistent with applicable Law or the fiduciary duties of the directors under Delaware law.
(e) Notwithstanding anything herein to the contrary, no provision of this Section 3 shall be construed to require the Company, the Board or any committee thereof, or any director or officer to take or refrain from taking any action to the extent such action or inaction would be contrary to or inconsistent with applicable Law or the fiduciary duties of the directors under Delaware law.
4. Restrictions on Transfer.
(a) Without the Company’s prior written consent (not to be unreasonably withheld, conditioned or delayed), the DOW Investors shall not sell, transfer, assign or otherwise dispose of the Preferred Stock or Warrants, except for any Transfer to any other U.S. federal Governmental Authority, division, department, organization, instrumentality or similar entity or body controlled, directly or indirectly, by the United States that can deliver a valid and duly executed Internal Revenue Service Form W-9 or otherwise demonstrate that it is a “United States person” for U.S. federal income tax purposes (such authority, entity or body, a “Qualified Governmental Authority”). Notwithstanding the foregoing, in no event is the Company required to provide its consent for the sale, transfer, assignment or other disposal of the Preferred Stock or Warrants to any Disqualified Holder or Restricted Entity.
(b) Notwithstanding Section 4(a), while the Minimum Ownership Condition is satisfied, if the DOW Investors propose to sell, transfer, assign or otherwise dispose of any shares of Preferred Stock or Warrants to any Person that is not a Qualified Governmental Authority (a “Proposed Third-Party Transfer”), the DOW Investors shall provide reasonable notice to the Company of the (i) identity of the buyer, (ii) the purchase price and (iii) the number of shares of Preferred Stock or Warrants, as the case may be, subject to the proposed transfer prior to such transaction, and the Company shall, within 30 days of receiving such notification, have the right, but not the obligation, to make a fully financed, binding offer to purchase all (but not less than all) of such securities, which must remain open for at least 180 days. If the Company makes such an offer, the DOW Investors will not consummate a Proposed Third-Party Transfer at a price per equity security less than that offered by the Company during such 180-day window.
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(c) Restrictions on Common Stock Issued Upon Exercise of Warrants.
(i) At any time following the exercise of any Warrants, the DOW Investors shall not, directly or indirectly, Transfer any shares of Common Stock (including any Warrant Shares) in a block trade, privately negotiated transaction, or other transaction that is not an open market transaction effected through a national securities exchange in the ordinary course of trading, to any Person that the DOW Investors know or reasonably believe to be a Disqualified Holder or a Restricted Entity.
(ii) For the avoidance of doubt, the restrictions in this Section 4(c) shall not apply to (A) open market transactions effected through a national securities exchange or other established trading market in the ordinary course of trading (other than any transaction that the DOW Investors know is prearranged with a buyer described in this Section 4(c)), (B) any Transfer to a Qualified Governmental Authority, or (C) any Transfer effected pursuant to a registration statement filed under the Securities Act in connection with an underwritten public offering.
5. Drag-Along Rights. If a Change of Control is approved by the Board, subject to Sections 3(a) and 3(b), (a) subject to compliance with clause (b), the DOW Investors shall vote in favor of such Change of Control and refrain from exercising any dissenters’ or appraisal rights and (b) the DOW Investors shall be afforded the option to continue and extend or “roll” their shares of Preferred Stock and Common Stock (including any Warrant Shares) on substantially the same governance, information, access and inspection terms as those set forth in this Agreement (including pursuant to Sections 3 through 8, 11 and 12) and the Certificate of Designations.
6. Restricted Entities.
(a) The Company shall not directly or indirectly trigger any Restricted Entity Event (as defined in Section 6(b) below).
(b) A “Restricted Entity Event” shall be deemed to have occurred if (i) to the Knowledge of the Company, a Restricted Entity, directly or indirectly, owns Equity Securities representing 10% or more of the outstanding Common Stock of the Company, (ii) any Restricted Entity files a statement on Schedule 13D, Schedule 13G, Form 13F, Form 3, Form 4 or any amendments to such schedules or forms (collectively, the “Beneficial Ownership Reports”) with respect to the Company that indicates ownership by such Restricted Entity of Equity Securities representing 10% or more of the outstanding Common Stock of the Company (or makes, or becomes obligated to make, any comparable filing under any comparable non-U.S. reporting regime reflecting beneficial ownership in excess of such threshold), (iii) any Restricted Entity acquires the right to appoint, nominate or designate a member of, or an observer to, the Board, (iv) the Company or any subsidiary thereof enters into any material offtake agreement, supply agreement, technical collaboration, intellectual property licensing agreement, technology agreement, or other material agreement with any Restricted Entity other than any such agreement or transaction with the Persons listed on Schedule II hereto or (v) any Restricted Entity becomes a lender, creditor or guarantor of Indebtedness of the Company or any Subsidiary in an aggregate principal amount exceeding $5,000,000.
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(c) For purposes of this Section 6, the beneficial ownership of a Restricted Entity and all of such Restricted Entity’s Affiliates shall be aggregated and treated as a single ownership position of such Restricted Entity; provided, that such aggregation shall only be required to the extent that the Company has Knowledge of such ownership by such Restricted Entity and its Affiliates. The Company shall (i) review and monitor the Beneficial Ownership Reports that are filed with the SEC (and any comparable filings made under any comparable non-U.S. reporting regime) in order to reasonably identify whether any acquiring Person or “group” is a Restricted Entity, (ii) within 50 days after the end of each Fiscal Quarter, deliver to the DOW a written report setting forth, to the Knowledge of the Company, number and percentage of Equity Securities beneficially owned by each such Restricted Entity together with its known Affiliates, in each case including the information reflected in the Beneficial Ownership Reports and other publicly available filings reviewed by the Company pursuant to this Section 6(c), and (iii) provide written notice to the DOW of any Restricted Entity Event promptly, and in any event within two (2) Business Days.
(d) At all times during which a Restricted Entity Event has occurred and is continuing, (i) the Company shall not, and shall cause each subsidiary thereof not to, without the prior written consent of the DOW, (A) enter into any material offtake agreement, supply agreement or technology agreement or terminate or materially amend any such agreement (other than agreements with the Persons listed on Schedule II hereto), (B) issue any new Equity Securities (other than any issuance of Equity Securities (or rights to acquire Equity Securities) pursuant to the Plan) or (C) enter into any joint venture, partnership or similar collaboration arrangement or sell, assign, license, transfer or otherwise dispose of, or encumber, any intellectual property (other than agreements or transactions, as applicable, with the Persons listed on Schedule II hereto), and (ii) the DOW shall have the right to designate one (1) individual to attend all meetings of the Board and each committee thereof in a nonvoting observer capacity and to receive copies of all notices, minutes, consents and other materials that are provided to the members of the Board, at the same time and in the same manner as provided to such members; provided that the DOW shall not have the designation rights pursuant to clause (ii) if the DOW already has the DOW Director or the DOW Board Observer with the right to attend all such meetings of the Board and all committee meetings of the Board.
(e) The rights of the DOW set forth in Section 6(d) shall apply automatically, and shall become effective without any further action by the Company, the Board or any other Person, upon the occurrence of a Restricted Entity Event, and shall continue until, and only until, such time as such Restricted Entity Event is no longer continuing and the Company has provided to the DOW written evidence, reasonably satisfactory to the DOW, that such Restricted Entity Event no longer exists.
(f) The Company shall use its reasonable best efforts to maintain in effect a shareholder rights plan or substantially similar arrangement (the “Plan”) triggered upon any Restricted Entity Event set forth in Section 6(b)(i)-(ii) (which shall be within 15 days of such Restricted Entity Event) (and for the avoidance of doubt, the Plan shall not be required to be triggered upon any Restricted Entity Event set forth in Section 6(b)(iii)-(iv)), and shall not exempt any Restricted Entity under, or waive the application of, such arrangement without the prior written approval of the DOW Investors.
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(g) If the Plan is invalidated, enjoined or otherwise rendered unenforceable, in whole or in part, by a court of competent jurisdiction, the Company shall use its reasonable best efforts to amend, replace or otherwise modify the Plan in a manner that would satisfy the requirements or concerns identified by such court or otherwise restore protections substantially equivalent to those contemplated by Section 6(f). During the period in which the Company is using such reasonable best efforts (the “Amendment Period”), any default or breach by the Company of its obligations under this Section 6 that arises as a result of such invalidation, injunction or other determination shall be tolled and shall not constitute a Breach Event or Event of Default. The Amendment Period shall commence on the date of such invalidation, injunction or other determination and shall continue until the earlier of (A) the date on which the Company has amended, replaced or otherwise modified the Plan in accordance with the foregoing or (B) 60 calendar days thereafter; provided that, if the Company is diligently pursuing such amendment, replacement or modification, the Amendment Period shall be extended beyond such 60-day period for such longer period as may be reasonably necessary to complete such action. If the Company fails to amend, replace or otherwise modify the Plan in accordance with the foregoing before the expiration of the Amendment Period, any such Default or breach shall cease to be tolled and shall resume and thereafter be subject to the applicable cure periods and other provisions of this Agreement.
(h) The Company shall use its reasonable best efforts to cause to be submitted for approval by the Company’s shareholders at the next annual or special meeting of shareholders of the Company an amendment to the Company’s Certificate of Incorporation that would prohibit a Restricted Entity from owning Equity Securities representing 10% or more of the outstanding Common Stock of the Company in form and substance reasonably acceptable to the DOW.
(i) The Company shall cooperate in good faith with the DOW in connection with any Restricted Entity Event and the implementation of this Section 6 and shall take such other actions in connection therewith as may be reasonably requested by the DOW and that are not inconsistent with applicable law or the fiduciary duties of the Board. The Company shall (and shall cause its subsidiaries to) not take any action designed to circumvent the purposes of this Section 6.
(j) Notwithstanding anything to the contrary in this Agreement, there shall be no cure period for any Restricted Entity Event arising from any voluntary act, material contract, license, debt incurrence, direct issuance or board appointment executed or approved by the Company or any of its Subsidiaries. In the event of any breach or default by the Company of any of its obligations under Section 6(b)(i) or Section 6(b)(ii), the Company shall have a period of 15 days following the earlier of (x) receipt of written notice from the DOW specifying in reasonable detail the nature of such breach or default or (y) the date on which the Company otherwise obtains Knowledge of such breach or default, during which the Company shall use its reasonable best efforts to cure such breach or default; provided, that (i) the Company provides written notice to the DOW within two (2) Business Days after acquiring such Knowledge and (ii) during such period, the Company shall not grant any governance, board, information or commercial rights to such Restricted Entity. The Company shall provide notice of any such breach or default to the DOW as promptly as practicable (which shall be no more than five calendar days after becoming aware of such breach or default). No Breach Event or Event of Default under this Section 6 shall be deemed to have occurred for purposes of this Agreement if such breach or default is cured to the reasonable satisfaction of the DOW within such 15-day period.
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(k) For purposes of this Section 6, “Knowledge of the Company” (and correlative terms such as “Knowledge” and “knowingly”) means the actual knowledge of the executive officers of the Company, in each case after due inquiry of (i) the Beneficial Ownership Reports publicly available on the SEC’s EDGAR filing system and, to the extent applicable, any comparable non-U.S. reporting system and (ii) to the extent otherwise actually received by the Company, any NOBO reports or other stock surveillance or shareholder identification reports.
7. Right of First Offer (Securities); Preemptive Rights.
(a) Except as set forth on Schedule IV, for so long as the DOW Investors continue to satisfy the Minimum Ownership Condition, the Company shall, prior to the issuance or sale of any New Securities, first offer to the DOW Investors the right to purchase all or any portion of such New Securities by delivering written notice of the proposed issuance at least 60 days prior to the proposed issuance date (the “Offer Notice”), which Offer Notice shall set forth the amount and type of New Securities, the proposed price (or the method of determining the price) and the other material terms and conditions of the proposed issuance.
(b) Except as set forth on Schedule IV, In addition to, and without limiting, the right of first offer set forth in Section 7(a), for so long as the DOW Investors continue to satisfy the Minimum Ownership Condition, if the Company issues or sells, or authorizes the issuance or sale of, any New Securities, the Company shall offer to the DOW Investors, within 60 days prior to such issuance, the right to purchase up to their Percentage Interest of such New Securities, in each case determined before giving effect to the issuance of such New Securities, so as to enable the DOW Investors to maintain their Percentage Interest following such issuance.
(c) The DOW Investors may exercise such right of first offer or preemptive rights, as applicable, in whole or in part, by delivering written notice of exercise to the Company prior to the proposed issuance date; provided that if the exercise of such right by the DOW Investors would cause the DOW Investors to exceed 19.9% (the “Issuance Limitation”) of the voting power of the Company, the Company shall take the actions described in Section 7(d) to enable the DOW Investors to complete the purchase of the New Securities.
(d) The date on which the Issuance Limitation would be exceeded shall be deemed the “Vote Threshold Date.” If the governing NASDAQ rules require stockholder approval of the sale of New Securities to the DOW Investors, the Company shall, within 60 days of the Vote Threshold Date, use commercially reasonable efforts to obtain the approval of the Company’s stockholders to issue Equity Securities in excess of the Issuance Limitation in accordance with the requirements of NASDAQ or applicable Law.
(e) Each DOW Investor shall be entitled to purchase New Securities pursuant to this Section 7 at the same price and under the same conditions as such New Securities are offered and sold to other purchasers. Each DOW Investor participating in such purchase shall also be obligated to execute agreements in the form presented to such holder by the Company, so long as such agreements (including any representations or warranties contained therein) are substantially similar to those to be or previously executed by other purchasers of New Securities; provided that the Company shall represent that such agreements are substantially the same after giving effect to side letters, if any. The purchase price for all New Securities offered to each DOW Investor shall be payable in cash by wire transfer of immediately available funds to an account designated by the Company.
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8. Offtake; Right of First Negotiation.
(a) In connection with any purchase, acquisition or exclusive offtake of any Product(s) produced or derived by, associated with, attributable to or otherwise regarding the Company or any of its Subsidiaries or otherwise in connection with, or as a result of, the Project (“Project Products”), the DOW Investors (or any Qualified Governmental Authority designated by the DOW) shall have an exclusive right of first negotiation for ninety (90) days following written notice from the Company (or such shorter time period as the parties agree in their sole discretion) (the “Negotiation Period”) to negotiate for the purchase, acquisition or exclusive offtake of such Product(s) (each agreement as a result of such negotiations, a “Product Contract”). If the DOW Investors elect to exercise such right, the Company and the DOW Investors shall undertake such negotiations in good faith and on commercially reasonable, arm’s-length terms, including pricing terms substantially consistent with then-prevailing market conditions; provided that the Company may continue marketing efforts and discussions with potential alternative customers during the Negotiation Period, so long as neither the Company nor any of its Subsidiaries enters into any binding agreement with respect to such Product(s) during the Negotiation Period without the prior written consent of the DOW Investors. Unless otherwise agreed by the Company and the DOW Investors, if the Company and the DOW Investors have not executed a Product Contract within the Negotiation Period, the Company and its Subsidiaries may pursue and enter into agreements with alternative customers for such Product(s) upon written notice to the DOW Investors; provided that the Company may not offer or sell such Product(s) on terms materially more favorable to a third-party purchaser (including a lower purchase price, longer payment terms or looser delivery obligations) than those last proposed to or by the DOW Investors, without first re-offering such terms to the DOW Investors.
(b) If the DOW Investors elect not to enter into a Product Contract for any Project Product(s) during the Negotiation Period, the Company shall satisfy rated orders to the extent required under 15 C.F.R. Part 700 and shall allocate and sell all remaining Project Product volumes according to the following mandatory order of priority:
(i) first, to the United States Defense Primes;
(ii) second, to the extent Products are not sold pursuant to clause (i), to suppliers of the Defense Industrial Base;
(iii) third, to the extent Products are not sold pursuant to clauses (i) or (ii), to U.S. Businesses;
(iv) fourth, to the extent such Product is not sold pursuant to clauses (i) through (iii), to U.S. Allies; then
(v) fifth, to any other Person that is not a Restricted Entity;
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(vi) For the avoidance of doubt, this Section 8(b) shall not preclude the Company to sell to any non-Restricted Entity so long as it has capacity to satisfy its obligations under this Section 8(b).
(c) The Company shall not offer or sell Project Product(s) to a lower-priority tier unless (i) no higher-priority requester has submitted a purchase request within 30 days of capacity availability; or (ii) a higher-priority requester has submitted an offer, and a lower-priority requester subsequently offers superior commercial terms. In such event, the Company shall provide written notice of such superior terms to the higher-priority requester (with a contemporaneous copy to the DOW Investors) and such higher-priority requester (or the DOW Investors on behalf of an eligible defense contractor) shall have 10 Business Days following receipt of such notice to match such terms prior to the Company executing a sale to the lower-priority requester.
(d) Notwithstanding anything to the contrary in this Agreement, the Company and its Subsidiaries may not, directly or indirectly, offer or sell such Project Product(s) to a Restricted Entity.
(e) For the avoidance of doubt, the Emergency Allocation Rights (as defined below) set forth in Section 10 are in addition to, and not in limitation of, the DOW Investors’ rights under this Section 8. In the event of any conflict between this Section 8 and Section 10, Section 10 shall control.
(f) Defined Terms. As used in this Section 8, the following terms have the meanings set forth below:
(i) “United States Defense Primes” means any entity that is a prime contractor holding an active facility security clearance and one or more active prime contracts with the U.S. Department of War, U.S. Department of Defense, or any military department thereof, for the development, production or sustainment of major defense systems, armaments, aerospace platforms, naval vessels or critical munitions, and any other entity reasonably and in good faith designated or agreed to by the DOW from time to time.
(ii) “Defense Industrial Base” means the U.S. Department of War / Department of Defense, government-owned and contractor-owned facilities, and private-sector industrial facilities, suppliers and subcontractors (at any tier), and any other entity reasonably and in good faith designated or agreed to by the DOW from time to time, that provide goods, raw materials, components, research or services to the U.S. Government or defense prime contractors directly supporting national security and military readiness requirements.
(iii) “U.S. Businesses” means any corporation, partnership, limited liability company or other business entity organized under the laws of the United States, any state thereof or the District of Columbia, that has its principal place of business in the United States and is not a foreign person as defined in 31 CFR §800.224 and is not controlled by a Restricted Entity.
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(iv) “U.S. Allies” means the governments of, and commercial entities organized under the laws of and headquartered in, (i) the member states of the North Atlantic Treaty Organization, (ii) Australia, New Zealand, Japan, the Republic of Korea and Israel, (iii) any other country designated as a Major Non-NATO Ally under 22 U.S.C. § 2321k or included within the National Technology and Industrial Base under 10 U.S.C. § 4801 and (iv) any other country the Assistant Secretary of War for Industrial Base Policy (or successor authority) may lawfully designate in writing for specified transactions.
9. Investment Security and Sanctions Compliance. Without the prior written consent of the DOW Investors, the Company shall not accept any investment, whether direct or indirect, including the sale of any equity or debt securities, in the Company from (a) any Restricted Entity, if such investment would result in the Restricted Entity holding any equity or any rights related to any equity in the Company, or (b) any foreign person, as defined in 31 CFR §800.224, if such investment would result in the foreign person holding any of the powers or rights identified in 31 C.F.R. § 800.208(a)/211(b) or constitute a covered transaction, as defined in 31 C.F.R. § 800.213. For purposes of this Section 9, the Company shall not be deemed to have accepted an investment solely as a result of any acquisition of any equity or debt securities of the Company by any Person in open-market transactions or other transactions not involving the issuance or sale of any equity or debt securities by the Company.
10. Emergency Allocation Rights. Notwithstanding anything to the contrary in this Agreement, upon issuance of an Activation Notice by the DOW Investors, the Company shall allocate and make available to the DOW Investors, or to such other recipient as the DOW Investors may designate in writing, on commercially reasonable, arm’s-length terms, including pricing terms substantially consistent with then-prevailing market conditions, up to one hundred percent (100%) of production capacity of the Projects (which shall include any inventory associated with the applicable Project wherever located), and, to the extent reasonably necessary to satisfy such requirement, the corresponding production, processing, storage, loading, transportation coordination, inventory management, and delivery capacity associated with the applicable Projects (collectively, the “Emergency Allocation Right”). No prior course of dealing, delay, or failure to exercise any right under this Agreement shall constitute a waiver of the DOW Investors’ rights with respect to the Emergency Allocation Right.
(a) Activation Standard. The DOW Investors may issue an Activation Notice whenever an Authorized Government Official determines in writing that the Project Products are required to support national defense, war, armed conflict, military contingency operations, industrial mobilization, emergency preparedness, or response to a national emergency, and that exercise of the Emergency Allocation Right is necessary or advisable to ensure timely availability of such Project Products. Such determination and any resulting Activation Notice: (1) shall be conclusive and binding on the Company and shall not be subject to review, challenge, or arbitration in any forum whatsoever; and (2) shall not require (i) a formal declaration of war; (ii) a specific Authorization for Use of Military Force; (iii) a declaration under the National Emergencies Act; or (iv) the prior issuance of a rated order, directive allocation, purchase order, or other implementing instrument under the Defense Priorities and Allocations System or otherwise.
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(b) Activation Notice. Each Activation Notice shall: (1) identify the Project Products, affected facilities, production streams, or the production capacity of the Projects subject to activation; (2) specify the effective date and, if known, anticipated duration of activation; (3) specify the allocation percentage required, which may be up to one hundred percent (100%) of the production capacity of the Projects; (4) identify the designated recipient; (5) include any then-available delivery, lifting, logistics, packaging, transportation, or scheduling instructions; and (6) identify the Authorized Government Official issuing or approving the Activation Notice. An Activation Notice may be delivered by electronic mail or other agreed written means and shall be effective upon receipt unless a later effective time is stated therein.
(c) Effect of Activation. Upon the effective date of an Activation Notice: (1) the DOW Investors’ rights under this Section 10 shall supersede the Company’s obligations to third-party customers with respect to the affected the production capacity of the Projects, except to the extent prohibited by applicable law, provided that the Company shall use best efforts to obtain any exemption, license, or waiver required to eliminate such prohibition and shall promptly notify the DOW Investors of any such prohibition and the actions being taken to remove it; (2) the Company shall cease entering into new commitments that would conflict with the Activated Volumes; (3) the Company shall take all actions reasonably necessary to redirect, defer, unwind, cancel, swap, or reassign previously committed volumes so as to maximize delivery to the DOW Investors or its designee(s); (4) the Company shall prioritize performance for the DOW Investors in all production, storage, handling, and logistics scheduling; (5) the Company shall not assert that conflicting commercial commitments excuse performance to the extent such commitments were entered into contrary to this Section 10; and (6) the Company shall provide an initial response acknowledging the Activation Notice within 24 hours and a preliminary implementation plan within 3 Business Days. The Company’s obligations under this Section 10 shall not be conditioned upon, or delayed by, the Company’s acknowledgment or provision of an implementation plan.
(d) Third-Party Contracting Covenant. The Company shall not enter into any sale, reservation, tolling, transport, storage, marketing, hedging, forward sale, exclusivity, take-or-pay, financing, or similar arrangement that would materially impair the DOW Investors’ rights under this Section 10. The Company shall include in material third-party contracts commercially reasonable provisions permitting diversion, cancellation, deferral, reassignment, or other accommodation necessary to honor the DOW Investors’ rights under this Section 10. The Company shall provide the DOW Investors with prior written notice, and copies, of any third-party contract reasonably expected to involve delivery, reservation, or sale of more than 10% of annual the production capacity of the Projects or a term in excess of 12 months, and shall not enter into any such contract without the DOW Investors’ prior written consent, not to be unreasonably withheld. As between the DOW Investors and the Company, any third-party commitment entered into in violation of this subsection shall be subordinate to the DOW Investors’ rights under this Section 10.
(e) Successors. The Company shall cause any successor, transferee, or acquirer of the applicable Project or any material portion thereof to assume this Section 10 in writing as a condition to such transaction.
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(f) Implementation Instruments. The DOW Investors may implement this Section 10 through one or more Activation Notices, delivery instructions, lifting schedules, purchase orders, rated orders, directive allocations, or other lawful implementing instruments, but no such instrument shall be required as a condition precedent to the validity of an Activation Notice or the existence of the Company’s obligations under this Section 10.
(g) DPAS and Priority Cooperation. If the DOW Investors or another authorized Government Authority issues a rated order, directive allocation, or other lawful priority instrument in connection with this Section 10, the Company shall comply with all applicable requirements associated with such instrument and shall, to the extent applicable, flow down priority ratings and related obligations to lower-tier suppliers. The Company shall reasonably cooperate in seeking priority assistance and in providing supply-chain information necessary to support priority execution.
(h) Breakage Costs. The DOW Investors shall reimburse the Company only for documented, reasonable, direct out-of-pocket costs unavoidably incurred to cancel, unwind, or redirect third-party commitments directly resulting from an Activation Notice (“Breakage Costs”). Breakage Costs expressly exclude lost profits, opportunity costs, facility downtime, indirect damages, and internal overhead. The Company shall submit any itemized, substantiated claim for Breakage Costs within 60 days of incurring the relevant cost, subject to the DOW Investors’ verification and audit rights; any claim not timely submitted is waived. Unless otherwise agreed in writing by an Authorized Government Official, reimbursable Breakage Costs shall not exceed $250,000 for any single item or $2,500,000 in the aggregate per Activation Notice. Notwithstanding anything herein to the contrary, all reimbursement obligations under this Section are subject to the availability of appropriated funds pursuant to 31 U.S.C. 1341, and nothing herein creates any obligation in advance or in excess of available appropriations.
(i) Reporting; Visibility; Audit. Upon issuance of an Activation Notice and for so long as it remains in effect, the Company shall provide the DOW Investors with prompt access to reasonably requested production reports, inventory status, delivery schedules, logistics constraints, affected third-party commitments, and other information reasonably necessary to verify and implement the Company’s obligations under this Section 10. The DOW Investors may audit compliance with this Section 10 upon reasonable notice, provided that such audit is conducted so as not to unreasonably interfere with operations.
(j) Product Specifications and Acceptance. The Company shall satisfy Activated Volumes using Project Products that conform to the specifications otherwise applicable to the production capacity of the Projects, subject to any different specifications or prioritization directions set forth in the Activation Notice. The Company shall not satisfy its obligations under this Section 10 by tendering nonconforming product unless the DOW Investors expressly agrees in writing.
(k) Force Majeure. No force majeure event shall excuse the Company’s failure to comply with this Section 10 to the extent such failure results from conflicting commercial commitments, inadequate contractual protections in third-party agreements entered into after the date of hereof, or the Company’s failure to maintain commercially reasonable arrangements consistent with this Section 10. Any otherwise applicable force majeure claim shall be promptly documented and shall not relieve the Company of the obligation to allocate all non-affected capacity and volumes in accordance with this Section 10.
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(l) Specific Performance. The DOW Investors and the Company acknowledge that a breach of this Section 10 would cause irreparable harm for which monetary damages alone would be inadequate. The DOW Investors shall therefore be entitled to specific performance, injunctive relief, and other equitable remedies, in addition to any other remedies available at law or in equity, without the necessity of posting bond except to the extent required by non-waivable law.
(m) Defined Terms. As used in this Section 10, the following terms have the meanings set forth below:
(i) “Activated Volumes” means that portion of production capacity of the Projects and/or existing inventory designated by the DOW Investors in an Activation Notice to be delivered to the DOW Investors or its designated recipient(s), up to one hundred percent (100%) of total production capacity of the Projects.
(ii) “Activation Notice” means a written notice issued by the DOW Investors (or by an Authorized Government Official on its behalf) pursuant to subsection (a) exercising the Emergency Allocation Right.
(iii) “Authorized Government Official” means the Secretary of War, the Deputy Secretary of War, the Assistant Secretary of War (Industrial Base Policy), the Director of the DLA, or any military or civilian official formally delegated written authority to execute defense production, DPAS allocation, or emergency acquisition directives.
(iv) “Contract Year” means each twelve (12) month period commencing on January 1 and ending on December 31; provided that the first Contract Year shall commence on the date hereof.
(v) “DLA” means the Defense Logistics Agency of DOW.
11. Information Rights. For so long as the DOW Investors continue to satisfy the Minimum Ownership Condition, in addition to all other information required to be delivered, furnished or provided to stockholders of a Delaware corporation under the DGCL, the Company shall provide the DOW Investors: (a) quarterly and annual financial statements of the Company when and if prepared by the Company (which obligation shall be deemed satisfied to the extent that such financial statements are filed by the Company with the SEC via the EDGAR system within the time periods required by the Exchange Act and the rules and regulations of the SEC promulgated thereunder, including any applicable extensions under Rule 12b-25); (b) financial projections (if prepared by the Company), (c) periodic board reports if and when such reports are being shared with the Board of Directors; and (d) upon DOW’s reasonable written request (but not more than once per month), information relating to the status and developments regarding the Project or any other information that is readily available (collectively, “Information”). Any DOW Investor may deliver written notice (a “DOW Opt-Out Notice”) to the Company requesting that such DOW Investor not receive any Information; provided, however, that such DOW Investor may later revoke any such DOW Opt-Out Notice in writing. Following receipt of a DOW Opt-Out Notice from a DOW Investor (unless subsequently revoked), the Company shall not deliver any Information to such DOW Investor pursuant to this Section 11.
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12. Inspection Rights. For so long as the DOW Investors continue to satisfy the Minimum Ownership Condition, the DOW Investors shall have the right to visit and inspect any of the properties of the Company or any of its Subsidiaries related to the Projects, and to discuss the affairs, finances and accounts of the Company or any of its Subsidiaries related to the Projects with its officers, and to review such information as is reasonably requested, in each case, at such reasonable times and at a frequency to be agreed to by the Company and the DOW Investors (not to exceed once per month); provided that after Completion, the DOW Investors shall have the right to visit and inspect any of the properties of the Company no more than once per fiscal quarter. Such inspection rights shall, subject to Section 17 herein, additionally extend to any operating company, subsidiary, joint venture, or special-purpose vehicle in which the DOW Investor’s equity has been invested, including standalone financial statements, if available, cash flow reports, and material contracts relating to the Projects.
13. Termination. This Agreement shall terminate automatically upon the earliest to occur of (a) the DOW Investors ceasing to hold any Preferred Stock, Common Stock or Warrants and (b) the written mutual agreement of all of the parties hereto.
14. No Fiduciary Duty. The parties hereto acknowledge and agree that nothing in this Agreement shall be deemed to create a fiduciary duty of any DOW Investors or any of its Affiliates to the Company or its equityholders.
15. No Conflicting Agreements. Each DOW Investor represents that it has not granted and is not a party to any proxy, voting trust or other agreement which is inconsistent with or conflicts with the provisions of this Agreement, and no DOW Investor shall grant any proxy or become party to any voting trust or other agreement which is inconsistent with or conflicts with the provisions of this Agreement.
16. Corporate Opportunity. To the fullest extent permitted by applicable Law, (a) the DOW Investors, their representatives and their Affiliates shall have the right to, and shall have no duty (contractual or otherwise) not to, directly or indirectly, engage in the same or similar business activities or lines of business as the Company or any of its Subsidiaries, on its own account, or in partnership with, or as a director, officer, employee or stockholder of, any other Person, including those lines of business deemed to be competing with the Company or any of its Subsidiaries, (b) the Company, on behalf of itself and its Subsidiaries, renounces any interest or expectancy of the Company and its Subsidiaries in, or in being offered an opportunity to participate in, any business opportunity that may from time to time be presented to the DOW Investors, even if the opportunity is one that the Company or any of its Subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so, and none of the Company or any of its Subsidiaries shall have any rights in and to such business opportunity or the income or profits derived therefrom, (c) each of the DOW Investors, their representatives and their Affiliates may independently do business with any potential or actual customer or supplier of the Company or any of its Subsidiaries and (d) the DOW Investors, their representatives and their Affiliates shall not (i) have any duty to communicate or offer such business opportunity to the Company or any of its Subsidiaries or (ii) be liable to the Company or any of its Subsidiaries for breach of any fiduciary or other duty (contractual or otherwise), as a director or officer or otherwise, by reason of the fact that DOW Investors, their representatives and their Affiliates pursues or acquires such business opportunity, directs such business opportunity to another Person or fails to present such business opportunity, or information regarding such business opportunity, to the Company or its Subsidiaries.
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17. Confidentiality
(a) Each party hereto agrees that it shall, and shall cause its Affiliates and its and their respective directors, managers, officers, employees, agents and other representatives (“Representatives”) to, keep confidential and not disclose to any other Person, without the prior written consent of the other parties hereto, the existence of, terms of, or transactions contemplated by, this Agreement or the Investment Agreement (including the Warrants) and any information prepared or provided in connection with this Agreement or the transactions contemplated hereby (collectively, “Confidential Information”), except (i) as required by applicable Law or NASDAQ rule (provided that the disclosing party shall, to the extent legally permissible, provide the other parties hereto with prompt written notice of such disclosure to allow the other parties to seek a protective order or other appropriate remedy), (ii) in connection with any action, claim, demand, charge, complaint, audit, investigation, arbitration, inquiry, litigation, suit, or other proceeding by or before any Governmental Authority (each, a “Proceeding”) arising under this Agreement or any other agreement or transaction contemplated hereby, and (iii) with respect to the DOW Investors only, in their sole discretion after reasonable prior consultation with the Company.
(b) The parties hereto understand that the DOW Investors are subject to the U.S. Freedom of Information Act (“FOIA”), 5 U.S.C. § 551 et seq., and are required to disclose records requested by the public unless the records are exempt from disclosure under FOIA. If any DOW Investor receives requests from the public for disclosure of any Confidential Information, it will, consistent with the regulations of 32 C.F.R. § 286.10, notify the Company and will reasonably consider any request from the Company to withhold the Confidential Information from disclosure under any applicable exemptions in the FOIA, in accordance with relevant agency procedures. If any DOW Investor determines that an exemption applies, it will withhold the Confidential Information from disclosure unless ordered by a federal court to disclose the Confidential Information. If any DOW Investor determines that no exemption applies, such DOW Investor shall (i) use commercially reasonable efforts to provide the Company with prior written notice of any information that it intends to disclose, to the extent permitted by applicable Law, and (ii) limit its disclosure to the maximum extent permitted by applicable Law. The provisions of this Section 17(b) shall survive the expiration or any termination of this Agreement.
(c) The provisions in this Section 17 are consistent with and do not supersede, conflict with, or otherwise alter the employee obligations, rights or liabilities created by existing statute or Executive Order of the President of the United States (“Executive Order”) relating to (i) classified information, (ii) communications to Congress, (iii) the reporting to an Inspector General or the Office of Special Counsel of a violation of any Law, rule, or regulation, or mismanagement, a gross waste of funds, an abuse of authority, or a substantial and specific danger to public health or safety, or (iv) any other whistleblower protection. The definitions, requirements, obligations, rights, sanctions and liabilities created by controlling Executive Orders and statutory provisions are incorporated into this Agreement and are controlling. Further, this Agreement does not bar disclosures to Congress, or to an authorized official of an executive agency or the Department of Justice, that are essential to reporting a substantial violation of Law.
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18. Amendment and Waiver. Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Agreement shall be effective unless such modification, amendment or waiver is approved in writing by the Company and the DOW Investors.
19. Severability. If any term, covenant, condition or provision of this Agreement or the application thereof to any Person or circumstance shall, at any time or to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to Persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term, covenant, condition and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by applicable Law.
20. Entire Agreement. This Agreement, together with the Certificate of Designations, the Investment Agreement, the Warrants and the Registration Rights Agreement, constitutes a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter.
21. Successors and Assigns. Except as expressly stated herein, nothing expressed or referred to in this Agreement will be construed to give any Person, other than the DOW Investors, any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement except such rights as may inure to a successor or permitted assignee. The DOW Investors may not assign their respective rights or delegate their obligations under this Agreement without the prior written consent of the other parties; provided, however, subject to applicable Law, the DOW Investors may assign all or a portion of their rights, or delegate all or a portion of its obligations, under this Agreement to one or more Qualified Governmental Authority, without the prior written consent of the Company; provided, further, however, that no such assignment shall release the DOW Investors from any of their respective obligations hereunder.
22. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument. Facsimile or electronic signatures may be used in place of original signatures on this Agreement. The parties to this Agreement intend to be bound by the signatures on any facsimile or electronic document, and hereby waive any defenses to the enforcement of the terms of this Agreement based on the use of a facsimile or electronic signature.
23. Remedies. Subject to Section 3(e) hereof, the Company acknowledges that the rights of any DOW Investor under this Agreement are unique and recognizes and affirms that in the event of a breach of this Agreement by the Company, money damages may be inadequate and such DOW Investor would have no adequate remedy at Law. Subject to Section 3(e) hereof, each DOW Investor shall be entitled to seek (and the other party shall not oppose on the basis that injunctive relief or specific performance is not available due to availability of an adequate remedy at Law) an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, without the necessity of showing any actual damages or that monetary damages would not afford an adequate remedy, and without the necessity of posting any bond or other security, this being in addition to any other remedy to which it is entitled at Law or in equity.
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24. Notices. All notices, consents, waivers and other communications under this Agreement must be in writing and will be deemed given to a party when delivered by e-mail to the e-mail addresses set forth below, in each case marked to the attention of the individual (by name or title) designated below (or to such e-mail address as a party may designate by notice to the other party):
if to the DOW Investors:
| United States Department of War | ||
| Address: | 1000 Defense Pentagon, | |
| Washington, DC 20301-1000 | ||
| Attention: | Office of the Deputy Assistant Secretary of War (Industrial Base Resilience) | |
| E-mail: | [*] | |
if to the Company:
| The Elmet Group Co. | ||
| Address: | 280 Fore Street, Suite 301 | |
| Portland, Maine 04101 | ||
| Attention: | Office of General Counsel | |
| E-mail: | [*] | |
with a simultaneous copy (which will not constitute notice) to:
| Akin Gump Strauss Hauer & Feld LLP | ||
| Address: | One Bryant Park | |
| Bank of America Tower | ||
| New York, New York 10036-6745 | ||
| Attention: | [*] | |
| E-mail: | [*] | |
25. Governing Law. This Agreement and the rights and obligations of the parties hereunder shall be governed by, and construed and interpreted in accordance with, the Federal Law of the United States (“Federal Law”). To the extent that Federal Law does not specify the appropriate rule of decision for a particular matter at issue, it is the intention and agreement of the parties hereto that the Law of the State of New York (without giving effect to its conflict of laws principles) shall be adopted as the governing rule of decision.
26. Jurisdiction Involving Non-Government Entities. By execution and delivery of this Agreement, the Company irrevocably and unconditionally:
(a) submits for itself and its property in any Proceeding against it arising out of or in connection with this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of (i) the courts of the United States for the Southern District of New York, (ii) any other federal court of competent jurisdiction in any other jurisdiction where it or any of its property may be found, and (iii) appellate courts from any of the foregoing;
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(b) consents that any such Proceeding may be brought in or removed to such courts, and waives any objection, or right to stay or dismiss any Proceeding, that it may now or hereafter have to the venue of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agrees not to plead or claim the same; and
(c) agrees that, subject to any and all rights of appeal provided by applicable Law, judgment against it in any such Proceeding shall be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment or otherwise as provided by applicable Law, a certified or exemplified copy of which judgment shall be conclusive evidence of the fact and amount of such party’s obligation.
27. Jurisdiction Involving Governmental Entities. By execution and delivery of this Agreement, the DOW Investors, to the maximum extent permitted by applicable Law, irrevocably and unconditionally acknowledges that this Agreement is an express contract within the meaning of 28 U.S.C. § 1491(a), and each submits for itself in any claim arising from, related to, or in connection with this Agreement to the jurisdiction of (a) the U.S. Court of Federal Claims; (b) any other federal court or tribunal of competent jurisdiction; and (c) appellate courts from any of the foregoing.
28. WAIVER OF JURY TRIAL. THE PARTIES HERETO EACH HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY PROCEEDING (a) ARISING UNDER THIS AGREEMENT OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREE AND CONSENT THAT ANY SUCH PROCEEDING SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
29. Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.
30. No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have executed this Investor Rights Agreement on the day and year first above written.
| THE ELMET GROUP CO. | |||
| By: | /s/ Peter V. Anania | ||
| Name: | Peter V. Anania | ||
| Title: | Chief Executive Officer and Chairman | ||
| UNITED STATES DEPARTMENT OF WAR | |||
| By: | /s/ Michael Duffey | ||
| Name: | HON Michael Duffey | ||
| Title: | Undersecretary of War for Acquisition & Sustainment | ||
APPENDIX I
Completion
“Completion” occurs when the milestones set forth below with respect to each Project are satisfied:
| 1) | Named MAC and Other DOW Projects Supporting Capacity and Qualifications: Upon the DOW’s determination that the capital equipment, facilities, systems, technology, or manufacturing capabilities contemplated by the approved capital plan have been installed, commissioned, acquired, or otherwise implemented to a degree sufficient to enable the Company to utilize such capabilities in commercial operations. |
| 2) | Defined Company Infrastructure Projects: Upon substantial completion (or, with respect to software and modernization projects, implementation) of the infrastructure improvements described in the applicable approved capital plan and the placement of such improvements into service, as determined by the DOW. |
| 3) | Expedited Upgrade and Restart of the Springer / Blue Moon APT Plant and Tungsten Mine in Nevada: Upon the DOW’s good faith determination that the APT facility is ready for commercial operation, and upon the Company securing long-term concentrate supply agreements with the Blue Moon Nevada facility. |
| 4) | [**] |
| 5) | Transaction Fees and Working Capital: Upon payment of the transaction fees and deployment of the working capital funds for the purposes contemplated by the approved capital plan for each Project, in each case, as determined by the DOW. |
APPENDIX II
APPENDIX III
Permitted Activities
[**]
In connection with the transactions described in Annex I, paragraph 3 and further described in Schedule 4.06 of the Investment Agreement, following the Initial Closing Date, the Company plans to (i) purchase new equity securities in Blue Moon Metals Inc. (“Blue Moon”) for an aggregate purchase price of approximately $25,000,000, (ii) advance Blue Moon (or its subsidiary) $50,000,000 as a prepayment for tungsten concentrate to be mined at Blue Moon’s Nevada facility, and (iii) invest $75,000,000 in a joint venture between the Company, Blue Moon (or its subsidiary), and EQ Resources Limited (of which the Company will own a majority stake) (the “APT Joint Venture”) to re-establish, operate, and maintain an ammonium paratungstate plant at Blue Moon’s Nevada site.
APPENDIX IV
Strategic Transactions
See Appendix III.
SCHEDULE I
Permitted Indebtedness
SCHEDULE II
Joint Ventures
SCHEDULE III
Disqualified Holders
SCHEDULE IV
Right of First Offer (Securities); Preemptive Rights
| 1. | [**] |
Exhibit 10.4
BINDING LETTER AGREEMENT
JOINT VENTURE FOR THE SPRINGER PROJECT APT PLANT
This binding letter agreement (this “Agreement”) is made and entered into as of September 11, 2026 (the “Effective Date”), by and between:
| ● | THE ELMET GROUP CO. (“TEG”), a company organized under the laws of Delaware, with its principal offices in Portland, Maine and listed on the Nasdaq Capital Market (the “Nasdaq”); and |
| ● | BLUE MOON METALS INC. (“Blue Moon”), a company existing under the laws of British Columbia, Canada], with its principal offices in Toronto, Ontario, and listed on the TSX Venture Exchange (the “TSXV”) and the Nasdaq; |
| ● | BLUE MOON (SPRINGER) INC. (“BM US”), a company organized under the laws of Delaware, operating out of Nevada; and |
| ● | EQ RESOURCES LIMITED (“EQ”), a company organized under the laws of Victoria, Australia with its principal offices located at Level 7A, Queen Street Brisbane, Queensland, Australia and listed on the Australian Stock Exchange, |
each a “Party” and together the “Parties.”
RECITALS:
| A. | WHEREAS, BM US is a wholly owned subsidiary of Blue Moon and owns the Springer tungsten project in Pershing County, Nevada, comprised of prospective exploration grounds, a mine, mill, and an existing ammonium paratungstate (“APT”) plant (the “APT Plant”; and collectively with the exploration grounds, mine and mill, the “Springer Project” or the “Site”); |
| B. | AND WHEREAS, the APT Plant is currently non-functioning and has been under care and maintenance; |
| C. | AND WHEREAS, TEG, with funding and demand support from the U.S. Department of War (the “DoW”), proposes to lead the restart and operation of the APT Plant (including additional infrastructure for blue tungsten oxide (“BTO”) capacity and an additional leaching line that are to be constructed) through a joint venture structure; |
| D. | AND WHEREAS, EQ owns and operates existing tungsten mining assets in Australia and Spain, can potentially supply material to the APT Plant, together with its expertise in X-ray sorting technology, APT plant design and operations experience; |
| E. | AND WHEREAS, the Parties desire to set forth the binding terms upon which they will transact business together, including but not limited to: (i) the formation of a joint venture entity (the “JV Entity”) among the Parties to own and operate the APT Plant, (ii) an investment by TEG into Blue Moon, (iii) TEG’s role in the JV Entity as well as a Board member of Blue Moon; (iv) offtake agreements for BM US and for EQ tungsten concentrates, and (v) a site sharing agreement between BM US and the JV Entity, covering the land, buildings, utilities, water, and services arrangements, all as more particularly described herein (collectively, the “Transactions”); |
| F. | AND WHEREAS, the Parties entered into that certain non-binding Memorandum of Understanding dated as of August 4, 2026 (the “MOU”), setting forth the Parties’ mutual understanding of the principal terms on which they intended to negotiate the Transactions and the Definitive Agreements, and the Parties now desire to supersede the MOU in its entirety with this Agreement; |
| G. | AND WHEREAS subject to such due diligence as may be required to confirm the obligations in certain definitive agreements set forth below, the Parties intend this Agreement to constitute a binding agreement on its stated terms, superseding the MOU in its entirety, while contemplating that more detailed definitive agreements giving effect to the design of the transactions contained herein (collectively, the “Definitive Agreements”) will be negotiated in good faith following the date hereof. |
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
| 1. | BLUE MOON – TEG TRANSACTION FRAMEWORK |
| (a) | TEG Investment. The Transactions contemplate a total investment from TEG of US$150,000,000, split equally between, (i) an investment in Blue Moon of US$75,000,000 (the “Blue Moon Investment”); and (ii) a contribution to the JV Entity of US$75,000,000 (the “JV Investment” and, together with the Blue Moon Investment, the “Project Investment”), all as part of the broader TEG arrangement with the DoW. |
| (b) | Announcement. Subject to the approval of the DoW, the Parties intend to announce the Project Investment on the date on which the DoW and TEG announce the DoW investment package (the “DoW Investment”) in TEG (the “Announcement Date”). |
| (c) | Use of Proceeds. Proceeds of the Blue Moon Investment shall be limited to use solely in connection with the Springer Project, with all mine and mill proceeds earmarked for tungsten development purposes only. Blue Moon shall not apply any portion of the Blue Moon Investment proceeds to activities unrelated to the Springer Project without the prior written consent of TEG. TEG shall have audit rights to confirm Blue Moon’s compliance with the foregoing commitment. |
| (d) | TSXV and Closing Conditions. Completion of the Transactions described herein (the “Closing”) is subject to (i) receipt of acceptable due diligence, except for that certain Equity Subscription (as defined below), results judged in TEG’s sole discretion; (ii) receipt of all requisite approvals of the TSXV; and (iii) execution and delivery of the Definitive Agreements, all as more particularly described herein. |
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| 2. | BLUE MOON INVESTMENT |
The Blue Moon Investment shall be structured as follows:
| (a) | Tungsten Prepayment Facility (US$50,000,000). As part of the Blue Moon Investment, TEG shall provide Blue Moon and BM US with a secured prepayment facility in the aggregate principal amount of US$50,000,000 (the “Tungsten Prepayment Facility”), to be funded in two tranches as follows: |
| (i) | Tranche 1: Subject to satisfactory due diligence, the first tranche, in the amount of US$25,000,000 (“Tranche 1”), shall be funded at the closing of the Tungsten Prepayment Facility, within sixty (60) days of the Announcement Date. |
| (ii) | Tranche 2: The second tranche, in the amount of US$25,000,000 (“Tranche 2”), shall be funded upon completion of agreed milestones to be set forth in the Definitive Agreements, aligned with Blue Moon’s readiness covenants relating to the mine, mill/concentrate plant, flotation circuit, and, if test work is favorable, ore sorting progress. Tranche 2 shall be funded only upon satisfactory completion of the construction milestones applicable to Tranche 1, as mutually determined by the Parties acting reasonably. The obligation to fund Tranche 2 shall be subject to TEG’s completion of due diligence, the results of which must be satisfactory to TEG in its sole discretion. |
| (iii) | Repayment: The Tungsten Prepayment Facility shall be repaid through a twenty-five percent (25%) credit against sales of Springer Concentrate (as defined below) until the outstanding balances of Tranche 1 and Tranche 2 have both been fully retired, and no interest shall accrue on amounts outstanding thereunder except in the event of default. The prior sentence notwithstanding, in the event Blue Moon fails to produce and sell Springer Concentrate to the JV Entity within 18 months from the closing date of the Tungsten Prepayment Facility, the Tungsten Prepayment facility shall be immediately due and payable upon demand and shall bear interest at 10% per annum. |
| (iv) | Security: The Tungsten Prepayment Facility shall be secured by a first-position security interest in the assets described in Sections 7(b)(iv) and 18(c) and such cross-default protections as set forth in Section 18, all as further described in the Tungsten Prepayment Facility definitive agreement (the “Tungsten Prepayment Facility Agreement”). |
| (b) | TEG Warrants. In connection with the Tungsten Prepayment Facility, TEG shall, pursuant to exemptions from registration, qualification and/or prospectus requirements under applicable securities laws, grant Blue Moon warrants to acquire common shares of TEG with an aggregate exercise price of US$25,000,000 (the “TEG Warrants”), to be issued on the fifth (5th) business day following the Announcement Date. The TEG Warrants shall have a strike price equal to the greater of: (i) the five (5)-day volume-weighted average price (the “VWAP”) of TEG’s shares ending on the fifth day following the Announcement Date, , or (ii) the Nasdaq minimum price under Nasdaq Rule 5635. The TEG Warrants shall have a term of three (3) years from the date of issuance and shall not be exercisable during the six (6)-month period following issuance. |
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| (c) | Equity Subscription. TEG shall subscribe for and purchase new equity in Blue Moon, pursuant to exemptions from registration, qualification and/or prospectus requirements under applicable securities laws, within forty-five (45) days of the Announcement Date (the “Equity Subscription”), consisting of 3,500,000 units of Blue Moon (each, a “Unit”) at a price of C$10.00 per Unit. Each Unit shall be made up of one (1) common share of Blue Moon (each a “Unit Share”) and one (1) common share purchase warrant (each, a “Warrant”). Each Warrant shall entitle the holder thereof to purchase one (1) additional common share of Blue Moon (each, a “Warrant Share”). Subject to the approval of the TSXV, the exercise price of each Warrant Share shall be equal to the greater of (i) C$10.00, and (ii) C$10.00 multiplied by the ratio of (A) the five (5)-day VWAP of Blue Moon’s common shares ending on the day prior to the Announcement Date, to (B) the five (5)-day VWAP of Blue Moon’s common shares ending on August 3, 2026, provided that the Warrant exercise price may only exceed C$12.00 if the price of the Blue Moon common shares on the TSXV also exceeds C$12.00 as of the Effective Date. The Warrants shall be exercisable for a period of three (3) years following the closing of the Equity Subscription. The Equity Subscription is a binding commitment upon the Announcement Date. |
| (d) | Investor Rights Agreement. Blue Moon and TEG shall enter into a mutually agreed investor rights agreement in conjunction with the Equity Subscription (the “Investor Rights Agreement”) providing TEG with customary pro-rata equity participation rights in future Blue Moon financings and the board representation rights described in Section 3 hereof. |
| 3. | TEG BOARD REPRESENTATION AND NOMINATION RIGHTS |
| (a) | Board Seat. Effective upon the closing of the Equity Subscription, TEG shall be entitled to nominate one (1) director to Blue Moon’s board of directors (the “TEG Nominee”). Blue Moon shall take all commercially reasonable efforts to cause the appointment and continued election of the TEG Nominee, including the inclusion of the TEG Nominee on management’s slate at each shareholders’ meeting and soliciting proxies in favor of the TEG Nominee’s election. |
| (b) | Duration. TEG’s board nomination right shall continue for so long as TEG holds at least forty percent (40%) of the Blue Moon equity acquired by TEG in connection with the Transactions (measured by reference to the Unit Shares issued pursuant to the Equity Subscription together with any Warrant Shares issued upon the exercise of the Warrants, adjusted for stock splits, consolidations, and similar events). |
| (c) | Observer Rights. If the TEG Nominee resigns, is not elected, or the seat is otherwise vacant, TEG may appoint a non-voting board observer until the seat is filled by a new TEG Nominee. |
| (d) | Compliance. The foregoing is subject to applicable corporate law, TSXV requirements and approval, and the TEG Nominee satisfying reasonable customary director qualification requirements. |
| (e) | Investor Rights Agreement. The mechanics of the nomination, election, and removal of the TEG Nominee shall be set out in the Investor Rights Agreement. |
| 4. | JV Entity FORMATION AND ENTITY STRUCTURE |
| (a) | Formation. Upon the completion, review and TEG’s acceptance of pre-investment due diligence the Parties will form a jointly owned entity (the “JV Entity”) to own and operate the APT Plant. |
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| (b) | Entity Type. The choice of entity and structure (including the formation of a corporation, limited liability company, unincorporated joint venture or limited partnership) will be mutually determined by the Parties and set out in the definitive joint venture agreement (the “Definitive JV Agreement”), taking into account relevant legal, tax and real property advice and legal constraints applicable to the Transactions contemplated hereby. |
| (c) | Purpose. The JV Entity’s purpose shall be to restart, operate and maintain the APT Plant and associated infrastructure necessary to produce and sell APT and oxides for profit (which may be distributed to the Parties from time to time as the needs of the JV Entity allow and pursuant to applicable governing law, in proportion to the Parties’ then current equity ownership in the JV Entity) and such ancillary activities as are reasonably necessary or incidental thereto, as further detailed in the Definitive JV Agreement. The Definitive JV Agreement shall set forth the criteria upon which distributions shall occur (including but not limited to a mandatory tax distribution). |
| 5. | JV ENTITY OWNERSHIP AND CAPITAL STRUCTURE |
| (a) | JV Entity Initial Ownership. The initial equity ownership interests in the JV Entity shall be allocated as follows: |
| (i) | TEG: seventy percent (70%); |
| (ii) | Blue Moon: twenty percent (20%); and |
| (iii) | EQ: ten percent (10%). |
| (b) | Blue Moon’s Initial Contribution. Blue Moon’s initial capital contribution to the JV Entity shall be to cause BM US to grant an irrevocable and exclusive 99 year license and operating agreement to use and operate the APT Plant, all equipment and associated infrastructure, contributed at a value to be determined by mutual agreement to be set forth in the Definitive JV Agreement. Blue Moon shall not be required to make additional cash capital contributions until the expected costs to bring the APT Plant to specification and operation reach the Carry Cap (as defined below). |
| (c) | Adjustments. Ownership percentages may be adjusted in accordance with the dilution mechanics set forth in Section 7 hereof and as further specified in the Definitive JV Agreement. The Definitive JV Agreement shall grant Blue Moon and EQ the option to increase their respective ownership interests in the JV Entity. Following the completion of Phase 1 construction and 12 months of full operations, Blue Moon and EQ shall have the option to purchase from TEG during a twelve (12) month window an additional 15% of the ownership in the JV Entity in the aggregate. Such purchase will be priced at TEG’s initial investment therein plus a 20% annualized base rate of return. The incremental 15% ownership in the JV Entity shall be allocated between Blue Moon and EQ, as mutually agreed between Blue Moon and EQ. If Blue Moon and EQ cannot mutually agree, they shall follow the Exclusive Dispute Resolution Mechanism set forth in Section 19(c) hereof. |
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| 6. | JV ENTITY GOVERNANCE, BOARD COMPOSITION, TEAM ROLES AND DESIGN SUPPORT |
| (a) | Board of Directors. The JV Entity shall be governed by a board of directors (the “JV Board”) comprised of seven (7) members, allocated as follows: |
| (i) | TEG: four (4) members; |
| (ii) | Blue Moon: two (2) members; and |
| (iii) | EQ: one (1) member. |
| (b) | Operator. TEG shall operate and control the JV Entity. |
| (c) | Team Roles and Design Support. The Definitive JV Agreement and Management and Operations Agreement referenced below shall set forth the respective roles and responsibilities of the Parties with respect to the development, design and operation of the APT Plant, which shall include, without limitation, the roles and responsibilities set forth below: |
| (i) | The Parties shall work together to achieve the objectives contemplated by this Agreement, including the establishment of a full-time operating team for the APT Plant. |
| (ii) | BM US and the JV Entity shall enter into an exclusive Management and Operations Agreement pursuant to which the JV Entity shall perform all management and operational functions associated with the APT Plant. All proceeds from the operation of the APT Plant shall accrue solely to the benefit of the JV Entity. The Management and Operations Agreement shall set forth the definitive terms, conditions and obligations of each member of the JV Entity and the operational or management role for the restart and operation of the APT Plant going forward. TEG shall provide overall oversight of the APT Plant and associated activities. |
| (iii) | EQ’s Initial Contribution: EQ shall be responsible for sourcing engineering, project management and other critical roles in the development of the APT Plant on behalf of the JV Entity. In addition, EQ will provide other advisory and technical support (including general recruiting suggestions, engineering introductions, vendor and equipment sourcing). EQ will not provide day-to-day management in connection with the operation of the APT Plant. EQ will commit its APT design and operating experience to the JV Entity, help design and fill in the missing SX design stage, and assist with the front-end digestion stage to ensure flexible plant operation and operating envelope to enable processing of various concentrate feedstocks. EQ shall also help optimize the APT Plant for a separate ST output from the APT end stage. EQ and its management will sit on the JV Entity’s design committee and support upgrades and startup on an advisory basis. EQ will commit to bi-weekly calls, 3–4 site trips per year during the design/build stage, and on-site presence for several weeks during commissioning and startup (at EQ’s own expense), with similar commitments for future phased expansions of the APT Plant. |
| (iv) | BM US’s role will be as the mine and general site manager for the Springer Project, including managing the necessary permits and water and utility rights necessary for the operation of the Site generally, consistent with the retained ownership, permitting and site-sharing arrangements set forth in Sections 8 and 14 hereof. |
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| 7. | CAPITAL CONTRIBUTIONS, RESTART COSTS, CARRY CAP, DILUTION AND WORKING CAPITAL |
| (a) | Blue Moon Contribution. The Parties agree and acknowledge that Blue Moon’s initial contribution to the JV Entity shall be BM US’s grant to the JV Entity of the exclusive use and operating agreement to use the APT Plant and rights to the ancillary utilities and services servicing the same. Blue Moon shall not be required to contribute cash to the JV Entity until TEG and EQ have together contributed a total of US$100,000,000 (the “Carry Cap”). Subject to regulatory approval BM US shall grant to the JV Entity an exclusive and irrevocable 99 year use and operating agreement to use the APT Plant and a nonexclusive irrevocable 99 year use and operating agreement to use such portions of the Site and the utilities interconnections, water rights, and tailings facilities necessary for the operation of the APT Plant. The precise terms and conditions of the above licenses and use and operating agreements shall be set forth in definitive agreements to be executed at a later date. In the event regulatory approval is not obtained to permit the licenses, use and operating agreements to operate as needed, the parties shall negotiate a structure which complies with the necessary regulatory requirements and provides for the equivalent economic and structural controls reflected in this Agreement. For the avoidance of doubt, Blue Moon’s initial capital contribution to the JV Entity consists solely of BM US’s grant of the exclusive right through a license or other agreement to provide use of and access to the APT Plant and associated infrastructure discussed herein. Thereafter, Blue Moon’s and BM US’s pro-rata share of additional capital calls shall be funded on terms and timing as set forth in the Definitive JV Agreement. |
| (b) | Restart Cost. The Parties estimate that the aggregate cost to restart the existing APT Plant (not including blue tungsten oxide (“BTO”) capacity and an additional leaching line) (the “Restart Cost”) is approximately US$75,000,000. The Restart Cost shall be funded as follows: |
| (i) | TEG shall fund the estimated Restart Cost through the JV Investment of US$75,000,000. Funding timing shall be based on milestones set forth in the JV Agreement; |
| (ii) | if the Restart Cost (including, without limitation, for the APT to BTO conversion additional infrastructure and additional leaching line) exceeds US$75,000,000 but is less than or equal to US$100,000,000, the difference shall be funded by TEG, and EQ in proportion to their respective ownership interests (87.5% by TEG and 12.5% by EQ). Such funding is to be paid within 30 days of the JV Entity issuing written request prior to completion of Phase 1 construction; provided that, if EQ fails to fund its 12.5% share when due, EQ’s right to participate in the JV Entity, including its right to acquire or retain any ownership interest in the JV Entity, shall be redeemed by TEG and Blue Moon for $1.00; and |
| (iii) | if the Restart Cost exceeds the Carry Cap, the Parties shall fund amounts beyond the Carry Cap (payable within 30 days of JV Entity call as per (b)(ii)), and future expansion phases, on a pro-rata ownership basis (i.e., 70% TEG, 20% Blue Moon, 10% EQ) or their equity ownership as adjusted in subsection (c) below. |
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| (iv) | The Restart Costs will be secured by a senior security Deed of Trust, collateral assignment and financing statement on the Site, including but not limited to all water permits and other assets. Upon agreement of the members of the JV Entity, this security interest may be subordinated to a working capital line of credit to benefit the JV Entity. Upon Blue Moon’s request, the JV Entity may agree to grant to a lender to Blue Moon a secured position in the Site on an equal or pari passu basis. |
| (v) | Blue Moon’s contribution to the JV Entity shall be secured by a senior collateral assignment of the use and operating agreement from BM US to the JV Entity. Upon agreement of the members of the JV Entity, this collateral assignment may be subordinated to a working capital line of credit to benefit the JV. |
| (c) | Dilution Mechanics. The Definitive JV Agreement shall specify the dilution formula applicable if TEG, Blue Moon and/or EQ elect not to fully fund their pro-rata share of amounts beyond the Carry Cap. Dilution shall be determined on a straight-line basis taking into consideration the number of units that TEG, Blue Moon and/or EQ have failed to purchase. |
| (d) | Working Capital. Separate from the capital contributions of the Parties described above, the Parties will cooperate to obtain a banking facility large enough to support the ramp up and ongoing working capital needs of the Phase 1 APT Plant as it relates to operations, material and supply purchases. The Parties also agree that during the first 12 months of full operation of the APT Plant (post completion of Phase 1 construction), to support operations startup and minimize the cash needs of the JV Entity, the payment terms for BM US and EQ concentrate shall be net 90 days for the 90% provisional invoice, with the final 10% invoice due net 120 days. |
| 8. | BLUE MOON OWNERSHIP, PERMITTING, AND SITE-SHARING |
| (a) | Mine and Mill Ownership. Blue Moon and BM US shall maintain complete ownership and operation of the mine and mill at the Springer Project. Nothing in this Agreement or the Definitive Agreements shall be construed to grant the JV Entity, TEG or EQ any ownership interest in, or operational control over, Blue Moon’s mine or mill operations. |
| (b) | Ancillary Assets. Unless the parties agree otherwise, the intention is for Blue Moon and BM US to retain ownership of certain ancillary assets on behalf of the JV Entity, including but not limited to utilities interconnections, water rights, and tailings facilities. The terms of such retained ownership shall be set forth in the Definitive Agreements or other related agreements (such as leases, utility wheeling or assignment agreements noted below) and shall include appropriate licenses, use agreements, and allocations to ensure the JV Entity’s access to such assets for APT Plant operations. |
| (c) | Permitting. Except as otherwise required for APT Plant operation and set out in the Definitive Agreements, BM US shall obtain and own all permits required to operate the Site. Where necessary for APT Plant operations, Blue Moon and BM US shall grant such other assignments, agreements, licenses, and security interests reasonably required to maintain: |
| (i) | the JV Entity’s dedicated allocations of utilities, water, and waste capacity; |
| (ii) | pass-through utility rates at cost (without markup); and |
| (iii) | continuity protections described herein. |
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| 9. | PLANT DESIGN AND PHASING |
The Definitive Agreements shall reflect the following intentions of the Parties regarding plant design and phasing of the APT Plant:
| (a) | The APT Plant shall be re-designed and re-built in two or more phases. |
| (b) | Phase 1 shall target 4,000 tons of APT production capacity per year and will be funded as set forth in Section 7 above, inclusive of the APT to BTO conversion infrastructure and additional leaching line. |
| (c) | Phased expansions of the APT Plant’s production capacity beyond Phase 1 shall be driven by market conditions, demand and the need to support BM US mine concentrate production, EQ current and new mines concentrate production and other new mines, if any. Upon an affirmative vote of the members of the JV Entity the phased expansion shall be funded pro-rata among the Parties after the Carry Cap has been exceeded, as described in Section 7 above. |
| (d) | Phase 2 contemplates inclusion of on-site scrap conversion, if space and utilities permit, with preference always given to BM US mine production; funded pro-rata among the Parties after the Carry Cap has been exceeded, as described in Section 7 above. Phase 2 is a “post-completion” project to be commenced in 2–3 years minimum post start up of the APT Plant. |
| (e) | The physical plant program will include the dedicated buildings and receiving infrastructure described in this Agreement, sized and located in accordance with the Site Master Plan (as defined herein). |
| 10. | FEEDSTOCK AND CAPACITY ALLOCATION |
The Definitive Agreements shall reflect the following intentions of the Parties regarding input capacity allocation for the APT Plant:
| (a) | TEG Years 1-5: The JV Entity allocates up to 75% of input volume to Springer Project production annually. If BM US lacks sufficient production to fill this threshold , TEG may source material from other offtake agreements to which it is a party (entered into at the request of, and with support from, DoW) in order to bring the APT Plant to full capacity. |
| (b) | EQ Years 1-5: Subject to a cap of 1,000 tons of production capacity per year, the JV Entity will allocate 25% of input volume to EQ concentrate annually. If EQ production is insufficient to provide 25% of the APT Plant input capacity annualized or if EQ does not take its allocation annually, any unused volume shall be available to BM US and/or the third-party sourcing described in (a) above. The parties acknowledge that EQ (or Elmet or BM) may have an interest in purchasing APT from the JV Entity at a discount for certain strategic customers, in order to support volume or existing customer relationships. The parties agree, however, that the JV Entity does not intend to enter into tolling arrangements which could disintermediate value from the JV Entity and its shareholders. The parties do agree to pursue commercially reasonable arrangements — such as commission or royalty agreements — in respect of special customers that BM, EQ or Elmet may bring to the JV Entity, provided that any such arrangement will be reviewed in light of prevailing market conditions and the overall economics of the JV Entity once the plant is operational. |
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| (c) | After Year 5: BM US shall be granted a most-favored-nation right to APT Plant capacity coincident with its ownership percentage in the JV Entity in comparison to EQ’s ownership percentage (87% to Blue Moon and 13% to EQ, as adjusted by changes to each Party’s relative ownership as detailed in Section 5(d)). |
| (d) | BM US grants the JV Entity the right to 100% offtake of Springer Concentrate (as defined below) so long as the JV Entity has the capacity to process 100% of the Springer Concentrate, priced as set out in the following Section; the Parties will build ahead cooperatively to align phasing. |
| 11. | OFFTAKE AGREEMENTS |
| (a) | BM US Offtake Agreement. The JV Entity and BM US shall enter into an offtake agreement (the “Blue Moon Offtake Agreement”) governing the JV Entity’s purchase of tungsten concentrate produced from the Springer Project mill and sourced from the Site (the “Springer Concentrate”). The Blue Moon Offtake Agreement shall include, among other things, the following terms: |
| (i) | Offtake. The JV Entity shall use its best efforts to take [**] of the Springer Concentrate, to be delivered to the JV EXW Springer mine gate with the precise delivery point (stockpile or other location) to be set out in the Blue Moon Offtake Agreement. Title to, and risk of loss of, the Springer Concentrate shall pass to the JV Entity upon delivery of the Springer Concentrate. [**] |
| (ii) | Pricing Parity with EQ. [**] |
| (iii) | Pricing. [**] |
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| (iv) | Floor — Mutual Cancellation of Rights. Separate from any floor price that may apply under an agreement with the Defense Logistics Agency (the “DLA”), the Blue Moon Offtake Agreement shall include a termination right for either party to exercise if the APT market price ever falls below [**] per MTU. |
| (v) | Pre-startup Springer Concentrate Sales. Until commercial production is achieved at the APT Plant, the JV Entity shall sell the Springer Concentrate into the open market, with best efforts by all Parties to place volumes into [**] or another suitable ex-China conversion facility, or into the DLA, with the goal of providing BM US and the JV Entity the best possible pricing adjusted for the benefit of BM US to reflect any then-applicable U.S. tariffs. |
| (b) | EQ Offtake Agreement. The JV Entity and EQ shall enter into an offtake agreement (the “EQ Offtake Agreement”) governing the JV Entity’s purchase of tungsten concentrate produced by EQ which shall include, among other things, the following terms: |
| (i) | The JV Entity and EQ shall enter into the EQ Offtake Agreement for [**] tonnes WO3 contained in EQ concentrate over an [**] period commencing upon APT Plant commissioning, at a nominal rate of [**] tonnes of WO3 contained per annum over the [**] offtake period. |
| (ii) | The EQ Offtake Agreement shall provide for rolling 1-year extensions, subject to the mutual agreement of the Parties (negotiations to commence at least 90 days prior to the end of the then current term) after the initial [**]. |
| (iii) | For the avoidance of doubt, the EQ Offtake Agreement shall not replace the current TEG prepayment and offtake agreement relating to EQ’s material sourced from Spain, that expires on 29 October 2029. |
| (iv) | Any additional material that EQ supplies to the JV Entity or DLA, to the extent allocated under this Agreement, shall be supplied on the same terms as the EQ Offtake Agreement. |
| (v) | Pricing. [**] |
| (vi) | Floor. [**] The Parties expect to align the floor price applicable under the EQ Offtake Agreement with the floor price applicable under the Blue Moon Offtake Agreement. |
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| (c) | Lower Feed Grade. Subject to the APT Plant processing restriction for the economical production of product, the JV Entity will endeavor to accept lower-grade or off-spec Springer Concentrate and EQ Concentrate if either party needs to supply off-spec or lower-grade material and the APT Plant has capacity to do so. Lower-grade or off-spec concentrate will be priced on a graded curve, with reference pricing set by the standard-grade (> or = 50% WO₃) concentrate pricing described above. Lower-grade or off-spec concentrate will be priced to benefit all Parties — more than covering the added APT, waste, and chemical costs while also providing an acceptable return to the supplier. |
| 12. | SCRAP AND POTENTIAL CRONIMET PARTICIPATION |
The JV Entity will use commercially reasonable efforts to negotiate an agreement with Cronimet, a shareholder of EQ, that provides the JV Entity a right of first offer to purchase for processing at the APT Plant up to 2,000 – 3,000 tons per year of scrap feedstock from Cronimet for Phase 2 extension.
| 13. | ORE SORTING LICENSE |
So long as EQ is a participant and its ore sorting technology fits the criteria needed for optimal operation at the Site, prior to the execution and closing of the Definitive JV Agreement, EQ and BM US will agree to mutually acceptable terms for the ore sorting licensing agreement (the “Ore Sorting License”).
| 14. | SITE MASTER PLAN, LAND, BUILDINGS, EXPANSION RIGHTS, UTILITIES, WATER, WASTE AND SHARED SITE SERVICES |
As the Site will be shared between BM US’s mine and mill and the APT Plant operations operated by the JV Entity, the following agreed provisions concerning the site will be set out in the Definitive Agreements:
| (a) | Site Master Plan. Within six (6) months of the Announcement Date, the Parties will jointly commission and complete an engineered master plan for the Site (the “Site Master Plan”), covering land allocation, buildings, roads and logistics, utilities and interconnections, water supply and storage, waste and tailings, laydown and receiving areas, solar, natural gas and other power generation, a potential scrap plant, and future expansion phases. The Site Master Plan will be approved by all Parties and will govern the physical development of the Site. Material deviations will require mutual approval. The cost of preparation of the Site Master Plan will be shared between the JV Entity and Blue Moon based on the relative percentage of the APT Plant and its associated facilities to the entire site. |
| (b) | Real Estate and Access Rights. The Parties will negotiate either a long-term ground lease or a transfer in fee of the APT Plant footprint and associated areas. Any ground lease would require at minimum a term for the life of the APT Plant plus renewals to be determined — together with recorded easements for access, utilities, water, and rail/truck logistics, in each case at nominal cost and surviving any change of control, financing, insolvency, or sale of Blue Moon, BM US or the Site, so that the JV Entity’s right to occupy and operate (including holding the Permits detailed in Section (k) below) does not depend on the continued solvency or ownership of Blue Moon or BM US. The Parties will use their best efforts to put this in place by the time of signing of the Definitive JV Agreement. |
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| (c) | Concentrate Receiving Building. The Site will include a dedicated building and laydown space for the receiving, weighing, sampling, and storage of incoming third-party concentrate (including DoW/DLA-directed material and EQ material), separate from BM US’s own mill concentrate handling, with truck access and security appropriate to custody transfer. |
| (d) | Production and Shipping Building. The Site will include a separate building (or buildings) housing BTO and yellow tungsten oxide conversion, APT production, packaging, and shipping, sized per the Site Master Plan and designed to permit the additional phased downstream product expansion outlined in Section 9. |
| (e) | Free Land Option for Solar, Natural Gas and Expansion. BM US will also grant the JV Entity an option, exercisable at no cost to the JV Entity, over designated areas of the Site (identified in the Site Master Plan) for solar or natural gas power generation and for other expansion projects (including the scrap plant and additional processing phases outlined in Section 9). The JV Entity will fund the improvements it elects to build, subject to the Parties working together on any required permit modifications; the underlying land will be contributed by BM US at no charge. |
| (f) | Utilities at Blue Moon’s rates; no markup. BM US will supply (or wheel through its interconnections) electricity, water, gas, and other utilities to the JV Entity at the same unit rates that BM US itself pays its utility providers for the same services — a direct pass-through of BM US’s actual rates, tariffs, and incurred costs, with no markup, margin, or administrative fee — supported by separate metering for the APT Plant and full audit rights for the JV Entity (including the right to review BM US’s underlying utility invoices and tariff schedules). The same pass-through, no-markup principle applies to waste and tailings fees, which will be set at a transparent, cost-based rate (covering BM US’s actual incremental tailings and closure costs attributable to APT residues) including a pro rata capital recovery cost to be fixed in the Definitive Agreements. |
| (g) | APT Plant Guaranteed Electricity. BM US will, at all times, maintain its utility interconnections and use commercially reasonable efforts to ensure firm, uninterrupted electrical supply to the APT Plant sufficient for full Phase 1 operation (and, once built, approved expansions). Except in emergencies threatening the safety of the mine and its employees, which shall take priority, the APT Plant’s allocated load will not be curtailed in favor of the mine and mill; any Site-wide capacity constraint will be managed under a load-priority protocol in the Joint Services Agreement described below that balances continuous APT Plant operation with critical path mine and mill operations. Any incremental grid capacity required solely for the JV Entity will be sourced and funded by the JV Entity, and the JV Entity will own or hold enforceable rights to the capacity it funds. |
| (h) | Water Rights and Water Investments. BM US shall retain ownership of the water rights for the entire Site, but will allocate to the JV Entity, by contract and (where possible) registered instrument, a firm water allocation sufficient for full APT Plant operation, on equal usage rights with the mine and mill. Capital investments in wells, storage, treatment, or conveyance required for the APT Plant will be identified in the Site Master Plan; where the JV Entity funds water infrastructure, the JV Entity will own the funded assets (or receive a credit against utility and waste fees) and its allocation will be secured for the life of the APT Plant. |
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| (i) | Laboratory. The Parties intend to share a single analytical laboratory on the Site on an at-cost basis, with an agreed sample-priority and turnaround protocol serving both the mill and the APT Plant, and with the JV Entity retaining the right to install its own QA/QC laboratory (at its cost, on Site) if shared service levels are not met. |
| (j) | Shared Services and Site Coordination. A joint services agreement (the “Joint Services Agreement”) will be negotiated and entered into in conjunction with the execution and closing of the Definitive JV Agreement, covering security, roads, snow removal, fire and emergency response, health and safety protocols, and site administration, each charged at cost. A joint Site coordination committee (JV Entity management and Blue Moon) will meet at least monthly to manage shared operations, logistics, and the Site Master Plan. |
| (k) | Environmental Separation. Legacy environmental conditions existing prior to the active operation of the APT Plant (the “Operations Commencement Date”) at the Site remain BM US’s responsibility and BM US and Blue Moon will provide written indemnification to TEG within the Definitive Agreements. BM US and the JV Entity shall conduct and share the expense of a current conditions survey to set forth and demarcate the responsibility for environmental conditions before and after the Operations Commencement Date. The JV Entity will only be responsible for conditions arising from its own operations. Permits required for the APT Plant will be obtained by BM US on behalf of the JV Entity and, if possible, held jointly with the JV Entity. The Parties shall fully cooperate on any permit modifications needed for the operation of the APT Plant |
| 15. | BLUE MOON READINESS AND FUNDING COVENANTS |
| (a) | BM US and Blue Moon will fully fund, at their sole cost, all work required to bring the concentrate production chain — including the mine, the mill/concentrate plant, the flotation circuit, and if the test work is successful, the ore sorting installation — to commercial operation in time to supply the APT Plant at its Phase 1 startup, in accordance with a milestone schedule (which will include the APT Plant construction schedule) to be set out in the Definitive Agreements. If such milestones are not met and the Springer Project mine and mill output are below approximately 60% of nameplate on a consistent basis at APT Plant completion, BM US will be subject to the cure period and third-party sourcing provisions set out in Section 17(a). |
| (b) | Blue Moon will report progress against the milestone schedule to the JV Entity Board quarterly (or more frequently if milestones are at risk), and the Parties will agree to an early warning method so that any BM US delay is identified in time for the JV Entity to secure alternative concentrate under the contingency arrangements described below. |
| (c) | For clarity, no JV Entity funds, or other TEG funds (other than the proceeds of the prepayment facility, equity investment or exercise of warrants described in this Agreement), or carried amounts will be used to fund the Springer Project’s mine, mill, flotation, or sorting readiness. |
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| 16. | DLA STOCKPILE RIGHTS – CONDITIONAL PASS-THROUGH |
| (a) | If, and only to the extent that, TEG is granted rights of access to, or purchases from DLA, tungsten stockpiles (whether concentrate, APT, or other forms), TEG will make the benefit of such rights available to the JV Entity as feedstock or product support, on terms consistent with the underlying DLA grant and TEG’s obligations to DoW/DLA. |
| (b) | Nothing in this Agreement or the Definitive Agreements will obligate TEG to obtain such rights, and no other Party will have any claim against TEG if such rights are not granted, are granted on restricted or conditional terms, or are later modified or withdrawn by the U.S. Government. Any allocation of DLA-related volume will follow the feedstock and offtake allocations described in this Agreement. |
| 17. | CONTINGENCIES — MINE, CONCENTRATE SUPPLY OR APT PLANT FAILURE |
The Definitive Agreements will provide expressly for the continued operation of the APT Plant if the Blue Moon and BM US mine does not open, fails, or cannot deliver acceptable concentrate, including:
| (a) | Cure Period and Third-Party Sourcing. If the mine and mill are operating at a level below approximately 60% of nameplate on a consistent basis at APT Plant completion (or thereafter), the JV Entity will prioritize sourcing commercially available third-party concentrate (including from EQ) for up to a 12-month cure period (the “Cure Period”); if the Springer Project’s supply is not restored within the Cure Period, the JV Entity may source third-party concentrate without volume limit for so long as the shortfall continues, and BM US’s feedstock allocations may be suspended in the discretion of the JV Entity to the extent of the shortfall. Should the shortfall continue for a period of longer than 6 months, the JV Entity may, at its option, terminate its obligation to purchase concentrate from the Site upon 60 days written notice. In the event the APT Plant is operating at a level below 60% of nameplate capacity on a consistent basis 18 months after substantial completion of the APT Plant, BM US may, at its option, terminate the Blue Moon Offtake Agreement. |
| (b) | Permits, Utilities, and Access Continuity. The Parties will agree that immediately upon a BM US or a Blue Moon insolvency event, abandonment of the Site, or permanent mine closure (a “Site Failure Event”), a method will be in place to cause all necessary actions to secure the operational independence of the APT Plant to occur automatically, including the immediate foreclosure by the JV Entity of its senior secured position in the Site and the ancillary assets. BM US shall cooperate in the issuance in or transfer to the JV Entity’s name of any permits, utility interconnections, water allocations, and waste/tailings arrangements. Blue Moon and BM US shall agree to immediately execute any and all documents or filings necessary to transfer such permits, licenses and other operational agreement to the JV Entity at no cost. The Definitive Agreements shall also provide that upon a Site Failure Event, the JV Entity shall have immediate access and operational control of any utility services or infrastructure necessary to operate the APT Plant. In the event the APT Plant operations cease, the equivalent measures as may be necessary to keep the APT Plant operational shall also be available to Blue Moon and BM US, including but not limited to the foreclosure of Blue Moon’s senior collateral assignment of the exclusive use and operating agreements permitting the Blue Moon access to the and operational control of the APT Plant. |
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| (c) | Survival of Property Rights. The exclusive use and operating agreements, easements, water dedication, and land options described in this Agreement will survive any mine failure, BM US or Blue Moon insolvency, change of control, or sale of the Site, and will bind all successors and assigns. |
| 18. | PROTECTIVE PROVISIONS |
The Definitive Agreements will include, among other things, the following protective provisions:
| (a) | Reserved matters. The following fundamental JV Entity decisions will require approval of at least 85.1% of the equity interests, which must include TEG: |
| (i) | amendments to the JV Entity’s governing documents; |
| (ii) | the issuance, transfer, or encumbrance of a majority of JV Entity interests; |
| (iii) | the approval of, and material deviations from the Site Master Plan; |
| (iv) | the entering into of any related-party contracts not on commercial terms; |
| (v) | the incurrence of material indebtedness in excess of $100,000,000; |
| (vi) | the disposal of any material assets; and |
| (vii) | the distribution of dividends and winding-up or dissolution. |
| (b) | Operatorship. TEG will operate the JV Entity and may not be removed as operator except based on a judicial finding of either uncured willful default or serious misconduct as defined in the Definitive JV Agreement. TEG shall prepare, for approval by the JV Entity, an annual budget for operation and maintenance of the APT Plant, providing for sufficient cash available from sale of APT to cover operating costs. |
| (c) | Security for the Prepayment Facility After Operation has Commenced. In addition to the Deed of Trust and senior collateral assignment set forth above, the Tungsten Prepayment Facility will be secured by a first-position security interest in all Springer Concentrate and a collateral assignment of all Blue Moon Offtake Agreement proceeds, and a deposit account control agreement into which all receivables/collections with respect to the Site will be deposited. The security interest granted will secure both the Tranche 1 and Tranche 2 payments, with the understanding that the payment of the Tranche 2 payments requires the achievement of the milestones set forth in the Definitive Agreements. |
| (d) | Site and Lien Protections. In order to protect the interests of the JV Entity in the APT Plant and the ancillary services, neither BM US nor Blue Moon will (i) grant any lien having priority over the JV Entity’s interests, or (ii) transfer any interest in the APT Plant footprint or the Site without the JV Entity’s consent, including any ground lease, easements, water dedication, land options, and utility arrangements. The Deed of Trust and UCC financing statements will be recorded with a first position priority position over any subsequent encumbrance. The JV Entity shall act reasonably in allowing for future project financing related to expansion of mine and mill at the Site, including royalty financing related to the Springer Project. |
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| (e) | Change of Control. A change of control of any party will require the acquirer to assume all of the obligations of the original party to the JV Entity and the other parties. Upon a change of control of BM US or Blue Moon, TEG shall have the right to elect early repayment of the then-outstanding Tungsten Prepayment Facility balance and to confirm continuity of the Blue Moon Offtake Agreement, and all site and utility arrangements. |
| (f) | Information and Audit Rights. BM US and Blue Moon will prepare and deliver to TEG and the JV Entity quarterly reporting on readiness milestones, and TEG and the JV Entity shall have audit rights over utility and waste pass-through charges, and inspection rights over the concentrate production chain. |
| (g) | Step-In and Remedies. On the occurrence of a BM US or a Blue Moon insolvency event, sustained supply failure, or uncured readiness default, the JV Entity will have the step-in and continuity rights described herein, in addition to any other remedies at law or under the Definitive Agreements. On a TEG or JV Entity insolvency event, BM US, Blue Moon and EQ will have the step-in and continuity rights described under the contingency arrangements above, in addition to any other remedies at law or under the Definitive Agreements. |
| (h) | Potential Future Subdivision. The Parties agree to explore and pursue if practical the future subdivision of the APT Plant and direct permitting of the APT Plant and its operations in order to secure and separate the APT Plant from the BM US operations. If subdivision and separation of the APT plant is successful, BM US and Blue Moon agree to sell the APT Plant to the JV Entity for one dollar and the release of the senior secured collateral Deed of Trust. |
| 19. | DEFINITIVE AGREEMENTS AND NEXT STEPS |
| (a) | The Parties will negotiate in good faith the following Definitive Agreements: |
| (i) | the Definitive JV Agreement, including but not limited to governance, budgets reserved matters, the carried interest and Carry Cap mechanics, the contribution and dilution formula, and the option to increase the ownership stakes of Blue Moon and EQ in the JV Entity; |
| (ii) | the Investor Rights Agreement and the equity subscription agreement in connection with the Blue Moon Investment, including forms of standalone warrant certificates for the BM Warrants; |
| (iii) | the Tungsten Prepayment Facility Agreement and related security documents, including forms of standalone warrant certificates for the TEG Warrants; |
| (iv) | the Blue Moon Offtake Agreement; |
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| (v) | the EQ Offtake Agreement; |
| (vi) | the Ore Sorting License Agreement; |
| (vii) | a ground lease or grant of ownership in fee and easements, as applicable, including the transfer documents or registered ground lease for the APT Plant footprint, access/utility/water/logistics easements, land options, and non-disturbance protections; |
| (viii) | the Joint Services Agreement; |
| (ix) | a water dedication instrument, which shall set out the firm water allocation and any JV Entity funded water infrastructure arrangements; |
| (x) | the Site Master Plan; |
| (xi) | a readiness milestone schedule, which shall contemplate BM US’s mine/mill/flotation/sorting milestone schedule, aligned with the second prepayment Tranche, and the APT Plant’s milestone schedule; and |
| (xii) | any applicable ancillary documents, including insurance and force majeure allocation between the Site operations. |
| (b) | Target Timing: Subject to previously indicated due diligence completion as necessary to support the investments, the Parties expect that the Investor Rights Agreement and Blue Moon Investment will close within 45 days of the Announcement Date. , Subject to completion of due diligence, the Tungsten Prepayment Facility Tranche 1 will, close within 60 days of the Announcement Date. All other agreements closing as set out in Section 21. |
| (c) | Exclusive Dispute Resolution Mechanism: The Parties shall resolve any dispute, controversy, or claim arising out of or relating to this Agreement, the breach, termination or invalidity hereof, the negotiation and finalization of the Definitive Agreements set forth in Section 19(a) hereof, or the satisfaction of the Conditions to Closing set forth in Section 22(a) hereof (each, a “Dispute”), under the provisions of this Section 19(c), which shall be the exclusive mechanism for resolving any Dispute that may arise from time to time. |
(i) General Negotiation. Upon the occurrence of a Dispute, any Party hereto may send written notice to the other Parties of such Dispute (the “Dispute Notice”). The Parties shall first attempt in good faith to resolve any Dispute set forth in the Dispute Notice by negotiation, consultation and unanimous resolution between themselves, including not fewer than three (3) negotiation sessions attended by the General Counsel for each Party.
(ii) Executive Negotiation. In the event that such Dispute is not resolved within five (5) business days after one Party delivers the Dispute Notice to the other Parties, whether the negotiation sessions contemplated in Section 19(c)(i) take place or not, any Party may, by written notice to the other Parties (“Escalation to Executive Notice”), refer such Dispute to the executives (Chief Executive Officer and/or President, as the case may be) of each Party (or to such other person of equivalent or superior position designated by such Party in a written notice to the other Parties) (the “Executive(s)”).
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(iii) Member Negotiation. If the Executives cannot unanimously resolve the Dispute during the time period ending five (5) business days after the date of the Escalation to Executive Notice (the last day of such time period, the “Escalation to Vote Date”), any party may, by written notice to the other Parties, refer such Dispute to the JV Entity (or directly to the Parties hereto if the JV Entity is not yet formed) for resolution by seventy-five percent (75%) of the owners of the JV Entity (or by TEG and either of Blue Moon or EQ if the JV Entity is not yet formed). A resolution by the owners of the JV Entity or by TEG and either of Blue Moon or EQ, if reached, shall be submitted to the Parties within five (5) business days after the Escalation to Vote Date and shall be final and binding upon the Parties.
(iv) Neutral Counsel Decision. If the JV Entity owners or the Parties, as the case may be, are deadlocked and are unable to resolve the Dispute during the time period ending five (5) business days after the Escalation to Vote Date (the last day of such time period, the “Escalation to Neutral Counsel Date”), the Parties shall submit the Dispute to a neutral, established and experienced corporate counsel (“Neutral Counsel”) to be chosen by mutual agreement of each Party’s counsel. The Parties shall each submit the subject of the Dispute and the relief requested to the Neutral Counsel, after which the Neutral Counsel shall issue a written decision within ten (10) business days of the Escalation to Neutral Counsel Date. The Neutral Counsel’s written decision shall be final, non-appealable, and binding upon the Parties. The Parties agree that the Neutral Counsel’s fees and expenses will be shared equally between the Parties.
| 20. | REPRESENTATIONS AND WARRANTIES |
| (a) | Mutual Representations and Warranties. Each Party hereby represents and warrants to the other Parties, as of the date hereof and as of the Closing of each applicable Transaction (each, a “Closing Date”), that: |
| (i) | Organization. Such Party is duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization and has all requisite corporate or organizational power and authority to conduct its business as presently conducted and to enter into and perform its obligations under this Agreement and the Definitive Agreements. |
| (ii) | Authorization. The execution and delivery of this Agreement and the performance of the Transactions contemplated hereby have been duly authorized by all necessary corporate or organizational action on the part of such Party. |
| (iii) | Enforceability. This Agreement constitutes the legal, valid, and binding obligation of such Party, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors’ rights generally and to general principles of equity. |
| (iv) | No Conflicts. The execution and delivery of this Agreement and the consummation of the Transactions contemplated hereby do not and will not (i) violate any provision of such Party’s organizational documents; (ii) conflict with, result in a breach of, or constitute a default under any material agreement to which such Party is a party; or (iii) violate any applicable law, regulation, or order binding on such Party, except as would not reasonably be expected to have a Material Adverse Effect (as defined below) on such Party’s ability to perform its obligations hereunder. “Material Adverse Effect” means, with respect to any Party, any event, condition, circumstance, or change that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (a) the business, assets, liabilities, financial condition, or results of operations of such Party; or (b) the ability of such Party to consummate the Transactions contemplated by this Agreement. |
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| (v) | Litigation. There is no action, suit, proceeding, or investigation pending or, to such Party’s knowledge, threatened against such Party that would reasonably be expected to materially impair such Party’s ability to consummate the Transactions contemplated hereby. |
| (vi) | Compliance with Laws. Such Party is in compliance in all material respects with all applicable laws, regulations, and orders relevant to its obligations under this Agreement. |
| (b) | Additional Representations and Warranties of TEG. TEG additionally represents and warrants to Blue Moon and EQ, as of the date hereof that: |
| (i) | DoW Investment: It has fully disclosed to the DoW the proposed Transactions contemplated by this Agreement, including TEG’s intention to use the funds received from the DoW Investment to fund the Transactions, the identity of Blue Moon and EQ, and the nature of their respective contemplated interests and involvement in the JV Entity, and that the DoW is aware of, and has not objected to, the foregoing. |
| (c) | Additional Representations and Warranties of Blue Moon. Blue Moon additionally represents and warrants to TEG and EQ, as of the date hereof that: |
| (i) | Title. BM US, directly or indirectly, has good and marketable title to the Springer Project and the APT Plant. |
| (ii) | Permits. BM US and/or Blue Moon holds, directly or indirectly, or has the ability to obtain in the ordinary course, all material permits, licenses, approvals, and authorizations necessary for the operation of the Springer Project (including the mine, mill, and APT Plant), and all such permits are in full force and effect and in good standing, except where the failure to hold such permits would not reasonably be expected to have a Material Adverse Effect. |
| (iii) | Mineral Rights. BM US and/or Blue Moon owns or holds, directly or indirectly, valid leasehold interests in all mineral rights necessary for the conduct of mine and mill operations at the Springer Project, and such mineral rights are in full force and effect. |
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| 21. | COVENANTS |
| (a) | Negotiation of Definitive Agreements. The Parties shall negotiate in good faith and use commercially reasonable efforts to finalize and execute the Definitive Agreements as promptly as practicable following the Effective Date, and in any event, (i) with respect to the Blue Moon Investment, within 45 days after the Announcement Date and (ii) with respect to Tranche 1 of the Tungsten Prepayment Facility subject to due diligence, within sixty (60) days following the Announcement Date, (iii) with respect to all other Definitive Agreements, within twelve (12) months following the Announcement Date (or, in each case, such later date as the Parties may mutually agree in writing) (each, an “Outside Date”). In the event that despite commercially reasonable efforts, the Parties are unable to finalize one or more issues contained in the Definitive Agreements, the Parties shall follow the Exclusive Dispute Resolution Mechanism set forth in Section 19(c) above. |
| (b) | Conduct of Business Pending Closing. From the Effective Date until the earlier of the applicable Closing Date or termination of this Agreement, each Party shall: |
| (i) | conduct its business in the ordinary course consistent with past practice; |
| (ii) | use commercially reasonable efforts to preserve intact its business organizations, relationships with third parties, and existing permits and approvals; |
| (iii) | not take any action that would reasonably be expected to result in a Material Adverse Effect or frustrate the conditions to Closing set forth in Section 22; and |
| (iv) | promptly notify the other Parties of any event or circumstance that would reasonably be expected to prevent or materially delay consummation of the Transactions contemplated hereby. |
| (c) | Regulatory Approvals and Cooperation. The Parties shall use commercially reasonable efforts to obtain all regulatory approvals, consents, and filings required to consummate the Transactions contemplated hereby, including TSXV approval, as promptly as practicable. Each Party shall cooperate with the other Parties in connection with any regulatory filing or proceeding, including by providing information reasonably requested by the applicable regulatory authority. No Party shall take any action that would reasonably be expected to delay, impair, or prevent receipt of any required regulatory approval. |
| (d) | Further Assurances. Each Party shall execute and deliver such additional instruments, documents, and agreements, and take such further actions, as may be reasonably necessary or appropriate to effectuate the purposes of this Agreement and the Transactions contemplated hereby. |
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| 22. | CONDITIONS TO CLOSING |
| (a) | Conditions to All Parties’ Obligations. The obligations of each Party to consummate the Transactions contemplated hereby shall be subject to the satisfaction or mutual waiver of the following conditions on or prior to each applicable Outside Date: |
| (i) | Regulatory Approvals. All requisite regulatory approvals (including TSXV approval) shall have been obtained and shall remain in full force and effect. |
| (ii) | Representations Accurate. The representations and warranties of each Party set forth in Section 20 shall be true and correct in all material respects as of the applicable Closing Date. |
| (iii) | Performance. Each of the Parties shall have performed and complied in all material respects with its covenants and obligations under this Agreement required to be performed on or prior to the applicable Closing Date. |
| (iv) | Due Diligence. The Parties shall have completed, to their reasonable satisfaction, legal, financial, technical, and environmental due diligence on each of the applicable Parties, except with respect to the closing of the Blue Moon Investment which shall be binding upon the Announcement Date. |
| (v) | Definitive Agreements. The Parties shall have negotiated, agreed upon, and executed the applicable Definitive Agreements, in form and substance reasonably satisfactory to all Parties. |
| (vi) | No Material Adverse Change. Since the Effective Date, no Material Adverse Effect shall have occurred with respect to any Party that is continuing as of the applicable Closing Date. |
| 23. | BINDING EFFECT AND TERM |
| (a) | Binding Agreement. This Agreement is intended to be, and constitutes, a binding agreement of the Parties as to all terms set forth herein. Notwithstanding the foregoing, the Parties acknowledge that the Transactions contemplated by this Agreement are complex and that more detailed Definitive Agreements will be required to fully document the rights and obligations of the Parties. The Parties agree to negotiate the Definitive Agreements in good faith and on the basis of the terms set forth herein. In the event of any conflict between the terms of this Agreement and the Definitive Agreements, the Definitive Agreements shall control (once executed). |
| (b) | Term. This Agreement shall remain in full force and effect from the Effective Date until the earliest of: |
| (i) | the execution and delivery of all of the Definitive Agreements (at which time the Definitive Agreements shall supersede this Agreement); |
| (ii) | the mutual written agreement of the Parties to terminate this Agreement; |
| (iii) | the applicable Outside Date (as may be extended by mutual agreement), if the applicable Definitive Agreements have not been executed by such date; or |
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| (iv) | a material breach by any Party of its obligations under this Agreement that remains uncured for thirty (30) days following written notice thereof from a non-breaching Party (provided that the terminating Party is not then in material breach of its own obligations hereunder). |
| (c) | Survival. The following provisions shall survive any termination of this Agreement: Section 24 (General Provisions); and any provisions that by their nature are intended to survive termination. |
| (d) | Effect of Termination. Upon termination of this Agreement in accordance with Section 23(b), the Parties shall have no further obligations hereunder (except for surviving provisions), and no Party shall have any liability to any other Party by reason of such termination; provided that termination shall not relieve any Party from liability for any willful breach of this Agreement occurring prior to termination. |
| 24. | GENERAL PROVISIONS |
| (a) | Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Maine, without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction. |
| (b) | Assignment. No Party may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the other Parties. Any purported assignment in violation of this Section shall be null and void. |
| (c) | Expenses. Each Party shall bear its own costs and expenses in connection with this Agreement and the negotiation of the Definitive Agreements, unless otherwise agreed in writing. |
| (d) | Entire Agreement. This Agreement and the NDA constitute the entire agreement among the Parties with respect to the subject matter hereof and supersede all prior agreements, understandings, negotiations, representations and discussions, whether oral or written, among the Parties with respect thereto, including, without limitation, the MOU. |
| (e) | Amendments. This Agreement may not be amended, modified or supplemented except by a written instrument executed by all Parties; provided, however, that any provision of this Agreement relating solely to a bilateral arrangement between two of the Parties may be amended, modified or supplemented by a written instrument executed only by those two Parties, without the consent or signature of the other Party, so long as such amendment, modification or supplement does not affect the rights or obligations of, or impose any liability on, the other Party under this Agreement. |
| (f) | Severability. If any provision of this Agreement is held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein, provided that the economic substance of the Transactions contemplated hereby is not affected in a manner materially adverse to any Party. |
| (g) | Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same agreement. Delivery of an executed counterpart by electronic transmission (including PDF) shall be effective as delivery of an original. |
| (h) | Waiver. No waiver of any term, provision, or condition of this Agreement shall be effective unless in writing and signed by the Party against which such waiver is to be enforced. No failure to exercise any right or remedy hereunder shall operate as a waiver thereof. |
[Signature Page Follows]
23
IN WITNESS WHEREOF, the Parties have executed this binding Agreement as of the Effective Date first written above.
| THE ELMET GROUP Co. | ||
| By: | /s/ Peter V. Anania | |
| Name / Title: | Peter V. Anania, Chief Executive Officer and Chairman | |
| Date: | 9/11/2026 | |
| BLUE MOON METALS INC. | ||
| By: | /s/ Christian Kargl-Simard | |
| Name / Title: | Christian Kargl-Simard, Chief Executive Officer | |
| Date: | 9/11/2026 | |
| BLUE MOON (SPRINGER) INC. | ||
| By: | /s/ Christian Kargl-Simard | |
| Name / Title: | Christian Kargl-Simard, Chief Executive Officer | |
| Date: | 9/11/2026 | |
| EQ RESOURCES LIMITED | ||
| By: | /s/ Craig Bradshaw | |
| Name / Title: | Craig Bradshaw, Managing Director | |
| Date: | 9/11/2026 | |
Exhibit 10.5
1 6. ADMINISTERED BY CODE 7. FOR SOLICITATION INFORMATION CALL: SOLICITATION/CONTRACT/ORDER FOR COMMERCIAL ITEMS OFFEROR TO COMPLETE BLOCKS 12, 17, 23, 24, & 30 1 . REQUISITION NUMBER SP8000 - 26 - D - 0029 2. CONTRACT NO. 3. AWARD/EFFECTIVE DATE 2026 SEP 1 1 4. ORDER NUMBER 5. SOLICITATION NUMBER 6. SOLICITATION ISSUE DATE a. NAME b. TELEPHONE NUMBER (No collect calls) 8. OFFER DUE DATE/ LOCAL TIME 9. ISSUED BY CODE SP8000 DCSO COLUMBUS 3990 EAST BROAD STREET COLUMBUS OH 4321 8 USA Local Admin: Chelsea Lee DCL01 28 Tel: 804 - 41 8 - 1 651 Email: [email protected] 1 0. THIS ACQUISITION IS UNRESTRICTED OR SET ASIDE: % FOR: WOMEN - OWNED SMALL BUSINESS (WOSB) ELIGIBLE UNDER THE WOMEN - OWNED SMALL BUSINESS PROGRAM SMALL BUSINESS HUBZONE SMALL BUSINESS SERVICE - DISABLED VETERAN - OWNED SMALL BUSINESS NAICS: 21 2290 SIZE STANDARD: 1 ,250 Employees 1 1 . DELIVERY FOR FOB DESTINA - TION UNLESS BLOCK IS MARKED Net 30 days 1 2. DISCOUNT TERMS 1 3a. THIS CONTRACT IS A RATED ORDER UNDER DPAS (1 5 CFR 700) 1 3b. RATING 1 4. METHOD OF SOLICITATION RFQ IFB RFP 1 5. DELIVER TO CODE SP8000 SEE BLOCK 9 Criticality: PAS : None FACILITY CODE 1 7a. CONTRACTOR/ CODE 7AWJ9 OFFEROR ELMET TECHNOLOGIES LLC 1 560 LISBON ST LEWISTON ME 04240 - 351 9 USA TELEPHONE NO. 207333621 0 1 8a. PAYMENT WILL BE MADE BY CODE SL4701 DEF FIN AND ACCOUNTING SVC BSM P O BOX 1 8231 7 COLUMBUS OH 4321 8 - 231 7 USA 1 7b. CHECK IF REMITTANCE IS DIFFERENT AND PUT SUCH ADDRESS IN 1 8b. SUBMIT INVOICES TO ADDRESS SHOWN IN BLOCK 1 8a UNLESS BLOCK OFFER BELOW IS CHECKED. 1 9. ITEM NO. 20. SCHEDULE OF SUPPLIES/SERVICES 21 . 22. QUANTITY UNIT 23. UNIT PRICE 24. AMOUNT 25. ACCOUNTING AND APPROPRIATION DATA 26. TOTAL AWARD AMOUNT (For Govt. Use Only) $2000000,000.00 ARE NOT ATTACHED. ARE 27a. SOLICITATION INCORPORATES BY REFERENCE FAR 52.21 2 - 1 , 52.21 2 - 4. FAR 52.21 2 - 3 AND 52.21 2 - 5 ARE ATTACHED. ADDENDA ARE NOT ATTACHED. ARE 27b. CONTRACT/PURCHASE ORDER INCORPORATES BY REFERENCE FAR 52.21 2 - 4. FAR 52.21 2 - 5 IS ATTACHED. ADDENDA GNATURE OF OFFER 29. AWARD OF CONTRACT: REF. OFFER DATED 0000 - 00 - 00 . YOUR OFFER ON SOLICITATION (BLOCK 5), INCLUDING ANY ADDITIONS OR CHANGES WHICH ARE SET FORTH , HEREIN IS ACCEPTED AS TO ITEMS: 28. CONTRACTOR IS REQUIRED TO SIGN THIS DOCUMENT AND RETURN 1 COPIES TO ISSUING OFFICE. CONTRACTOR AGREES TO FURNISH AND DELIVER ALL ITEMS SET FORTH OR OTHERWISE IDENTIFIED ABOVE AND ON ANY ADDITIONAL SHEETS SUBJECT TO THE TERMS AND CONDITIONS SPECIFIED 31 a. UNITED STATES OF AMERICA (SIGNATURE OF CONTRACTING OFFICER) 30a. SI OR/CONTRACTOR 31 c. DATE SIGNED 2026 SEP 09 31 b. NAME OF CONTRACTING OFFICER (Type or Print) 30c. DATE SIGNED 9/11/2026 30b. NAME AND TITLE OF SIGNER (Type or Print) Scott Knoll LLC - Manager SEE SCHEDULE SEE SCHEDULE SEE ADDENDUM See Schedule EDWOSB 8 (A) PAGE 1 OF 44 Docusign Envelope ID: FDD5FE47 - A134 - 832A - 81F5 - 78A5B38D49C8 AUTHORIZED FOR LOCAL REPRODUCTION PREVIOUS EDITION IS NOT USABLE STANDARD FORM 1449 (REV. 2/2012) Prescribed by GSA - FAR (48 CFR) 53.212
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2
Section a – Solicitation/contract form
a. standard form 1449 notes / considerations
The contract writing system used to execute this action contains limitations that can result in the creation of a final document partially inconsistent with what would be appropriate for certain agreements or contract actions. Please note the following regarding this SF 1449:
Block 7a -- NAME: [*], Email: [*]
Block 26 -- TOTAL AWARD AMOUNT: The amount listed in this block, $2,000,000,000.00, represents the Indefinite Delivery Indefinite Quantity (IDIQ) Contract Maximum. The award of this IDIQ contract does not obligate funds.
* * * * * * * *
A.1 ADMINISTRATIVE SUMMARY
The DLA Contracting Services Office – Columbus Division 4 (DCSO-C4) hereby awards this contract to Elmet Technologies, LLC. (CAGE: 7AWJ9) (Contractor) for Tungsten Ores and Concentrates and Sodium Tungstate. Delivery order(s) (DO) covering the contract guaranteed minimum of $150,000,000.00 will be awarded (meaning procured/purchased), within the ordering period of this IDIQ contract. Any further DOs will be placed as requirements are determined as necessary by DCSO-C4.
The parties mutually agree to expand the scope of this contract for the purchase of additional Tungsten materials/derivatives subject to mutual agreement during the ordering period(s) of this contract.
A.1.1 MATERIAL DESCRIPTION/PRICING
Description: Tungsten O&C / Sodium Tungstate
PSC: 9610 / Material Code: N30011040
NAICS: 212290 / Size Standard: 1,250 employees
A.1.2 INDEFINITE DELIVERY INDEFINITE QUANTITY (IDIQ) CONTRACT INFORMATION
A.1.2.1 Contract Period. This award will be a five-year base ordering period, followed by an additional two-year option ordering period, with such option being exercised at DLA’s discretion. DO(s) may be issued through the final IDIQ ordering date to include the option period if exercised. The IDIQ ordering period(s) are as follows:
Base Ordering Period: August 31, 2026 – August 30, 2031
Option ordering period (IAW FAR Clause 52.217-9): August 31, 2031 – August 30, 2033
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A.1.2.2 Contract minimum and maximum: The Government intends to acquire quantities based on the following IDIQ contract minimum and maximum:
Minimum: $150,000,000.00 (guaranteed)
Maximum: $2,000,000,000.00
Under an IDIQ contract agreement, DCSO-C4 agrees to procure quantities of Tungsten to cover only the guaranteed minimum stated in the contract. Once the minimum guaranteed amount has been met, the Government is under no obligation to place orders for additional quantities against this contract. Additional orders may be placed up to the stated maximum for the IDIQ contract, if the Government requires them. Specified quantities will apply to the entire contract ordering period(s), and the cumulative total for all DO’s will not exceed the specified IDIQ contract maximum.
A.1.2.3 The included Statement of Work (SOW) represents the general scope of supplies required under this IDIQ contract. Each DO may have an SOW Addendum for more detailed information specific to the delivery order.
A.1.2.4 Issuance of Delivery Orders. All requirements for supplies will be ordered as DOs that are fixed price at the time of DO issuance. Requirements will be presented to the Contractor by way of a DO(s) “request for proposal” prior to the issuance of any DO(s). Pricing for any ordered DOs will be fixed at the time of order, not the time of delivery. Any DLA Contracting Services Office (DCSO) warranted Contracting Officer, within the limits of their warrants, may award and administer a DO for supplies covered by the IDIQ contract. DOs will mostly be placed by the DLA Contracting Services Office – Colombus (DCSO-C4).
A.1.3 DELIVERY / SHIPPING LOCATION
The Contractor must deliver materials to the Government Storage Depots (delivery point) stated in the SOW which in turn will be specified in each Delivery Order. The Government reserves the right to add additional shipping locations within the Continental United States (CONUS).
A.1.4 POINTS OF CONTACT FOR THIS ACQUISITION
Contract Specialist:
[*]
Contracting Officer:
[*]
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Quality Assurance Specialist (QAS):
The QAS will be assigned on each delivery order
Post Award Contact Manager (PACMAN)
The PACMAN will be assigned on each delivery order.
A.2 INCONSISTENCIES BETWEEN THE ADMINISTRATIVE SUMMARY AND CONTRACT
This administrative summary has been prepared as an aid to you, the Contractor. Every attempt has been made to accurately reflect the requirements and information contained within this contract. Any inconsistencies between the summary and the contract will be resolved in favor of the specific requirements of the contract.
Section B – Supplies Or Services And Prices Or Costs
SECTION B – SUPPIES OR SERVICES AND PRICES OR COSTS
All pricing for materials, as listed in the Contract Line-Item Numbers (CLINs) below, will be determined at the time of each delivery order. Pricing will be established through negotiation between the parties as specified in the Request for Proposal for each DO.
CLIN 0001 (BASE) – Tungsten O&C
SUPPLY/SERVICE: 9610--N30011040
ITEM DESCRIPTION: Tungsten Ores and Concentrates, as described in the SOW. In accordance with the SOW, the Contractor shall source, package, and delivery the awarded quantity as defined in the DO to the DLA Strategic Materials location defined in the DO. Pricing under this CLIN shall be reflective of all work to be performed under the SOW to included Third-Party Testing.
PRICING TERMS: Fixed Price – to be determined at the DO level
ORDERING PERIOD: August 31, 2026 – August 30, 2031
INSPECTION POINT: Destination
ACCEPTANCE POINT: Destination
FOB: Destination
DELIVERY DATE: To be delivered within 48 months after DO issuance.
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PREP FOR DELIVERY: Packaging and labeling shall be in accordance with the SOW.
CLIN 0001 – Tungsten O&C
| Quantity (in kg.) | Unit Price (per kg.) | Validity |
| 1 | TBD | 90 calendar days (after DO RFP) |
CLIN 0002 (BASE) – Sodium Tungstate
SUPPLY/SERVICE: 9610--N30011040
ITEM DESCRIPTION: Sodium Tungstate (Na2WO4), as described in the SOW. In accordance with the SOW, the Contractor shall source, package, and delivery the awarded quantity as defined in the DO to the DLA Strategic Materials location defined in the DO. Pricing under this CLIN shall be reflective of all work to be performed under the SOW to included Third-Party Testing.
PRICING TERMS: Fixed Price – to be determined at the DO level
ORDERING PERIOD: August 31, 2026 – August 30, 2031
INSPECTION POINT: Destination
ACCEPTANCE POINT: Destination
FOB: Destination
DELIVERY DATE: To be delivered within 48 months after DO issuance.
PREP FOR DELIVERY: Packaging and labeling shall be in accordance with the SOW.
CLIN 0002 – Sodium Tungstate (Na2WO4)
| Quantity (in kg.) | Unit Price (per kg.) | Validity |
| 1 | TBD | 90 calendar days (after DO RFP) |
CLIN 0002 (OPTION) – Tungsten O&C
SUPPLY/SERVICE: 9610--N30011040
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ITEM DESCRIPTION: Tungsten Ores and Concentrates, as described in the SOW. In accordance with the SOW, the Contractor shall source, package, and delivery the awarded quantity as defined in the DO to the DLA Strategic Materials location defined in the DO. Pricing under this CLIN shall be reflective of all work to be performed under the SOW to included Third-Party Testing.
PRICING TERMS: Fixed Price – to be determined at the DO level
ORDERING PERIOD: August 31, 2031 – August 30, 2033
INSPECTION POINT: Destination
ACCEPTANCE POINT: Destination
FOB: Destination
DELIVERY DATE: To be delivered within 48 months after DO issuance.
PREP FOR DELIVERY: Packaging and labeling shall be in accordance with the SOW.
CLIN 0001 – Tungsten O&C
| Quantity (in kg.) | Unit Price (per kg.) | Validity |
| 1 | TBD | 90 calendar days (after DO RFP) |
CLIN 0002 (BASE) – Sodium Tungstate
SUPPLY/SERVICE: 9610--N30011040
ITEM DESCRIPTION: Sodium Tungstate (Na2WO4), as described in the SOW. In accordance with the SOW, the Contractor shall source, package, and delivery the awarded quantity as defined in the DO to the DLA Strategic Materials location defined in the DO. Pricing under this CLIN shall be reflective of all work to be performed under the SOW to included Third-Party Testing.
PRICING TERMS: Fixed Price – to be determined at the DO level
ORDERING PERIOD: August 31, 2031 – August 30, 2033
INSPECTION POINT: Destination
7
ACCEPTANCE POINT: Destination
FOB: Destination
DELIVERY DATE: To be delivered within 48 months after DO issuance.
PREP FOR DELIVERY: Packaging and labeling shall be in accordance with the SOW.
CLIN 0002 – Sodium Tungstate (Na2WO4)
| Quantity (in kg.) | Unit Price (per kg.) | Validity |
| 1 | TBD | 90 calendar days (after DO RFP) |
Section C – Specifications/sow/soo/ord
DEFENSE LOGISTICS AGENCY
Tungsten Ores and Concentrates
STATEMENT OF WORK
| I. | INTRODUCTION |
| A. | BACKGROUND |
The Department of War (DoW) procures parts that contain tungsten ores and concentrates. Tungsten ores and concentrates are shelf stable forms of tungsten that can readily be converted into various other forms for utilization by the DoW.
| B. | OBJECTIVES |
The objective of this procurement is to establish an indefinite delivery/indefinite quantity (IDIQ) ordering vehicle to allow DLA, via delivery orders (DOs), to purchase tungsten ores and concentrates as needed within the parameters established within the resulting IDIQ regarding minimum and maximum purchase amounts.
| C. | SCOPE |
The Contractor will provide the necessary management, services, personnel, and documentation required to accomplish the tasks described within this Statement of Work (SOW).
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To reduce the risk of unavailability in the tungsten supply chain, DLA Strategic Materials (SM) intends to purchase tungsten ores and concentrates with estimated values shown in Table 1. DLA SM reserves the right to procure either Sodium Tungstates or Ores and Concentrates throughout the contract ordering period; however, the type of material (Tungstate Ores or Sodium Tungstate) will be mutually agreed upon by the contractor and DLA prior to issuance of the DO.
Table 1 – Estimated Quantities of Tungsten Ores and Concentrates and Sodium Tungstate (in Kilograms (kg)
[**]
| D. | COMPLIANCE REQUIREMENTS |
The Contractor must meet the below listed compliance requirements:
| ● | Harmonized Tariff Schedule, the Tariff Act of 1930, and the Trade Act of 1974 |
| ● | United States (US) Customs and Border Protection (CBP) Form 7501 |
| ● | US CBP Form 6059 General Declaration |
| ● | US CBP Form 5106 Request for Importer Number or Notification of Importer Number |
| II. | PERFORMANCE REQUIREMENTS |
Unless otherwise specified, all references to days are considered US Government business days and do not include federal holidays. The Contractor will perform actions necessary to accomplish the objectives stated above as well as the following tasks and deliverables.
Contact information will be provided with each delivery order that indicates the Government point of contact and an e-mail address for submitting deliverables.
| A. | MATERIAL REQUIREMENTS |
The Government reserves the right to specify which location material, for both Tungsten Trioxide (WO3) and Sodium Tungstate (Na2WO4), is sourced from at the time of the delivery order. Sourcing determination will be made pending availability of material. Potential sources of material include:
[**]
| B. | SAMPLING |
[**]
| C. | TESTING |
[**]
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| D. | CERTIFICATES OF ANALYSIS (COA) |
[**]
| E. | ENVIRONMENTAL, SAFETY, AND OCCUPATIONAL HEALTH |
[**]
| F. | PACKAGING |
[**]
| G. | LABELING |
[**]
| H. | TRANSPORTATION AND DELIVERY |
[**]
| I. | INSPECTION AND ACCEPTANCE |
[**]
| J. | TIMELINE AND ACTIONS/SUBMISSIONS |
[**]
Section I – CONTRACT CLAUSES
SECTION i – cONTRACT cLAUSES
52.212-4 tERMS AND CONDITIONS -- cOMMERICIAL PRODUCTS AND COMMERICAL SERVICES (DEVIATION 2026-O0038) (FEB 2026) FAR
52.216-18 ORDERING (AUG 2020) FAR
(a) Any supplies and services to be furnished under this contract shall be ordered by issuance of delivery orders or task orders by the individuals or activities designated in the Schedule. Such orders may be issued from 31 August 2026 through 30 August 2031; if the option is exercised, in clause 52.217-9, the ordering period is extended through 30 August 2033.
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(b) All delivery orders or task orders are subject to the terms and conditions of this contract. In the event of conflict between a delivery order or task order and this contract, the contract shall control.
(c) If mailed, a delivery order or task order is considered “issued” when the Government deposits the order in the mail. Orders may be issued orally, by facsimile, or by electronic commerce methods only if authorized in the Schedule.
(End of clause)
52.216-19 ORDER LIMITATIONS (OCT 1995) FAR
(a) Minimum order. [**]
(b) Maximum order. [**]
(c) If this is a requirements contract (i.e., includes the Requirements clause at subsection 52.216-21 of the Federal Acquisition Regulation (FAR)), the Government is not required to order a part of any one requirement from the Contractor if that requirement exceeds the maximum-order limitations in paragraph (b) of this section. (d) Notwithstanding paragraphs (b) and (c) of this section, the Contractor shall honor any order exceeding the maximum order limitations in paragraph (b), unless that order (or orders) is returned to the ordering office within seven (7) days after issuance, with written notice stating the Contractor’s intent not to ship the item (or items) called for and the reasons. Upon receiving this notice, the Government may acquire the supplies or services from another source.
(End of clause)
52.216-22 INDEFINITE QUANTITY (DEVIATION 2026-O0038) (FEB 2026) FAR
(a) This is an indefinite-quantity contract for the supplies or services specified, and effective for the period stated, in the Schedule. The quantities of supplies and services specified in the Schedule are estimates only and are not purchased by this contract.
(b) Delivery or performance shall be made only as authorized by orders issued in accordance with the Ordering clause. The Contractor shall furnish to the Government, when and if ordered, the supplies or services specified in the Schedule up to and including the quantity designated in the Schedule as the “maximum.” The Government shall order at least the quantity of supplies or services designated in the Schedule as the “minimum.”
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(c) Except for any limitations on quantities in the Order Limitations clause or in the Schedule, there is no limit on the number of orders that may be issued. The Government may issue orders requiring delivery to multiple destinations or performance at multiple locations.
(d) Any order issued during the ordering period of this contract and not completed within that period shall be completed by the Contractor within the time specified in the order, which may include order options to be exercised after the ordering period of this contract but before the end of the period of performance of the order. The contract shall govern the Contractor’s and Government’s rights and obligations with respect to that order, including options exercised, to the same extent as if the order were completed during the contract’s ordering period; provided, that the Contractor shall not be required to make any deliveries under this contract after four (4) years from the expiration of the ordering period.
(End of clause)
52.203-12 LIMITATION ON PAYMENTS TO INFLUENCE CERTAIN FEDERAL TRANSACTIONS (JUN 2020) FAR
52.204-13 SYSTEM FOR AWARD MANAGEMENT -- MAINTENANCE (DEVIATION 2026-O0038) (FEB 2026) FAR
52.204-19 INCORPORATION BY REFRENCE OF REPRESENTATIONS AND CERTIFICATIONS (DEC 2014) FAR
The Contractor’s representations and certifications, including those completed electronically via the System for Award Management (SAM), are incorporated by reference into the contract.
(End of clause)
252.203-7002 REQUIREMENT TO INFORM EMPLOYEES OF WHISTLEBLOWER RIGHTS (DEC 2022) DFARS
252.204-7000 DISCLOSURE OF INFORMATION (OCT 2016) DFARS
252.204-7003 CONTROL OF GOVERNMENT PERSONNEL WORK PRODUCT (APR 1992) DFARS
252.204-7009 LIMITATIONS ON THE USE OR DISCLOSURE OF THIRD-PARTY CONTRACTOR REPORTED CYBER INCIDENT INFORMATION (JAN 2023) DFARS
252.204-7012 SAFEGUARDING COVERED DEFENSE INFORMATION AND CYBER INCIDENT REPORTING (DEVIATION 2024-O0013) (MAY 2024) DFARS
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(a) Definitions. As used in this clause
Adequate security means protective measures that are commensurate with the consequences and probability of loss, misuse, or unauthorized access to, or modification of information.
Compromise means disclosure of information to unauthorized persons, or a violation of the security policy of a system, in which unauthorized intentional or unintentional disclosure, modification, destruction, or loss of an object, or the copying of information to unauthorized media may have occurred.
Contractor attributional/proprietary information means information that identifies the contractor(s), whether directly or indirectly, by the grouping of information that can be traced back to the contractor(s) (e.g., program description, facility locations), personally identifiable information, as well as trade secrets, commercial or financial information, or other commercially sensitive information that is not customarily shared outside of the company.
Controlled technical information means technical information with military or space application that is subject to controls on the access, use, reproduction, modification, performance, display, release, disclosure, or dissemination. Controlled technical information would meet the criteria, if disseminated, for distribution statements B through F using the criteria set forth in DoD Instruction 5230.24, Distribution Statements on Technical Documents. The term does not include information that is lawfully publicly available without restrictions.
Covered contractor information system means an unclassified information system that is owned, or operated by or for, a contractor and that processes, stores, or transmits covered defense information.
Covered defense information means unclassified controlled technical information or other information, as described in the Controlled Unclassified Information (CUI) Registry at http://www.archives.gov/cui/registry/category-list.html, that requires safeguarding or dissemination controls pursuant to and consistent with law, regulations, and Governmentwide policies, and is --
(1) Marked or otherwise identified in the contract, task order, or delivery order and provided to the contractor by or on behalf of DoD in support of the performance of the contract; or
(2) Collected, developed, received, transmitted, used, or stored by or on behalf of the contractor in support of the performance of the contract.
Cyber incident means actions taken through the use of computer networks that result in a compromise or an actual or potentially adverse effect on an information system and/or the information residing therein.
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Forensic analysis means the practice of gathering, retaining, and analyzing computer-related data for investigative purposes in a manner that maintains the integrity of the data.
Information system means a discrete set of information resources organized for the collection, processing, maintenance, use, sharing, dissemination, or disposition of information.
Malicious software means computer software or firmware intended to perform an unauthorized process that will have adverse impact on the confidentiality, integrity, or availability of an information system. This definition includes a virus, worm, Trojan horse, or other code-based entity that infects a host, as well as spyware and some forms of adware.
Media means physical devices or writing surfaces including, but is not limited to, magnetic tapes, optical disks, magnetic disks, large-scale integration memory chips, and printouts onto which covered defense information is recorded, stored, or printed within a covered contractor information system.
Operationally critical support means supplies or services designated by the Government as critical for airlift, sealift, intermodal transportation services, or logistical support that is essential to the mobilization, deployment, or sustainment of the Armed Forces in a contingency operation.
Rapidly report means within 72 hours of discovery of any cyber incident.
Technical information means technical data or computer software, as those terms are defined in the clause at DFARS 252.227-7013, Rights in Technical Data --Other Than Commercial Products and Commercial Services, regardless of whether or not the clause is incorporated in this solicitation or contract. Examples of technical information include research and engineering data, engineering drawings, and associated lists, specifications, standards, process sheets, manuals, technical reports, technical orders, catalog-item identifications, data sets, studies and analyses and related information, and computer software executable code and source code.
(b) Adequate security. The Contractor shall provide adequate security on all covered contractor information systems. To provide adequate security, the Contractor shall implement, at a minimum, the following information security protections:
(1) For covered contractor information systems that are part of an Information Technology (IT) service or system operated on behalf of the Government, the following security requirements apply:
(i) Cloud computing services shall be subject to the security requirements specified in the clause 252.239-7010, Cloud Computing Services, of this contract.(ii) Any other such IT service or system (i.e., other than cloud computing) shall be subject to the security requirements specified elsewhere in this contract.
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(2) For covered contractor information systems that are not part of an IT service or system operated on behalf of the Government and therefore are not subject to the security requirement specified at paragraph (b)(1) of this clause, the following security requirements apply:
(i) Except as provided in paragraph (b)(2)(ii) of this clause, the covered contractor information system shall be subject to the security requirements in National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171, “Protecting Controlled Unclassified Information in Nonfederal Information Systems and Organizations”, Revision 2 (available via the internet at http://dx.doi.org/10.6028/NIST.SP.800-171).
(ii)(A) The Contractor shall implement NIST SP 800-171, as soon as practical, but not later than December 31, 2017. For all contracts awarded prior to October 1, 2017, the Contractor shall notify the DoD Chief Information Officer (CIO), via email at [*], within 30 days of contract award, of any security requirements specified by NIST SP 800-171 not implemented at the time of contract award.
(B) The Contractor shall submit requests to vary from NIST SP 800-171 in writing to the Contracting Officer, for consideration by the DoD CIO. The Contractor need not implement any security requirement adjudicated by an authorized representative of the DoD CIO to be nonapplicable or to have an alternative, but equally effective, security measure that may be implemented in its place.
(C) If the DoD CIO has previously adjudicated the contractor’s requests indicating that a requirement is not applicable or that an alternative security measure is equally effective, a copy of that approval shall be provided to the Contracting Officer when requesting its recognition under this contract.
(D) If the Contractor intends to use an external cloud service provider to store, process, or transmit any covered defense information in performance of this contract, the Contractor shall require and ensure that the cloud service provider meets security requirements equivalent to those established by the Government for the Federal Risk and Authorization Management Program (FedRAMP) Moderate baseline (https://www.fedramp.gov/resources/ documents/) and that the cloud service provider complies with requirements in paragraphs (c) through (g) of this clause for cyber incident reporting, malicious software, media preservation and protection, access to additional information and equipment necessary for forensic analysis, and cyber incident damage assessment.
(3) Apply other information systems security measures when the Contractor reasonably determines that information systems security measures, in addition to those identified in paragraphs (b)(1) and (2) of this clause, may be required to provide adequate security in a dynamic environment or to accommodate special circumstances (e.g., medical devices) and any individual, isolated, or temporary deficiencies based on an assessed risk or vulnerability. These measures may be addressed in a system security plan.
(c) Cyber incident reporting requirement.
(1) When the Contractor discovers a cyber incident that affects a covered contractor information system or the covered defense information residing therein, or that affects the contractor’s ability to perform the requirements of the contract that are designated as operationally critical support and identified in the contract, the Contractor shall --
(i) Conduct a review for evidence of compromise of covered defense information, including, but not limited to, identifying compromised computers, servers, specific data, and user accounts. This review shall also include analyzing covered contractor information system(s) that were part of the cyber incident, as well as other information systems on the Contractor’s network(s), that may have been accessed as a result of the incident in order to identify compromised covered defense information, or that affect the Contractor’s ability to provide operationally critical support; and
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(ii) Rapidly report cyber incidents to DoD at https://dibnet.dod.mil.
(2) Cyber incident report. The cyber incident report shall be treated as information created by or for DoD and shall include, at a minimum, the required elements at https://dibnet.dod.mil.
(3) Medium assurance certificate requirement. In order to report cyber incidents in accordance with this clause, the Contractor or subcontractor shall have or acquire a DoD-approved medium assurance certificate to report cyber incidents. For information on obtaining a DoD-approved medium assurance certificate, see https://public.cyber.mil/ eca/.
(d) Malicious software. When the Contractor or subcontractors discover and isolate malicious software in connection with a reported cyber incident, submit the malicious software to DoD Cyber Crime Center (DC3) in accordance with instructions provided by DC3 or the Contracting Officer. Do not send the malicious software to the Contracting Officer.
(e) Media preservation and protection. When a Contractor discovers a cyber incident has occurred, the Contractor shall preserve and protect images of all known affected information systems identified in paragraph (c)(1)(i) of this clause and all relevant monitoring/packet capture data for at least 90 days from the submission of the cyber incident report to allow DoD to request the media or decline interest.
(f) Access to additional information or equipment necessary for forensic analysis. Upon request by DoD, the Contractor shall provide DoD with access to additional information equipment that is necessary to conduct a forensic analysis.
(g) Cyber incident damage assessment activities. If DoD elects to conduct a damage assessment, the Contracting Officer will request that the Contractor provide all of the damage assessment information gathered in accordance with paragraph (e) of this clause.
(h) DoD safeguarding and use of contractor attributional/proprietary information. The Government shall protect against the unauthorized use or release of information obtained from the contractor (or derived from information obtained from the contractor) under this clause that includes contractor attributional/proprietary information, including such information submitted in accordance with paragraph (c). To the maximum extent practicable, the Contractor shall identify and mark attributional/proprietary information. In making an authorized release of such information, the Government will implement appropriate procedures to minimize the contractor attributional/ proprietary information that is included in such authorized release, seeking to include only that information that is necessary for the authorized purpose(s) for which the information is being released.
(i) Use and release of contractor attributional/proprietary information not created by or for DoD. Information that is obtained from the contractor (or derived from information obtained from the contractor) under this clause that is not created by or for DoD is authorized to be released outside of DoD-
(1) To entities with missions that may be affected by such information;
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(2) To entities that may be called upon to assist in the diagnosis, detection, or mitigation of cyber incidents;
(3) To Government entities that conduct counterintelligence or law enforcement investigations;
(4) For national security purposes, including cyber situational awareness and defense purposes (including with Defense Industrial Base (DIB) participants in the program at 32 CFR part 236); or
(5) To a support services contractor (“recipient”) that is directly supporting Government activities under a contract that includes the clause at 252.204-7009, Limitations on the Use or Disclosure of Third-Party Contractor Reported Cyber Incident Information.
(j) Use and release of contractor attributional/proprietary information created by or for DoD. Information that is obtained from the contractor (or derived from information obtained from the contractor) under this clause that is created by or for DoD (including the information submitted pursuant to paragraph (c) of this clause) is authorized to be used and released outside of DoD for purposes and activities authorized by paragraph (i) of this clause, and for any other lawful Government purpose or activity, subject to all applicable statutory, regulatory, and policy based restrictions on the Government’s use and release of such information.
(k) The Contractor shall conduct activities under this clause in accordance with applicable laws and regulations on the interception, monitoring, access, use, and disclosure of electronic communications and data.
(l) Other safeguarding or reporting requirements. The safeguarding and cyber incident reporting required by this clause in no way abrogates the Contractor’s responsibility for other safeguarding or cyber incident reporting pertaining to its unclassified information systems as required by other applicable clauses of this contract, or as a result of other applicable U.S. Government statutory or regulatory requirements.
(m) Subcontracts. The Contractor shall --
(1) Include this clause, including this paragraph (m), in subcontracts, or similar contractual instruments, for operationally critical support, or for which subcontract performance will involve covered defense information, including subcontracts for commercial products or commercial services, without alteration, except to identify the parties. The Contractor shall determine if the information required for subcontractor performance retains its identity as covered defense information and will require protection under this clause, and, if necessary, consult with the Contracting Officer; and
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(2) Require subcontractors to --
(i) Notify the prime Contractor (or next higher-tier subcontractor) when submitting a request to vary from a NIST SP 800-171 security requirement to the Contracting Officer, in accordance with paragraph (b)(2)(ii)(B) of this clause; and
(ii) Provide the incident report number, automatically assigned by DoD, to the prime Contractor (or next higher-tier subcontractor) as soon as practicable, when reporting a cyber incident to DoD as required in paragraph (c) of this clause.
(End of clause)
252.209-7004 SUBCONTRACTING WITH FIRMS THAT ARE OWNED OR CONTROLLED BY THE GOVERNMENT OF A COUNTRY THAT IS A STATE SPONSOR OF TERRORISM (MAY 2019) DFARS
52.222-90 ADDRESSING DEI DISCRIMINATION BY FEDERAL CONTRACTORS (DEVIATION 2026-O0040, REVISION 1) (APR 2026)
(a) Definitions. As used in this clause—
Program participation means membership or participation in, or access or admission to: training, mentoring, or leadership development programs; educational opportunities; clubs; associations; or similar opportunities that are sponsored or established by the contractor or subcontractor.
Racially discriminatory diversity, equity, and inclusion (DEI) activities means disparate treatment based on race or ethnicity in the recruitment, employment (e.g., hiring, promotions), contracting (e.g., vendor agreements), program participation, or allocation or deployment of an entity’s resources.
(b) In connection with the performance of work under this contract, the Contractor agrees as follows:
(1) The Contractor will not engage in any racially discriminatory DEI activities;
(2) The Contractor will furnish all information and reports, including providing access to books, records, and accounts, as required by the Contracting Officer, for purposes of ascertaining compliance with this clause;
(3) In the event of the Contractor’s or a subcontractor’s noncompliance with this clause, this contract may be canceled, terminated, or suspended in whole or in part, and the Contractor or subcontractor may be declared ineligible for further Government contracts;
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(4) The Contractor will report any subcontractor’s known or reasonably knowable conduct that may violate this clause to the Contracting Officer and take any appropriate remedial actions directed by the Contracting Officer; and
(5) The Contractor will inform the Contracting Officer if a subcontractor sues the Contractor and the suit puts at issue, in any way, the validity of this clause.
(6) The Contractor recognizes that compliance with the requirements of this clause are material to the Government’s payment decisions for purposes of 31 U.S.C. 3729(b)(4).
(c) The Contractor must include the substance of this clause, including this paragraph (c), in subcontracts at any tier, including those for commercial products and commercial services, except those where the place of delivery or performance is outside the United States.
(End of clause)
52.223-23 SUSTAINABLE PRODUCTS (DEVIATION 2026-O0038) (FEB 2026) FAR
252.225-7001 BUY AMERICAN AND BALANCE OF PAYMENTS PROGRAM - BASIC (FEB 2024) DFARS
252.225-7002 QUALIFYING COUNTRY SOURCES AS SUBCONTRACTORS (MAR 2022) DFARS
252.225-7013 DUTY-FREE ENTRY (AUG 2025) DFARS
(a) Definitions. As used in this clause—
“Component,” means any item supplied to the Government as part of an end product or of another component. “Customs territory of the United States” means the 50 States, the District of Columbia, and Puerto Rico.
“Eligible product” means—
(1) “Designated country end product,” as defined in the Trade Agreements (either basic or alternate) clause of this contract;
(2) Free Trade Agreement country end product, other than a Bahraini end product, a Moroccan end product, a Panamanian end product, or a Peruvian end product, as defined in the Buy American—Free Trade Agreements—
Balance of Payments Program (either basic or alternate II) clause of this contract; or
(3) Free Trade Agreement country end product other than a Bahraini end product, Korean end product, Moroccan end product, Panamanian end product, or Peruvian end product, as defined in the Buy American—Free Trade Agreements—Balance of Payments Program (either alternate IV or alternate V) clause of this contract.
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“Qualifying country” and “qualifying country end product” have the meanings given in the Trade Agreements clause, the Buy American and Balance of Payments Program clause, or the Buy American—Free Trade Agreements—Balance of Payments Program clause of this contract, basic or alternate.
(b) Except as provided in paragraph (i) of this clause, or unless supplies were imported into the customs territory of the United States before the date of this contract or the applicable subcontract, the price of this contract shall not include any amount for duty on—
(1) End items that are eligible products or qualifying country end products;
(2) Components (including, without limitation, raw materials and intermediate assemblies) produced or made in qualifying countries, that are to be incorporated in U.S.- made end products to be delivered under this contract; or
(3) Other supplies for which the Contractor estimates that duty will exceed $300 per shipment into the customs territory of the United States.
(c) The Contractor shall—
(1) Claim duty-free entry only for supplies that the Contractor intends to deliver to the Government under this contract, either as end items or components of end items; and
(2) Pay duty on supplies, or any portion thereof, that are diverted to nongovernmental use, other than—
(i) Scrap or salvage; or
(ii) Competitive sale made, directed, or authorized by the Contracting Officer.
(d) Except as the Contractor may otherwise agree, the Government will execute duty-free entry certificates and will afford such assistance as appropriate to obtain the duty-free entry of supplies—
(1) For which no duty is included in the contract price in accordance with paragraph (b) of this clause; and
(2) For which shipping documents bear the notation specified in paragraph (e) of this clause.
(e) For foreign supplies for which the Government will issue duty-free entry certificates in accordance with this clause, shipping documents submitted to Customs shall—
(1) Consign the shipments to the appropriate—
(i) Military department in care of the Contractor, including the Contractor’s delivery address; or
(ii) Military installation; and
(2) Include the following information:
(i) Prime contract number and, if applicable, delivery order number.
(ii) Number of the subcontract for foreign supplies, if applicable.
(iii) Identification of the carrier.
(iv)(A) For direct shipments to a U.S. military installation, the notation: “UNITED STATES GOVERNMENT, DEPARTMENT OF DEFENSE Duty-Free Entry to be claimed pursuant to Section XXII, Chapter 98, Subchapter VIII, Item 9808.00.30 of the Harmonized Tariff Schedule of the United States. Upon arrival of shipment at the appropriate port of entry, District Director of Customs, please release shipment under 19 CFR part 142 and notify Defense Contract Management Agency (DCMA) St. Louis, St. Louis, MO, ATTN: Duty Free Entry Team, 1222 Spruce Street, Room 9.300, St. Louis, MO 63103-2812, for execution of Customs Form 7501, 7501A, or 7506 and any required duty-free entry certificates.”
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(B) If the shipment will be consigned to other than a military installation, e.g., a domestic contractor’s plant, the shipping document notation shall be altered to include the name and address of the contractor, agent, or broker who will notify DCMA St. Louis, Duty Free Entry Team, for execution of the duty-free entry certificate. (If the shipment will be consigned to a contractor’s plant and no duty-free entry certificate is required due to a trade agreement, the Contractor shall claim duty-free entry under the applicable trade agreement and shall comply with the U.S. Customs Service requirements. No notification to DCMA St. Louis, Duty Free Entry Team, is required.)
(v) Gross weight in pounds (if freight is based on space tonnage, state cubic feet in addition to gross shipping weight).
(vi) Estimated value in U.S. dollars.
(vii) Activity address number of the contract administration office administering the prime contract, e.g., for DCMA Dayton, S3605A.
(f) Preparation of customs forms.
(1)(i) Except for shipments consigned to a military installation, the Contractor shall—
(A) Prepare any customs forms required for the entry of foreign supplies into the customs territory of the United States in connection with this contract; and
(B) Submit the completed customs forms to the District Director of Customs, with a copy to DCMA St. Louis, Duty Free Entry Team for execution of any required duty-free entry certificates.
(ii) Shipments consigned directly to a military installation will be released in accordance with sections 10.101 and 10.102 of the U.S. Customs regulations.
(2) For shipments containing both supplies that are to be accorded duty-free entry and supplies that are not, the Contractor shall identify on the customs forms those items that are eligible for duty-free entry.
(g) The Contractor shall—
(1) Prepare (if the Contractor is a foreign supplier), or shall instruct the foreign supplier to prepare, a sufficient number of copies of the bill of lading (or other shipping document) so that at least two of the copies accompanying the shipment will be available for use by the District Director of Customs at the port of entry;
(2) Consign the shipment as specified in paragraph (e) of this clause; and
(3) Mark on the exterior of all packages—
(i) “UNITED STATES GOVERNMENT, DEPARTMENT OF DEFENSE”; and
(ii) The activity address number of the contract administration office administering the prime contract.
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(h) The Contractor shall notify the Administrative Contracting Officer (ACO) in writing of any purchase of eligible products or qualifying country supplies to be accorded duty-free entry, that are to be imported into the customs territory of the United States for delivery to the Government or for incorporation in end items to be delivered to the Government. The Contractor shall furnish the notice to the ACO immediately upon award to the supplier and shall include in the notice—
(1) The Contractor’s name, address, and Commercial and Government Entity (CAGE) code;
(2) Prime contract number and, if applicable, delivery order number;
(3) Total dollar value of the prime contract or delivery order;
(4) Date of the last scheduled delivery under the prime contract or delivery order;
(5) Foreign supplier’s name and address;
(6) Number of the subcontract for foreign supplies;
(7) Total dollar value of the subcontract for foreign supplies;
(8) Date of the last scheduled delivery under the subcontract for foreign supplies;
(9) List of items purchased;
(10) An agreement that the Contractor will pay duty on supplies, or any portion thereof, that are diverted to nongovernmental use other than—
(i) Scrap or salvage; or
(ii) Competitive sale made, directed, or authorized by the Contracting Officer;
(11) Country of origin; and
(12) Scheduled delivery date(s).
(i) This clause does not apply to purchases of eligible products or qualifying country supplies in connection with this contract if—
(1) The supplies are identical in nature to supplies purchased by the Contractor or any subcontractor in connection with its commercial business; and
(2) It is not economical or feasible to account for such supplies so as to ensure that the amount of the supplies for which duty-free entry is claimed does not exceed the amount purchased in connection with this contract.
(j) The Contractor shall—
(1) Insert the substance of this clause, including this paragraph (j), in all subcontracts for—
(i) Qualifying country components; or
(ii) Nonqualifying country components for which the Contractor estimates that duty will exceed $200 per unit;
(2) Require subcontractors to include the number of this contract on all shipping documents submitted to Customs for supplies for which duty-free entry is claimed pursuant to this clause; and
(3) Include in applicable subcontracts—
(i) The name and address of the ACO for this contract;
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(ii) The name, address, and activity address number of the contract administration office specified in this contract; and
(iii) The information required by paragraphs (h)(1), (2), and (3) of this clause.
(End of clause)
252.225-7060 PROHIBITION ON CERTAIN PROCUREMENTS FROM THE XINJIANG UYGHUR AUTONOMOUS REGION (JUN 2023) DFARS
(a) Definitions. As used in this clause --
“Forced labor” means any work or service that is exacted from any person under the menace of any penalty for its nonperformance and that the worker does not offer to perform (10 U.S.C. 2496).
“XUAR” means the Xinjiang Uyghur Autonomous Region of the People’s Republic of China (10 U.S.C. 2496).
(b) Prohibition. In accordance with 10 U.S.C. 4661, none of the funds appropriated or otherwise made available for DoD may be used to knowingly procure any products mined, produced, or manufactured wholly or in part by forced labor from XUAR or from an entity that has used labor from within or transferred from XUAR.The Contractor shall make a good faith effort to determine that forced labor from XUAR will not be used in the performance of this contract (section 855, Pub. L. 117-263).
(c) Subcontracts. The Contractor shall insert this clause, including this paragraph (c), without alteration other than to identify the appropriate parties, in subcontracts including subcontracts for commercial products, commercial services, and commercially available off-the-shelf items.
(End of clause)
52.226-8 ENCOURAGING CONTRACTOR POLICIES TO BAN TEXT MESSAGING WHILE DRIVING (MAY 2024) FAR
252.225-7048 EXPORT CONTROLLED ITEMS (JUN 2013) DFARS
252.225-7056 PROHIBITION REGARDING BUSINESS OPERATIONS WITH THE MADURO REGIME (JAN 2023) DFARS
252.227-7015 TECHNICAL DATA - COMMERCIAL PRODUCTS OR COMMERICAL SERVICES (JAN 2025) DFARS
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52.232-17 INTEREST (MAY 2014) FAR
52.232-40 PROVIDING ACCELERATED PAYMENTS TO SMALL BUSINESS SUBCONTRACTORS (MAR 2023) FAR
252.227-7037 VALIDATION OF ASSERTED RESTRICTIONS ON TECHNICAL DATA (JAN 2025) DFARS
252.232-7003 ELECTRONIC SUBMISSION OF PAYMENT REQUESTS AND RECEIVING REPORTS (DEC 2018) DFARS
252.232-7006 WIDE AREA WORKFLOW PAYMENT INSTRUCTIONS (PRE-FILLED) (JAN 2023) DFARS
(a) Definitions. As used in this clause - Department of Defense Activity Address Code ((DoDAAC)) is a six position code that uniquely identifies a unit, activity, or organization. Document type means the type of payment request or receiving report available for creation in Wide Area WorkFlow (WAWF). Local processing office (LPO) is the office responsible for payment certification when payment certification is done external to the entitlement system. Payment request and receiving report are defined in the clause at 252.232-7003, Electronic Submission of Payment Requests and Receiving Reports.
(b) Electronic invoicing. The WAWF system provides the method to electronically process vendor payment requests and receiving reports, as authorized by Defense Federal Acquisition Regulation System (DFARS) 252.232-7003, Electronic Submission of Payment Requests and Receiving Reports.
(c) WAWF access. To access WAWF, the Contractor shall -
(1) Have a designated electronic business point of contact in the System for Award Management at https://www.sam.gov and
(2) Be registered to use WAWF at https://wawf.eb.mil/ following the step-by-step procedures for self-registration available at this Web site. (d) WAWF training. The Contractor should follow the training instructions of the WAWF Web-Based Training Course and use the Practice Training Site before submitting payment requests through WAWF. Both can be accessed by selecting the “Web Based Training” link on the WAWF home page at https://wawf.eb.mil/.
(e) WAWF methods of document submission. Document submissions may be via Web entry, Electronic Data Interchange, or File Transfer Protocol.
(f) WAWF payment instructions. The Contractor shall use the following information when submitting payment requests and receiving reports in WAWF for this contract or task or delivery order:
(1) Document type. The Contractor shall submit payment requests using the following document type(s):
(i) For cost-type line items, including labor-hour or time-and-materials, submit a cost voucher.
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(ii) For fixed price line items -
(A) That require shipment of a deliverable, submit the invoice and receiving report specified by the Contracting Officer.
Invoice and Receiving Report (combination)
(B) For services that do not require shipment of a deliverable, submit either the Invoice 2in1, which meets the requirements for the invoice and receiving report, or the applicable invoice and receiving report, as specified by the Contracting Officer.
Invoice 2in1
(iii) For customary progress payments based on costs incurred, submit a progress payment request.
(iv) For performance based payments, submit a performance based payment request.
(v) For commercial financing, submit a commercial financing request.
(2) Fast Pay requests are only permitted when Federal Acquisition Regulation (FAR) 52.213-1 is included in the contract. [Note: The Contractor may use a WAWF “combo” document type to create some combinations of invoice and receiving report in one step.]
(3) Document routing. The Contractor shall use the information in the Routing Data Table below only to fill in applicable fields in WAWF when creating payment requests and receiving reports in the system.
Routing Data Table *
| Field Name in WAWF | Data to be entered in WAWF |
| Pay Official DoDAAC | SL4701 |
| Issue By DoDAAC | SP8000 |
| Admin DoDAAC | SP8000 |
| Inspect By DoDAAC | See Section B of Delivery Order |
| Ship To Code | See Section B of Delivery Order |
| Ship From Code | N/A |
| Mark For Code | N/A |
| Service Approver (DoDAAC) | N/A |
| Service Acceptor (DoDAAC) | N/A |
| Accept at Other DoDAAC | N/A |
| LPO DoDAAC | N/A |
| DCAA Auditor DoDAAC | N/A |
| Other DoDAAC(s) | N/A |
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(4) Payment request. The Contractor shall ensure a payment request includes documentation appropriate to the type of payment request in accordance with the payment clause, contract financing clause, or Federal Acquisition Regulation 52.216-7, Allowable Cost and Payment, as applicable.
(5) Receiving report. The Contractor shall ensure a receiving report meets the requirements of DFARS Appendix F.
(g) WAWF point of contact.
(1) The Contractor may obtain clarification regarding invoicing in WAWF from the following contracting activity’s WAWF point of contact.
(2) Contact the WAWF helpdesk at 866-618-5988, if assistance is needed.
(End of clause)
252.232-7010 LEVIES ON CONTRACT PAYMENTS (DEC 2006) DFARS
52.233-3 PROTEST AFTER AWARD ((DEVIATION 2026-O0038) (FEB 2026) FAR
(a) Upon receipt of a stop-work order, the Contractor must immediately comply with its terms and take all reasonable steps to minimize incurring costs allocable to the work covered by the order during the period of work stoppage. After receiving the final decision in the protest, the Contracting Officer must either—
(1) Cancel the stop-work order; or
(2) Terminate the work covered by the order as provided in the Default, or the Termination for Convenience of the Government, clause of this contract.
(b) If a stop-work order issued under this clause is canceled either before or after a final decision in the protest, the Contractor must resume work. The Contracting Officer must make an equitable adjustment in the delivery schedule or contract price, or both, and the contract must be modified, in writing, accordingly, if—
(1) The stop-work order results in an increase in the time required for, or in the Contractor’s cost properly allocable to, the performance of any part of this contract; and
(2) The Contractor asserts its right to an adjustment within 30 days after the end of the period of work stoppage; provided, that if the Contracting Officer decides the facts justify the action, the Contracting Officer may receive and act upon a proposal submitted at any time before final payment under this contract.
(c) If a stop-work order is not canceled and the work covered by the order is terminated for the convenience of the Government, the Contracting Officer must allow reasonable costs resulting from the stop-work order in arriving at the termination settlement.
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(d) If a stop-work order is not canceled and the work covered by the order is terminated for default, the Contracting Officer must allow, by equitable adjustment or otherwise, reasonable costs resulting from the stop-work order.
(e) The Government’s rights to terminate this contract at any time are not affected by action taken under this clause.
(f) If, as the result of the Contractor’s intentional or negligent misstatement, misrepresentation, or miscertification, a protest related to this contract is sustained, and the Government pays costs, the Government may require the Contractor to reimburse the Government the amount of such costs. In addition to any other remedy available, and pursuant to the requirements of subpart 32.6, the Government may collect this debt by offsetting the amount against any payment due the Contractor under any contract between the Contractor and the Government.
(End of clause)
252.243-7001 PRICING OF CONTRACT MODIFICATIONS (DEC 1991) DFARS
252.243-7002 REQUESTS FOR EQUITABLE ADJUSTMENTS (DEC 2022) DFARS
(a) The amount of any request for equitable adjustment to contract terms shall accurately reflect the contract adjustment for which the Contractor believes the Government is liable. The request shall include only costs for performing the change, and shall not include any costs that already have been reimbursed or that have been separately claimed. All indirect costs included in the request shall be properly allocable to the change in accordance with applicable acquisition regulations.
(b) In accordance with 10 U.S.C. 3862(a), any request for equitable adjustment to contract terms that exceeds the simplified acquisition threshold shall bear, at the time of submission, the following certificate executed by an individual authorized to certify the request on behalf of the Contractor: I certify that the request is made in good faith, and that the supporting data are accurate and complete to the best of my knowledge and belief.
(c) The certification in paragraph (b) of this clause requires full disclosure of all relevant facts, including -
(1) Certified cost or pricing data if required in accordance with subsection 15.403-4 of the Federal Acquisition Regulation (FAR); and
(2) Data other than certified cost or pricing data, in accordance with subsection 15.403-3 of the FAR, including actual cost data and data to support any estimated costs, even if certified cost or pricing data are not required.
(d) The certification requirement in paragraph (b) of this clause does not apply to -
(1) Requests for routine contract payments; for example, requests for payment for accepted supplies and services, routine vouchers under a cost-reimbursement type contract, or progress payment invoices; or
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(2) Final adjustment under an incentive provision of the contract.
(End of clause)
252.244-7000 SUBCONTRACTS FOR COMMERCIAL PRODUCTS OR COMMERCIAL SERVICES (NOV 2023) DFARS
52.247-34 F.O.B. DESTINATION (JAN 1991) FAR
52.252-2 CLAUSES INCORPORATED BY REFERENCE (FEB 1998) FAR
This contract incorporates one or more clauses by reference, with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make their full text available. Also, the full text of a clause may be accessed electronically at this/these address(es) –
FAR: https://www.acquisition.gov/far-overhaul/far-part-deviation-guide
DFARS: https://www.acq.osd.mil/dpap/dars/dfarspgi/current/index.html DLAD: http://www.dla.mil/HQ/Acquisition/Offers/DLAD.aspx
(End of clause)
52.252-6 AUTHORIZED DEVIATIONS IN CLAUSES (NOV 2020) FAR
(a) Whenever any FAR or supplemental clause is used with an authorized deviation, the contracting officer shall identify it by the same number, title, and date assigned to the clause when it is used without deviation, include regulation name for any supplemental clause, except that the contracting officer shall insert “(DEVIATION)” after the date of the clause.
(b) The use in this solicitation or contract of any DoD FAR Supplement (DFARS) (48 CFR Chapter 2) clause with an authorized deviation is indicated by the addition of “(DEVIATION)” after the name of the regulation.
(End of Clause)
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52.253-1 COMPUTER GENERATED FORMS (DEVIATION 2026-O0038) (FEB 2026) FAR
252.204-7018 PROHIBITION ON THE ACQUISITION OF COVERED DEFENSE TELECOMMUNICATIONS EQUIPMENT OR SERVICES (JAN 2023) DFARS
52.233-1 DISPUTES (DEVIATION 2026-O0028)(FEB 2026) FAR
(a) This contract is subject to 41 U.S.C chapter 71, Contract Disputes.
(b) Except as provided in 41 U.S.C chapter 71, all disputes arising under or relating to this contract shall be resolved under this clause.
(c) “Claim,” as used in this clause, means a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to this contract. However, a written demand or written assertion by the Contractor seeking the payment of money exceeding $100,000 is not a claim under 41 U.S.C chapter 71 until certified. A voucher, invoice, or other routine request for payment that is not in dispute when submitted is not a claim under 41 U.S.C chapter 71. The submission may be converted to a claim under 41 U.S.C chapter 71, by complying with the submission and certification requirements of this clause, if it is disputed either as to liability or amount or is not acted upon in a reasonable time.
(d)
(1) A claim by the Contractor shall be made in writing and, unless otherwise stated in this contract, submitted within 6 years after accrual of the claim to the Contracting Officer for a written decision. A claim by the Government against the Contractor shall be subject to a written decision by the Contracting Officer.
(2)
(i) The Contractor shall provide the certification specified in paragraph (d)(2)(iii) of this clause when submitting any claim exceeding $100,000.
(ii) The certification requirement does not apply to issues in controversy that have not been submitted as all or part of a claim.
(iii) The certification shall state as follows: “I certify that the claim is made in good faith; that the supporting data are accurate and complete to the best of my knowledge and belief; that the amount requested accurately reflects the contract adjustment for which the Contractor believes the Government is liable; and that I am authorized to certify the claim on behalf of the Contractor.”
(3) The certification may be executed by any person authorized to bind the Contractor with respect to the claim.
(e) For Contractor claims of $100,000 or less, the Contracting Officer must, if requested in writing by the Contractor, render a decision within 60 days of the request. For Contractor-certified claims over $100,000, the Contracting Officer must, within 60 days, decide the claim or notify the Contractor of the date by which the decision will be made.
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(f) The Contracting Officer’s decision shall be final unless the Contractor appeals or files a suit as provided in 41 U.S.C chapter 71.
(g) If the claim by the Contractor is submitted to the Contracting Officer or a claim by the Government is presented to the Contractor, the parties, by mutual consent, may agree to use alternative dispute resolution (ADR). If the Contractor refuses an offer for ADR, the Contractor shall inform the Contracting Officer, in writing, of the Contractor’s specific reasons for rejecting the offer.
(h) The Government shall pay interest on the amount found due and unpaid from (1) the date that the Contracting Officer receives the claim (certified, if required); or (2) the date that payment otherwise would be due, if that date is later, until the date of payment. With regard to claims having defective certifications, as defined in FAR 33.201, interest shall be paid from the date that the Contracting Officer initially receives the claim. Simple interest on claims shall be paid at the rate, fixed by the Secretary of the Treasury as provided in the Act, which is applicable to the period during which the Contracting Officer receives the claim and then at the rate applicable for each 6-month period as fixed by the Treasury Secretary during the pendency of the claim.
(i) The Contractor shall proceed diligently with performance of this contract, pending final resolution of any request for relief, claim, appeal, or action arising under the contract, and comply with any decision of the Contracting Officer.
(End of clause)
52.240-91 SECURITY PROHIBITIONS AND EXCLUSIONS (DEVIATION 2026-O0038) (FEB 2026) FAR
52.217-9 OPTION TO EXTEND THE TERM OF THE CONTRACT (MAR 200) FAR
(a) The Government may extend the term of this contract by written notice to the Contractor within at least 30 days prior to the expiration of the contract; provided that the Government gives the Contractor a preliminary written notice of its intent to extend at least 60 days prior to the expiration of the contract. The preliminary notice does not commit the Government to an extension.
(b) If the Government exercises this option, the extended contract shall be considered to include this option clause.
(c) The total duration of this contract, including the exercise of any options under this clause, shall not exceed seven years.
(End of clause)
ECONOMIC PRICE ADJUSTMENT (EPA) CLAUSE – Tungsten Concentrate and Sodium Tungstate
[**]
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Exhibit 10.6
THE ELMET GROUP CO.
SUPPLEMENTAL
MARKET CAPITALIZATION
CASH BONUS AWARD AGREEMENT
This Supplemental Market Capitalization Cash Bonus Award Agreement (this “Agreement”) is entered into as of September 9, 2026 (the “Effective Date”), by and between The Elmet Group Co., a Delaware corporation, together with its subsidiaries and affiliates, as applicable, the “Company,” and Scott Knoll (“Executive”). References to the “Compensation Committee” means the Compensation Committee of the Board of Directors of the Company (the “Board”).
1. Purpose
The purpose of this Agreement is to document a special, one-time, performance-based cash bonus opportunity for Executive in recognition of Executive’s work developing and supporting strategic opportunities related to the closing of a Department of War investment in the Company in an amount that exceeds Two Hundred and Fifty Million dollars ($250,000,000) (the “Conditions Precedent”).
This Agreement is intended to provide a clear framework for the potential payment of a performance cash bonus if the Department of War makes a direct investment in the company and specified market capitalization milestones are achieved during the Measurement Period described below.
This Agreement is intended to be a special performance-based bonus arrangement for work performed and value created, as measured by the Company’s market capitalization between the Effective Date, and April 23, 2027 (the “Measurement Period”). The Bonus (as defined below) shall only be earned at the end of the Measurement Period. For the avoidance of doubt, if the Conditions Precedent are not met and the Company’s Market Capitalization Targets (as defined below) are not reached during the Measurement Period, no bonus shall be payable.
This Agreement is in addition to the Executive’s eligibility under the Company’s annual incentive plan, equity compensation program, executive severance policies, and any other Company plan or arrangement, except as expressly provided herein.
2. Supplemental Cash Bonus Opportunity
Subject to the terms and conditions of this Agreement, Executive shall be eligible to earn a supplemental cash bonus (the “Bonus”) based on the Highest Average Market Capitalization achieved during the Measurement Period, as set forth below (each of the $1.00 billion, $1.25 billion, and $1.50 billion thresholds below, a “Market Capitalization Target):
| Highest Average Market Capitalization During the Measurement Period | Bonus Amount | Cumulative Bonus | ||||||
| Less than $1.00 billion | $ | 0 | $ | 0 | ||||
| At least $1.00 billion but less than $1.25 billion | $ | 1,000,000 | $ | 1,000,000 | ||||
| At least $1.25 billion but less than $1.50 billion | $ | 1,000,000 | $ | 2,000,000 | ||||
| $1.50 billion and above | $ | 1,000,000 | $ | 3,000,000 | ||||
The Bonus shall be determined solely by reference to the band within which the Highest Average Market Capitalization falls. No amount shall be payable if the Highest Average Market Capitalization is less than $1.00 billion, and no interpolation or pro-ration shall apply with respect to any Highest Average Market Capitalization that falls between Market Capitalization Targets. The maximum amount payable under this Agreement shall not exceed $3,000,000.
3. Highest Average Market Capitalization
The “Highest Average Market Capitalization” means the highest average of the daily Market Capitalization (as defined in Section 4) over any period of ten (10) consecutive Trading Days that falls entirely within the Measurement Period.
“Trading Day” means a day on which the principal national exchange on which the Company’s common stock (the “Common Stock”) is listed is open for trading and the Common Stock is actually traded.
4. Market Capitalization Calculation
For purposes of this Agreement, “Market Capitalization” means, for any Trading Day, the product of (i) the Closing Price of the Common Stock on such Trading Day, and (ii) the Total Shares Outstanding as of the close of business on such Trading Day. “Closing Price” means the closing sales price of the Common Stock on the principal national securities exchange on which the Common Stock is then listed, as reported by such exchange or, if not so reported, by such reliable reporting source as the Compensation Committee selects.
“Total Shares Outstanding” shall means, as of any date, the number of shares of Common Stock issued and outstanding as reflected in the records of the Company’s transfer agent (or, if such records are unavailable, the Company’s stock ledger), excluding (i) shares held in the treasury of the Company, and (ii) shares of restricted stock issued under any equity incentive plan of the Company that remain subject to vesting or forfeiture conditions. Shares issuable upon the exercise, conversion, or settlement of options, warrants, restricted stock units, convertible securities or other rights shall not be treated as outstanding until actually issued.
In the event of any stock dividend, stock split, reverse stock split, spin-off, extraordinary cash or in-kind dividend, recapitalization, reorganization or other similar corporate event affecting the Common Stock, or any acquisition or business combination in which the Company issues shares of Common Stock as consideration, the Compensation Committee shall make such equitable adjustments to the Market Capitalization Targets and to the method of calculating Market Capitalization as it determines in good faith to be necessary or appropriate to prevent the enlargement or dilution of the benefits intended to be provided under this Agreement.
The Compensation Committee’s determinations of Market Capitalization, Total Shares Outstanding, the Highest Average Market Capitalization and the satisfaction of the Conditions Precedent shall be made in good faith and shall be final, binding, and conclusive, absent manifest error.
5. Certification of Performance
As soon as reasonably practicable following the end of the Measurement Period, and in any event within sixty (60) days thereafter, the Compensation Committee or the Board shall determine and certify in writing whether the Conditions Precedent have been satisfied, the Highest Average Market Capitalization, and the resulting Bonus, if any.
No Bonus shall be earned or payable unless and until the Board or Compensation Committee certifies the foregoing; provided that the Compensation Committee’s or the Board’s certification shall be ministerial in nature and shall not be withheld or delayed so as to cause the Bonus to be paid after the date specified in Section 7.
6. Board or Compensation Committee Discretion
The Board or the Compensation Committee may, in their sole discretion, reduce (including to zero) the Bonus otherwise payable under Section 2 if it determines that the Executive has engaged in conduct that would constitute Cause or a breach of any obligation described in Section 18.
7. Payment Timing
Any Bonus that becomes payable under this Agreement shall be paid in a single cash lump sum within thirty (30) days following the Board’s or the Compensation Committee’s certification under Section 5 and in all events no later than March 15 of the calendar year immediately following the calendar year in which the last day of the Measurement Period occurs (or, if earlier, the calendar year in which the Bonus otherwise ceases to be subject to a substantial risk of forfeiture within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury Regulations thereunder (collectively, “Section 409A”)), subject to Section 14.
8. Employment Requirement
Except as otherwise provided in this Agreement, Executive must remain continuously employed by the Company through the end of the Measurement Period to be eligible to receive any Bonus under this Agreement, and Executive shall have no right to any payment under this Agreement if Executive’s employment terminates for any reason before the last day of the Measurement Period, subject to Sections 10 and 11.
Subject to Sections 10, 11, 12, and 18, if Executive remains employed through the last day of the Measurement Period and the Board or the Compensation Committee certifies a Bonus, Executive shall be entitled to receive the certified Bonus at the time provided in Section 7 notwithstanding any termination of Executive’s employment after the last day of the Measurement Period and before the payment date.
9. Voluntary Resignation Before End of Measurement Period
If Executive voluntarily resigns before the end of the Measurement Period, Executive shall forfeit all rights to any payment under this Agreement.
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10. Termination Without Cause
If the Executive’s employment is terminated by the Company without Cause before the end of the Measurement Period, the Board or the Compensation Committee may, in their discretion, determine that Executive shall remain eligible to receive all or a pro-rated portion of the Bonus, if any, that would have been earned had Executive remained employed through the last day of the Measurement Period, determined following the end of the Measurement Period on the basis of actual satisfaction of the Conditions Precedent and the actual achievement of Market Capitalization Targets, and paid at the same time provided in Section 7, subject to Executive’s execution and nonrevocation of a full release of claims in favor of the Company (the “Release”).
If Executive’s employment is terminated by the Company without Cause after the end of the Measurement Period but before payment is made, Executive shall remain eligible to receive any earned and certified Bonus under this Agreement, subject to execution and non-revocation of a Release.
Any Bonus payable under this Section 10 shall be paid at the time provided in Section 7, or, if later, within ten (10) days following the date the Release becomes effective, but in no event later than the March 15 deadline specified in Section 7.
11. Death or Disability
If Executive’s employment terminates due to death or Disability (as defined in the Company’s Executive Severance Policy) before the end of the Measurement Period, the Board or Compensation Committee may, in their discretion, determine that Executive (or, in the case of death, Executive’s estate) shall remain eligible to receive all or a pro-rated portion of the Bonus, if any, that would have been earned had Executive remained employed through the last day of the Measurement Period, determined following the end of the Measurement Period on the basis of actual satisfaction of the Conditions Precedent and the actual achievement of Market Capitalization Targets, and paid at the same time provided in Section 7, subject in the case of Disability, to Executive’s execution and nonrevocation of a Release.
If Executive’s employment terminates due to death or Disability after the end of the Measurement Period but before payment is made, Executive, Executive’s estate, or Executive’s designated beneficiary, as applicable, shall remain eligible to receive any earned and certified Bonus under this Agreement.
12. Cause
For purposes of this Agreement, “Cause” shall have the meaning set forth in the Company’s Executive Severance Policy, as in effect from time to time, or, if no such policy applies, as determined by the Board or Compensation Committee in good faith.
If Executive is terminated for Cause before payment of the Bonus is made, Executive shall immediately forfeit all rights to the Bonus, whether or not any Market Capitalization Target has been achieved or certified. If, following any termination of Executive’s employment, the Compensation Committee or the Board determine in good faith that grounds for Cause existed on the date of Executive’s termination, Executive’s termination shall be treated as a termination for Cause for purposes of this Agreement.
13. Change in Control
If a Change in Control is consummated before the end of the Measurement Period, and Executive remains employed by the Company through the date of such consummation, then, notwithstanding Sections 3, 4, 5, and 7: (i) the Measurement Period shall end on the date of the Change in Control, (ii) the Highest Average Market Capitalization shall be deemed to equal the greater of (A) the Highest Average Market Capitalization actually achieved through the Trading Day immediately preceding the Change in Control, and (B) the Transaction Value, (iii) the Compensation Committee or the Board shall determine and certify the resulting Bonus, if any, on or before the date of the Change in Control is consummated, or as soon as practicable thereafter if not determinable by such date, and (iv) the Bonus, if any, shall be paid within thirty (30) days following the consummation of the Change in Control; provided, however, that no Bonus shall be payable unless the Conditions Precedent have also been satisfied prior to the Change in Control.
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“Transaction Value” means the product of (i) the price per share of Common Stock paid or payable to the Company’s stockholders in the Change in Control (with any non-cash consideration valued at its fair market value, and any contingent, deferred or escrowed consideration valued as of the Change in Control, in each case as determined by the Compensation Committee or the Board in good faith), and (ii) the Total Shares Outstanding immediately prior to the Change in Control; provided that, in a Change in Control in which no per share consideration is paid to the Company’s stockholders, the Board or the Compensation Committee shall determine the Transaction Value in good faith.
For purposes of this Agreement, “Change in Control” shall mean as defined in the Company’s 2026 Equity Incentive Plan, and the Compensation Committee or the Board shall have the powers given to the “Administrator” thereunder.
14. Tax Withholding
All payments under this Agreement shall be subject to applicable federal, state, local, and other taxes, withholdings, and deductions. The Company shall have the right to withhold from any payment any amounts required to satisfy applicable tax withholding obligations. Executive acknowledges that the Company has made no representation regarding the tax treatment of this Agreement or any payment made under it. The Executive is encouraged to consult the Executive’s own tax advisor.
15. No Tax Gross-Up
The Company shall not provide any tax gross-up, tax reimbursement, or similar payment in connection with this Agreement, including with respect to federal, state, local, excise, employment, Medicare, Social Security, or other taxes.
16. Section 409A Compliance
The payments under this Agreement are intended to qualify as short-term deferrals exempt from Section 409A, and this Agreement shall be interpreted and administered accordingly. The Company may, without Executive’s consent, amend this Agreement or adjust the timing of any payment to the extent the Company reasonably determines necessary to preserve such exemption or otherwise avoid the imposition of taxes or penalties under Section 409A, provided that no such action shall reduce the Bonus otherwise payable.
Each payment under this Agreement shall be treated as a separate payment for purposes of Section 409A. To the extent any payment under this Agreement is determined to constitute nonqualified deferred compensation subject to Section 409A, (i) such payment shall be made only in a manner and upon an event permitted by Section 409A, (ii) any reference to a termination of employment shall mean a “separation from service” within the meaning of Section 409A, and (iii) if Executive is a “specified employee” within the meaning of Section 409A on the date of his separation from service, any such payment that is payable on account of the separation from service shall instead be paid on the first business day of the seventh month following the separation from service, or if earlier, upon Executive’s death.
The Company makes no representation that this Agreement complies with or is exempt from Section 409A, and in no event shall the Company or any of its directors, officers, employees, or advisors be liable for any tax, interest, or penalty imposed on Executive under Section 409A.
17. No Funding
This Agreement is unfunded and unsecured, and no trust, escrow, insurance contract, or other funding vehicle is created by this Agreement. Any amount payable under this Agreement shall be paid from the Company’s general assets, and Executive shall have no rights under this Agreement other than as a general unsecured creditor of the Company.
18. Restrictive Covenants and Continuing Obligations
Executive’s eligibility to receive or retain any payment under this Agreement is conditioned on Executive’s continued compliance with all confidentiality, non-solicitation, non-competition, invention assignment, cooperation, return of property, insider trading, code of conduct, and other obligations owed to the Company. If Executive materially breaches any such obligation, the Company may cancel any unpaid amount under this Agreement and may seek repayment of any amount previously paid, to the fullest extent permitted by applicable law.
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19. Company Policies
Executive remains subject to all applicable Company policies, including policies related to insider trading, confidentiality, claw back, conflicts of interest, ethics, securities law compliance, and public company governance.
20. No Right to Continued Employment
This Agreement does not create a contract of employment or guarantee employment for any period of time. Executive’s employment with the Company remains at will, meaning that either Executive or the Company may terminate the employment relationship at any time, with or without cause and with or without notice, subject to applicable law and any written agreement or policy that applies.
21. No Assignment
The Executive may not assign, transfer, pledge, or otherwise encumber any right under this Agreement. Any attempted assignment shall be void. The Company may assign this Agreement to any successor or affiliate, including in connection with a merger, consolidation, sale of assets, reorganization, or other corporate transaction.
22. Amendment or Termination
This Agreement may be amended or terminated only by written action approved by the Board or Compensation Committee and signed by the Company and Executive, except that the Company may amend this Agreement without Executive’s consent to the extent reasonably necessary to comply with applicable law, securities rules, tax requirements, Section 409A, accounting requirements, or stock exchange requirements.
23. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of Maine, without regard to conflict of law principles.
24. Entire Agreement
This Agreement contains the entire understanding between the Company and the Executive with respect to the subject hereof.
This Agreement does not replace or supersede the Executive’s compensation side letter, executive severance policy participation, executive change in control severance policy participation, equity award agreements, restrictive covenant agreements, or other written Company plans or agreements, except to the extent expressly stated herein.
25. Required Approvals
This Agreement and any payment under it are subject to approval by the Board of Directors or the Compensation Committee, as applicable. No payment shall be made unless and until the Company confirms that all required approvals have been obtained.
26. Counterparts and Electronic Signatures
This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one agreement. Electronic signatures shall have the same force and effect as original signatures.
| THE ELMET GROUP CO. | ||
| By: | /s/ Peter V. Anania | |
| Peter V. Anania | ||
| Chairman and Chief Executive Officer | ||
| Date: | 9/10/2026 | |
| EXECUTIVE | ||
| Scott Knoll | ||
| Signature: | /s/ Scott Knoll | |
| Date: | 9/9/2026 | |
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Exhibit 99.1
Department of War Makes Landmark $450 Million Committed Investment in
The Elmet Group to Secure America’s Tungsten Supply Chain
Investment expected to enhance domestic manufacturing capacity
and reduce foreign dependence on critical minerals
Anticipated to expand ELMT’s resilient global tungsten mining network and processing capabilities
ELMT secures up to $2 billion agreement to support the National Defense Stockpile
Company to host investor call today at 9 a.m. ET
PORTLAND, Maine — September 14, 2026 — The Elmet Group Co. (NASDAQ: ELMT) (“ELMT” or the “Company”), a U.S.-based provider of critical materials, precision-engineered components, and advanced high-energy systems, today announced a $450 million committed investment from the United States Department of War (“DoW”) to accelerate ELMT’s U.S. manufacturing capabilities and expand agreements with key supply-chain partners.
The investment will be used to increase domestic tungsten manufacturing, secure long-term access to critical raw materials, and strengthen mining and processing capacity. This includes an anticipated more than $165 million investment in ELMT’s operations in Maine; Michigan; and Ohio, which manufacture and process tungsten, molybdenum, and other advanced materials and components.
The funding will also support ELMT’s investments in mining and processing operations in the United States, Australia, and Spain, helping to establish a resilient supply chain. To support these efforts, ELMT will launch Elmet Refining & Trading (“ERT”), a new division responsible for coordinating sourcing, processing, and material delivery across the Company’s expanding global network.
“This investment represents an important step toward securing a resilient supply of tungsten, a material that is critical to America’s defense, industrial, and economic future,” said The Elmet Group CEO and Chairman Peter V. Anania. “The Elmet Group’s vertically integrated production capabilities, sourcing strategy, and commitment to expanding capacity positions our company to play a meaningful role in strengthening supply chains. We are honored by the Administration’s and DoW’s confidence in The Elmet Group and look forward to using this investment to expand capacity, strengthen supply security, and support our customers’ growing needs. Following our successful IPO earlier this year and recent expansion into Europe, we believe this investment will further accelerate our growth and reinforces The Elmet Group’s position as a leading Western supplier of tungsten products and other advanced materials and components.”
Tungsten is a strategically important metal valued for its ability to withstand extreme heat, pressure, and wear, making it essential to national defense and a wide range of advanced industrial applications. Its unique properties make it irreplaceable in certain high-performance components used across aerospace, energy, semiconductor, medical, and industrial markets, underscoring the need for reliable and secure sources of supply. ELMT is a supplier to critical U.S. defense programs, including Patriot, Javelin, AEGIS, Trident II, and THAAD, as well as Virginia- and Columbia-class submarines, and is the only U.S.-owned, vertically-integrated producer of tungsten servicing the full breadth of critical end markets.
The DoW’s investment in ELMT is an initiative launched under its newly established Economic Defense Unit (“EDU”), which was created earlier this year to coordinate defense-related economic initiatives aimed at accelerating U.S. defense industrial base production. This is part of the U.S. government’s broader effort to build resilient domestic and allied supply chains for the critical minerals, materials, and components.
“The Department is committed to empowering the American warfighter and workforce,” said George K. Kollitides II, Director of the Economic Defense Unit. “We are proud to invest in Elmet Technologies to bring tungsten-processing capacity home to the United States and strengthen the industrial might that powers and protects our way of life.”
Transaction Overview
Under terms of the agreement, the DoW has agreed to invest $450 million to support ELMT’s efforts to expand tungsten mining, processing, and manufacturing capacity. The investment will be funded through an initial $200 million drawdown at closing, followed by additional drawdowns. In connection with the investment, the DoW will receive redeemable preferred equity, warrants representing up to 19.9% of ELMT’s common stock on a post-transaction basis, and the right to appoint one independent director to the Company’s Board and one non-voting Board observer.
To implement the Company’s obligations under the agreements, the Company entered into a restricted entity compliance plan with Continental Stock Transfer & Trust Company, as rights agent (the “Plan”), designed to deter a Restricted Entity (as defined in the Plan), or a group including a Restricted Entity, from acquiring beneficial ownership of 10% or more of the Company’s outstanding common stock. Other than with respect to Restricted Entities, it does not limit any person’s ability to acquire shares of the Company’s common stock or to make offers to acquire, merge or combine with the Company.
Together, the initiatives funded by the investment are designed to expand domestic manufacturing, strengthen global mining and processing capacity. ELMT will be involved with securing a, vertically integrated tungsten supply chain serving critical defense and commercial end markets. Specifically, ELMT plans to:
| ● | Invest more than $165 million in its U.S. manufacturing facilities in Lewiston, Maine; Coldwater, Michigan; and Euclid, Ohio to expand production capacity, increase tungsten output and modernize infrastructure supporting critical defense, aerospace, and industrial applications, including Patriot, Phalanx, JDAM, F-35, and rocket programs. |
| ● | Allocate approximately $150 million to Blue Moon’s Springer Tungsten Complex in Imlay, Nevada, forming and operating a majority-owned joint venture with Blue Moon Metals and EQ Resources of Australia to restart and expand ammonium paratungstate (“APT”) conversion capacity at the facility. |
| ● | Establish Elmet Refining and Trading (“ERT”), a new division that will coordinate sourcing, refining, and delivery activities across a diversified supply chain, helping ensure reliable long-term access to tungsten for the U.S. and its Allies. |
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| ● | Support strategic mining, processing, and commercial partnerships in the U.S. and allied countries, including investments in the United States, Australia, and Spain, creating a more resilient supply chain for critical materials independent of China. |
| ● | Secure long-term tungsten feedstock and processing capacity through strategic investments and offtake agreements, strengthening access to mined material while supporting the development of additional Western refining and conversion capabilities. |
Tungsten Resiliency Framework: Up to $2 Billion National Defense Stockpile Agreement
Separately, Elmet Technologies, a subsidiary of ELMT, has been awarded an indefinite delivery/indefinite quantity (“IDIQ”) contract by the Defense Logistics Agency (“DLA”) to support the rebuilding of the U.S. National Defense Stockpile and strengthen the long-term resiliency of the nation’s tungsten supply chain. The contract has a ceiling value of up to $2 billion, including a guaranteed funded commitment of $150 million, and covers the supply of tungsten ores, concentrates and sodium tungstate to DLA Strategic Materials.
Importantly, ELMT does not intend to begin delivering material into the National Defense Stockpile until sufficient incremental supply becomes available through the mining investments, offtake agreements, and processing capacity expansions announced today, ensuring stockpile replenishment does not come at the expense of existing American manufacturers. Deliveries will be phased in coordination with DLA as new production capacity comes online from ELMT’s approved supplier network, including Blue Moon Metals’ Springer Mine in Nevada and EQ Resources’ Mt. Carbine Mine in Australia and Barruecopardo Mine in Spain.
The contract includes a five-year base ordering period through August 30, 2031, with a two-year extension option through August 30, 2033, providing a long-term framework to strengthen domestic and allied sources of a critical material essential to U.S. defense and industrial capabilities.
Investor Call
ELMT will host a conference call for investors to discuss the investment today at 9:00 a.m. ET. Details can be found at https://event.choruscall.com/mediaframe/webcast.html?webcastid=8mKspJRt. A live webcast of the investor call, as well as related presentation materials, will be available through the Investor Relations section of the company’s website (https://investors.theelmetgroup.com/). A replay of the webcast will be available for 30 days following the presentation.
Advisors
Goldman Sachs & Co. LLC and Cantor Fitzgerald & Co. are acting as financial advisors, Akin Gump Strauss Hauer & Feld LLP and Ellenoff Grossman & Schole LLP are acting as legal advisors, and Joele Frank, Wilkinson Brimmer Katcher is serving as strategic communications advisor to ELMT.
About The Elmet Group
The Elmet Group is a U.S.-based provider of critical materials, precision-engineered components, and advanced high-energy systems for the Aerospace, Defense and Government, Industrial, Medical, Semiconductor and Electronics, and Energy industries. The Company operates through three divisions: Critical Materials Components (CMC), Engineered Microwave Products (EMP), and Elmet Refining & Trading (ERT), leveraging materials science and precision engineering expertise to deliver high-performance solutions. The Elmet Group is dedicated to strengthening domestic manufacturing capabilities to support the U.S. and its Allies’ needs in both critical materials and advanced high-power microwave systems.
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Media Contact
Investor Contact
Tom Colton and Greg Bradbury
Gateway Group, Inc.
[email protected]
949-574-3860
Forward-looking statements disclaimer
The information in this press release includes forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. These statements generally relate to future events or our future financial or operating performance and include statements regarding (i) the ultimate size of (a) the DoW’s investment, (b) ELMT’s investments into modernizing and expanding its existing facilities, (c) ELMT’s investment in the Blue Moon Springer Tungsten Complex and (d) ELMT’s investments in creating a network of strategic partnerships to diversify Tungsten supply; (ii) Elmet’s ability to: (a) establish a secure, diversified and vertically integrated Tungsten supply chain while expanding domestic manufacturing and strengthening allied sources of critical minerals, (b) expand relationships with key supply-chain partners, (c) secure long-term access to critical raw materials, processing and refining assets, (d) modernize and expand its existing critical infrastructure facilities, (e) effectively meet demand for its products and (f) restart production at the Blue Moon Springer Tungsten Complex on the anticipated timeline and at the anticipated cost; (iii) the creation of ERT enhancing ELMT’s control over feedstock sourcing, processing capacity, material flows and support to customers as well as strengthening its competitive position in strategic end markets; (iv) ELMT’s ability to successfully navigate turbulent raw materials markets; (viii) ELMT’s ability to successfully perform under, and realize the anticipated benefits of, its indefinite delivery/indefinite quantity contract with the Defense Logistics Agency; (ix) ELMT’s ability to realize the anticipated benefits of partnerships, including with Blue Moon Metals and EQ resources as well as the successful operation of joint ventures with such parties; and (x) ELMT’s future performance, expected outcomes and strategic initiatives.
When used in this press release, words such as “expect,” “project,” “estimate,” “believe,” “anticipate,” “intend,” “plan,” “seek,” “forecast,” “target,” “predict,” “may,” “should,” “would,” “could,” and “will,” the negative of these terms and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Forward-looking statements are based on management’s current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward-looking statements. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in Elmet’s Registration Statement on Form S-1, as amended (File No. 333-294725) and subsequent filings Elmet makes with the Securities and Exchange Commission. Elmet undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.
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Exhibit 99.2
The Elmet Group to Deploy Strategic Capital to Strengthen U.S. and Allied Tungsten Supply Chain
$450 Million Department of War Committed Investment Expected to Expand ELMT’s Global Tungsten Mining Network and Processing Capabilities
PORTLAND, Maine, Sept. 14, 2026 (GLOBE NEWSWIRE) -- The Elmet Group Co. (NASDAQ: ELMT) (“ELMT” or the “Company”), a U.S.-based provider of critical materials, precision-engineered components, and advanced high-energy systems, plans to allocate capital from the $450 million committed investment from the United States Department of War (“DoW”) to establish a more secure, vertically integrated tungsten supply chain while expanding domestic manufacturing and strengthening sources of critical minerals.
The anticipated investments are designed to strengthen America’s tungsten supply chain by expanding domestic manufacturing, securing long-term access to critical raw materials, and establishing an integrated network of sourcing, processing, and refining assets across the globe.
“We expect the funding from the Department of War to enable The Elmet Group to advance a series of transformative initiatives that will strengthen and secure the U.S. tungsten supply chain,” said The Elmet Group CEO and Chairman Peter V. Anania. “Through these initiatives, we are seeking to expand the capacity of our U.S. manufacturing operations while establishing long-term partnerships with Blue Moon Metals and EQ Resources to secure critical feedstock, processing expertise, and downstream manufacturing capabilities. Together, these efforts represent a significant step toward establishing a secure, vertically integrated tungsten supply chain and creating a more resilient allied platform, from mine to finished component, for the defense and industrial markets that depend on this strategic material.”
Tungsten is a strategically important metal valued for its ability to withstand extreme heat, pressure, and wear, making it essential to national defense and a wide range of advanced industrial applications. Its unique properties make it irreplaceable in certain high-performance components used across aerospace, energy, semiconductor, medical, and industrial markets, underscoring the need for reliable and secure sources of supply. ELMT supplies tungsten to critical U.S. defense programs, including Patriot, Javelin, AEGIS, Trident II, and THAAD, as well as Virginia- and Columbia-class submarines, and is the only U.S.-owned vertically integrated producer of tungsten servicing the full breadth of critical end markets.
Expanding American Mineral Manufacturing and Processing
ELMT anticipates directing more than $165 million of the DoW Investment toward the modernization and expansion of the Company’s existing critical infrastructure facilities in Lewiston, Maine; Coldwater, Michigan; and Euclid, Ohio. The upgrades will be intended to increase capacity for key defense and industrial applications, expand production of tungsten heavy alloy and powder products, and strengthen ELMT’s domestic manufacturing infrastructure.
In addition, ELMT plans to allocate approximately $150 million to the Springer Tungsten Complex in Imlay, Nevada, operated by Blue Moon Metals. As part of the investment, ELMT intends to form and operate a majority-owned joint venture with Blue Moon Metals and EQ Resources to restart and expand ammonium paratungstate (“APT”) conversion capacity at the site, creating a significant new source of tungsten processing capacity in North America.
The Springer Mine and mill located at the complex are expected to restart production in the fourth quarter of 2027, while the APT conversion facility owned by the joint venture is expected to begin operations in the second half of 2028. Together, these assets are intended to establish a critical processing hub that connects mine supply with downstream demand and strengthens domestic manufacturing capabilities.
Expanding a Resilient Allied Tungsten Supply Network
In parallel with its domestic manufacturing investments, up to $150 million is expected to be utilized to help ELMT create and advance a network of key partnerships and investments, including the Mt. Carbine Mine in Australia and the Barruecopardo Mine in Spain, to diversify tungsten supply, reduce concentration risk, and establish secure sources of critical materials. Together, these investments are designed to increase access to tungsten feedstock, strengthen supply chain resiliency, and support the development of a more diversified tungsten ecosystem.
By expanding these partnerships, ELMT seeks to build an integrated supply network spanning mining, processing, and advanced manufacturing, further strengthening its ability to support the critical materials, components, and systems required by the United States and its Allies.
Launching Elmet Refining & Trading to Integrate Global Tungsten Supply
To oversee these efforts, ELMT is launching Elmet Refining & Trading (“ERT”), a new division responsible for coordinating sourcing, processing, and material delivery across the Company’s expanding global network. ERT will oversee upstream mining operations and downstream processing and manufacturing assets to enhance supply chain visibility, coordination, and resiliency.
By integrating these capabilities under a single platform, ELMT anticipates gaining greater control over feedstock sourcing, processing capacity, and material flows, enhancing its ability to support customers with reliable, long-term access to critical materials while strengthening its competitive position in strategic end markets.
Supporting the Rebuilding of the U.S. National Defense Stockpile
The initiatives announced today complement The Elmet Group’s recently secured indefinite delivery/indefinite quantity contract with the Defense Logistics Agency (“DLA”) to support the rebuilding of the U.S. National Defense Stockpile. The contract has a ceiling value of up to $2 billion, including a guaranteed minimum commitment of $150 million, and covers the supply of tungsten ores and concentrates and sodium tungstate to DLA Strategic Materials. Importantly, ELMT does not intend to begin deliveries into the stockpile until sufficient incremental supply is available through the mining investments, offtake agreements, and processing capacity expansions described above, ensuring stockpile replenishment does not come at the expense of existing American manufacturers.
This approach aligns stockpile replenishment with the creation of new mining, processing, and manufacturing capacity, to help increase the availability of tungsten across the broader U.S. industrial base while supporting long-term national security objectives.
Advisors
Goldman Sachs & Co. LLC and Cantor Fitzgerald & Co. are acting as financial advisors, Akin Gump Strauss Hauer & Feld LLP and Ellenoff Grossman & Schole LLP are acting as legal advisors, and Joele Frank, Wilkinson Brimmer Katcher is serving as strategic communications advisor to ELMT.
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About The Elmet Group
The Elmet Group is a U.S.-based provider of critical materials, precision-engineered components, and advanced high-energy systems for the Aerospace, Defense and Government, Industrial, Medical, Semiconductor and Electronics, and Energy industries. The Company operates through three divisions: Critical Materials Components (CMC), Engineered Microwave Products (EMP), and Elmet Refining & Trading (ERT), leveraging materials science and precision engineering expertise to deliver high-performance solutions. The Elmet Group is dedicated to strengthening domestic manufacturing capabilities to support the U.S. and its Allies’ needs in both critical materials and advanced high-power microwave systems.
Media Contact
Investor Contact
Tom Colton and Greg Bradbury
Gateway Group, Inc.
[email protected]
949-574-3860
Forward-looking statements disclaimer
The information in this press release includes forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. These statements generally relate to future events or our future financial or operating performance and include statements regarding (i) the ultimate size of (a) the DoW’s investment, (b) ELMT’s investments into modernizing and expanding its existing facilities, (c) ELMT’s investment in the Blue Moon Springer Tungsten Complex and (d) ELMT’s investments in creating a network of strategic partnerships to diversify Tungsten supply; (ii) Elmet’s ability to: (a) establish a secure, diversified and vertically integrated Tungsten supply chain while expanding domestic manufacturing and strengthening allied sources of critical minerals, (b) expand relationships with key supply-chain partners, (c) secure long-term access to critical raw materials, processing and refining assets, (d) modernize and expand its existing critical infrastructure facilities, (e) effectively meet demand for its products and (f) restart production at the Blue Moon Springer Tungsten Complex on the anticipated timeline and at the anticipated cost; (iii) the creation of ERT enhancing ELMT’s control over feedstock sourcing, processing capacity, material flows and support to customers as well as strengthening its competitive position in strategic end markets; (iv) ELMT’s ability to successfully navigate turbulent raw materials markets; (viii) ELMT’s ability to successfully perform under, and realize the anticipated benefits of, its indefinite delivery/indefinite quantity contract with the Defense Logistics Agency; (ix) ELMT’s ability to realize the anticipated benefits of partnerships, including with Blue Moon Metals and EQ resources as well as the successful operation of joint ventures with such parties; and (x) ELMT’s future performance, expected outcomes and strategic initiatives.
When used in this press release, words such as “expect,” “project,” “estimate,” “believe,” “anticipate,” “intend,” “plan,” “seek,” “forecast,” “target,” “predict,” “may,” “should,” “would,” “could,” and “will,” the negative of these terms and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Forward-looking statements are based on management’s current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward-looking statements. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in Elmet’s Registration Statement on Form S-1, as amended (File No. 333-294725) and subsequent filings Elmet makes with the Securities and Exchange Commission. Elmet undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.
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Exhibit 99.3
1 MADE BY US USED BY THEM MADE BY US USED BY THEM MADE BY US USED BY THEM Critical Materials Critical Processes Critical Engineering Critical Manufacturing Strengthening America's Tungsten Supply Chain Department of War Investment and National Defense Stockpile Framework September 2026
Disclaimer 2 FORWARD-LOOKING STATEMENTS The information in this Presentation includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. All statements other than statements of historical fact included in this presentation regarding our business strategy, plans, goals, and objectives are forward-looking statements. When used in this presentation, the words "believe," "project," "expect," "anticipate," "estimate," "intend," "budget," "target," "aim," "strategy," "plan," "guidance," "outlook," "intent," "may," "should," "could," "will," "would," "will be," "will continue," "will likely result," and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on the current expectations of The Elmet Group Co. ("we," "us," "our," or the "Company") and assumptions about future events and are based on currently available information as to the outcome and timing of future events. We caution you that these forward-looking statements are subject to all the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, associated with our business of critical materials components, critical materials refining and trading, and high-powered microwave engineering and manufacturing. These risks include, but are not limited to: our market opportunities and the potential growth of those markets; our strategy, expected outcomes and growth prospects; trends in our operations and industry markets; our ability to execute our growth strategy and successfully acquire and integrate potential acquisition targets; our future profitability, indebtedness, liquidity, access to capital and financial condition; our ability to service our current and future indebtedness; any inability to attract, train or retain employees with the requisite skills and experience; failure by us or our employees to obtain and maintain necessary security clearances or certifications; changes in U.S. government appropriations, procurement, contract or other practices or the adoption by governments of new laws, rules, regulations and programs in a manner adverse to us; the termination or nonrenewal of our government contracts and subcontracts, particularly those contracts with the U.S. government and the Department of War; our ability to achieve the anticipated benefits from the Department of War investment in us and related transactions, if at all; availability and volatility in the prices of raw materials and energy; our ability to remain in compliance with extensive laws and regulations that apply to our business and operations; the increased expenses associated with being a public company; changes in estimates used in recognizing revenue; internal system or service failures and security breaches; inherent uncertainties and potential adverse developments in legal proceedings, including litigation, audits, reviews and investigations, which may result in materially adverse judgments, settlements or other unfavorable outcomes; the future trading prices of our common stock; and other risks and uncertainties set forth in our filings that may be made with the SEC from time to time. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. No representation or warranty (express or implied) is made as to and no reliance should be placed on, any information, including projections, estimates, targets, or opinions contained herein and no liability whatsoever is accepted as to any errors, omissions, or misstatements contained herein. Please refer to the "Risk Factors" section of the Registration Statement on Form S-1 (File No. 333-294725), as amended and supplemented, and declared effective by the SEC on April 22, 2026, Part II, Item 1A. "Risk Factors" in our Quarterly Reports on Form 10-Q for the quarters ended April 3, 2026 and July 3, 2026, and our Current Reports on Form 8-K filed with the SEC on September 8, 2026 and September 14, 2026 for more information. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this Presentation. Except as otherwise required by applicable law, we disclaim any duty to update and do not intend to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Presentation. This presentation also includes certain forward-looking figures, including Projected Revenue and Projected Gross Margin, that management believes is useful in evaluating the Company's underlying economic trajectory and scalability of the Company's business model once the proceeds of the DoW investment are deployed. These figures are presented in connection with the strategic investments described herein. These figures are not financial measures prepared in accordance with U.S. GAAP and have not been audited or reviewed by the Company's independent auditors. They are provided solely for information purposes in connection with this presentation. Actual future revenue, gross profit, and gross margin may differ materially from these figures due to, among other factors: (1) the prevailing market price of ammonium paratungstate, (2) the timing of, and successful entry into, definitive documentation for the transactions discussed in this presentation, (3) the final terms of the definitive transaction documentation, (4) the completion and on-time ramp-up of key projects related to the DoW investment, including (i) U.S. facility upgrades, (ii) commercial agreements and strategic offtakes, and (iii) the APT refining facility, (5) the closing and long-term expectations of existing operations and the Schwabmünchen facility, (6) cost fluctuations, supply-chain conditions, or operational efficiencies, (7) timing of revenue recognition, (8) changes in customer purchasing behavior, customer cancellations, and demand for our products generally, (9) customer acquisition rates and competitive dynamics, and (10) other risks and uncertainties set forth in our filings that may be made with the SEC from time to time. These figures are included solely to assist investors in understanding management's view of the Company's operating trajectory in the context of the strategic transactions discussed in this presentation. They should not be considered in isolation, as a substitute for, or superior to, the Company's historical financial results prepared in accordance with U.S. GAAP, or as a guarantee of future performance. Investors are strongly encouraged to review the Company's complete financial statements, risk factors and all other information contained in set our filings that have been made and may be made with the SEC from time to time. MARKET AND INDUSTRY DATA This Presentation has been prepared by the Company and includes market data and other statistical information from third-party sources, including independent industry publications, government publications or other published independent sources. Although the Company believes these third-party sources are reliable as of their respective dates for the purposes used herein, neither we nor any of our affiliates, directors, officers, employees, members, partners, stockholders or agents make any representation or warranty with respect to the accuracy or completeness of such information. Although we believe the sources are reliable, we have not independently verified the accuracy or completeness of data from such sources. Some data is also based on the Company's good faith estimates, which are derived from our review of internal sources as well as the third-party sources described above. Additionally, descriptions herein of market conditions and opportunities are presented for informational purposes only and there can be no assurance that such conditions will actually occur or result in positive returns.
3 Tungsten & Molybdenum Materials and Components U.S. Leader for Key Critical Materials Supply Chain One of the world's largest manufacturers of high-performance refractory metals, with nearly a century of experience Only U.S.-owned and U.S.-based manufacturer of highly engineered critical materials components for essential industries New investment from Department of War Domestic production capacity upgrades and expansion Acquisition of new European manufacturing base Strategic investments in tungsten supply chain Long-term supplier to top U.S. government programs Difficult-to-replicate asset base developed over decades U.S.-centric operations with clear growth plan Strong and dedicated supply chain network The Elmet Evolution
4 The Elmet Group Business Overview Select CMC Products Foil Furnace Boats Balance Weights Cubes Powder Plate Select EMP Products Waveguide Components Coaxial Components Microwave Generators Ultra-High Vacuum Components Microwave Systems Custom RF Critical Materials Components ("CMC") Engineered Microwave Products ("EMP") Vertically integrated manufacturer of critical refractory materials specializing in tungsten, molybdenum and specialized alloys Provider of highly engineered radio frequency ("RF") systems, components and engineering services Elmet Refining & Trading ("ERT") New division managing all ammonium paratungstate ("APT") conversion capacity and mine offtake agreements Select ERT Products Manages all APT conversion capacity Administers all mine offtake agreements Supplies Defense Logistics Agency (DLA) NEW ENHANCED / NEW PRODUCTS Business Segments Expanding U.S. capacity and establishing European stronghold Creating national leader for tungsten supply Rod Coil Thoriated Wire INCREASED PROGRAM EXPOSURE New developments open reach into adjacent radar platforms Sodium Tungstate Tungsten Concentrate Blue Tungsten Oxide (BTO)
Operational Since: 1961 | Production Area: 26,800m2 European Expansion: Schwabmünchen Acquisition 5 • Elmet is acquiring the plant equipment, process IP and inventory, as well as assuming certain employees and associated assets & liabilities – Demonstrates Elmet continues to be the "acquiror of choice" in the industry • 2-year framework contract manufacturing agreement to supply ams OSRAM • Elmet to lease plant facility for a nominal amount for ten years, with renewal options • Transaction is expected to close in Q1 2027 • Acquired business will be consolidated under CMC division Transaction Detail Fully-Integrated Facility Capabilities Powder Formation Pressing Sintering Swaging / Drawing Finishing On-Site Materials Lab Elmet has agreed to acquire ams OSRAM's Schwabmünchen metal production operations, which establishes a strategic, integrated tungsten and molybdenum manufacturing base in Europe with smart manufacturing capabilities Note: No DoW funding will be allocated to the ams OSRAM asset acquisition.
6 Landmark Transaction to Secure U.S. Tungsten Supply Chain ✓ Upgrade existing CMC facilities and expand downstream capacity ✓ Build out midstream processing capabilities for APT – all other U.S. APT plants are foreign- owned and/or tungsten carbide focused ✓ Strengthen U.S. critical materials supply chain ✓ Prepare the business for upcoming missile replenishment cycle ✓ Increase overall market competitiveness ✓ Provide further control over input costs ✓ Align capital deployment with key milestones ✓ Maintain capital structure flexibility through redemption adjustment feature Total DoW Investment • $450 million Funding Schedule • $200 million at close, followed by five, $50 million tranches at 6-month intervals based on project spend Securities(1) • Class A Redeemable Preferred Equity • Warrants for 19.9% of post-deal common stock Dividend Rate • 5.5% per annum, paid-in-kind (PIK) Redemption Adjustment • Partial repayment of preferred balance based on value of penny warrants when exercised (up to the full-face value of the preferred) Board Representation • DoW shall appoint one independent board director and one non-voting board observer (1) Preferred equity issued at each tranche closing, warrants issued at initial closing. Summary Investment Terms DoW Investment Expected to Allow Elmet To: First initiative of the DoW's Economic Defense Unit aligns public and private capital to strengthen America's tungsten supply chain while creating long-term value for Elmet, the U.S. government and taxpayers
$4.5 - $5.0 $5.7 - $6.3 2024 2030 7 Advanced Properties of Critical Materials Heat resistance and dimensional stability Low thermal coefficient of expansion High corrosion resistance High density and high strength Shielding of X-ray and gamma radiation Great electrical and thermal conductivity Global Tungsten Demand(1) ($ in B) Global Molybdenum Demand(2) ($ in B) Critical Use Cases Missile Systems Aircraft Systems Heat Sinks Surgical Robots Critical Use Cases Satellite Systems Chip Production Medical Devices Ordnance Systems $5.0 - $5.5 $7.0 - $8.0 2024 2030 +7.0% CAGR (1) Stellar Market Research. (2) Merchant Research and Straits Research. +4.0% CAGR Global Tungsten and Molybdenum Demand Remains Strong
Solving Urgent Tungsten Supply Chain Challenges is Critical 8 • China controls more than 85% of the current supply of tungsten, making the tungsten market susceptible to manipulation Significant Concentration Risk • Recent foreign export restrictions on tungsten and other critical materials have led to significant global supply tightening and price volatility Foreign Export Restrictions • Western tungsten supply chains have historically experienced underinvestment, which has necessitated investments to modernize existing facilities Underdeveloped Supply Chain • Other than Elmet, there are no U.S.-owned vertically integrated producers of tungsten servicing the same breadth of critical end markets Lack of U.S.-Owned Producers • Tungsten is a critical material used in key U.S. defense and government programs with long qualification periods because of stringent performance and compliance requirements Strict National Security Rules Elmet's vertically integrated U.S. production, diversified global supply and expanded U.S. and European capacity positions us to begin addressing these challenges
Investments in Existing CMC Facilities • Expand capacity for Patriot PAC, PrSM, Phalanx, SLAP, F-35 and rocket components • Increase output of tungsten heavy alloy balance weights and 5X powder capacity and products • Modernize infrastructure across Coldwater, Euclid and Lewiston facilities Strategic Capital Deployment of DoW Investment 9 $450M DoW Committed Investment $165M+ CMC Facility Upgrades ~$100M Strategic Investments in Elmet Refining & Trading ~$75M APT JV Investment Creation of Elmet Refining & Trading • Develop the first independent (non-tungsten carbide-focused) APT plant in the U.S. at the Blue Moon Springer Nevada site (expedited restart of former General Electric facility) • Pursue strategic, diversified feedstock portfolio through future equity investments and long-term offtakes • Create an integrated platform to source, refine, trade and allocate tungsten • Enables further exploration and continued development of supply chain with key critical materials partners Proceeds to be allocated toward expanding and fortifying existing operations while strengthening domestic supply chains for critical tungsten and molybdenum products ~$35M Fees, Expenses & Other ~$75M Blue Moon Investment & Commercial Agreement
10 Defense Logistics Agency Awards Elmet IDIQ Contract ▪ DLA manages end-to-end global defense supply chain from raw materials to end user disposition ▪ Strategic Materials is the leading agency for planning, procurement and management of materials critical to national security Defense Logistics Agency ("DLA") Strategic Materials Key Terms for Tungsten Stockpile Agreement Up to $2 Billion Total IDIQ Contract $150 Million Funded Commitment 5 Years + 2 Years Base Term + Option Years 3+ Approved Source Mines Secures resilient, long-term APT demand for ERT segment Enhances government relationship and strengthens business positioning Backstops refining volumes and de-risks investments Strategic Importance for Elmet 1 2 3 Note: IDIQ stands for Indefinite Delivery, Indefinite Quantity. Elmet does not intend to begin delivering material into the National Defense Stockpile until sufficient incremental new supply is available
Planned Upgrade and Expansion of Existing CMC Facilities 11 Euclid, Ohio Coldwater, Michigan Lewiston, Maine Expected Key Benefits Expanding capacity for powder and key defense programs Dedicated capacity reserved for new opportunities Accelerating qualifications as the U.S. tungsten leader Strengthening critical asset base New equipment capable of servicing multiple end markets Investment Focus $165M+ Capex Investment Expanding capacity and improving resiliency of existing CMC facilities • MAC related infrastructure & capacity (Patriot PAC, PrSM, Frag Spheres, rocket components, etc.) • Increased capacity for tungsten heavy balance weights • Increased capacity for Phalanx & SLAP • F-35 program components • Powder production capabilities • General infrastructure upgrades across Coldwater, Lewiston and Euclid
CMC Capacity Expansion Across U.S. Facilities 12 $165+ million investment expected to expand capacity across Lewiston, Coldwater and Euclid to meet growing U.S. defense demand, capitalize on the megatrends shaping our other end markets and enhance business resilience throughout market cycles Capacity Uplift 5X Tungsten powder production capacity ~570,000 sq. ft. U.S. manufacturing footprint across three facilities 125+ Key U.S. defense programs supported Capacity for critical and new programs and opportunities Capacity Additions by Product Line Tungsten Powder — 5X production capacity; the foundational input for all downstream CMC products Missile & Munitions Components — Patriot PAC, PrSM, frag spheres and rocket components (MAC-related infra.) Tungsten Wire — Resilient capacity for radar, missile and aircraft defrost wire Tungsten Heavy Alloy Balance Weights — Increased tungsten heavy alloy output for key aircraft (fixed and rotary) F-35 Program Components — Dedicated capacity for F-35 requirements Expected Expansion Timeline 2026 DoW investment closes; initial funding released 2027 Equipment procurement, installation and facility modernization 2H'28 Expanded capacity begins coming online for defense programs 2031 Full run-rate across upgraded U.S. facilities European capacity: Schwabmünchen acquisition adds a ~290,000 sq. ft. integrated facility (expected close Q1 2027)
Formation of Elmet Refining & Trading ("ERT") Segment 13 APT Refining Facility To secure tungsten from trusted suppliers, enabling mine to missile capabilities Restarting and operating APT refining facility in Nevada to support U.S. tungsten supply chain Independent APT plant supporting U.S. mines Strategic reserve capacity for USA JV majority owned by Elmet Strategic Offtake Agreements Securing qualified feedstock from Blue Moon, EQR and others while capturing value from market opportunities Significant, long-term offtake agreements Stronger critical materials supply chain Low-overhead business model DLA IDIQ contract to support DLA Strategic Materials tungsten stockpile
~$75M APT JV Investment — Elmet majority- owned (70%) JV to restart and operate the APT plant ~$75M Blue Moon Investment — Equity investment and commercial agreement with Blue Moon Metals (TSXV: MOON; Nasdaq: BMM) Long-Term Mine Offtake — ~1–3k tpa of tungsten concentrate from the Springer Mine Targeted APT Restart — 1H 2029 Blue Moon Springer APT Restart 14 Expedited restart of the former General Electric (GE) mine and APT plant to create the first independent APT facility in the U.S. Springer Complex – Pershing County, NV Historic tungsten mine with existing flotation mill and APT circuit, originally built by GE in 1979–82 ~4,000 tpa APT refining capacity Brownfield restart of existing infrastructure Springer Mine to be owned and operated by Blue Moon Transaction Structure Strategic Value First independent U.S. APT plant — other U.S. APT capacity is foreign- owned and/or carbide-focused Hub for U.S. mines — ability to process concentrate from other Western U.S. tungsten mines Strategic reserve capacity — anchors DLA IDIQ stockpile deliveries for the U.S. Control of input costs — majority owned and operated by Elmet Restart timing subject to engineering, permitting, construction and other customary conditions
USA 15 Consolidation & Transformation Metal Powder Processing Mining Raw Materials Thermomechanical Processing Machining & Fabrication Shaping, Deforming, Heat Treating Melting, Pressing, Sintering Refining the Metal Powder Mining Cutting, Machining, Finishing Australia Vietnam Spain Chile Mining locations / investment: Mixing & Alloying Key powder metallurgy processes: Spray Drying Spheroidization Thermal Reduction Plasma Densification Key transformative processes: Melting Cold & Hot Pressing Mechanical Pressing Sintering Key thermomechanical processes: Cold & Hot Rolling Swaging Extruding Forging Drawing Key final fabrication processes: Bending & Forming Laser Cutting 5+ Axis Machining Assembly and Testing Finishing, QC Shipping CMC Vertically Integrated Engineering-to-Production Process Vertically Integrated Critical Materials Components Operations Enable High Quality and Greater Control APT Chemical Refining Digestion and Crystallization APT refining locations: Masan Nevada Past 10 years and ongoing 2028 NEW (long term strategic and commercial partner) (joint venture) Investment or long-term offtake ENHANCED ENHANCED ENHANCED ENHANCED APT joint venture provides new refining expertise, which is expected to enhance overall value chain and shorten typical cycle time from mine to finished component for critical defense applications by ~3 months
Well-Positioned for New U.S. Defense Sourcing Requirements 16 As U.S. defense sourcing for critical materials continues to tighten, DoW investment enables Elmet to be the provider-of- choice for tungsten, strengthening U.S. supply chain resiliency Critical Material Restrictions Limited number of trusted suppliers given current sourcing restrictions • U.S. restricts sourcing specific tungsten materials from China, Russia, Iran and North Korea ("CRINK") • Restrictions on molybdenum added under 2026 National Defense Authorization Act • Beginning January 1, 2027, U.S. defense procurement rules set to restrict tungsten sourced from CRINK nations in key military applications Elmet's Strategic Positioning Sole U.S.-owned supplier of critical materials components for a wide range of essential industries ✓Fully-integrated manufacturer of tungsten and molybdenum products ✓Multiple sources of feedstock and conversion capacity supporting U.S. supply chain ✓Supplier to key U.S. defense programs including Patriot, PrSM, Javelin, AEGIS, Trident II, THAAD, NGI, GMLRS, Virginia / Columbia Class Subs and more
Long-Term Investment and Operational Framework 17 CMC EMP ERT 2026 2029 2027 2028 2030 2031 Existing Operations Schwabmünchen Facility U.S. Facility Upgrades Existing Operations Current Commercial Agreements / Strategic Offtake APT Refining Facility ~$50 – $70 Start of Operations Initial Funding ~$625 - $675 ~$850 – $950 Note: Projected figures based on Elmet's internal estimates and assumptions for 2031. Figures assume a long-term APT price of $1,500 per MTU per Fastmarkets and the completion and on-time ramp-up of key projects related to the DoW investment including (i) U.S. facility upgrades, (ii) commercial agreements / strategic offtakes and (iii) the APT refining facility. Figures also reflect the company's long-term expectations of existing operations and the Schwabmünchen facility. These projections are for informational purposes only and have not been prepared in accordance with U.S. GAAP. Actual results may differ materially. Elmet becomes the sole U.S.-owned, vertically integrated supplier with a clear pathway to expanding market share in defense end-markets 2031 Projected Gross Margin ~26 – 29% ~35 – 38% ~10 – 15% Expected Timeline of Investment and Operations ~$1.5B – $1.7B ~18 – 22% 2031 Projected Revenue ($M)
Key Takeaways from Elmet's Strategic Expansion 18 Landmark $450M DoW Investment First initiative of the DoW's new Economic Defense Unit; milestone-based funding with capital structure flexibility and interests aligned through the DoW's equity stake $165M+ to Expand U.S. Manufacturing Capacity 5X tungsten powder capacity and expanded output for Patriot PAC, PrSM, Phalanx, SLAP, F-35 and other programs across Lewiston, Coldwater and Euclid facilities Elmet Refining & Trading Creates a Mine-to- Missile Platform First independent U.S. APT plant at the Blue Moon Springer site, backed by long-term offtake agreements DLA IDIQ Contract Anchors Demand Up to $2 billion contract with a $150 million commitment to supply the National Defense Stockpile as incremental new supply comes online European Expansion Through Schwabmünchen Integrated tungsten and molybdenum manufacturing base in Germany, expected to close Q1 2027 (no DoW funding) Positioned as the Tungsten Leader for the U.S. and its Allies Sole U.S.-owned, vertically-integrated supplier as CRINK sourcing restrictions take effect January 1, 2027 Enhancing domestic manufacturing capacity and reducing foreign dependence on critical minerals
19 Capitalizing on Global Trends Including Defense Fortification, Clean Energy Transition and Supply Chain Reshoring 1 Sole U.S. Owned Supplier of Certain Highly Engineered Critical Materials Components Empowering Critical End Markets 2 Vertically Integrated and Scaled Operations Supported by a Dedicated Engineering Team 3 Difficult-to-Replicate Asset Base Paired with Specialized Production Capabilities 4 Experienced Management Team with Proven History of Executing Successful Organic Growth Strategy and Synergistic Acquisitions 5 Critical to U.S. Material Independence Accelerating Defense Qualifications Mine to Missile Capabilities Est. $1+ Billion in Replacement Value(1) Proven Record of Long-Term Growth (1) Replacement value based on Elmet's internal estimates. Uniquely Positioned to Strengthen Tungsten Supply Chain for the U.S. and its Allies
Announcing Elmet's Investor Business Update 20 Investor Business Update Thursday, September 24, 2026 Details to follow
Critical Materials Critical Processes Critical Engineering Critical Manufacturing The Elmet Group | www.theelmetgroup.com MADE BY US USED BY THEM MADE BY US USED BY THEM MADE BY US USED BY THEM 21