Energy Vault Holdings, Inc 10-Q for FY2025 Q1
Energy Vault Holdings, Inc. (NRGV)
10-Q
2025-05-13
For: 2025-03-31
View Original
Added on
April 08, 2026
About this 10-Q
Energy Vault Holdings, Inc filed this 10-Q on May 13, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $8.53M
- up 10.0% from $7.76M a year earlier
- Net loss
- $21.14M
- compared with a net loss of $21.14M a year earlier
- Diluted EPS
- -$0.14
- compared with -$0.14 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 10-Q
___________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 31, 2025
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from _________ to _________
Commission file number 001-39982
___________________________________
___________________________________
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of Principal Executive Offices) | (Zip Code) | ||||
(805 ) 852-0000
Registrant’s telephone number, including area code
___________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | ¨ | x | |||||||||
Non-accelerated filer | ¨ | Smaller reporting company | |||||||||
Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes o No x
The registrant had 156,044,290 , shares of common stock, par value $0.0001 per share, outstanding as of May 8, 2025.
TABLE OF CONTENTS
| Page | |||||
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, and our ability to cure our New York Stock Exchange (“NYSE”) price deficiency and meet the continued listing requirements of the NYSE, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that are in some cases beyond our control and may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:
•changes in our strategy, expansion plans, customer opportunities, future operations, future financial position, estimated revenues and losses, projected costs, prospects and plans;
•the implementation, market acceptance and success of our business model and growth strategy;
•our ability to develop and maintain our brand and reputation;
•developments and projections relating to our business, our competitors, and industry;
•the impact of macroeconomic uncertainty, including with respect to uncertainty about the future relationship between the United States and other countries with respect to trade policies, taxes, government regulations, and tariffs;
•investment in development projects that may not achieve commercial operations in our predicted timeframe or at all;
•our efforts to diversify our supply chain to lessen the impact of tariffs;
•our expectations regarding our ability to obtain and maintain intellectual property protection and not infringe on the rights of others;
•expectations regarding the time during which we will be an emerging growth company under the JOBS Act;
•our future capital requirements and sources and uses of cash;
•the international nature of our operations and the impact of war or other hostilities on our business and global markets;
•our ability to obtain funding for our operations and future growth; and
•our business, expansion plans and opportunities, including our expectation that our first two-owned projects will begin generating revenue in 2025.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” in our 2024 Annual Report on Form 10-K and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. Additionally, our discussions of environmental, social, and governance (“ESG”) assessments, goals and relevant issues herein or in other locations, including our corporate website, are informed by various ESG standards and frameworks (including standards for the measurement of underlying data), and the interests of various stakeholders. References to “materiality” in the context of such discussions and any related assessment of ESG “materiality” may differ from the definition of “materiality” under the federal securities laws for SEC reporting purposes. Furthermore, much of this information is subject to assumptions, estimates or third-party information that is still evolving and subject to change. For example, we note that standards and expectations regarding greenhouse gas (“GHG”) accounting and the process for measuring and counting GHG emissions and GHG emissions reductions are evolving, and it is possible that our approaches both to measuring our emissions and any reductions may be
3
at some point, either currently or in the future, considered not in keeping with best practices. In addition, our disclosures based on any standards may change due to revisions in framework requirements, availability or quality of information, changes in our business or applicable government policies, or other factors, some of which may be beyond our control.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements. Any forward-looking statements only speak as of the date of this document, and we undertake no obligation to update any forward-looking information or statements, whether written or oral, to reflect any change, except as required by law. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.
4
Part I-Financial Information
Item 1. Financial Statements
ENERGY VAULT HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands except par value)
| March 31, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash, current portion | |||||||||||
Accounts receivable, net of allowance for credit losses of $ | |||||||||||
Contract assets, net of allowance for credit losses of $ | |||||||||||
| Inventory | |||||||||||
Customer financing receivable, current portion, net of allowance for credit losses of $ | |||||||||||
| Advances to suppliers | |||||||||||
| Investments, current portion | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Intangible assets, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
Customer financing receivable, long-term portion, net of allowance for credit losses of $ | |||||||||||
| Investments, long-term portion | |||||||||||
| Restricted cash, long-term portion | |||||||||||
| Other assets | |||||||||||
| Total Assets | $ | $ | |||||||||
Liabilities and Stockholders’ Equity | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses | |||||||||||
| Long-term debt, current portion | |||||||||||
| Contract liabilities | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Deferred pension obligation | |||||||||||
| Other long-term liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ Equity | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Non-controlling interest | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
ENERGY VAULT HOLDINGS, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(In thousands except per share data)
Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Revenue | $ | $ | |||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Benefit for credit losses | ( | ( | |||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Loss from operations | ( | ( | |||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest expense | ( | ( | |||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Other income (expense), net | ( | ||||||||||||||||||||||
| Loss before income taxes | ( | ( | |||||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||
| Net loss | ( | ( | |||||||||||||||||||||
| Net loss attributable to non-controlling interest | ( | ||||||||||||||||||||||
| Net loss attributable to Energy Vault Holdings, Inc. | $ | ( | $ | ( | |||||||||||||||||||
| Net loss per share attributable to Energy Vault Holdings, Inc. — basic and diluted | $ | ( | $ | ( | |||||||||||||||||||
| Weighted average shares outstanding — basic and diluted | |||||||||||||||||||||||
| Other comprehensive income (loss) — net of tax | |||||||||||||||||||||||
| Actuarial gain (loss) on pension | $ | $ | ( | ||||||||||||||||||||
| Foreign currency translation gain | |||||||||||||||||||||||
| Total other comprehensive income (loss) attributable to Energy Vault Holdings, Inc. | ( | ||||||||||||||||||||||
| Total comprehensive loss attributable to Energy Vault Holdings, Inc. | $ | ( | $ | ( | |||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
ENERGY VAULT HOLDINGS, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands)
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Non-Controlling Interest | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units (“RSUs”) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Short-swing profit recovery | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Actuarial gain on pension | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Foreign currency translation gain | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Balance at March 31, 2025 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2024 | |||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Non-Controlling Interest | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Vesting of RSUs | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Actuarial loss on pension | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Foreign currency translation gain | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Balance at March 31, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||
7
ENERGY VAULT HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash Flows From Operating Activities | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Non-cash debt and financing costs | |||||||||||
| Non-cash interest income | ( | ( | |||||||||
| Stock-based compensation | |||||||||||
| Benefit for credit losses | ( | ( | |||||||||
| Foreign exchange losses | |||||||||||
| Change in operating assets | |||||||||||
| Change in operating liabilities | ( | ||||||||||
| Net cash (used in) provided by operating activities | ( | ||||||||||
| Cash Flows From Investing Activities | |||||||||||
| Purchase of property and equipment | ( | ( | |||||||||
| Investment in note receivable | ( | ||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash Flows From Financing Activities | |||||||||||
| Proceeds from debt financing | |||||||||||
| Proceeds from insurance premium financings | |||||||||||
| Repayment of insurance premium financings | ( | ( | |||||||||
| Payment of debt issuance costs | ( | ||||||||||
| Short-swing profit recovery | |||||||||||
| Payment of taxes related to net settlement of equity awards | ( | ||||||||||
| Payment of finance lease obligations | ( | ( | |||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | ( | ||||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | ( | ||||||||||
Cash, cash equivalents, and restricted cash – beginning of the period | |||||||||||
Cash, cash equivalents, and restricted cash – end of the period | |||||||||||
| Less: restricted cash at end of period | |||||||||||
| Cash and cash equivalents - end of period | $ | $ | |||||||||
| Supplemental Disclosures of Cash Flow Information: | |||||||||||
| Cash paid for income taxes | $ | $ | |||||||||
| Cash paid for interest | |||||||||||
| Supplemental Disclosures of Non-Cash Investing and Financing Information: | |||||||||||
| Actuarial gain (loss) on pension | ( | ||||||||||
| Property and equipment financed through accounts payable and accrued expenses | |||||||||||
| Assets acquired on finance lease | |||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
ENERGY VAULT HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Energy Vault Holdings, Inc., which together with its subsidiaries is referred to herein as “Energy Vault” or the “Company,” provides a diverse technology portfolio of turnkey energy storage platforms, including proprietary gravity, battery, and green hydrogen energy storage hardware technologies, supported by our technology-agnostic energy management system software and integration platform. In 2024, we began a multi-year transition from providing this technology portfolio solely to third parties through a build-and-transfer model or licensing model, to also taking an ownership interest in energy storage assets in select attractive markets.
We incorporate a customer-centric, solutions-based approach toward helping utilities, independent power producers (“IPP”), and large industrial energy users reduce their energy costs while maintaining power reliability. As the global demand for electricity increases and the world transitions to an economy powered by increasingly intermittent renewable energy such as solar and wind, the ability to provide clean, reliable, and affordable electricity to a growing global population will depend heavily on the ability to store and distribute energy at appropriate times. We are striving to create a world powered by renewable resources so that everyone will have access to clean, reliable, sustainable, and affordable energy. The Company’s mission is to provide energy storage solutions to accelerate the global transition to renewable energy.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements have been prepared on an accrual basis of accounting in accordance with United States Generally Accepted Accounting Principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2024. The condensed consolidated balance sheet as of December 31, 2024, included herein, was derived from the consolidated financial statements of the Company as of that date.
These unaudited interim condensed consolidated financial statements, in the opinion of management, reflect all adjustments necessary to present fairly the Company’s financial position as of March 31, 2025, results of operations and comprehensive loss, stockholders’ equity activities, and cash flows for the three months ended March 31, 2025 and 2024. The results for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any interim period or for any other future year.
Principles of Consolidation
These unaudited interim condensed consolidated financial statements include Energy Vault Holdings, Inc., its wholly owned subsidiaries, and a majority owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation.
Non-controlling interest
Emerging Growth Company
Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised, and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
9
ENERGY VAULT HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
This may make comparison of the Company’s consolidated financial statement with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of the condensed consolidated financial statements, in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited interim condensed consolidated financial statements and accompanying notes. The Company evaluates its assumptions on an ongoing basis. The Company’s management believes that the estimates, judgment, and assumptions used are reasonable based upon information available at the time they are made. Significant estimates made by management include, among others, revenue recognition, warranty accruals, and stock-based compensation. Due to the inherent uncertainty involved in making assumptions and estimates, changes in circumstances could result in actual results differing from those estimates, and such differences could be material to the Company’s consolidated financial condition and results of operations.
Liquidity
The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and the satisfaction of liabilities and commitments in the normal course of business.
Since our inception in October 2017, we have incurred significant net losses and have used significant cash in our business. As of March 31, 2025 and December 31, 2024, we had accumulated deficits of $405.0 million and $383.8 million, respectively, and net losses of $21.1 million and $21.1 million, respectively, for the three months ended March 31, 2025 and 2024. We anticipate that we will incur net losses for the foreseeable future and there is no guarantee that we will achieve or maintain profitability.
The assessment of liquidity requires management to make estimates of future activity and judgments about whether the Company can meet its obligations and have adequate liquidity to operate. Significant inputs to the Company’s liquidity analysis include:
•$10.0 million in Cross Trails Bridge Loan proceeds. The Cross Trails Bridge Loan was executed on May 12, 2025. Refer to Note 17, Subsequent Events, for further details on this transaction.
•$39.9 million in estimated proceeds from the sale of investment tax credits (“ITCs”) pursuant to a Tax Credit Transfer Commitment. Refer to Note 16, Commitments and Contingencies, for further details on the Tax Credit Transfer Commitment.
•$25.0 million in proceeds from the sale of common stock pursuant to an equity purchase agreement (the “Equity Purchase Agreement”) with an investor (the “Equity Investor”). Pursuant to the Equity Purchase Agreement, the Company has the right at its sole discretion, but not the obligation, to sell to the Equity Investor, and the Equity Investor is obligated to purchase, up to $25.0 million of newly issued shares of the Company’s common stock, from time to time during the term of the Equity Purchase Agreement, subject to certain limitations and conditions. The Company expects to issue the Equity Investor shares of our common stock equivalent to 0.3 % of our outstanding common stock as of March 31, 2025 to maintain the right to sell shares to the Equity Investor at a market discount (the “Commitment Shares”). The Equity Purchase Agreement contains customary representations, warranties and agreements by us, as well as customary indemnification obligations of the Company. Pursuant to the terms of the Equity Purchase Agreement, we have agreed to enter into a Registration Rights Agreement with the Equity Investor, pursuant to which, among other things, the Company will provide the Equity Investor with customary registration rights with respect to the Commitment Shares and the shares issuable pursuant to the Equity Purchase Agreement.
The securities to be offered pursuant to the Equity Purchase Agreement will be offered pursuant to our effective S-3/A shelf registration statement (File No. 333-273089), which was filed with the SEC on July 14, 2023 and declared effective on July 20, 2023, or a registration statement that will be filed with the SEC promptly after the execution of the Registration Rights Agreement.
Management believes that its cash, cash equivalents, and restricted cash on hand as of the filing date of this Quarterly Report, along with the actions which can be taken subsequent to March 31, 2025 as discussed above, will be sufficient to fund our operating activities for at least the next twelve months.
10
ENERGY VAULT HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Segment Reporting
Concentration of Credit and Other Risks
Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, accounts receivable, and customer financings receivable.
As of March 31, 2025 and December 31, 2024, one customer accounted for 100
As of March 31, 2025 and December 31, 2024, one customer accounted for 100
Revenue from two customers accounted for 55 % and 38 % of total revenue for the three months ended March 31, 2025 and revenue from two customers accounted for 80 % and 14 % of total revenue for the three months ended March 31, 2024.
Summary of Significant Accounting Policies
The Company’s significant accounting policies are discussed in Note 2 of the notes to the consolidated financial statements included in the Company’s 2024 Annual Report on Form 10-K filed with the SEC on April 1, 2025. There have not been any significant changes to these policies during the three months ended March 31, 2025.
NOTE 3. REVENUE RECOGNITION
The Company recognized revenue for the product and service categories as follows for three months ended March 31, 2025 and 2024 (amounts in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Sale of energy storage products | $ | $ | |||||||||||||||||||||
| Operation and maintenance services | |||||||||||||||||||||||
| Software licensing | |||||||||||||||||||||||
| Intellectual property (“IP”) licensing | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total revenue | $ | $ | |||||||||||||||||||||
Remaining Performance Obligations
Remaining performance obligations represent the amount of unearned transaction prices under contracts for which work is wholly or partially unperformed. As of March 31, 2025, the amount of the Company’s remaining performance obligations was $127.6 million. The Company generally expects to recognize approximately 97 % of the remaining performance obligations as revenue over the next 12 months and the remainder more than 12 months from March 31, 2025.
11
ENERGY VAULT HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Contract Balances
The following table provides information about contract assets and contract liabilities from contracts with customers (amounts in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||
| Refundable contribution | $ | $ | |||||||||
| Unbilled receivables | |||||||||||
| Less allowance for credit losses | ( | ( | |||||||||
| Contract assets, net of allowance for credit losses | $ | $ | |||||||||
| Contract liabilities | $ | $ | |||||||||
Contract assets consist of a refundable contribution and unbilled receivables. The refundable contribution was initially payable to the Company upon the customer’s first gravity energy storage system achieving substantial completion, subject to potential downward adjustment for liquidated damages if specified performance metrics were not met. In 2024, the customer agreed to remove the substantial completion condition and committed to repay the refundable contribution in the second half of 2024. However, the customer did not remit payment, and during 2024 the Company increased its allowance for credit losses to fully reserve this receivable. The Company is continuing to engage with the customer and is actively pursuing collection efforts.
Unbilled receivables represent the estimated value of unbilled work for projects with performance obligations recognized over time.
NOTE 4. ALLOWANCE FOR CREDIT LOSSES
Activity in the allowance for credit losses was as follows for the three months ended March 31, 2025 and 2024 (amounts in thousands):
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||
| Accounts Receivable | Contract Assets | Customer Financing Receivable | Other Notes Receivable | Total | ||||||||||||||||||||||||||||
| Allowance for credit losses, beginning of period | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Provision (benefit) for credit losses | ( | ( | ( | |||||||||||||||||||||||||||||
| Allowance for credit losses, end of period | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||||||
| Accounts Receivable | Contract Assets | Customer Financing Receivable | Other Notes Receivable | Total | ||||||||||||||||||||||||||||
| Allowance for credit losses, beginning of period | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Provision (benefit) for credit losses | ( | ( | ( | |||||||||||||||||||||||||||||
| Allowance for credit losses, end of period | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
The Company estimates expected uncollectible amounts related to its accounts receivable, customer financing receivable, contract asset balances, and other notes receivable as of the end of each reporting period, and presents those financial asset balances net of an allowance for expected credit losses in the consolidated balance sheets. Due to the Company’s limited
12
ENERGY VAULT HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
operating history, the Company generally utilizes a probability-of-default (“PD”) and loss-given-default (“LGD”) methodology to calculate the allowance for credit losses for each customer by type of financial asset. The Company derives its PD and LGD rates using historical rates for corporate bonds as published by Moody’s. The Company uses PD and LGD rates that correspond to the customer’s credit rating and period of time in which the financial asset is expected to remain outstanding. For significantly past due receivables, such as the customer financing receivable and refundable contribution, the Company determines specific allowances for each receivable.
The amortized cost basis for the Company’s customer financing receivable was $11.5 two installment payments being past-due.
NOTE 5. FAIR VALUE MEASUREMENTS
Carrying amounts of certain financial instruments, including cash, accounts payable, and accrued expenses approximate their fair value due to their relatively short maturities and market interest rates, if applicable.
The Company categorizes assets and liabilities recorded or disclosed at fair value on the consolidated balance sheet based upon the level of judgment associated with inputs used to measure their fair value. The categories are as follows:
•Level 1—Inputs which included quoted prices in active markets for identical assets and liabilities.
•Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
The Company’s financial assets and liabilities measured at fair value on a recurring basis are as follows (amounts in thousands):
| Fair Value at | |||||||||||||||||
| Fair Value Hierarchy | March 31, 2025 | December 31, 2024 | |||||||||||||||
| Assets (Liabilities): | |||||||||||||||||
Warrant liabilities (1) | Level 3 | $ | ( | $ | ( | ||||||||||||
NOTE 6. RELATED PARTY TRANSACTIONS
NOTE 7. INVESTMENTS
The following table provides a reconciliation of investments to the Company’s condensed consolidated balance sheets (amounts in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Current | Long-Term | Current | Long-Term | ||||||||||||||||||||
| Investment in equity securities | $ | $ | $ | $ | |||||||||||||||||||
| Convertible note receivable | |||||||||||||||||||||||
Other note receivable (1) | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
13
ENERGY VAULT HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Investment in Equity Securities
In 2022 and 2023, the Company purchased equity securities in KORE Power, Inc. (“KORE”), a U.S. manufacturer of battery cells and modules. These equity securities do not have a readily determinable fair value and are recorded at cost, less any impairment, plus or minus adjustments for observable price changes in orderly transactions for the same or similar securities, with unrealized gains and losses recognized in earnings. The cost basis of the KORE equity securities is $15.0 11.7
Convertible Note Receivable
In October 2021, the Company entered into a convertible promissory note purchase agreement with DG Fuels, LLC (“DG Fuels”) and purchased a promissory note with a principal balance of $1.0 million (“DG Fuels Tranche 1 Note”). In April 2022, the Company purchased an additional promissory note from DG Fuels with a principal balance of $2.0 million. (“DG Fuels Tranche 2 Note”) (collectively, the “DG Fuels Note”).
The maturity date of the DG Fuels Note is the earlier of (i) 30 days after a demand for payment is made by the Company at any time after the two year anniversary of the date of issuance of the note; (ii) the four year anniversary of the date of issuance of the note; (iii) five days following a Financial Close (“Financial Close” means a project finance style closing by DG Fuels or its subsidiary of debt and equity capital to finance the construction of that certain biofuel facility currently under development by DG Fuels), or (iv) upon an event of default determined at the discretion of the Company. The DG Fuels Note has an annual interest rate of 10.0 %. Per the conversion terms, the Company can convert the principal balance and unpaid accrued interest into equity securities of DG Fuels at a 20 % discount. The Company does not expect to exercise its conversion option when the DG Fuels Note matures in October 2025.
Other Note Receivable
In October 2024, the Company loaned AUD 0.5 million (or $0.3 million) to Stoney Creek BESS Pty Ltd (“Stoney Creek”) to assist the company with purchasing a bond for a battery energy storage system (“BESS”) project (“Tranche 1”). Tranche 1 has a stated interest rate of 8.0 % and principal and accrued interest for are due in October 2025.
On March 7, 2025, the Company agreed to provide Stoney Creek with a bank guarantee of AUD 2.5 million (or $1.6 million) as security for a performance bond (“Tranche 2”). This bank guarantee has not been issued as of March 31, 2025.
Also on March 7, 2025, the Company loaned an additional AUD 0.5 million (or $0.3 million) to Stoney Creek to fund BESS project costs (“Tranche 3”). Tranche 3 has a stated interest rate of 8.0 % and principal and accrued interest are due in March 2026.
On March 17, 2025, the Company agreed to loan Stoney Creek, pending final governmental approval of the BESS project, up to an additional AUD 7.8 million (or $4.9 million) to fund development payments due to Stoney Creek’s owner and developer, Enervest Utility Pty Ltd (“Enervest”) (“Tranche 4”). The Company has loaned AUD 0.4 million (or $0.2 million) under Tranche 4 as of March 31, 2025.
If Stoney Creek’s BESS project is cancelled or does not obtain final governmental approval, any outstanding principal and interest owed to Energy Vault would immediately become due. In February 2025, Stoney Creek received preliminary approval by the Australian regulator and Stoney Creek was awarded a long-term energy service agreement by the Australian Energy Market Operator Services.
14
ENERGY VAULT HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 8. PROPERTY AND EQUIPMENT, NET
As of March 31, 2025 and December 31, 2024, property and equipment, net consisted of the following (amounts in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||
| Land | $ | $ | |||||||||
| Buildings | |||||||||||
| Machinery and equipment | |||||||||||
| Finance lease right-of-use assets – vehicles | |||||||||||
| Furniture and IT equipment | |||||||||||
| Leasehold improvements | |||||||||||
| Construction in progress | |||||||||||
| Total property and equipment | |||||||||||
| Less: accumulated depreciation and amortization | ( | ( | |||||||||
| Property and equipment, net | $ | $ | |||||||||
The increase in construction in progress primarily relates to construction of the Calistoga Resiliency Center hybrid energy storage system, the BESS in Snyder, Texas (“Cross Trails BESS”), and the microgrid and customer demonstration unit in Snyder, Texas (“Snyder CDU”).
NOTE 9. INTANGIBLE ASSETS, NET
Intangible assets are stated at amortized cost and consist of the following (amounts in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||||||||||||
| Capitalized software to be sold | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Once a software application is available for general release and is placed in service, the Company amortizes the capitalized costs on a product basis by the greater of the straight-line method over the estimated economic life of the product, or the ratio that current gross revenues for a product bear to the total current and anticipated future gross revenues for that product. The useful life for our external-use software development costs is five years . Amortization expense for the three months ended March 31, 2025 and 2024 was $0.2 million and $0.1 million, respectively.
Future amortization expense for intangible assets is estimated as follows (amounts in thousands):
| Amount | |||||
| Remainder of 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| Subtotal | |||||
| Software projects in process | |||||
| Total | $ | ||||
15
ENERGY VAULT HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 10. DEBT
CRC Bridge Loan
On March 31, 2025, Calistoga Resiliency Center, LLC (“CRC” or the “Borrower”), a wholly-owned subsidiary of the Company, entered into a $27.8 million credit agreement (“CRC Bridge Loan”) with Jefferies Finance LLC (“Jefferies”), as administrative agent, collateral agent, and lender. The CRC Bridge Loan was intended to provide interim financing until long-term debt could be arranged. The CRC Bridge Loan carried a 9.5 % annual interest rate and had a scheduled maturity date of April 23, 2025. After deducting closing fees, net proceeds totaled $26.8 million. The loan proceeds were included in the line item, restricted cash, current portion in the condensed consolidated balance sheet as of March 31, 2025.
On April 4, 2025, the Company refinanced the full outstanding balance of the CRC Bridge Loan through the issuance of $27.8 million in CRC Senior Notes (as described below). In accordance with Accounting Standard Codification (“ASC”) 470-10-45-14, because the refinancing was completed prior to the issuance of the financial statements, the Company reclassified the CRC Bridge Loan in the March 31, 2025 condensed consolidated balance sheet to reflect the long-term nature of the refinancing. The current portion of the CRC Bridge Loan is presented in an amount equal to the principal payments due within 12 months of March 31, 2025 under the terms of the CRC Senior Notes, which totals $13.3 million. The remaining $12.9 million carrying value of the CRC Bridge Loan, which is net of $1.6 million in debt discounts and issuance costs, is classified as long-term debt in the condensed consolidated balance sheet as of March 31, 2025. Due to the short-term nature of the CRC Bridge Loan, fair value approximates carrying value as of March 31, 2025.
CRC Senior Notes
On April 4, 2025, CRC issued $27.8 million of senior notes (“CRC Senior Notes”), with Eagle Point Credit as lender and Jefferies serving as agent for the transaction. The CRC Senior Notes were priced at 99.25 % of par, resulting in net proceeds of $27.6 million.
The CRC Senior Notes bear interest at 12.5 % per annum until the earlier of (i) the Company’s receipt of any tax credit transfer proceeds and (ii) December 31, 2025, and thereafter at a rate of 9.50 % per annum. The CRC Senior Notes are senior secured obligations of CRC, backed by a first-priority pledge of all CRC assets and equity interests. The CRC Senior Notes include customary affirmative and negative covenants, including minimum cash reserves and a minimum debt service coverage ratio.
Principal and interest are payable semi-annually, with installments due each February 28 and August 31. The first principal payment of $12.9 million is due on August 31, 2025, with subsequent payments as set forth in the financing agreement. A final balloon payment of $7.0 million is due at maturity on April 4, 2032.
The Company may, at its option, redeem all or a portion of the CRC Senior Notes prior to maturity, subject to specified call protection provisions and any prepayment premiums set forth in the agreement. In the event of a change of control, the Company may be required to offer to repurchase the notes at a specified price. The proceeds of the CRC Senior Notes are restricted until the hybrid energy storage system in Calistoga, California is placed into service.
Insurance Premium Financings
In April 2024, the Company entered into two financing agreements related to premiums under certain insurance policies. For the first financing, the Company was obligated to repay the lender an aggregate sum of $1.4 million through ten equal monthly payments commencing on April 10, 2024. For the second financing, the Company was obligated to repay the lender an aggregate sum of $0.4 million through nine equal monthly payments commencing on May 10, 2024. Both financings had an annual interest rate of 7.4
In June 2024, the Company entered into a financing agreement related to premiums under certain insurance policies. The Company is obligated to repay the lender an aggregate sum of AUD 0.3 million (or $0.2 million) through twelve equal
16
ENERGY VAULT HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
monthly payments of AUD 22 thousand (or $15 thousand), at an annual interest rate of 4.4 %, commencing on June 25, 2024.
In July 2024, the Company entered into a financing agreement related to premiums under certain insurance policies. The Company is obligated to repay the lender an aggregate sum of $1.1 million through nine equal monthly payments, at an annual interest rate of 7.5 %, commencing on August 15, 2024.
In March 2025, the Company entered into a financing agreement related to premiums under certain insurance policies. The Company is obligated to repay the lender an aggregate sum of $1.5 million through nine equal monthly payments, at an annual interest rate of 5.8 %, commencing on April 10, 2025.
As of March 31, 2025 and December 31, 2024, the carrying value of the Company’s insurance premium financings was $1.6 million and $0.7 million, respectively, and is included in the line item, accrued expenses, in the condensed consolidated balance sheets.
Interest Expense
The line item, interest expense, on the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025 and 2024, consists of the following (amounts in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Contractual interest expense | $ | $ | |||||||||
| Amortization of debt issuance costs | |||||||||||
| Amortization of debt discount | |||||||||||
| Interest expense on finance leases | |||||||||||
| Total | $ | $ | |||||||||
17
ENERGY VAULT HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 11. SUPPLEMENTAL BALANCE SHEETS DETAIL
| (amounts in thousands) | March 31, 2025 | December 31, 2024 | ||||||||||||
| Prepaid and other current assets: | ||||||||||||||
| Prepaid expenses | $ | $ | ||||||||||||
| Tax refund receivable | ||||||||||||||
| Other | ||||||||||||||
| Total | $ | $ | ||||||||||||
| Other assets: | ||||||||||||||
| Interest receivable | $ | $ | ||||||||||||
| Other | ||||||||||||||
| Total | $ | $ | ||||||||||||
| Accrued expenses: | ||||||||||||||
| Professional fees | $ | $ | ||||||||||||
| Accrued purchases | ||||||||||||||
| Employee costs | ||||||||||||||
| Insurance premium financings | ||||||||||||||
| Taxes payable | ||||||||||||||
| Warranty liabilities | ||||||||||||||
| Total | $ | $ | ||||||||||||
| Other current liabilities: | ||||||||||||||
| Customer deposits | $ | $ | ||||||||||||
| Total | $ | $ | ||||||||||||
| Other long-term liabilities: | ||||||||||||||
| $ | $ | |||||||||||||
| Asset retirement obligation | ||||||||||||||
| Warrant liabilities | ||||||||||||||
| Warranty liabilities | ||||||||||||||
| Total | $ | $ | ||||||||||||
NOTE 12. STOCK-BASED COMPENSATION
2022 Equity Incentive Plan
In 2022, the Company adopted its 2022 Equity Incentive Plan (the “2022 Incentive Plan”). The 2022 Incentive Plan provides for the granting of stock options, stock appreciation rights (“SARs”), restricted stock, and RSUs to employees, non-employee directors, and consultants of the Company. Shares of common stock underlying awards that expire or are forfeited or canceled will again be available for issuance under the 2022 Incentive Plan.
18
ENERGY VAULT HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The initial number of shares of the Company’s common stock reserved for issuance under the 2022 Incentive Plan was approximately 15.5 million, plus up to approximately 8.3 million shares subject to awards granted under the 2017 and 2020 Stock Incentive Plans. Beginning on March 1, 2022 and ending on (and including) March 31, 2031, the number of shares of the Company’s common stock that may be issued under the 2022 Incentive Plan increases by a number of shares equal to the lesser of (i) 4.0 % of the outstanding shares on the last day of the immediately preceding month or (ii) such lesser number of shares (including zero ) that the Company’s Board determines for the purposes of the annual increase for that fiscal year.
2022 Inducement Plan
In 2022, the Company adopted its 2022 Inducement Plan, which provides for the granting of stock options, SARs, restricted stock, and RSUs to individuals who were not previously employees of Energy Vault, or following a bona fide period of non-employment, as inducement material to such individuals entering into employment with Energy Vault. Shares of common stock underlying awards that expire or are forfeited or canceled will again be available for issuance under the 2022 Inducement Plan. 8.0 million shares of the Company’s common stock are reserved for issuance under the 2022 Inducement Plan.
2025 Inducement Plan
In February 2025, the Board approved the Company’s 2025 Inducement Plan, which provides for the granting of stock options, SARs, restricted stock, and RSUs to individuals who were not previously employees of Energy Vault, or following a bona fide period of non-employment, as inducement material to such individuals entering into employment with Energy Vault. Shares of common stock underlying awards that expire or are forfeited or canceled will again be available for issuance under the 2025 Inducement Plan. 8.0 million shares of the Company’s common stock are reserved for issuance under the 2025 Inducement Plan.
Stock Option Activity
Stock option activity for the three months ended March 31, 2025 was as follows (amounts in thousands, except per share data):
| Options Outstanding | |||||||||||||||||||||||
| Number of Options | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Balance as of December 31, 2024 | $ | $ | |||||||||||||||||||||
| Stock options granted | — | — | |||||||||||||||||||||
| Stock options exercised | — | — | |||||||||||||||||||||
| Stock options forfeited, canceled, or expired | — | — | |||||||||||||||||||||
Balance as of March 31, 2025 | |||||||||||||||||||||||
Options exercisable as of March 31, 2025 | |||||||||||||||||||||||
Options vested and expected to vest as of March 31, 2025 | $ | $ | |||||||||||||||||||||
As of March 31, 2025, total unrecognized stock-based compensation expense related to unvested option awards that are expected to vest was $3.1 million. The weighted-average period over which such stock-based compensation expense will be recognized is approximately 1.6 years.
The aggregate intrinsic values of options outstanding, exercisable, vested and expected to vest were calculated as the difference between the exercise price of the options and the closing stock price of the Company’s common stock on the NYSE as of March 31, 2025.
19
ENERGY VAULT HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Restricted Stock Units
RSU activity for the three months ended March 31, 2025 was as follows (amounts in thousands, except per share data):
| Number of RSUs | Weighted Average Grant Date Fair Value per Share | ||||||||||
Nonvested balance as of December 31, 2024 | $ | ||||||||||
| RSUs granted | |||||||||||
| RSUs forfeited | ( | ||||||||||
| RSUs vested | ( | ||||||||||
Nonvested balance as of March 31, 2025 | $ | ||||||||||
As of March 31, 2025, unrecognized stock-based compensation expense related to these RSUs was $43.1 million which is expected to be recognized over the remaining weighted-average vesting period of approximately 1.7 years.
Stock-Based Compensation Expense
Total stock-based compensation expense for the three months ended March 31, 2025 and 2024 is as follows (amounts in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Sales and marketing | $ | $ | |||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Total stock-based compensation expense | $ | $ | |||||||||||||||||||||
NOTE 13. SEGMENT REPORTING
As a single reportable segment entity, the Company’s CODM uses the profit measure of net loss to allocate resources and assess performance of our business by comparing actual results to historical results and previously forecasted financial information. The measure of segment assets is reported on the condensed consolidated balance sheets as total assets.
See Note 3 for the Company’s revenue disaggregated by product line.
20
ENERGY VAULT HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table presents revenue, significant segment expenses provided to the CODM, and net loss for our consolidated segment (amounts in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Revenue | $ | $ | |||||||||
| Cost of revenue | |||||||||||
| Gross profit | |||||||||||
Significant segment expenses: (1) | |||||||||||
Non-personnel operating costs (2) | |||||||||||
Salaries and wages (3) | |||||||||||
| Stock-based compensation | |||||||||||
| Depreciation and amortization | |||||||||||
Other segment items (4) | ( | ||||||||||
| Net loss | $ | ( | $ | ( | |||||||
(1) The significant segment expense categories and amounts presented align with the segment-level information that is regularly provided to the CODM.
(2) Represents sales and marketing, research and development, and general and administrative expenses, excluding personnel related costs.
(3) Represents the costs of employees’ salaries, benefits, and payroll taxes that are reported within sales and marketing, research and development, and general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss. This amount excludes stock-based compensation expense.
(4) Represents certain other segment items that are not deemed significant segment expenses and primarily consists of provision (benefit) for credit losses, interest income, interest expense, and other income/expense items.
NOTE 14. INCOME TAXES
The Company recognized a tax provision of $0.4 million for the three months ended March 31, 2025 and did not recognize any tax provision for the three months ended March 31, 2024. The Company has recorded a valuation allowance against substantially all of the Company’s net deferred tax assets. The Company provides for a valuation allowance when it is more likely than not that some portion of, or all of the Company’s deferred tax assets will not be realized. Due to the Company’s history of losses, the Company determined that it is not more likely than not to realize its deferred tax assets.
NOTE 15. NET LOSS PER SHARE OF COMMON STOCK
Basic and diluted net loss per share attributable to common stockholders are calculated as follows (amounts in thousands, except per share amounts):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Net loss attributable to Energy Vault Holdings, Inc. | $ | ( | $ | ( | |||||||||||||||||||
| Weighted-average shares outstanding – basic and diluted | |||||||||||||||||||||||
| Net loss per share – basic and diluted attributable to Energy Vault Holdings, Inc. | $ | ( | $ | ( | |||||||||||||||||||
There were no
21
ENERGY VAULT HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following outstanding balances of common share equivalent securities have been excluded from the calculation of diluted weighted-average common shares outstanding because the effect is anti-dilutive for the three months ended March 31, 2025 and 2024 (amounts in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Private warrants | |||||||||||
| Stock options | |||||||||||
| RSUs | |||||||||||
| Total | |||||||||||
In connection with the reverse recapitalization in 2022, eligible Energy Vault stockholders immediately prior to the closing of the transaction obtained a contingent right to receive 9.0 million shares of the Company’s common stock (“Earn-Out Shares”) upon the Company’s common stock quoted on the NYSE equaling or exceeding certain specified prices for any 20 trading days within a 30 consecutive day trading period (“Earn-Out Triggering Event”). 9.0 million of common stock equivalents subject to the Earn-Out Shares are excluded from the anti-dilutive table above as of March 31, 2025, as the underlying shares remain contingently issuable as the Earn-Out Triggering Events have not been satisfied.
The contingent right for Earn-Out Shares expired on May 12, 2025.
NOTE 16. COMMITMENTS AND CONTINGENCIES
Our principal commitments as of March 31, 2025 consisted primarily of obligations under operating leases, finance leases, a deferred pension, warranty liabilities, and issued purchase orders. Our non-cancelable purchase obligations as of March 31, 2025 totaled approximately $7.6 million.
Loss Contingencies:
In the ordinary course of business, the Company is regularly subject to various legal proceedings. The Company has identified certain legal matters where the Company believes an unfavorable outcome is not probable and, therefore, no reserve has been established. Although the Company currently believes that resolving claims against the Company, including claims where an unfavorable outcome is reasonably possible, will not have a material impact on the Company’s business, financial position, results of operations, or cash flows, these matters are subject to inherent uncertainties and the Company’s view of these matters may change in the future.
Warranty Liabilities:
The Company provides a limited warranty to its BESS customers assuring that the BESSs are free from defects. The Company’s limited warranties are generally for a period of or three years after the substantial completion date of a project. These warranties are considered assurance-type warranties which provide a guarantee of quality of the products. For assurance-type warranties in engineering, procurement, and construction (“EPC”) contracts, the Company records an estimate of future warranty costs over the period of construction. For assurance-type warranties in engineered equipment (“EEQ”) contracts, the Company records an estimate of future warranty costs upon the transfer of the equipment to the customer. Warranty costs are recorded as a component of cost of revenue in the Company’s condensed consolidated statements of operations and comprehensive loss.
As of March 31, 2025 and 2024, the Company accrued the below estimated warranty liabilities, respectively (amounts in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Warranty liabilities, balance at beginning of period | $ | $ | |||||||||||||||||||||
| Change in estimates | |||||||||||||||||||||||
| Costs paid or settled | ( | ( | |||||||||||||||||||||
| Warranty liabilities, balance at end of period | $ | $ | |||||||||||||||||||||
The key inputs and assumptions used in calculating the estimated warranty liability are reviewed by management each reporting period. The Company may make additional adjustments to the estimated warranty liability based on a comparison
22
ENERGY VAULT HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
of actual warranty results to expected results for significant differences or based on performance trends or other qualitative factors. If actual failure rates or replacement costs differ from our estimates in future periods, changes to these estimates may be required, resulting in increases or decreases in the estimated warranty liability, which may be material.
Letters of Credit and Bank Guarantees:
In the ordinary course of business and under certain contracts, the Company is required to post letters of credit or bank guarantees for its customers, for project performance, and for its vendors for payment guarantees. Such letters of credit or bank guarantees are generally issued by a bank or a similar financial institution. The letter of credit or bank guarantee commits the issuer to pay specified amounts to the holder of the letter of credit or bank guarantee under certain conditions. As of March 31, 2025, the Company had $14.5 million in outstanding letters of credit and $2.0 million in bank guarantees issued through the Company’s credit relationships. The Company is not aware of any material claims relating to its outstanding letters of credit or bank guarantees. $3.0 million of the Company’s restricted cash balance as of March 31, 2025 consists of cash held by banks as collateral for the Company’s letters of credit or bank guarantees.
Performance and Payment Bonds:
In the ordinary course of business, Energy Vault is required by certain customers to provide performance and payment bonds for contractual commitments related to its projects. These bonds provide a guarantee that the Company will perform under the terms of a contract and that the Company will pay its subcontractors and vendors. If the Company fails to perform under a contract or to pay its subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond. The Company must reimburse the surety for expenses or outlays it incurs. As of March 31, 2025, the Company had $110.3 million in outstanding performance and payment bonds. Subsequent to March 31, 2025, an additional $4.0 million in cash was restricted in connection with the issuance of a payment bond.
Other Bonds:
In the ordinary course of business, Energy Vault is required to obtain other bonds, such as for insurance and government payments. These bonds provide a guarantee that the Company will post the necessary reserves as required by banks and tax or licensing authorities. Additionally, bonds are issued to banks as support for letters of credit provided by those banks. As of March 31, 2025, the Company had $20.5 million in outstanding other bonds.
Tax Credit Transfer Commitment
NOTE 17. SUBSEQUENT EVENTS
NYSE Notification
On April 16, 2025, the Company was notified by the NYSE that it was not in compliance with Section 802.01C of the NYSE Listed Company Manual because the average closing price of the Company’s common stock was less than $1.00 over a consecutive 30 trading-day period. The notice did not result in the immediate delisting of the Company’s common stock from the NYSE. Under NYSE rules, Energy Vault has a period of six months from receipt of the notice to regain compliance with the NYSE minimum stock price listing requirement. The Company intends to consider available alternatives, subject to stockholder approval, to cure the stock price non-compliance. Under the NYSE’s rules, if Energy Vault determines that it will cure the stock price deficiency by taking an action that will require stockholder approval, the price condition will be deemed cured if the average closing price exceeds $1.00 per share over a 30-day trading period and the Company has a closing share price of at least $1.00 on the last day of the cure period. Energy Vault’s common stock will continue to be listed and trade on the NYSE during this cure period.
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ENERGY VAULT HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Cross Trails Bridge Loan
On May 12, 2025, the Company entered into a credit agreement with Crescent Cove Opportunity Lending, LLC (“Crescent Cove”) as lender and administrative agent, providing for a short-term loan in an aggregate principal amount of $10.0 million (Cross Trails Bridge Loan”). The Cross Trails Bridge loan bears interest at an annual rate of 24 % and matures on July 13, 2025. The Cross Trails Bridge Loan includes an original issue discount equal to 5 % of the principal amount and a structuring fee of $0.2 million. The loan is secured by substantially all of the Company’s assets in the U.S., primarily the Cross Trails BESS and excludes the Calistoga hybrid energy system, and is guaranteed by all of the Company’s U.S. subsidiaries except for CRC. Proceeds will be used for general corporate purposes and working capital.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provide information which Energy Vault’s management believes is relevant to an assessment and understanding of Energy Vault’s condensed consolidated results of operations and financial condition. The discussion should be read together with our unaudited interim condensed consolidated financial statements, the respective notes thereto, and other financial information included elsewhere in this Quarterly Report. The discussion and analysis should also be read together with the audited consolidated financial statements, the respective notes thereto, and other financial information included elsewhere in the Annual Report for the year ended December 31, 2024 filed by us with the SEC on April 1, 2025. This discussion may contain forward-looking statements based upon Energy Vault’s current expectations that involve risks, uncertainties, and assumptions. Energy Vault’s actual results may differ materially from those anticipated in these forward-looking statements. You should review the section titled “Cautionary Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements and the section titled “Risk Factors,” for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Quarterly Report. Energy Vault’s historical results are not necessarily indicative of the results that may be expected for any period in the future. Unless the context otherwise requires, all references in this Quarterly Report to “we,” “our,” “us,” “the Company,” or “Energy Vault” refer to Energy Vault Holdings, Inc., a Delaware corporation, and its subsidiaries both prior to the consummation of and following the Merger (as defined below).
Our Business
Energy Vault provides a diverse technology portfolio of turnkey energy storage platforms, including proprietary gravity, battery, and green hydrogen energy storage hardware technologies, supported by our technology-agnostic energy management system software and integration platform. In 2024, we began a multi-year transition from providing this technology portfolio solely to third parties through a build-and-transfer model or licensing model, to also taking an ownership interest in energy storage assets in select attractive markets. We believe that our experience in the build-and-transfer business, combined with our proprietary energy storage technologies and geographical footprint, uniquely positions us to build and operate storage projects with superior efficiency and reliability.
We incorporate a customer-centric, solutions-based approach toward helping utilities, independent power producers (“IPP”), and large industrial energy users reduce their energy costs while maintaining power reliability. As the global demand for electricity increases and the world transitions to an economy powered by increasingly intermittent renewable energy such as solar and wind, the ability to provide clean, reliable, and affordable electricity to a growing global population will depend heavily on the ability to store and distribute energy at appropriate times. We are striving to create a world powered by renewable resources so that everyone will have access to clean, reliable, sustainable, and affordable energy.
Key Factors and Trends Affecting our Business
We believe that our performance and future success depend upon several factors that present significant opportunities for us, but also pose risks and challenges including those discussed below and in Part I, Item 1A. “Risk Factors” of our 2024 Annual Report on Form 10-K filed with the SEC on April 1, 2025 and Part II, Item 1A. “Risk Factors” in this Quarterly Report.
Impact of Tariffs
Effective March 4, 2025, the U.S. government implemented a 20% tariff under the International Emergency Economic Powers Act (“IEEPA”) on imports from China, including lithium-ion batteries. Subsequently, on April 10, 2025, an additional 125% reciprocal tariff was imposed on Chinese-origin goods. These tariffs are in addition to the preexisting 3.4% Most-Favored-Nation (MFN) base tariff and the 7.5% Section 301 tariff applicable to lithium-ion batteries imported from China. As a result, our B-Vault products, all of which have been sourced and manufactured in China, are now subject to a cumulative U.S. import tariff burden of approximately 155.9%.
The imposition of these tariffs has materially affected our operations. Several third-party sales projects within our backlog and development pipeline have experienced delays or cancellations due to the increased costs associated with importing B-Vault products from China. In response, we are actively exploring alternative sourcing options, including vendors with manufacturing capabilities outside of China, to mitigate the impact of these tariffs. As of the filing date of this Quarterly Report, we have not successfully imported our B-Vault products from non-Chinese suppliers on an economical basis.
Should trade tensions escalate further or if additional tariffs, trade restrictions, or retaliatory measures are implemented on our products or components originating from countries outside the U.S., our ability to source B-Vault products or sell them
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at competitive prices could be adversely affected. Such developments may have a material and adverse impact on our business operations, financial results, and cash flows.
Development and Deployment Plan for Energy Storage Products
In our third-party business, we primarily rely on two models for project delivery, which are (i) EPC delivery and (ii) EEQ delivery. Under the EPC model, we generally rely on third-party EPC firms to construct our storage systems, under our supervision with dedicated teams tasked with project management. Under the EEQ model, we are responsible for the delivery of the equipment we provide, as well as resolving issues within our scope of supply.
Our cost projections for our third-party business and for our owned projects are heavily dependent upon raw materials (such as steel), equipment (such as motors, batteries, inverters, and power electronic devices), and technical and construction service providers (such as engineering, procurement, construction firms).
Energy Storage Industry
The utility-scale energy storage industry is increasing at a rapid pace, driven by increased demand for electricity, global transitions toward renewable energy, and increased focus on grid resilience.
According to a report from the U.S. Department of Energy in December 2024, electricity demand is forecasted to grow substantially in the United States over the next few decades. Electricity demand is expected to be driven primarily by new data centers, artificial intelligence, new manufacturing facilities, electric vehicles, and sector-wide electrification. In June 2024, the Australian Energy Market Operator (“AEMO”) released their Integrated System Plan (“ISP”), a development path to transition their national electricity market to net-zero by 2050. Between 2024 and 2050, the ISP anticipates that electricity consumption from the Australian electric grid will increase by approximately 80% and energy storage capacity will increase by approximately 1,500%.
Over the past decade, deployment of renewable energy resources has accelerated and there has been an industry-wide push for decarbonization, which is increasing the demand for grid-scale energy storage. A major obstacle to transitioning to renewable sources of energy such as wind and solar is the intermittent availability of these types of energy sources. Energy storage solutions are needed to balance the production intermittency of variable renewable energy to support a clean-energy future and a balanced electrical grid infrastructure. Both government mandates and companies focused on reducing energy use, cost, and emissions are expected to propel the shift to renewable sources of power.
Additionally, software solutions play a vital role in assisting energy storage owners in managing the growing complexities of renewable energy and energy storage markets. As renewable and energy storage asset portfolios expand globally, these stakeholders will need software solutions that enhance asset performance and boost revenue while reducing total ownership costs.
Our expansion of revenue depends on the ongoing adoption of energy storage solutions by our customers and our ability to source, execute, and operate energy storage projects with attractive economics. The growth of the energy storage market that we address is primarily driven by the decreasing cost of energy storage technologies, government mandates, financial incentives to reduce GHG emissions, and efforts to enhance grid stability and efficiency. These dynamics are driving demand for increased energy storage capacity and duration.
Increasing Deployment of Renewable Energy
Deployment of renewable energy resources has accelerated over the last decade, and solar and wind have become a low cost energy source. Energy storage is critical to reducing the intermittency and volatility of renewable energy generation. However, there is no guarantee that the deployment of renewable energy will occur at the rate that is expected. Inflationary pressures, supply chain disruptions, geopolitical conflicts, government regulations, and other factors could result in fluctuations in demand for and deployment of renewable energy resources, adversely affecting our revenue and ability to generate profits in the future.
Competition
The market for our products is competitive, and we may face increased competition as new and existing competitors introduce energy storage solutions and components. Furthermore, as we expand our services and digital applications in the future, we may face other competitors including software providers and hardware manufacturers that offer software solutions. If our market share declines due to increased competition or if we are not able to compete as we expect, our revenue and ability to generate profits in the future may be adversely affected.
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Inflation
In the markets in which we operate, there have been higher rates of inflation in recent years. If inflation continues to increase in our markets, it may increase our expenses that we may not be able to pass through to customers. It may also increase the costs of our products that could negatively impact their competitiveness.
Government Regulation and Compliance
Federal, state, and local government statutes and regulations concerning electricity heavily influence the market for our product and services. These statutes and regulations directly affect our owned asset business and indirectly affect our third-party sales business. These statutes and regulations often relate to electricity pricing, net metering, incentives, taxation, competition with utilities and the interconnection of customer-owned electricity generation. In the United States, governments continuously modify these statutes and regulations. Governments, often acting through state utility or public service commissions, change and adopt different rates for commercial customers on a regular basis. These changes could affect our ability to deliver cost savings to our current and future customers for the purchase of electricity.
Each of our owned installations or our customer installations must be designed, constructed, and operated in compliance with applicable federal, state and local regulations, codes, standards, guidelines, policies, and laws. To install and operate energy storage systems on its platform, we, our customers or our partners, as applicable, are required to obtain applicable permits and approvals from local authorities having jurisdiction to install energy storage systems and to interconnect the systems with the local electrical utility.
U.S. Energy Storage Regulation and Legislation
The U.S. Congress is continuously reviewing and passing various climate change proposals, incentives, regulations, and legislation that may support the energy storage industry, including in the form of tax credits and incentives. The implementation of these laws can vary greatly across administrations and take long periods of time before the full extent of regulations are adopted. We cannot guarantee we will realize any or all of the anticipated benefits or incentives under any such enacted regulations or legislation, including the IRA. IRS private letter ruling 201809003 clarified that energy storage is eligible for federal tax credits if charged primarily by qualifying renewable resources.
The IRA adopted in August 2022 contains a number of tax incentive provisions that directly support the adoption of energy storage solutions and services. Before the enactment of the IRA, the Section 48 ITC did not apply to standalone energy storage projects. The IRA added Section 48(a)(3)(A)(ix) to allow a taxpayer that placed in service a standalone energy storage technology with a minimum capacity of 5 kWh to claim the ITC, if certain requirements are met. Energy storage technology that is placed in service after December 31, 2022 and started construction for U.S. federal income tax purposes prior to January 1, 2025, may claim the ITC under Section 48(a). To qualify for the full ITC rate of 30%, an energy storage project will need to satisfy certain labor requirements relating to the payment of prevailing wages and use of apprentices, or have started construction for U.S. federal income tax purposes prior to January 29, 2023. If these requirements are not met, the project may be eligible only for a base rate of 6%. The existing energy ITC will be replaced by a CEITC or “tech neutral” regime, which is available for any investment in a qualified storage facility that is placed in service after calendar year 2024 (certain labor requirements will still apply). The IRA also included bonus credits associated with the ITC, which may be relevant to our business. There is a 10% bonus credit for projects located in certain areas designated as energy communities, an additional 10% bonus credit for projects utilizing products which collectively meet certain minimum domestic content requirements, and a 10% or 20% bonus credit for certain projects less than 5 MW located in a low-income community or that serve low-income community members. Finally, the IRA included a manufacturing production tax credit for specific renewable energy and battery storage related products and components manufactured in the U.S.
We believe we may be positioned to benefit from the bonus credits related to the energy storage systems we intend to own and operate and will stimulate demand for our customers to invest in more energy storage systems. To date, the IRA regulations, proposed regulations and/or guidance issued by the U.S. Department of Treasury and Internal Revenue Service associated with these various tax credits, including but not limited to the ITC, domestic content bonus credit, energy community bonus credit, and manufacturing production tax credit have provided some substantive clarity. However, we are continuing to seek additional clarity on certain aspects of IRA guidance and/or regulation via updated guidance and future proposed and/or final regulations. The potential impact from the change in the U.S. presidential administration to any existing regulations, including any potential ramifications for the IRA and the various tax incentive provisions as well as other government and tax incentives for clean energy and energy storage in the United States, is uncertain at this stage. Some of the guidance and rulemaking enacted under the Biden Administration could be changed or modified by the Trump Administration, creating uncertainty with respect to implementation of the IRA. It remains uncertain whether Congress will modify or repeal the IRA in connection with the budget reconciliation process or otherwise. Accordingly, no assurance can be given that our projects will be eligible for tax credits or other benefits under the IRA.
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Recent Developments
Between October 2024 and March 2025, the Company agreed to loan Stoney Creek BESS Pty Ltd (“Stoney Creek”) up to AUD 8.8 million (or $5.5 million) to assist them in paying for BESS project development related costs. The Company also agreed to provide Stoney Creek a bank guarantee of up to AUD 2.5 million (or $1.6 million) as security for a performance bond. On March 17, 2025, the Company entered into a share purchase agreement to acquire Stoney Creek for a nominal purchase price of one hundred Australian dollars. The closing of the acquisition is subject to regulatory review and approval in Australia. Upon closing of the acquisition, the carrying value of the note receivable is expected to be incorporated as part of the total consideration.
On March 31, 2025, the Company entered into a license and royalty agreement with a publicly listed infrastructure development company in India. The agreement is expected to accelerate the manufacturing and deployment of Energy Vault’s B-Vault BESS technology alongside the Company’s VaultOS EMS software, in the Indian market. The agreement includes upfront licensing fees paid to Energy Vault, in addition to long-term recurring royalty revenue streams.
On April 16, 2025, the Company was notified by the NYSE that it was not in compliance with Section 802.01C of the NYSE Listed Company Manual because the average closing price of the Company’s common stock was less than $1.00 over a consecutive 30 trading-day period. The notice did not result in the immediate delisting of the Company’s common stock from the NYSE. Under NYSE rules, Energy Vault has a period of six months from receipt of the notice to regain compliance with the NYSE minimum stock price listing requirement. The Company intends to consider available alternatives, subject to stockholder approval, to cure the stock price non-compliance. Under the NYSE’s rules, if Energy Vault determines that it will cure the stock price deficiency by taking an action that will require stockholder approval, the price condition will be deemed cured if the average closing price exceeds $1.00 per share over a 30-day trading period and the Company has a closing share price of at least $1.00 on the last day of the cure period. Energy Vault’s common stock will continue to be listed and trade on the NYSE during this cure period.
Key Operating Metrics
The following tables present our key operating metrics for the periods presented (amounts in thousands unless otherwise noted):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| New bookings | $ | 225,729 | $ | — | |||||||||||||||||||
| Cancellations | — | — | |||||||||||||||||||||
| Net bookings | $ | 225,729 | $ | — | |||||||||||||||||||
| New bookings (in MWh) | 1,004 | — | |||||||||||||||||||||
| Cancellations (in MWh) | — | — | |||||||||||||||||||||
| Net bookings (in MWh) | 1,004 | — | |||||||||||||||||||||
| March 31, 2025 | December 31, 2024 | ||||||||||
| Developed Pipeline | $ | 2,131,300 | $ | 2,085,908 | |||||||
| Developed Pipeline (in MWh) | 8,797 | 9,194 | |||||||||
| Backlog | $ | 648,043 | $ | 433,886 | |||||||
| Backlog (in MWh) | 2,577 | 1,574 | |||||||||
Bookings
Net bookings represent the total aggregate contract value and total MWhs to be delivered from customer contracts signed during the period (i.e., gross bookings), net of the total aggregate value and total MWhs of contracts that were cancelled during the period. The aggregate contract value includes any potential future variable payments from tolling and offtake arrangements that the Company believes are probable of being realized. Probable future variable payments are forecasted by an independent third-party firm using simulation software that factors in current and projected energy market dynamics, historical and forecasted volatility, and location specific data. The Company considers the low-end simulation results to be probable. Potential future IP royalties are not included in bookings. Due to the long-term nature of our contracts, bookings
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are a key metric that allows us to understand and evaluate the growth of our Company and our estimated future revenue related to our customer contracts.
Developed Pipeline
Developed pipeline represents uncontracted potential revenue from third-party projects where potential prospective customers have either awarded the Company a project or shortlisted the Company for consideration. It also includes potential tolling revenue from projects where the Company is in advanced negotiations to build, own, and operate energy storage systems. Developed pipeline is an internal management metric that we construct using information from our global sales team and is monitored by management to understand the potential anticipated growth of our Company and to estimate potential future revenue. Developed pipeline is influenced by the prevailing foreign exchange rates and equipment prices and may vary from period to period if these inputs change.
Developed pipeline may not generate margins equal to our historical operating results. We have only recently begun to track our developed pipeline on a consistent basis as a performance measure, and as a result, we do not have significant experience in determining the level of realization that we may achieve on these potential contracts. Our customers may experience project delays or cancel orders as a result of external market factors and economic or other factors beyond our control.
Backlog
Backlog represents contracted but unrecognized revenue from projects and services yet to be completed, unrecognized revenue or other income from IP licensing agreements, and unrecognized revenue from tolling arrangements for projects operated by Energy Vault or affiliates. Backlog includes any potential future variable payments from tolling and offtake arrangements that the Company believes is probable of being realized. Probable future variable payments are forecasted by an independent third-party firm using simulation software that factors in current and projected energy market dynamics, historical and forecasted volatility, and location specific data. The Company considers the low-end simulation results to be probable. Potential future IP royalties are not included in backlog. Backlog is a common measurement used in our industry. Our methodology for determining backlog may not, however, be comparable to the methodologies used by others.
We cannot guarantee that our bookings, backlog, or developed pipeline will result in actual revenue in the originally anticipated period, or at all. Our customers may experience project delays or cancel orders as a result of external market factors and economic or other factors beyond our control. Many of our projects require government approvals, third-party financing, and other contingencies, many of which are beyond our control. If our bookings, backlog, or developed pipeline fail to result in revenue as anticipated or in a timely manner, we could experience a reduction in revenue, profitability, and liquidity. See “Risk Factors - Our total backlog, bookings, and developed pipeline may not be indicative of our future revenue, which could have a material impact on our business, financial condition, and results of operations” in the Annual Report for the year ended December 31, 2024 filed by us with the SEC on April 1, 2025.
Key Components of Results of Operations
Revenue
The Company generates revenue from the sale of our energy storage products, the licensing of the Company’s software solutions and IP, and from long-term service agreements to operate and maintain customer owned energy systems. To date, the Company has primarily generated revenue from the sale of our BESSs and from licensing our EVx technology. In addition to these sources of revenue, in the future we expect to generate revenue from tolling arrangements in connection with energy storage systems that we intend to own and operate.
The Company sells its BESSs under (i) an EPC model and (ii) an EEQ model. When the Company sells a BESS under the EPC model, the Company recognizes revenue over time as we transfer control of our product to the customer. Under an EEQ model, the Company recognizes revenue related to equipment sales upon delivery to the customer and service revenue over time as we provide specialized technical services to the customer.
When the Company licenses its IP, revenue is recognized at the point in time at which the customer obtains control of the licensed technology. When the Company licenses its software solutions or provides operation and maintenance services, the transaction price for each contract is recognized as revenue on a straight-line basis over the term of the contract.
Our revenue is affected by changes in the price, volume, and mix of products and services purchased by our customers, which is driven by the demand of our products, geographic mix of our customers, strength of competitor’s product offerings, and the availability of government incentives to the end-users of our products.
Our revenue growth is dependent on continued growth in the number of energy storage systems constructed each year and our ability to increase our share of demand in the geographic regions where we currently compete and plan to compete in
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the future. Additionally, our revenue growth is dependent on our ability to find attractive projects to build, own, and operate.
Cost of Revenue
Cost of revenue primarily consists of product costs, materials and supplies, and costs associated with subcontractors, direct labor, and product warranties. Product costs include the cost of purchased equipment, as well as tariffs and shipping costs directly attributable to that equipment.
Our cost of revenue is affected by underlying costs of equipment and materials such as batteries, inverters, enclosures, transformers, and cables, as well as the cost of subcontractors to provide construction services. We do not currently hedge against changes in the price of raw materials as we do not purchase raw materials. We purchase energy storage system components from our suppliers.
Gross Profit and Gross Profit Margin
Gross profit and gross profit margin may vary from period to period due to the timing of transferring control of significant uninstalled equipment to customers under contracts to sell energy storage systems. When control of significant uninstalled equipment is transferred to customers in a EPC project, the Company recognizes revenue in an amount equal to the cost of that equipment. The profit margin inherent in these materials is deferred until the Company fulfills its obligation to install the materials during construction of the energy storage systems. Generally, margins in an EPC project are lower in the beginning and middle stages as the equipment is delivered, and margins are higher in the later stages as the Company performs the construction, installation, and commissioning services. As a result, gross profit and gross profit margin will vary from period to period.
Additionally, gross profit and gross profit margin may vary from period to period due to our sales volume, product prices, product costs, product mix, geographical mix, and change in estimates for warranty liabilities.
Sales and Marketing (“S&M”) Expenses
S&M expenses consist primarily of internal personnel-related costs for marketing, sales, and related support teams, as well as external costs such as professional service fees, trade shows, marketing and sales-related promotional materials, public relations expenses, website operating and maintenance costs. Personnel-related expenses include salaries, benefits, and stock-based compensation expenses.
Research and Development (“R&D”) Expenses
R&D expenses consist primarily of internal and external expenses incurred in connection with our research activities and development programs that include materials costs directly related to product development, testing and evaluation costs, construction costs including labor and transportation of material, overhead related costs and other direct expenses consisting of personnel-related expenses and consulting expenses relating to study of product safety, reliability and development. Personnel-related expenses consist of salaries, benefits, and stock-based compensation expense.
General and Administrative (“G&A”) Expenses
G&A expenses consist of information technology expenses, legal and professional fees, travel costs, and personnel-related expenses for our corporate, executive, finance, and other administrative functions, including expenses for professional and contract services. Personnel-related expenses consist of salaries, benefits, and stock-based compensation expense. To a lesser extent, general and administrative expenses include investor relations costs, insurance costs, rent, office expenses, and maintenance costs.
Provision (Benefit) for Credit Losses
Provision (Benefit) for credit losses represents the expense (benefit) recognized to account for potential losses on accounts receivable, contract assets, and customer financing receivable due to customer defaults or credit deterioration. This provision reflects management’s estimate of expected credit losses based on historical trends and forward-looking assessments.
Depreciation and Amortization Expense
Depreciation and amortization expense consists of costs associated with property and equipment, and amortization of intangibles. We expect to invest in additional property, equipment, and other assets as we construct and own energy storage systems, which will result in additional depreciation expense in the future.
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Interest Income
Interest income consists of interest income from our money market funds, interest-bearing savings accounts, customer financing receivable, and convertible note receivable.
Results of operations
Consolidated Comparison of Three Months Ended March 31, 2025 to March 31, 2024
The following table sets forth our results of operations for the periods indicated (amounts in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 8,534 | $ | 7,759 | $ | 775 | |||||||||||||||||||||||||||||||||||||||||
| Cost of revenue | 3,658 | 5,691 | (2,033) | ||||||||||||||||||||||||||||||||||||||||||||
| Gross profit | 4,876 | 2,068 | 2,808 | ||||||||||||||||||||||||||||||||||||||||||||
| Operating Expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
| Sales and marketing | 4,145 | 4,170 | (25) | ||||||||||||||||||||||||||||||||||||||||||||
| Research and development | 3,824 | 6,966 | (3,142) | ||||||||||||||||||||||||||||||||||||||||||||
| General and administrative | 17,506 | 15,353 | 2,153 | ||||||||||||||||||||||||||||||||||||||||||||
| Benefit for credit losses | (11) | (89) | 78 | ||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 305 | 295 | 10 | ||||||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | 25,769 | 26,695 | (926) | ||||||||||||||||||||||||||||||||||||||||||||
| Loss from operations | (20,893) | (24,627) | 3,734 | ||||||||||||||||||||||||||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | (95) | (8) | (87) | ||||||||||||||||||||||||||||||||||||||||||||
| Interest income | 315 | 1,826 | (1,511) | ||||||||||||||||||||||||||||||||||||||||||||
| Other income (expense), net | (118) | 1,670 | (1,788) | ||||||||||||||||||||||||||||||||||||||||||||
| Loss before income taxes | $ | (20,791) | $ | (21,139) | $ | 348 | |||||||||||||||||||||||||||||||||||||||||
Revenue
The Company recognized revenue for the product and service categories as follows for the three months ended March 31, 2025 and 2024 (amounts in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Sale of energy storage products | $ | 4,891 | $ | 7,725 | |||||||||||||||||||
| Operation and maintenance services | 276 | — | |||||||||||||||||||||
| Software licensing | 112 | — | |||||||||||||||||||||
| IP licensing | 3,255 | — | |||||||||||||||||||||
| Other | — | 34 | |||||||||||||||||||||
| Total revenue | $ | 8,534 | $ | 7,759 | |||||||||||||||||||
Revenue increased by $0.8 million to $8.5 million for the three months ended March 31, 2025, compared to $7.8 million for the same period in 2024. The increase was driven by $3.6 million in revenue generated from IP licensing, operation and maintenance services, and software licensing as those revenue streams did not have comparable amounts in the prior-year period. The IP licensing revenue relates to the Company’s agreement to license its B-Vault IP to an Indian infrastructure company. These increases were partially offset by a decline of $2.8 million in energy product storage sales.
Revenue from two customers accounted for 55% and 38% of total revenue for the three months ended March 31, 2025 and revenue from two customers accounted for 80% and 14% of total revenue for the three months ended March 31, 2024.
Cost of Revenue
Cost of revenue decreased by $2.0 million to $3.7 million for the three months ended March 31, 2025, compared to $5.7 million for the same period in 2024. The decrease was primarily due to lower sales of energy storage products.
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Gross Profit and Gross Profit Margin
Gross profit was $4.9 million and $2.1 million for the three months ended March 31, 2025 and 2024, respectively, and gross profit margin was 57.1% and 26.7%, respectively. The improvement in gross profit and gross margin was primarily driven by IP licensing revenue, which did not incur any cost of sales.
Sales and Marketing Expenses
Sales and marketing expenses remained relatively flat at $4.1 million for the three months ended March 31, 2025, compared to $4.2 million for the same period in 2024.
Research and Development Expenses
Research and development expenses decreased by $3.1 million to $3.8 million for the three months ended March 31, 2025, compared to $7.0 million for the same period in 2024. The decrease was primarily due to reductions of $2.4 million in personnel-related expenses, $0.5 million in software expenses, and $0.1 million in engineering costs, driven mainly by cost-control measures and lower R&D headcount.
General and Administrative Expenses
General and administrative expenses increased by $2.2 million to $17.5 million for the three months ended March 31, 2025, compared to $15.4 million for the same period in 2024. The increase was primarily due to a $2.2 million increase in personnel-related expenses resulting from higher G&A headcount and retention bonuses.
Benefit for Credit Losses
Benefit for credit losses was relatively flat at $11 thousand and $0.1 million for the three months ended March 31, 2025 and 2024, respectively.
Depreciation and Amortization Expense
Depreciation and amortization expense was $0.3 million for each of the three months ended March 31, 2025 and 2024.
Interest Income
Interest income decreased by $1.5 million to $0.3 million for the three months ended March 31, 2025, compared to $1.8 million for the same period in 2024. The decrease was primarily due to lower average cash balances during the three months ended March 31, 2025, compared to the same period in 2024.
Other Income (Expense), Net
Other expense, net was $0.1 million for the three months ended March 31, 2025, compared to other income, net of $1.7 million for the same period in 2024, representing a year-over-year change of $1.8 million. The change was primarily due to a $1.5 million gain recognized in the first quarter of 2024 related to the derecognition of a related-party contract liability, for which there was no comparable gain the first quarter of 2025.
Liquidity and Capital Resources
Sources of Liquidity
Since inception, Energy Vault has financed its net cash used in operating and investing activities primarily through the issuance and sale of equity, as well as proceeds from the reverse recapitalization and private investment in public equity transaction completed in 2022.
As part of our ongoing business operations, the Company had a sales backlog of $648.0 million as of March 31, 2025. Management expects this backlog to contribute to the future funding of our business, supported by a robust developed pipeline, which we anticipate to convert into additional contracted backlog as new agreements are executed.
To support non-cash backed performance bonding and surety obligations required under project EPC agreements, the Company partners globally with Marsh to access bonding and surety instruments issued by top-rated insurance firms. As of March 31, 2025, Energy Vault maintained a bonding capacity exceeding $1.0 billion for new projects.
Energy Vault has historically incurred negative operating cash flows and operating losses and may continue to incur operating losses in the future. The Company may seek to raise additional capital through combinations of equity and/or debt financings, subject to prevailing market conditions. Issuance of equity securities could result in dilution to existing stockholders and may include rights, preferences, or privileges senior to those of the Company’s common stock. Separately, the Company has announced its intention to raise preferred equity in connection with project-specific financing
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vehicles. These vehicles are expected to be non-dilutive to common stockholders and would be directly tied to individual project cash flows.
The Company has raised funds through debt financing secured by one project owned by the Company, and the resulting debt ranks senior to the Company’s common equity. If the Company raises additional funds through the issuance of debt securities, such instruments could also rank senior to common equity and may include covenants or terms that impose significant restrictions on operations. Volatility in the credit markets and broader financial services sector could impact the availability and cost of both debt and equity financing in the future.
Management believes that its cash, cash equivalents, and restricted cash on hand as of the filing date of this Quarterly Report will be sufficient to fund our operating activities for at least the next twelve months without regard to any cash proceeds we may receive in the future upon the exercise of our private warrants.
The exercise price for our private warrants is $11.50 per warrant, subject to certain specified adjustments. To the extent that the price of our common stock exceeds $11.50 per share, it is more likely that our private warrant holders will exercise their warrants. To the extent that the price of our common stock declines, including a decline below $11.50 per share, it is less likely that our private warrant holders will exercise their warrants.
Tax Credit Transfer Commitment
On March 28, 2025, the Company entered into a Tax Credit Transfer Commitment, on behalf of its wholly owned subsidiary companies, with a third-party purchaser pursuant to which the Company agreed to sell certain ITCs generated by the Calistoga Resiliency Center hybrid energy storage system, the Cross Trails BESS, and the Snyder CDU that are anticipated to be placed in service in 2025. The Tax Credit Transfer commitment is subject to certain conditions set forth therein, and requires the Company to incur the remaining associated capital expenditures to complete the projects (via internal sources or external sources such as project financing). The third-party purchaser has agreed to purchase on or before December 15, 2025, all the eligible ITCs generated by these projects, in an amount to be finalized subject to final cost segregation reports, which management believes will be approximately $39.9 million, net of fees, across all three projects.
ATM Facility and Equity Purchase Agreement
On November 12, 2024, we entered into an open market sales agreement (“Sales Agreement”) with Jefferies LLC, as sales agent (the “Sales Agent”), pursuant to which we may, from time to time, sell shares of our common stock, having an aggregate offering price of up to $50.0 million through the Sales Agent under an “at-the-market” equity offering program. We may seek, from time to time, to raise additional capital either under the Sales Agreement or otherwise.
On March 31, 2025, we entered into an Equity Purchase Agreement with an Equity Investor. Pursuant to the Equity Purchase Agreement, the Company has the right at its sole discretion, but not the obligation, to sell to the Equity Investor, and the Equity Investor is obligated to purchase, up to $25.0 million of newly issued shares of the Company’s common stock, from time to time during the term of the Equity Purchase Agreement, subject to certain limitations and conditions. The Company expects to issue the Equity Investor shares of our common stock equivalent to 0.3% of our outstanding common stock as of March 31, 2025 to maintain the right to sell shares to the Equity Investor at a market discount (the “Commitment Shares”). The Equity Purchase Agreement contains customary representations, warranties and agreements by us, as well as customary indemnification obligations of the Company. Pursuant to the terms of the Equity Purchase Agreement, we have agreed to enter into a Registration Rights Agreement with the Equity Investor, pursuant to which, among other things, the Company will provide the Equity Investor with customary registration rights with respect to the Commitment Shares and the shares issuable pursuant to the Equity Purchase Agreement.
The securities to be offered pursuant to the Equity Purchase Agreement will be offered pursuant to our effective S-3/A shelf registration statement (File No. 333-273089), which was filed with the SEC on July 14, 2023 and declared effective on July 20, 2023, or a registration statement that will be filed with the SEC promptly after the execution of the Registration Rights Agreement.
CRC Bridge Loan
On March 31, 2025, CRC, a wholly-owned subsidiary of the Company, entered into a $27.8 million credit agreement with Jefferies, as administrative agent, collateral agent, and lender. The CRC Bridge Loan was intended to provide interim financing until long-term debt could be arranged. The CRC Bridge Loan carried a 9.5% annual interest rate and had a scheduled maturity date of April 23, 2025. After deducting closing fees, net proceeds totaled $26.8 million. The loan
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proceeds were included in the line item, restricted cash, current portion in the condensed consolidated balance sheet as of March 31, 2025.
On April 4, 2025, the Company refinanced the full outstanding balance of the CRC Bridge Loan through the issuance of $27.8 million in CRC Senior Notes (as described below).
CRC Senior Notes
On April 4, 2025, CRC issued $27.8 million of senior notes (“CRC Senior Notes”), with Eagle Point Credit as lender and Jefferies serving as agent for the transaction. The CRC Senior Notes were priced at 99.25% of par, resulting in net proceeds of $27.6 million.
The CRC Senior Notes bear interest at 12.5% per annum until the earlier of (i) the Company’s receipt of any tax credit transfer proceeds and (ii) December 31, 2025, and thereafter at a rate of 9.50% per annum. The CRC Senior Notes are senior secured obligations of CRC, backed by a first-priority pledge of all CRC assets and equity interests. The CRC Senior Notes include customary affirmative and negative covenants, including minimum cash reserves and a minimum debt service coverage ratio.
Principal and interest are payable semi-annually, with installments due each February 28 and August 31. The first principal payment of $12.9 million is due on August 31, 2025, with subsequent payments as set forth in the financing agreement. A final balloon payment of $7.0 million is due at maturity on April 4, 2032.
The Company may, at its option, redeem all or a portion of the CRC Senior Notes prior to maturity, subject to specified call protection provisions and any prepayment premiums set forth in the agreement. In the event of a change of control, the Company may be required to offer to repurchase the notes at a specified price. The proceeds of the CRC Senior Notes are restricted until the hybrid energy storage system in Calistoga, California is placed into service.
Cross Trails Bridge Loan
On May 12, 2025, the Company entered into a credit agreement with Crescent Cove Opportunity Lending, LLC (“Crescent Cove”) as lender and administrative agent, providing for a short-term loan in an aggregate principal amount of $10.0 million (Cross Trails Bridge Loan”). The Cross Trails Bridge loan bears interest at an annual rate of 24% and matures on July 13, 2025. The Cross Trails Bridge Loan includes an original issue discount equal to 5% of the principal amount and a structuring fee of $0.2 million. The loan is secured by substantially all of the Company’s assets in the U.S., primarily the Cross Trails BESS and excludes the Calistoga hybrid energy system, and is guaranteed by all of the Company’s U.S. subsidiaries except for CRC. Proceeds will be used for general corporate purposes and working capital.
Cash, Cash Equivalents, and Restricted Cash
The following table summarizes our cash, cash equivalents, and restricted cash balances as of March 31, 2025 and December 31, 2024 (amounts in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||
| Cash and cash equivalents | $ | 17,822 | $ | 27,091 | |||||||
| Restricted cash | 29,333 | 2,982 | |||||||||
| Total cash, cash equivalents, and restricted cash | $ | 47,155 | $ | 30,073 | |||||||
Our cash equivalents are highly liquid investments purchased with an original or remaining maturities of three months or less. $26.3 million of our restricted cash balance as of March 31, 2025 was attributable to the CRC Bridge Loan. The remaining restricted cash balance was primarily held by banks as collateral for the Company’s letters of credit.
Contractual Obligations
Our principal commitments as of March 31, 2025 consisted primarily of obligations under operating leases, finance leases, a deferred pension, warranty liabilities, and issued purchase orders. Our non-cancellable purchase obligations as of March 31, 2025 totaled approximately $7.6 million.
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Cash Flows
The following table summarizes cash flows from operating, investing, and financing activities for the periods indicated (amounts in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net cash (used in) provided by operating activities | $ | (2,730) | $ | 947 | |||||||
| Net cash used in investing activities | (7,313) | (8,768) | |||||||||
| Net cash provided by (used in) financing activities | 27,060 | (678) | |||||||||
| Effects of exchange rate changes on cash | 65 | (272) | |||||||||
| Net increase (decrease) in cash | $ | 17,082 | $ | (8,771) | |||||||
Operating Activities
Cash used in operating activities was $2.7 million for the three months ended March 31, 2025, compared to cash provided by operating activities of $0.9 million for the same period in 2024.
For the three months ended March 31, 2025, cash used in operating activities reflected a net loss of $21.2 million, adjusted for $9.6 million in non-cash charges, a $6.2 million increase in operating liabilities, and a $2.6 million decrease in operating assets. Significant non-cash items included $9.3 million in stock-based compensation expense and $0.3 million in depreciation and amortization expense. The increase in operating liabilities was driven by a $15.0 million customer deposit and a $1.6 million increase in deferred revenue, partially offset by a $9.9 million decrease in accounts payable and accrued expenses. The customer deposit relates to potential third-party projects to sell B-Vaults, but the deposit is refundable if Energy Vault or the potential customer choose not to proceed with the projects. The increase in deferred revenue relates to advance customer payments for ongoing projects. The decrease in operating assets was driven by a $10.6 million decrease in accounts receivable, partially offset by a $5.6 million increase in advances to suppliers and a $1.7 million increase in prepaid and other current assets. The change in cash flows from operating activities for the three months ended March 31, 2025, compared to the same period in 2024, was primarily due to lower cash collections from customers, as our beginning accounts receivable balance in the first quarter of 2025 was significantly lower than it was in the first quarter of 2024.
Investing Activities
During the three months ended March 31, 2025 and 2024, cash used in investing activities totaled $7.3 million and $8.8 million, respectively.
Cash used in investing activities for the three months ended March 31, 2025 consisted of $6.8 million for the purchase of property and equipment, primarily related to the construction of the Snyder CDU, Cross Trails BESS, and the hybrid energy storage system being constructed in Calistoga, California. Additionally, the Company loaned Stoney Creek $0.5 million during the three months ended March 31, 2025.
The decrease in cash used in investing activities for the three months ended March 31, 2025, compared to the same period in 2024, is due to a decrease in cash outflows for the purchase of property and equipment.
Financing Activities
During the three months ended March 31, 2025, cash provided by financing activities totaled $27.1 million, compared to cash used in financing activities of $0.7 million for the three months ended March 31, 2024.
For the three months ended March 31, 2025, cash provided by financing activities was primarily attributable to $26.8 million in net proceeds from the CRC Bridge loan and $1.5 million in proceeds from insurance premium financings, partially offset by the payment of $0.7 million in debt issuance costs for the CRC Bridge Loan and $0.5 million in insurance premium financing repayments. The year-over-year change in financing cash flows primarily reflects the proceeds from the new financing transactions in the first quarter of 2025. There were no such comparable transactions in the first quarter of 2024.
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Non-GAAP Financial Measures
To complement our condensed consolidated statements of operations and comprehensive loss, we use non-GAAP financial measures of adjusted S&M expenses, adjusted R&D expenses, adjusted G&A expenses, adjusted operating expenses, adjusted net loss, and adjusted EBITDA. Management believes that these non-GAAP financial measures complement our GAAP amounts and such measures are useful to securities analysts and investors to evaluate our ongoing results of operations when considered alongside our GAAP measures. The presentation of these non-GAAP measures is not meant to be considered in isolation or as an alternative to other measures of financial performance calculated in accordance with GAAP. These non-GAAP measures and their reconciliation to GAAP financial measures are shown below.
The following table provides a reconciliation from GAAP S&M expenses to non-GAAP adjusted S&M expenses (amounts in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| S&M expenses (GAAP) | $ | 4,145 | $ | 4,170 | |||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Stock-based compensation expense | 1,045 | 1,715 | |||||||||||||||||||||
| Adjusted S&M expenses (non-GAAP) | $ | 3,100 | $ | 2,455 | |||||||||||||||||||
The following table provides a reconciliation from GAAP R&D expenses to non-GAAP adjusted R&D expenses (amounts in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| R&D expenses (GAAP) | $ | 3,824 | $ | 6,966 | |||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Stock-based compensation expense | 1,368 | 2,227 | |||||||||||||||||||||
| Adjusted R&D expenses (non-GAAP) | $ | 2,456 | $ | 4,739 | |||||||||||||||||||
The following table provides a reconciliation from GAAP G&A expenses to non-GAAP adjusted G&A expenses (amounts in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| G&A expenses (GAAP) | $ | 17,506 | $ | 15,353 | |||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Stock-based compensation expense | 6,863 | 5,742 | |||||||||||||||||||||
| Adjusted G&A expenses (non-GAAP) | $ | 10,643 | $ | 9,611 | |||||||||||||||||||
The following table provides a reconciliation from GAAP operating expenses to non-GAAP operating expenses (amounts in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Operating expenses (GAAP) | $ | 25,769 | $ | 26,695 | |||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Stock-based compensation expense | 9,276 | 9,684 | |||||||||||||||||||||
| Depreciation and amortization | 305 | 295 | |||||||||||||||||||||
| Benefit for credit losses | (11) | (88) | |||||||||||||||||||||
| Adjusted operating expenses (non-GAAP) | $ | 16,199 | $ | 16,804 | |||||||||||||||||||
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The following table provides a reconciliation from net loss attributable to Energy Vault Holdings, Inc. to non-GAAP adjusted net loss, (amounts in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Net loss attributable to Energy Vault Holdings, Inc. (GAAP) | $ | (21,136) | $ | (21,139) | |||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Stock-based compensation expense | 9,276 | 9,684 | |||||||||||||||||||||
| Gain on derecognition of contract liability | — | (1,500) | |||||||||||||||||||||
| Benefit for credit losses | (11) | (88) | |||||||||||||||||||||
| Foreign exchange losses | 133 | 60 | |||||||||||||||||||||
| Adjusted net loss (non-GAAP) | $ | (11,738) | $ | (12,983) | |||||||||||||||||||
The following table provides a reconciliation from net loss to non-GAAP adjusted EBITDA, with net loss being the most directly comparable GAAP measure (amounts in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Net loss attributable to Energy Vault Holdings, Inc. (GAAP) | $ | (21,136) | $ | (21,139) | |||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Interest income, net | (220) | (1,818) | |||||||||||||||||||||
| Provision for income taxes | 383 | — | |||||||||||||||||||||
| Depreciation and amortization | 305 | 295 | |||||||||||||||||||||
| Stock-based compensation expense | 9,276 | 9,684 | |||||||||||||||||||||
| Gain on derecognition of contract liability | — | (1,500) | |||||||||||||||||||||
| Benefit for credit losses | (11) | (88) | |||||||||||||||||||||
| Foreign exchange losses | 133 | 60 | |||||||||||||||||||||
| Adjusted EBITDA (non-GAAP) | $ | (11,270) | $ | (14,506) | |||||||||||||||||||
We present adjusted EBITDA, which is net loss excluding adjustments that are outlined in the quantitative reconciliation provided above, as a supplemental measure of our performance and because we believe this measure is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. The items excluded from adjusted EBITDA are excluded in order to better reflect our continuing operations.
In evaluating adjusted EBITDA, one should be aware that in the future we may incur expenses similar to the adjustments noted above. Our presentation of adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these types of adjustments. Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net loss, operating loss, or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity.
Our adjusted EBITDA measure has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
•it does not reflect our cash expenditures, future requirements for capital expenditures, or contractual commitments;
•it does not reflect changes in, or cash requirements for, our working capital needs;
•it does not reflect stock-based compensation, which is an ongoing expense;
•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and our adjusted EBITDA measure does not reflect any cash requirements for such replacements;
•it is not adjusted for all non-cash income or expense items that are reflected in our consolidated statements of cash flows;
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•it does not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations;
•it does not reflect limitations on or costs related to transferring earnings from our subsidiaries to us; and
•other companies in our industry may calculate this measure differently than we do, limiting its usefulness as a comparative measure.
Because of these limitations, adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to use to meet our obligations. You should compensate for these limitations by relying primarily on our GAAP results and using adjusted EBITDA only supplementally.
Critical Accounting Estimates
The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
There have not been any changes to our critical accounting policies and estimates as compared to those disclosed under the caption Critical Accounting Policies and Use of Estimates in Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 2024 Annual Report on Form 10-K filed with the SEC on April 1, 2025.
Emerging Growth Company Accounting Election
We are an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended, and have irrevocably elected to take advantage of the benefits of this extended transition period for new or revised financial accounting standards. We are expected to remain an emerging growth company through the end of 2026 and expect to continue to take advantage of the benefits of the extended transition period. This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions for emerging growth companies because of the potential differences in accounting standards used.
Recently Adopted and Issued Accounting Pronouncements
Recently issued and adopted/unadopted accounting pronouncements are described in Note 2 of the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk represents the risk of loss that may impact our financial position because of adverse changes in financial market prices and rates.
Foreign Currency Risk
The majority of our contracts with customers are denominated in U.S. dollars or the Australian dollar, and certain of our definitive agreements could be denominated in other currencies, including the Euro, the Swiss franc, the South African rand, the Brazilian real, and the Saudi riyal. A strengthening of the U.S. dollar could increase the cost of our solutions to our international customers, which could adversely affect our business and results of operations.
In addition, a portion of our operating expenses are incurred outside the United States and are denominated in foreign currencies, such as the euro, the Swiss franc, and the Australian dollar, and are subject to fluctuations due to changes in foreign currency exchange rates. If we increase our exposure to foreign currencies and are not able to successfully hedge against the risks associated with currency fluctuations, our results of operations could be adversely affected.
Inflation Risk
Our operations could be adversely impacted by inflation, primarily from higher material, labor, and construction costs. While it is difficult to measure the impact of inflation for such estimates accurately, we believe, if our costs are affected due to significant inflationary pressures, we may not be able to fully offset higher costs through price increases or other corrective measures, which may adversely affect our business, financial condition, and results of operations.
Credit Risk
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Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a loss to us. Our customers include the counterparties for the sale of our energy storage products and solutions and the licensees of our IP. A loss of one or more of our significant customers, their inability to perform under their contracts, or their default in payment could harm our business and negatively impact revenue, results of operations, and cash flows. Credit policies have been approved and implemented to assess our existing and potential customers with the objective of mitigating credit losses. These policies establish guidelines, controls, and credit limits to manage credit risk within approved tolerances by mandating an appropriate evaluation of the financial condition of existing and potential customers, monitoring agency credit ratings, and by implementing credit practices that limit exposure according to the risk profiles of the counterparties. In addition, customers are required to make milestone payments based on their project’s progress. We may also, at times, require letters of credit, parent guarantees, or cash collateral when deemed necessary.
Our overall exposure may be affected positively or negatively by macroeconomic or regulatory changes that may impact our counterparties. We continuously monitor the creditworthiness of all our customers.
Commodity Price Risk
We are subject to risk from fluctuating market prices of certain commodity raw materials, including cement, steel, aluminum, and lithium, that are used in the components that we purchase from our suppliers and then as inputs to our products. Prices of these raw materials may be affected by supply restrictions or other logistic costs market factors from time to time. We do not enter into hedging arrangements to mitigate commodity risk. Significant price changes for these raw materials could reduce our operating margins if suppliers increase component prices and we are unable to recover such increases from our customers and could harm our business, financial condition, and results of operations.
Item 4. Controls and Procedures
Limitations on the Effectiveness of Controls
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation of our disclosure controls and procedures as of March 31, 2025, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of such date are effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Part II-Other Information
Item 1. Legal Proceedings
Energy Vault has been and continues to be involved in legal proceedings that arise in the ordinary course of business, the outcome of which, if determined adversely to Energy Vault, would not individually or in the aggregate have a material adverse effect on Energy Vault’s business, financial condition, and results of operations. From time to time, Energy Vault may become involved in additional legal proceedings arising in the ordinary course of its business.
Item 1A. Risk Factors
Except as set forth below, as of the date of this report, there are no material changes to our risk factors as previously disclosed in Part I, Item 1A of our 2024 Annual Report on Form 10-K filed with the SEC on April 1, 2025. You should carefully consider the risks set forth in Part 1, Item 1A, Risk Factors, of the Company’s 2024 Annual Report, and all other information included in this Quarterly Report before making an investment decision. Our business, financial condition, and results of operations could be materially and adversely affected by any of these risks or uncertainties.
An active, liquid trading market for our securities may not be sustained.
There can be no assurance that we will be able to maintain an active trading market for our common stock on the NYSE or any other exchange. On April 16, 2025, we were notified by the NYSE that we are not in compliance with Rule 802.01C of the NYSE Listed Company Manual because the average closing price of our common stock was less than $1.00 over a consecutive 30 trading-day period. The notice has no immediate impact on the listing of our common stock, which will continue to be listed and traded on the NYSE during the period allowed to regain compliance, subject to our compliance with other listing standards. We informed the NYSE that we intend to cure the deficiency and to return to compliance with the NYSE continued listing requirements. If an active market for our securities is not maintained, or if we fail to satisfy the continued listing standards of the NYSE for any reason and our securities are delisted, it may be difficult for our security holders to sell their securities without depressing the market price for our securities, or at all. Further, an inactive trading market may also impair our ability to raise capital by selling shares of capital stock, attract and motivate employees through equity incentive awards.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(a) Disclosure in lieu of reporting on a Current Report on Form 8-K.
None.
(b) Material changes to the procedures by which security holders may recommend nominees to the board of directors.
None.
(c) Insider trading arrangements and policies.
During the three months ended March 31, 2025, no director or officer of the Company adopted terminated
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Item 6. Exhibits
| Exhibit Number | Incorporated by Reference | |||||||||||||||||||||||||||||||
| Description of Document | Schedule/Form | File Number | Exhibit Number | Filing Date | ||||||||||||||||||||||||||||
| 3.1 | 8-K | 001-39982 | 3.1 | February 14, 2022 | ||||||||||||||||||||||||||||
| 3.2 | 8-K | 001-39982 | 3.2 | February 14, 2022 | ||||||||||||||||||||||||||||
| 10.1** | ||||||||||||||||||||||||||||||||
| 10.2** | ||||||||||||||||||||||||||||||||
| 10.3** | ||||||||||||||||||||||||||||||||
| 10.4** | ||||||||||||||||||||||||||||||||
| 10.5** | ||||||||||||||||||||||||||||||||
| 10.6** | ||||||||||||||||||||||||||||||||
| 31.1** | ||||||||||||||||||||||||||||||||
| 31.2** | ||||||||||||||||||||||||||||||||
| 32.1** | ||||||||||||||||||||||||||||||||
| 32.2** | ||||||||||||||||||||||||||||||||
| 101.INS** | XBRL Instance Document | |||||||||||||||||||||||||||||||
| 101.CAL** | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||||||||||||||||||||||||
| 101.SCH** | XBRL Taxonomy Extension Schema Document | |||||||||||||||||||||||||||||||
| 101.DEF** | XBRL Taxonomy Extension Definition Linkbase Document | |||||||||||||||||||||||||||||||
| 101.LAB** | XBRL Taxonomy Extension Labels Linkbase Document | |||||||||||||||||||||||||||||||
| 101.PRE** | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||||||||||||||||||||||||
| 104** | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |||||||||||||||||||||||||||||||
_____________________
** Filed herewith
^ The certifications attached as Exhibit 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any
41
filings of Energy Vault Holdings, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Energy Vault Holdings, Inc. | ||||||||
Date: May 12, 2025 | By: | /s/ Robert Piconi | ||||||
| Name: Robert Piconi | ||||||||
| Title: Chairman of the Board and Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
| Date: May 12, 2025 | By: | /s/ Michael Beer | ||||||
| Name: Michael Beer | ||||||||
| Title: Chief Financial Officer | ||||||||
| (Principal Financial and Accounting Officer) | ||||||||
43
Exhibit 10.1 ENERGY VAULT HOLDINGS, INC. 2025 EMPLOYMENT INDUCEMENT AWARD PLAN ARTICLE 1. INTRODUCTION. The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging Eligible Individuals to focus on critical long- range corporate objectives, (b) encouraging the attraction and retention of Eligible Individuals with exceptional qualifications and (c) linking Eligible Individuals directly to stockholder interests through increased stock ownership. The Plan seeks to achieve this purpose by providing for Awards in the form of Options, SARs, Restricted Shares and Restricted Stock Units. Capitalized terms used in this Plan are defined in Article 14. ARTICLE 2. ADMINISTRATION. 2.1 General. The Plan may be administered by the Board or one or more Committees to which the Board (or an authorized Board committee) has delegated authority. If administration is delegated to a Committee, the Committee shall have the powers theretofore possessed by the Board, including, to the extent permitted by applicable law, the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to either the Board or the Administrator shall hereafter also encompass the Committee or subcommittee, as applicable). The Board may abolish the Committee’s delegation at any time and the Board shall at all times also retain the authority it has delegated to the Committee. The Administrator shall comply with rules and regulations applicable to it, including under the rules of any exchange on which the Common Shares are traded, and shall have the authority and be responsible for such functions as have been assigned to it. 2.2 Section 16. To the extent desirable to qualify transactions hereunder as exempt under Exchange Act Rule 16b-3, the transactions contemplated hereunder will be approved by the entire Board or a Committee of two or more “non-employee directors” within the meaning of Exchange Act Rule 16b-3. 2.3 Powers of Administrator. Subject to the terms of the Plan, and in the case of a Committee, subject to the specific duties delegated to the Committee, the Administrator shall have the authority to (a) select the Eligible Individuals who are to receive Awards under the Plan, (b) determine the type, number, vesting requirements and other features and conditions of such Awards, (c) interpret the Plan and Awards granted under the Plan, (d) determine whether, when and to what extent an Award has become vested and/or exercisable and whether any performance- based vesting conditions have been satisfied, (e) make, amend and rescind rules relating to the Plan and Awards granted under the Plan, including rules relating to sub-plans established for the purposes of satisfying applicable foreign laws or for qualifying for favorable tax treatment under applicable foreign laws, (f) impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant of any Common Shares issued pursuant to an Award, including restrictions under an insider trading policy and restrictions as to the use of a specified brokerage firm for such resales, and (g) make all other decisions relating to the operation of the Plan and Awards granted under the Plan. The Administrator may adopt
procedures from time to time that are intended to ensure that an individual is an Eligible Individual prior to the granting of any Awards to such individual (including without limitation a requirement that each such individuals certify to the Company prior to the receipt of an Award that he or she is not currently employed by the Company or a Subsidiary and, if previously so employed, has had a bona fide period of interruption of employment, and that the grant of Awards is an inducement material to his or her agreement to enter into employment with the Company or a Subsidiary. In addition, with regard to the terms and conditions of Awards granted to Eligible Individuals outside of the United States, the Administrator may vary from the provisions of the Plan to the extent it determines it necessary and appropriate to do so. 2.4 Effect of Administrator’s Decisions. The Administrator’s decisions, determinations and interpretations shall be final and binding on all interested parties. 2.5 Governing Law. The Plan shall be governed by, and construed in accordance with, the laws of the State of Delaware (except its choice-of-law provisions). ARTICLE 3. SHARES AVAILABLE FOR GRANTS. 3.1 Basic Limitation. Common Shares issued pursuant to the Plan may be authorized but unissued shares or treasury shares. The aggregate number of Common Shares issued under the Plan shall not exceed the sum of (a) 8,000,000 Common Shares, plus (b) the additional Common Shares described in Article 3.2. The Company shall reserve and keep available such number of Common Shares as will be sufficient to satisfy the requirements of the Plan. The numerical limitations in this Article 3.1 shall be subject to adjustment pursuant to Article 9. 3.2 Shares Returned to Reserve. To the extent that Options, SARs, Restricted Stock Units or other Awards are forfeited, cancelled or expire for any reason before being exercised or settled in full, the Common Shares subject to such Awards shall again become available for issuance under the Plan. If SARs are exercised or Restricted Stock Units are settled, then only the number of Common Shares (if any) actually issued to the Participant upon exercise of such SARs or settlement of such Restricted Stock Units, as applicable, shall reduce the number of Common Shares available under Article 3.1 and the balance shall again become available for issuance under the Plan. If Restricted Shares or Common Shares issued upon the exercise of Options are reacquired by the Company pursuant to a forfeiture provision, repurchase right or for any other reason, then such Common Shares shall again become available for issuance under the Plan. Common Shares applied to pay the Exercise Price of Options or to satisfy tax withholding obligations related to any Award shall again become available for issuance under the Plan. To the extent that an Award is settled in cash rather than Common Shares, the cash settlement shall not reduce the number of Common Shares available for issuance under the Plan. ARTICLE 4. EMPLOYEE INDUCEMENT PLAN 4.1 Stockholder Approval Not Required. It is expressly intended that approval of the Company's stockholders not be required as a condition of the effectiveness of the Plan, and the Plan's provisions shall be interpreted in a manner consistent with such intent for all purposes. Specifically, NYSE Rule 303A.08 generally requires stockholder approval for equity compensation plans adopted by companies whose securities are listed on the New York Stock Exchange that provide for the delivery of equity securities to any employees, directors or other service providers of such companies as compensation for services. NYSE Rule 303A.08 provides
an exemption in certain circumstances for employment inducement awards. Notwithstanding anything to the contrary herein, in accordance with NYSE Rule 303A.08, Awards may only be granted as material inducements to Eligible Individuals being hired or rehired as Employees, as applicable, and must be approved by (a) the Board, acting through a majority of the Company’s Independent Directors or (b) the independent Compensation Committee of the Board. Accordingly, pursuant to NYSE Rule 303A.08, the issuance of Awards and the Common Shares issuable upon exercise or vesting of such Awards pursuant to the Plan is not subject to the approval of the Company’s stockholders. 4.2 Action Required Upon Grant of Award. Promptly following the grant of an Award, the Company shall, in accordance with NYSE Rule 303A.08, (a) issue a press release disclosing the material terms of the Award, including the recipient(s) of the Award and the number of Common Shares involved and (b) provide any required written notice to the New York Stock Exchange of the grant. ARTICLE 5. OPTIONS. 5.1 Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. 5.2 Number of Shares. Each Stock Option Agreement shall specify the number of Common Shares subject to the Option, which number shall adjust in accordance with Article 9. 5.3 Exercise Price. Each Stock Option Agreement shall specify the Exercise Price, which shall not be less than 100% of the Fair Market Value of a Common Share on the date of grant. 5.4 Exercisability and Term. Each Stock Option Agreement shall specify the date or event when all or any installment of the Option is to become vested and/or exercisable. The vesting and exercisability conditions applicable to the Option may include service-based conditions, performance-based conditions, such other conditions as the Administrator may determine, or any combination of such conditions. The Stock Option Agreement shall also specify the term of the Option; provided that, except to the extent necessary to comply with applicable foreign law, the term of an Option shall in no event exceed 10 years from the date of grant. A Stock Option Agreement may provide for accelerated vesting and/or exercisability upon certain specified events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s service. 5.5 Death of Optionee. After an Optionee’s death, any vested and exercisable Options held by such Optionee may be exercised by his or her beneficiary or beneficiaries. Each Optionee may designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Optionee’s death. If no beneficiary was designated or if no designated beneficiary survives the Optionee, then any vested and exercisable Options held by the Optionee may be exercised by his or her estate.
5.6 Modification or Assumption of Options. Within the limitations of the Plan, the Administrator may modify, reprice, extend or assume outstanding options or may accept the cancellation of outstanding options (whether granted by the Company or by another issuer) in return for the grant of new Options for the same or a different number of shares and at the same or a different exercise price or in return for the grant of a different type of Award. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, materially impair his or her rights or obligations under such Option. 5.7 Buyout Provisions. The Administrator may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or (b) authorize an Optionee to elect to cash out an Option previously granted, in either case at such time and based upon such terms and conditions as the Administrator shall establish. 5.8 Payment for Option Shares. The entire Exercise Price of Common Shares issued upon exercise of Options shall be payable in cash or cash equivalents at the time when such Common Shares are purchased. In addition, the Administrator may, in its sole discretion and to the extent permitted by applicable law, accept payment of all or a portion of the Exercise Price through any one or a combination of the following forms or methods: (a) Subject to any conditions or limitations established by the Administrator, by surrendering, or attesting to the ownership of, Common Shares that are already owned by the Optionee with a value on the date of surrender equal to the aggregate exercise price of the Common Shares as to which such Option will be exercised; (b) By delivering (on a form prescribed by the Company) an irrevocable direction to a securities broker approved by the Company to sell all or part of the Common Shares being purchased under the Plan and to deliver all or part of the sales proceeds to the Company; (c) Subject to such conditions and requirements as the Administrator may impose from time to time, through a net exercise procedure; or (d) Through any other form or method consistent with applicable laws, regulations and rules. ARTICLE 6. STOCK APPRECIATION RIGHTS. 6.1 SAR Agreement. Each grant of a SAR under the Plan shall be evidenced by a SAR Agreement between the Optionee and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Agreements entered into under the Plan need not be identical. 6.2 Number of Shares. Each SAR Agreement shall specify the number of Common Shares to which the SAR pertains, which number shall adjust in accordance with Article 9. 6.3 Exercise Price. Each SAR Agreement shall specify the Exercise Price, which shall in no event be less than 100% of the Fair Market Value of a Common Share on the date of grant. The preceding sentence shall not apply to a SAR that is a Substitute Award granted in a manner that would satisfy the requirements of Code Section 409A.
6.4 Exercisability and Term. Each SAR Agreement shall specify the date when all or any installment of the SAR is to become vested and exercisable. The vesting and exercisability conditions applicable to the SAR may include service-based conditions, performance-based conditions, such other conditions as the Administrator may determine, or any combination thereof. The SAR Agreement shall also specify the term of the SAR; provided that except to the extent necessary to comply with applicable foreign law, the term of a SAR shall not exceed 10 years from the date of grant. A SAR Agreement may provide for accelerated vesting and exercisability upon certain specified events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s service. 6.5 Exercise of SARs. Upon exercise of a SAR, the Optionee (or any person having the right to exercise the SAR after his or her death) shall receive from the Company (a) Common Shares, (b) cash or (c) a combination of Common Shares and cash, as the Administrator shall determine. The amount of cash and/or the Fair Market Value of Common Shares received upon exercise of SARs shall, in the aggregate, not exceed the amount by which the Fair Market Value (on the date of surrender) of the Common Shares subject to the SARs exceeds the Exercise Price. If, on the date when a SAR expires, the Exercise Price is less than the Fair Market Value on such date but any portion of such SAR has not been exercised or surrendered, then such SAR shall automatically be deemed to be exercised as of such date with respect to such portion. A SAR Agreement may also provide for an automatic exercise of the SAR on an earlier date. 6.6 Death of Optionee. After an Optionee’s death, any vested and exercisable SARs held by such Optionee may be exercised by his or her beneficiary or beneficiaries. Each Optionee may designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Optionee’s death. If no beneficiary was designated or if no designated beneficiary survives the Optionee, then any vested and exercisable SARs held by the Optionee at the time of his or her death may be exercised by his or her estate. 6.7 Modification or Assumption of SARs. Within the limitations of the Plan, the Administrator may modify, reprice, extend or assume outstanding stock appreciation rights or may accept the cancellation of outstanding stock appreciation rights (whether granted by the Company or by another issuer) in return for the grant of new SARs for the same or a different number of shares and at the same or a different exercise price or in return for the grant of a different type of Award. The foregoing notwithstanding, no modification of a SAR shall, without the consent of the Optionee, materially impair his or her rights or obligations under such SAR. ARTICLE 7. RESTRICTED SHARES. 7.1 Restricted Stock Agreement. Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Stock Agreement between the recipient and the Company. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Stock Agreements entered into under the Plan need not be identical. 7.2 Payment for Awards. Restricted Shares may be sold or awarded under the Plan for such consideration as the Administrator may determine, including (without limitation) cash, cash equivalents, property, cancellation of other equity awards, promissory notes, past services and future services, and such other methods of payment as are permitted by applicable law.
7.3 Vesting Conditions. Each Award of Restricted Shares may or may not be subject to vesting and/or other conditions as the Administrator may determine. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Stock Agreement. Vesting conditions may include service-based conditions, performance-based conditions, such other conditions as the Administrator may determine, or any combination thereof. A Restricted Stock Agreement may provide for accelerated vesting upon certain specified events. 7.4 Voting and Dividend Rights. The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other stockholders, unless the Administrator otherwise provides. A Restricted Stock Agreement, however, may require that any cash dividends paid on Restricted Shares (a) be accumulated and paid when such Restricted Shares vest, or (b) be invested in additional Restricted Shares. Such additional Restricted Shares shall be subject to the same conditions and restrictions as the shares subject to the Award with respect to which the dividends were paid. In addition, unless the Administrator provides otherwise, if any dividends or other distributions are paid in Common Shares, such Common Shares shall be subject to the same restrictions on transferability and forfeitability as the Restricted Shares with respect to which they were paid. 7.5 Modification or Assumption of Restricted Shares. Within the limitations of the Plan, the Administrator may modify or assume outstanding Restricted Shares or may accept the cancellation of outstanding restricted shares (whether granted by the Company or by another issuer) in return for the grant of new Restricted Shares for the same or a different number of shares or in return for the grant of a different type of Award. The foregoing notwithstanding, no modification of Restricted Shares shall, without the consent of the Participant, materially impair his or her rights or obligations under such Restricted Shares. ARTICLE 8. RESTRICTED STOCK UNITS. 8.1 Restricted Stock Unit Agreement. Each grant of Restricted Stock Units under the Plan shall be evidenced by a Restricted Stock Unit Agreement between the recipient and the Company. Such Restricted Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Stock Unit Agreements entered into under the Plan need not be identical. 8.2 Payment for Awards. To the extent that an Award is granted in the form of Restricted Stock Units, no cash consideration shall be required of the Award recipients. 8.3 Vesting Conditions. Each Award of Restricted Stock Units may or may not be subject to vesting, as determined by the Administrator. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Stock Unit Agreement. Vesting conditions may include service-based conditions, performance-based conditions, such other conditions as the Administrator may determine, or any combination thereof. A Restricted Stock Unit Agreement may provide for accelerated vesting upon certain specified events. 8.4 Voting and Dividend Rights. The holders of Restricted Stock Units shall have no voting rights. Prior to settlement or forfeiture, Restricted Stock Units awarded under the Plan may, at the Administrator’s discretion, provide for a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Common Share while the Restricted Stock Unit is outstanding. Dividend equivalents may be converted into
additional Restricted Stock Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Common Shares, or in a combination of both. Prior to distribution, any dividend equivalents shall be subject to the same conditions and restrictions as the Restricted Stock Units to which they attach. 8.5 Form and Time of Settlement of Restricted Stock Units. Settlement of vested Restricted Stock Units may be made in the form of (a) cash, (b) Common Shares or (c) any combination of both, as determined by the Administrator. The actual number of Restricted Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors. Methods of converting Restricted Stock Units into cash may include (without limitation) a method based on the average value of Common Shares over a series of trading days. Vested Restricted Stock Units shall be settled in such manner and at such time(s) as specified in the Restricted Stock Unit Agreement. Until an Award of Restricted Stock Units is settled, the number of such Restricted Stock Units shall be subject to adjustment pursuant to Article 9. 8.6 Death of Recipient. Any Restricted Stock Units that become payable after the recipient’s death shall be distributed to the recipient’s beneficiary or beneficiaries. Each recipient of Restricted Stock Units under the Plan may designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Award recipient’s death. If no beneficiary was designated or if no designated beneficiary survives the Award recipient, then any Restricted Stock Units that become payable after the recipient’s death shall be distributed to the recipient’s estate. 8.7 Modification or Assumption of Restricted Stock Units. Within the limitations of the Plan, the Administrator may modify or assume outstanding restricted stock units or may accept the cancellation of outstanding restricted stock units (whether granted by the Company or by another issuer) in return for the grant of new Restricted Stock Units for the same or a different number of shares or in return for the grant of a different type of Award. The foregoing notwithstanding, no modification of a Restricted Stock Unit shall, without the consent of the Participant, materially impair his or her rights or obligations under such Restricted Stock Unit. 8.8 Creditors’ Rights. A holder of Restricted Stock Units shall have no rights other than those of a general creditor of the Company. Restricted Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Restricted Stock Unit Agreement. ARTICLE 9. ADJUSTMENTS; DISSOLUTIONS AND LIQUIDATIONS; CORPORATE TRANSACTIONS. 9.1 Adjustments. In the event of a subdivision of the outstanding Common Shares, a declaration of a dividend payable in Common Shares, a combination or consolidation of the outstanding Common Shares (by reclassification or otherwise) into a lesser number of Common Shares or any other increase or decrease in the number of issued Common Shares effected without receipt of consideration by the Company, proportionate adjustments shall be made to the following:
(a) The number and kind of shares available for issuance under Article 3, including the numerical share limits in Articles 3.1 and 3.5; (b) The number and kind of shares covered by each outstanding Option, SAR and Restricted Stock Unit; and/or (c) The Exercise Price applicable to each outstanding Option and SAR, and the repurchase price, if any, applicable to Restricted Shares. In the event of a declaration of an extraordinary dividend payable in a form other than Common Shares in an amount that has a material effect on the price of Common Shares, a recapitalization, a spin-off or a similar occurrence, the Administrator may make such adjustments as it, in its sole discretion, deems appropriate to the foregoing. Any adjustment in the number of shares subject to an Award under this Article 9.1 shall be rounded down to the nearest whole share, although the Administrator in its sole discretion may make a cash payment in lieu of a fractional share. Except as provided in this Article 9, a Participant shall have no rights by reason of any issuance by the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class. 9.2 Dissolution or Liquidation. To the extent not previously exercised or settled, Options, SARs and Restricted Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company. 9.3 Corporate Transactions. In the event that the Company is a party to a merger, consolidation, or a Change in Control (other than one described in Article 14.7(d)), all Common Shares acquired under the Plan and all Awards outstanding on the effective date of the transaction shall be treated in the manner described in the definitive transaction agreement (or, in the event the transaction does not entail a definitive agreement to which the Company is party, in the manner determined by the Administrator, with such determination having final and binding effect on all parties), which agreement or determination need not treat all Awards (or portions thereof) in an identical manner. Unless an Award Agreement provides otherwise, the treatment specified in the transaction agreement or by the Administrator may include (without limitation) one or more of the following with respect to each outstanding Award: (a) The continuation of such outstanding Award by the Company (if the Company is the surviving entity); (b) The assumption of such outstanding Award by the surviving entity or its parent, provided that the assumption of an Option or a SAR shall comply with applicable tax requirements; (c) The substitution by the surviving entity or its parent of an equivalent award for such outstanding Award (including, but not limited to, an award to acquire the same consideration paid to the holders of Common Shares in the transaction), provided that the substitution of an Option or a SAR shall comply with applicable tax requirements; (d) In the case of an Option or SAR, the cancellation of such Award without payment of any consideration. An Optionee shall be able to exercise his or
her outstanding Option or SAR, to the extent such Option or SAR is then vested or becomes vested as of the effective time of the transaction, during a period of not less than five full business days preceding the closing date of the transaction, unless (i) a shorter period is required to permit a timely closing of the transaction and (ii) such shorter period still offers the Optionee a reasonable opportunity to exercise such Option or SAR; (e) The cancellation of such Award and a payment to the Participant with respect to each share subject to the portion of the Award that is vested or becomes vested as of the effective time of the transaction equal to the excess of (A) the value, as determined by the Administrator in its absolute discretion, of the property (including cash) received by the holder of a Common Share as a result of the transaction, over (if applicable) (B) the per-share Exercise Price of such Award (such excess, if any, the “Spread”). Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving entity or its parent having a value equal to the Spread. In addition, any escrow, holdback, earn-out or similar provisions in the transaction agreement may apply to such payment to the same extent and in the same manner as such provisions apply to the holders of Common Shares. If the Spread applicable to an Award (whether or not vested) is zero or a negative number, then the Award may be cancelled without making a payment to the Participant. In the event that an Award is subject to Code Section 409A, the payment described in this clause (e) shall be made on the settlement date specified in the applicable Award Agreement, provided that settlement may be accelerated in accordance with Treasury Regulation Section 1.409A-3(j)(4); or (f) The assignment of any reacquisition or repurchase rights held by the Company in respect of an Award of Restricted Shares to the surviving entity or its parent, with corresponding proportionate adjustments made to the price per share to be paid upon exercise of any such reacquisition or repurchase rights. Unless an Award Agreement provides otherwise, each outstanding Award held by a Participant who remains a Service Provider as of the effective time of a merger, consolidation or Change in Control (other than one described in Article 14.7(d)) (a “Current Participant”) shall become fully vested and, if applicable, exercisable (with any performance-based vesting conditions applicable to an Award deemed achieved at 100% of target levels) immediately prior to the effective time of the transaction. However, the prior sentence shall not apply, and an outstanding Award shall not become vested and, if applicable, exercisable, if and to the extent the Award is continued, assumed or substituted as provided for in clauses (a), (b) or (c) above. In addition, the prior two sentences shall not apply to an Award held by a Participant who is not a Current Participant, unless an Award Agreement provides otherwise or unless the Company and the acquirer agree otherwise. For avoidance of doubt, the Administrator shall have the discretion, exercisable either at the time an Award is granted or at any time while the Award remains outstanding, to provide for the acceleration of vesting upon the occurrence of a Change in Control, whether or not the Award is to be assumed or replaced in the transaction, or in connection with a termination of the Participant’s service following a transaction. Any action taken under this Article 9.3 shall either preserve a Award’s status as exempt from Code Section 409A or comply with Code Section 409A.
ARTICLE 10. OTHER AWARDS. Subject in all events to the limitations under Article 3 above as to the number of Common Shares available for issuance under this Plan, the Company may grant other forms of Awards not specifically described herein and may grant awards under other plans or programs, where such awards are settled in the form of Common Shares issued under this Plan. Such Common Shares shall be treated for all purposes under the Plan like Common Shares issued in settlement of Restricted Stock Units and shall, when issued, reduce the number of Common Shares available under Article 3. ARTICLE 11. LIMITATION ON RIGHTS. 11.1 Retention Rights. Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual a right to remain a Service Provider. The Company and its Parents, Subsidiaries and Affiliates reserve the right to terminate the service of any Service Provider at any time, with or without cause, subject to applicable laws, the Company’s certificate of incorporation and by-laws and a written employment agreement (if any). 11.2 Stockholders’ Rights. Except as set forth in Article 7.4 or 8.4 above, a Participant shall have no dividend rights, voting rights or other rights as a stockholder with respect to any Common Shares covered by his or her Award prior to the time when a stock certificate for such Common Shares is issued or, if applicable, the time when he or she becomes entitled to receive such Common Shares by filing any required notice of exercise and paying any required Exercise Price. No adjustment shall be made for cash dividends or other rights for which the record date is prior to such time, except as expressly provided in the Plan. 11.3 Regulatory Requirements. Any other provision of the Plan notwithstanding, the obligation of the Company to issue Common Shares under the Plan shall be subject to all applicable laws, rules and regulations and such approval by any regulatory body as may be required. The Company reserves the right to restrict, in whole or in part, the delivery of Common Shares pursuant to any Award prior to the satisfaction of all legal requirements relating to the issuance of such Common Shares, to their registration, qualification or listing or to an exemption from registration, qualification or listing. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed necessary by the Company’s counsel to be necessary to the lawful issuance and sale of any Common Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Common Shares as to which such requisite authority will not have been obtained. 11.4 Transferability of Awards. The Administrator may, in its sole discretion, permit transfer of an Award in a manner consistent with applicable law. Unless otherwise determined by the Administrator, Awards shall be transferable by a Participant only by (a) beneficiary designation, (b) a will or (c) the laws of descent and distribution. 11.5 Recoupment Policy. All Awards granted under the Plan, all amounts paid under the Plan and all Common Shares issued under the Plan shall be subject to recoupment, clawback or recovery by the Company in accordance with applicable law and with Company policy (whenever adopted) regarding same, whether or not such policy is intended to satisfy the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Sarbanes-
Oxley Act, or other applicable law, as well as any implementing regulations and/or listing standards thereunder. 11.6 Other Conditions and Restrictions on Common Shares. Any Common Shares issued under the Plan shall be subject to such forfeiture conditions, rights of repurchase, rights of first refusal, other transfer restrictions and such other terms and conditions as the Administrator may determine. Such conditions and restrictions shall be set forth in the applicable Award Agreement and shall apply in addition to any restrictions that may apply to holders of Common Shares generally. In addition, Common Shares issued under the Plan shall be subject to such conditions and restrictions imposed either by applicable law or by Company policy, as adopted from time to time, designed to ensure compliance with applicable law or laws with which the Company determines in its sole discretion to comply including in order to maintain any statutory, regulatory or tax advantage. ARTICLE 12. TAXES. 12.1 General. It is a condition to each Award under the Plan that a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any federal, state, local or foreign withholding tax obligations that arise in connection with any Award granted under the Plan. The Company shall not be required to issue any Common Shares or make any cash payment under the Plan unless such obligations are satisfied. 12.2 Share Withholding. To the extent that applicable law subjects a Participant to tax withholding obligations, the Administrator may permit such Participant to satisfy all or part of such obligations by having the Company withhold all or a portion of any Common Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Common Shares that he or she previously acquired. Such Common Shares shall be valued on the date when they are withheld or surrendered. Any payment of taxes by assigning Common Shares to the Company may be subject to restrictions including any restrictions required by the SEC, accounting or other rules. 12.3 Section 409A Matters. Except as otherwise expressly set forth in an Award Agreement, it is intended that Awards granted under the Plan either be exempt from, or comply with, the requirements of Code Section 409A. To the extent an Award is subject to Code Section 409A (a “409A Award”), the terms of the Plan, the Award and any written agreement governing the Award shall be interpreted to comply with the requirements of Code Section 409A so that the Award is not subject to additional tax or interest under Code Section 409A, unless the Administrator expressly provides otherwise. A 409A Award shall be subject to such additional rules and requirements as specified by the Administrator from time to time in order for it to comply with the requirements of Code Section 409A. In this regard, if any amount under a 409A Award is payable upon a “separation from service” to an individual who is considered a “specified employee” (as each term is defined under Code Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the Participant’s separation from service or (ii) the Participant’s death, but only to the extent such delay is necessary to prevent such payment from being subject to Code Section 409A(a)(1). 12.4 Limitation on Liability. Neither the Company nor any person serving as Administrator shall have any liability to a Participant in the event an Award held by the Participant fails to achieve its intended characterization under applicable tax law.
ARTICLE 13. FUTURE OF THE PLAN. 13.1 Term of the Plan. The Plan, as set forth herein, shall become effective on the date of its adoption by the Board. The Plan shall terminate automatically 10 years after the date when the Board adopted the Plan, but Awards previously granted may extend beyond that date in accordance with the Plan. 13.2 Amendment or Termination. The Board may, at any time and for any reason, amend or terminate the Plan. No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan, or any amendment thereof, shall not affect any Award previously granted under the Plan. ARTICLE 14. DEFINITIONS. 14.1 “Administrator” means the Board or any Committee administering the Plan in accordance with Article 2. 14.2 “Affiliate” means any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity. 14.3 “Award” means any award granted under the Plan, including as an Option, a SAR, a Restricted Share award, a Restricted Stock Unit award or another form of equity-based compensation award. 14.4 “Award Agreement” means a Stock Option Agreement, a SAR Agreement, a Restricted Stock Agreement, a Restricted Stock Unit Agreement or such other agreement evidencing an Award granted under the Plan. 14.5 “Board” means the Company’s Board of Directors, as constituted from time to time and, where the context so requires, reference to the “Board” may refer to a Committee to whom the Board has delegated authority to administer any aspect of this Plan. 14.6 “Change in Control” means: (a) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Company’s then-outstanding voting securities; (b) The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; (c) The consummation of a merger or consolidation of the Company with or into any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation; or
(d) Individuals who are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members of the Board over a period of 12 months; provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member shall, for purposes of this Plan, be considered as a member of the Incumbent Board. A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction. In addition, if a Change in Control constitutes a payment event with respect to any Award which provides for a deferral of compensation and is subject to Code Section 409A, then notwithstanding anything to the contrary in the Plan or applicable Award Agreement the transaction with respect to such Award must also constitute a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5) to the extent required by Code Section 409A. 14.7 “Code” means the Internal Revenue Code of 1986, as amended. 14.8 “Committee” means a committee of one or more members of the Board, or of other individuals satisfying applicable laws, appointed by the Board to administer the Plan. 14.9 “Common Share” means one share of the Company’s Common Stock. 14.10 “Company” means Energy Vault Holdings, Inc., a Delaware corporation. 14.11 “Consultant” means a consultant or adviser who provides bona fide services to the Company, a Parent, a Subsidiary or an Affiliate as an independent contractor and who qualifies as a consultant or advisor under Instruction A.1.(a)(1) of Form S-8 under the Securities Act. 14.12 “Director” means a Board member. 14.13 “Eligible Individual” means any individual hired as a new Employee or rehired as an Employee following a bona fide period of interruption of employment if such person is granted an Award as a material inducement to his or her entering into employment with the Company or a Subsidiary (within the meaning of NYSE Rule 303A.08). 14.14 “Employee” means a common-law employee of the Company, a Parent, a Subsidiary or an Affiliate. 14.15 “Exchange Act” means the Securities Exchange Act of 1934, as amended. 14.16 “Exercise Price,” in the case of an Option, means the amount for which one Common Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. “Exercise Price,” in the case of a SAR, means an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one Common Share in determining the amount payable upon exercise of such SAR.
14.17 “Fair Market Value” means the closing price of a Common Share on any established stock exchange or a national market system on the applicable date or, if the applicable date is not a trading day, on the last trading day prior to the applicable date, as reported in a source that the Administrator deems reliable. If Common Shares are not traded on an established stock exchange or a national market system, the Fair Market Value shall be determined by the Administrator in good faith on such basis as it deems appropriate. The Administrator’s determination shall be conclusive and binding on all persons. Notwithstanding the foregoing, the determination of Fair Market Value in all cases shall be in accordance with the requirements set forth under Section 409A of the Code to the extent necessary for an Award to comply with, or be exempt from, Section 409A of the Code. 14.18 “Independent Director” means a director who qualifies as “independent” within the meaning of New York Stock Exchange Rule 303A.02, or any successor rule, as such rule may be amended from time to time. 14.19 “NYSE Rule 303A.08” means New York Stock Exchange Rule 303A.08, or any successor rule, and all guidance and other interpretative authority thereunder, as such rule, guidance and other authority may be amended from time to time. 14.20 “NSO” means a stock option not described in Code Sections 422 or 423. 14.21 “Option” means a NSO granted under the Plan and entitling the holder to purchase Common Shares. 14.22 “Optionee” means an individual or estate holding an Option or SAR. 14.23 “Outside Director” means a member of the Board who is not an Employee. 14.24 “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date. Award. 14.25 “Participant” means an Eligible Individual who has been granted an 14.26 “Plan” means this Energy Vault Holdings, Inc. 2025 Employment Inducement Award Plan, as it may be amended and/or restated from time to time. 14.27 “Restricted Share” means a Common Share awarded under Article 7 of the Plan. 14.28 “Restricted Stock Agreement” means the agreement consistent with the terms of the Plan between the Company and the recipient of a Restricted Share that contains the terms, conditions and restrictions pertaining to such Restricted Share. 14.29 “Restricted Stock Unit” means a bookkeeping entry representing the equivalent of one Common Share, as awarded under the Plan. 14.30 “Restricted Stock Unit Agreement” means the agreement consistent with the terms of the Plan between the Company and the recipient of a Restricted Stock Unit that
contains the terms, conditions and restrictions pertaining to such Restricted Stock Unit. 14.31 “SAR” means a stock appreciation right granted under the Plan. 14.32 “SAR Agreement” means the agreement consistent with the terms of the Plan between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his or her SAR. 14.33 “Securities Act” means the Securities Act of 1933, as amended. 14.34 “Service Provider” means any individual who is an Employee, Outside Director or Consultant, including any prospective Employee, Outside Director or Consultant who has accepted an offer of employment or service and will be an Employee, Outside Director or Consultant after the commencement of their service. 14.35 “Stock Option Agreement” means the agreement consistent with the terms of the Plan between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his or her Option. 14.36 “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date. ARTICLE 15. LANGUAGE 15.1 The parties hereto acknowledge that they have requested and are satisfied that this document and all related documents be drawn up in the English language.
Exhibit 10.2 ENERGY VAULT HOLDINGS, INC. 2025 EMPLOYMENT INDUCEMENT AWARD PLAN NOTICE OF STOCK OPTION GRANT You have been granted the following option to purchase shares of the Common Stock of Energy Vault Holdings, Inc. (the “Company”) on the terms and conditions set out below: Name of Optionee: «Name» Total Number of Shares: «TotalShares» Type of Option (U.S. Tax Status): Nonstatutory Stock Option Exercise Price per Share: US$«PricePerShare» Date of Grant: «DateGrant» Vesting Commencement Date: «VestDay» Vesting Schedule: This option shall vest and become exercisable with respect to [ ]% of the shares subject to this option on the Vesting Date (as defined below) occurring in the fiscal quarter immediately following the fiscal quarter that contains the Vesting Commencement Date, and this option shall vest and become exercisable with respect to an additional [ ]% of the shares subject to this option quarterly thereafter on the corresponding Vesting Date occurring in each fiscal quarter thereafter, in each case, subject to your continuous service as an Employee or Consultant (“Service) through each such date. “Vesting Date” means each of March 15, June 15, September 15 and December 15.1 Expiration Date: «ExpDate». This option expires earlier if your Service terminates earlier, as described in the Stock Option Agreement, and may terminate earlier in connection with certain corporate transactions as described in Article 9 of the Plan. You and the Company agree that this option is granted under and governed by the terms and conditions of the Company’s 2025 Employment Inducement Award Plan (the “Plan”) and the Stock Option Agreement (including, if applicable, the Appendix for Non-U.S. Participants), both of which are attached to, and made a part of, this document. Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Plan. The Company may, in its sole discretion, decide to deliver any documents related to options awarded under the Plan, future options that may be awarded under the Plan and all other documents that the Company is required to deliver to security holders (including annual reports and proxy 1 Vesting schedule to be revised as necessary.
statements) by email or other electronic means (including by posting them on a website maintained by the Company or a third party under contract with the Company). You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through any on-line or electronic system established and maintained by the Company or another third party designated by the Company. You acknowledge that you may incur costs in connection with any such delivery by means of electronic transmission, including the cost of accessing the Internet and printing fees, and that an interruption of Internet access may interfere with your ability to access the documents. You further agree to comply with the Company’s Insider Trading Policy when selling shares of the Company’s Common Stock.
ENERGY VAULT HOLDINGS, INC. 2025 EMPLOYMENT INDUCEMENT AWARD PLAN STOCK OPTION AGREEMENT Grant of Option Subject to all of the terms and conditions set forth in the Notice of Stock Option Grant (the “Grant Notice”), this Stock Option Agreement (the “Agreement”) and the Plan, the Company has granted you an option to purchase up to the total number of shares specified in the Grant Notice at the exercise price indicated in the Grant Notice. All capitalized terms used in this Agreement shall have the meanings assigned to them in this Agreement, the Grant Notice or the Plan. U.S. Tax Treatment This option is intended to be a nonstatutory stock option, as provided in the Grant Notice. Vesting This option vests and becomes exercisable in accordance with the vesting schedule set forth in the Grant Notice. In no event will this option vest or become exercisable for additional shares after your Service has terminated for any reason unless expressly provided in a written agreement between you and the Company. Term of Option This option expires in any event at the close of business at Company headquarters on the day before the 10th anniversary of the Date of Grant, as shown in the Grant Notice. (This option will expire earlier if your Service terminates earlier, as described below, and this option may be terminated earlier as provided in Article 9 of the Plan.) Termination of Service Regular Termination If your Service terminates for any reason, this option will expire to the extent it is unvested as of your termination date and does not vest as a result of your termination of Service. The Company determines whether and when your Service terminates for all purposes of this option. If your Service terminates for any reason except death or total and permanent disability, then this option, to the extent vested as of your termination date, will expire at the close of business at Company headquarters on the date three months after your termination date.
Death If your Service terminates as a result of your death, then this option, to the extent vested as of the date of your death, will expire at the close of business at Company headquarters on the date twelve months after the date of death. Disability If your Service terminates because of your total and permanent disability, then this option, to the extent vested as of your termination date, will expire at the close of business at Company headquarters on the date six months after your termination date. For all purposes under this Agreement, “total and permanent disability” means that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than one year. Leaves of Absence and Part-Time Work Restrictions on Exercise/Complian ce with Law If you go on a leave of absence, then, to the extent permitted by applicable law and consistent with the Company’s leave of absence policy or the terms of your leave, the Company may adjust or suspend the vesting schedule set forth in the Notice of Stock Option Grant. Except as provided in the preceding sentence, Service shall be deemed to continue for any purpose under this Agreement while you are on a paid leave or any other bona fide leave of absence approved by the Company in writing. Service shall be deemed to terminate when such leave ends, unless you immediately return to active work when such leave ends. If you commence working on a part-time basis, the Company may adjust the vesting schedule so that the rate of vesting is commensurate with your reduced work schedule. The Company will not permit you to exercise this option if the issuance of shares at that time would violate any law or regulation. Notwithstanding any other provision in the Plan or this Agreement, unless there is an available exemption from registration, qualification or other legal requirement applicable to the Company’s shares, the Company shall not be required to permit the exercise of this option and/or delivery of Company shares prior to the completion of any registration or qualification of the shares under any local, state, national or federal securities law or under rulings or regulations of the Securities and Exchange Commission (“SEC”) or of any other governmental body, or prior to obtaining any approval or other clearance from any local, state, national or federal governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable. You understand that the Company is under no obligation to register or qualify the Company’s shares with the SEC or any state securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the shares.
Notice of Exercise When you wish to exercise this option, you must notify the Company by filing the proper “Notice of Exercise” form at the address given on the form or, if the Company has designated a third party to administer the Plan, you must notify such third party in the manner such third party requires. Your notice must specify how many shares you wish to purchase. The notice will be effective when the Company receives it. However, if you wish to exercise this option by executing a same-day sale (as described below), you must follow the instructions of the Company and the broker who will execute the sale. If someone else wants to exercise this option after your death, that person must prove to the Company’s satisfaction that he or she is entitled to do so. You may only exercise your option for whole shares. Form of Payment When you submit your notice of exercise, you must make arrangements for the payment of the option exercise price for the shares that you are purchasing. To the extent permitted by applicable law, payment may be made in one (or a combination of two or more) of the following forms: • By delivering to the Company your personal check, a cashier’s check or a money order, or arranging for a wire transfer. • By giving to a securities broker approved by the Company irrevocable directions to sell all or part of your option shares and to deliver to the Company, from the sale proceeds, an amount sufficient to pay the option exercise price and any Tax-Related Items (as defined below). (The balance of the sale proceeds, if any, will be delivered to you.) The directions must be given in accordance with the instructions of the Company and the broker. This exercise method is sometimes called a “same-day sale.” The Company may permit other forms of payment in its discretion to the extent permitted by the Plan. Employment Inducement Award This option is intended to constitute an employment inducement award under NYSE Rule 303A.08 that is exempt from the requirements of shareholder approval of equity compensation plans under such rule. This Agreement and the terms and conditions of this option will be interpreted consistent with such intent. Withholding Taxes Regardless of any action the Company (or, if applicable, the Parent, Subsidiary or Affiliate employing or retaining you (the “Employer”)) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the participation in the Plan and legally applicable to you (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items is and remains your responsibility and may exceed the amount actually withheld by the
Company and/or the Employer. You further acknowledge that the Company and the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the options, including, but not limited to, the grant, vesting or exercise of the option, the issuance of shares upon exercise of the option, the subsequent sale of shares acquired pursuant to such exercise and the receipt of any dividends and/or any dividend equivalents; and (2) do not commit to and are under no obligation to structure the terms of the option or any aspect of the option to reduce or eliminate your liability for Tax- Related Items or achieve any particular tax result. Further, if you are subject to tax in more than one jurisdiction, you acknowledge that the Company and/or the Employer may be required to withhold or account for Tax-Related Items in more than one jurisdiction. You will not be allowed to exercise this option unless you make arrangements acceptable to the Company and/or the Employer to pay any Tax-Related Items that the Company and/or the Employer determine must be withheld. These arrangements include payment in cash or via the same- day sale procedure described above. With the Company’s consent, these arrangements may also include (a) withholding shares of Company stock that otherwise would be issued to you when you exercise this option with a value equal to withholding taxes, (b) surrendering shares that you previously acquired with a value equal to the withholding taxes, or (c) withholding cash from other compensation. The value of withheld or surrendered shares, determined as of the date when taxes otherwise would have been withheld in cash, will be applied to the Tax-Related Items.
Restrictions on Resale You agree not to sell any option shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify. Transfer of Option Prior to your death, only you may exercise this option. You cannot transfer or assign this option. For instance, you may not sell this option or use it as security for a loan. If you attempt to do any of these things, this option will immediately become invalid. You may, however, dispose of this option in your will or by means of a written beneficiary designation (if authorized by the Company and to the extent such beneficiary designation is valid under applicable law) which must be filed with the Company on the proper form; provided, however, that your beneficiary or a representative of your estate acknowledges and agrees in writing in a form reasonably acceptable to the Company, to be bound by the provisions of this Agreement and the Plan as if such beneficiary or representative of the estate were you. Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your former spouse, nor is the Company obligated to recognize your former spouse’s interest in your option in any other way. No Retention Rights Your option or this Agreement does not give you the right to be retained by the Company, a Parent, Subsidiary, or an Affiliate in any capacity. The Company and its Parents, Subsidiaries, and Affiliates reserve the right to terminate your Service at any time, with or without cause. Stockholder Rights You, or your estate or heirs, have no rights as a stockholder of the Company until you have exercised this option by giving the required notice to the Company, paying the exercise price, and satisfying any applicable Tax- Related Items. No adjustments are made for dividends or other rights if the applicable record date occurs before you exercise this option, except as described in the Plan. Recoupment Policy This option, and the shares acquired upon exercise of this option, shall be subject to any Company recoupment or clawback policy in effect from time to time. Adjustments In the event of a stock split, a stock dividend or a similar change in Company’s Common Stock, the number of shares covered by this option and the exercise price per share will be adjusted pursuant to the Plan. Effect of Significant Corporate Transactions If the Company is a party to a merger, consolidation, or certain change in control transactions, then this option will be subject to the applicable provisions of Article 9 of the Plan.
Applicable Law This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to its choice-of-law provisions). The Plan and Other Agreements The text of the Plan is incorporated in this Agreement by reference. This Plan, this Agreement (including, if applicable, the Appendix for Non- U.S. Participants) and the Grant Notice constitute the entire understanding between you and the Company regarding this option. Any prior agreements, commitments or negotiations concerning this option are superseded. This Agreement may be amended only by another written agreement between the parties.
Language The parties hereto acknowledge that they have requested and are satisfied that this document and all related documents be drawn up in the English language. Les parties aux présentes reconnaissent avoir requis que le présent document et les documents qui y sont liés soient rédigés en anglais. BY ACCEPTING THIS OPTION GRANT, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN (INCLUDING THE TERMS OF ANY APPLICABLE APPENDIX INCORPORATED HEREIN BY REFERENCE).
EXHIBIT 10.3 ENERGY VAULT HOLDINGS, INC. 2025 EMPLOYMENT INDUCEMENT AWARD PLAN NOTICE OF RESTRICTED STOCK UNIT AWARD You have been granted Restricted Stock Units (“RSUs”), each representing the right to receive one share of the Common Stock of Energy Vault Holdings, Inc. (the “Company”) on the following terms and conditions: Name of Recipient: «Name» Total Number of RSUs Granted: «TotalRSUs» Date of Grant: «DateGrant» Vesting Commencement Date «VestCommDate» Vesting Schedule: [ ]% of the RSUs subject to this award will vest on the RSU Vesting Date (as defined below) occurring in the fiscal quarter that contains the first anniversary of the Vesting Commencement Date and an additional [ ]% of the RSUs subject to this award will vest quarterly thereafter on the corresponding RSU Vesting Date occurring in each fiscal quarter thereafter, in each case, subject to your continuous service as an Employee or Consultant (“Service”) through each such date. “RSU Vesting Date” means each of March 15, June 15, September 15 and December 15.2 You and the Company agree that these RSUs are granted under and governed by the terms and conditions of the Company’s 2025 Employment Inducement Award Plan (the “Plan”) and the Restricted Stock Unit Agreement, both of which are attached to, and made a part of, this document. Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Plan. The Company may, in its sole discretion, decide to deliver any documents related to RSUs awarded under the Plan, future RSUs that may be awarded under the Plan (if any) and all documents that the Company is required to deliver to security holders (including annual reports and proxy statements) by email or other electronic means (including posting them on a website maintained by the Company or a third party under contract with the Company). You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through any on-line or electronic system established and maintained by the Company or another third party designated by the Company. You acknowledge that you may incur costs in connection with any such delivery 2 Vesting schedule to be customized as necessary.
by means of electronic transmission, including the cost of accessing the Internet and printing fees, and that an interruption of Internet access may interfere with your ability to access the documents. You further agree to comply with the Company’s Insider Trading Policy when selling shares of the Company’s Common Stock.
ENERGY VAULT HOLDINGS, INC. 2025 EMPLOYMENT INDUCEMENT AWARD PLAN RESTRICTED STOCK UNIT AGREEMENT Grant of RSUs Subject to all of the terms and conditions set forth in the Notice of Restricted Stock Unit Award (the “Grant Notice”), this Restricted Stock Unit Agreement (the “Agreement”) and the Plan, the Company has granted to you the number of RSUs set forth in the Grant Notice. All capitalized terms used in this Agreement shall have the meanings assigned to them in this Agreement, the Grant Notice or the Plan. Nature of RSUs Your RSUs are bookkeeping entries. They represent only the Company’s unfunded and unsecured promise to issue shares of the Company’s Common Stock on a future date. As a holder of RSUs, you have no rights other than the rights of a general creditor of the Company. Payment for RSUs No payment is required for the RSUs that you are receiving. Vesting The RSUs vest in accordance with the vesting schedule set forth in the Grant Notice. In no event will any additional RSUs vest after your Service has terminated for any reason unless expressly provided in a written agreement between you and the Company. The Company determines whether and when your Service terminates for all purposes of your RSUs. Termination of Service/Forfeiture Leaves of Absence and Part-Time Work If your Service terminates for any reason, then your RSUs will be forfeited to the extent that they have not vested before the termination date and do not vest as a result of the termination of your Service. This means that any RSUs that have not vested under this Agreement will be cancelled immediately. You will receive no payment for RSUs that are forfeited. If you go on a leave of absence, then, to the extent permitted by applicable law and consistent with the Company’s leave of absence policy or the terms of your leave, the Company may adjust or suspend the vesting schedule set forth in the Grant Notice. Except as provided in the preceding sentence, Service shall be deemed to continue for any purpose under this Agreement while you are on a paid leave or any other bona fide leave of absence approved by the Company in writing. Service shall be deemed to terminate when such leave ends, unless you immediately return to active work when such leave ends. If you commence working on a part-time basis, the Company may adjust the vesting schedule so that the rate of vesting is commensurate with your reduced work schedule.
Settlement of RSUs Each RSU will be settled as soon as practicable on or following the date when it vests, but in any event within 60 days following the vesting date (unless you and the Company have agreed in writing to a later settlement date pursuant to procedures the Company may prescribe at its discretion). In no event will you be permitted, directly or indirectly, to specify the taxable year of settlement of any RSUs subject to this award. At the time of settlement, you will receive one share of the Company’s Common Stock for each vested RSU. No fractional shares will be issued upon settlement. Employment Inducement Award The RSUs are intended to constitute an employment inducement award under NYSE Rule 303A.08 that is exempt from the requirements of shareholder approval of equity compensation plans such rule. This Agreement and the terms and conditions of the RSUs will be interpreted consistent with such intent. Section 409A Unless you and the Company have agreed to a deferred settlement date (pursuant to procedures that the Company may prescribe at its discretion), settlement of these restricted stock units is intended to be exempt from the application of Code Section 409A pursuant to Treasury Regulation 1.409A-1(b)(4) and shall be administered and interpreted in a manner that complies with such exception. Notwithstanding the foregoing, if it is determined that settlement of these RSUs is not exempt from Code Section 409A and the Company determines that you are a “specified employee,” as defined in the regulations under Code Section 409A at the time of your “separation from service,” as defined in Treasury Regulation Section 1.409A-1(h), then this paragraph will apply. If this paragraph applies, and the event triggering settlement is your “separation from service,” then any RSUs that otherwise would have been settled during the first six months following your “separation from service” will instead be settled on the first business day following the earlier of (i) the six-month anniversary of your separation from service or (ii) your death. Each installment of RSUs that vests is hereby designated as a separate payment for purposes of Code Section 409A. No Voting Rights or Dividends RSUs Nontransferable Your RSUs carry neither voting rights nor rights to cash dividends. You have no rights as a stockholder of the Company unless and until your RSUs are settled by issuing shares of the Company’s Common Stock. You may not sell, transfer, assign, pledge or otherwise dispose of any RSUs. For instance, you may not use your RSUs as security for a loan.
Beneficiary Designation In addition, regardless of any marital property settlement agreement, the Company is not obligated to recognize your former spouse’s interest in your RSUs in any way. You may dispose of your RSUs in a written beneficiary designation if authorized by the Company and to the extent such beneficiary designation is valid under applicable law. Any beneficiary designation must be filed with the Company on the proper form. It will be recognized only if it has been received at the Company’s headquarters before your death. If you file no beneficiary designation or if none of your designated beneficiaries survives you, then your estate will receive any vested RSUs that you hold at the time of your death. Withholding Taxes Regardless of any action the Company (or, if applicable, the Parent, Subsidiary or Affiliate employing or retaining you (the “Employer”)) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the participation in the Plan and legally applicable to you (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items is and remains your responsibility and may exceed the amount actually withheld by the Company and/or the Employer. You further acknowledge that the Company and the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant or vesting of the RSUs, the issuance of shares upon vesting of the RSUs, the subsequent sale of shares acquired pursuant to such vesting and the receipt of any dividends and/or any dividend equivalents; and (2) do not commit to and are under no obligation to structure the terms of the RSUs or any aspect of the RSUs to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. Further, if you are subject to tax in more than one jurisdiction, you acknowledge that the Company and/or the Employer may be required to withhold or account for Tax-Related Items in more than one jurisdiction. No shares will be distributed to you unless you have made arrangements satisfactory to the Company and/or the Employer for the payment of any Tax-Related Items that the Company and/or the Employer determine must be withheld. In this regard, you authorize the Company, at its sole discretion, to satisfy your Tax-Related Items by one or a combination of the following: • Withholding the amount of any Tax-Related Items from your wages or other cash compensation paid to you by the Company and/or the Employer. • Instructing a brokerage firm selected by the Company for this purpose to sell on your behalf a number of whole shares of Company
stock to be issued to you when the RSUs are settled that the Company determines are appropriate to generate cash proceeds sufficient to satisfy the Tax-Related Items. You acknowledge that the Company or its designee is under no obligation to arrange for such sale at any particular price. Regardless of whether the Company arranges for such sale, you will be responsible for all fees and other costs of sale, and you agree to indemnify and hold the Company harmless from any losses, costs, damages or expenses relating to any such sale. • Withholding shares of Company stock that would otherwise be issued to you when the RSUs are settled equal in value to the Tax- Related Items. The fair market value of the withheld shares, determined as of the date when taxes otherwise would have been withheld in cash, will be applied to the Tax-Related Items. • Any other means approved by the Company. You agree to pay to the Company in cash any amount of Tax-Related Items that the Company does not elect to satisfy by the means described above. To the extent you fail to make satisfactory arrangements for the payment of any required withholding taxes, you will permanently forfeit the applicable RSUs. Restrictions on Issuance Restrictions on Resale The Company will not issue any shares to you if the issuance of shares at that time would violate any law or regulation. Notwithstanding any other provision in the Plan or this Agreement, unless there is an available exemption from registration, qualification or other legal requirement applicable to the shares of Company Common Stock, the Company shall not be required to issue any shares to you prior to the completion of any registration or qualification of the shares under any local, state, national or federal securities law or under rulings or regulations of the Securities and Exchange Commission (“SEC”) or of any other governmental body, or prior to obtaining any approval or other clearance from any local, state, national or federal governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable. You understand that the Company is under no obligation to register or qualify the Company’s shares with the SEC or any state securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the shares. You agree not to sell any shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify.
No Retention Rights Your award or this Agreement does not give you the right to be retained by the Company, a Parent, Subsidiary, or an Affiliate in any capacity. The Company and its Parents, Subsidiaries, and Affiliates reserve the right to terminate your Service at any time, with or without cause. Adjustments In the event of a stock split, a stock dividend or a similar change in Company’s Common Stock, the number of your RSUs will be adjusted pursuant to the Plan. Effect of Significant Corporate Transactions If the Company is a party to a merger, consolidation, or certain change in control transactions, then your RSUs will be subject to the applicable provisions of Article 9 of the Plan, provided that any action taken must either (a) preserve the exemption of your RSUs from Code Section 409A or (b) comply with Code Section 409A. Recoupment Policy This award, and the shares acquired upon settlement of this award, shall be subject to any Company recoupment or clawback policy in effect from time to time. Applicable Law This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to its choice-of-law provisions). The Plan and Other Agreements The text of the Plan is incorporated in this Agreement by reference. The Plan, this Agreement and the Grant Notice constitute the entire understanding between you and the Company regarding this award. Any prior agreements, commitments or negotiations concerning this award are superseded. This Agreement may be amended only by another written agreement between the parties. Language The parties hereto acknowledge that they have requested and are satisfied that this document and all related documents be drawn up in the English language. BY ACCEPTING THIS RSU AWARD, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.
Execution Version CALISTOGA RESILIENCY CENTER, LLC $27,826,365.17 12.50% Senior Secured Notes due April 4, 2032 ______________ NOTE PURCHASE AGREEMENT ______________ Dated April 4, 2025 Exhibit 10.4
i TABLE OF CONTENTS SECTION 1. AUTHORIZATION OF NOTES. ...................................................................1 SECTION 2. CONVERSION OF INDEBTEDNESS. .........................................................1 SECTION 3. CLOSING OF CONVERSION.......................................................................1 SECTION 4. CONDITIONS TO CLOSING OF CONVERSION. ....................................2 Section 4.1 Representations and Warranties .........................................................................2 Section 4.2 Performance; No Default ...................................................................................2 Section 4.3 Compliance Certificates .....................................................................................2 Section 4.4 Opinions of Counsel ..........................................................................................3 Section 4.5 Purchase Permitted By Applicable Law, Etc .....................................................3 Section 4.6 Sale of Other Notes ............................................................................................3 Section 4.7 Payment of Fees and Expenses ..........................................................................3 Section 4.8 Private Placement Number ................................................................................3 Section 4.9 Changes in Corporate Structure .........................................................................3 Section 4.10 Funds Flow Memorandum .................................................................................4 Section 4.11 Proceedings and Documents ..............................................................................4 Section 4.12 Delivery of Financing Documents .....................................................................4 Section 4.13 Construction Budget and Schedule ....................................................................4 Section 4.14 Annual Operating Budget ..................................................................................4 Section 4.15 Lien Searches .....................................................................................................4 Section 4.16 Financing Statements .........................................................................................4 Section 4.17 LLC Interest Certificates....................................................................................4 Section 4.18 Filing Fees ..........................................................................................................4 Section 4.19 Independent Engineer and Insurance Consultant Reports .................................4 Section 4.20 Financial Model .................................................................................................5 Section 4.21 Historical Financial Statements .........................................................................5 Section 4.22 No Material Adverse Effect ...............................................................................5 Section 4.23 Know Your Customer.........................................................................................5 Section 4.24 Collateral Accounts ............................................................................................5 Section 4.25 Base Equity Contributions .................................................................................5 Section 4.26 Insurance ............................................................................................................5 Section 4.27 Acquisition of Bridge Facility Loans. ................................................................5 Section 4.28 Repayment and Release of Bridge Facility Loans and Liens. ...........................5 SECTION 5. [RESERVED] ...................................................................................................6 SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. ......................................................................................................6 Section 6.1 Organization; Power and Authority ...................................................................6 Section 6.2 Authorization, Consents Etc ..............................................................................6 Section 6.3 Disclosure ..........................................................................................................7 Section 6.4 No Subsidiaries ..................................................................................................7 Section 6.5 Financial Statements; Material Liabilities .........................................................7 Section 6.6 Compliance with Laws, Other Instruments, Etc ................................................7 Section 6.7 Litigation; Observance of Agreements, Statutes and Orders .............................8
Table of Contents (continued) Page ii Section 6.8 Taxes ..................................................................................................................8 Section 6.9 Title to Property; Leases ....................................................................................8 Section 6.10 Licenses, Permits, Etc ........................................................................................8 Section 6.11 Compliance with Employee Benefit Plans ........................................................9 Section 6.12 Private Offering by the Company ....................................................................10 Section 6.13 Use of Proceeds; Margin Regulations ..............................................................10 Section 6.14 Existing Indebtedness; Future Liens ................................................................10 Section 6.15 Foreign Assets Control Regulations, Etc ......................................................... 11 Section 6.16 Status under Certain Statutes ........................................................................... 11 Section 6.17 Environmental Matters..................................................................................... 11 Section 6.18 Energy Regulatory Status ................................................................................12 Section 6.19 Applicable Permits ...........................................................................................13 Section 6.20 Solvency ...........................................................................................................13 Section 6.21 No Default ........................................................................................................13 Section 6.22 Perfection of Security Interests ........................................................................13 Section 6.23 Material Project Documents ............................................................................14 Section 6.24 Labor Matters ...................................................................................................14 Section 6.25 Required Insurance ..........................................................................................14 Section 6.26 Condemnation Proceedings .............................................................................14 Section 6.27 Utilities .............................................................................................................14 Section 6.28 Roads and Feeder Lines ...................................................................................14 SECTION 7. REPRESENTATIONS OF THE PURCHASERS. ......................................14 Section 7.1 Purchase for Investment ...................................................................................14 Section 7.2 Source of Funds ...............................................................................................15 SECTION 8. INFORMATION AS TO COMPANY ..........................................................16 Section 8.1 Financial and Business Information .................................................................16 Section 8.2 Visitation ..........................................................................................................19 Section 8.3 Electronic Delivery ..........................................................................................19 SECTION 9. PAYMENT AND PREPAYMENT OF THE NOTES. .................................20 Section 9.1 Scheduled Amortization; Maturity ...................................................................20 Section 9.2 Optional Prepayments with Make-Whole Amount ..........................................20 Section 9.3 Offer to Prepay .................................................................................................20 Section 9.4 Mandatory Prepayments ..................................................................................23 Section 9.5 Allocation of Partial Prepayments ...................................................................23 Section 9.6 Maturity; Surrender, Etc ..................................................................................24 Section 9.7 Purchase of Notes ............................................................................................24 Section 9.8 Make-Whole Amount.......................................................................................24 Section 9.9 Payments Due on Non-Business Days .............................................................25 SECTION 10. AFFIRMATIVE COVENANTS. ..................................................................25 Section 10.1 Compliance with Laws ....................................................................................25 Section 10.2 Insurance; Loss Proceeds .................................................................................26 Section 10.3 Maintenance of Properties ...............................................................................26
Table of Contents (continued) Page iii Section 10.4 Tax Status; Payment of Taxes ..........................................................................26 Section 10.5 Corporate Existence, Etc ..................................................................................27 Section 10.6 Books and Records ..........................................................................................27 Section 10.7 Further Assurances; Additional Collateral .......................................................27 Section 10.8 Material Project Documents ............................................................................28 Section 10.9 Use of Proceeds................................................................................................28 Section 10.10 Separateness Provisions ...................................................................................28 Section 10.11 Operating Budget .............................................................................................28 Section 10.12 Construction of Project ....................................................................................28 Section 10.13 Market-Based Rate Authority; EWG Status ....................................................29 Section 10.14 Conditions Subsequent.....................................................................................29 SECTION 11. NEGATIVE COVENANTS. .........................................................................32 Section 11.1 Transactions with Affiliates .............................................................................32 Section 11.2 Merger, Consolidation, Etc ..............................................................................32 Section 11.3 Line of Business; Subsidiaries, Employees .....................................................33 Section 11.4 Economic Sanctions, Etc .................................................................................33 Section 11.5 Liens .................................................................................................................33 Section 11.6 Limitation on Amendments to the Material Project Documents, Organizational Documents and Tax Credit Transfer Documents ....................33 Section 11.7 Additional Material Project Documents ..........................................................34 Section 11.8 Investments ......................................................................................................34 Section 11.9 Incurrence of Indebtedness ..............................................................................34 Section 11.10 Sale of Assets ...................................................................................................35 Section 11.11 Capital Expenditures ........................................................................................35 Section 11.12 Restricted Payments .........................................................................................35 Section 11.13 Swap Contracts ................................................................................................36 Section 11.14 Changes in Fiscal Periods; Accounting Policies; Location; Name ..................36 Section 11.15 Maintenance of Accounts .................................................................................36 Section 11.16 Lease Agreements ............................................................................................36 Section 11.17 Sale and Leasebacks ........................................................................................36 Section 11.18 Debt Service Coverage Ratio. ..........................................................................36 SECTION 12. EVENTS OF DEFAULT. ...............................................................................36 SECTION 13. REMEDIES ON DEFAULT, ETC. ...............................................................40 Section 13.1 Acceleration .....................................................................................................40 Section 13.2 Other Remedies ................................................................................................40 Section 13.3 Rescission ........................................................................................................41 Section 13.4 No Waivers or Election of Remedies, Expenses, Etc.......................................41 SECTION 14. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. ...........41 Section 14.1 Registration of Notes .......................................................................................41 Section 14.2 Transfer and Exchange of Notes ......................................................................41 Section 14.3 Replacement of Notes ......................................................................................42
Table of Contents (continued) Page iv SECTION 15. PAYMENTS ON NOTES. .............................................................................42 Section 15.1 Place of Payment..............................................................................................42 Section 15.2 Payment by Wire Transfer ...............................................................................42 Section 15.3 FATCA Information .........................................................................................43 SECTION 16. EXPENSES, ETC. ..........................................................................................43 Section 16.1 Transaction Expenses .......................................................................................43 Section 16.2 Certain Taxes ....................................................................................................44 Section 16.3 Survival ............................................................................................................44 SECTION 17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. ..............................................................................44 SECTION 18. AMENDMENT AND WAIVER. ...................................................................44 Section 18.1 Requirements ...................................................................................................44 Section 18.2 Solicitation of Holders of Notes ......................................................................45 Section 18.3 Binding Effect, Etc ...........................................................................................45 Section 18.4 Notes Held by Company, Etc ...........................................................................45 SECTION 19. NOTICES........................................................................................................46 SECTION 20. REPRODUCTION OF DOCUMENTS. ......................................................46 SECTION 21. CONFIDENTIAL INFORMATION. ...........................................................46 SECTION 22. SUBSTITUTION OF PURCHASER. ..........................................................47 SECTION 23. MISCELLANEOUS. .....................................................................................48 Section 23.1 Successors and Assigns ....................................................................................48 Section 23.2 Accounting Terms ............................................................................................48 Section 23.3 Severability ......................................................................................................48 Section 23.4 Construction, Etc..............................................................................................48 Section 23.5 Counterparts .....................................................................................................49 Section 23.6 Governing Law ................................................................................................49 Section 23.7 Jurisdiction and Process; Waiver of Jury Trial .................................................49 Section 23.8 Forbearance Agreement ...................................................................................50
v SCHEDULES AND EXHIBITS SCHEDULE A — Defined Terms SCHEDULE 1 — Site SCHEDULE 6.3 — Disclosure Materials SCHEDULE 6.5 Financial Statements SCHEDULE 6.14 — Existing Indebtedness of the Company SCHEDULE 6.19 — Applicable Permits SCHEDULE 10.2 — Required Insurance SCHEDULE 10.14 — Consents and Notices SCHEDULE PL — Permitted Liens PURCHASER SCHEDULE — Information Relating to Purchasers EXHIBIT A — Form of Note EXHIBIT B — Form of Consent EXHIBIT C — Construction Budget and Schedule EXHIBIT D — Form of Mortgage ANNEX I — Financial Model ANNEX II — Amortization Schedule
-1- CALISTOGA RESILIENCY CENTER, LLC 4360 Park Terrace Drive, Suite 100 Westlake Village, CA 91361 12.50% Senior Secured Notes due April 4, 2032 April 4, 2025 TO EACH OF THE HOLDERS LISTED IN THE PURCHASER SCHEDULE HERETO: Ladies and Gentlemen: Calistoga Resiliency Center, LLC, a Delaware limited liability company (the “Company”), agrees with each of the Purchasers as follows: SECTION 1. AUTHORIZATION OF NOTES. The Company will authorize the Conversion of $27,826,365.17 aggregate principal amount of its outstanding Indebtedness under the Bridge Facility in the form of $27,826,365.17 aggregate principal amount of its 12.50% Senior Secured Notes due April 4, 2032 (the “Notes”). The Notes shall be substantially in the form set out in Exhibit A. Certain capitalized and other terms used in this Agreement are defined in Schedule A and, for purposes of this Agreement, the rules of construction set forth in Section 23.4 shall govern. The Notes are to be secured by the Collateral in accordance with the Security Documents. By entering into this Agreement, the Company acknowledges and agrees to be bound by the provisions of the Security Documents. By acceptance hereof, each holder of a Note acknowledges and agrees, and each transferee of a Note shall be deemed to acknowledge and agree, that the Collateral Agent acts as collateral agent for the holders of the Notes and has certain rights and obligations as a collateral agent under the Financing Documents. SECTION 2. CONVERSION OF INDEBTEDNESS. Subject to the terms and conditions of this Agreement, concurrently with the Conversion the Company will reissue to such Purchaser, at the Closing provided for in Section 3 (Closing of Conversion), Notes in the principal amount specified opposite such Purchaser’s name in the Purchaser Schedule in an amount equal to 100% of the principal amount thereof at a purchase price equal to 99.25% of such Note. SECTION 3. CLOSING OF CONVERSION. The purchase of the outstanding Indebtedness under the Bridge Facility to be purchased by each Purchaser and the concurrent Conversion shall occur at the offices of Winston & Strawn LLP, 200 Park Avenue, New York, NY 10166, at 9:00 a.m., New York time, at a closing (the “Closing”) on April 4, 2025. At the Closing, the Company will deliver to each Purchaser of such Indebtedness a Note (or such greater number of Notes in denominations of at least $100,000 as such Purchaser may request) dated the date of the Closing and registered in such Purchaser’s name (or in the name of its nominee), against delivery by such Purchaser to the Bridge Facility Provider or its order of immediately available
-2- funds in the amount of the purchase price therefor set forth in the Assignment and Acceptance to be paid on the Closing in accordance with this Section 3 (Closing of Conversion) by wire transfer of immediately available funds for the account of the Bridge Facility Provider using the wire instructions provided by the Bridge Facility Provider to such Purchaser. If, at the Closing, the Company shall fail to tender such Notes to any holder as provided above in this Section 3 (Closing of Conversion), or any of the conditions specified in Section 4 (Conditions to Closing of Conversion) shall not have been fulfilled to such Purchaser’s satisfaction, such Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Purchaser may have by reason of such failure by the Company to tender such Notes or any of the conditions specified in Section 4 (Conditions to Closing of Conversion) not having been fulfilled to such Purchaser’s satisfaction. SECTION 4. CONDITIONS TO CLOSING OF CONVERSION. Each Purchaser’s obligation to purchase and pay for the applicable Indebtedness under the Bridge Facility to be sold to such Purchaser at the Closing and to convert such Indebtedness into a Note is subject to the fulfillment to such Purchaser’s satisfaction, prior to or at the Closing, of the following conditions: Section 4.1 Representations and Warranties. The representations and warranties of the Company, Sponsor and the Pledgor in the Financing Documents to which such Person is a party shall be correct when made and at the Closing. Section 4.2 Performance; No Default. (a) The Company shall have performed and complied with all agreements and conditions contained in the Financing Documents required to be performed or complied with by it prior to or at the Closing. (b) Before and after giving effect to the purchase of such Indebtedness under the Bridge Facility and the Conversion (and the application of the proceeds of the Bridge Facility as contemplated by Section 6.13 (Use of Proceeds; Margin Regulations)), no Default or Event of Default shall have occurred and be continuing. (c) The Company shall not have entered into any transaction since the date of the Investor Presentation that would have been prohibited by Section 11 (Negative Covenants) had such Section applied since such date. Section 4.3 Compliance Certificates. (a) Officer’s Certificate. The Company shall have delivered to such Purchaser an Officer’s Certificate, dated the date of the Closing, certifying that the conditions specified in Section 4.1 (Representations and Warranties), Section 4.2(b) (Performance; No Default) and Section 4.9 (Changes in Corporate Structure) have been fulfilled. (b) Secretary’s Certificate. The Company shall have delivered to such Purchaser a certificate of its Secretary or Assistant Secretary, dated the date of the Closing, certifying as to (i) the resolutions attached thereto and other corporate proceedings relating to the authorization, execution
-3- and delivery of the Financing Documents, (ii) the Company’s organizational documents as then in effect, (iii) the incumbency and signatures of those officers authorized to act with respect to the Financing Documents and (iv) a certificate of good standing in its jurisdiction of formation. Section 4.4 Opinions of Counsel. Such Purchaser shall have received opinions in form and substance satisfactory to such Purchaser, dated the date of the Closing (a) from Vinson & Elkins LLP, counsel for the Company and (b) from Winston & Strawn LLP, the Purchasers’ special counsel in connection with such transactions. Section 4.5 Purchase Permitted By Applicable Law, Etc. On the date of the Closing such Purchaser’s purchase of Indebtedness under the Bridge Facility and the concurrent Conversion shall (a) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (such as section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (b) not violate any applicable law or regulation (including Regulation T, U or X of the Board of Governors of the Federal Reserve System) and (c) not subject such Purchaser to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof. If requested by such Purchaser, such Purchaser shall have received an Officer’s Certificate certifying as to such matters of fact as such Purchaser may reasonably specify to enable such Purchaser to determine whether such purchase is so permitted. Section 4.6 Sale of Other Notes. Contemporaneously with the Closing, each Purchaser shall purchase the Indebtedness to be purchased by it from the Bridge Facility Provider at the Closing as specified in the Purchaser Schedule attached hereto and the Company shall convert such Indebtedness purchased by each Purchaser as set forth in Section 3 (Closing of Conversion). Section 4.7 Payment of Fees and Expenses. Without limiting Section 16.1 (Transaction Expenses), the Company shall have paid on or before the Closing: (a) the fees, charges and disbursements of (i) Winston & Strawn LLP, counsel for the Purchasers, (ii) Vinson & Elkins LLP, counsel for the Company and (iii) the other consultants referred to in the Funds Flow Memorandum, in each case, to the extent reflected in a statement of such counsel or consultant, as applicable, rendered to the Company at least one (1) Business Day prior to the Closing; and (b) any fees, charges and disbursements required under the fee letters between, and disbursements required under, the fee letters between the Company, on the one hand, and the Depositary Bank and the Collateral Agent, on the other hand, referred to in the Investor Presentation. Section 4.8 Private Placement Number. A Private Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the SVO) shall have been obtained for the Notes. Section 4.9 Changes in Corporate Structure. The Company shall not have changed its jurisdiction of incorporation or organization, as applicable, or been a party to any merger or consolidation or succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in Schedule 6.5.
-4- Section 4.10 Funds Flow Memorandum. Each Purchaser shall have received the Funds Flow Memorandum. Section 4.11 Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to such Purchaser and its counsel, and such Purchaser and its counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such counsel may reasonably request. Section 4.12 Delivery of Financing Documents. The Purchasers shall have received this Agreement and each other Financing Document, duly authorized, executed and entered into by the Company, the Purchasers, in each case, to the extent party thereto. Section 4.13 Construction Budget and Schedule. The Purchasers shall have received the Construction Budget and Schedule. Section 4.14 Annual Operating Budget. The Purchasers shall have received the Annual Operating Budget. Section 4.15 Lien Searches. The Purchasers shall have received the results of a recent lien search in the Office of the Secretary of State of the State of Delaware with respect to the Pledgor and the Company, and in each other jurisdiction where assets of the Pledgor and Company are located, and such searches shall reveal no Liens on the equity interests of the Company or any of the assets of the Pledgor or Company, in each case, except for Permitted Liens or Liens discharged prior to the Closing pursuant to documentation satisfactory to the Purchasers. Section 4.16 Financing Statements. Each document (including any UCC financing statement) required by the Security Documents or under law or reasonably requested by the Purchasers to be filed, registered or recorded in order to create in favor of the Collateral Agent, for the benefit of the Secured Parties, a perfected Lien on the Collateral described therein, prior and superior in right to any other Person (other than Permitted Liens that are entitled to a higher priority) shall be in proper form for filing, registration or recordation. Section 4.17 LLC Interest Certificates. The Collateral Agent shall have received the original executed limited liability company membership interest certificates representing 100% of the limited liability company membership interests in the Company pledged pursuant to the Pledge Agreement, together with an undated transfer power for each such membership interest certificate executed in blank by a duly authorized officer of the Pledgor. Section 4.18 Filing Fees. The Purchasers shall have received evidence that all filing and recordation fees and all recording and other similar fees, and all recording, stamp and other taxes and other expenses related to such filings, registrations and recordings necessary for and related to the transactions contemplated by this Agreement and the other Financing Documents to be consummated on or prior to the Closing have been paid in full (to the extent the obligation to make such payment then exists) by or on behalf of the Company or are to be paid in full on the Closing. Section 4.19 Independent Engineer and Insurance Consultant Reports. The Purchasers shall have received copies of the following reports, together with reliance letters in respect of same
-5- authorizing the Purchasers’ reliance on such reports: (a) report of the Independent Engineer; and (b) report of the Insurance Consultant. Section 4.20 Financial Model. The Purchaser shall have received the Financial Model, which includes, inter alia, projections of the Debt Service Coverage Ratio during the term of the Notes. Section 4.21 Historical Financial Statements. The Purchasers shall have received the Historical Financial Statements. Section 4.22 No Material Adverse Effect. No event, condition or circumstance that would reasonably be expected to constitute a Material Adverse Effect shall have occurred and be continuing. Section 4.23 Know Your Customer. The Purchasers shall have received all such documentation and information requested by the Purchasers that are necessary (including the names and addresses of the Company) for the Purchasers to identify the Company in accordance with applicable Anti-Money Laundering Laws and the requirements of the USA PATRIOT Act (including the “know your customer” and similar regulations thereunder). Section 4.24 Collateral Accounts. The Company shall have established each Collateral Account required to be established in accordance with the terms of the Depositary Agreement and the other Financing Documents as of the Closing. Section 4.25 Base Equity Contributions. The Purchasers shall have received evidence that not less than $14,300,000 of equity contributions have been used (or are available to the Company to be used) to pay Project Costs. Section 4.26 Insurance. The Collateral Agent (on behalf of the Purchasers) shall have received (a) an insurance broker’s certificate from the Company’s nationally recognized insurance broker(s), dated on or about the Closing, confirming that all Required Insurance is in full force and effect and that all premia then due thereon have been paid and providing copies of all policies evidencing such insurance (or a binder, commitment or certificates signed by the insurer or a broker authorized to bind the insurer) and (b) a certificate from the Insurance Consultant, dated on or about the Closing, addressed to the Purchasers and the Collateral Agent confirming that all insurance required to be maintained by the Company pursuant to the terms of this Agreement and the other Transaction Documents to which it is a party (i) are in full force and effect and (ii) all premia due at that time under each relevant insurance have been paid. Section 4.27 Acquisition of Bridge Facility Loans. The Purchasers shall have acquired the Bridge Facility Loans from the Bridge Facility Provider pursuant to an Assignment and Acceptance. Section 4.28 Repayment and Release of Bridge Facility Loans and Liens. Such Purchaser shall have received evidence that: (a) the lenders under the Bridge Facility have been (or immediately following the issuance of the Notes on the Closing Date, will be) fully paid, and such lenders shall have released all Liens granted in their favor under the Bridge Facility, and (b) each of the “Security Agreement” and the “Pledge Agreement” (as each such term is defined in the Bridge Facility) has been (or immediately following the issuance of the Notes, will be) terminated, in each case pursuant to executed releases, discharges and payoff letters provided on the Closing Date.
-6- SECTION 5. [RESERVED] SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to each Purchaser that: Section 6.1 Organization; Power and Authority. (a) The Company is a limited liability corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. (b) The Company has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Agreement and the Notes and to perform the provisions hereof and thereof. Section 6.2 Authorization, Consents Etc. (a) The Company has the power and authority, and the legal right, to make, deliver and perform the Financing Documents to which it is a party and to obtain extensions of credit thereunder. The Company has taken all necessary organizational action to authorize the execution, delivery and performance of the Financing Documents to which it is a party, including, as of the Closing, the granting of Liens pursuant to the Security Documents, and, in the case of the Company, to authorize the extensions of credit on the terms and conditions of the Financing Documents. (b) No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with such extensions of credit or with the execution, delivery and performance of this Agreement or any of the other Financing Documents by the Company, except (i) consents, authorizations, filings and notices which have been obtained or made and are in full force and effect, (ii) the filings referred to in Section 6.22, (iii) consents, authorizations, filings and notices required by securities, regulatory or other applicable Legal Requirements in connection with an exercise of remedies, (iv) consents, authorizations, filings and notices set forth in Section 10.14 and (v) which, if not obtained or made, would not reasonably be expected to result in a Material Adverse Effect. (c) Each Financing Document has been duly executed and delivered on behalf of the Company. (d) This Agreement constitutes, and each other Financing Document upon execution and delivery thereof will constitute, a legal, valid and binding obligation of the Company enforceable against each such Person in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law.)
-7- Section 6.3 Disclosure. (a) The Company, through its agent, Jefferies LLC, has delivered to each Purchaser a copy of an Investor Presentation, dated November 2024 (the “Investor Presentation”), relating to the transactions contemplated hereby. The Investor Presentation fairly describes, in all material respects, the business and principal properties of the Company. This Agreement, the Investor Presentation prepared by or on behalf of the Company in connection with the transactions contemplated herein, the financial statements listed in Schedule 6.5 and the documents, certificates or other writings delivered to the Purchasers by or on behalf of the Company prior to April 4, 2025 in connection with the transactions contemplated hereby and identified in Schedule 6.3 (this Agreement, the Investor Presentation and such documents, certificates or other writings and such financial statements delivered to each Purchaser being referred to, collectively, as the “Disclosure Documents”), taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made. Except as disclosed in the Disclosure Documents, since the date of the latest financial statements delivered pursuant to Section 8.1, there has been no change in the financial condition, operations, business, or properties of the Company except changes that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. There is no fact known to the Company that could reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the Disclosure Documents. It is understood and agreed that the projections and forward looking statements in the Disclosure Documents are not subject to this Section 6.3(a) and are instead subject to Section 6.3(b), below. (b) All projections and forward-looking statements in the Disclosure Documents prepared by the Company were prepared in good faith and were based on reasonable assumptions as to all legal and factual matters material to the estimates set forth therein. Section 6.4 No Subsidiaries. The Company has no subsidiaries and has no Equity Interests in any Person. Section 6.5 Financial Statements; Material Liabilities. The Company has delivered to each Purchaser copies of the financial statements of the Company listed on Schedule 6.5. All of such financial statements (including in each case the related schedules and notes) fairly present in all material respects the financial position of the Company as of the respective dates specified in such Schedule and the consolidated results of their operations and cash flows for the respective periods so specified and have been prepared in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year-end adjustments). Section 6.6 Compliance with Laws, Other Instruments, Etc. The execution, delivery and performance by the Company of this Agreement, the Notes and the other Financing Documents will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien (other than the creation of any Liens pursuant to the Financing Documents) in respect of any property of the Company under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter, regulations or by-laws, shareholders agreement or any other agreement or instrument to which the Company is bound or by which the Company or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree or ruling of any court, arbitrator or
-8- Governmental Authority applicable to the Company or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company. Section 6.7 Litigation; Observance of Agreements, Statutes and Orders. (a) Except as set forth on Schedule 6.3, there are no actions, suits, investigations or proceedings pending or, to the best knowledge of the Company, threatened in writing against or affecting the Company or any property of the Company in any court or before any arbitrator of any kind or before or by any Governmental Authority that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. (b) Except as set forth in Schedule 6.3, the Company is not (i) in default under any agreement or instrument to which it is a party or by which it is bound, (ii) in violation of any order, judgement, decree or ruling of any court, any arbitrator of any kind or any Governmental Authority or (iii) any statute or other rule or regulation of any Governmental Authority applicable to the Company, in each case, which default or violation could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Section 6.8 Taxes. The Company has filed all Material tax returns that are required to have been filed in any jurisdiction, and has paid all taxes shown to be due and payable on such returns and all other taxes and assessments levied upon them or their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (i) the amount of which, individually or in the aggregate, is not Material or (ii) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company has established adequate reserves in accordance with GAAP. The Company knows of no basis for any other tax or assessment that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company in respect of U.S. federal, state or other taxes for all fiscal periods are adequate in all material respects. Section 6.9 Title to Property; Leases. The Company has good and sufficient title to its properties or leases that individually or in the aggregate are Material or are necessary to construct, operate or maintain the Project, including all such properties reflected in the most recent audited balance sheet referred to in Section 6.5 (Financial Statements; Material Liabilities) or purported to have been acquired or leased by the Company after such date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear of Liens prohibited by this Agreement. All leases that individually or in the aggregate are Material are valid and subsisting and are in full force and effect in all material respects. Section 6.10 Licenses, Permits, Etc. (a) The Company owns or possesses all licenses, permits, franchises, authorizations, patents, copyrights, proprietary software, service marks, trademarks and trade names, or rights thereto required for the operations of the Company and the Project, that individually or in the aggregate are Material, without known conflict with the rights of others. (b) To the best knowledge of the Company, no product or service of the Company infringes in any material respect any license, permit, franchise, authorization, patent, copyright, proprietary software, service mark, trademark, trade name or other right owned by any other Person.
-9- (c) To the best knowledge of the Company, there is no Material violation by any Person of any right of the Company with respect to any license, permit, franchise, authorization, patent, copyright, proprietary software, service mark, trademark, trade name or other right owned or used by the Company. Section 6.11 Compliance with Employee Benefit Plans. (a) The Company and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances of noncompliance as have not resulted in and could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in section 3 of ERISA), and no event, transaction or condition has occurred or exists that could, individually or in the aggregate, reasonably be expected to result in the incurrence of any such liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to section 430(k) of the Code or to any such penalty or excise tax provisions under the Code or federal law or section 4068 of ERISA or by the granting of a security interest in connection with the amendment of a Plan, other than such liabilities or Liens as would not be individually or in the aggregate Material. (b) The present value of the aggregate benefit liabilities under each of the Plans (other than Multiemployer Plans), determined as of the end of such Plan’s most recently ended plan year on the basis of the actuarial assumptions specified for funding purposes in such Plan’s most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities in an amount that would result in a Material Adverse Effect. The term “benefit liabilities” has the meaning specified in section 4001 of ERISA and the terms “current value” and “present value” have the meaning specified in section 3 of ERISA. (c) The Company and its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material. (d) The expected postretirement benefit obligation (determined as of the last day of the Company’s most recently ended fiscal year in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 715-60, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Code) of the Company is not Material. (e) The execution and delivery of this Agreement and the Conversion hereunder will not involve any transaction that is subject to the prohibitions of section 406 of ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by the Company to each Purchaser in the first sentence of this Section 6.11(e) is made in reliance upon and subject to the accuracy of such Purchaser’s representation in Section 7.2 (Source of Funds) as to the sources of the funds to be used to pay the purchase price of the Notes to be purchased by such Purchaser. (f) The Company does not have any Non-U.S. Plans.
-10- Section 6.12 Private Offering by the Company. Neither the Company nor anyone acting on its behalf has offered the Notes or any similar Securities for sale to, or solicited any offer to buy the Notes or any similar Securities from, or otherwise approached or negotiated in respect thereof with, any Person other than not more than forty (40) Institutional Investors (including the Purchasers), each of which has been offered the Notes at a private sale for investment. Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of section 5 of the Securities Act or to the registration requirements of any Securities or blue-sky laws of any applicable jurisdiction. Section 6.13 Use of Proceeds; Margin Regulations. The Company will apply the proceeds of the sale of the Notes hereunder as set forth in Section 10.9 (Use of Proceeds). No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any Securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock does not constitute more than 5% of the value of the consolidated assets of the Company and the Company does not have any present intention that margin stock will constitute more than 5% of the value of such assets. As used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U. Section 6.14 Existing Indebtedness; Future Liens. (a) Except as described therein, Schedule 6.14 (Schedule of Existing Indebtedness of the Company) sets forth a complete and correct list of all outstanding Indebtedness of the Company as of December 31, 2024 (including descriptions of the obligors and obligees, principal amounts outstanding, any collateral therefor and any Guaranty thereof), since which date there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of the Indebtedness of the Company. The Company is not in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness of the Company and no event or condition exists with respect to any Indebtedness of the Company that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment. (b) Except as disclosed in Schedule 6.14 (Schedule of Existing Indebtedness of the Company), the Company has not agreed or consented to cause or permit any of its property, whether now owned or hereafter acquired, to be subject to a Lien that secures Indebtedness or to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien that secures Indebtedness. (c) The Company is not a party to, or otherwise subject to any provision contained in, any instrument evidencing Indebtedness of the Company, any agreement relating thereto or any other agreement (including its charter or any other organizational document) which limits the amount of, or otherwise imposes restrictions on the incurring of, Indebtedness of the Company, except as disclosed in Schedule 6.14 (Schedule of Existing Indebtedness of the Company).
-11- Section 6.15 Foreign Assets Control Regulations, Etc. (a) Neither the Company nor any Controlled Entity (i) is a Blocked Person, (ii) has been notified that its name appears or may in the future appear on a State Sanctions List or (iii) is a target of sanctions that have been imposed by the United Nations or the European Union. (b) Neither the Company nor any Controlled Entity (i) has violated, been found in violation of, or been charged or convicted under, any applicable U.S. Economic Sanctions Laws, Anti- Money Laundering Laws or Anti-Corruption Laws or (ii) to the Company’s knowledge, is under investigation by any Governmental Authority for possible violation of any U.S. Economic Sanctions Laws, Anti-Money Laundering Laws or Anti-Corruption Laws. (c) No part of the proceeds from the sale of the Notes hereunder: (i) constitutes or will constitute funds obtained on behalf of any Blocked Person or will otherwise be used by the Company or any Controlled Entity, directly or indirectly, (A) in connection with any investment in, or any transactions or dealings with, any Blocked Person, (B) for any purpose that would cause any Purchaser to be in violation of any U.S. Economic Sanctions Laws or (C) otherwise in violation of any U.S. Economic Sanctions Laws; (ii) will be used, directly or indirectly, in violation of, or cause any Purchaser to be in violation of, any applicable Anti-Money Laundering Laws; or (iii) will be used, directly or indirectly, for the purpose of making any improper payments, including bribes, to any Governmental Official or commercial counterparty in order to obtain, retain or direct business or obtain any improper advantage, in each case which would be in violation of, or cause any Purchaser to be in violation of, any applicable Anti-Corruption Laws. (d) The Company has established procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable law) to ensure that the Company and each Controlled Entity is and will continue to be in compliance with all applicable U.S. Economic Sanctions Laws, Anti-Money Laundering Laws and Anti-Corruption Laws. Section 6.16 Status under Certain Statutes. The Company is not subject to, or is exempt from, regulation under the Investment Company Act of 1940. Section 6.17 Environmental Matters. (a) The Company has no knowledge of any Environmental Claim and has not received any written notice of any Environmental Claim or proceeding against the Company or any of their real properties or other assets owned, leased or operated by the Company, alleging any violation of or liability under any Environmental Laws, except, in each case, such as would not reasonably be expected to result in a Material Adverse Effect. (b) The Company has no knowledge of any facts which would give rise to any Environmental Claim or any other liability under Environmental Laws occurring on or in any way related to real properties owned, leased or operated by the Company or to other assets or their use,
-12- except, in each case, such as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. (c) The Company has not stored any Hazardous Materials on real properties owned, leased or operated by the Company in a manner which is contrary to any Environmental Law that would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. (d) The Company has not disposed of any Hazardous Materials in a manner which is contrary to any Environmental Law that would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. (e) All buildings on all real properties now owned, leased or operated by the Company are in compliance with applicable Environmental Laws, except where failure to comply would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Section 6.18 Energy Regulatory Status. (a) No later than the date the Project injects electric energy onto the Transmission System, the Company shall: (i) be a “public utility” under the FPA and shall have received authorization from FERC to sell energy, capacity and ancillary services at market-based rates under Section 205 of the FPA (“MBR Authority”) and has been granted associated waivers from regulation and blanket authorizations typically granted to sellers of power at market-based rates; and (ii) have filed a notification of self-certification of EWG status with FERC. (b) The Pledgor is not subject to, or is exempt from, regulation under the FPA as a “public utility”. The Pledgor is a “holding company” under PUHCA solely with respect to its ownership of an EWG. Neither the Company nor the Pledgor is subject to regulation as a “public utility” or an “electrical corporation” or an “electric utility” or any equivalent entity under California laws and regulations governing such entities. (c) None of the Secured Parties or any Affiliate of such Persons will, solely as a result of the Company’s construction, ownership, leasing or operation of the Project, the sale of energy, capacity or ancillary services therefrom as contemplated in the Material Project Documents or the entering into a Material Project Document in respect of such Project, the issuance of the Notes, the entering into of the Financing Documents by the Company or the Pledgor, or any transaction contemplated hereby or thereby, be subject to, or not exempt from, regulation under the FPA or PUHCA or under state laws and regulations respecting the rates or the financial or organizational regulation of electric utilities, except that (i) upon the exercise of certain remedies as provided for under the Financing Documents, a Secured Party or its Affiliate may be subject to regulation under the FPA or PUHCA, unless an exemption or exception applies and (ii) the exercise of any remedy provided for in any Financing Document by a Secured Party or its Affiliate or any of their respective successors or assigns may require prior FERC approval under Section 203 of the FPA. (d) Other than the receipt by the Company of MBR Authority (with associated waivers from regulation and blanket authorizations typically granted to sellers of power at market-based rates) from FERC with respect to its future sales of energy and capacity at wholesale, the notice of self-certification of EWG status, and filings, consents, orders or approvals that may be
-13- required by the Company to obtain and maintain its Interconnection Agreement, MBR Authority and associated waivers or authorizations, and EWG status, no filing with or consent, order or approval from FERC or CPUC is required to be made or obtained in order for the Company and the Pledgor to enter into the Financing Documents or for the ownership and operation of the Project and the sale of energy, capacity and/or ancillary services therefrom. Section 6.19 Applicable Permits. (a) There are no Permits under existing rules of a Governmental Authority (including Environmental Laws) as the Project is contemplated to be constructed, owned and operated that are or will become Applicable Permits other than the Permits described in Schedule 6.19 (Applicable Permits) (other than those Permits the failure of which to obtain or maintain could not reasonably be expected to have a Material Adverse Effect). (b) Each Applicable Permit listed in Part I of Schedule 6.19 (Applicable Permits) has been issued to or made by the Company, as applicable, is in full force and effect and is not subject to any current legal proceeding (including administrative or judicial appeal, permit renewals or modification) or to any unsatisfied condition (required to be satisfied as of the date this representation and warranty is made) that could reasonably be expected to have a Material Adverse Effect, and all statutorily prescribed appeal periods with respect to the issuance of such Permits have expired. (c) The Company is in compliance with all Applicable Permits held in its name and to the Company’s knowledge, third parties are in compliance with Applicable Permits held for the benefit of the Project except in each case as such non-compliance as could not reasonably be expected to have a Material Adverse Effect. (d) As of the Closing, each Permit listed in Part II of Schedule 6.19 (Applicable Permits), which has not yet been obtained, is not yet an Applicable Permit and is of a type that is reasonably expected to be timely obtainable in accordance with the Construction Budget and Schedule, and, to the Company’s knowledge, no facts or circumstances exist that make it reasonably likely that any such Permit will not be so obtainable. Section 6.20 Solvency. As of the Closing, the Sponsor, Company and the Pledgor, are each and after giving effect to the transactions contemplated by the Financing Documents, will be, Solvent. Section 6.21 No Default. No Default or Event of Default has occurred and is continuing. Section 6.22 Perfection of Security Interests. As of the Closing, the Security Documents are effective to create in favor of the Collateral Agent and the Secured Parties a legal, valid and enforceable security interest in the Collateral described therein, subject to any Permitted Liens. The security interest granted to the Collateral Agent (for the benefit of the Secured Parties) pursuant to the Security Documents in the Collateral will be perfected (a) with respect to any property that can be perfected solely by filing, to the extent Article 9 of the UCC applies thereto, upon the filing of financing statements in the applicable filing office in Delaware, (b) with respect to the Collateral Accounts, upon execution of the Depositary Agreement and (c) with respect to any property (if any) that can be perfected by possession, upon the Collateral Agent receiving possession thereof.
-14- Section 6.23 Material Project Documents. (a) Correct and complete copies of all Material Project Documents have been delivered to each Purchaser by the Company. (b) Each Material Project Document is an Effective Material Project Document (except such Material Project Document that has been terminated in accordance with its terms). (c) The rights granted to the Company pursuant to the Material Project Documents are sufficient in all material respects to enable the Project to be located, constructed, operated and routinely maintained as contemplated by the Transaction Documents and provide adequate ingress and egress for any reasonable purpose in connection with the operation and maintenance of the Project. Section 6.24 Labor Matters. Except as, in the aggregate, would not reasonably be expected to have a Material Adverse Effect: (a) there is no strike, request for representation, organizing campaign, work stoppage, slowdown, lockout or other labor dispute against the Company pending or, to the knowledge of the Company, threatened; and (b) hours worked by and payments made to employees of the Company have not been in violation of the Fair Labor Standards Act or any other applicable Legal Requirement dealing with such matters. Section 6.25 Required Insurance. All Required Insurance has been obtained and is in full force and effect. Section 6.26 Condemnation Proceedings. There are no condemnation proceedings by or before any Governmental Authority now pending or, to the knowledge of the Company, threatened in writing with respect to any Project, or sale of power therefrom or any portion thereof material to the construction, ownership or operation of the Project or sale of power therefrom. Section 6.27 Utilities. All utility services necessary for the construction of the Project and the operation of the Project for its intended purpose are available at the Mortgaged Property or will be so available as and when required upon commercially reasonable terms. Section 6.28 Roads and Feeder Lines. (a) All roads necessary for the construction and full utilization of each Project for its intended purposes under the Material Project Documents have either been completed or the necessary rights of way therefor have been acquired, except for Permits to cross state, county or township roads that will be granted as a ministerial matter during the construction of such Project, prior to the date such Permits are required to be acquired pursuant to any applicable Governmental Rule. (b) All necessary easements, rights of way, agreements and other rights for the construction, interconnection, and utilization of the feeder lines of each Project have been acquired. SECTION 7. REPRESENTATIONS OF THE PURCHASERS. Section 7.1 Purchase for Investment. (a) Each Purchaser severally represents that it is purchasing the Notes for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the
-15- disposition of such Purchaser’s or their property shall at all times be within such Purchaser’s or their control. Each Purchaser understands that the Notes have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that the Company is not required to register the Notes. (b) The Purchaser (i) has such knowledge and experience in financial and business matters and in investments of this type that it is capable of evaluating the merits and risks of its investment in the Notes and of making an informed investment decision and (ii) (A) has performed such investigations it deems necessary in order to make an informed investment decision and (B) can bear the economic risk of (x) investment in the Notes and (y) a total loss in respect of such investment. The Purchaser has such knowledge and experience in business and financial matters so as to enable it to understand and evaluate the risks of and form an investment decision with respect to its investment in the Notes and to protect its own interest in connection with such investment. Section 7.2 Source of Funds. Each Purchaser severally represents that at least one of the following statements is an accurate representation as to each source of funds (a “Source”) to be used by such Purchaser to pay the purchase price of the Notes to be purchased by such Purchaser hereunder: (a) the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the NAIC (the “NAIC Annual Statement”)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser’s state of domicile; or (b) the Source is a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or (c) the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1 or (ii) a bank collective investment fund, within the meaning of the PTE 91- 38 and, except as disclosed by such Purchaser to the Company in writing pursuant to this clause (c), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or (d) the Source constitutes assets of an “investment fund” (within the meaning of Part VI of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part VI of the QPAM Exemption), no employee benefit plan’s assets that are managed by the QPAM in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same
-16- employee organization and managed by such QPAM, represent more than 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM maintains an ownership interest in the Company that would cause the QPAM and the Company to be “related” within the meaning of Part VI(h) of the QPAM Exemption and (i) the identity of such QPAM and (ii) the names of any employee benefit plans whose assets in the investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization, represent 10% or more of the assets of such investment fund, have been disclosed to the Company in writing pursuant to this clause (d); or (e) the Source constitutes assets of a “plan(s)” (within the meaning of Part IV(h) of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in Part IV(d)(3) of the INHAM Exemption) owns a 10% or more interest in the Company and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this clause (e); or (f) the Source is a governmental plan; or (g) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this clause (g); or (h) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA. As used in this Section 7.2, the terms “employee benefit plan,” “governmental plan,” and “separate account” shall have the respective meanings assigned to such terms in section 3 of ERISA. SECTION 8. INFORMATION AS TO COMPANY Section 8.1 Financial and Business Information. The Company shall deliver to each holder of a Note that is an Institutional Investor: (a) Quarterly Statements — (x) until the first anniversary of the Closing, within ninety (90) days and (y) thereafter, within sixty (60) days after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), duplicate copies of, (i) the balance sheet of the Company as at the end of such quarter, and (ii) statements of income, changes in shareholders’ equity and cash flows of the Company, for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter,
-17- setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from year-end adjustments; (b) Annual Statements — within 120 days after the end of each fiscal year of the Company, duplicate copies of, (i) the balance sheet of the Company as at the end of such year, and (ii) statements of income, changes in members’ equity and cash flows of the Company for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion thereon (without a “going concern” or similar qualification or exception and without any qualification or exception as to the scope of the audit on which such opinion is based) of independent public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances; (c) Construction Reports — on or prior to the 30th day following the last day of each calendar month, provide to each Purchaser and the Independent Engineer monthly construction progress reports delivered to the Company under the EPC Contract; (d) Annual Operating Budget — no later than 45 days prior to the end of each fiscal year of the Company commencing with the fiscal year ending December 31, 2025, the Company shall adopt and deliver to each Holder an operating plan and budget for the following fiscal year with respect to the operation and maintenance of the Project, including all anticipated Operating Costs, with allowance for contingencies (the “Annual Operating Budget”); (e) Notice of Default or Event of Default — promptly, and in any event within 5 days after a Responsible Officer becoming aware of the existence of any Default or Event of Default or that any Person has given any written notice or taken any action with respect to a claimed Default of the type referred to in Section 12(g), a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto; (f) Employee Benefits Matters — to the extent that it would reasonably be expected to result in a Material Adverse Effect, promptly, and in any event within 5 days after a Responsible Officer becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes to take with respect thereto:
-18- (i) with respect to any Plan, any reportable event, as defined in section 4043(c) of ERISA and the regulations thereunder, for which notice thereof has not been waived pursuant to such regulations as in effect on the date hereof; (ii) the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; (iii) any event, transaction or condition that could result in the incurrence of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, could reasonably be expected to have a Material Adverse Effect; or (iv) receipt of notice of the imposition of a Material financial penalty (which for this purpose shall mean any tax, penalty or other liability, whether by way of indemnity or otherwise) with respect to one or more non-U.S. Plans; (g) Notices from Governmental Authority — promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Company from any Governmental Authority relating to any order, ruling, statute or other law or regulation that could reasonably be expected to have a Material Adverse Effect; (h) Resignation or Replacement of Auditors — within 10 days following the date on which the Company’s auditors resign or the Company elects to change auditors, as the case may be, notification thereof, together with such further information as the Required Holders may request; (i) Litigation — promptly, copies of any written complaint commencing any litigation or proceeding (or any written threat or notice of the intention of any Person to file or commence any litigation or proceeding), including any litigation or proceeding under Environmental Laws, involving the Company or the Project, to the extent any such litigation or proceeding (i) relates to the Project and involves a claim which equals or exceeds $2,000,000, (ii) would reasonably be expected to have a Material Adverse Effect if determined adversely to the Company or the Project or (iii) seeks injunctive or similar relief; (j) Event of Loss — the occurrence of any Event of Loss, in each case, whether or not insured and involving a probable loss of $2,000,000 or more; (k) Environmental Matters — promptly, and in any event within 30 days of the Company’s knowledge thereof, provide (i) copies of any written notices of noncompliance with any Environmental Law or Release of Hazardous Materials on or from any Mortgaged Property, required to be reported pursuant to Environmental Laws or (ii) pending or, to the Company’s knowledge, threatened in writing, material Environmental Claim against the Company arising in connection with its operations on or at the Project or any Mortgaged Property, in each case, which would reasonably be expected to have a Material Adverse Effect;
-19- (l) Material Adverse Effect — the occurrence of any event or condition that has had or is reasonably expected to cause a Material Adverse Effect; (m) Material Project Document — (i) the delivery or receipt of any notice pursuant to any Material Project Document that could reasonably be expected to have a Material Adverse Effect, (ii) any termination or material amendment, modification or waiver of any Material Project Document or (iii) any material breach or default under any Material Project Document (such notice to be provided no later than five Business Days after the receipt by the Company of any notice of such material breach or default of a Material Project Document from a Material Project Participant); or any event of force majeure asserted under any Material Project Document which exists for more than 10 consecutive days; (n) Tax Credit Transfer Documents — promptly after the Tax Credit Transfer Agreement Signing Date, copies of the Tax Credit Transfer Documents; and (o) Requested Information — with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Company or relating to the ability of the Company to perform its obligations hereunder and under the Notes as from time to time may be reasonably requested by any such holder of a Note. Section 8.2 Visitation. The Company shall permit the representatives of each holder of a Note that is an Institutional Investor: (a) No Default — if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Company, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company with the Company’s officers, and (with the consent of the Company, which consent will not be unreasonably withheld) its independent public accountants, and (with the consent of the Company, which consent will not be unreasonably withheld) to visit the other offices and properties of the Company, all at such reasonable times and no more than once a year (for all Purchasers and holders of Notes, taken as a whole), as reasonably requested in writing; and (b) Default — if a Default or an Event of Default then exists, at the expense of the Company to visit and inspect any of the offices or properties of the Company, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their affairs, finances and accounts with their officers and independent public accountants (and by this provision the Company authorizes said accountants to discuss the affairs, finances and accounts of the Company), all at such times and as often as may be reasonably requested. Section 8.3 Electronic Delivery. Financial statements, opinions of independent certified public accountants, other information and Officer’s Certificates that are required to be delivered by the Company pursuant to Section 8.1(a) (Quarterly Statements) or (b) (Annual Statements) shall be deemed to have been delivered if the Company satisfies any of the following requirements with respect thereto: (a) such financial statements satisfying the requirements of Section 8.1(a) (Quarterly Statements) or Section 8.1(b) (Annual Statements) are delivered to each holder of a Note by e-mail at the e-mail address set forth in such holder’s Purchaser Schedule or as communicated from time to time in a separate writing delivered to the Company; or
-20- (b) such financial statements satisfying the requirements of Section 8.1(a) (Quarterly Statements) or Section 8.1(b) (Annual Statements) are timely posted by or on behalf of the Company on Intralinks or on any other similar website to which each holder of Notes has free access; provided however, that in no case shall access to such financial statements, other information and Officer’s Certificates be conditioned upon any waiver or other agreement or consent (other than confidentiality provisions consistent with Section 21 of this Agreement.) SECTION 9. PAYMENT AND PREPAYMENT OF THE NOTES. Section 9.1 Scheduled Amortization; Maturity. The Company will prepay and on the Maturity Date, the Company will repay, the Notes at par and without payment of the Make-Whole Amount or any premium on the dates and in the amounts set forth in Annex II, provided that upon any partial prepayment of the Notes pursuant to Section 9.2 or partial purchase of the Notes pursuant to Section 9.5, the principal amount of each required prepayment of the Notes becoming due under this Section 9.1 on and after the date of such prepayment shall be reduced in the same proportion as the aggregate unpaid principal amount of the Notes is reduced as a result of such prepayment or purchase. As provided therein, the entire unpaid principal balance of each Note shall be due and payable on the Maturity Date thereof. Section 9.2 Optional Prepayments with Make-Whole Amount. The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes, in an amount no less than 5% of the aggregate principal amount of the Notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, and the Make-Whole Amount determined for the prepayment date with respect to such principal amount. The Company will give each holder of Notes written notice of each optional prepayment under this Section 9.2 not less than 10 days and not more than 60 days prior to the date fixed for such prepayment unless the Company and the Required Holders agree to another time period pursuant to Section 18. Each such notice shall specify such date (which shall be a Business Day), the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of each Note held by such holder to be prepaid (determined in accordance with Section 9.3), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two (2) Business Days prior to such prepayment, the Company shall deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date. Section 9.3 Offer to Prepay. (a) In addition to required pre-payments pursuant to Section 9.1 (Scheduled Amortization; Maturity), the Company shall make an Offer to Prepay the Notes at par, without prepayment or penalty, upon the occurrence of the events and in the principal amounts (plus accrued and unpaid interest on such principal amount to and including the date of prepayment) as describe below (each, an “Offer to Prepay”): (i) to the extent all or any portion of the Net Available Amount in connection with any Event of Taking or Event of Loss is required to be transferred to the
-21- Prepayment Account in accordance with Section 3.05(b) (Loss Proceeds) of the Depositary Agreement, in an amount equal to such portion of the Net Available Amount; (ii) to the extent of any Net Cash Proceeds in excess of $1,000,000 received from sales of assets (other than asset disposals in the ordinary course of business or otherwise permitted hereunder) that are not used to purchase replacement assets within one hundred eighty (180) days following receipt thereof, in an amount equal to such excess; (iii) to the extent of amounts on deposit in the Distribution Reserve Account and undisbursed for eighteen (18) consecutive months, in an amount equal to such amounts on deposit; (iv) promptly after the Tax Credit Transfer Agreement Funding Date, in an amount equal to the first $12,963,006 of Tax Credit Transfer Proceeds received (the “Tax Credit Transfer Prepayment Amount”); and (v) upon the occurrence of a Change of Control, in an amount equal to the amount required to prepay all of the Notes at par. (b) On the date (the “Offer Date”) which shall be no later than ten (10) Business Days following (i) in the case of Section 9.3(a)(i), the date on which the applicable Net Available Amounts are available to be applied for prepayment in accordance with Section 3.05 of the Depositary Agreement, (ii) in the case of Section 9.3(a)(ii), the date on which the Company decides not to use such Net Cash Proceeds for the purchase of replacement assets, (iii) in the case of Section 9.3(a)(iii), the date on which amounts on deposit in the Distribution Reserve Account are transferred to the Prepayment Account in accordance with Section 3.06(b)(ii) of the Depositary Agreement and are available to be applied for prepayment in accordance with Section 3.06 of the Depositary Agreement, (iv) in the case of Section 9.3(a)(iv), the Tax Credit Transfer Agreement Funding Date and (v) in the case of Section 9.3(a)(v), the date of the Change of Control of the applicable Company, the Company shall make an Offer to Prepay, which shall remain open for a period of at least twenty (20) Business Days following its commencement, by sending a notice to each holder of a Note (with a copy to the Collateral Agent), by overnight mail and otherwise in accordance with Section 19, which notice shall state: (i) that the Offer to Prepay is being made pursuant to this Section 9.3 and that all Notes tendered will be accepted for payment; (ii) the aggregate amount (the “Aggregate Offer Amount”) being offered by the Company to prepay the Notes, specifying the amount of such principal and accrued interest thereon; (iii) the date (the “Prepayment Date”), which date shall be no earlier than ten (10) Business Days and no later than sixty (60) Business Days from the Offer Date, the Company shall prepay the Notes to be prepaid, provided that each holder shall, if applicable, tender reasonably promptly after such prepayment, in accordance with the instructions in the applicable Offer to Prepay, each of its respective Notes that is prepaid in full and in which no other payment obligations with respect thereto remains outstanding;
-22- (iv) that each holder has the right to accept or decline such Offer to Prepay as to its pro rata share thereof (such pro rata share to be determined by multiplying the Aggregate Offer Amount by a fraction, the numerator of which is the aggregate principal amount of the Notes owing to such holder on the Offer Date and the denominator of which is the aggregate principal amount of all outstanding Notes as of the Offer Date); (v) that any holder electing to accept such Offer to Prepay with respect to their Notes may elect to have all or any portion of their pro rata share of the proposed prepayment (as specified by such holder) prepaid; (vi) that any holder electing (A) to have less than its pro rata share (as determined in accordance with clause (v) above) of the proposed prepayment shall provide a notice of acceptance to the Company, which shall include the amount and Notes to be prepaid or (B) not to have its Notes (or any portion thereof) prepaid shall provide a notice of rejection to the Company, in each case within twenty (20) Business Days after receipt by such Holder of the Offer to Prepay, and that failure of any Holder to so provide such notice of acceptance as to less than its pro rata share of the proposed prepayment or notice of rejection within such twenty (20) Business Days shall be deemed to be a rejection by such Holder of its pro rata share (as determined in accordance with clause (v) above) of such Offer to Prepay; (vii) that any Notes not prepaid on the applicable Prepayment Date shall continue to accrue interest; (viii) that, unless the Company defaults in making such payment, the Notes tendered for payment pursuant to the Offer to Prepay shall cease to accrue interest after the Prepayment Date; (ix) that holders of Notes will be entitled to withdraw their election if the Company receives, not later than the close of business on the second Business Day preceding the Prepayment Date, electronically or by mail a notice setting forth the name of the holder, the principal amount of Notes delivered for purchase, and a statement that such holder is withdrawing his election to have the Notes purchased; and (x) that holders whose Notes are being purchased shall be required to surrender the Notes and holders whose Notes are being purchased in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $100,000 in principal amount or an integral multiple of $1,000 in excess thereof. (c) On the Prepayment Date, the Company shall: (i) accept for payment all Notes properly tendered pursuant to the related Offer to Prepay; (ii) pay each holder an amount equal to the payment required in respect of such holder’s Note or portion of such Note properly tendered;
-23- (iii) deliver to the Collateral Agent the Notes properly accepted together with an Officer’s Certificate stating the aggregate principal amount of Notes being purchased by the Company; and (iv) promptly authenticate and mail (or cause to be transferred by book entry) to each holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided, that each such new Note will be in a principal amount of $100,000 or an integral multiple of $1,000 in excess thereof. (d) If the Company complies with the provisions of the preceding clause (b), on and after the Prepayment Date, interest shall cease to accrue on the Notes or the portions thereof repurchased or repaid. If any holder accepts an Offer to Prepay (and notifies the Company of such acceptance) pursuant to Section 9.3(b) and such acceptance is not rescinded but the Company does not repurchase or repay such Note because of the failure of the Company to comply with the preceding clause, interest shall be paid on the unpaid principal, from the Prepayment Date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the Default Rate. (e) The Company shall promptly notify the Collateral Agent of any prepayment of the full outstanding principal amount of the Notes pursuant to Section 9.3. Section 9.4 Mandatory Prepayments. In addition to required pre-payments pursuant to Section 9.1 (Scheduled Amortization; Maturity), the Company shall make the following mandatory payments of the Notes: (a) no later than the third Business Day following the date of receipt by the Company of any cash proceeds from the incurrence of any Indebtedness of the Company (other than with respect to any Indebtedness permitted pursuant to Section 11.9) the Company shall prepay (on a pro rata basis based on the respective principal amounts outstanding of the Notes) the Notes, together with accrued and unpaid interest on the principal amount to be prepaid and an amount equal to the Make-Whole Amount for each such Note, in an aggregate amount equal to 100% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses; and (b) no later than the third Business Day following the date of receipt by the Company of any Net Equity Proceeds, the Company shall prepay (on a pro rata basis based on the respective principal amounts outstanding of the Notes) the Notes, together with accrued and unpaid interest on the principal amount to be prepaid and an amount equal to the Make-Whole Amount for each such Note, in an aggregate amount equal to 100% of such Net Equity Proceeds. Section 9.5 Allocation of Partial Prepayments. In the case of each partial prepayment of the Notes pursuant to Section 9.1 (Scheduled Amortization; Maturity), Section 9.2 (Optional Prepayments with Make-Whole Amount) or Section 9.4 (Mandatory Prepayments), the principal amount of the Notes to be prepaid shall be allocated among all of the Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment. In the case of each partial prepayment of the Notes pursuant to Section 9.3 (Offer to Prepay), the principal amount of the Notes to be prepaid shall be allocated among all of the Notes being prepaid at such time in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment.
-24- Section 9.6 Maturity; Surrender, Etc. In the case of each prepayment of Notes pursuant to this Section 9, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note. Section 9.7 Purchase of Notes. The Company will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except upon the payment or prepayment of the Notes in accordance with this Agreement and the Notes. The Company will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment or prepayment of Notes pursuant to this Agreement and no Notes may be issued in substitution or exchange for any such Notes. Section 9.8 Make-Whole Amount. The term “Make-Whole Amount” means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings: “Called Principal” means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 9.2 or has become or is declared to be immediately due and payable pursuant to Section 13.1, as the context requires. “Discounted Value” means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal. “Reinvestment Yield” means, with respect to the Called Principal of any Note, the sum of (a) 0.50% plus (b) the yield to maturity implied by the “Ask Yield(s)” reported as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1” (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded on-the-run U.S. Treasury Securities Reported having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. If there are no such U.S. Treasury Securities Reported having a maturity equal to such Remaining Average Life, then such implied yield to maturity will be determined by (i) converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted financial practice and (ii) interpolating linearly between the “Ask Yields” Reported for the applicable most recently issued actively traded on-the-run U.S. Treasury Securities with the maturities (1) closest to and greater than such Remaining Average Life and (2) closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.
-25- If such yields are not Reported or the yields Reported as of such time are not ascertainable (including by way of interpolation), then “Reinvestment Yield” means, with respect to the Called Principal of any Note, the sum of (x) 0.50% plus (y) the yield to maturity implied by the U.S. Treasury constant maturity yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for the U.S. Treasury constant maturity having a term equal to the Remaining Average Life of such Called Principal as of such Settlement Date. If there is no such U.S. Treasury constant maturity having a term equal to such Remaining Average Life, such implied yield to maturity will be determined by interpolating linearly between (1) the U.S. Treasury constant maturity so reported with the term closest to and greater than such Remaining Average Life and (2) the U.S. Treasury constant maturity so reported with the term closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note. “Remaining Average Life” means, with respect to any Called Principal, the number of years obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years, computed on the basis of a 360-day year comprised of twelve 30- day months and calculated to two decimal places, that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment. “Remaining Scheduled Payments” means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 9.2 or Section 13.1. “Settlement Date” means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 9.2 or has become or is declared to be immediately due and payable pursuant to Section 13.1, as the context requires. Section 9.9 Payments Due on Non-Business Days. Anything in this Agreement or the Notes to the contrary notwithstanding, (x) except as set forth in clause (y), any payment of interest on any Note that is due on a date that is not a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day; and (y) any payment of principal of or Make-Whole Amount on any Note (including principal due on the Maturity Date of such Note) that is due on a date that is not a Business Day shall be made on the next succeeding Business Day and shall include the additional days elapsed in the computation of interest payable on such next succeeding Business Day. SECTION 10. AFFIRMATIVE COVENANTS. The Company covenants that so long as any of the Notes are outstanding: Section 10.1 Compliance with Laws. Without limiting Section 11.4 (Economic Sanctions, Etc.), the Company shall comply with all laws, ordinances or Governmental Rules or regulations to which it is subject (including ERISA, Environmental Laws, the USA PATRIOT Act and the other laws
-26- and regulations that are referred to in Section 6.15 (Foreign Assets Control Regulations, Etc.)) and will obtain and maintain in effect all Permits necessary to the ownership of its properties or to the conduct of its business, in each case to the extent necessary to ensure that failures to obtain or maintain in effect such Permits and other governmental authorizations could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Section 10.2 Insurance; Loss Proceeds. The Company shall: (a) (i) keep and maintain the Project, all equipment and other property useful and necessary in the business of the Company in good working order and condition, ordinary wear and tear excepted and (ii) maintain and operate the Project in accordance with its obligations under the Material Project Documents, insurance policies, all Applicable Permits and all applicable Legal Requirements, except, in each case (including clauses (i) and (ii) of this Section 10.2(a)), where the failure to do so would not reasonably be expect to have a Material Adverse Effect; and (b) maintain, through either an individual policy or as part of a group policy maintained by or for the Company, with financially sound and reputable insurance companies, the insurance on all material property of the Company that is of an insurable character in at least the amounts and against at least such risks (but including in any event property/business interruption and casualty) as are set forth on Schedule 10.2 hereto, to the extent available on commercially reasonable terms (the “Required Insurance”). If the Company fails to take out or maintain the full insurance coverage required by this Section 10.2, the Collateral Agent, acting at the direction of the Required Holders, upon ten (10) Business Days’ prior notice (unless the aforementioned insurance would lapse within such period or has already lapsed, in which event notice shall not be required) to the Company of any such failure, may (but shall not be obligated to) take out the required policies of insurance and pay the premia on the same. Section 10.3 Maintenance of Properties. The Company shall maintain and keep, or cause to be maintained and kept, its properties in all material respects, in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, provided that this Section 10.3 shall not prevent the Company from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business or the Company has concluded that such discontinuance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Section 10.4 Tax Status; Payment of Taxes. (a) The Company shall file all Material tax returns required to be filed by it in any jurisdiction and shall pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges, or levies imposed on it or any of its properties, assets, income or franchises, to the extent the same have become due and payable and before they have become delinquent and all claims for which sums have become due and payable that have or might become a Lien on properties or assets of the Company, provided that the Company shall not be required to pay any such tax, assessment, charge or levy if (i) the amount, applicability or validity thereof is contested by the Company on a timely basis in good faith and in appropriate proceedings, and the Company has established adequate reserves therefor in accordance with GAAP on the books of the Company or (ii) the nonpayment of all such taxes, assessments, charges and levies could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
-27- (b) The Company shall at all times maintain its status as a partnership or an entity disregarded for U.S. federal, state and local income tax purposes. All of the owners of interests in the Company that are treated as equity for U.S. federal income tax purposes will be United States persons within the meaning of Code Section 7701(a)(30). Section 10.5 Corporate Existence, Etc. Subject to Section 11.2 (Merger, Consolidation, Etc.), the Company shall at all times preserve and keep its corporate existence in full force and effect. Section 10.6 Books and Records. The Company shall maintain proper books of record and account in conformity with GAAP and all applicable requirements of any Governmental Authority having legal or regulatory jurisdiction over the Company. The Company shall keep books, records and accounts which, in reasonable detail, accurately reflect all transactions and dispositions of assets. Section 10.7 Further Assurances; Additional Collateral. (a) Subject to the terms and conditions of this Agreement and the other Financing Documents, the Company shall use commercially reasonable efforts to take, or cause to be taken, all actions necessary to maintain and preserve the Liens created by the Security Documents and the priority thereof, subject in all events to Permitted Liens, including (i) making filings and recordations on a timely basis, (ii) making payments of fees and other charges on a timely basis, (iii) issuing and, if necessary, filing or recording supplemental documentation on a timely basis, including continuation statements, (iv) taking commercially reasonable efforts to promptly discharge all claims or other Liens (other than Permitted Liens) adversely affecting the rights of any Secured Party in any Collateral, (v) publishing or otherwise delivering notice to third parties and (vi) taking all other actions necessary to ensure that all Collateral is subject to a valid and enforceable first-priority Lien (subject only to Permitted Liens) in favor of the Collateral Agent for the benefit of the Secured Parties. (b) Upon the occurrence of any change in the legal description to any Site Lease, the Company shall (i) promptly execute an amendment to the Mortgage with respect to such Site Lease updating such legal description and (ii) deliver copies of the documents described in clause (i) above to the Secured Parties. (c) With respect to any personal property acquired after the Closing by the Company as to which the Collateral Agent, for the benefit of the Secured Parties, does not have a perfected security interest, the Company shall promptly (i) execute and deliver to the Collateral Agent such amendments to the Security Agreement or such other documents necessary or advisable to grant to the Collateral Agent, for the benefit of the Secured Parties, a security interest in such property and (ii) take all actions necessary or advisable to grant to the Collateral Agent, for the benefit of the Secured Parties, a perfected security interest in such property, including the entering into of account control agreements and the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Security Agreement or by applicable law or as may be reasonably requested by the Collateral Agent (acting at the direction of the Required Holders); provided that the actions contemplated by clause (ii) shall not be required in respect of any such property if perfection of the security interest in such property requires more than the entering into of account control agreements and the filing of Uniform Commercial Code financing statements or delivery of Collateral that can be perfected by possession unless the value of such property, individually or in the aggregate, is equal to $1,000,000 or more.
-28- (d) With respect to any fee or leasehold interest in any real property having a value (together with improvements thereof) of at least $1,000,000 acquired after the Closing by the Company, the Company shall promptly (i) execute and deliver a mortgage or deed of trust, as applicable, (or an amendment to the existing Mortgage) in favor of the Collateral Agent, for the benefit of the Secured Parties, covering such real property and (ii) if requested by the Collateral Agent (acting at the direction of the Required Holders), deliver to the Secured Parties title insurance, surveys, consents, estoppels and legal opinions with respect to such after-acquired property in form and scope substantially reasonably satisfactory to the Required Holders with respect to the Mortgage or the Mortgaged Properties. Section 10.8 Material Project Documents. The Company shall (a) perform and observe, in all material respects, the terms, its covenants and obligations under the Material Project Documents, except as could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (b) enforce, defend and protect all of its material rights under all of the Material Project Documents, except to the extent that the failure to enforce, defend or protect any such rights could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect and (c) operate, preserve and maintain the Project in accordance with applicable law, specifications in the relevant Material Project Documents and, in the absence thereof, Prudent Industry Practices, in each case, in all material respects. Section 10.9 Use of Proceeds. The Company shall apply the proceeds of the sale of the Notes to (a) pay Project Costs, (b) fund the Debt Service Reserve Account, the Operating and Major Maintenance Reserve Account and the CapEx and Warranty Reserve Account to the then-applicable Debt Service Reserve Requirement, Operating Reserve Requirement and CapEx Reserve Requirement, as applicable, (c) pay fees, costs and expenses in connection with the transactions under the Transaction Documents and/or (d) make a distribution or distributions to the Sponsor or its designee as and when permitted in accordance with Section 3.01(b)(ii) or (iii) of the Depositary Agreement. Section 10.10 Separateness Provisions. The Company shall comply with its separate obligations under its organizational documents. Section 10.11 Operating Budget. (a) The Company shall use its commercially reasonable efforts to comply with the applicable Annual Operating Budget. (b) Each Annual Operating Budget may only be amended with the prior written consent of the Collateral Agent (acting upon the instructions of the Required Holders in consultation with the Independent Engineer), which consent shall not be unreasonably withheld, conditioned, or delayed; provided that the Annual Operating Budget may increase, without the consent, the aggregate amount of Operating Costs and Capital Expenditures by no more than 10% as contemplated by the prior effective Annual Operating Budget or as projected for any given year in the Financial Model delivered as a condition precedent to the Closing pursuant to Section 4.23 above. Section 10.12 Construction of Project. The Company shall construct, or cause the construction of, the Project in accordance, in all material respects, with the Construction Budget and Schedule, the applicable Material Project Documents (including the EPC Contract), Legal Requirements, Prudent Industry Practices and Applicable Permits, in each case, taking into account any modifications, supplements, waivers or change orders entered into as permitted by Section 11.6;
-29- provided that the Company shall not be considered in violation of the foregoing solely due to exceeding the amounts contemplated in the Construction Budget and Schedule by no greater than 10% in the aggregate or as a result of payable of Project Costs that are unanticipated, imminent, due and payable under any project document. Section 10.13 Market-Based Rate Authority; EWG Status. The Company shall take all necessary or appropriate actions to (a) obtain and maintain MBR Authority (with all waivers of regulations and blanket authorizations as are customarily granted by FERC to entities authorized to sell wholesale electric power at market-based rates) and (b) obtain and maintain EWG status. Section 10.14 Conditions Subsequent. (a) Subject to Section 10.14(b), the release and disbursement of funds deposited in the Note Proceeds Account in accordance with Section 3.01(b)(ii) and (iii) of the Depositary Agreement are subject to the fulfillment to each holder’s satisfaction (in the manner set forth below) or waiver of the following conditions (each, a “Condition Subsequent” and collectively, the “Conditions Subsequent”), as applicable, by the date that is one hundred and eighty (180) days after the Closing (such date, the “Outside Condition Subsequent Date”), as such date may be extended by the Purchasers in their sole discretion: (i) the Company shall use commercially reasonable efforts to obtain and deliver to each holder copies of each fully executed Consent or notice, as applicable, set forth in Schedule 10.14 hereto; (ii) the Company shall deliver to the holders a duly executed PPA Amendment in form and substance satisfactory to the holders, which shall be in full force and effect; (iii) the Company shall deliver to the holders a copy of the CPUC Approval (as defined in the Power Purchase Agreement) with respect to the Power Purchase Agreement, including the PPA Amendment; (iv) any Delay Damages (as defined in the Power Purchase Agreement) due and owing by the Company to the Power Purchaser under the Power Purchase Agreement shall have been satisfied or waived; (v) the Initial Delivery Date shall have occurred, and the Company shall have delivered to the holders a copy of the Initial Delivery Date Confirmation Letter (as defined in the Power Purchase Agreement); (vi) the Company shall deliver to the holders a duly executed Tax Credit Transfer Agreement in form and substance satisfactory to the holders in their reasonable sole discretion, which shall be in full force and effect; (vii) the Company shall deliver to the holders in respect of the Mortgaged Property: (A) the fully executed and notarized Mortgage in proper form for recording in the official real property records of Napa County, California (the “Official
-30- Records”), encumbering the Mortgaged Property, which shall be in form and substance satisfactory to Collateral Agent and each Purchaser; (B) an estoppel and consent agreement from the City in satisfaction of the requirements set forth in Section 22c of the Site Lease and dated as of a date that is no more than twenty-five (25) days prior to the date of the Mortgage, which shall be in form and substance satisfactory to Collateral Agent and each Purchaser; (C) an ALTA 2006 Form extended coverage loan policy of title insurance (the “Title Policy”) issued by a nationally recognized title company reasonably acceptable to Collateral Agent and the Purchasers (the “Title Company”) with respect to the Mortgaged Property identified therein, in an amount not less than $27,826,365.17, and otherwise in form and substance reasonably satisfactory to each holder and the Collateral Agent, containing such endorsements as each holder and the Collateral Agent may reasonably request, including, but not limited to, endorsements as to access, comprehensive coverage, contiguity, and subdivision, and (x) insuring that Issuer has good legal and valid title, including leasehold interest and easement interest, in, or right to occupy and use, such Mortgaged Property (and any other real property that is subject to any easement granted for the benefit of the Company), free and clear of any Liens or other exceptions to title other than Permitted Encumbrances, (y) containing no exception for the lien rights of mechanics’ liens or suppliers, inchoate or otherwise, and (z) insuring such other matters as the holders and Collateral Agent may request; and (ii) evidence satisfactory to the holders that the Company has paid to the Title Company or to the appropriate Governmental Authority all expenses and premiums of the Title Company and all other sums required in connection with the issuance of the Title Policy and all recording charges payable in connection with recording the Mortgage in the Official Records; and (D) the Collateral Agent and the holders shall have received ALTA/ACSM form survey of the Mortgaged Property prepared in accordance with the 2021 Minimum Standard Detail Requirements in form and substance reasonably satisfactory to the Required Holders showing (i) as to the Mortgaged Property, the exact location and dimensions thereof, including the location of all means of access thereto and all easements relating thereto and showing the perimeter within which all improvements are located and all encroachments thereon,(ii) the location and dimensions of all improvements, fences or encroachments located in or on the Mortgaged Property, (iii) whether the Mortgaged Property or any portion thereof is located in a special earthquake or flood hazard zone and (iv) that there are no encroachments, easements or other encumbrances affecting the Mortgaged Property, except for Permitted Liens;the Collateral Agent shall have received (i) a flood hazard certificate evidencing whether the Mortgaged Property is located, in whole or in part, in an area designated by the Federal Emergency Management Agency as a special flood hazard area (a “Flood Hazard Property”) and whether the community in which such Mortgaged Property is located is participating in the National Flood Insurance Program, (ii) for any Flood Hazard Property, the Company’s written acknowledgment of receipt of written notification as to the fact that such Mortgaged Property is a Flood Hazard Property and as to whether the community in which such Flood Hazard Property is located is participating in the National Flood Insurance Program and (iii) for any “Buildings” or “Manufactured (Mobile) Homes” (as such terms are defined
-31- in Flood Insurance Laws) situated on a Flood Hazard Property which Buildings and/or Manufactured (Mobile) Homes are also located in a special flood hazard area or an area having mud slide hazards, copies of the application for a flood insurance policy of the Company plus proof of premium payment, and a declaration page confirming that flood insurance in the amounts required by Flood Insurance Laws has been issued, or such other evidence of such flood insurance reasonably satisfactory to the Required Holders and naming the Collateral Agent as sole loss payee on behalf of the Holders of Notes; (viii) the Company shall deliver to the holders an enforceability opinion of Venable LLP, California counsel to the Company, covering matters related to the Mortgage and real estate matters incident to the transaction; (ix) the Independent Engineer shall deliver to the holders a certificate in form and substance reasonably acceptable to the Required Holders confirming the facts and information necessary for the holders to establish that the Project has been placed in service for U.S. federal income tax purposes; (x) the Insurance Consultant shall deliver to the holders a certificate addressed to the holders and the Collateral Agent confirming that all insurance required to be maintained by the Company pursuant to the terms of this Agreement and the other Transaction Documents to which it is a party (i) are in full force and effect and (ii) all premia due at that time under each relevant insurance have been paid; (xi) the Company shall deliver to the holders an amended and restated limited liability company agreement for the Company which includes the appointment of an independent director of the Company with approval rights over the Company’s decision to file voluntary bankruptcy; and (xii) the Company shall deliver to the holders a duly executed contract with an expiry date not earlier than December 31, 2031 for a supply of Fuel (as defined in the Power Purchase Agreement) required for the Company to comply with its obligations under Section 10.1(c)(ix) of the Power Purchase Agreement with Air Products and Chemicals, Inc., Air Liquide, S.A., Linde plc or another gas provider mutually acceptable to the Company and the holders of the Notes. (b) Notwithstanding the foregoing, the Company may, without satisfying each of the Conditions Subsequent, release an amount from the Note Proceeds Account (i) (without duplication of any amounts released pursuant to clause (ii) of this Section 10.14) not to exceed $12,963,006 upon (I) the Company delivering to the holders a duly executed PPA Amendment in form and substance satisfactory to the holders and (II) the satisfaction of clauses (a)(vi) and (a)(ix) of this Section 10.14 and (ii) (without duplication of any amounts released pursuant to clause (i) of this Section 10.14) not to exceed $14,863,359 upon the satisfaction of each of the Conditions Subsequent (other than clauses (a)(vi) and (a)(ix) of this Section 10.14). (c) If (i) an Event of Default has occurred and is continuing and the Collateral Agent has been so instructed in writing by the Required Holders or (ii) the Conditions Subsequent have not been satisfied by the Outside Condition Subsequent Date, the Depositary Bank shall, in accordance with Section 3.01(b)(iv) of the Depositary Agreement and upon receipt of the Note Proceeds Release Instructions (as defined in the Depositary Agreement) executed by the Collateral Agent, pay all
-32- remaining amounts in the Note Proceeds Account to the holders of the Notes in accordance with such Note Proceeds Release Instructions (each of clauses (i) and (ii), a “Return of Funds”) as follows: (i) In the event that such Return of Funds occurs prior to the satisfaction of the Condition Subsequent set forth in clause (a)(v) of this Section 10.14, the Return of Funds to each holder of a Note shall be at a price equal to 0.15% multiplied by the outstanding principal amount of such holder’s Notes; provided, that any interest that accrued and was paid on such outstanding principal amount during the period such funds were on deposit in the Note Proceeds Account shall be netted from the amount paid by the Company to such holder pursuant to this clause (c)(i). (ii) In the event that such Return of Funds occurs after satisfaction of the Condition Subsequent set forth in clause (a)(v) of this Section 10.14, the Return of Funds to each holder of a Note shall be at a price equal to 0.40% multiplied by the outstanding principal amount of such holder’s Notes; provided, that any interest that accrued and was paid on such outstanding principal amount during the period such funds were on deposit in the Note Proceeds Account shall be netted from the amount paid by the Company to such holder pursuant to this clause (c)(ii). SECTION 11. NEGATIVE COVENANTS. The Company covenants that so long as any of the Notes are outstanding: Section 11.1 Transactions with Affiliates. Except as set forth in Schedule 6.3, the Company will not enter into directly or indirectly any transaction or group of related transactions (including the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate, except in the ordinary course and pursuant to the reasonable requirements of the Company’s business and upon fair and reasonable terms no less favorable to the Company than would be obtainable in a comparable arm’s-length transaction with a Person not an Affiliate. Section 11.2 Merger, Consolidation, Etc. The Company shall not consolidate with or merge with any other Person or convey, transfer or lease all or substantially all of its assets in a single transaction or series of transactions to any Person unless: (a) the successor formed by such consolidation or the survivor of such merger or the Person that acquires by conveyance, transfer or lease all or substantially all of the assets of the Company as an entirety, as the case may be, shall be a solvent corporation or limited liability company organized and existing under the laws of the United States or any state thereof (including the District of Columbia), and, if the Company is not such corporation or limited liability company, (i) such corporation or limited liability company shall have executed and delivered to each holder of any Notes its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement, the Notes and the other Financing Documents and (ii) such corporation or limited liability company shall have caused to be delivered to each holder of any Notes an opinion of nationally recognized independent counsel, or other independent counsel reasonably satisfactory to the Required Holders, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof; and
-33- (b) immediately before and immediately after giving effect to such transaction or each transaction in any such series of transactions, no Default or Event of Default shall have occurred and be continuing. No such conveyance, transfer or lease of substantially all of the assets of the Company shall have the effect of releasing the Company or any successor corporation or limited liability company that shall theretofore have become such in the manner prescribed in this Section 11.2, from its liability under this Agreement, the Notes and the other Financing Documents. Section 11.3 Line of Business; Subsidiaries, Employees. (a) The Company shall not engage in any business if, as a result, the general nature of the business in which the Company would then be engaged would be substantially changed from the general nature of the business in which the Company is engaged on the date of this Agreement as described in the Investor Presentation. (b) The Company shall not (i) create, form or acquire any subsidiary (of any percentage of legal, beneficial or record ownership), (ii) enter into any partnership or joint venture or (iii) maintain any employees. For purposes of this Section 11.3, beneficial ownership shall not refer to any Permitted Investments or contractual rights of the Company otherwise permitted pursuant to the Financing Documents. Section 11.4 Economic Sanctions, Etc. The Company shall not, and will not permit any Controlled Entity to (a) become (including by virtue of being owned or controlled by a Blocked Person), own or control a Blocked Person or (b) directly or indirectly have any investment in or engage in any dealing or transaction (including any investment, dealing or transaction involving the proceeds of the Notes) with any Person if such investment, dealing or transaction (i) would cause any holder or any affiliate of such holder to be in violation of, or subject to sanctions under, any law or regulation applicable to such holder or (ii) is prohibited by or subject to sanctions under any U.S. Economic Sanctions Laws. Section 11.5 Liens. The Company shall not directly or indirectly create, incur, assume or suffer to exist (upon the happening of a contingency or otherwise) any Lien upon any of the Collateral, whether now owned or hereafter acquired, except Permitted Liens. Section 11.6 Limitation on Amendments to the Material Project Documents, Organizational Documents and Tax Credit Transfer Documents. (a) The Company shall not amend or otherwise modify, in any material or adverse respect, or grant any material or adverse waiver or consent under, any Material Project Document without the consent of the Required Holders (in consultation with the Independent Engineer), other than the PPA Amendment. (b) The Company shall not amend, supplement or otherwise modify (pursuant to a waiver or otherwise) its organizational documents, including the separateness provisions thereof, or permit or suffer to exist any amendment or modification of any of its organizational documents unless any such amendment or modification (i) does not adversely affect any material rights or remedies of any of the parties under any Material Project Document and (ii) could not otherwise reasonably be expected to have a Material Adverse Effect.
-34- (c) The Company shall not amend or otherwise modify, in any material or adverse respect, or grant any material or adverse waiver or consent under, any Tax Credit Transfer Document without the consent of the Required Holders. Section 11.7 Additional Material Project Documents. The Company shall not enter into or become a party to any Additional Material Project Document (with any series of related Additional Material Project Documents entered into as part of a single transaction or series of related transactions to be considered as one “Additional Project Document” for purposes of this Section 11.7) without the consent of the Required Holders unless such Additional Material Project Document (a) is in the best interest of, and on terms fair and reasonable to the Company, as certified by a Responsible Officer of the Company and (b) if such Additional Material Project Document provides for payments of more than $2,000,000 in the aggregate to be made or received by the Company thereunder in any year, (i) the Company has delivered a copy of the Additional Material Project Document to each Holder and (ii) to the extent required, the Company has given or caused to be given written notice to the counterparty thereto of the security interest therein granted under the Security Documents, or used commercially reasonable efforts to obtain a consent to assignment therefor within thirty (30) days after the execution of such Additional Material Project Document. Section 11.8 Investments. The Company shall not make any advance, loan, extension of credit (by way of Guaranty or otherwise) or capital contribution to, or purchase any Equity Interests, bonds, notes, debentures or other debt securities of, or any assets constituting a business unit of, or make any other investment in, any Person, asset or Property other than (a) Permitted Investments, (b) any rights it may have under the Material Project Documents and (c) immaterial assets and properties. Section 11.9 Incurrence of Indebtedness. The Company shall not create, issue, incur, assume, become liable in respect of or suffer to exist any Indebtedness, except Permitted Indebtedness; provided that any incurrence of a Pari Passu LC Facility shall be subject to the satisfaction or waiver of the following: (a) Delivery of a certificate from an Authorized Officer of the Company that (i) that no Default or Event of Default has occurred and is continuing or will result from the incurrence of such Pari Passu LC Facility, (ii) the additional Indebtedness is not expect to have a Material Adverse Effect, (iii) as to the use of the proceeds of such Indebtedness and (iv) to the extent that such Indebtedness is incurred to provide credit support required to be provided in connection with obligations under the Material Project Documents, a certification that such Indebtedness, together with other funds available for the Project, are expected to comply with obligations under the applicable Material Project Documents; (b) Delivery of any documents and/or instruments evidencing, documenting, securing or otherwise relating to any or all of the obligations relating to the applicable Pari Passu LC Facility; (c) Each of (i) the Debt Service Reserve Account, after giving effect to such incurrence, will be funded in an amount equal to the then-applicable Debt Service Reserve Requirement, (ii) the Operating and Major Maintenance Reserve Account will be funded in an amount equal to the then-applicable Operating Reserve Requirement, and (iii) the CapEx and Warranty Reserve Account will be funded in an amount equal to the then-applicable CapEx Reserve Requirement; and
-35- (d) The aggregate amount of the Pari Passu LC Facility shall not exceed $5,000,000 at any time. Section 11.10 Sale of Assets. The Company shall not dispose of any of its property, whether now owned or hereafter acquired, except: (a) the liquidation, sale or use of cash and Permitted Investments; (b) the Disposition of obsolete, damaged, worn out or surplus property, assets or rights (including surplus real property), or property, assets or rights not used or useful in the business of the Company in the ordinary course of business or where such property is not otherwise material to the operation of the relevant Project or the business of the Company; (c) sales of (and the granting of any option or other right to purchase, lease or otherwise acquire) power, electric capacity, transmission capacity, emissions credits, energy storage capacity or energy storage services or ancillary services or other inventory or products in the ordinary course of business, including pursuant to the Power Purchase Agreement; (d) sales of tax credits and other tax monetization structures; or (e) other Dispositions on an arm’s-length basis for cash consideration having a fair market value not to exceed (i) $1,000,000 in any fiscal year and (ii) $2,000,000 in the aggregate for all such Dispositions; provided that such Disposition is not reasonably expected to materially and adversely affect the operation and maintenance of the relevant Project. Section 11.11 Capital Expenditures. The Company shall not make any Capital Expenditures other than (a) Permitted Capital Expenditures and (b) Capital Expenditures to the extent financed in full with the proceeds of Voluntary Equity Contributions made to the Company which could not reasonably be expected to have a Material Adverse Effect. Section 11.12 Restricted Payments. Except as set forth in Section 10.9(d), the Company shall not make any Restricted Payments unless each of the following conditions (“Restricted Payment Conditions”) set forth below have been satisfied: (a) COD has been achieved; (b) no Default or Event of Default has occurred and is continuing; (c) the Company delivers to the Collateral Agent a certificate (setting out its calculations therein) confirming that, on the proposed date of such Restricted Payment, (i) the Historical Debt Service Coverage Ratio for the Calculation Period ending on the Calculation Date most recently preceding such proposed date is not less than 1.15:1.00 and (ii) the Pro Forma Debt Service Coverage Ratio for the first Calculation Period ending after such proposed date shall not be less than 1.15:1.00; and (d) (i) the Debt Service Reserve Account is funded (with cash or an Acceptable Letter of Credit (or by any combination of the foregoing)) in an amount equal to the Debt Service Reserve Requirement, (ii) the Operating and Major Maintenance Reserve Account is funded (with cash or an Acceptable Letter of Credit (or by any combination of the foregoing)) in an amount equal to the Operating Reserve Requirement and (iii) the CapEx and Warranty Reserve Account is funded (with
-36- cash or an Acceptable Letter of Credit (or by any combination of the foregoing)) in an amount equal to the CapEx Reserve Requirement. Section 11.13 Swap Contracts. The Company shall not enter into any Swap Contract or engage in any similar transaction for speculative purposes. Section 11.14 Changes in Fiscal Periods; Accounting Policies; Location; Name. (a) The Company shall not without the consent of the Required Holders, the Company shall not permit its fiscal year to end on a day other than December 31, change its method of determining fiscal quarters or make, permit any change in accounting policies or reporting practices except as required by GAAP or change its federal employer identification number, except for any such changes which are not materially adverse to the holders of Notes. (b) Except upon 20 days’ prior written notice to the Collateral Agent and delivery to the Collateral Agent of all additional financing statements (executed where appropriate) and other documents reasonably requested by the Collateral Agent and the Required Holders to maintain the validity, perfection and priority of the security interests provided for herein, (i) change its jurisdiction of organization, (ii) change its location of principal place of business or (iii) change its name. Section 11.15 Maintenance of Accounts. The Company shall not establish or maintain any deposit, securities, commodities or similar account other than (a) the Collateral Accounts established in accordance with the terms of the Depositary Agreement, (b) any deposit or securities accounts necessary or useful in the conduct of the Company’s business that may be established after the Closing (the “Deposit Accounts”); provided that, solely with respect to the Deposit Accounts, the Company shall obtain and deliver control agreements to the Collateral Agent concurrently with the establishment thereof and (c) Excluded Accounts. Section 11.16 Lease Agreements. The Company shall not enter into any lease agreements other than (a) the Site Lease and (b) lease agreements pursuant to which no more than $1,000,000 in the aggregate in rental payments shall be made in any fiscal year. Section 11.17 Sale and Leasebacks. The Company shall not enter into any arrangement with any Person providing for the leasing by the Company of real or personal property that has been or is to be sold or transferred by the Company to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Company. Section 11.18 Debt Service Coverage Ratio. Commencing with the first Calculation Date to occur following the first anniversary of COD, the Debt Service Coverage Ratio shall not be less than 1.00 to 1.00. SECTION 12. EVENTS OF DEFAULT. An “Event of Default” shall exist if any of the following conditions or events shall occur and be continuing:
-37- (a) the Company defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or (b) the Company defaults in the payment of any interest on any Note for more than five Business Days after the same becomes due and payable; or (c) the Company defaults in the performance of or compliance with any term contained in Section 8.1(e) or Section 11 hereof; or (d) the Company defaults in the performance of or compliance with any term contained in Section 8.1 hereof (other than Section 8.1(e)) and such default is not remedied within five Business Days; or (e) the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in Sections 12(a), (b), (c) and (d)) or in any Security Document or the Pledgor defaults in the compliance with any term contained in any Security Document and such default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Company receiving written notice of such default from the Collateral Agent or any holder of a Note (any such written notice to be identified as a “notice of default” and to refer specifically to this Section 12(e)); provided, that if such default is not capable of remedy within such 30 day period, such 30 day period shall be extended to a total period of forty-five (45) days so long as (x) such default is subject to cure, (y) the Company certifies that it is diligently pursuing a cure and (z) such additional cure period could not reasonably be expected to result in a Material Adverse Effect; or (f) any representation or warranty made in writing by or on behalf of the Company or the Pledgor or by any officer of the Company or the Pledgor in this Agreement, any Security Document or any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made (other than those qualified by a reference to materiality or Material Adverse Effect, which representations and warranties shall be true and correct in all respects); provided that (i) if the fact, event or circumstance resulting in such false or incorrect representation or warranty is capable of being cured, corrected or otherwise remedied, (ii) such fact, event or circumstance resulting in such false or incorrect representation or warranty shall have been cured, corrected or otherwise remedied within 30 days from the date on which the Company or the Pledgor first obtains knowledge thereof and (iii) such representation or warranty (as cured, corrected or remedied) could not reasonably be expected to result in a Material Adverse Effect during the pendency of such cure period, then such false or incorrect representation or warranty shall not constitute an Event of Default hereunder; provided, that if such false or incorrect representation or warranty is not capable of remedy within such 30 day period, such 30 day period shall be extended to a total period of forty-five (45) days so long as (x) such false or incorrect representation or warranty is subject to cure, (y) the Company certifies that it is diligently pursuing a cure and (z) such additional cure period could not reasonably be expected to result in a Material Adverse Effect or (g) (i) the Company is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Indebtedness (other than the Notes and any other Indebtedness under the Financing Documents) that is outstanding in an aggregate principal amount of at least $2,000,000 (or its equivalent in the relevant currency of
-38- payment) beyond any period of grace provided with respect thereto, or (ii) the Company is in default in the performance of or compliance with any term of any evidence of any Indebtedness in an aggregate outstanding principal amount of at least $2,000,000 (or its equivalent in the relevant currency of payment) or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition, such Indebtedness has become or has been declared due and payable or one or more Persons are entitled to declare such Indebtedness to be due and payable before its stated maturity or before its regularly scheduled dates of payment, or (iii) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Indebtedness to convert such Indebtedness into equity interests), (x) the Company has become obligated to purchase or repay Indebtedness before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least $2,000,000 (or its equivalent in the relevant currency of payment), or (y) one or more Persons have the right to require the Company so to purchase or repay such Indebtedness; or (h) (i) Any Affiliated Bankruptcy Party shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or any Affiliated Bankruptcy Party shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against any Affiliated Bankruptcy Party any case, proceeding or other action of a nature referred to in clause (i)(A) above that (1) results in the entry of an order for relief or any such adjudication or appointment or (2) remains undismissed or un-discharged for a period of sixty (60) days; or (iii) there shall be commenced against any Affiliated Bankruptcy Party any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof; or (iv) any Affiliated Bankruptcy Party shall take any corporate action in furtherance of, or consenting to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) any Affiliated Bankruptcy Party shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or (i) one or more final judgments or orders for the payment of money aggregating in excess of $2,000,000 (or its equivalent in the relevant currency of payment), including any such final order enforcing a binding arbitration decision, are rendered against the Company and which judgments are not, within sixty (60) days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within sixty (60) days after the expiration of such stay; or (j) if (i) the aggregate present value of accrued benefit liabilities under all funded Non-U.S. Plans exceeds the aggregate current value of the assets of such Non-U.S. Plans allocable to such liabilities, (ii) the Company shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (iii) the Company establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Company thereunder, (iv) the Company fails to administer or maintain a Non-U.S. Plan in compliance with the requirements of any and all applicable laws, statutes, rules, regulations or court orders or any Non-U.S. Plan is involuntarily terminated or wound up or (v) the Company becomes subject to the
-39- imposition of a financial penalty (which for this purpose shall mean any tax, penalty or other liability, whether by way of indemnity or otherwise) with respect to one or more Non-U.S. Plans; and any such event or events described in clauses (i) through (v) above, either individually or together with any other such event or events, would reasonably be expected to have a Material Adverse Effect; or (k) Any Applicable Permit necessary for the construction or operation of any Project shall be modified in an adverse manner, revoked, suspended, terminated, non-renewed, or cancelled by the issuing agency or other Governmental Authority having jurisdiction or the Company shall fail to obtain, renew, maintain or comply in all respects with any Applicable Permit, as applicable, if such event, together with all such other events, could reasonably be expected to result in a Material Adverse Effect; provided that an Event of Default with respect to an Applicable Permit shall not be deemed to have occurred if such Applicable Permit has been renewed, issued or replaced within thirty (30) days of the occurrence of a Default under this Section by a replacement Applicable Permit in form and substance reasonably acceptable to the Required Holders, so long as no Material Adverse Effect shall have occurred during such 30-day period; provided, further, that so long as the Company (i) certifies it is proceeding with all requisite diligence and in good faith to obtain such replacement Applicable Permit, then such 30-day period shall be extended to such date, not to exceed a total of 15 days after the end of the initial 30-day period (for a total of forty-five (45) days), as shall be necessary for the Company to obtain such replacement Applicable Permit or (ii) has applied for and is diligently pursuing renewal of the Applicable Permit in good faith and is operating under an existing version of the same Applicable Permit, whether active or expired, for the duration that the renewal application is pending before the relevant Governmental Authority pursuant to any permit shield provisions available under applicable Environmental Laws, then such 30-day period or 45-day period, as applicable, shall be extended to the full duration allowed under any such applicable permit shield provisions; or (l) Except as set forth on Schedule 6.3, the Company or any other party thereto shall breach or be in default under any material term, condition, provision, covenant, representation or warranty contained in any Material Project Document (including, for the avoidance of doubt, warranty obligations) and the effect of such breach or default could be reasonably expected to have a Material Adverse Effect on the Company or the relevant Project and any applicable grace or cure period with respect to such breach or default under such Material Project Document has expired; or (m) (i) The Power Purchaser or, prior to the Substantial Completion Date (as such term is defined in the EPC Contract) with respect to the EPC Contract, the EPC Contractor shall have suffered a continuing Bankruptcy Event; provided that such Event of Default shall not be deemed to have occurred if the Company has replaced the applicable Material Project Document with any such Person within forty-five (45) days of the occurrence of the Bankruptcy Event, with an Additional Project Document or other agreement that is in form and substance reasonably acceptable to the Required Holders (such acceptance not to be unreasonably withheld or delayed); or (n) Any Material Project Document shall cease for any reason to be in full force and effect unless terminated in accordance with its terms and not as a result of a default thereunder; provided that such Event of Default shall not be deemed to have occurred if such Material Project Document, within thirty (30) days of such termination, has been replaced with an Additional Material Project Document and each of the other conditions contained in Section 11.7 have been satisfied; or (o) an Event of Abandonment has occurred; or
-40- (p) an Event of Taking has occurred with respect to a material portion of the Company’s property and such Event of Taking could reasonably be expected to result in a Material Adverse Effect; or (q) any Financing Document shall, (i) except in accordance with its terms, as expressly permitted hereunder or thereunder or upon the satisfaction of the obligations, cease to be in full force and effect or shall be terminated or (ii) shall be declared void by a Governmental Authority or (iii) any party thereto (other than any holder or holders of Notes or the Collateral Agent) shall claim in writing such unenforceability or invalidity; or (r) The Project shall not have achieved Substantial Completion (as defined in the EPC Contract) by the Date Certain. SECTION 13. REMEDIES ON DEFAULT, ETC. Section 13.1 Acceleration. (a) If an Event of Default with respect to the Company described in Section 12(h) has occurred, all the Notes then outstanding shall automatically become immediately due and payable. (b) If any other Event of Default has occurred and is continuing, the Required Holders may at any time at its or their option, by notice or notices to the Company, declare all the Notes then outstanding to be immediately due and payable. (c) If any Event of Default described in Section 12(a) or (b) has occurred and is continuing, any holder or holders of Notes at the time outstanding affected by such Event of Default may at any time, at its or their option, by notice or notices to the Company, declare all the Notes held by it or them to be immediately due and payable. Upon any Notes becoming due and payable under this Section 13.1, whether automatically or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest thereon (including interest accrued thereon at the Default Rate) and (y) the Make-Whole Amount determined in respect of such principal amount, shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived. The Company acknowledges, and the parties hereto agree, that each holder of a Note has the right to maintain its investment in the Notes free from repayment by the Company (except as herein specifically provided for) and that the provision for payment of a Make- Whole Amount by the Company in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances. Section 13.2 Other Remedies. If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under Section 13.1, the holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in any Note or other Financing Document, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise.
-41- Section 13.3 Rescission. At any time after any Notes have been declared due and payable pursuant to Section 13.1(b) or (c), the Required Holders, by written notice to the Company, may rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue interest on the Notes, all principal of and Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest in respect of the Notes, at the Default Rate, (b) neither the Company nor any other Person shall have paid any amounts which have become due solely by reason of such declaration, (c) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 18 and (d) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this Section 13.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon. Section 13.4 No Waivers or Election of Remedies, Expenses, Etc. No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder’s rights, powers or remedies. No right, power or remedy conferred by this Agreement, any Note, or any other Financing Document upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Company under Section 16, the Company will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all costs and expenses of such holder incurred in any enforcement or collection under this Section 13, including reasonable attorneys’ fees, expenses and disbursements. SECTION 14. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. Section 14.1 Registration of Notes. The Company shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee and the principal amount (and stated interest) of one or more Notes shall be registered in such register. If any holder of one or more Notes is a nominee, then (a) the name and address of the beneficial owner and the principal amount (and stated interest) of such Note or Notes shall also be registered in such register as an owner and holder thereof and (b) at any such beneficial owner’s option, either such beneficial owner or its nominee may execute any amendment, waiver or consent pursuant to this Agreement. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary. The Company shall give to any holder of a Note that is an Institutional Investor promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes. The register shall be maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code. Section 14.2 Transfer and Exchange of Notes. Upon surrender of any Note to the Company at the address and to the attention of the designated officer (all as specified in Section 19(c)(iii)), for registration of transfer or exchange (and in the case of a surrender for registration of transfer accompanied by a written instrument of transfer duly executed by the registered holder of such Note or such holder’s attorney duly authorized in writing and accompanied by the relevant name, address and other information for notices of each transferee of such Note or part thereof), within 10 Business
-42- Days thereafter, the Company shall execute and deliver, at the Company’s expense (except as provided below), one or more new Notes (as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of Exhibit A. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp, documentary or similar tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than $100,000, provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than $100,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representation set forth in Section 7.2. Section 14.3 Replacement of Notes. Upon receipt by the Company at the address and to the attention of the designated officer (all as specified in Section 19(c)(iii)) of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser or another holder of a Note with a minimum net worth of at least $50,000,000 or a Qualified Institutional Buyer, such Person’s own unsecured agreement of indemnity shall be deemed to be satisfactory), or (b) in the case of mutilation, upon surrender and cancellation thereof, within 10 Business Days thereafter, the Company at its own expense shall execute and deliver, in lieu thereof, a new Note, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon. SECTION 15. PAYMENTS ON NOTES. Section 15.1 Place of Payment. Subject to Section 15.2, payments of principal, Make- Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in New York, New York at the principal office of Wilmington Trust, National Association in such jurisdiction. The Company may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment shall be either the principal office of the Company in such jurisdiction or the principal office of a bank or trust company in such jurisdiction. Section 15.2 Payment by Wire Transfer. So long as any Purchaser or its nominee shall be the holder of any Note, and notwithstanding anything contained in Section 15.1 or in such Note to the contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, interest and all other amounts becoming due hereunder by the method and at the address specified for such purpose below such Purchaser’s name in the Purchaser Schedule, or by such other method or at such other address as such Purchaser shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, such Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request, to the Company at its principal
-43- executive office or at the place of payment most recently designated by the Company pursuant to Section 15.1. Prior to any sale or other disposition of any Note held by a Purchaser or its nominee, such Purchaser will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes pursuant to Section 14.2. The Company will afford the benefits of this Section 15.2 to any Institutional Investor that is the direct or indirect transferee of any Note purchased by a Purchaser under this Agreement and that has made the same agreement relating to such Note as the Purchasers have made in this Section 15.2. Section 15.3 FATCA Information. By acceptance of any Note, the holder of such Note agrees that such holder will with reasonable promptness duly complete and deliver to the Company, or to such other Person as may be reasonably requested by the Company, from time to time (a) in the case of any such holder that is a United States Person, such holder’s United States tax identification number on an Internal Revenue Service W-9 or other Forms reasonably requested by the Company necessary to establish such holder’s status as a United States Person under FATCA and as may otherwise be necessary for the Company to comply with its obligations under FATCA and (b) in the case of any such holder that is not a United States Person, an Internal Revenue Service Form W-8 (and if applicable, a portfolio interest exemption certification), such documentation prescribed by applicable law (including as prescribed by section 1471(b)(3)(C)(i) of the Code) and such additional documentation as may be necessary for the Company to comply with its obligations under FATCA and to determine that such holder has complied with such holder’s obligations under FATCA or to determine the amount (if any) to deduct and withhold from any such payment made to such holder. Nothing in this Section 15.3 shall require any holder to provide information that is confidential or proprietary to such holder unless the Company is required to obtain such information under FATCA and, in such event, the Company shall treat any such information it receives as confidential. SECTION 16. EXPENSES, ETC. Section 16.1 Transaction Expenses. Whether or not the transactions contemplated hereby are consummated, the Company will pay all costs and expenses (including reasonable and documented attorneys’ fees of one counsel for the Purchasers and holders of Notes, taken as a whole, and, if reasonably required by the Required Holders, local or other counsel) incurred by the Purchasers and each other holder of a Note in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of this Agreement, the Notes or any other Financing Document (whether or not such amendment, waiver or consent becomes effective), including: (a) the costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement, the Notes, or any other Financing Document or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement, the Notes, or any other Financing Document or by reason of being a holder of any Note; (b) the costs and expenses, including financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes and by any other Financing Document; and (c) the costs and expenses incurred in connection with the initial filing of this Agreement and all related documents and financial information with the SVO. If required by the NAIC, the Company shall obtain and maintain at its own cost and expense a Legal Entity Identifier (LEI). The Company will pay, and will save each Purchaser and each other holder of a Note harmless from, (i) all claims in respect of any fees, costs or expenses, if any, of brokers and finders (other than
-44- those, if any, retained by a Purchaser or other holder in connection with its purchase of the Notes), (ii) any and all wire transfer fees that any bank or other financial institution deducts from any payment under such Note to such holder or otherwise charges to a holder of a Note with respect to a payment under such Note and (iii) any judgment, liability, claim, order, decree, fine, penalty, cost, fee, expense (including reasonable attorneys’ fees and expenses) or obligation resulting from the consummation of the transactions contemplated hereby, including the use of the proceeds of the Notes by the Company; in each case, other than those that result from or have arisen by reason of such Person’s bad faith, gross negligence or willful misconduct, as determined in the final and non-appealable judgement of a court of competent jurisdiction. Section 16.2 Certain Taxes. The Company agrees to pay all stamp, documentary or similar taxes or fees which may be payable in respect of the execution and delivery or the enforcement of this Agreement or the execution and delivery (but not the transfer) or the enforcement of any of the Notes in the United States or any other applicable jurisdiction where the Company has assets or of any amendment of, or waiver or consent under or with respect to, this Agreement or of any of the Notes or any other Financing Document, and to pay any value added tax due and payable in respect of reimbursement of costs and expenses by the Company pursuant to this Section 16, and will save each holder of a Note to the extent permitted by applicable law harmless against any loss or liability resulting from nonpayment or delay in payment of any such tax or fee required to be paid by the Company hereunder. Section 16.3 Survival. The obligations of the Company under this Section 16 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement, the Notes, or any other Financing Documents and the termination of this Agreement. SECTION 17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All representations and warranties contained herein and in any other Financing Document shall survive the execution and delivery of this Agreement, the Notes, and the other Financing Documents, the purchase or transfer by any Purchaser of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of such Purchaser or any other holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of the Company pursuant to this Agreement or any other Financing Document shall be deemed representations and warranties of the Company under this Agreement. Subject to the preceding sentence, this Agreement, the Notes and the other Financing Document embody the entire agreement and understanding between each Purchaser and the Company and supersede all prior agreements and understandings relating to the subject matter hereof. SECTION 18. AMENDMENT AND WAIVER. Section 18.1 Requirements. This Agreement and the Notes may be amended, and the observance of any term hereof or of the Notes may be waived (either retroactively or prospectively), only with the written consent of the Company and the Required Holders, except that: (a) no amendment or waiver of any of Sections 1, 2, 3, 7 or 22 hereof, or any defined term (as it is used therein), will be effective as to any Purchaser unless consented to by such Purchaser in writing; and
-45- (b) no amendment or waiver may, without the written consent of each Purchaser and the holder of each Note at the time outstanding, (i) subject to Section 12 relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of (x) interest on the Notes or (y) the Make- Whole Amount, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any amendment or waiver or (iii) amend any of Section 9 (except as set forth in the second sentence of Section 9.2, Section 12(a), Section 12(b) and Section 13, or Section 18). Section 18.2 Solicitation of Holders of Notes. (a) Solicitation. The Company will provide each holder of a Note with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof or of the Notes. The Company will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to this Section 18 to each holder of a Note promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite holders of Notes. (b) Payment. The Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security or provide other credit support, to any holder of a Note as consideration for or as an inducement to the entering into by such holder of any waiver or amendment of any of the terms and provisions hereof or any Note unless such remuneration is concurrently paid, or security is concurrently granted or other credit support concurrently provided, on the same terms, ratably to each holder of a Note even if such holder did not consent to such waiver or amendment. (c) Consent in Contemplation of Transfer. Any consent given pursuant to this Section 18 by a holder of a Note that has transferred or has agreed to transfer its Note to (i) the Company, (ii) any Affiliate or (iii) any other Person in connection with, or in anticipation of, such other Person acquiring, making a tender offer for or merging with the Company and/or any of its Affiliates (either pursuant to a waiver under Section 18.1 or subsequent to Section 9.5 having been amended pursuant to Section 18.) in each case in connection with such consent, shall be void and of no force or effect except solely as to such holder, and any amendments effected or waivers granted or to be effected or granted that would not have been or would not be so effected or granted but for such consent (and the consents of all other holders of Notes that were acquired under the same or similar conditions) shall be void and of no force or effect except solely as to such holder. Section 18.3 Binding Effect, Etc. Any amendment or waiver consented to as provided in this Section 18 applies equally to all holders of Notes and is binding upon them and upon each future holder of any Note and upon the Company without regard to whether such Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing between the Company and any holder of a Note and no delay in exercising any rights hereunder or under any Note shall operate as a waiver of any rights of any holder of such Note. Section 18.4 Notes Held by Company, Etc. Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement, the
-46- Notes or any other Financing Document, or have directed the taking of any action provided herein or the Notes or any other Financing Document to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to be outstanding. SECTION 19. NOTICES. Except to the extent otherwise provided in Section 8.3 all notices and communications provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a confirming copy of such notice by an internationally recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by an internationally recognized overnight delivery service (charges prepaid). Any such notice must be sent: (i) if to any Purchaser or its nominee, to such Purchaser or nominee at the address specified for such communications in the Purchaser Schedule, or at such other address as such Purchaser or nominee shall have specified to the Company in writing, (ii) if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing, or (iii) if to the Company, to the Company at its address set forth at the beginning hereof to the attention of Chief Legal Officer, or at such other address as the Company shall have specified to the holder of each Note in writing. Notices under this Section 19 will be deemed given only when actually received. SECTION 20. REPRODUCTION OF DOCUMENTS. This Agreement and all documents relating thereto, including (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by any Purchaser at the Closing (except the Notes themselves) and (c) financial statements, certificates and other information previously or hereafter furnished to any Purchaser, may be reproduced by such Purchaser by any photographic, photostatic, electronic, digital, or other similar process and such Purchaser may destroy any original document so reproduced. The Company agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such Purchaser in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This Section 20 shall not prohibit the Company or any other holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction. SECTION 21. CONFIDENTIAL INFORMATION. For the purposes of this Section 21, “Confidential Information” means information delivered to any Purchaser by or on behalf of the Company in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by such Purchaser as being confidential
-47- information of the Company, provided that such term does not include information that (a) was publicly known or otherwise known to such Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by such Purchaser or any Person acting on such Purchaser’s behalf, (c) otherwise becomes known to such Purchaser other than through disclosure by the Company or (d) constitutes financial statements delivered to such Purchaser under Section 8.1 that are otherwise publicly available. Each Purchaser will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such Purchaser in good faith to protect confidential information of third parties delivered to such Purchaser, provided that such Purchaser may deliver or disclose Confidential Information to (i) its directors, officers, employees, agents, attorneys, trustees and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by its Notes), (ii) its auditors, financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with this Section 21, (iii) any other holder of any Note, (iv) any Institutional Investor to which it sells or offers to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by this Section 21), (v) any Person from which it offers to purchase any Security of the Company (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by this Section 21), (vi) any federal or state regulatory authority having jurisdiction over such Purchaser, (vii) the NAIC or the SVO or, in each case, any similar organization, or any nationally recognized rating agency that requires access to information about such Purchaser’s investment portfolio or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or order applicable to such Purchaser, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which such Purchaser is a party or (z) if an Event of Default has occurred and is continuing, to the extent such Purchaser may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under such Purchaser’s Notes, this Agreement or any other Financing Document. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 21 as though it were a party to this Agreement. On reasonable request by the Company in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Company embodying this Section 21. In the event that as a condition to receiving access to information relating to the Company in connection with the transactions contemplated by or otherwise pursuant to this Agreement, any Purchaser or holder of a Note is required to agree to a confidentiality undertaking (whether through Intralinks, another secure website, a secure virtual workspace or otherwise) which is different from this Section 21, this Section 21 shall not be amended thereby and, as between such Purchaser or such holder and the Company, this Section 21 shall supersede any such other confidentiality undertaking. SECTION 22. SUBSTITUTION OF PURCHASER. Each Purchaser shall have the right to substitute any one of its Affiliates or another Purchaser or any one of such other Purchaser’s Affiliates (a “Substitute Purchaser”; provided, that no Person, or an Affiliate of any Person, that is a competitor of the Company or its Affiliates shall be a Substitute Purchaser) as the purchaser of the Notes that it has agreed to purchase hereunder, by written notice to the Company, which notice shall be signed by both such Purchaser and such Substitute Purchaser, shall contain such Substitute Purchaser’s agreement to be bound by this Agreement and shall contain a confirmation by such Substitute Purchaser of the accuracy with respect to it of the representations set
-48- forth in Section 7. Upon receipt of such notice, any reference to such Purchaser in this Agreement (other than in this Section 22), shall be deemed to refer to such Substitute Purchaser in lieu of such original Purchaser. In the event that such Substitute Purchaser is so substituted as a Purchaser hereunder and such Substitute Purchaser thereafter transfers to such original Purchaser all of the Notes then held by such Substitute Purchaser, upon receipt by the Company of notice of such transfer, any reference to such Substitute Purchaser as a “Purchaser” in this Agreement (other than in this Section 22), shall no longer be deemed to refer to such Substitute Purchaser, but shall refer to such original Purchaser, and such original Purchaser shall again have all the rights of an original holder of the Notes under this Agreement. SECTION 23. MISCELLANEOUS. Section 23.1 Successors and Assigns. All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including any subsequent holder of a Note) whether so expressed or not, except that, subject to Section 11.2, the Company may not assign or otherwise transfer any of its rights or obligations hereunder or under the Notes without the prior written consent of each holder. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto and their respective successors and assigns permitted hereby) any legal or equitable right, remedy or claim under or by reason of this Agreement. Section 23.2 Accounting Terms. All accounting terms used herein which are not expressly defined in this Agreement have the meanings respectively given to them in accordance with GAAP. Except as otherwise specifically provided herein, (i) all computations made pursuant to this Agreement shall be made in accordance with GAAP and (ii) all financial statements shall be prepared in accordance with GAAP. For purposes of determining compliance with this Agreement (including Section 10, Section 11 and the definition of “Indebtedness”), any election by the Company to measure any financial liability using fair value (as permitted by Financial Accounting Standards Board Accounting Standards Codification Topic No. 825-10-25 – Fair Value Option, International Accounting Standard 39 – Financial Instruments: Recognition and Measurement or any similar accounting standard) shall be disregarded and such determination shall be made as if such election had not been made. Section 23.3 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction. Section 23.4 Construction, Etc. Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person. Defined terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by
-49- the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein) and, for purposes of the Notes, shall also include any such notes issued in substitution therefor pursuant to Section 14, (b) subject to Section 23.1, any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Sections and Schedules shall be construed to refer to Sections of, and Schedules to, this Agreement and (e) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time. Section 23.5 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto. Section 23.6 Governing Law. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State. Section 23.7 Jurisdiction and Process; Waiver of Jury Trial. (a) The Company irrevocably submits to the non-exclusive jurisdiction of any New York State or federal court sitting in the Borough of Manhattan, The City of New York, over any suit, action or proceeding arising out of or relating to this Agreement or the Notes. To the fullest extent permitted by applicable law, the Company irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. (b) The Company agrees, to the fullest extent permitted by applicable law, that a final judgment in any suit, action or proceeding of the nature referred to in Section 23.7(a) brought in any such court shall be conclusive and binding upon it subject to rights of appeal, as the case may be, and may be enforced in the courts of the United States of America or the State of New York (or any other courts to the jurisdiction of which it or any of its assets is or may be subject) by a suit upon such judgment. (c) The Company consents to process being served by or on behalf of any holder of Notes in any suit, action or proceeding of the nature referred to in Section 23.7(a) by mailing a copy thereof by registered, certified, priority or express mail (or any substantially similar form of mail), postage prepaid, return receipt or delivery confirmation requested, to it at its address specified in Section 19 or at such other address of which such holder shall then have been notified pursuant to said Section. The Company agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest
-50- extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service. (d) Nothing in this Section 23.7 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders of any of the Notes may have to bring proceedings against the Company in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction. (e) The parties hereto hereby waive trial by jury in any action brought on or with respect to this Agreement, the Notes or any other document executed in connection herewith or therewith. Section 23.8 Forbearance Agreement. In connection with the Company’s execution of a Tax Credit Transfer Agreement, the Purchasers shall use commercially reasonable efforts to negotiate and concurrently enter into or to cause the Collateral Agent to enter into on their behalf, a forbearance agreement with the Company and the Tax Credit Transferee pursuant to which the Purchasers, or the Collateral Agent on their behalf, shall agree to forbear from exercising certain enforcement rights under the Security Documents that would cause the loss, reduction, recapture (as defined under Section 50 of the Code), unavailability, delay, or disallowance of any part of any of the Tax Credits to the Tax Credit Transferee that would not occur but for such foreclosure, sale, assignment, lease or other transfer. * * * * *
[Signature Page to Note Purchase Agreement (Calistoga)] If you are in agreement with the foregoing, please sign the form of agreement on a counterpart of this Agreement and return it to the Company, whereupon this Agreement shall become a binding agreement between you and the Company. Very truly yours, CALISTOGA RESILIENCY CENTER, LLC By: ____________________________________ Name: Robert Piconi Title: President This Agreement is hereby accepted and agreed to as of the date hereof. Docusign Envelope ID: 9285E9CD-B443-451F-9AF3-A046B72498FB
A-1 SCHEDULE A DEFINED TERMS As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term: “Acceptable Letter of Credit” means a letter of credit (which is not secured by the Collateral) issued by a bank or other financial institution rated at least A- by S&P or Fitch or A3 by Moody’s. “Additional Material Project Document” means any contract or agreement relating to the ownership, operation, maintenance, repair, financing or use of the Project entered into by the Company with any other Person subsequent to the date of this Agreement (including any contract(s) or agreement(s) entered into in substitution for any Material Project Document that has been terminated in accordance with its terms or otherwise) that (i) requires payments to be made or received in an amount in excess of two million Dollars ($2,000,000) in the aggregate per year or (ii) is for a term that is greater than two (2) years; provided that “Additional Material Project Documents” shall not include Tax Credit Transfer Documents. “Affiliate” means, at any time, and with respect to any Person, any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person, and, with respect to the Company, shall include any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or equity interests of the Company or any Person of which the Company beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of any class of voting or equity interests. Unless the context otherwise clearly requires, any reference to an “Affiliate” is a reference to an Affiliate of the Company. “Affiliated Bankruptcy Party” means (a) the Company and (b) the Pledgor. “Aggregate Offer Amount” is defined in Section 9.3(b)(ii) (Offer to Prepay). “Agreement” means this Note Purchase Agreement, including all Schedules attached to this Agreement. “Annual Operating Budget” is defined in Section 8.1(d) (Financial and Business Information – Annual Operating Budget). “Anti-Corruption Laws” means any law or regulation in a U.S. or any non-U.S. jurisdiction regarding bribery or any other corrupt activity, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010. “Anti-Money Laundering Laws” means any law or regulation in a U.S. or any non-U.S. jurisdiction regarding money laundering, drug trafficking, terrorist-related activities or other money laundering predicate crimes, including the Currency and Foreign Transactions Reporting Act of 1970 (otherwise known as the Bank Secrecy Act) and the USA PATRIOT Act. “Applicable Permit” means, at any time, any Permit to be obtained by or on behalf of the Company, including any such Permit relating to zoning, environmental or natural resource protection,
A-2 pollution, sanitation, FERC, CPUC, CAISO, PUHCA, safety, siting or building, importation of technology, equipment and materials, that is (a) material and necessary at such time to the development, construction or operation of the Project to construct, test, operate, maintain, repair, own or use the Project as contemplated by the Transaction Documents, to enter into any Transaction Document or to consummate any transaction contemplated thereby or (b) necessary so that (i) none of the Collateral Agent, the Holders, or any Affiliate of any of them may be deemed by any Governmental Authority to be subject to regulation under the FPA or PUHCA or under California laws or regulations in respect of the rates or the financial or organizational regulation of electric utilities solely as a result of the construction, operation, ownership, leasing or control of the Project or (ii) none of the Company nor any Affiliate of the Company that is a party to an Transaction Document may be deemed by any Governmental Authority to be subject to, or not exempt from, regulation under PUHCA (other than the FERC regulations implementing PUHCA relating to obtaining EWG Status, notice of holding company status and regulatory access to books and records), or under any California laws or regulations respecting the rates or the financial or organizational regulation of electric utilities. “Assignment and Acceptance” is defined in the Bridge Facility. “Authorized Officer” means a natural Person designated by the Company as such on forms supplied by the Collateral Agent, in each case acting solely in his or her representative capacity and not individually. “Bankruptcy Event” means, with respect to any Person, such Person (a) becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, (b) has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, (c) makes a general assignment for the benefit of creditors or (d) admits in writing its inability to pay its debts generally as they become due. “Blocked Person” means (a) a Person whose name appears on the list of Specially Designated Nationals and Blocked Persons published by OFAC, (b) a Person, entity, organization, country or regime that is blocked or a target of sanctions that have been imposed under U.S. Economic Sanctions Laws or (c) a Person that is an agent, department or instrumentality of, or is otherwise beneficially owned by, directly or indirectly, any Person, entity, organization, country or regime described in clause (a) or (b). “Bridge Facility” means that certain Credit Agreement dated as of March 31, 2025 among the Company, Jefferies Finance LLC, as administrative agent and collateral agent, and the lenders party thereto. “Bridge Facility Notes” means the “Notes” as defined in the Bridge Facility. “Bridge Facility Provider” means Jefferies Finance LLC. “Business Day” means any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed. “Calculation Date” means each February 28, May 31, August 31 and November 30 to occur after the Initial Closing Date.
A-3 “Calculation Period” means the period of twelve months ending on a Calculation Date. “CapEx and Warranty Reserve Account” is defined in the Depositary Agreement. “CapEx Reserve Requirement” means (i) from the date of the Closing to May 31, 2026, $500,000 and (ii) from and after June 1, 2026, $750,000. “Capital Expenditures” means, for any period, the aggregate amount of all expenditures of the Company payable during such period which, in accordance with GAAP, are or should be included in “purchase of property and equipment” or similar items reflected in the consolidated statement of cash flows of the Company, but excluding each of the following items, to the extent such item would otherwise be included as “Capital Expenditures”: (a) costs and expenses constituting Operating Costs (other than Permitted Capital Expenditures) or Project Costs or costs and expenses paid with amounts on deposit in Collateral Accounts in accordance with the Depositary Agreement; (b) the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment to the extent that the gross amount of such purchase price is less than any credit granted by the seller of such equipment for the equipment being traded in at such time; (c) payments in respect of Capital Lease Obligations permitted under this Agreement; and (d) expenditures to the extent the Company has received or has an unconditional commitment to receive reimbursement in cash from a Person that is not an Affiliate of the Company and for which the Company has not provided or is not required to provide or incur, directly or indirectly, any consideration or obligation to such Person or any other Person without such reimbursement. “Capital Lease” means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP. “Capital Lease Obligations” means, as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP. “Change of Control” means (a) (i) prior to the Initial Delivery Date, Sponsor shall cease to legally and beneficially own and control, directly or indirectly, 100% of the common voting interests in Pledgor other than due to a sale or other transfer to a Qualified Owner or (ii) after the Initial Delivery Date, the Permitted Holders shall cease to legally and beneficially own and control, directly or indirectly, 50.1% of the common voting interests in Pledgor or (b) Pledgor shall cease to legally and beneficially directly own and control 100% of the common voting interests in the Company.
A-4 “City” means the City of Calistoga, California. “Closing” is defined in Section 3 (Closing). “COD” means the “Commercial Operation Date” as defined in the Interconnection Agreement. “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time. “Collateral” means all property which is subject or is required to become subject to the security interests or Liens granted pursuant to any of the Security Documents. “Collateral Accounts” is defined in Section 11.15 (Maintenance of Accounts). “Collateral Agent” means Wilmington Trust, National Association. “Company” is defined in the first paragraph of this Agreement. “Conditions Subsequent” is defined in Section 10.14 (Conditions Subsequent). “Confidential Information” is defined in Section 21 (Confidential Information). “Consents” means each consent to collateral assignment required to be entered into pursuant to this Agreement, in each case by and among the Company, the Collateral Agent and the Persons identified therein, including, with respect to any Additional Material Project Document, a consent and agreement of each such party to such Additional Material Project Document (other than the Company), in each case, substantially in the form of Exhibit B or otherwise in form and substance reasonably satisfactory to the Required Holders. “Construction Budget and Schedule” means a reasonably detailed schedule of the development and construction of the Project and a reasonably detailed total budget for the Project following the drawdown in full of the Notes, as prepared by the Company and approved by the Purchasers (in consultation with the Independent Engineer) delivered on or before the Closing, in the form of Exhibit C hereto; and containing a reasonably detailed description of Project Costs incurred and expected to be incurred with respect to the development and construction of the Project, for the period commencing on the date of such Construction Budget and Schedule through the Guaranteed Substantial Completion Date (as such term is defined in the EPC Contract) for the Project. “Control” 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; and the terms “Controlled” and “Controlling” shall have meanings correlative to the foregoing. “Controlled Entity” means (a) any of the Company’s respective Controlled Affiliates and (b) the parent entity of the Company and its Controlled Affiliates. “Conversion” means the conversion of the Indebtedness existing under the Bridge Facility as evidenced by the Bridge Facility Notes to the Indebtedness contemplated pursuant to this Agreement, including the amendment and restatement of the Bridge Facility Notes in the form of the Notes.
A-5 “CPUC” means the California Public Utilities Commission. “Date Certain” means October 4, 2025. “Debt Service” means, as of any period of determination, the aggregate amount of fees, interest and principal on account of the Notes (including any scheduled payments thereon but excluding any extraordinary mandatory redemptions) and the Pari Passu LC Facility, if applicable, due and payable by the Company during such period of determination. “Debt Service Coverage Ratio” means, as at any Calculation Date, (a) the ratio of (i) Net Cash Flow for the Calculation Period ended on such Calculation Date to (ii) Debt Service for the Calculation Period ended on such Calculation Date (the “Historical Debt Service Coverage Ratio”) and (b) the ratio of (i) Net Cash Flow for the period of twelve months beginning on such Calculation Date to (ii) projected Debt Service for the period of twelve months beginning on such Calculation Date (the “Pro Forma Debt Service Coverage Ratio”). “Debt Service Reserve Account” is defined in the Depositary Agreement. “Debt Service Reserve Requirement” means as of the date of determination, 100% of Maximum Annual Debt Service. “Default” means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default. “Default Rate” means interest at a rate per annum equal to two percent (2%) above the rate of interest stated in clause (a) of the first paragraph of the Notes. “Deposit Accounts” is defined in Section 11.15 (Maintenance of Accounts) “Depositary Agreement” means the Depositary Agreement, dated on or about the date hereof, among the Company, the Collateral Agent, and the Depositary Bank. “Depositary Bank” means Wilmington Trust, National Association. “Disclosure Documents” is defined in Section 6.3 (Disclosure). “Disposition” means any disposition of property or series of related dispositions of property that yields gross proceeds to the Company (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds). “Distribution Reserve Account” has the meaning ascribed to such term in the Depositary Agreement. “Effective Material Project Document” means, with respect to any Material Project Document, that such Material Project Document (a) has been executed and delivered by each party thereto, (b) all conditions precedent to the effectiveness of such Material Project Document have been satisfied or waived and (c) such Material Project Document is in full force and effect.
A-6 “Environmental Claim” means any and all liabilities, obligations, losses, administrative, regulatory or judicial actions, suits, demands, decrees, claims, liens, judgments, warning notices, notices of noncompliance or violation, investigations (other than internal reports prepared by or on behalf of the Company), proceedings, removal or remedial actions or orders, or damages, penalties, out-of-pocket costs, expenses, or disbursements, arising under any Environmental Law or any Permit issued under any such Environmental Law and relating to any Site or other property that is the subject of the Site Lease, including (a) any and all such claims for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law and (b) any and all such claims arising from alleged injury or threat of injury to health and safety, the environment, including ambient air, surface water, land surface, subsurface strate, and natural resources, or regarding the investigation, delineation, remediation, Release or potential Release of any Hazardous Materials (in each case, to the extent relating to human exposure to Hazardous Materials.) “Environmental Laws” means any and all federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment and the use or Release into the environment of any Hazardous Materials. “EPC Contract” means the Engineering, Procurement, and Construction Agreement between Energy Vault, Inc., a Delaware corporation, and Calistoga Resiliency Center, LLC, a Delaware Limited Liability Company, dated as of November 18, 2024. “EPC Contractor” means Energy Vault, Inc., a Delaware limited liability company. “Equity Interests” means, with respect to any Person, all of the shares, membership interests, rights, participations or other equivalents (however designated) of capital stock of (or other ownership or profit interests or units in) such Person and all of the warrants, options or other rights for the purchase, acquisition or exchange from such Person of any of the foregoing (including through convertible securities). “ERISA” means the Employee Retirement Income Security Act of 1974 and the rules and regulations promulgated thereunder from time to time in effect. “ERISA Affiliate” means any trade or business (whether or not incorporated) that is treated as a single employer together with the Company under section 414 of the Code. “Event of Abandonment” means, with respect to the Project, the suspension or cessation for a period of at least sixty (60) consecutive days of all or substantially all of the operation and maintenance activities at the Project; provided, however, that any such suspension or cessation that arises from an Event of Loss, a requirement of law, an event of force majeure, curtailment or failure to be dispatched, or other bona fide business reasons shall not constitute an Event of Abandonment, in each case, so long as the Company is taking commercially reasonable actions to overcome or mitigate the effects of the cause of suspension or cessation so that maintenance and/or operations, as the case may be, can be resumed. Any period of cessation or suspension shall end on the date that operation and maintenance activities of a substantial nature are resumed. “Event of Default” is defined in Section 12 (Events of Default).
A-7 “Event of Loss” means any event that causes all or substantially all of the Project to be damaged, destroyed or rendered unfit for normal use for any reason whatsoever and, in each case, shall include an Event of Taking. “Event of Taking” means any taking, seizure, confiscation, requisition, exercise of rights of eminent domain, public improvement, inverse condemnation, condemnation or similar action of or proceeding by any Governmental Authority relating to all or substantially all of the Project, any equity interests in the Company or any other part of the Collateral. “EWG” means an exempt wholesale generator as defined under 18 C.F.R. § 366.1 (2024) “Excluded Accounts” is defined in the Security Agreement. “Fair Labor Standards Act” means the federal Fair Labor Standards Act of 1938 and the rules and regulations promulgated thereunder from time to time in effect. “FATCA” means (a) sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), together with any current or future regulations or official interpretations thereof, (b) any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the United States of America and any other jurisdiction, which (in either case) facilitates the implementation of the foregoing clause (a), and (b) any agreements entered into pursuant to section 1471(b)(1) of the Code. “FERC” means the Federal Energy Regulatory Commission and any successor thereto. “Financial Model” means the financial model of the Company dated April 3, 2025, attached hereto as Annex I, as approved by the Purchasers. “Financing Documents” means (a) this Agreement, (b) the Notes, (c) the Security Documents, and (d) any other documents, agreements or instruments entered into, filed or recorded in connection with any of the foregoing. “Fitch” means Fitch Investors Service, Inc. and its subsidiaries, or any successor organization thereto. “Flood Hazard Property” is defined in Section 10.14(a)(vii)(D) (Conditions Subsequent). “Flood Insurance Laws” shall mean (a) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (b) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statute thereto, (c) the National Flood Insurance Reform Act of 1994 (amending 42 USC 4001, et seq.), as the same may be amended or recodified from time to time, (d) the Flood Insurance Reform Act of 2004 and (e) the Biggert Waters Reform Act of 2012 and, in each case, any regulations promulgated thereunder. “FPA” means the Federal Power Act, as amended, and FERC’s regulations promulgated thereunder. “Fronted Equity Contributions” is defined in the Depositary Agreement.
A-8 “Funding Instructions Letter” is defined in Section 3(b). “Funds Flow Memorandum” means the memorandum setting forth the flow of funds on the Closing. “GAAP” means generally accepted accounting principles as in effect from time to time in the United States of America. “Governmental Authority” means (a) the government of (i) the United States of America or any state or other political subdivision thereof, or (ii) any other jurisdiction in which the Company conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company, or (b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government. “Governmental Official” means any governmental official or employee, employee of any government-owned or government-controlled entity, political party, any official of a political party, candidate for political office, official of any public international organization or anyone else acting in an official capacity. “Governmental Rules” means any law, rule, regulation, ordinance, order, binding code interpretation, judgment, decree, or similar form of decision of any Governmental Authority, including FERC, CPUC, CAISO and the North American Reliability Corporation. “Guaranty” means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such indebtedness or obligation or any property constituting security therefor; (b) to advance or supply funds (i) for the purchase or payment of such indebtedness or obligation or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation; (c) to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of any other Person to make payment of the indebtedness or obligation; or (d) otherwise to assure the owner of such indebtedness or obligation against loss in respect thereof.
A-9 In any computation of the indebtedness or other liabilities of the obligor under any Guaranty, the indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor. “Hazardous Materials” means any and all pollutants, toxic or hazardous wastes or other substances that a Governmental Authority has determined a hazard to health and safety, the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage or filtration of which is regulated under Environmental Laws, including asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum, petroleum products, lead-based paint, radon gas or similar regulated substances. “Historical Debt Service Coverage Ratio” has the meaning ascribed to such term in the definition of Debt Service Coverage Ratio. “Historical Financial Statements” means the unaudited balance sheet of the Company as of February 28, 2025. “Holder” means, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Company pursuant to Section 14.1 (Registration of Notes), provided, however, that if such Person is a nominee, then for the purposes of Section 8 (Information as to Company), Section 13 (Remedies on Default, Etc.), Section 18.2 (Solicitation of Holders of Notes) and Section 19 (Notices) and any related definitions in this Schedule A, “holder” shall mean the beneficial owner of such Note whose name and address appears in such register. “Indebtedness” with respect to any Person means, at any time, without duplication, (a) its liabilities for borrowed money and its redemption obligations in respect of mandatorily redeemable Preferred Stock; (b) its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property); (c) (i) all liabilities appearing on its balance sheet in accordance with GAAP in respect of Capital Leases and (ii) all liabilities which would appear on its balance sheet in accordance with GAAP in respect of Synthetic Leases assuming such Synthetic Leases were accounted for as Capital Leases; (d) all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities); (e) all its liabilities in respect of letters of credit or instruments serving a similar function issued or accepted for its account by banks and other financial institutions (whether or not representing obligations for borrowed money); (f) the aggregate Swap Termination Value of all Swap Contracts of such Person; and
A-10 (g) any Guaranty of such Person with respect to liabilities of a type described in any of clauses (a) through (f) hereof. Indebtedness of any Person shall include all obligations of such Person of the character described in clauses (a) through (g) to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP. “Independent Engineer” means E3 Consulting or any other nationally recognized independent engineer with relevant experience appointed after the Closing by the Company with the consent of the Required Holders. “INHAM Exemption” is defined in Section 7.2(e) (Source of Funds). “Initial Delivery Date” means the date on which the Project achieves the “Initial Delivery Date” under and as defined in the Power Purchase Agreement. “Institutional Investor” means (a) any Purchaser of a Note, (b) any holder of a Note holding (together with one or more of its affiliates) more than 5% of the aggregate principal amount of the Notes then outstanding, (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form and (d) any Related Fund of any holder of any Note. “Insurance Consultant” means Blades, Crout & Proulx LLC, or any other nationally recognized insurance consultant with relevant experience. “Interconnection Agreement” means the Gas and Electric Extension Agreement, dated July 10, 2024, by and between Company and Power Purchaser. “Investment Grade Rating” means a Person whose long-term unsubordinated debt has been assigned a credit rating of “BBB-” or better by S&P or “Baa3” or better by Moody’s. “Investor Presentation” is defined in Section 6.3 (Disclosure). “Legal Requirements” means, as to any Person, any applicable law, statute, code, treaty, rule, regulation, ordinance including any Governmental Rule (including, without limitation, (a) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith or in implementation thereof and (b) any requests, rules, guidelines, requirements or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States, in each case, pursuant to Basel III), or determination of an arbitrator or a court or other Governmental Authority, or any requirement under a material Permit, in each case, applicable to or binding upon such Person or any of its properties or to which such Person or any of its property is subject. “Lien” means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or
A-11 with respect to any property or asset of such Person (including in the case of stock, stockholder agreements, voting trust agreements and all similar arrangements). “Make-Whole Amount” is defined in Section 9.8 (Make-Whole Amount). “Material” means material in relation to the business, operations, affairs, financial condition, assets, or properties of the Company taken as a whole. “Material Adverse Effect” means a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of the Company taken as a whole, (b) the ability of the Company to perform its obligations under this Agreement and the Notes or (c) the validity or enforceability of this Agreement, the Notes or any other Financing Document. “Material Project Documents” means, collectively, the Power Purchase Agreement, the EPC Contract, the O&M Agreement, the Interconnection Agreement, the Site Lease and any Additional Project Documents, as of the applicable time of determination, then in force and effect; provided that “Material Project Documents” shall not include Tax Credit Transfer Documents. “Material Project Participant” means a party to a Material Project Document other than the Company. “Maturity Date” is defined in the first paragraph of each Note. “Maximum Annual Debt Service” means as of the date of determination, an amount equal to the maximum aggregate Debt Service payable during the then-current or any future fiscal year, excluding any balloon payment of Debt Service (i.e., the amount of Debt Service in excess of the regularly-scheduled amortization payment) required to be paid on the Maturity Date. “MBR Authority” has the meaning given to such term in Section 6.18 (Energy Regulatory Status). “Moody’s” means Moody’s Investors Service, Inc. “Mortgage” means the deed of trust, dated as of the date hereof, and each other deed of trust made by the Company in favor of, or for the benefit of, the Collateral Agent for the benefit of the Secured Parties, substantially in the form of Exhibit D (Form of Mortgage). “Mortgaged Property” or “Mortgaged Properties” means the real property in Calistoga, California, identified as the “Property” in the Site Lease and identified in Schedule 1, attached hereto and made a part hereof, together with any after acquired real property as to which the Collateral Agent for the benefit of the Secured Parties shall be granted a Lien pursuant to the provisions of Section 10.7(b) (Further Assurances; Additional Collateral) or Section 10.14(a) (Conditions Subsequent) of this Agreement. For the avoidance of doubt, after acquired Property Interests shall not be considered Mortgaged Property until such time as the Company actually acquires such after acquired Property Interests and same are subjected to the Lien of a Mortgage pursuant to Section 10.7(b) (Further Assurances; Additional Collateral). “Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term is defined in section 4001(a)(3) of ERISA).
A-12 “NAIC” means the National Association of Insurance Commissioners. “NAIC Annual Statement” is defined in Section 7.2(a) (Source of Funds). “Net Available Amount” means the aggregate amount of Loss Proceeds (as such term is defined in the Depositary Agreement) received by the Company in respect of an Event of Loss or Event of Taking net of reasonable expenses incurred by the Company in connection with the collection of such Loss Proceeds. “Net Cash Flow” means in respect of any period, (i) the sum of the following (without duplication): (A) aggregate Project Revenues received by the Company during such period; plus (B) any other revenues received by the Company, less (ii) the sum of the following (without duplication): (A) the Operating Costs paid during such period with Project Revenues; and (B) all Capital Expenditures (to the extent not funded from any source other than Project Revenues paid during such period). “Net Cash Proceeds” means in connection with any asset disposition, the aggregate cash proceeds received by the Company in respect of any asset disposition (including any cash received upon the sale or other disposition of any non-cash consideration received in any asset disposition), net of the direct costs relating to such asset disposition and payments made to retire Indebtedness (other than the Notes) required to be repaid in connection therewith, including legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result of such asset disposition, Taxes paid or payable as a result of such asset disposition, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements and, including, without duplication, any Permitted Tax Distributions arising as a result of such asset disposition, and amounts reserved for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. “Net Equity Proceeds” means an amount equal to any cash proceeds from the issuance of any Equity Interests of the Company, net of underwriting discounts and commissions and other reasonable costs, expenses and stamp or similar Taxes associated therewith, including reasonable legal fees and expenses. For the avoidance of doubt, cash proceeds in connection with the sale of Tax Credits shall not constitute Net Equity Proceeds. Contributions by the Pledgor without the issuance of any additional Equity Interests of the Company shall not constitute Net Equity Proceeds. “Non-U.S. Plan” means any plan, fund or other similar program that (a) is established or maintained outside the United States of America by the Company primarily for the benefit of employees of the Company residing outside the United States of America, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment and (b) is not subject to ERISA or the Code. “Note Proceeds Account” has the meaning ascribed to such term in the Depositary Agreement. “Note Purchase Agreement” is defined in the third paragraph of each Note. “Notes” is defined in Section 1 (Authorization of Notes).
A-13 “O&M Agreement” means the Operation and Maintenance Agreement, dated as of November 7, 2024, by and between the O&M Provider and the Company, as further amended, amended and restated, or otherwise modified through the date of this Agreement. “O&M Provider” means Energy Vault, Inc. “OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury. “OFAC Sanctions Program” means any economic or trade sanction that OFAC is responsible for administering and enforcing. A list of OFAC Sanctions Programs may be found at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx. “Offer Date” is defined in Section 9.3(a) (Offer to Prepay). “Offer to Prepay” is defined in Section 9.3(b) (Offer to Prepay). “Officer’s Certificate” means a certificate of a Senior Financial Officer or of any other officer of the Company whose responsibilities extend to the subject matter of such certificate. “Operating Costs” means, for any period, the sum, computed without duplication among any of the following categories or from period to period, of the following: (a) cash operation, maintenance (including major maintenance costs) and administrative costs relating to the Project or any portion thereof and ordinary course fees, royalties and costs, including those paid or payable to the O&M Provider pursuant to the O&M Agreement; plus (b) Permitted Capital Expenditures and expenses for operating the Project and maintaining the Project in good repair and operating condition in accordance with Prudent Industry Practices paid or payable during such period, including to the counterparties to the Material Project Documents as required pursuant to the Material Project Documents; plus (c) insurance costs paid or payable in respect of insurance maintained or required to be maintained in respect of the Project during such period; plus (d) applicable sales and excise taxes (if any) paid or payable or reimbursable by the Company during such period; plus (e) franchise taxes paid or payable by the Company during such period; plus (f) property taxes paid or payable by the Company during such period; plus (g) any other direct taxes (if any) paid or payable by the Company during such period; plus (h) costs and fees attendant to the obtaining and maintaining in effect the Applicable Permits paid or payable during such period; plus (i) legal, accounting and other professional fees attendant to any of the foregoing items paid or payable during such period; plus (j) any fees, expenses and indemnification payments of the Secured Parties during such period not included in Debt Service; plus (k) all other cash expenses paid or payable by the Company in the ordinary course of business in connection with the operation of the Project. Operating Costs shall exclude, to the extent included above: (i) payments into any of the Collateral Accounts during such period; (ii) payments of any kind with respect to Restricted Payments during such period, except as permitted under Section 11.12; (iii) depreciation for such period; (iv) payments of any kind with respect to Debt Service or Indebtedness required to be paid from amounts available after application of Section 3.02(c) of the Depositary Agreement; and (v) any payments of any kind with respect to any restoration of the Project during such period. “Operating and Major Maintenance Reserve Account” is defined in the Depositary Agreement.
A-14 “Operating Reserve Requirement” means $1,000,000. “Outside Condition Subsequent Date” is defined in Section 10.14 (Conditions Subsequent). “Pari Passu LC Facility” is defined in the definition of “Permitted Indebtedness”. “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA. “Permit” means any and all franchises, licenses, permits, approvals, certifications, authorizations, exemptions and other rights, privileges required to be obtained from a Governmental Authority under any Legal Requirement. “Permitted Capital Expenditures” means Capital Expenditures consistent with the Construction Budget and Schedule or the then current Annual Operating Budget (a) incurred for the purpose of permitting (i) the Company to comply with applicable Legal Requirements (including any Environmental Laws) and Applicable Permits or (ii) the Project to operate in accordance with the projections and budget set forth in the Financial Model or (b) as required to operate the Project in accordance with Prudent Industry Practices. “Permitted Holder” means Sponsor or any of its Affiliates or any Qualified Owner. “Permitted Indebtedness” means: (a) Indebtedness under the Note Purchase Agreement; (b) trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of the Company’s business operation so long as such trade accounts payable are payable within 60 days of the date the respective goods are delivered or the respective services are rendered and are not more than 60 days past due; (c) Indebtedness secured by Permitted Liens; and (d) Subject to Section 11.9, Indebtedness consisting of working capital facilities, letters of credit facilities or reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including for funding of the Debt Service Reserve Account or for credit support required to be provided in connection with obligations under the Material Project Documents (“Pari Passu LC Facility”). “Permitted Investments” means: (a) direct obligations of the United States, or of any agency thereof, or obligations guaranteed as to principal and interest by the United States, or of any agency thereof, in either case maturing not more than one year from the date of acquisition thereof; (b) investments in marketable general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case, maturing within one year from the date of acquisition and rated (on the date of acquisition thereof) “A” or better by Fitch or S&P or “A2” or better by Moody’s, respectively; (c) Dollar time deposits with, or certificates of deposit issued by, (i) any bank or trust company licensed under the laws of the United States or any state thereof having outstanding senior long-term unsecured indebtedness and whose long-term debt is rated (on the date of acquisition thereof) “A” or better by Fitch or S&P or “A2” or better by Moody’s, respectively or (ii) a licensed branch of a foreign bank organized under the law of
A-15 any member country of the Organization for Economic Co-Operation and Development having outstanding senior long-term unsecured indebtedness and whose long-term debt is rated (on the date of acquisition thereof) “A” or better by Fitch or S&P or “A2” or better by Moody’s, respectively, in each case maturing not more than one year from the date of acquisition thereof; (d) commercial paper or tax exempt obligations with a short-term rating “F-1” or better by Fitch or S&P or “P-1” or better by Moody’s, respectively, maturing not more than one year from the date of acquisition thereof; (e) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) of this definition and entered into with a financial institution satisfying the criteria described in clause (c) of this definition; and (f) money market funds rated at least “AA” or better by Fitch or Standard Poor’s or “Aa2” or better by Moody’s, including any fund for which the Depositary Bank or an affiliate of the Depositary Bank serves as an investment advisor, administrator or shareholder servicing agent, notwithstanding that (i) the Depositary Bank or an affiliate of the Depositary Bank charges and collects fees and expenses from such fund for services rendered (provided that such charges, fees and expenses are on terms consistent with terms negotiated at arm’s length) and (ii) the Depositary Bank charges and collects fees and expenses for services rendered pursuant to the Depositary Agreement. “Permitted Lien” means: (a) Liens on Property of the Company securing all obligations of the Company under (i) the Notes and each other Financing Document and/or (ii) a Pari Passu LC Facility; (b) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted; provided that any reserve or other appropriate provision as is required in conformity with GAAP, has been made therefor; (c) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlord’s or other like Liens imposed by law and arising in the ordinary course of business or in connection with the operation of the Project, in each case for sums not yet due or being contested in good faith and by appropriate proceedings and with (i) adequate reserves in accordance with GAAP or (ii) for which other appropriate provisions have been made or provided, or (C) are fully covered by insurance; (d) pledges or deposits under worker’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts or leases, or to secure public or statutory obligations, surety bonds, appeal bonds, or customs duties and the like, in each case incurred in the ordinary course of business and not securing Indebtedness; (e) Liens resulting from judgments under any litigation or legal proceeding; provided that (i) execution or other enforcement of such Liens is effectively stayed or (ii) the claims secured thereby are being actively contested in good faith and by appropriate proceedings and (A) for which adequate reserves in conformity with applicable generally accepted accounting practices have been established, (B) for which other appropriate provisions have been made or provided, or (C) are fully covered by insurance; (f) Liens, deposits or pledges to secure statutory obligations; (g) other Liens incident to the ordinary course of business that are not incurred in connection with the obtaining of any loan, advance, or credit and that do not in the aggregate materially impair the use of the Company’s property or assets or the value of such property or assets for the purpose of such business; (h) [reserved]; (i) servitudes, easements, rights-of-way, restrictions, encroachments, overlapping of improvements, strips, gores, gaps or breaks in contiguity, minor defects or irregularities in title and such other encumbrances or charges against real property or interests therein as of a similar nature which do not in a material way interfere with the value or use thereof or the Company’s business; (j) the terms and provisions of any Material Project Documents; (k) as disclosed in Schedule 6.3 or the Investor Presentation; and (l) as set forth on Schedule PL. “Permitted Tax Distribution” means (i) with respect to any taxable period or portion thereof for which the Borrower or any of its subsidiaries are members of a consolidated, combined, affiliated,
A-16 unitary or similar income tax group for U.S. federal or applicable U.S. state or local or non-U.S. income tax purposes of which a direct or indirect parent of the Borrower is the common parent (each, a “Consolidated Tax Group”), or for which the Borrower is a partnership or disregarded entity for U.S. federal or applicable U.S. state or local or non-U.S. income tax purposes that is wholly-owned (directly or indirectly) by an entity that is taxable as a corporation for such income tax purposes, dividends or distributions by the Borrower or an applicable subsidiary, as may be relevant, to any direct or indirect parent of the Borrower in an amount required to pay any U.S. federal, state or local and/or non-U.S. income taxes (as applicable) of such Consolidated Tax Group or of such direct or indirect parent of the Borrower, as applicable, that are attributable to the taxable income of the Borrower and its subsidiaries for such taxable period; provided that for each such taxable period, the amount of distributions shall not exceed the amount of any U.S. federal, state or local and/or non-U.S. income taxes that the Borrower and/or its subsidiaries would have paid for such taxable period had the Borrower and/or such subsidiaries, as applicable, been a stand-alone corporate taxpayer or stand-alone corporate group, (ii) with respect to any taxable period (or portion thereof) for which the Borrower is a pass-through entity (including a partnership or disregarded entity) for U.S. federal or applicable U.S. state or local or non- U.S. income tax purposes and is not wholly owned (directly or indirectly) by an entity that is taxable as a corporation for such income tax purposes, dividends or distributions by the Borrower or an applicable subsidiary, as may be relevant, on or prior to each estimated tax payment date as well as each other applicable due date, in amounts which are sufficient to permit the direct and indirect members or partners of the Borrower to pay their income Taxes which arise as a result of their direct or indirect ownership of the Borrower and its subsidiaries, as determined or estimated by the Borrower in good faith, assuming each such member or partner is subject to tax at the highest combined marginal U.S. federal, state and/or local income tax rates applicable to an individual or, if higher, a corporation resident in Los Angeles, California, determined by taking into account (1) any U.S. federal, state and/or local (as applicable) loss carryforwards of such member or partner available from losses of such member or partner attributable to its direct or indirect ownership of the Borrower and its subsidiaries for prior taxable periods to the extent such loss is of a character that would allow such loss to be available to reduce taxes in the current taxable period (taking into account any limitations on the utilization of such loss to reduce such taxes, and to the extent such loss had not already been utilized), and (2) the character (e.g., long-term or short-term capital gain or ordinary or exempt) of the applicable income and (3) any adjustment to such member’s or partner’s taxable income attributable to its direct or indirect ownership of the Borrower and its subsidiaries as a result of any tax examination, audit or adjustment and (ii) not taking into account the application of Section 199A of the Code and (2) the deductibility of state and local income taxes for U.S. federal income tax purposes and (iii) dividends or distributions by the Borrower to any direct or indirect parent of the Borrower in an amount required for any direct or indirect parent to pay franchise, excise and similar taxes and other fees and expenses required to maintain its corporate or other legal existence. “Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, business entity or Governmental Authority. “Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA) subject to Title I of ERISA that is or, within the preceding five years, has been established or maintained, or to which contributions are or, within the preceding five years, have been made or required to be made, by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability. “Pledge Agreement” means the Pledge Agreement, dated as of the Closing, between the Pledgor and the Collateral Agent.
A-17 “Pledgor” means Calistoga Resiliency Center HoldCo, LLC, a Delaware limited liability company. “Power Purchase Agreement” means the Distributed Generation Enabled Microgrid Services Agreement, dated as of December 20, 2022, between the Company and the Power Purchaser, as amended, amended and restated, or otherwise modified through the date of this Agreement. “Power Purchaser” means Pacific Gas and Electric Company, a California Corporation. “PPA Amendment” means that certain Amendment to the Power Purchase Agreement to be entered into by and between the Power Purchaser and the Company, pursuant to which, among other things, the Guaranteed Initial Delivery Date (as defined in the Power Purchase Agreement) shall be extended to September 1, 2025. “Preferred Stock” means any class of capital stock of a Person that is preferred over any other class of capital stock (or similar equity interests) of such Person as to the payment of dividends or the payment of any amount upon liquidation or dissolution of such Person. “Prepayment Date” is defined in Section 9.3(b)(iii) (Offer to Prepay). “Pro Forma Debt Service Coverage Ratio” has the meaning ascribed to such term in the definition of Debt Service Coverage Ratio. “Project” means the Calistoga Resiliency Center, a hybrid battery energy storage hydrogen fuel cell electrical power generation facility located in Calistoga, California, and capable of delivering approximately 8.5 MW peak power and 293 MWh over a 48-hour period without refueling while generating. “Project Costs” is defined in the Depositary Agreement. “Project Revenues” means all revenues of the Company from the Project, including all interest paid in respect of any funds on deposit in the Collateral Accounts, proceeds from any business interruption and delay in start-up insurance, payments received by the Company under any Material Project Document, all cash payments received by the Company under or in connection with any Hedging Agreement, all proceeds of the sale or other disposition of any part of the Project, all income derived from Permitted Investments and all Tax Credit Transfer Proceeds. “Property,” “property,” or “Properties,” or “properties” means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate. “Property Interests” means all property of the Company to the extent that it is treated as real property under applicable law. “Prudent Industry Practices” means, with respect to any Person, those practices, methods, equipment, specifications and standards of safety, as the same may change from time to time, as are commonly used by energy storage and electric generation facilities of a type and size similar to the Project as good, safe and prudent engineering practices in connection with the design, construction, operation, maintenance, repair and use of electrical and other equipment, facilities and improvements of such electrical generation facility, with commensurate standards of safety, performance, dependability, efficiency and economy. “Prudent Industry Practices” are not intended to be limited to
A-18 the optimum practices, methods or acts to the exclusion of all others, but rather to be acceptable practices, methods or acts generally accepted in the United States electric power generation industry. “PTE” is defined in Section 7.2(a) (Source of Funds). “PUHCA” means the Public Utility Holding Company Act of 2005 and FERC’s regulations promulgated thereunder. “Purchaser” or “Purchasers” means each of the purchasers that has executed and delivered this Agreement to the Company and such Purchaser’s successors and assigns (so long as any such assignment complies with Section 14.2 (Transfer and Exchange of Notes)), provided, however, that any Purchaser of a Note that ceases to be the registered holder or a beneficial owner (through a nominee) of such Note as the result of a transfer thereof pursuant to Section 14.2 (Transfer and Exchange of Notes) shall cease to be included within the meaning of “Purchaser” of such Note for the purposes of this Agreement upon such transfer. “Purchaser Schedule” means the Purchaser Schedule to this Agreement listing the Purchasers of the Notes and including their notice and payment information. “QPAM Exemption” is defined in Section 7.2(d) (Source of Funds). “Qualified Institutional Buyer” means any Person who is a “qualified institutional buyer” within the meaning of such term as set forth in Rule 144A(a)(1) under the Securities Act. “Qualified Operator” means any Person that has (or has an Affiliate that has) at least two (2) consecutive years of experience in the day-to-day operation of one or more facilities that consist of, in the aggregate, battery storage assets with capacity of at least 250 megawatts of utility scale solar energy generation or storage assets in the United States. “Qualified Owner” means any Person that, (a)(i) has current long-term senior unsecured debt rated not less than “BBB” by S&P or Fitch and “Baa2” by Moody’s, or an equivalent issuer rating or (ii) if an unrated entity, has a minimum tangible net worth of at least $200,000,000; and (b) (i) is a Qualified Operator or has an Affiliate that is a Qualified Operator or (ii) has caused the Company to contract for the operation of the Project by one or more Qualified Operators to the extent that the Project is not, at the time of (and after giving effect to) the direct or indirect acquisition of the interests in any Pledgor, as applicable, by such Person operated by a Qualified Operator. “Related Fund” means, with respect to any holder of any Note, any fund or entity that (a) invests in Securities or bank loans and (b) is advised or managed by such holder, the same investment advisor as such holder or by an affiliate of such holder or such investment advisor. “Release” means any release, spill, emission, leaking, pumping, depositing, pouring, placing, discarding, abandoning, emptying, migrating, seeping, escaping, leaching, dumping, injection, disposal or discharge into the environment, including the abandonment or discarding of barrels, containers and other closed receptacles containing any Hazardous Materials. “Required Holders” means at any time on or after the Closing, the holders of at least 50% in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates).
A-19 “Required Insurance” is defined in Section 10.2(b) (Insurance; Loss Proceeds). “Responsible Officer” means any Senior Financial Officer and any other officer of the Company with responsibility for the administration of the relevant portion of this Agreement. “Restricted Payment Conditions” is defined in Section 11.12. “Restricted Payments” means (a) any dividend or other distribution by the Company (in cash, Property of the Company, securities, obligations, or other property) on, or other dividends or distributions on account of, or the setting apart of money for a sinking or other analogous fund for, or the purchase, redemption, retirement or other acquisition by the Company of, any portion of any membership interest in the Company and (b) all payments (in cash, Property of the Company, securities, obligations, or other property) of principal of, interest on and other amounts with respect to, or other payments on account of, or the setting apart of money for a sinking or other analogous fund for, or the purchase, redemption, retirement or other acquisition by the Company of, any Indebtedness owed to the Pledgor or any Affiliate thereof; provided that Restricted Payments shall not include (i) the distribution to the Sponsor in accordance with Section 3.01(b)(ii) or (iii) of the Depositary Agreement, (ii) Permitted Tax Distributions, (iii) reimbursement of Operating Costs in accordance with the Financing Documents and (iv) reimbursement of Fronted Equity Contributions in accordance with the Financing Documents. “S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. “SEC” means the Securities and Exchange Commission of the United States of America. “Secured Party” means each holder of a Note, the Collateral Agent, and the Depositary Bank. “Securities” or “Security” shall have the meaning specified in section 2(1) of the Securities Act. “Securities Act” means the Securities Act of 1933 and the rules and regulations promulgated thereunder from time to time in effect. “Security Agreement” means the Security Agreement, dated as of the Closing, between the Company and the Collateral Agent for the benefit of the Secured Parties. “Security Documents” collectively means, (a) the Depositary Agreement, (b) the Security Agreement, (c) the Pledge Agreement, (d) the Mortgage, (e) each Consent, (f) any other mortgages, deeds of trust, security agreements, mandates, trust arrangements, pledge agreements or control agreements entered into after the Closing and of a similar nature relating to the Company or the financing contemplated by this offering, in each case for the benefit of the Secured Parties and (g) all other security documents hereafter delivered to the Collateral Agent granting a Lien on any property of any Person to secure the obligations of under the Financing Documents. “Senior Financial Officer” means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company. “Site Lease” means the Site Lease, dated as of July 18, 2023, by and between the City and the Company, as lessee.
A-20 “Solvent” means, with respect to any Person on any date of determination, that on such date (it being agreed that any such determination on the Closing shall be after giving effect to the Closing): (a) the fair value of the assets of such Person exceeds their debts and liabilities, subordinated, contingent or otherwise, on a combined basis; (b) the present fair saleable value of the property of such Person is not less than the amount that will be required to pay the probable liability, on a combined basis, of their debts, subordinated, contingent or otherwise, on a combined basis, as such debts become absolute and matured; (c) such Person does not intend to incur, or believe that they will incur, debts (including current obligations and contingent liabilities) beyond their ability to pay such debts as they mature; and (d) such Person will not have unreasonably small capital with which to conduct the business in which they are engaged as such businesses are conducted at Closing. “Source” is defined in Section 7.2 (Source of Funds). “Specified Conditions Subsequent” is defined in Section 10.14. “Sponsor” means Energy Vault Holdings, Inc., a Delaware corporation. “State Sanctions List” means a list that is adopted by any state Governmental Authority within the United States of America pertaining to Persons that engage in investment or other commercial activities in Iran or any other country that is a target of economic sanctions imposed under U.S. Economic Sanctions Laws. “Subsidiary” means, as to any Person, any other Person in which such first Person or one or more of its Subsidiaries or such first Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such second Person, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such first Person or one or more of its Subsidiaries or such first Person and one or more of its Subsidiaries (unless such partnership or joint venture can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries). Unless the context otherwise clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary of the Company. “Substitute Purchaser” is defined in Section 22 (Substitution of Purchaser). “SVO” means the Securities Valuation Office of the NAIC. “Swap Contract” means (a) any and all interest rate swap transactions, basis swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward foreign exchange transactions, cap transactions, floor transactions, currency options, spot contracts or any other similar transactions or any of the
A-21 foregoing (including any options to enter into any of the foregoing) and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc. or any International Foreign Exchange Master Agreement. “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s) and (b) for any date prior to the date referenced in clause (a), the amounts(s) determined as the mark-to-market values(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts. “Synthetic Lease” means, at any time, any lease (including leases that may be terminated by the lessee at any time) of any property (a) that is accounted for as an operating lease under GAAP and (b) in respect of which the lessee retains or obtains ownership of the property so leased for U.S. federal income tax purposes, other than any such lease under which such Person is the lessor. “Tax Credit” means the investment tax credit under Section 48 of the Code. “Tax Credit Transfer” means a transfer of all or a portion of the Tax Credits with respect to the Project from the Company to a Tax Credit Transferee pursuant to Section 6418 of the Code. “Tax Credit Transfer Agreement” means, with respect to the Project, an agreement entered into between the Company and a Tax Credit Transferee setting forth the terms of a Tax Credit Transfer, together with all other related agreements effecting such Tax Credit Transfer, in form and substance reasonably satisfactory to the Required Holders (such approval not to be unreasonably withheld, conditioned or delayed). “Tax Credit Transfer Agreement Funding Date” means any date on which Tax Credit Transferee makes payment amounts to the Company pursuant to the Tax Credit Transfer Agreement. “Tax Credit Transfer Agreement Signing Date” means the date of execution of the applicable Tax Credit Transfer Agreement. “Tax Credit Transfer Documents” means, collectively, the Tax Credit Transfer Agreement and the Tax Credit Transferee Credit Support, if any. “Tax Credit Transfer Prepayment Amount” is defined in Section 9.3(a)(iv). “Tax Credit Transfer Proceeds” means the payments to the Company by the Tax Credit Transferee pursuant to the Tax Credit Transfer Agreement. “Tax Credit Transferee” means a “transferee taxpayer” (as such term is used in Section 6418 of the Code) which is not related (within the meaning of Code Section 267(b) or 707(b)(1)) to the transferor, who shall be any Person that (a) (i) (x) (1) has long-term unsecured senior debt obligations rated at least “BBB-” by S&P or at least “Baa3” by Moody’s or such equivalent rating by another ratings agency reasonably acceptable to the Required Holders or (2) if an unrated entity, has a minimum tangible net worth of at least $200,000,000 or (y) otherwise has a creditworthiness
A-22 reasonably acceptable to the Required Holders or (b) has provided the Tax Credit Transferee Credit Support as of the date of the Tax Credit Transfer Agreement. “Tax Credit Transferee Credit Support” means, to the extent that the Tax Credit Transferee does not satisfy the condition in clause (a) of the definition of “Tax Credit Transferee”, either (a) a letter of credit for the benefit of the Company as beneficiary an issuer whose long-term unsecured, unsubordinated indebtedness is rated at least “A-” by S&P, “A3” by Moody’s or “A-” by Fitch or such other ratings agency reasonably acceptable to the Required Holders with an initial statement amount that is not less than Tax Credit Transferee’s purchase commitment under the Tax Credit Transfer Agreement or (b) a parent guaranty, for the benefit of the Company, in form and substance reasonably acceptable to the Required Holders (such approval not to be unreasonably withheld, delayed or conditioned) by either (i) an Affiliate of the Tax Credit Transferee that has (A) has long-term unsecured senior debt obligations rated at least “BBB-” by S&P or at least “Baa3” by Moody’s or such equivalent rating by another ratings agency reasonably acceptable to the Required Holders or (B) if an unrated entity, has a minimum tangible net worth of at least $200,000,000 or (ii) another Person reasonably acceptable to the Required Holders. “Transaction Documents” means, collectively, the Material Project Documents and the Financing Documents. “Transmission System” means the high voltage electric transmission system owned by Power Purchaser with an interconnection at the substation known as CALISTOGA SUB. “United States Person” has the meaning set forth in Section 7701(a)(30) of the Code. “U.S. Economic Sanctions Laws” means those laws, executive orders, enabling legislation or regulations administered and enforced by the United States pursuant to which economic sanctions have been imposed on any Person, entity, organization, country or regime, including the Trading with the Enemy Act, the International Emergency Economic Powers Act, the Iran Sanctions Act, the Sudan Accountability and Divestment Act and any other OFAC Sanctions Program. “USA PATRIOT Act” means United States Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001 and the rules and regulations promulgated thereunder from time to time in effect. “Voluntary Equity Contributions” means any equity contribution made to the Company by or on behalf of the Pledgor or any Affiliate of the Pledgor.
SCHEDULE 1 (to Note Agreement) SCHEDULE 1 SITE Lying within the City of Calistoga, County of Napa, State of California and being a portion of the parcel of land described in the deed to the City of Calistoga recorded February 4, 1916 in Book 232 of Deeds at page 200, a portion of the parcels of land described in the deed to the City of Calistoga recorded May 11, 1943 in Book 194 of Official Records at Page 86, and a portion of the parcel of land described as Parcel No. 1 in the deed to the City of Calistoga recorded September 24, 1986 in Book 1468 of Official Records at Page 214, all in the Office of the County Recorder of Napa County, said portion of land being more particularly described as follows: COMMENCING at a found 3” brass disk well monument at the centerline of Washington Street in the City of Calistoga; thence south 71◦18’40” East 626.60 feet to another 3” brass disc well monument as shown on the Record of Survey Map Filed in Bool 48 at Page 81 Napa County Records (Basis of Bearings for this legal description); thence South 72◦22’46” East 852.3 feet to the POINT OF BEGINNING; thence North 24◦38’38” East 106.69 feet; thence South 63◦57’04” East 370 feet; thence South 12◦47’47” West 26.60 feet; thence South 78◦56’57” West 68.74 feet; thence North 71◦01’03” West 371.09 feet to the POINT OF BEGINNING Containing 0.70 acres, more or less.
SCHEDULE 6.3 (to Note Agreement) SCHEDULE 6.3 DISCLOSURE MATERIALS The following documents are located in the SharePoint site labeled: Calistoga Resiliency Center - Dataroom2 in folder: 8. Disclosure Materials (NPA) 1. The Investor Presentation 2. Insurance Certificates 3. Financial Statements The Financial Model can be accessed at the following link: 2. Calistoga Financial Model_4.3.25_1510_vF.xlsm
SCHEDULE 6.5 (to Note Agreement) SCHEDULE 6.5 FINANCIAL STATEMENTS The Financial Statements can be found in Schedule 6.3.
SCHEDULE 6.14 (to Note Agreement) SCHEDULE 6.14 EXISTING INDEBTEDNESS OF THE COMPANY None.
SCHEDULE 6.19 (to Note Agreement) SCHEDULE 6.19 APPLICABLE PERMITS Part I The following documents are located in the SharePoint site labeled: Calistoga Resiliency Center - Dataroom2 in folder: NPA Permit Library FILENAME Description 1018-PGE Easement Deed Executed easement for the MV line extension from pole to the site 240223 Phase II Activities_Encroachment App_CRC General encroachment permit for Phase 2 drainage and grading around City property 240223 Phase II Activities_Grading App_CRC-signed Basic grading permit for dirt work and excavation around the site CRC Building Permit_Phase 2 Control House Specific building permit for the site control house structure CRC Encroachment Permit_Phase 2 5002 General encroachment permit for the Phase 2 work around City property CRC Encroachment Permit_Phase 1 4870 General encroachment permit for the Phase 1 work around City property CRC Grading Permit Phase 2 Specific building permit related to Phase 2 grading work at the site PC RESO 2023-7 Approving UP 2022-11 City Design Committee approval for the project Use Permit PC RESO 2023-9 Approving DP 2022-4 City Design Committee approval for the Design Review for the project SPCC Tier1 Calistoga Resiliency Center 2024.07 Spill Prevention Control and Countermeasure approved plan for the operating site
SCHEDULE 6.19 (to Note Agreement) Part II The following documents are located in the SharePoint site labeled: Calistoga Resiliency Center - Dataroom2 in folder: NPA Permit Library FILENAME Description CRC Building Permit_Phase 1 CSE General building permit for the Phase 1 site work, utility movements and excavation CRC Fire Permit 1990 Site Fire permit for the design, panel, sensors etc
SCHEDULE 10.2 (to Note Agreement) SCHEDULE 10.2 REQUIRED INSURANCE A. Capitalized terms used in this Schedule 10.2 shall have the meanings given to such terms in the Agreement to which this Schedule 10.2 is attached and made part of (unless specifically defined in this Schedule 10.2). B. Company shall procure and/or maintain, or cause to be maintained, for the full term and thereafter as required herein, at their sole cost and expense, the following insurance coverage: 1. Builders risk insurance - until such time as the materials or work are accepted and put to their intended use or Commercial Operation Date (COD), and appropriate lien waivers are received and accepted by Company, written on an “all risk” builders risk form, on a completed value basis including change orders with the following minimum coverage: (i) replacement cost valuation; (ii) debris removal; (iii) earthquake, flood and wind coverage; (iv) permission for partial occupancy; (v) temporary off-site storage; (vi) transit; (vii) testing and startup; (viii) waiver of subrogation in favor of all named insureds, project manager, Collateral Agent and Secured Parties; (ix) name the Collateral Agent for the benefit of the Secured Parties as assignee on a lender’s loss payable clause, or equivalent endorsement; and (x) a reasonable deductible based on market availability. Company will include general contractor, subcontractors, of all tiers, as named insureds with Company as the first named insured. Company will adjust all claims on behalf of all named insureds subject to lenders’ loss payable clause or equivalent endorsement and in accordance with the Note Purchase Agreement. 2. Property insurance shall insure the real and personal property (building, improvements and betterments, contents) under a form with coverage not less than that found on ISO “Causes of Loss – Special Form” and ISO “Building and Personal Property Form” or their equivalent forms (e.g., an “All Risk” manuscript policy) upon COD. The coverage shall include, but not be limited to: (i) 100% of the estimated replacement cost of the real and personal property; (ii) agreed amount endorsement and or a coinsurance waiver endorsement; (iii) building ordinance coverage (ordinance or law); (iv) equipment breakdown coverage; v) name the Collateral Agent for the benefit of the Secured Parties as assignee on a lender’s loss payable clause or equivalent endorsement; and (v) loss of business income and extra expense coverage for a period not less than 12 months with an extended period of indemnity of 12 months. In addition to the ISO forms (or their equivalent), the property policy shall cover; (a) acts of terrorism (at a minimum TRIA coverage); and (b) the following additional perils with separate limits of no less than $10,000,000 per occurrence for each of the following perils: windstorm, earthquake and flood. If the location is in a high hazard flood zone as determined by Federal Emergency Management Agency, then Company shall purchase and maintain coverage through the National Flood Insurance Plan to the maximum available limit for commercial concerns and $5,000,000 of excess flood insurance including business income coverage. 3. Commercial general liability insurance shall cover all operations and work of Company for bodily injury and property damage, advertising and personal injury liability with limits of not less than: a. $1,000,000 each occurrence.
SCHEDULE 10.2 (to Note Agreement) b. $1,000,000 personal and advertising injury. c. $2,000,000 general aggregate (other than products – completed operations). d. $2,000,000 products – completed operations aggregate. Coverage shall be written on an “occurrence” basis using an ISO CG 00 01 form (“claims made” is not acceptable), with the following minimum coverage: a. Separation of insureds. b. Contractual liability (as provided by ISO CG 00 01 form); with no additional restrictions, modifications, endorsements, or amendments. c. Additional insured coverage for Collateral Agent, Secured Parties and Customers as required by contract using an ISO CG 20 26 07/04 edition or equivalent form. d. Additional insured status must be on a primary and noncontributory basis. e. Waiver of subrogation in favor of Collateral Agent, Secured Parties and Customers as required by contract using an ISO CG 24 04 12/19 edition or equivalent form. f. No “height restriction”, “explosion, collapse or underground (XCU)” limitations or similar restrictions, endorsements, or exclusions. Company shall maintain commercial general liability insurance for not less than ten (10) years, the statute of repose or statute of limitations, whichever is shorter, after the completion of the Project; including products - completed operations coverage and additional insured status as detailed above. 4. Commercial automobile liability insurance shall cover all owned, leased, non-owned and hired vehicles or any mobile equipment subject to compulsory insurance or financial responsibility laws or other motor vehicle insurance laws for bodily injury and property damage with limits of not less than $1,000,000 per accident and shall be written on an ISO CA 00 01 or equivalent form and include Collateral Agent and Secured Parties as additional insureds on a primary and non-contributory basis and include a waiver of subrogation in favor of the Collateral Agent and Secured Parties. 5. Workers’ compensation and employers’ liability insurance in accordance with the applicable state statutes and laws exercising jurisdiction over employees. Employers’ liability limits not less than: a. $1,000,000 bodily injury by accident, for each accident. b. $1,000,000 bodily injury by disease, policy limit. c. $1,000,000 bodily injury by disease, each employee. To the fullest extent allowed by law, include a waiver of subrogation in favor of the Collateral Agent and Secured Parties.
SCHEDULE 10.2 (to Note Agreement) 6. Umbrella liability insurance shall cover all operations and work of Company and shall be follow form of the employers’ liability, commercial general liability and commercial automobile liability insurance policies as detailed in this Schedule 10.2, with limits of not less than: a. $25,000,000 each occurrence. b. $25,000,000 general aggregate. c. $25,000,000 products – completed operations aggregate. Coverage shall be written on an “occurrence” basis form. Follow form of all underlying insurance policies for additional insured, primary and noncontributory basis and waiver of subrogation. Company shall maintain umbrella or excess liability insurance for not less than the ten (10) years, statute of repose or statute of limitations, whichever is shorter, after the completion of the project; including products - completed operations coverage and additional insured status as detailed above. 7. Contractors Pollution Liability (during construction/maintenance) and Pollution legal liability insurance which shall cover all operations, services and/or work with limits not less than $5,000,000 per loss, schedule CRC location and include Collateral Agent and Secured Parties as additional insureds on a primary and non-contributory basis and include a waiver of subrogation in favor of the Collateral Agent and Secured Parties. 8. Cyber and privacy insurance shall cover all operations and work of Company with limits of not less than $10,000,000 each claim and include Collateral Agent and Secured Parties as additional insureds on a primary and non-contributory basis and include a waiver of subrogation in favor of the Collateral Agent and Secured Parties. 9. Directors & Officers liability insurance for any actual or alleged act, error, statement, omission, or breach of duty by a director or officer in their capacity as such, or any matter claimed against them solely by reason of their status as a director or officer of the Company with limits of not less than $5,000,000 each claim. 10. Crime (fidelity) insurance covering all employees, temporary workers or independent contracts of Company with limits not less than $1,000,000 each occurrence, including third party / client coverage where required by contract. 11. And such other or additional insurance as may be customary, required by law, or as the Collateral Agent and Secured Parties, Customer or Company deems necessary to maintain. C. All reference to “ISO” means unamended or unaltered versions of the Insurance Services Office insurance policy forms and endorsements. D. All required insurance shall use Insurers with a minimum A.M. Best rating of A- VIII and all insurers shall be licensed or authorized to do business in the state of California. E. All required insurance shall be endorsed to provide Collateral Agent and Customers as required by contract to receive thirty (30) days prior written notice of cancellation or nonrenewal except ten (10) days for nonpayment of premium.
SCHEDULE 10.2 (to Note Agreement) F. Company shall furnish Collateral Agent and Customers as required by contract with ACORD certificate(s) of insurance executed by a duly authorized representative of each insurer, showing compliance with the insurance requirements set forth herein. Any waiver of the Company’s obligation to furnish such ACORD certificate(s) or maintain such insurance must be in writing and signed by an authorized representative of Collateral Agent. Failure of Collateral Agent to demand such certificate(s) or other evidence of full compliance with these insurance requirements or failure of Collateral Agent to identify a deficiency from evidence that is provided shall not be construed as a waiver of Company’s obligation to maintain such insurance, or as a waiver as to the enforcement of any of these provisions at a later date. G. Company shall cooperate with Collateral Agent on behalf of the Secured Parties. Company shall notify Collateral Agent in writing as soon as practicable after they receive notice of any loss, damage, or injury or are aware of an incident which might give rise to a claim in the future when the amount of the claim or estimated amount of the claim is in excess of $100,000. Company shall work with Collateral Agent on behalf of the Secured Parties to adjust claims per the Note Purchase Agreement and take no action which might operate to bar Collateral Agent or Secured Parties from obtaining protection afforded by Company’s insurance policies or which might prejudice Collateral Agent or Secured Parties in its defense to a claim based on such loss, damage, or injury. H. Upon the request of Collateral Agent, a complete copy of the required insurance policies and/or any other documents or information necessary to verify the insurance coverage required herein are in force and all premia have been paid, are to be submitted to Collateral Agent as soon as practical. I. The insurance coverage set forth in this Insurance Schedule, will in no way limit Company liability arising out of any operations, services and/or work (including liability under indemnification provisions) or under any other agreements or by-law. Company will be responsible for determining appropriate inclusions, coverage and limits which may be in excess of the minimum insurance requirements set forth herein. J. This Insurance Schedule is an independent contract provision and shall survive the termination or expiration of the agreement.
SCHEDULE 10.14 (to Note Agreement) SCHEDULE 10.14 CONSENTS AND NOTICES 1. Consent to collateral assignment of the Power Purchase Agreement; 2. Consent to collateral assignment of the EPC Contract; 3. Consent to collateral assignment of the O&M Agreement; 4. Consent of the City to the Financing Documents in accordance with Section 22(c) of the Site Lease; and 5. Notice to the City of the Mortgage.
SCHEDULE PL (to Note Agreement) SCHEDULE PL PERMITTED LIENS Napa County Tax Lien No. 23776, recorded on November 21, 2024. The property tax bill related to the lien has been paid in full on March 20, 2025.
PURCHASER SCHEDULE (to Note Agreement) PURCHASER SCHEDULE CALISTOGA RESILIENCY CENTER, LLC 4360 Park Terrace Drive, Suite 100 Westlake Village, CA 91361 Information Relating to Purchasers NAME AND ADDRESS OF PURCHASER PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED EAGLE POINT ENHANCED INCOME FUND LP $13,125,643.95 Note No. 1 (1) All payments by wire transfer of immediately available funds to: Wells Fargo Bank, NA ABA/Routing # 121-000-248 Account Number: 6355067033 Account Name: CTCNA FBO CDO Clearing Account For further credit to: 99752900 EAGLE POINT ENHANCED INCOME FUND LP with sufficient information to identify the source and application of such funds. (2) All notices of payments, written confirmations of such wire transfers, and all other communications: Eagle Point Credit Management LLC Attn: Operations 600 Steamboat Road, Suite 202 Greenwich, CT 06830 Office: (203) 340-8513 Cell: (475)-292-4831 Email: epoperations@eaglepointcredit.com AND Mike Davin 600 Steamboat Road, Suite 202 Greenwich, CT 06830 Office: (203) 340 8539 Cell: (203) 832 3526 Email: mdavin@eaglepointcredit.com (4) U.S. Tax Identification Number: 98-1724718
PURCHASER SCHEDULE (to Note Agreement) PURCHASER SCHEDULE CALISTOGA RESILIENCY CENTER, LLC 4360 Park Terrace Drive, Suite 100 Westlake Village, CA 91361 Information Relating to Purchasers NAME AND ADDRESS OF PURCHASER PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED EAGLE POINT ENHANCED INCOME TRUST $4,200,206.06 Note No. 2 (1) All payments by wire transfer of immediately available funds to: Wells Fargo Bank, NA ABA/Routing # 121-000-248 Account Number: 6355067033 Account Name: CTCNA FBO CDO Clearing Account For further credit to: 99815400 EAGLE POINT ENHANCED INCOME TRUST with sufficient information to identify the source and application of such funds. (2) All notices of payments, written confirmations of such wire transfers, and all other communications: Eagle Point Credit Management LLC Attn: Operations 600 Steamboat Road, Suite 202 Greenwich, CT 06830 Office: (203) 340-8513 Cell: (475)-292-4831 Email: epoperations@eaglepointcredit.com AND Mike Davin 600 Steamboat Road, Suite 202 Greenwich, CT 06830 Office: (203) 340 8539 Cell: (203) 832 3526 Email: mdavin@eaglepointcredit.com (4) U.S. Tax Identification Number: 93-3395436
PURCHASER SCHEDULE (to Note Agreement) PURCHASER SCHEDULE CALISTOGA RESILIENCY CENTER, LLC 4360 Park Terrace Drive, Suite 100 Westlake Village, CA 91361 Information Relating to Purchasers NAME AND ADDRESS OF PURCHASER PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED EAGLE POINT CORE INCOME FUND LP $10,500,515.16 Note No. 3 (1) All payments by wire transfer of immediately available funds to: Wells Fargo Bank, NA ABA/Routing # 121-000-248 Account Number: 6355067033 Account Name: CTCNA FBO CDO Clearing Account For further credit to: 92402900 EAGLE POINT CORE INCOME FUND LP with sufficient information to identify the source and application of such funds. (2) All notices of payments, written confirmations of such wire transfers, and all other communications: Eagle Point Credit Management LLC Attn: Operations 600 Steamboat Road, Suite 202 Greenwich, CT 06830 Office: (203) 340-8513 Cell: (475)-292-4831 Email: epoperations@eaglepointcredit.com AND Mike Davin 600 Steamboat Road, Suite 202 Greenwich, CT 06830 Office: (203) 340 8539 Cell: (203) 832 3526 Email: mdavin@eaglepointcredit.com (4) U.S. Tax Identification Number: 98-1610914
Exhibit A-1 (to Note Agreement) EXHIBIT A FORM OF NOTE CALISTOGA RESILIENCY CENTER, LLC 12.50% SENIOR SECURED NOTE DUE APRIL 4, 2032 No. [_____] [Date] $[_______] PPN 13093# AA5 FOR VALUE RECEIVED, the undersigned, CALISTOGA RESILIENCY CENTER, LLC (herein called the “Company”), a limited liability company organized and existing under the laws of the State of Delaware, hereby promises to pay to [____________], or its registered assigns, the principal sum of [_____________________] DOLLARS (or so much thereof as shall not have been prepaid) on April 4, 2032 (the “Maturity Date”), with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance hereof at the rate of (x) 12.50% per annum (the “Initial Interest Rate”) from the date hereof until the earlier to occur of (i) the Company’s receipt of any Tax Credit Transfer Proceeds and (ii) December 31, 2025 and (y) thereafter, 9.50% per annum (the “Subsequent Interest Rate”), in each case payable semiannually, on the 28th day of February (or the 29th day of February in a leap year) and the 31st day of August in each year, commencing with the February 28 (or February 29 in a leap year) or August 31 next succeeding the date hereof, and on the Maturity Date, until the principal hereof shall have become due and payable and (b) to the extent permitted by law, (x) on any overdue payment of interest and (y) during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make-Whole Amount, at a rate per annum from time to time equal to the greater of (i)(I) 14.50% while the Initial Interest Rate is in effect or (II) 11.50% while the Subsequent Interest Rate is in effect or (ii) 2.00% over the rate of interest publicly announced by Citibank, N.A. from time to time in New York City, NY as its “base” or “prime” rate, payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand). Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America in New York City, New York at the principal office of Wilmington Trust, National Association in such jurisdiction or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below. This Note is one of a series of senior secured notes (herein called the “Notes”) issued pursuant to the Note Purchase Agreement, dated April 4, 2025 (as from time to time amended, the “Note Purchase Agreement”), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 21 of the Note Purchase Agreement and (ii) made the representation set forth in Section 7.2 of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement. This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer accompanied by a written instrument of transfer
Exhibit A-2 (to Note Agreement) duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the Person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary. The Company will make required prepayments of principal on the dates and in the amounts specified in the Note Purchase Agreement. This Note is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise. If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement. This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York excluding choice- of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State. CALISTOGA RESILIENCY CENTER, LLC By ____________________________________ Name: Title:
Exhibit B-1 (to Note Agreement) EXHIBIT B FORM OF CONSENT CONSENT AND AGREEMENT This CONSENT AND AGREEMENT (“Consent and Agreement”) is entered into as of [______] [__], 2025 between [●], [●] (“Contracting Party”), and Wilmington Trust, National Association as collateral agent (in such capacity, “Collateral Agent”), for the benefit of various lenders and issuing banks (collectively, the “Secured Parties”) providing financing to Calistoga Resiliency Center, LLC, a Delaware limited liability Company (“Company”). Contracting Party, Company, and the Collateral Agent shall each individually be referred to as a “Party” and collectively as the “Parties”. Recitals A. Pursuant to that certain [___________] dated as of [●] (as amended, modified, supplemented or amended and restated from time to time, and including all related agreements, instruments and documents, collectively, the “Assigned Agreement”) between Contracting Party and Company. B. The Secured Parties have provided, or have agreed to provide, to Company financing pursuant to one or more agreements (the “Financing Documents”), and require that Collateral Agent be provided certain rights with respect to the “Assigned Agreement” and the “Assigned Agreement Accounts,” each as defined below, in connection with such financing. C. In consideration for the execution and delivery of the Assigned Agreement, Contracting Party has agreed to enter into this Consent and Agreement for the benefit of Company. Agreement 1. Definitions. Any capitalized term used but not defined herein shall have the meaning specified for such term in the Assigned Agreement. 2. Consent. Subject to the terms and conditions below, Contracting Party consents to and approves the pledge and assignment by Company to Collateral Agent pursuant to the Financing Documents of (a) the Assigned Agreement and (b) the accounts, revenues and proceeds of the Assigned Agreement (collectively, the “Assigned Agreement Accounts”). 3. Limitations on Assignment. 3.1 Limitations. Collateral Agent acknowledges and confirms that, notwithstanding any provision to the contrary under applicable law or in any Financing Document executed by Company, Collateral Agent shall not assume, sell or otherwise dispose of the Assigned Agreement (whether by foreclosure sale, conveyance in lieu of foreclosure or otherwise) unless, on or before the date of any such assumption, sale or disposition, Collateral Agent or any third-party designated by Collateral Agent, as the case may be, assuming, purchasing or otherwise acquiring the Assigned Agreement is a Permitted Transferee. Collateral Agent further acknowledges that this assignment of the Assigned Agreement and the Assigned Agreement Accounts is for security purposes only and that Collateral Agent has no rights under the Assigned Agreement or the Assigned Agreement Accounts to enforce the
Exhibit B-2 (to Note Agreement) provisions of the Assigned Agreement or the Assigned Agreement Accounts unless and until an event of default has occurred and is continuing under the Financing Documents between Company and Collateral Agent (a “Financing Default”), in which case Collateral Agent shall be entitled to designate a Permitted Transferee, after completing the process of obtaining Contracting Party’s acceptance in accordance with Section 3.2(a), to assume all of the rights and benefits and be subject to all of the obligations which Company then has or may have under the Assigned Agreement to the same extent and in the same manner as if the Permitted Transferee were an original party to the Assigned Agreement. 3.2 “Permitted Transferee”. (a) A Permitted Transferee is a person or entity that: (i) cures any and all defaults of Company under the Assigned Agreement which are “Capable of Being Cured” as defined in Section 3.2(b); (ii) executes and delivers to Contracting Party a written assumption of all of Company’s rights and obligations under the Assigned Agreement in form and substance reasonably satisfactory to Contracting Party; (iii) otherwise satisfies and complies with all requirements of the Assigned Agreement; (iv) if requested by Contracting Party, provides (A) tax and enforceability assurance as Contracting Party may reasonably request, to ensure that Contracting Party does not incur any costs or lose any benefits by such assignment; (B) documentation to demonstrate the Permitted Transferee’s safety record and ability to meet applicable safety obligations; and (C) its ability to construct (if applicable), operate, and maintain the Project, and evidence that the Permitted Transferee has operated other energy facilities with a similar technology and operating profile; and (v) is reasonably acceptable to Contracting Party. (b) “Capable of Being Cured” means that the Assigned Agreement specifies that a cure is available to Company for a default(s), whether such cure is financial or by performance, and the terms of the cure as specified in the Assigned Agreement remain unfulfilled and available as set forth in the Assigned Agreement without modification. If the Assigned Agreement does not specify that a cure is available for a default(s), or a cure is specified but is no longer available as a cure (due to the passage of time or for any other reason), then the default(s) shall not be “Capable of Being Cured”. An incurable default by Company shall be cause for termination by Contracting Party of the Assigned Agreement and the Assigned Agreement will not be available for assignment to a Permitted Transferee. (c) Collateral Agent shall, following the occurrence of a Financing Default, Notify Contracting Party of the identity of a proposed transferee of the Assigned Agreement, which proposed transferee may include Collateral Agent, in connection with the enforcement of Collateral Agent’s rights under the Financing Documents, and Contracting Party shall, within thirty (30) Business Days of its receipt of such Notice, confirm to Collateral Agent whether or not such proposed transferee is a Permitted Transferee (together with a written statement of the reason(s) for any negative determination), it being understood that if Contracting Party shall fail to so respond within such thirty (30) Business Day period such proposed transferee shall be deemed to be a Permitted Transferee. 4. Cure Rights. 4.1 Notice to Collateral Agent. Concurrently with the delivery to Company of any Notice of an event of default under the Assigned Agreement (each, an “Event of Default”) (and, a “Default Notice”), Contracting Party shall provide a copy of such Default Notice to Collateral Agent pursuant
Exhibit B-3 (to Note Agreement) to Section 8.1 of this Consent and Agreement. In addition, Company shall provide a copy of the Default Notice to Collateral Agent promptly after receipt from Contracting Party (and in any event within five (5) Business Days), independent of any agreement of Contracting Party to deliver such Default Notice. 4.2 Cure Period Available to Collateral Agent. Upon the occurrence of an Event of Default, but only if the default is curable, Contracting Party agrees not to terminate the Assigned Agreement unless it or Company first provides Collateral Agent with Notice of the Event of Default and Contracting Party affords Collateral Agent an additional cure period of ten (10) calendar days for a financial cure or thirty (30) calendar days for a non-financial cure. 4.3 Failure to Deliver Default Notice. If neither Contracting Party nor Company delivers a Default Notice to Collateral Agent as provided in Section 4.1, then the Collateral Agent’s applicable cure period shall begin on the date on which Notice of an Event of Default is delivered to Collateral Agent by either Contracting Party or Company, whichever is received first. Except for a delay in the commencement of the cure period for Collateral Agent and a delay in Contracting Party’s ability to terminate the Assigned Agreement (in each case only if both Contracting Party and Company fail to deliver Notice of an Event of Default to Collateral Agent), failure of Contracting Party to deliver any Default Notice shall not waive Contracting Party’s right to take any action under the Assigned Agreement and will not subject Contracting Party to any damages or liability for failure to provide such Notice. 4.4 Extension for Foreclosure Proceedings. If (a) it is necessary for the Collateral Agent to have possession of the Project (as defined in the Assigned Agreement) in order for Collateral Agent to cure an Event of Default which is Capable of Being Cured, as defined in Section 3.2(b) and (b) Collateral Agent commences foreclosure proceedings against Company within thirty (30) calendar days of receiving Notice of an Event of Default from Contracting Party or Company, whichever is received first, then Collateral Agent shall be allowed an additional period to complete such foreclosure proceedings, such period not to exceed ninety (90) calendar days; provided, however, that Collateral Agent shall provide a Notice to Contracting Party that it intends to commence foreclosure proceedings with respect to Company within ten (10) calendar days of receiving a Notice of such Event of Default from Contracting Party or Company, whichever is received first. In the event Collateral Agent or its designated Permitted Transferee succeeds to Company’s interest in the Project as a result of foreclosure proceedings, the Collateral Agent or Permitted Transferee shall be subject to the requirements of Section 3 of this Consent and Agreement. 5. Setoffs and Deductions. Each of Company and Collateral Agent agrees that Contracting Party shall have the right to set off or deduct from payments due to Company each and every amount due Contracting Party from Company whether or not arising out of or in connection with the Assigned Agreement on the terms and conditions set forth in the Assignment Agreement or other arrangement between Contracting Party and Company. Collateral Agent further agrees that it takes the assignment for security purposes of the Assigned Agreement and the Assigned Agreement Accounts subject to any defenses or causes of action Contracting Party may have against Company. 6. No Representation or Warranty. Company and Collateral Agent each recognizes and acknowledges that Contracting Party makes no representation or warranty, express or implied, that Company has any right, title, or interest in the Assigned Agreement or as to the priority of the assignment for security purposes of the Assigned Agreement or the Assigned Agreement Accounts. Collateral Agent is responsible for satisfying itself as to the existence and extent of Company’s right,
Exhibit B-4 (to Note Agreement) title, and interest in the Assigned Agreement, and Collateral Agent releases Contracting Party from any liability resulting from the assignment for security purposes of the Assigned Agreement and the Assigned Agreement Accounts. 7. Amendment to Assigned Agreement. Collateral Agent acknowledges and agrees that Contracting Party may agree with Company to modify or amend the Assigned Agreement, and that Contracting Party is not obligated to notify Collateral Agent of any such amendment or modification to the Assigned Agreement. Collateral Agent hereby releases Contracting Party from all liability arising out of or in connection with the making of any amendment or modification to the Assigned Agreement. 8. Miscellaneous. 8.1 Notices. All Notices given or requirements of a Party to notify hereunder shall be in writing, receipt of which shall be deemed complete (i) at the close of business of the date of receipt, if delivered by hand or by electronic means or (ii) when signed for by recipient, if sent registered or certified mail, postage prepaid, provided such Notice was properly addressed to the appropriate address set forth below or to such other address that a Party may designate by prior Notice to the other Parties. To Collateral Agent: Wilmington Trust, National Association Attn: Department Street Address: Telephone: Email: with a copy to: [●] To Contacting Party: [●] Attn: Department Street Address: Telephone: Email: 8.2 No Assignment. This Consent and Agreement shall be binding upon and shall inure to the benefit of the successors and assigns of Contracting Party, and shall be binding on and inure to the benefit of the Collateral Agent, the Secured Parties and their respective successors and Permitted Transferees and assigns under the Financing Documents. 8.3 No Modification. This Consent and Agreement is neither a modification of, nor an amendment to, the Assigned Agreement.
Exhibit B-5 (to Note Agreement) 8.4 Choice of Law. The Parties hereto agree that this Consent and Agreement shall be construed and interpreted in accordance with the laws of the State of New York, excluding any choice of law rules which may direct the application of the laws of another jurisdiction. 8.5 No Waiver. No term, covenant or condition hereof shall be deemed waived and no breach excused unless such waiver or excuse shall be in writing and signed by the Party claimed to have so waived or excused. 8.6 Counterparts. This Consent and Agreement may be executed in one or more duplicate counterparts, and when executed and delivered by all the Parties, shall constitute a single binding agreement. 8.7 No Third-Party Beneficiaries. There are no third-party beneficiaries to this Consent and Agreement. 8.8 Severability. The invalidity or unenforceability of any provision of this Consent and Agreement shall not affect the validity or enforceability of any other provision of this Consent and Agreement, which shall remain in full force and effect. 8.9 Amendments. This Consent and Agreement may be modified, amended, or rescinded only by writing expressly referring to this Consent and Agreement and signed by all Parties hereto. [Signature Page Follows]
SIGNATURE PAGE TO CONSENT AND AGREEMENT Exhibit B-6 (to Note Agreement) IN WITNESS WHEREOF, each of Contracting Party and Collateral Agent has duly executed this Consent and Agreement as of the date first written above. [●] By: ____________________________________ Name: Title:
Exhibit C (to Note Agreement) EXHIBIT C CONSTRUCTION BUDGET AND SCHEDULE For the Construction Budget, please refer to the Financial Model, which can be accessed at the following link: 2. Calistoga Financial Model_4.3.25_1510_vF.xlsm The Construction Schedule can be accessed at the following link: CRC Microgrid ProjSch_250404.pdf
Exhibit D (to Note Agreement) EXHIBIT D FORM OF MORTGAGE [Attached.]
RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Winston & Strawn LLP 200 Park Avenue New York, New York 10166 Attention: Jason Goldstein, Esq. APN: 011-260-002 011-260-003 AMERICASACTIVE:20959587.4 CALISTOGA RESILIENCY CENTER, LLC, as grantor to CHICAGO TITLE COMPANY, as trustee for the benefit of WILMINGTON TRUST, NATIONAL ASSOCIATION, as Collateral Agent, as beneficiary LEASEHOLD DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES, AND FIXTURE FILING Dated: as of [●], 2025 Location: 204 Washington Street Municipality: Calistoga County: Napa State: California
AMERICASACTIVE:20959587.4 THIS LEASEHOLD DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND FIXTURE FILING (this “Security Instrument”) is made as of [●], 2025, by CALISTOGA RESILIENCY CENTER, LLC, a Delaware limited liability company, having an office located at 4360 Park Terrace Drive, Suite 100, Westlake Village, California 91361, as grantor (together with its permitted successors and assigns, “Grantor”), as grantor, to CHICAGO TITLE COMPANY, a California corporation, having an office located at [●], as trustee (together with its successors and assigns, “Trustee”), as trustee, for the benefit of WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity but solely in its capacity as collateral agent for each of the Secured Parties (as defined in the Note Purchase Agreement referred to below), with a mailing address at [●] (together with its successors and assigns in such capacity, “Agent”), as beneficiary. All capitalized terms not defined herein shall have the respective meanings set forth in the Note Purchase Agreement (defined below). RECITALS: Grantor is entering into that certain Note Purchase Agreement, dated as of April 4, 2025 (as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time, the “Note Purchase Agreement”), whereby the Grantor has authorized the issuance and sale of $27,826,365.17 aggregate principal amount of its 12.50% Senior Notes due April 4, 2032 (such notes, together with all extensions, renewals, replacements, restatements or modifications thereof being hereinafter collectively referred to as the “Notes”) and agreed to issue and sell to each Purchaser (as defined in the Note Purchase Agreement) and each Purchaser has agreed to purchase from the Company, the Notes (as defined in the Note Purchase Agreement) in the principal amount specified opposite such Purchaser’s name in the Purchaser Schedule attached thereto, subject to conditions set forth in the Note Purchase Agreement. Grantor has agreed to secure all of its Indebtedness (as defined in the Note Purchase Agreement) by granting to Agent a first priority lien on the Collateral (as defined in the Note Purchase Agreement), and pursuant to the Financing Documents (as defined in the Note Purchase Agreement), Grantor shall execute and deliver this Security Instrument for the benefit of Agent. Article 1 - GRANTS OF SECURITY Section 1.1. Property Mortgaged. Grantor does hereby irrevocably mortgage, grant, bargain, sell, pledge, assign, warrant, transfer, convey and grant a security interest to Trustee, its successors and assigns, for the benefit of Agent and its successors and assigns all of its right, title and interest in and to the following property, rights, interests and estates now owned, or hereafter acquired by Grantor (collectively, the “Property”): (a) Land. A leasehold interest created by and contained in the Ground Lease (as defined below) in the real property described in Exhibit A attached hereto and made a part hereof (collectively, the “Land”); (b) Intentionally Deleted;
2 AMERICASACTIVE:20959587.4 (c) Ground Lease. Grantor’s interest in that certain Site Lease Agreement dated as of July 18, 2023 between The City of Calistoga, a municipal corporation, as lessor (“Ground Lessor”), and Grantor, as lessee (the “Ground Lease”) and the leasehold estates created thereby in the real property or air rights leased thereby, being more particularly described in Exhibit A attached hereto and made a part hereof (the “Leasehold Estate”); (d) Assignments/Modifications. All assignments, modifications, extensions and renewals of the Ground Lease and all credits, deposits, options, privileges and rights of Grantor as tenant under the Ground Lease, including, but not limited to, rights of first refusal, if any, and the right, if any, to renew or extend the Ground Lease for a succeeding term or terms, and also including all the right, title, claim or demand whatsoever of Grantor either in law or in equity, in possession or expectancy, of, in and to Grantor’s right, as tenant under the Ground Lease, to elect under Section 365(h)(1) of the Bankruptcy Code to terminate or treat the Ground Lease as terminated in the event (i) of the bankruptcy, reorganization or insolvency of the Ground Lessor, and (ii) the rejection of the Ground Lease by Ground Lessor, as debtor in possession, or by a trustee for Ground Lessor, pursuant to Section 365 of the Bankruptcy Code; (e) Improvements. The buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter erected or located on the Land, to the extent owned by Grantor (collectively, the “Improvements”); (f) Easements. All easements, rights-of-way or use, rights, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, and all estates, rights, titles, interests, privileges, liberties, servitudes, tenements, hereditaments and appurtenances of any nature whatsoever, in any way now or hereafter belonging, relating or pertaining to the Leasehold Estate and the Improvements, including, but not limited to, those arising under and by virtue of the Ground Lease, and the reversions and remainders, and all land lying in the bed of any street, road or avenue, opened or proposed, in front of or adjoining the Land to the extent of Grantor’s interests therein, to the center line thereof and all the estates, rights, titles, interests, rights of dower, rights of curtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Grantor of, in and to the Leasehold Estate and the Improvements, including, but not limited to, those arising under and by virtue of the Ground Lease, and every part and parcel thereof, with the appurtenances thereto; (g) Fixtures and Personal Property. All machinery, equipment, fixtures (including, but not limited to, all heating, air conditioning, plumbing, lighting, communications and elevator fixtures), furniture, software used in or to operate any of the foregoing and other property of every kind and nature whatsoever owned by Grantor, or in which Grantor has or shall have an interest, now or hereafter located upon the Land and the Improvements, or appurtenant thereto, and usable in connection with the present or future operation and occupancy of the Land and the Improvements and all building equipment, materials and supplies of any nature whatsoever owned by Grantor, or in which Grantor has or shall have an interest, now or hereafter located upon the Land and the Improvements, or appurtenant thereto, or usable in connection with the present or future operation and occupancy of the Land and the Improvements (collectively, the “Personal Property”), and the right, title and interest of Grantor in and to any of the Personal Property which may be subject to any security interests, as defined in the Uniform Commercial Code, as adopted
3 AMERICASACTIVE:20959587.4 and enacted by the state or states where any of the Property is located (the “Uniform Commercial Code”), and all proceeds and products of the above; (h) Leases and Rents. All leases, subleases, subsubleases, lettings, licenses, concessions or other agreements (whether written or oral) pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of the Leasehold Estate and the Improvements, and every modification, amendment or other agreement relating to such leases, subleases, subsubleases, or other agreements entered into in connection with such leases, subleases, subsubleases, or other agreements and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto, heretofore or hereafter entered into, whether before or after the filing by or against Grantor of any petition for relief under any Creditors Rights Laws (hereinafter defined) (collectively, the “Leases”) and all right, title and interest of Grantor, its successors and assigns therein and thereunder, including, without limitation, cash or securities deposited thereunder to secure the performance by the lessees of their obligations thereunder and all rents, additional rents, rent equivalents, moneys payable as damages or in lieu of rent or rent equivalents, royalties (including, without limitation, all oil and gas or other mineral royalties and bonuses), income, receivables, receipts, revenues, deposits (including, without limitation, security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other consideration of whatever form or nature received by or paid to or for the account of or benefit of Grantor or its agents or employees from any and all sources arising from or attributable to the Property, including, all receivables, customer obligations, installment payment obligations and other obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of property or rendering of services by Grantor and proceeds, if any, from business interruption or other loss of income insurance whether paid or accruing before or after the filing by or against Grantor of any petition for relief under any Creditors Rights Laws (collectively, the “Rents”) and all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment of the Debt. “Creditors Rights Laws” shall mean applicable bankruptcy, insolvency or other similar laws relating to or affecting the enforcement of creditors’ rights generally and to general principles of equity; (i) Insurance Proceeds. All insurance proceeds in respect of the Property under any insurance policies covering the Property, including, without limitation, the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Property, to the extent of Grantor’s interest therein (collectively, the “Insurance Proceeds”); (j) Condemnation Awards. All condemnation awards, including interest thereon, which may heretofore and hereafter be made with respect to the Property by reason of any taking or condemnation, whether from the exercise of the right of eminent domain (including, but not limited to, any transfer made in lieu of or in anticipation of the exercise of the right), or for a change of grade, or for any other injury to or decrease in the value of the Property, to the extent of Grantor’s interest therein (collectively, the “Awards”);
4 AMERICASACTIVE:20959587.4 (k) Tax Certiorari. All refunds, rebates or credits in connection with reduction in real estate taxes and assessments charged against the Property as a result of tax certiorari or any applications or proceedings for reduction, to the extent of Grantor’s interest therein; (l) Intentionally Deleted. (m) Agreements. All agreements, contracts, certificates, instruments, franchises, permits, licenses, plans, specifications and other documents, now or hereafter entered into, and all rights therein and thereto, respecting or pertaining to the use, occupation, construction, management or operation of the Leasehold Estate and any part thereof and any Improvements or any business or activity conducted on the Leasehold Estate and any part thereof and all right, title and interest of Grantor therein and thereunder, to the extent owned by Grantor and assignable to Grantee, including, without limitation, the right, upon the happening of any Event of Default hereunder, to receive and collect any sums payable to Grantor thereunder; (n) Intentionally Deleted. (o) Accounts. All reserves, escrows and deposit accounts maintained by Grantor with respect to the Property, including without limitation, the Accounts and all cash, checks, drafts, certificates, securities, investment property, financial assets, instruments and other property held therein from time to time and all proceeds, products, distributions or dividends or substitutions thereon and thereof; (p) Proceeds. All proceeds of any of the foregoing items set forth in subsections (a) through (o) including, without limitation, Insurance Proceeds and Awards, into cash or liquidation claims. (q) Other Rights. Any and all other rights of Grantor in and to the items set forth in subsections (a) through (p) above. Section 1.2. ASSIGNMENT OF RENTS. Grantor hereby absolutely and unconditionally assigns to Agent and Trustee all of Grantor’s right, title and interest in and to all current and future Leases and Rents; it being intended by Grantor that this assignment constitutes a present, absolute assignment and not an assignment for additional security only. Nevertheless, subject to the terms of the Note Purchase Agreement and Section 8.1(h) of this Security Instrument, Agent grants to Grantor a revocable license to (i) collect, receive, use and enjoy the Rents and Grantor shall hold the Rents, or a portion thereof sufficient to discharge all current sums due on the Debt, in trust for the benefit of Agent for use in the payment of such sums, and (ii) enforce the terms of the Leases. Section 1.3. SECURITY AGREEMENT. This Security Instrument is both a real property mortgage and a “security agreement” within the meaning of the Uniform Commercial Code. The Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Grantor in the Property. By executing and delivering this Security Instrument, Grantor hereby grants to Agent, as security for the Obligations (hereinafter defined), a security interest in the Property to the full extent that the Property may be subject to the Uniform Commercial Code.
5 AMERICASACTIVE:20959587.4 Section 1.4. FIXTURE FILING. Certain of the Property is or will become “fixtures” (as that term is defined in the Uniform Commercial Code) on the Land, and this Security Instrument, upon being filed for record in the real estate records of the city or county wherein such fixtures are situated, shall operate also as a financing statement filed as a fixture filing in accordance with the applicable provisions of said Uniform Commercial Code upon such of the Property that is or may become fixtures. Information concerning the security interest herein granted may be obtained at the addresses of Debtor (Grantor) and Secured Party (Agent) as set forth in the first paragraph of this Security Instrument. Debtor’s (Grantor’s) organization identification number is [●]. Section 1.5. CONDITIONS TO GRANT. TO HAVE AND TO HOLD the above granted and described Property unto Trustee for and on behalf of Agent and to the use and benefit of Agent and Trustee and their successors and assigns, forever, subject, however to the Permitted Liens; IN TRUST, WITH POWER OF SALE, to secure payment to Agent of the Debt at the time and in the manner provided for its payment in the Notes and in the Note Purchase Agreement; PROVIDED, HOWEVER, these presents are upon the express condition that, if Agent shall be well and truly paid the Debt (other than contingent obligations for indemnification, expense reimbursement, tax gross up or yield protection or similar matters as to which no claim has been made) at the time and in the manner provided the Note Purchase Agreement and this Security Instrument, if Grantor shall well and truly perform the Other Obligations (as defined below) as set forth in this Security Instrument and shall well and truly abide by and comply with each and every covenant and condition set forth herein and in the Financing Documents (other than contingent obligations for indemnification, expense reimbursement, tax gross up or yield protection or similar matters as to which no claim has been made), these presents and the estate hereby granted shall cease, terminate and be void. Article 2 - DEBT AND OBLIGATIONS SECURED Section 2.1. DEBT. This Security Instrument and the grants, assignments and transfers made in Article 1 are given for the purpose of securing the payment of the outstanding principal amount set forth in, and evidenced by, the Notes together with all interest accrued and unpaid and all other sums due to Agent and the Secured Parties in respect of the Notes under the Note Purchase Agreement, this Security Instrument or any of the other Financing Documents (collectively, the “Debt”). Section 2.2. OTHER OBLIGATIONS. This Security Instrument and the grants, assignments and transfers made in Article 1 are also given for the purpose of securing the performance of the following (the “Other Obligations”): (a) all other obligations of Grantor contained herein; (b) each obligation of Grantor contained in the Financing Documents; and (c) each obligation of Grantor contained in any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part of the Financing Documents. Section 2.3. DEBT AND OTHER OBLIGATIONS. Grantor’s obligations for the payment of the Debt and the performance of the Other Obligations shall be referred to collectively herein as the “Obligations.” Section 2.4. PAYMENT OF DEBT. Grantor will pay the Debt at the time and in the manner provided in the Notes and the Note Purchase Agreement and this Security Instrument.
6 AMERICASACTIVE:20959587.4 Section 2.5. INCORPORATION BY REFERENCE. All of the covenants, conditions and agreements contained in (a) the Note Purchase Agreement, and (b) any and all of the other Financing Documents, are hereby made a part of this Security Instrument to the same extent and with the same force as if fully set forth herein. Article 3 - PROPERTY COVENANTS Grantor covenants and agrees that: Section 3.1. INSURANCE. Grantor shall obtain and maintain, or cause to be obtained and maintained, in full force and effect at all times insurance with respect to Grantor and the Property as required pursuant to the Note Purchase Agreement. Section 3.2. TAXES AND OTHER CHARGES. Grantor shall pay all real estate and personal property taxes, assessments, water rates or sewer rents (collectively “Taxes”), ground rents, maintenance charges, impositions (other than Taxes), and any other charges, including, without limitation, vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Property (collectively, “Other Charges”), now or hereafter levied or assessed or imposed against the Property or any part thereof in accordance with the Note Purchase Agreement. Section 3.3. LEASES. Grantor shall not (and shall not permit any other applicable Person to) enter in any Leases for all or any portion of the Property unless in accordance with the provisions of the Note Purchase Agreement. Section 3.4. WARRANTY OF TITLE. Grantor has good, indefeasible, marketable and insurable title to the Property and has the right to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey the same. Grantor possesses an unencumbered Leasehold Estate in the Land and the Improvements except for the Permitted Liens (as defined in the Note Purchase Agreement), such other liens as are permitted pursuant to the Financing Documents and the liens created thereby. This Security Instrument, when properly recorded in the appropriate records, together with any Uniform Commercial Code financing statements required to be filed in connection therewith, pursuant to the Uniform Commercial Code of the State of California and in the state of Grantor’s organization, will create (a) a legal, valid, and perfected lien on the Property, subject only to Permitted Encumbrances and the liens created by the Financing Documents and (b) a legal, valid, and perfected security interests in and to, and legal, valid, and perfected collateral assignments of, all personalty (including the Leases) which may be perfected by the recording of this Security Instrument or such Uniform Commercial Code financing statements, all in accordance with the terms thereof, in each case subject only to any applicable Permitted Encumbrances, such other liens as are permitted pursuant to the Financing Documents and the liens created thereby. Grantor shall forever warrant, defend and preserve its interest in the Leasehold Estate and the validity and priority of the lien of this Security Instrument and shall forever warrant and defend the same to Agent against the claims of all Persons whomsoever, other than the holders of Permitted Encumbrances. Section 3.5. PAYMENT FOR LABOR AND MATERIALS. Subject to Grantor’s right to contest any Work Charge (defined herein) pursuant to the terms of the Note Purchase Agreement, Grantor will promptly pay (or cause to be paid) when due all bills and costs for labor, materials, and
7 AMERICASACTIVE:20959587.4 specifically fabricated materials incurred in connection with the Property (each, a “Work Charge”) and never permit to exist beyond the due date thereof in respect of the Property or any part thereof any lien or security interest, even though inferior to the liens and the security interests hereof, and in any event never permit to be created or exist in respect of the Property or any part thereof any other or additional lien or security interest other than the liens or security interests hereof except for the Permitted Encumbrances. Article 4 - FURTHER ASSURANCES Section 4.1. COMPLIANCE WITH NOTE PURCHASE AGREEMENT. Grantor shall comply with all covenants set forth in the Note Purchase Agreement relating to acts or other further assurances to be made on the part of Grantor in order to protect and perfect the lien or security interest hereof upon, and in the interest of Agent in, the Property. Section 4.2. AUTHORIZATION TO FILE FINANCING STATEMENTS. Grantor hereby authorizes Agent at any time and from time to time to file any initial financing statements, amendments thereto and continuation statements as authorized by applicable law, as applicable to all or part of the Personal Property and as necessary or required in connection herewith. For purposes of such filings, Grantor agrees to furnish any information requested by Agent promptly upon request by Agent. Grantor also ratifies its authorization for Agent to have filed any like initial financing statements, amendments thereto or continuation statements, if filed prior to the date of this Security Instrument. During the continuance of an Event of Default, Grantor hereby irrevocably constitutes and appoints Agent and any officer or agent of Agent, with full power of substitution, as its true and lawful attorneys-in-fact with full irrevocable power and authority in the place and stead of Grantor or in Grantor’s own name to execute in Grantor’s name any such documents and otherwise to carry out the purposes of this Section 4.2, to the extent that Grantor’s authorization above is not sufficient and Grantor fails or refuses to promptly execute such documents. This power of attorney is a power coupled with an interest and shall be irrevocable. Article 5 - DUE ON SALE/ENCUMBRANCE Section 5.1. NO SALE/ENCUMBRANCE. Except in accordance with the Financing Documents, Grantor shall not cause or permit a sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or grant of any options with respect to, or any other transfer or disposition (directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and whether or not for consideration or of record) of a legal or beneficial interest in the Property or any part thereof that would violate the terms of the Note Purchase Agreement. Article 6 - PREPAYMENT; RELEASE OF PROPERTY Section 6.1. PREPAYMENT. The Debt may not be prepaid in whole or in part except in strict accordance with the express terms and conditions of the Notes and the Note Purchase Agreement. Section 6.2. RELEASE OF PROPERTY. Grantor shall not be entitled to a release of any portion of the Property from the lien of this Security Instrument except in accordance with the terms and conditions of the Note Purchase Agreement, if any.
8 AMERICASACTIVE:20959587.4 Article 7 - DEFAULT Section 7.1. EVENT OF DEFAULT. The term “Event of Default” as used in this Security Instrument shall have the meaning assigned to such term in the Note Purchase Agreement. Article 8 - RIGHTS AND REMEDIES UPON DEFAULT Section 8.1. REMEDIES. Upon the occurrence and during the continuance of any Event of Default, subject to, and in accordance with, the terms of the Note Purchase Agreement and the Financing Documents, Grantor agrees that Agent (acting at the direction of the Required Holders) may or acting by or through Trustee may take such action, without notice or demand, other than notices required by applicable law and/or the Note Purchase Agreement, as it deems advisable to protect and enforce its rights against Grantor and in and to the Property, including, but not limited to, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Agent or Trustee may determine, in their sole discretion, without impairing or otherwise affecting the other rights and remedies of Agent or Trustee: (a) declare the entire unpaid Debt then outstanding to be immediately due and payable; (b) institute proceedings, judicial or otherwise, for the complete foreclosure of this Security Instrument in accordance with applicable law, in which case the Property or any interest therein may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner; (c) with or without entry, to the extent permitted and pursuant to the procedures provided by applicable law, institute proceedings for the partial foreclosure of this Security Instrument for the portion of the Debt then due and payable, subject to the continuing lien and security interest of this Security Instrument for the balance of the Debt not then due, unimpaired and without loss of priority; (d) sell for cash or upon credit the Property or any part thereof and all estate, claim, demand, right, title and interest of Grantor therein and rights of redemption thereof, pursuant to power of sale or otherwise, at one or more sales, as an entirety or in parcels, at such time and place, upon such terms and after such notice thereof as may be required or permitted by law; (e) institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein, in the Financing Documents; (f) recover judgment on the Debt either before, during or after any proceedings for the enforcement of this Security Instrument or any of the Financing Documents; (g) apply for the appointment of a receiver, trustee, liquidator or conservator of the Property, without notice to Grantor, which notice Grantor expressly waives, and without regard for the adequacy of the security for the Debt and without regard for the solvency of Grantor, any guarantor or indemnitor of the Notes under the Notes or Note Purchase Agreement or any other Person liable for the payment of the Debt and whose appointment Grantor expressly consents to take possession of and to operate the Property and to collect the Rents and to otherwise protect and preserve the Property;
9 AMERICASACTIVE:20959587.4 (h) the license granted to Grantor under Section 1.2 hereof shall automatically be revoked and Agent may enter into or upon the Property, either personally or by its agents, nominees or attorneys and dispossess Grantor and its agents therefrom, without liability for trespass, damages or otherwise and exclude Grantor and its agents wholly therefrom, and take possession of all books, records and accounts relating thereto and Grantor agrees to surrender possession of the Property and of such books, records and accounts to Agent upon demand, and thereupon Agent may (i) use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with all and every part of the Property and conduct the business thereat; (ii) complete any construction on the Property in such manner and form as Agent deems advisable; (iii) make alterations, additions, renewals, replacements and improvements to or on the Property; (iv) exercise all rights and powers of Grantor with respect to the Property, whether in the name of Grantor or otherwise, including, without limitation, the right to make, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and receive all Rents of the Property and every part thereof; (v) require Grantor to pay monthly in advance to Agent, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupation of such part of the Property as may be occupied by Grantor; (vi) require Grantor to vacate and surrender possession of the Property to Agent or to such receiver and, in default thereof, Grantor may be evicted by summary proceedings or otherwise; and (vii) apply the receipts from the Property to the payment of the Debt, in such order, priority and proportions as Agent shall deem appropriate in its sole discretion after deducting therefrom all expenses (including reasonable, documented and out-of-pocket attorneys’ fees) incurred in connection with the aforesaid operations and all amounts necessary to pay the Taxes, Other Charges, insurance and other expenses in connection with the Property, as well as just and reasonable compensation for the services of Agent, its counsel, agents and employees; (i) apply any sums then deposited or held in escrow or otherwise by or on behalf of Agent in accordance with the terms of the Note Purchase Agreement, this Security Instrument or any other Financing Document to the payment of the following items in any order in its sole discretion: (i) Taxes and Other Charges; (ii) insurance premiums; (iii) interest on the unpaid principal balance of the Notes; (iv) amortization of the unpaid principal balance of the Notes; (v) all other sums payable pursuant to the Note Purchase Agreement, this Security Instrument and the other Financing Documents, including without limitation advances made by Agent pursuant to the terms of this Security Instrument; (j) surrender the insurance policies maintained pursuant to the Note Purchase Agreement, collect the unearned insurance premiums for such insurance policies and apply such sums as a credit on the Debt in such priority and proportion as Agent in its discretion shall deem proper, and in connection therewith, Grantor hereby appoints Agent as agent and attorney-in-fact (which is coupled with an interest and is therefore irrevocable) for Grantor to collect such insurance premiums; (k) apply the undisbursed balance of any deposit made by Grantor with Agent in connection with the restoration of the Property after a casualty thereto or condemnation thereof, together with interest thereon, to the payment of the Debt in such order, priority and proportions as Agent shall deem to be appropriate in its discretion; and/or (l) pursue such other remedies as Agent may have under applicable law.
10 AMERICASACTIVE:20959587.4 In the event of a sale, by foreclosure, power of sale or otherwise, of less than all of Property, this Security Instrument shall continue as a lien and security interest on the remaining portion of the Property unimpaired and without loss of priority. Any determination as to whether an action may be necessary, property or appropriate shall be made by the Required Holders. Section 8.2. APPLICATION OF PROCEEDS. The purchase money, proceeds and avails of any disposition of the Property, and or any part thereof, or any other sums collected by Agent pursuant to this Security Instrument or the other Financing Documents, may be applied by Agent to the payment of the Debt in such priority and proportions as set forth in the Note Purchase Agreement and the Financing Documents. Section 8.3. RIGHT TO CURE DEFAULTS. Upon the occurrence and during the continuance of any Event of Default, Agent may, but without any obligation to do so and without notice to or demand on Grantor and without releasing Grantor from any obligation hereunder, make any payment or do any act required of Grantor hereunder in such manner and to such extent as Agent may deem necessary to protect the security hereof. Agent or Trustee is authorized to enter upon the Property for such purposes, or appear in, defend, or bring any action or proceeding to protect its interest in the Property or to foreclose this Security Instrument or collect the Debt, and the documented and out-of-pocket cost and expense thereof (including documented and out- of-pocket attorneys’ fees to the extent permitted by applicable law), with interest as provided in this Section 8.3, shall constitute a portion of the Debt and shall be due and payable to Agent upon demand. All such costs and expenses incurred by Agent in remedying such Event of Default or such failed payment or act or in appearing in, defending, or bringing any such action or proceeding shall bear interest at the default rate specified in the Notes and the Note Purchase Agreement (the “Default Rate”), for the period commencing three (3) Business Days after notice from Agent that such cost or expense was incurred to the date of payment to Agent. All such costs and expenses incurred by Agent or Trustee together with interest thereon calculated at the Default Rate shall be deemed to constitute a portion of the Debt and be secured by this Security Instrument and the other Financing Documents and shall be immediately due and payable upon demand by Agent therefor. Section 8.4. ACTIONS AND PROCEEDINGS. During the continuance of any Event of Default, Agent or Trustee has the right to appear in and defend any action or proceeding brought with respect to the Property and to bring any action or proceeding, in the name and on behalf of Grantor, which Agent in its discretion, decides should be brought to protect its interest in the Property. Section 8.5. RECOVERY OF SUMS REQUIRED TO BE PAID. Agent shall have the right from time to time to take action to recover any sum or sums which constitute a part of the Debt as the same become due, without regard to whether or not the balance of the Debt shall be due, and without prejudice to the right of Agent thereafter to bring an action of foreclosure, or any other action, for a default or defaults by Grantor existing at the time such earlier action was commenced. Section 8.6. OTHER RIGHTS, ETC. (a) The failure of Agent or Trustee to insist upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this Security Instrument. Grantor shall not be relieved of Grantor’s obligations hereunder by reason of (i) the failure of Agent or Trustee to comply with any request of Grantor or any guarantor or indemnitor of the Notes under the Note Purchase Agreement to take any action to foreclose this Security
11 AMERICASACTIVE:20959587.4 Instrument or otherwise enforce any of the provisions hereof or of the other Financing Documents, (ii) the release, regardless of consideration, of the whole or any part of the Property, or of any Person liable for the Debt or any portion thereof, or (iii) any agreement or stipulation by Agent extending the time of payment or otherwise modifying or supplementing the terms of the Note Purchase Agreement, this Security Instrument or the other Financing Documents. It is agreed that the risk of loss or damage to the Property is on Grantor, and Agent shall have no liability whatsoever for decline in the value of the Property, for failure to maintain the insurance policies required to be maintained pursuant to the Note Purchase Agreement, or for failure to determine whether insurance in force is adequate as to the amount of risks insured. Possession by Agent shall not be deemed an election of judicial relief if any such possession is requested or obtained with respect to any Property or collateral not in Agent’s possession. (b) Agent may resort for the payment of the Debt to any other security held by Agent in such order and manner as Agent, in its discretion, may elect. Agent or Trustee may take action to recover the Debt, or any portion thereof, or to enforce any covenant hereof without prejudice to the right of Agent or Trustee thereafter to foreclose this Security Instrument. The rights of Agent or Trustee under this Security Instrument shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others, to the extent permitted by law. No act of Agent or Trustee shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision, to the extent permitted by law. Neither Agent nor Trustee shall be limited exclusively to the rights and remedies herein stated but shall be entitled to every right and remedy now or hereafter afforded at law or in equity. Section 8.7. RIGHT TO RELEASE ANY PORTION OF THE PROPERTY. In addition to the provisions of Section 6.2 hereof, Agent (acting at the direction of the Required Holders) may release any other portion of the Property for such consideration as Agent may require without, as to the remainder of the Property, in any way impairing or affecting the lien or priority of this Security Instrument, or improving the position of any subordinate lienholder with respect thereto, except to the extent that the obligations hereunder shall have been reduced by the actual monetary consideration, if any, received by Agent for such release, and may accept by assignment, pledge or otherwise any other property in place thereof as Agent may require without being accountable for so doing to any other lienholder. This Security Instrument shall continue as a lien and security interest in the remaining portion of the Property. Section 8.8. RIGHT OF ENTRY. Upon reasonable notice to Grantor, Agent and its agents shall have the right to enter and inspect the Property at all reasonable times. Section 8.9. BANKRUPTCY. Upon the occurrence and during the continuance of an Event of Default, Agent shall have the right to proceed in its own name or in the name of Grantor in respect of any claim, suit, action or proceeding relating to the rejection of any Lease, including, without limitation, the right to file and prosecute, to the exclusion of Grantor, any proofs of claim, complaints, motions, applications, notices and other documents, in any case in respect of the lessee under such Lease under the Bankruptcy Code. If there shall be filed by or against Grantor a petition under the Bankruptcy Code and Grantor, as lessor under any Lease, shall determine to reject such Lease pursuant to Section 365(a) of the Bankruptcy Code (defined below), then Grantor shall give Agent not less than ten (10) business days’ prior notice of the date on which Grantor shall apply to the bankruptcy court for authority to reject the Lease. Agent (acting at the direction of the
12 AMERICASACTIVE:20959587.4 Required Holders) shall have the right, but not the obligation, to serve upon Grantor within such ten-day period a notice stating that (i) Agent demands that Grantor assume and assign the Lease to Agent pursuant to Section 365 of the Bankruptcy Code and (ii) Agent covenants to cure or provide adequate assurance of future performance under the Lease. If Agent serves upon Grantor the notice described in the preceding sentence, Grantor shall not seek to reject the Lease and shall comply with the demand provided for in clause (i) of the preceding sentence within thirty (30) days after the notice shall have been given, subject to the performance by Agent of the covenant provided for in clause (ii) of the preceding sentence. Section 8.10. SUBROGATION. If any or all of the proceeds of the Debt have been used to extinguish, extend or renew any indebtedness heretofore existing against the Property, then, to the extent of the funds so used, Agent shall be subrogated to all of the rights, claims, liens, titles, and interests existing against the Property heretofore held by, or in favor of, the holder of such indebtedness and such former rights, claims, liens, titles, and interests, if any, are not waived but rather are continued in full force and effect in favor of Agent and are merged with the lien and security interest created herein as cumulative security for the repayment of the Debt, the performance and discharge of the Other Obligations. Article 9 - WAIVERS Section 9.1. MARSHALLING AND OTHER MATTERS. Grantor hereby waives, to the extent permitted by applicable law, the benefit of all applicable law now or hereafter in force regarding appraisement, valuation, stay, extension, reinstatement and redemption and all rights of marshalling in the event of any sale hereunder of the Property or any part thereof or any interest therein. Further, Grantor hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of this Security Instrument on behalf of Grantor, and on behalf of each and every Person acquiring any interest in or title to the Property subsequent to the date of this Security Instrument and on behalf of all Persons to the extent permitted by applicable law. Section 9.2. WAIVER OF NOTICE. Grantor shall not be entitled to any notices of any nature whatsoever from Agent or Trustee except with respect to matters for which this Security Instrument, the Note Purchase Agreement or any other Financing Document specifically and expressly provides for the giving of notice by Agent or Trustee to Grantor and except with respect to matters for which Grantor is not permitted by applicable law to waive its right to receive notice, Grantor hereby expressly waives the right to receive any notice from Agent or Trustee with respect to any matter for which the Note Purchase Agreement, this Security Instrument or any other Financing Document does not specifically and expressly provide for the giving of notice by Agent or Trustee to Grantor. Section 9.3. SOLE DISCRETION OF AGENT. Except as provided in the Note Purchase Agreement, whenever pursuant to this Security Instrument, Agent exercises any right given to it to approve or disapprove, or any arrangement or term is to be satisfactory to Agent, the decision of Agent (acting at the direction of the Required Holders) to approve or disapprove or to decide whether arrangements or terms are satisfactory or not satisfactory shall (except as is otherwise specifically herein provided) be in the sole (but reasonable) discretion of the Required Holders (acting through the Agent) and shall be final and conclusive.
13 AMERICASACTIVE:20959587.4 Section 9.4. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE LAW, GRANTOR AND AGENT (BY ITS ACCEPTANCE HEREOF) EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE FINANCING DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY GRANTOR AND AGENT, AND IS INTENDED TO ENCOMPASS TO THE EXTENT PERMITTED BY APPLICABLE LAW INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH OF AGENT AND GRANTOR IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY GRANTOR AND AGENT. Section 9.5. WAIVER OF FORECLOSURE DEFENSE. Grantor hereby waives any defense Grantor might assert or have by reason of Agent’s failure to make any tenant or lessee of the Property a party defendant in any foreclosure proceeding or action instituted by Agent. Article 10 - NOTICES Section 10.1. NOTICES. All notices or other written communications hereunder shall be delivered in accordance with the applicable terms and conditions of the Note Purchase Agreement. Notices to the Trustee shall be sent as follows: [●] [●] [●] Article 11 - APPLICABLE LAW Section 11.1. GOVERNING LAW. This Security Instrument shall be governed, construed, applied and enforced in accordance with the laws of the state in which the Property is located. Section 11.2. PROVISIONS SUBJECT TO APPLICABLE LAW. All rights, powers and remedies provided in this Security Instrument may be exercised only to the extent that the exercise thereof does not violate any applicable provisions of law and are intended to be limited to the extent necessary so that they will not render this Security Instrument invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any applicable law. If any term of this Security Instrument or any application thereof shall be invalid or unenforceable, the remainder of this Security Instrument and any other application of the term shall not be affected thereby. Article 12 - DEFINITIONS Section 12.1. GENERAL DEFINITIONS. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Security Instrument may
14 AMERICASACTIVE:20959587.4 be used interchangeably in singular or plural form and the word “Grantor” shall mean “each Grantor and any subsequent owner or owners of the Property or any part thereof or any interest therein,” the word “Secured Parties” shall mean “each Secured Party any of a Secured Party’s successors and assigns, as permitted under the Notes, the Note Purchase Agreement or any of the Financing Documents”; the word “Note” shall mean “each promissory note issued and sold pursuant to Section 2 or Section 13 of the Note Purchase Agreement and any other evidence of indebtedness secured by the Note Purchase Agreement,” “Trustee” shall mean “Trustee and any substitute Trustee of the estates, properties, powers, trusts and rights conferred upon Trustee pursuant to this Security Instrument,” the word “Property” shall include any portion of the Property and any interest therein, and the phrases “attorneys’ fees”, “legal fees” and “counsel fees” shall include any and all reasonable, documented and out-of-pocket attorneys’, paralegal and law clerk fees and disbursements, including, but not limited to, reasonable fees and disbursements at the pre- trial, trial and appellate levels incurred or paid by Agent in protecting its interest in the Property, the Leases and the Rents and enforcing its rights hereunder. Article 13 - MISCELLANEOUS PROVISIONS Section 13.1. NO ORAL CHANGE. This Security Instrument, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Grantor, Agent or Trustee, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought. Section 13.2. SUCCESSORS AND ASSIGNS. This Security Instrument shall be binding upon and inure to the benefit of Grantor, Agent and their respective successors and permitted assigns forever. Section 13.3. INAPPLICABLE PROVISIONS. If any term, covenant or condition of the Note Purchase Agreement, the Notes or this Security Instrument is held to be invalid, illegal or unenforceable in any respect, the Note Purchase Agreement, the Notes and this Security Instrument shall be construed without such provision. Section 13.4. HEADINGS, ETC. The headings and captions of various Sections of this Security Instrument are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof. Section 13.5. NUMBER AND GENDER. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa. Section 13.6. ENTIRE AGREEMENT. This Security Instrument and the other Financing Documents contain the entire agreement of the parties hereto and thereto in respect of the transactions contemplated hereby and thereby, and all prior agreements among or between such parties, whether oral or written, are superseded by the terms of this Security Instrument and the other Financing Documents. Section 13.7. LIMITATION ON AGENT’S RESPONSIBILITY. No provision of this Security Instrument shall operate to place any obligation or liability for the control, care, management or
15 AMERICASACTIVE:20959587.4 repair of the Property upon Agent, nor shall it operate to make Agent responsible or liable for any waste committed on the Property by the tenants or any other Person, or for any dangerous or defective condition of the Property, or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any tenant, licensee, employee or stranger. Nothing herein contained shall be construed as constituting Agent a “mortgagee in possession.” Section 13.8. COLLATERAL AGENT. The Agent has participated in this Security Instrument as directed under and in accordance with the Financing Documents and will perform this Security Instrument solely in its capacity as Collateral Agent and not in its individual capacity. In acting pursuant to this Security Instrument Agreement, the Agent shall be afforded all of the rights, powers, protections, immunities and indemnities set forth in the Financing Documents as if the same were specifically set forth herein. With regards to any action or refusal to act that involves discretion on behalf of the Agent (including, but not limited to the exercise of any remedies and any permissive rights to request the Grantor provide documents or take actions), such action (or inaction) shall be taken (or omitted to be taken) by the Agent pursuant to the terms of the Financing Documents and direction provided thereunder. The Agent shall be entitled to exercise its rights, powers and duties hereunder through agents, attorneys or designees and shall not be liable for any actions of any such party retained by it in good faith. The permissive authorizations, entitlements, powers and rights (including the right to request that the Grantor take an action or deliver a document and the exercise of remedies following an Event of Default) granted to the Agent herein shall not be construed as duties. Notwithstanding anything to the contrary contained herein or in applicable law, the Agent shall have no responsibility for (i) preparing, recording, filing, re- recording, or re-filing any financing statement, perfection statement, continuation statement or other instrument in any public office or for otherwise ensuring the perfection or maintenance of any security interest granted pursuant to, or contemplated by, this Security Instrument (ii) taking any necessary steps to preserve rights against any parties with respect to any Property or (iii) taking any action to protect against any diminution in value of the Property. Article 14 - DEED OF TRUST PROVISIONS Section 14.1. CONCERNING THE TRUSTEE. Trustee shall be under no duty to take any action hereunder except as expressly required hereunder or by law, or to perform any act which would involve Trustee in any expense or liability or to institute or defend any suit in respect hereof, unless properly indemnified to Trustee’s reasonable satisfaction. Trustee, by acceptance of this Security Instrument, represents that it is duly qualified to serve as Trustee hereunder and covenants to perform and fulfill the trusts herein created, being liable, however, only for its own gross negligence or willful misconduct (to the extent determined by a court of competent jurisdiction in a final and nonappealable judgment), and hereby waives any statutory fee and agrees to accept reasonable compensation, in lieu thereof, for any services rendered by Trustee in accordance with the terms hereof. Trustee may resign at any time upon giving thirty (30) days’ notice to Grantor and to Agent. Agent may remove Trustee at any time or from time to time and select a successor trustee. In the event of the death, removal, resignation, refusal to act, or inability to act of Trustee, or in its sole discretion for any reason whatsoever Agent may, without notice and without specifying any reason therefor and without applying to any court, select and appoint a successor trustee, by an instrument recorded wherever this Security Instrument is recorded and all powers, rights, duties and authority of Trustee, as aforesaid, shall thereupon become vested in such
16 AMERICASACTIVE:20959587.4 successor. Such substitute trustee shall not be required to give bond for the faithful performance of the duties of Trustee hereunder unless required by Agent. The procedure provided for in this paragraph for substitution of Trustee shall be in addition to and not in exclusion of any other provisions for substitution, by law or otherwise. Section 14.2. TRUSTEE’S FEES. Grantor shall pay all documented and out-of-pocket costs, fees and expenses incurred by Trustee and Trustee's agents and counsel in connection with the performance by Trustee of Trustee's duties hereunder and all such costs, fees and expenses shall be secured by this Security Instrument. Notwithstanding anything to the contrary contained herein or in any other Financing Document, Trustee hereby acknowledges and agrees that no fees or other compensation shall be payable to Trustee hereunder or otherwise in connection with the Notes or Financing Documents except in connection with (a) a sale of the Property in connection with an exercise of remedies hereunder and/or under the other Financing Documents or (b) a release hereof in accordance with the applicable terms and conditions hereof and of the other Financing Documents. Section 14.3. CERTAIN RIGHTS. With the approval of Agent (acting at the direction of the Required Holders), Trustee shall have the right to take any and all of the following actions: (i) to select, employ, and advise with counsel (who may be, but need not be, counsel for Agent) upon any matters arising hereunder, including the preparation, execution, and interpretation of the Note, this Security Instrument or the other Financing Documents, and shall be fully protected in relying as to legal matters on the advice of counsel, (ii) to execute any of the trusts and powers hereof and to perform any duty hereunder either directly or through his/her agents or attorneys, (iii) to select and employ, in and about the execution of his/her duties hereunder, suitable accountants, engineers and other experts, agents and attorneys-in-fact, either corporate or individual, not regularly in the employ of Trustee, and Trustee shall not be answerable for any act, default, negligence, or misconduct of any such accountant, engineer or other expert, agent or attorney-in-fact, if selected with reasonable care, or for any error of judgment or act done by Trustee in good faith, or be otherwise responsible or accountable under any circumstances whatsoever, except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that Trustee acted with gross negligence or willful misconduct in its selection of such agents, and (iv) any and all other lawful action as Agent may instruct Trustee to take to protect or enforce Agent’s rights hereunder. Trustee shall not be personally liable in case of entry by Trustee, or anyone entering by virtue of the powers herein granted to Trustee, upon the Property for debts contracted for or liability or damages incurred in the management or operation of the Property except for any liabilities or damages to the extent determined by a court of competent jurisdiction in a final and nonappealable judgment to have resulted from the gross negligence, willful misconduct or bad faith of the Trustee. Trustee shall have the right to rely on any instrument, document, or signature authorizing or supporting an action taken or proposed to be taken by Trustee hereunder, believed by Trustee in good faith to be genuine. Trustee shall be entitled to reimbursement for actual expenses incurred by Trustee in the performance of Trustee’s duties hereunder and to reasonable compensation for such of Trustee’s services hereunder as shall be rendered. Section 14.4. RETENTION OF MONEY. All moneys received by Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by
17 AMERICASACTIVE:20959587.4 applicable law) and Trustee shall be under no liability for interest on any moneys received by Trustee hereunder. Section 14.5. PERFECTION OF APPOINTMENT. Should any deed, conveyance, or instrument of any nature be required from Grantor by any Trustee or substitute trustee to more fully and certainly vest in and confirm to Trustee or substitute trustee such estates rights, powers, and duties, then, upon request by Trustee or substitute trustee, any and all such deeds, conveyances and instruments shall be made, executed, acknowledged, and delivered and shall be caused to be recorded and/or filed by Grantor. Section 14.6. SUCCESSION INSTRUMENTS. Any substitute trustee appointed pursuant to any of the provisions hereof shall, without any further act, deed, or conveyance, become vested with all the estates, properties, rights, powers, and trusts of its or his/her predecessor in the rights hereunder with like effect as if originally named as Trustee herein; but nevertheless, upon the written request of Agent or of the substitute trustee, Trustee ceasing to act shall execute and deliver any instrument transferring to such substitute trustee, upon the trusts herein expressed, all the estates, properties, rights, powers, and trusts of Trustee so ceasing to act, and shall duly assign, transfer and deliver any of the property and moneys held by such Trustee to the substitute trustee so appointed in Trustee’s place. Article 15 - GROUND LEASE PROVISIONS Section 15.1. NO MERGER OF FEE AND LEASEHOLD ESTATES; RELEASES. So long as any portion of the Debt shall remain unpaid, unless Agent shall otherwise consent (acting at the direction of the Required Holders), the fee title to the Land and the Leasehold Estate shall not merge but shall always be kept separate and distinct, notwithstanding the union of such estates in Grantor, Ground Lessor or in any other Person by purchase, operation of law or otherwise. Agent reserves the right, at any time, to release portions of the Property, including, but not limited to, the Leasehold Estate, with or without consideration, at Agent’s election (acting at the direction of the Required Holders), without waiving or affecting any of its rights hereunder or under the Note or the other Financing Documents and any such release shall not affect Agent’s rights in connection with the portion of the Property not so released. Section 15.2. GRANTOR’S ACQUISITION OF FEE ESTATE. In the event that Grantor, so long as any portion of the Debt remains unpaid, shall become the owner and holder of Ground Lessor’s fee interest in the portion of the Property demised pursuant to the Ground Lease, the lien of this Security Instrument shall be spread to cover such interest and such interest shall be deemed to be included in the Property. Grantor agrees, at its sole cost and expense, including without limitation, Agent’s reasonable, documented and out-of-pocket attorney’s fees, to (i) execute any and all documents or instruments necessary to subject the foregoing interest to the lien of this Security Instrument; and (ii) provide a title insurance policy which shall insure that the lien of this Security Instrument is a first lien on such interest. The foregoing shall not be construed to permit Grantor to acquire the aforesaid fee interest and Grantor rights to acquire additional property shall remain subject to the restrictions relating thereto contained in the Note Purchase Agreement and the other Financing Documents. Section 15.3. REJECTION OF THE GROUND LEASE.
18 AMERICASACTIVE:20959587.4 (a) If the Ground Lease is terminated by Ground Lessor for any reason in the event of the rejection or disaffirmance of the Ground Lease by Ground Lessor pursuant to the Bankruptcy Code or any other law affecting creditor’s rights, (i) Grantor, immediately after obtaining notice thereof, shall give notice thereof to Agent, (ii) Grantor, without the prior written consent of Agent (acting at the direction of the Required Holders), shall not elect to treat the Ground Lease as terminated pursuant to Section 365(h) of the Bankruptcy Code or any comparable federal or state statute or law, and any election by Grantor made without such consent shall be void and (iii) this Security Instrument and all the liens, terms, covenants and conditions of this Security Instrument shall extend to and cover Grantor’s possessory rights under Section 365(h) of the Bankruptcy Code and to any claim for damages due to the rejection of the Ground Lease or other termination of the Ground Lease. In addition, Grantor hereby assigns irrevocably to Agent Grantor’s rights to treat the Ground Lease as terminated pursuant to Section 365(h) of the Bankruptcy Code and to offset rents under the Ground Lease in the event any case, proceeding or other action is commenced by or against Ground Lessor under the Bankruptcy Code or any comparable federal or state statute or law, provided that Agent shall not exercise such rights and shall permit Grantor to exercise such rights with the prior written consent of Agent (acting at the direction of the Required Holders), not to be unreasonably withheld or delayed, unless an Event of Default shall have occurred and be continuing. (b) Grantor hereby assigns to Agent Grantor’s right to reject the Ground Lease under Section 365 of the Bankruptcy Code or any comparable federal or state statute or law with respect to any case, proceeding or other action commenced by or against Grantor under the Bankruptcy Code or comparable federal or state statute or law, provided Agent shall not exercise such right, and shall permit Grantor to exercise such right with the prior written consent of Agent (acting at the direction of the Required Holders), not to be unreasonably withheld or delayed, unless an Event of Default shall have occurred and be continuing. Further, if Grantor shall desire to so reject the Ground Lease, at Agent’s request (acting at the direction of the Required Holders), to the extent not prohibited by the terms of the Ground Lease and applicable law, Grantor shall assign its interest in the Ground Lease to Agent in lieu of rejecting the Ground Lease as described above, upon receipt by Grantor of written notice from Agent of such request together with Agent’s agreement to cure any existing defaults of Grantor under the Ground Lease and to provide adequate assurance of future performance of Grantor’s obligations thereunder. (c) Grantor hereby assigns to Agent Grantor’s right to seek an extension of the 60-day period within which Grantor must accept or reject the Ground Lease under Section 365 of the Bankruptcy Code or any comparable federal or state statute or law with respect to any case, proceeding or other action commenced by or against Grantor under the Bankruptcy Code or comparable federal or state statute or law, provided Agent shall not exercise such right, and shall permit Grantor to exercise such right with the prior written consent of Agent (acting at the direction of the Required Holders), not to be unreasonably withheld or delayed, unless an Event of Default shall have occurred and be continuing. (d) Grantor hereby agrees that if the Ground Lease is terminated for any reason in the event of the rejection or disaffirmance of the Ground Lease pursuant to the Bankruptcy Code or any other law affecting creditor’s rights, any Personal Property of Grantor not removed from the Property by Grantor as permitted or required by the Ground Lease, shall at the option of Agent (acting at the direction of the Required Holders), be deemed abandoned by Grantor, provided that
19 AMERICASACTIVE:20959587.4 Agent may remove any such Personal Property required to be removed by Grantor pursuant to the Ground Lease and all documented and out-of-pocket costs and expenses associated with such removal shall be paid by Grantor within five (5) days of receipt by Grantor of an invoice for such removal costs and expenses. Article 16 - STATE-SPECIFIC PROVISIONS Section 16.1. CONSTRUCTION. The terms and provisions set forth below in this Article 16 shall be construed, to the greatest extent possible, consistently with all other provisions set forth in this Security Instrument, and shall be deemed as being in addition to and supplementing all such other terms and provisions of this Security Instrument. However, notwithstanding anything to the contrary set forth elsewhere in this Security Instrument, in the event of any inconsistencies between the terms and conditions of this Article 16 and the other terms and conditions of this Security Instrument, the terms and conditions of this Article 16 shall control and be binding. Section 16.2. FORECLOSURE. (a) Should Agent (acting at the direction of the Required Holders) elect to foreclose by exercise of the power of sale herein contained, Agent shall deliver to Trustee a written declaration of default and demand for sale, and shall deposit with Trustee this Security Instrument and such receipts and evidence of expenditures made and secured hereby as Trustee may require. (b) Upon receipt of notice from Agent, Trustee shall cause to be recorded, published and delivered to Grantor such notice of default and election to sell as is then required by law. Trustee shall, without demand on Grantor, after lapse of such time as may then be required by law and after recordation of such notice of default and after notice of sale having been given as required by law, sell the Property at the time and place of sale fixed by it in said notice of sale, either as a whole, or in separate lots or parcels or items and in such order as Agent (acting at the direction of the Required Holders) may direct Trustee so to do, at public auction to the highest bidder for cash in lawful money of the United States payable at the time of sale. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matter or fact shall be conclusive proof of the truthfulness thereof. Any person, including, without limitation, Grantor, Trustee, Agent or any Agent, may purchase at such sale, and Grantor hereby covenants to warrant and defend the title of such purchaser or purchasers. (c) Subject to applicable law, Trustee may postpone the sale of all or any portion of the Property by public announcement at the time and place of sale, and from time to time thereafter may postpone such sale by public announcement or subsequently noticed sale, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give a new notice of sale. (d) The Property may be sold in one or more parcels and in such manner and order as Agent (acting at the direction of the Required Holders), may direct Trustee so to do. A sale of less than the whole of the Property or any defective or irregular sale made hereunder shall not exhaust the power of sale provided for herein, and subsequent sales may be made hereunder until all
20 AMERICASACTIVE:20959587.4 obligations secured hereby have been satisfied, or the entire Property sold, without defect or irregularity. (e) For the avoidance of doubt, in the event that any provision in this Security Instrument shall be inconsistent with any provision of California law regarding power of sale or foreclosure (the “California Foreclosure Law”), the provisions of the California Foreclosure Law shall take precedence over the provisions of this Security Instrument, but shall not invalidate or render unenforceable any other provision of this Security Instrument that can be construed in a manner consistent with California Foreclosure Law. If any provision of this Security Instrument shall grant to Agent (including Agent acting as a mortgagee-in-possession) or a receiver appointed pursuant to the provisions of this Security Instrument, any rights or remedies prior to, upon or following the occurrence of an Event of Default which are more limited than the rights that would otherwise be vested in Agent or such receiver under the California Foreclosure Law in the absence of said provision, Agent and such receiver shall be vested with the rights granted under the California Foreclosure Law to the full extent permitted by applicable law. (f) Neither the Agent nor Trustee shall incur liability as a result of the sale of Property, or any part thereof in accordance with the requirements of applicable laws and this Section. The Grantor hereby waives any claims against Agent, Trustee and the Secured Parties arising by reason of the fact that the price at which the Property may have been sold was less than the aggregate amount of the Secured Obligations. The Grantor hereby agrees that in respect of any sale of any of the Property pursuant to the terms hereof, the Agent and Trustee are hereby authorized to comply with any limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to avoid any violation of applicable laws, or in order to obtain any required approval of the sale or of the purchaser by any governmental authority or official, and Grantor further agrees that such compliance shall not, in and of itself, result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall Agent or Trustee be liable or accountable to Grantor for any discount allowed by reason of the fact that such Property is sold in compliance with any such limitation or restriction. Section 16.3. SUPPLEMENTAL ENVIRONMENTAL PROVISIONS. If any portion of the Property is determined to be “environmentally impaired” (as “environmentally impaired” is defined in California Code of Civil Procedure Section 726.5(e)(3)) or to be an “affected parcel” (as “affected parcel” is defined in California Code of Civil Procedure Section 726.5(e)(1)), then, without otherwise limiting or in any way affecting Agent’s or Trustee’s rights and remedies under this Security Instrument, Agent may elect to exercise its right under California Code of Civil Procedure Section 726.5(a) to (i) waive its lien on such environmentally impaired or affected portion of the Property, and (ii) exercise the rights and remedies of an unsecured creditor, including reduction of its claim against Grantor to judgment and any other rights and remedies permitted by applicable law. For purposes of determining Agent’s right to proceed as an unsecured creditor under California Code of Civil Procedure Section 726.5(a), Grantor shall be deemed to have willfully permitted or acquiesced in a release or threatened release of hazardous materials, within the meaning of California Code of Civil Procedure Section 726.5(d)(1), if the release or threatened release of hazardous materials was knowingly or negligently caused or contributed to by any lessee, occupant or user of any portion of the Property and Grantor knew of the activity by such lessee, occupant or user which caused or contributed to the release or threatened release. Agent shall have the right to allocate amounts recovered on the Obligations first to those portions thereof
21 AMERICASACTIVE:20959587.4 other than damages and other amounts recoverable under California Code of Civil Procedure Section 736, and thereafter to damages and other amounts recoverable under said Section. Section 16.4. WAIVER OF REDEMPTION, NOTICE AND MARSHALING OF ASSETS. To the fullest extent permitted by applicable law, Grantor hereby irrevocably and unconditionally waives and releases any right to a marshaling of assets or a sale in inverse order of alienation. [NO FURTHER TEXT ON THIS PAGE]
[Signature Page to Leasehold Deed of Trust] IN WITNESS WHEREOF, this Security Instrument has been executed by the undersigned as of the day and year first above written. CALISTOGA RESILIENCY CENTER, LLC, a Delaware limited liability company By: ________________________________________ Name: Title: A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF ) COUNTY OF ) On ______________________, 20____, before me, ____________________________________ (insert name and title of officer) personally appeared ___________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of ________________ that the foregoing paragraph is true and correct. WITNESS my hand and official seal.
23 AMERICASACTIVE:20959587.4 EXHIBIT A LEGAL DESCRIPTION [to be inserted]
Annex I (to Note Agreement) ANNEX I – FINANCIAL MODEL The Financial Model can be accessed at the following link: 2. Calistoga Financial Model_4.3.25_1510_vF.xlsm
Annex II (to Note Agreement) ANNEX II – AMORTIZATION SCHEDULE 8/31/2025 $12,904,734.20 2/28/2026 $398,137.90 8/31/2026 $271,169.80 2/28/2027 $476,595.80 8/31/2027 $440,527.60 2/29/2028 $546,699.50 8/31/2028 $527,651.90 2/28/2029 $632,655.40 8/31/2029 $627,966.40 2/28/2030 $715,356.90 8/31/2030 $715,103.60 2/28/2031 $806,574.60 8/31/2031 $832,231.30 2/29/2032 $916,811.20 4/4/2032 $7,014,149.30
Execution Version EQUITY PURCHASE AGREEMENT This equity purchase agreement is entered into as of March 31, 2025 (this “Agreement”), by and between Energy Vault Holdings, Inc., a Delaware corporation (the “Company”), and Hudson Global Ventures, LLC, a Nevada limited liability company (the “Investor”, and collectively with the Company, the “Parties”). WHEREAS, the Parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the Investor, from time to time as provided herein, and the Investor shall purchase up to Twenty-Five Million Dollars ($25,000,000.00) of the Company’s Common Stock (as defined below); NOW, THEREFORE, the Parties hereto agree as follows: ARTICLE I CERTAIN DEFINITIONS Section 1.1 DEFINED TERMS. As used in this Agreement, the following terms shall have the following meanings specified or indicated (such meanings to be equally applicable to both the singular and plural forms of the terms defined): “Agreement” shall have the meaning specified in the preamble hereof. “Average Daily Trading Value” shall mean the average trading volume of the Company’s Common Stock on the Principal Market during the three (3) Trading Days immediately preceding the respective Put Date multiplied by the lowest closing price of the Company’s Common Stock on the Principal Market during the three (3) Trading Days immediately preceding the respective Put Date. “Bankruptcy Law” means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors. “Claim Notice” shall have the meaning specified in Section 9.3(a). “Clearing Costs” shall mean all fees incurred by the Investor with respect to the Put Shares, including but not limited to fees charged by or paid to any brokerage firm (including commissions), any clearing firm, and Transfer Agent fees, as well as attorney fees of $1,000 per Put. “Clearing Date” shall be the date on which the Investor receives the Put Shares in its brokerage account. “Closing” shall mean one of the closings of a purchase and sale of shares of Common Stock pursuant to Section 2.3.
“Closing Certificate” shall mean the closing certificate of the Company in the form of Exhibit B hereto. “Closing Date” shall mean the date of any Closing hereunder. “Commitment Fee” shall have the meaning specified in Section 10.7. “Commitment Period” shall mean the period commencing on the Execution Date, and ending on the earlier of (i) the date on which the Investor shall have purchased Put Shares pursuant to this Agreement equal to the Maximum Commitment Amount, (ii) twenty-four (24) months after the date of this Agreement, (iii) written notice of termination by the Company to the Investor (which shall not occur at any time that the Investor holds any of the Put Shares), (iv) the Registration Statement is no longer effective after the initial effective date of the Registration Statement, or (v) the date that, pursuant to or within the meaning of any Bankruptcy Law, the Company commences a voluntary case or any Person commences a proceeding against the Company, a Custodian is appointed for the Company or for all or substantially all of its property or the Company makes a general assignment for the benefit of its creditors; provided, however, that the provisions of Articles III, IV, V, VI, IX and the agreements and covenants of the Company and the Investor set forth in Article X shall survive the termination of this Agreement. “Commitment Shares” shall mean 452,000 shares of Common Stock. “Common Stock” shall mean the Company’s common shares, $0.0001 par value per share, and any shares of any other class of common stock whether now or hereafter authorized, having the right to participate in the distribution of dividends (as and when declared) and assets (upon liquidation of the Company). “Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock. “Company” shall have the meaning specified in the preamble to this Agreement. “Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. “Damages” shall mean any loss, claim, damage, liability, cost and expense (including, without limitation, documented attorneys’ fees and disbursements and costs and expenses of expert witnesses and investigation). “Dispute Period” shall have the meaning specified in Section 9.3(a).
“DTC” shall mean The Depository Trust Company, or any successor performing substantially the same function for the Company. “DTC/FAST Program” shall mean the DTC’s Fast Automated Securities Transfer Program. “DWAC” shall mean Deposit Withdrawal at Custodian as defined by the DTC. “DWAC Eligible” shall mean that (a) the Common Stock is eligible at DTC for full services pursuant to DTC’s Operational Arrangements, including, without limitation, transfer through DTC’s DWAC system, (b) the Company has been approved (without revocation) by the DTC’s underwriting department, (c) the Transfer Agent is approved as an agent in the DTC/FAST Program, (d) the Put Shares are otherwise eligible for delivery via DWAC, and (e) the Transfer Agent does not have a policy prohibiting or limiting delivery of the Put Shares, as applicable, via DWAC. “DWAC Shares” means shares of Common Stock that are (i) issued in electronic form, (ii) freely tradable and transferable and without restriction on resale and (iii) timely credited by the Company to the Investor’s or its designee’s specified DWAC account with DTC under the DTC/FAST Program, or any similar program hereafter adopted by DTC performing substantially the same function. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. “Execution Date” shall mean the date of this Agreement. “FINRA” shall mean the Financial Industry Regulatory Authority, Inc. “Investment Amount” shall mean the Put Shares referenced in the Put Notice multiplied by the Purchase Price, minus the Clearing Costs. “Indemnified Party” shall have the meaning specified in Section 9.2. “Indemnifying Party” shall have the meaning specified in Section 9.2. “Indemnity Notice” shall have the meaning specified in Section 9.3(e). “Initial Purchase Price” shall mean 88% of the closing price of the Company’s Common Stock on the Principal Market on the Trading Day immediately preceding the respective Put Date. “Investor” shall have the meaning specified in the preamble to this Agreement. “Lien” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Market Price” shall mean 88% of the lowest closing price of the Company’s Common Stock on the Principal Market on any Trading Day during the Valuation Period, as reported by Quotestream or other reputable source designated by the Investor, subject to adjustment as provided in this Agreement. “Material Adverse Effect” shall mean any effect on the business, operations, properties, or financial condition of the Company and the Subsidiaries that is material and adverse to the Company and the Subsidiaries and/or any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of the Company to enter into and perform its obligations under any Transaction Document. “Maximum Commitment Amount” shall mean Twenty-Five Million Dollars ($25,000,000.00) inclusive of the Commitment Shares. “Person” shall mean an individual, a corporation, a partnership, an association, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. “Principal Market” shall mean any of the national exchanges (i.e. NYSE, NYSE American, and Nasdaq) which is at the time the principal trading platform for the Common Stock (excluding all OTC marketplaces). “Prospectus” shall mean any prospectus (including, without limitation, all amendments and supplements thereto) used by the Company in connection with a Registration Statement. “Prospectus Supplement” shall mean any prospectus supplement to a Prospectus filed with the SEC from time to time pursuant to Rule 424(b) under the Securities Act, including the documents incorporated by reference therein. “Purchase Price” shall mean the lesser of the (i) Initial Purchase Price or (ii) Market Price on such date on which the Purchase Price is calculated in accordance with the terms and conditions of this Agreement. “Put” shall mean the right of the Company to require the Investor to purchase shares of Common Stock, subject to the terms and conditions of this Agreement. “Put Date” shall mean any Trading Day during the Commitment Period that a Put Notice is deemed delivered pursuant to Section 2.2(b). “Put Notice” shall mean a written notice, substantially in the form of Exhibit A hereto, to Investor setting forth the Put Shares which the Company intends to require Investor to purchase pursuant to the terms of this Agreement.
“Put Shares” shall mean all shares of Common Stock issued, or that the Company shall be entitled to issue, per any applicable Put Notice in accordance with the terms and conditions of this Agreement. “Registration Rights Agreement” shall mean that certain registration rights agreement entered into by the Company with the Investor in connection with this Agreement. “Registration Statement” shall mean a registration statement (including any documents incorporated by reference therein) on Form S-1 or Form S-3 or on such other form promulgated by the SEC for which the Company then qualifies and which counsel for the Company shall deem appropriate, and which form shall be available for the registration of the resale by the Investor of the Securities under the Securities Act, which registration statement provides for the resale from time to time of the Securities as provided herein. “Regulation D” shall mean Regulation D promulgated under the Securities Act. “Required Minimum” shall mean, as of any date, the maximum aggregate number of shares of Common Stock potentially issuable at such time pursuant to the Transaction Documents, which shall be calculated on each such date as follows: the then remaining Maximum Commitment Amount divided by the Initial Purchase Price on each such date, ignoring any beneficial ownership limitations set forth herein. “Restricted Period” shall have the meaning set forth in Section 5.2. “Restricted Person” shall have the meaning set forth in Section 5.2. “Rule 144” shall mean Rule 144 under the Securities Act or any similar provision then in force under the Securities Act. “SEC” shall mean the United States Securities and Exchange Commission. “SEC Documents” shall have the meaning specified in Section 4.5. “Securities” means, collectively, the Put Shares and Commitment Shares. “Securities Act” shall mean the Securities Act of 1933, as amended. “Shareholder Approval” shall mean the approval of a sufficient amount of holders of the Company’s Common Stock to satisfy the shareholder approval requirements for such action as provided in New York Stock Exchange Rule 312, to effectuate the transactions contemplated by this Agreement, including but not limited to the issuance of Common Stock under this Agreement, including but not limited to the Put Shares and Commitment Shares, in excess of 30,833,163 shares of Common Stock (representing 19.99% of the aggregate number of shares of Common Stock issued and outstanding as of the Effective Date of this Agreement, subject to appropriate adjustment for any stock dividend, stock split, stock combination, rights offerings,
reclassification or similar transaction that proportionately decreases or increases the Common Stock) (the “Exchange Cap”). “Subsidiary” means any Person the Company wholly-owns or controls, or in which the Company, directly or indirectly, owns a majority of the voting stock or similar voting interest, in each case that would be disclosable pursuant to Item 601(b)(21) of Regulation S-K promulgated under the Securities Act. “Third Party Claim” shall have the meaning specified in Section 9.3(a). “Trading Day” shall mean a day on which the Principal Market shall be open for business. “Transaction Documents” shall mean this Agreement, the Registration Rights Agreement, and all exhibits hereto and thereto. “Transfer Agent” shall mean Continental Stock Transfer & Trust Company, the current transfer agent of the Company, with a mailing address of 1 State Street, 30th floor, New York, New York 10004, and any successor transfer agent of the Company. “Commitment Shares Trigger Condition” shall mean the earlier to occur of (i) the Company fails to terminate this Agreement on or before May 15, 2025 or (ii) the Company delivers a Put Notice to the Investor under this Agreement. “Valuation Period” shall mean the period beginning on the Put Date and continuing through the date that is three (3) Trading Days immediately following the Clearing Date associated with the applicable Put Notice. ARTICLE II PURCHASE AND SALE OF COMMON STOCK Section 2.1 PUTS. Subject to the terms and conditions set forth herein (including, without limitation, the provisions of Article VII), the Company shall have the right, but not the obligation, to direct the Investor, by its delivery to the Investor of a Put Notice from time to time, to purchase Put Shares (i) in a minimum amount not less than $25,000.00 (calculated using the Initial Purchase Price) and (ii) in a maximum amount up to the lesser of (a) $2,500,000.00 (calculated using the Initial Purchase Price) or (b) 200% of the Average Daily Trading Value. Section 2.2 MECHANICS. (a) PUT NOTICE. At any time and from time to time during the Commitment Period, except as provided in this Agreement, the Company may deliver a Put Notice to Investor, subject to satisfaction of the conditions set forth in Section 7.2 and otherwise provided herein. The initial price per share identified in the respective Put Notice shall be equal to the Initial Purchase Price and shall be used for purposes of determining the number of shares of Common Stock that the Company can issue pursuant to a respective Put Notice in accordance
with Section 2.1 of this Agreement. At the end of the Valuation Period, the Purchase Price for the respective Put Shares and Investment Amount shall be established as further provided in this Agreement. The Company shall deliver, or cause to be delivered, the Put Shares as DWAC Shares to the Investor on or before 4:30 p.m. Eastern time, on the Put Date. (b) DATE OF DELIVERY OF PUT NOTICE. A Put Notice shall be deemed delivered on (i) the Trading Day it is received by email by the Investor if such notice is received on or prior to 2:30 p.m. Eastern time, or (ii) the immediately succeeding Trading Day if it is received by email after 2:30 p.m. Eastern time on a Trading Day or at any time on a day which is not a Trading Day. The Company shall not deliver a Put Notice to the Investor during the period beginning on the Put Date of the immediately prior Put Notice and continuing through the date that is three (3) Trading Days following the Clearing Date associated with the immediately prior Put Notice (the “Cooldown Period”), provided, however, that the respective Cooldown Period shall not apply to the immediately prior Put Notice if (i) the Put Shares for the immediately prior Put Notice have been delivered to the Investor pursuant to the terms of this Agreement and (ii) the trading volume of the Common Stock on any Trading Day during the respective Cooldown Period exceeds 300% of the total Put Shares of the immediately prior Put Notice (the “Cooldown Waiver Trigger”). Notwithstanding anything herein to the contrary, all trading volume of the Common Stock on the respective Put Date that occurs prior to the specific time that the Put Notice is delivered to Investor shall not count towards the Cooldown Waiver Trigger. Section 2.3 CLOSINGS. At the end of the Valuation Period, the Purchase Price and Investment Amount for the respective Put Shares shall be established as provided in this Agreement. If the value of the Put Shares delivered to the Investor causes the Company to exceed the Maximum Commitment Amount, then immediately after the Valuation Period the Investor shall return to the Company the surplus amount of Put Shares associated with such Put and the Purchase Price with respect to such Put shall be reduced by any Clearing Costs related to the return of such Put Shares. The Closing of a Put shall occur within two (2) Trading Days following the end of the respective Valuation Period, whereby the Investor shall deliver the Investment Amount by wire transfer of immediately available funds to an account designated by the Company. Section 2.4 PRINCIPAL MARKET REGULATION. The Company shall not effect any issuances or sales of the Put Shares under this Agreement above the Exchange Cap and the Investor shall not have the obligation to purchase Put Shares under this Agreement above the Exchange Cap until the Shareholder Approval has been obtained by the Company and is in effect. Section 2.5 COMPLETION OF RESALE PURSUANT TO THE REGISTRATION STATEMENT. After the Investor has purchased the Maximum Commitment Amount and has completed the subsequent resale of the Maximum Commitment Amount pursuant to the Registration Statement, the Investor will notify the Company in writing (which may be by e-mail) that all subsequent resales are completed and the Company will be under no further obligation to maintain the effectiveness of the Registration Statement. ARTICLE III REPRESENTATIONS AND WARRANTIES OF INVESTOR
The Investor represents and warrants to the Company that: Section 3.1 INTENT. The Investor is entering into this Agreement for its own account and for investment purposes and the Investor has no present arrangement (whether or not legally binding) at any time to sell the Securities to or through any Person in violation of the Securities Act or any applicable state securities laws; provided, however, that the Investor reserves the right to dispose of the Securities at any time in accordance with federal and state securities laws applicable to such disposition. Section 3.2 NO LEGAL ADVICE FROM THE COMPANY. The Investor acknowledges that it has had the opportunity to review this Agreement and the transactions contemplated by this Agreement with its own legal counsel and investment and tax advisors. The Investor is relying solely on such counsel and advisors and not on any statements or representations of the Company or any of its representatives or agents for legal, tax or investment advice with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction. The Investor agrees not to sell, hypothecate or otherwise transfer the Securities except pursuant to the Registration Statement in which the resale of such Securities is registered under the Securities Act, in a manner described under the caption “Plan of Distribution” in such Registration Statement, and in a manner in compliance with all applicable federal and state securities laws, rules and regulations, or unless, in the opinion of counsel reasonably satisfactory to the Company, an exemption from such registration is available. The Investor is acquiring the Securities hereunder in the ordinary course of its business. The Investor acknowledges that it will be disclosed as an “underwriter” and a “selling stockholder” in each Registration Statement and in any Prospectus or Prospectus Supplement to the extent required by applicable law. Section 3.3 ACCREDITED INVESTOR. The Investor is an accredited investor as defined in Rule 501(a)(3) of Regulation D, and the Investor has such experience in business and financial matters that it is capable of evaluating the merits and risks of an investment in the Securities. The Investor acknowledges that an investment in the Securities is speculative and involves a high degree of risk. Section 3.4 AUTHORITY. The Investor has the requisite power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other Transaction Documents and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action and no further consent or authorization of the Investor is required. Each Transaction Document to which it is a party has been duly executed by the Investor, and when delivered by the Investor in accordance with the terms hereof, will constitute the valid and binding obligation of the Investor enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.
Section 3.5 NOT AN AFFILIATE. The Investor is not an officer, director or “affiliate” (as that term is defined in Rule 405 of the Securities Act) of the Company. Section 3.6 ORGANIZATION AND STANDING. The Investor is an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by this Agreement and the other Transaction Documents. Section 3.7 ABSENCE OF CONFLICTS. The execution and delivery of this Agreement and the other Transaction Documents, and the consummation of the transactions contemplated hereby and thereby and compliance with the requirements hereof and thereof, will not (a) violate any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on the Investor, (b) violate any provision of any indenture, instrument or agreement to which the Investor is a party or is subject, or by which the Investor or any of its assets is bound, or conflict with or constitute a material default thereunder, (c) result in the creation or imposition of any lien pursuant to the terms of any such indenture, instrument or agreement, or constitute a breach of any fiduciary duty owed by the Investor to any third party, or (d) require the approval of any third-party (that has not been obtained) pursuant to any material contract, instrument, agreement, relationship or legal obligation to which the Investor is subject or to which any of its assets, operations or management may be subject. Section 3.8 DISCLOSURE; ACCESS TO INFORMATION. The Investor had an opportunity to review copies of the SEC Documents filed on behalf of the Company and has had access to all publicly available information with respect to the Company. Section 3.9 MANNER OF SALE. At no time was the Investor presented with or solicited by or through any leaflet, public promotional meeting, television advertisement or any other form of general solicitation or advertising. Section 3.10 RELIANCE ON EXEMPTIONS. The Investor understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of U.S. federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Investor’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Investor set forth herein in order to determine the availability of such exemptions and the eligibility of the Investor to acquire the Securities. Section 3.11 NO GOVERNMENTAL REVIEW. The Investor understands that no U.S. federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of an investment in the Securities, nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
Section 3.12 NO PRIOR SHORT SALES. Neither the Investor nor any Person acting on behalf of or pursuant to any understanding with the Investor has, directly or indirectly engaged in any transactions in the securities of the Company (including, without limitation, any “short sales” (as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) or hedging transactions involving the Company’s securities) during the period commencing as of the time that the Investor was first in contact with the Company or the Company’s agents regarding the specific investment in the Company contemplated by this Agreement and ending immediately prior to the execution of this Agreement. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY Except as set forth or disclosed in the SEC Documents, the Company represents and warrants to the Investor that: Section 4.1 ORGANIZATION OF THE COMPANY. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in a Material Adverse Effect and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification. Section 4.2 AUTHORITY. The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents. The execution and delivery of this Agreement and the other Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action and no further consent or authorization of the Company or its Board of Directors or stockholders is required. Each of this Agreement and the other Transaction Documents has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application. Section 4.3 CAPITALIZATION. The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase
plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as set forth in the SEC Documents and except as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. Except as disclosed in the SEC Documents, the issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Investor) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders. Section 4.4 LISTING AND MAINTENANCE REQUIREMENTS. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the SEC is contemplating terminating such registration. The Company has not, in the twelve (12) months preceding the date hereof, received an unremediated notice from the Principal Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Principal Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. Section 4.5 SEC DOCUMENTS; DISCLOSURE. Notwithstanding the late filing of the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2024, which report was filed within the fifteen (15) day extension period afforded under the Exchange Act, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the one (1) year preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Documents”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Documents prior to the expiration of any such extension. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and other federal laws, rules and regulations applicable to such SEC Documents, and none of the SEC Documents when filed contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
The financial statements of the Company included in the SEC Documents comply as to form and substance in all material respects with applicable accounting requirements and the published rules and regulations of the SEC or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (except (a) as may be otherwise indicated in such financial statements or the notes thereto or (b) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments). The Company understands and confirms that the Investor will rely on the foregoing representation in effecting transactions in securities of the Company. Section 4.6 VALID ISSUANCES. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid, and non-assessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. Section 4.7 NO CONFLICTS. The execution, delivery and performance of this Agreement and the other Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Securities, do not and will not: (a) result in a violation of the Company’s or any Subsidiary’s certificate or articles of incorporation, by-laws or other organizational or charter documents, (b) conflict with, or constitute a material default (or an event that with notice or lapse of time or both would become a material default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, instrument or any “lock-up” or similar provision of any underwriting or similar agreement to which the Company or any Subsidiary is a party, or (c) result in a violation of any federal, state or local law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or any Subsidiary or by which any property or asset of the Company or any Subsidiary is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect) nor is the Company otherwise in violation of, conflict with or in default under any of the foregoing. The business of the Company is not being conducted in violation of any law, ordinance or regulation of any governmental entity, except for possible violations that either singly or in the aggregate do not and will not have a Material Adverse Effect. The Company is not required under federal, state or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or the other Transaction Documents (other than any SEC, FINRA or state securities filings that may be required to be made by the Company subsequent to any Closing or any registration statement that may be filed pursuant hereto); provided that, for purposes of the representation made in this sentence, the Company is assuming and relying upon the accuracy of the relevant representations and agreements of Investor herein.
Section 4.8 NO MATERIAL ADVERSE CHANGE. No event has occurred that would have a Material Adverse Effect on the Company that has not been disclosed in SEC Documents. Section 4.9 LITIGATION AND OTHER PROCEEDINGS. There are no actions, suits, investigations, inquiries or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties, nor has the Company received any written or oral notice of any such action, suit, proceeding, inquiry or investigation, which would have a Material Adverse Effect. No judgment, order, writ, injunction or decree or award has been issued by or, to the knowledge of the Company, requested of any court, arbitrator or governmental agency which would have a Material Adverse Effect. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company, any Subsidiary or any current or former director or officer of the Company or any Subsidiary. Section 4.10 REGISTRATION RIGHTS. Except as set forth in the SEC Documents and as granted to Investor, no Person (other than the Investor) has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company or any Subsidiary. Section 4.11 NO SOLICITATION; NO BROKERS. The Company represents and warrants that neither the Investor nor its employee(s), member(s), beneficial owner(s), or partner(s) solicited the Company to enter into this Agreement and consummate the transactions described in this Agreement. The Company represents and warrants that the Investor is not required to be registered as a broker-dealer under the Securities Exchange Act of 1934 in order to (i) enter into or consummate the transactions encompassed by the Transaction Documents, (ii) fulfill the Investor’s obligations under the Transaction Documents, or (iii) exercise any of the Investor’s rights under the Transaction Documents (including but not limited to the sale of the Securities). ARTICLE V COVENANTS OF INVESTOR Section 5.1 COMPLIANCE WITH LAW; TRADING IN SECURITIES. The Investor’s trading activities with respect to shares of Common Stock will be in compliance with all applicable state and federal securities laws and regulations and the rules and regulations of FINRA and the Principal Market. Section 5.2 SELLING RESTRICTIONS. Except as expressly set forth below, the Investor covenants that from and after the date hereof through and including the Trading Day immediately following the expiration or termination of this Agreement as provided in Section 10.5 (the “Restricted Period”), none of the Investor, any of its officers, or any entity managed or controlled by the Investor (collectively, the “Restricted Persons” and each of the foregoing is referred to herein as a “Restricted Person”) shall, directly or indirectly, (i) engage in any “short sale” (as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of the
Common Stock or (ii) hedging transaction, which establishes a net short position with respect to any securities of the Company (including the Common Stock), with respect to each of clauses (i) and (ii) hereof, either for its own principal account or for the principal account of any other Restricted Person. Notwithstanding the foregoing, it is expressly understood and agreed that nothing contained herein shall (without implication that the contrary would otherwise be true) prohibit any Restricted Person during the Restricted Period from: (1) selling “long” (as defined under Rule 200 promulgated under Regulation SHO) any Common Stock; or (2) selling a number of Common Stock equal to the number of Put Shares that such Restricted Person is unconditionally obligated to purchase under a pending Put Notice but has not yet received from the Company or the Transfer Agent pursuant to this Agreement. ARTICLE VI COVENANTS OF THE COMPANY Section 6.1 RESERVATION OF COMMON STOCK. The Company shall maintain a reserve from its duly authorized shares of Common Stock equal to the Required Minimum in accordance with the terms of this Agreement. Section 6.2 LISTING OF COMMON STOCK. The Company shall promptly secure the listing of all of the Securities to be issued to the Investor hereunder on the Principal Market (subject to official notice of issuance) and shall maintain the listing of all such Securities from time to time issuable hereunder. The Company shall maintain the listing and trading of the Common Stock on the Principal Market (including, without limitation, maintaining sufficient net tangible assets) and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of FINRA and the Principal Market. Section 6.3 OTHER EQUITY LINES AND TRANSACTIONS. Other than pursuant to agreements disclosed in the SEC Documents as of the date hereof, so long as this Agreement remains in effect, the Company covenants and agrees that it will not, without the prior written consent of the Investor, enter into any other Equity Line of Credit (as defined below) or Variable Rate Transaction (as defined below) with any other party. “Equity Line of Credit” shall mean any transaction involving a written agreement between the Company and an investor or underwriter whereby the Company has the right to “put” its securities to the investor or underwriter over an agreed period of time and at an agreed price or price formula. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) issues securities at a future determined price.
Section 6.4 FILING OF CURRENT REPORT AND REGISTRATION STATEMENT. The Company agrees that it shall file the Transaction Documents either (i) on the first Form 10- Q filed by Company after entry into of the Transaction Documents (to the extent still then in effect), relating to the transactions contemplated by, and describing the material terms and conditions of, the Transaction Documents (the “Quarterly Report”) or (ii) if not then filed on Form 10-Q, prior to the delivery of any Put Notice, on Form 8-K, and include in its Form 10-K a description of the material terms of each Transaction Document entered into at the time of the filing of such Form 10-K. The Company shall permit the Investor to review and comment upon the final pre-filing draft version of the Quarterly Report at least one (1) Trading Day prior to its filing with the SEC, and the Company shall give reasonable consideration to all such comments. The Investor shall use its reasonable best efforts to comment upon the final pre-filing draft version of the Quarterly Report within one (1) Trading Day from the date the Investor receives it from the Company. Section 6.5 NO BROKER-DEALER ACKNOWLEDGEMENT. Absent a final adjudication from a court of competent jurisdiction stating otherwise, the Company shall not to any person, institution, governmental or other entity, state, claim, allege, or in any way assert, that Investor is currently, or ever has been, a broker-dealer under the Securities Exchange Act of 1934. ARTICLE VII CONDITIONS TO DELIVERY OF PUT NOTICES AND CONDITIONS TO CLOSING Section 7.1 CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO ISSUE AND SELL PUT SHARES. In addition to the other provisions of this Agreement, the right of the Company to issue and sell the Put Shares to the Investor is subject to the satisfaction of each of the conditions set forth below: (a) ACCURACY OF INVESTOR’S REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Investor shall be true and correct in all material respects as of the date of this Agreement and as of the date of each Closing as though made at each such time. (b) PERFORMANCE BY INVESTOR. Investor shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Investor at or prior to such Closing. Section 7.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF INVESTOR TO PURCHASE PUT SHARES. The obligation of the Investor hereunder to purchase Put Shares is subject to the satisfaction of each of the following conditions: (a) EFFECTIVE REGISTRATION STATEMENT. The Registration Statement, and any related Prospectus and amendment or supplement thereto, shall remain effective for the resale by the Investor of the Put Shares and Commitment Shares at prevailing
market prices (and not fixed prices) and (i) neither the Company nor the Investor shall have received notice that the SEC has issued or intends to issue a stop order with respect to such Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of such Registration Statement, either temporarily or permanently, or intends or has threatened to do so and (ii) no other suspension of the use of, or withdrawal of the effectiveness of, such Registration Statement or related Prospectus shall exist. (b) ACCURACY OF THE COMPANY’S REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Company shall be true and correct in all material respects as of the date of this Agreement and as of the date of each Closing (except for representations and warranties specifically made as of a particular date). (c) PERFORMANCE BY THE COMPANY. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company, including but not limited to the delivery of the Put Shares as provided in Section 2.2(a) of this Agreement. (d) NO INJUNCTION. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or adopted by any court or governmental authority of competent jurisdiction that prohibits or directly and materially adversely affects any of the transactions contemplated by the Transaction Documents, and no proceeding shall have been commenced that may have the effect of prohibiting or materially adversely affecting any of the transactions contemplated by the Transaction Documents. (e) ADVERSE CHANGES. Since the date of filing of the Company’s most recent SEC Document, no event that had or is reasonably likely to have a Material Adverse Effect has occurred. (f) NO SUSPENSION OF TRADING IN OR DELISTING OF COMMON STOCK. The trading of the Common Stock shall not have been suspended by the SEC, the Principal Market or FINRA, or otherwise halted for any reason, and the Common Stock shall have been approved for listing on and shall not have been delisted from the Principal Market. In the event of a suspension, delisting, or halting for any reason, of the trading of the Common Stock, as contemplated by this Section 7.2(f), the Investor shall have the right to return to the Company any remaining amount of Put Shares associated with such Put, and the Purchase Price with respect to such Put shall be reduced accordingly. (g) BENEFICIAL OWNERSHIP LIMITATION. The number of Put Shares then to be purchased by the Investor shall not exceed the number of such shares that, when aggregated with all other shares of Common Stock then owned by the Investor beneficially or deemed beneficially owned by the Investor, would result in the Investor owning more than the Beneficial Ownership Limitation (as defined below), as determined in accordance with Section 16 of the Exchange Act and the regulations promulgated thereunder. For purposes of this Section 7.2(g), in the event that the amount of Common Stock outstanding, as determined in accordance with Section 16 of the Exchange Act and the regulations promulgated thereunder, is
greater on a Closing Date than on the date upon which the Put Notice associated with such Closing Date is given, the amount of Common Stock outstanding on such Closing Date shall govern for purposes of determining whether the Investor, when aggregating all purchases of Common Stock made pursuant to this Agreement, would own more than the Beneficial Ownership Limitation following such Closing Date. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable pursuant to a Put Notice. (h) PENNY STOCK. The Common Stock shall not be deemed to be a “penny stock” as defined in SEC Rule 240.3a51-1 (17 CFR § 240.3a51-1). In the event that the Common Stock becomes a “penny stock” prior to the closing of a respective Put, the Investor shall have the right to return to the Company up to all of the Put Shares associated with such Put, and the Purchase Price with respect to such Put shall be reduced accordingly. (i) NO KNOWLEDGE. The Company shall have no knowledge of any event more likely than not to have the effect of causing the Registration Statement to be suspended or otherwise ineffective (which event is more likely than not to occur within the fifteen (15) Trading Days following the Trading Day on which such Put Notice is deemed delivered). (j) NO VIOLATION OF SHAREHOLDER APPROVAL REQUIREMENT. The issuance of the Put Shares shall not violate the shareholder approval requirements of the Principal Market, including but not limited to as contemplated by Section 2.4 of this Agreement. (k) OFFICER’S CERTIFICATE. On the date of delivery of each Put Notice, the Investor shall have received the Closing Certificate executed by an executive officer of the Company and to the effect that all the conditions to such Closing shall have been satisfied as of the date of each such certificate. (l) DWAC ELIGIBLE. The Common Stock must be DWAC Eligible and not subject to a “DTC chill.” (m) SEC DOCUMENTS. All reports, schedules, registrations, forms, statements, information and other documents required to have been filed by the Company with the SEC pursuant to the reporting requirements of the Exchange Act shall have been filed with the SEC within the applicable time periods prescribed for such filings under the Exchange Act. (n) RESERVE. The Company shall have reserved the Required Minimum for the Investor’s benefit under this Agreement and the Company shall have satisfied the reserve requirements with respect to all other contracts between the Company and Investor. (o) MINIMUM PRICING. The lowest traded price of the Common Stock in the ten (10) Trading Days immediately preceding the respective Put Date must exceed $0.15 per share. (p) BANKRUPTCY. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law
or any law for the relief of debtors shall not be instituted by or against the Company or any subsidiary of the Company (the “Bankruptcy Proceedings”), and the Company shall have no knowledge of any event more likely than not to have the effect of causing Bankruptcy Proceedings to arise. In the event of Bankruptcy Proceedings as contemplated by this Section 7.2(p), the Investor shall have the right to return to the Company any remaining amount of Put Shares associated with such Put, and the Purchase Price with respect to such Put shall be reduced accordingly. (q) REGISTRATION RIGHTS AGREEMENT. Prior to any delivery of a Put Notice, the Company will enter into a customary registration rights agreement, reasonably acceptable to Investor. ARTICLE VIII LEGENDS Section 8.1 NO RESTRICTIVE STOCK LEGEND. No restrictive stock legend shall be placed on the share certificates representing the Put Shares so long as there is an effective Registration Statement covering the resale of such Put Shares (it being understood and agreed by the Investor that notwithstanding the lack of restrictive legends, the Investor may only sell such Put Shares pursuant to the Plan of Distribution set forth in the Prospectus included in the Registration Statement and otherwise in compliance with the requirements of the Securities Act (including any applicable prospectus delivery requirements)). Section 8.2 INVESTOR’S COMPLIANCE. Nothing in this Article VIII shall affect in any way the Investor’s obligations hereunder to comply with all applicable securities laws upon the sale of the Common Stock. ARTICLE IX NOTICES; INDEMNIFICATION Section 9.1 NOTICES. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (a) personally served, (b) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (c) delivered by reputable air courier service with charges prepaid, or (d) transmitted by hand delivery, telegram, or email as a PDF, addressed as set forth below or to such other address as such party shall have specified most recently by written notice given in accordance herewith. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (i) upon hand delivery or delivery by email at the address designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (ii) on the second business day following the date of mailing by express courier service or on the fifth business day after deposited in the mail, in each case, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:
If to the Company: Energy Vault Holdings, Inc. 4360 Park Terrace Drive, Suite 100 Westlake Village, CA 91361 Email: Michael.Beer@energyvault.com Attention: Michael Beer with a copy (which shall not constitute notice) to: Latham & Watkins LLP 300 Colorado St. Suite 2400 Austin, TX 78701 Email: Samuel.Rettew@lw.com Attention: Samuel Rettew If to the Investor: Hudson Global Ventures, LLC Email: info@hudsonventuresllc.com Attention: Seth Ahdoot Either party hereto may from time to time change its address or email for notices under this Section 9.1 by giving at least ten (10) days’ prior written notice of such changed address to the other party hereto. Section 9.2 INDEMNIFICATION. Each party (an “Indemnifying Party”) agrees to indemnify and hold harmless the other party along with its officers, directors, employees, and authorized agents, and each Person or entity, if any, who controls such party within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (an “Indemnified Party”) from and against any Damages, joint or several, and any action in respect thereof to which the Indemnified Party becomes subject to, resulting from, arising out of or relating to (i) any misrepresentation, breach of warranty or nonfulfillment of or failure to perform any covenant or agreement on the part of the Indemnifying Party contained in this Agreement, (ii) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment thereof or supplement thereto, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading to the extent of any sales pursuant to this Agreement, (iii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in the light of the circumstances under which the statements therein were made, not misleading to the
extent of any sales pursuant to this Agreement, or (iv) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation under the Securities Act, the Exchange Act or any state securities law, as such Damages are incurred, except to the extent such Damages result primarily from the Indemnified Party’s failure to perform any covenant or agreement contained in this Agreement or the Indemnified Party’s negligence, recklessness or bad faith in performing its obligations under this Agreement to the extent of any sales pursuant to this Agreement; provided, however, that the foregoing indemnity agreement shall not apply to any Damages of an Indemnified Party to the extent, but only to the extent, arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made by an Indemnifying Party in reliance upon and in conformity with written information furnished to the Indemnifying Party by the Indemnified Party expressly for use in the Registration Statement, any post-effective amendment thereof or supplement thereto, or any preliminary prospectus or final prospectus (as amended or supplemented). Section 9.3 METHOD OF ASSERTING INDEMNIFICATION CLAIMS. All claims for indemnification by any Indemnified Party under Section 9.2 shall be asserted and resolved as follows: (a) In the event any claim or demand in respect of which an Indemnified Party might seek indemnity under Section 9.2 is asserted against or sought to be collected from such Indemnified Party by a Person other than a party hereto or an affiliate thereof (a “Third Party Claim”), the Indemnified Party shall deliver a written notification, enclosing a copy of all papers served, if any, and specifying the nature of and basis for such Third Party Claim and for the Indemnified Party’s claim for indemnification that is being asserted under any provision of Section 9.2 against an Indemnifying Party, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such Third Party Claim (a “Claim Notice”) with reasonable promptness to the Indemnifying Party. If the Indemnified Party fails to provide the Claim Notice with reasonable promptness after the Indemnified Party receives notice of such Third Party Claim, the Indemnifying Party shall not be obligated to indemnify the Indemnified Party with respect to such Third Party Claim to the extent that the Indemnifying Party’s ability to defend has been prejudiced by such failure of the Indemnified Party. The Indemnifying Party shall notify the Indemnified Party as soon as practicable within the period ending thirty (30) calendar days following receipt by the Indemnifying Party of either a Claim Notice or an Indemnity Notice (as defined below) (the “Dispute Period”) whether the Indemnifying Party disputes its liability or the amount of its liability to the Indemnified Party under Section 9.2 and whether the Indemnifying Party desires, at its sole cost and expense, to defend the Indemnified Party against such Third Party Claim. (i) If the Indemnifying Party notifies the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the Indemnified Party with respect to the Third Party Claim pursuant to this Section 9.3(a), then the Indemnifying Party shall have the right to defend, with counsel reasonably satisfactory to the Indemnified Party, at the sole cost and expense of the Indemnifying Party, such Third Party Claim by all appropriate proceedings, which proceedings shall be vigorously and diligently prosecuted by the Indemnifying Party to a final conclusion or will be settled at the discretion of the Indemnifying
Party (but only with the consent of the Indemnified Party in the case of any settlement that provides for any relief other than the payment of monetary damages or that provides for the payment of monetary damages as to which the Indemnified Party shall not be indemnified in full pursuant to Section 9.2). The Indemnifying Party shall have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that the Indemnified Party may, at the sole cost and expense of the Indemnified Party, at any time prior to the Indemnifying Party’s delivery of the notice referred to in the first sentence of this clause (i), file any motion, answer or other pleadings or take any other action that the Indemnified Party reasonably believes to be necessary or appropriate to protect its interests; and provided, further, that if requested by the Indemnifying Party, the Indemnified Party will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnifying Party in contesting any Third Party Claim that the Indemnifying Party elects to contest. The Indemnified Party may participate in, but not control, any defense or settlement of any Third Party Claim controlled by the Indemnifying Party pursuant to this clause (i), and except as provided in the preceding sentence, the Indemnified Party shall bear its own costs and expenses with respect to such participation. Notwithstanding the foregoing, the Indemnified Party may takeover the control of the defense or settlement of a Third Party Claim at any time if it irrevocably waives its right to indemnity under Section 9.2 with respect to such Third Party Claim. (ii) If the Indemnifying Party fails to notify the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the Third Party Claim pursuant to Section 9.3(a), or if the Indemnifying Party gives such notice but fails to prosecute vigorously and diligently or settle the Third Party Claim, or if the Indemnifying Party fails to give any notice whatsoever within the Dispute Period, then the Indemnified Party shall have the right to defend, at the sole cost and expense of the Indemnifying Party, the Third Party Claim by all appropriate proceedings, which proceedings shall be prosecuted by the Indemnified Party in a reasonable manner and in good faith or will be settled at the discretion of the Indemnified Party(with the consent of the Indemnifying Party, which consent will not be unreasonably withheld). The Indemnified Party will have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that if requested by the Indemnified Party, the Indemnifying Party will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnified Party and its counsel in contesting any Third Party Claim which the Indemnified Party is contesting. Notwithstanding the foregoing provisions of this clause (ii), if the Indemnifying Party has notified the Indemnified Party within the Dispute Period that the Indemnifying Party disputes its liability or the amount of its liability hereunder to the Indemnified Party with respect to such Third Party Claim and if such dispute is resolved in favor of the Indemnifying Party in the manner provided in clause (iii) below, the Indemnifying Party will not be required to bear the costs and expenses of the Indemnified Party’s defense pursuant to this clause (ii) or of the Indemnifying Party’s participation therein at the Indemnified Party’s request, and the Indemnified Party shall reimburse the Indemnifying Party in full for all reasonable costs and expenses incurred by the Indemnifying Party in connection with such litigation. The Indemnifying Party may participate in, but not control, any defense or settlement controlled by the Indemnified Party pursuant to this clause (ii), and the Indemnifying Party shall bear its own costs and expenses with respect to such participation.
(iii) If the Indemnifying Party notifies the Indemnified Party that it does not dispute its liability or the amount of its liability to the Indemnified Party with respect to the Third Party Claim under Section 9.2 or fails to notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes its liability or the amount of its liability to the Indemnified Party with respect to such Third Party Claim, the amount of Damages specified in the Claim Notice shall be conclusively deemed a liability of the Indemnifying Party under Section 9.2 and the Indemnifying Party shall pay the amount of such Damages to the Indemnified Party on demand. If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute; provided, however, that if the dispute is not resolved within thirty (30) days after the Claim Notice, the Indemnifying Party shall be entitled to institute such legal action as it deems appropriate. (b) In the event any Indemnified Party should have a claim under Section 9.2 against the Indemnifying Party that does not involve a Third Party Claim, the Indemnified Party shall deliver a written notification of a claim for indemnity under Section 9.2 specifying the nature of and basis for such claim, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such claim (an “Indemnity Notice”) with reasonable promptness to the Indemnifying Party. The failure by any Indemnified Party to give the Indemnity Notice shall not impair such party’s rights hereunder except to the extent that the Indemnifying Party demonstrates that it has been irreparably prejudiced thereby. If the Indemnifying Party notifies the Indemnified Party that it does not dispute the claim or the amount of the claim described in such Indemnity Notice or fails to notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes the claim or the amount of the claim described in such Indemnity Notice, the amount of Damages specified in the Indemnity Notice will be conclusively deemed a liability of the Indemnifying Party under Section 9.2 and the Indemnifying Party shall pay the amount of such Damages to the Indemnified Party on demand. If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute; provided, however, that if the dispute is not resolved within thirty (30) days after the Claim Notice, the Indemnifying Party shall be entitled to institute such legal action as it deems appropriate. (c) The Indemnifying Party agrees to pay the Indemnified Party, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. (d) The indemnity provisions contained herein shall be in addition to (i) any cause of action or similar rights of the Indemnified Party against the Indemnifying Party or others, and (ii) any liabilities the Indemnifying Party may be subject to.
ARTICLE X MISCELLANEOUS Section 10.1 ARBITRATION OF CLAIMS; GOVERNING LAW; JURISDICTION. The Company and Investor shall submit all Claims (as defined in Exhibit C of this Agreement) (the “Claims”) arising under this Agreement or any other agreement between the Company and Investor or their respective affiliates (including but not limited to the Transaction Documents) or any Claim relating to the relationship of the Company and Investor or their respective affiliates to binding arbitration pursuant to the arbitration provisions set forth in Exhibit C of the Agreement (the “Arbitration Provisions”). The Company and Investor hereby acknowledge and agree that the Arbitration Provisions are unconditionally binding on the Company and Investor hereto and are severable from all other provisions of this Agreement. By executing this Agreement, Company represents, warrants and covenants that Company has reviewed the Arbitration Provisions carefully, consulted with legal counsel about such provisions (or waived its right to do so), understands that the Arbitration Provisions are intended to allow for the expeditious and efficient resolution of any dispute hereunder, agrees to the terms and limitations set forth in the Arbitration Provisions, and that Company will not take a position contrary to the foregoing representations. Company acknowledges and agrees that Investor may rely upon the foregoing representations and covenants of Company regarding the Arbitration Provisions. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed by, the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. The Company and Investor consent to and expressly agree that the exclusive venue for arbitration of any Claims arising under this Agreement or any other agreement between the Company and Investor or their respective affiliates (including but not limited to the Transaction Documents) or any Claim relating to the relationship of the Company and Investor or their respective affiliates shall be in the State of Delaware. Without modifying the Company’s and Investor’s mandatory obligations to resolve disputes hereunder pursuant to the Arbitration Provisions, for any litigation arising in connection with any of the Transaction Documents (and notwithstanding the terms (specifically including any governing law and venue terms) of any transfer agent services agreement or other agreement between the Company’s transfer agent and the Company, such litigation specifically includes, without limitation any action between or involving Company and the Company’s transfer agent related to Investor in any way (specifically including, without limitation, any action where Company seeks to obtain an injunction, temporary restraining order, or otherwise prohibit the Company’s transfer agent from issuing shares of Common Stock to Investor for any reason)), each party hereto hereby (i) consents to and expressly submits to the exclusive personal jurisdiction of any state or federal court sitting in the State of Delaware, (ii) expressly submits to the exclusive venue of any such court for the purposes hereof, (iii) agrees to not bring any such action (specifically including, without limitation, any action where Company seeks to obtain an injunction, temporary restraining order, or otherwise prohibit the Company’s transfer agent from issuing shares of Common Stock to Investor for any reason) outside of any state or federal court sitting in the State of Delaware, and (iv) waives any claim of improper venue and any claim or objection that such courts are an inconvenient forum or any other claim, defense or objection to the bringing
of any such proceeding in such jurisdiction or to any claim that such venue of the suit, action or proceeding is improper. Notwithstanding anything in the foregoing to the contrary, nothing herein shall limit, or shall be deemed or construed to limit, the ability of the Investor to realize on any collateral or any other security, or to enforce a judgment or other court ruling in favor of the Investor, including through a legal action in any court of competent jurisdiction. The Company hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any objection to jurisdiction and venue of any action instituted hereunder, any claim that it is not personally subject to the jurisdiction of any such court, and any claim that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper (including but not limited to based upon forum non conveniens). THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY. The Company irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other agreement, certificate, instrument or document contemplated hereby or thereby by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to Company at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. The prevailing party in any action or dispute brought in connection with this Agreement or any other agreement, certificate, instrument or document contemplated hereby or thereby shall be entitled to recover from the other party its reasonable attorney’s fees and costs. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. Section 10.2 PAYMENT SET ASIDE. Further, to the extent that the (i) Company makes a payment or payments to the Investor pursuant to this Agreement or any other agreement, certificate, instrument or document contemplated hereby or thereby, or (ii) the Investor enforces or exercises its rights pursuant to this Agreement or any other agreement, certificate, instrument or document contemplated hereby or thereby (including but not limited to the sale of the Securities), and such payment or payments or the proceeds of such enforcement or exercise or any part thereof (including but not limited to the sale of the Securities) are for any reason (i) subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, or disgorged by the Investor, or (ii) are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver, government entity, or any other person or entity under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then (i) to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred and (ii) the Company shall immediately pay to the Investor a dollar amount equal to the amount that was for any reason (i) subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, or disgorged by the Investor, or (ii) required to be
refunded, repaid or otherwise restored to the Company, a trustee, receiver, government entity, or any other person or entity under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action). Section 10.3 ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the Company and the Investor and their respective successors. Neither this Agreement nor any rights of the Investor or the Company hereunder may be assigned by either party to any other Person. Section 10.4 NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of the Company and the Investor and their respective successors, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as set forth in Section 9.3. Section 10.5 TERMINATION. The Company may terminate this Agreement at any time by written notice to the Investor, except during any Valuation Period or during the seven (7) Trading Day period after any Valuation Period. In addition, this Agreement shall automatically terminate at the end of the Commitment Period. Notwithstanding anything in this Agreement to the contrary, (i) the provisions of Articles III, IV, VI, IX of this Agreement and the agreements and covenants of the Company and the Investor set forth in Article X of this Agreement shall survive the termination of this Agreement, (ii) the Investor shall retain all rights to the Commitment Shares even if this Agreement is terminated if the Commitment Shares Trigger Condition has occurred, and (iii) the Investor shall retain all rights to the Legal Fee and Commitment Fee even if this Agreement is terminated. Section 10.6 ENTIRE AGREEMENT. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the Company and the Investor with respect to the matters covered herein and therein and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the Parties acknowledge have been merged into such documents, exhibits and schedules. Section 10.7 FEES AND EXPENSES. Except as expressly set forth in the Transaction Documents or any other writing to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Investor. If the Commitment Shares Trigger Condition occurs, then the Company shall issue the Commitment Shares to Investor within one (1) Trading Day of the date of the occurrence of the Commitment Shares Trigger Condition (the “Trigger Date”), for its commitment to enter into this Agreement. The Commitment Shares shall be earned in full on the Trigger Date. In addition, the Company shall pay $15,000.00 (the “Legal Fee”) to legal counsel of the Investor on the date of this Agreement for Investor’s expenses relating to the preparation of this Agreement, and shall cause to be paid to the Investor a commitment fee in an amount equal to $200,000.00 (the “Commitment Fee”) by wire transfer of immediately
available funds to an account designated by the Investor by written notice to the Company on or prior to the date of this Agreement. For the avoidance of doubt, the Legal Fee and Commitment Fee shall be fully earned by the Investor as of the date of this Agreement and is not contingent upon any other event or condition, including but not limited to the effectiveness of the Registration Statement or the Company’s submission of a Put Notice to the Investor. Section 10.8 COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which may be executed by less than all of the Parties and shall be deemed to be an original instrument which shall be enforceable against the Parties actually executing such counterparts and all of which together shall constitute one and the same instrument. This Agreement may be delivered to the other Parties hereto by email of a copy of this Agreement bearing the signature of the Parties so delivering this Agreement. Section 10.9 SEVERABILITY. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that such severability shall be ineffective if it materially changes the economic benefit of this Agreement to any party. Section 10.10 FURTHER ASSURANCES. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. Section 10.11 NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed to be the language chosen by the Parties to express their mutual intent, and no rules of strict construction will be applied against any party. Section 10.12 EQUITABLE RELIEF. The Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under this Agreement, any remedy at law may prove to be inadequate relief to the Investor. The Company therefore agrees that the Investor shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages. Section 10.13 TITLE AND SUBTITLES. The titles and subtitles used in this Agreement are used for the convenience of reference and are not to be considered in construing or interpreting this Agreement. Section 10.14 AMENDMENTS; WAIVERS. No provision of this Agreement may be amended or waived by the Parties from and after the date that is one (1) Trading Day immediately preceding the initial filing of the Registration Statement with the SEC. Subject to the immediately preceding sentence, (i) no provision of this Agreement may be amended other than by a written instrument signed by both Parties hereto and (ii) no provision of this Agreement may be waived other than in a written instrument signed by the party against whom enforcement of such waiver is sought. No failure or delay in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. Section 10.15 PUBLICITY. The Company and the Investor shall consult with each other in issuing any press releases or otherwise making public statements with respect to the transactions contemplated hereby and no party shall issue any such press release or otherwise make any such public statement, other than as required by law, without the prior written consent of the other Parties, which consent shall not be unreasonably withheld or delayed, except that no prior consent shall be required if such disclosure is required by law, in which such case the disclosing party shall provide the other party with prior notice of such public statement. Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Investor without the prior written consent of the Investor, except to the extent required by law. The Investor acknowledges that this Agreement and all or part of the Transaction Documents may be deemed to be “material contracts,” as that term is defined by Item 601(b)(10) of Regulation S-K, and that the Company may therefore be required to file such documents as exhibits to reports or registration statements filed under the Securities Act or the Exchange Act. The Investor further agrees that the status of such documents and materials as material contracts shall be determined solely by the Company, in consultation with its counsel. [Signature Page Follows]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. THE COMPANY: ENERGY VAULT HOLDINGS, INC. By:______________________ Name: Michael Beer Title: Chief Financial Officer INVESTOR: HUDSON GLOBAL VENTURES, LLC By:______________________ Name: Seth Ahdoot Title: Member [Signature Page to equity purchase agreement]
EXHIBIT A FORM OF PUT NOTICE TO: HUDSON GLOBAL VENTURES, LLC DATE: ____________________ We refer to the equity purchase agreement, dated March 31, 2025 (the “Agreement”), entered into by and between Energy Vault Holdings, Inc. and you. Capitalized terms defined in the Agreement shall, unless otherwise defined herein, have the same meaning when used herein. We hereby: 1) Give you notice that we require you to purchase ____________ Put Shares pursuant to the Agreement; and 2) The Initial Purchase Price pursuant to the Agreement is ____________; and 2) Certify that, as of the date hereof, the conditions set forth in Section 7.2 of the Agreement are satisfied. ENERGY VAULT HOLDINGS, INC. By: _______________________ Name: Michael Beer Title: Chief Financial Officer
EXHIBIT B FORM OF OFFICER’S CERTIFICATE OF ENERGY VAULT HOLDINGS, INC. Pursuant to Section 7.2(k) of that certain equity purchase agreement, dated March 31, 2025 (the “Agreement”), by and between Energy Vault Holdings, Inc. (the “Company”) and Hudson Global Ventures, LLC (the “Investor”), the undersigned, in his capacity as Chief Financial Officer of the Company, and not in his individual capacity, hereby certifies, as of the date hereof (such date, the “Condition Satisfaction Date”), the following: 1. The representations and warranties of the Company are true and correct in all material respects as of the Condition Satisfaction Date as though made on the Condition Satisfaction Date (except for representations and warranties specifically made as of a particular date) with respect to all periods, and as to all events and circumstances occurring or existing to and including the Condition Satisfaction Date, except for any conditions which have temporarily caused any representations or warranties of the Company set forth in the Agreement to be incorrect and which have been corrected with no continuing impairment to the Company or the Investor; and 2. All of the conditions precedent to the obligation of the Investor to purchase Put Shares set forth in the Agreement, including but not limited to Section 7.2 of the Agreement, have been satisfied as of the Condition Satisfaction Date. Capitalized terms used herein shall have the meanings set forth in the Agreement unless otherwise defined herein. IN WITNESS WHEREOF, the undersigned has hereunto affixed his hand as of the ________, 20__. By: _______________________ Name: Michael Beer Title: Chief Financial Officer
EXHIBIT C ARBITRATION PROVISIONS 1. Dispute Resolution. Each party consents to and expressly agrees that the exclusive venue for arbitration of any dispute arising out of or relating to any of the Transaction Documents or the relationship of the parties or their affiliates shall be in the State of Delaware. For purposes of this Exhibit C, the term “Claims” means any disputes, claims, demands, causes of action, requests for injunctive relief, requests for specific performance, questions regarding severability of any provisions of the Transaction Documents, liabilities, damages, losses, or controversies whatsoever arising from, related to, or connected with the transactions contemplated in the Transaction Documents and any communications between the parties related thereto, including without limitation any claims of mutual mistake, mistake, fraud, misrepresentation, failure of formation, failure of consideration, promissory estoppel, unconscionability, failure of condition precedent, rescission, and any statutory claims, tort claims, contract claims, or claims to void, invalidate or terminate the Agreement (or these Arbitration Provisions (defined below)) or any of the other Transaction Documents. The parties to this Agreement (the “parties”) hereby agree that the Claims may be arbitrated in one or more Arbitrations pursuant to these Arbitration Provisions (one for an injunction or injunctions and a separate one for all other Claims). The parties hereby agree that the arbitration provisions set forth in this Exhibit C (“Arbitration Provisions”) are binding on each of them. As a result, any attempt to rescind the Agreement (or these Arbitration Provisions) or any other Transaction Document or declare the Agreement (or these Arbitration Provisions) or any other Transaction Document invalid or unenforceable pursuant to Section 29 of the 1934 Act or for any other reason is subject to these Arbitration Provisions. These Arbitration Provisions shall also survive any termination or expiration of the Agreement. Any capitalized term not defined in these Arbitration Provisions shall have the meaning set forth in the Agreement. 2. Arbitration. Except as otherwise provided herein, all Claims must be submitted to arbitration (“Arbitration”) to be conducted exclusively in the State of Delaware and pursuant to the terms set forth in these Arbitration Provisions. Subject to the arbitration appeal right provided for in Paragraph 5 below (the “Appeal Right”), the parties agree that the award of the arbitrator rendered pursuant to Paragraph 4 below (the “Arbitration Award”) shall be (a) final and binding upon the parties, (b) the sole and exclusive remedy between them regarding any Claims, counterclaims, issues, or accountings presented or pleaded to the arbitrator, and (c) promptly payable in United States dollars free of any tax, deduction or offset (with respect to monetary awards). Subject to the Appeal Right, any costs or fees, including without limitation attorneys’ fees, incurred in connection with or incident to enforcing the Arbitration Award shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement. Judgment upon the Arbitration Award will be entered and enforced by any state or federal court sitting in the State of Delaware. 3. The Arbitration Act. The parties hereby incorporate herein the provisions and procedures set forth in the Delaware Uniform Arbitration Act, Chapter 38 (as amended or superseded from time to time, the “Arbitration Act”). Notwithstanding the foregoing, pursuant to, and to the maximum extent permitted by, the Arbitration Act, in the event of conflict or variation between the terms of these Arbitration Provisions and the provisions of the Arbitration Act, the terms of these Arbitration Provisions shall control and the parties hereby waive or otherwise agree to vary the effect of all requirements of the Arbitration Act that may conflict with or vary from these Arbitration Provisions. 4. Arbitration Proceedings. Arbitration between the parties will be subject to the following: 4.1 Initiation of Arbitration. Pursuant to the Arbitration Act, the parties agree that a party may initiate Arbitration by giving written notice to the other party (“Arbitration Notice”) in the same manner that notice is permitted under Section 8(f) of the Agreement; provided, however, that the Arbitration Notice may not be given by email or fax. Arbitration will be deemed initiated as of the date that the Arbitration Notice is deemed physically delivered to such other party under Section 8(f) of the Agreement (the “Service Date”). After the Service Date, information may be delivered, and notices may be given, by email or fax pursuant to Section 8(f) of the Agreement or any other method permitted thereunder. The Arbitration Notice must describe the nature of the controversy, the remedies sought, and the election to commence Arbitration proceedings. All Claims in the Arbitration Notice must be pleaded consistent with the Delaware Rules of Civil Procedure. 4.2 Selection and Payment of Arbitrator. (a) Within ten (10) calendar days after the Service Date, Investor shall select and submit to Company the names of three (3) arbitrators that are designated as “neutrals” or qualified arbitrators by JAMS (https://www.jamsadr.com/) or other arbitration service provider agreed upon by the parties (such three (3) designated persons hereunder are referred to herein as the “Proposed Arbitrators”). For the avoidance of doubt, each Proposed
Arbitrator must be qualified as a “neutral” with JAMS or other arbitration service provider agreed upon by the parties. Within five (5) calendar days after Investor has submitted to Company the names of the Proposed Arbitrators, Company must select, by written notice to Investor, one (1) of the Proposed Arbitrators to act as the arbitrator for the parties under these Arbitration Provisions. If Company fails to select one of the Proposed Arbitrators in writing within such 5-day period, then Investor may select the arbitrator from the Proposed Arbitrators by providing written notice of such selection to Company. (b) If Investor fails to submit to Company the Proposed Arbitrators within ten (10) calendar days after the Service Date pursuant to subparagraph (a) above, then Company may at any time prior to Investor so designating the Proposed Arbitrators, identify the names of three (3) arbitrators that are designated as “neutrals” or qualified arbitrators by JAMS or other arbitration service provider agreed upon by the parties by written notice to Investor. Investor may then, within five (5) calendar days after Company has submitted notice of its Proposed Arbitrators to Investor, select, by written notice to Company, one (1) of the Proposed Arbitrators to act as the arbitrator for the parties under these Arbitration Provisions. If Investor fails to select in writing and within such 5-day period one (1) of the three (3) Proposed Arbitrators selected by Company, then Company may select the arbitrator from its three (3) previously selected Proposed Arbitrators by providing written notice of such selection to Investor. (c) If a Proposed Arbitrator chosen to serve as arbitrator declines or is otherwise unable to serve as arbitrator, then the party that selected such Proposed Arbitrator may select one (1) of the other three (3) Proposed Arbitrators within three (3) calendar days of the date the chosen Proposed Arbitrator declines or notifies the parties he or she is unable to serve as arbitrator. If all three (3) Proposed Arbitrators decline or are otherwise unable to serve as arbitrator, then the arbitrator selection process shall begin again in accordance with this Paragraph 4.2. (d) The date that the Proposed Arbitrator selected pursuant to this Paragraph 4.2 agrees in writing (including via email) delivered to both parties to serve as the arbitrator hereunder is referred to herein as the “Arbitration Commencement Date”. If an arbitrator resigns or is unable to act during the Arbitration, a replacement arbitrator shall be chosen in accordance with this Paragraph 4.2 to continue the Arbitration. If JAMS or other arbitration service provider agreed upon by the parties ceases to exist or to provide a list of neutrals and there is no successor thereto, then the arbitrator shall be selected under the then prevailing rules of the American Arbitration Association. (e) Subject to Paragraph 4.10 below, the cost of the arbitrator must be paid equally by both parties. Subject to Paragraph 4.10 below, if one party refuses or fails to pay its portion of the arbitrator fee, then the other party can advance such unpaid amount, with such amount being added to or subtracted from, as applicable, the Arbitration Award. 4.3 Applicability of Certain Delaware Rules. The parties agree that the Arbitration shall be conducted generally in accordance with the Delaware Rules of Civil Procedure and the Delaware Rules of Evidence. More specifically, the Delaware Rules of Civil Procedure shall apply, without limitation, to the filing of any pleadings, motions or memoranda, the conducting of discovery, and the taking of any depositions. The Delaware Rules of Evidence shall apply to any hearings, whether telephonic or in person, held by the arbitrator. Notwithstanding the foregoing, it is the parties’ intent that the incorporation of such rules will in no event supersede these Arbitration Provisions. In the event of any conflict between the Delaware Rules of Civil Procedure or the Delaware Rules of Evidence and these Arbitration Provisions, these Arbitration Provisions shall control. 4.4 Answer and Default. An answer and any counterclaims to the Arbitration Notice shall be required to be delivered to the party initiating the Arbitration within twenty (20) calendar days after the Arbitration Commencement Date. If an answer is not delivered by the required deadline, the arbitrator must provide written notice to the defaulting party stating that the arbitrator will enter a default award against such party if such party does not file an answer within five (5) calendar days of receipt of such notice. If an answer is not filed within the five (5) day extension period, the arbitrator must render a default award, consistent with the relief requested in the Arbitration Notice, against a party that fails to submit an answer within such time period. 4.5 [Intentionally Omitted]. 4.6 Discovery. The parties agree that discovery shall be conducted as follows: (a) Written discovery will only be allowed if the likely benefits of the proposed written discovery outweigh the burden or expense thereof, and the written discovery sought is likely to reveal information that will satisfy a specific element of a claim or defense already pleaded in the Arbitration. The party seeking written discovery shall always have the burden of showing that all of the standards and limitations set forth in these Arbitration Provisions are satisfied. The scope of discovery in the Arbitration proceedings shall also be limited as follows:
(i) To facts directly connected with the transactions contemplated by the Agreement. (ii) To facts and information that cannot be obtained from another source or in another manner that is more convenient, less burdensome or less expensive than in the manner requested. (b) No party shall be allowed (i) more than fifteen (15) interrogatories (including discrete subparts), (ii) more than fifteen (15) requests for admission (including discrete subparts), (iii) more than ten (10) document requests (including discrete subparts), or (iv) more than three (3) depositions (excluding expert depositions) for a maximum of seven (7) hours per deposition. The costs associated with depositions will be borne by the party taking the deposition. The party defending the deposition will submit a notice to the party taking the deposition of the estimated attorneys’ fees that such party expects to incur in connection with defending the deposition. If the party defending the deposition fails to submit an estimate of attorneys’ fees within five (5) calendar days of its receipt of a deposition notice, then such party shall be deemed to have waived its right to the estimated attorneys’ fees. The party taking the deposition must pay the party defending the deposition the estimated attorneys’ fees prior to taking the deposition, unless such obligation is deemed to be waived as set forth in the immediately preceding sentence. If the party taking the deposition believes that the estimated attorneys’ fees are unreasonable, such party may submit the issue to the arbitrator for a decision. (c) All discovery requests (including document production requests included in deposition notices) must be submitted in writing to the arbitrator and the other party. The party submitting the written discovery requests must include with such discovery requests a detailed explanation of how the proposed discovery requests satisfy the requirements of these Arbitration Provisions and the Delaware Rules of Civil Procedure. The receiving party will then be allowed, within five (5) calendar days of receiving the proposed discovery requests, to submit to the arbitrator an estimate of the attorneys’ fees and costs associated with responding to such written discovery requests and a written challenge to each applicable discovery request. After receipt of an estimate of attorneys’ fees and costs and/or challenge(s) to one or more discovery requests, consistent with subparagraph (c) above, the arbitrator will within three (3) calendar days make a finding as to the likely attorneys’ fees and costs associated with responding to the discovery requests and issue an order that (i) requires the requesting party to prepay the attorneys’ fees and costs associated with responding to the discovery requests, and (ii) requires the responding party to respond to the discovery requests as limited by the arbitrator within twenty-five (25) calendar days of the arbitrator’s finding with respect to such discovery requests. If a party entitled to submit an estimate of attorneys’ fees and costs and/or a challenge to discovery requests fails to do so within such 5-day period, the arbitrator will make a finding that (A) there are no attorneys’ fees or costs associated with responding to such discovery requests, and (B) the responding party must respond to such discovery requests (as may be limited by the arbitrator) within twenty-five (25) calendar days of the arbitrator’s finding with respect to such discovery requests. Any party submitting any written discovery requests, including without limitation interrogatories, requests for production subpoenas to a party or a third party, or requests for admissions, must prepay the estimated attorneys’ fees and costs, before the responding party has any obligation to produce or respond to the same, unless such obligation is deemed waived as set forth above. (d) In order to allow a written discovery request, the arbitrator must find that the discovery request satisfies the standards set forth in these Arbitration Provisions and the Delaware Rules of Civil Procedure. The arbitrator must strictly enforce these standards. If a discovery request does not satisfy any of the standards set forth in these Arbitration Provisions or the Delaware Rules of Civil Procedure, the arbitrator may modify such discovery request to satisfy the applicable standards, or strike such discovery request in whole or in part. (e) Each party may submit expert reports (and rebuttals thereto), provided that such reports must be submitted within sixty (60) days of the Arbitration Commencement Date. Each party will be allowed a maximum of two (2) experts. Expert reports must contain the following: (i) a complete statement of all opinions the expert will offer at trial and the basis and reasons for them; (ii) the expert’s name and qualifications, including a list of all the expert’s publications within the preceding ten (10) years, and a list of any other cases in which the expert has testified at trial or in a deposition or prepared a report within the preceding ten (10) years; and (iii) the compensation to be paid for the expert’s report and testimony. The parties are entitled to depose any other party’s expert witness one (1) time for no more than four (4) hours. An expert may not testify in a party’s case-in-chief concerning any matter not fairly disclosed in the expert report. 4.6 Dispositive Motions. Each party shall have the right to submit dispositive motions pursuant to the Delaware Rules of Civil Procedure (a “Dispositive Motion”). The party submitting the Dispositive Motion may, but is not required to, deliver to the arbitrator and to the other party a memorandum in support (the “Memorandum in Support”) of the Dispositive Motion. Within seven (7) calendar days of delivery of the Memorandum in Support, the other party shall deliver to the arbitrator and to the other party a memorandum in opposition to the Memorandum in
Support (the “Memorandum in Opposition”). Within seven (7) calendar days of delivery of the Memorandum in Opposition, as applicable, the party that submitted the Memorandum in Support shall deliver to the arbitrator and to the other party a reply memorandum to the Memorandum in Opposition (“Reply Memorandum”). If the applicable party shall fail to deliver the Memorandum in Opposition as required above, or if the other party fails to deliver the Reply Memorandum as required above, then the applicable party shall lose its right to so deliver the same, and the Dispositive Motion shall proceed regardless. 4.7 Confidentiality. All information disclosed by either party (or such party’s agents) during the Arbitration process (including without limitation information disclosed during the discovery process or any Appeal (defined below)) shall be considered confidential in nature. Each party agrees not to disclose any confidential information received from the other party (or its agents) during the Arbitration process (including without limitation during the discovery process or any Appeal) unless (a) prior to or after the time of disclosure such information becomes public knowledge or part of the public domain, not as a result of any inaction or action of the receiving party or its agents, (b) such information is required by a court order, subpoena or similar legal duress to be disclosed if such receiving party has notified the other party thereof in writing and given it a reasonable opportunity to obtain a protective order from a court of competent jurisdiction prior to disclosure, or (c) such information is disclosed to the receiving party’s agents, representatives and legal counsel on a need to know basis who each agree in writing not to disclose such information to any third party. The arbitrator is hereby authorized and directed to issue a protective order to prevent the disclosure of privileged information and confidential information upon the written request of either party. 4.8 Authorization; Timing; Scheduling Order. Subject to all other portions of these Arbitration Provisions, the parties hereby authorize and direct the arbitrator to take such actions and make such rulings as may be necessary to carry out the parties’ intent for the Arbitration proceedings to be efficient and expeditious. The parties hereby agree that an Arbitration Award must be made within one hundred twenty (120) calendar days after the Arbitration Commencement Date. The arbitrator is hereby authorized and directed to hold a scheduling conference within ten (10) calendar days after the Arbitration Commencement Date in order to establish a scheduling order with various binding deadlines for discovery, expert testimony, and the submission of documents by the parties to enable the arbitrator to render a decision prior to the end of such 120-day period. 4.9 Relief. The arbitrator shall have the right to award or include in the Arbitration Award (or in a preliminary ruling) any relief which the arbitrator deems proper under the circumstances, including, without limitation, specific performance and injunctive relief, provided that the arbitrator may not award exemplary or punitive damages. 4.10 Fees and Costs. As part of the Arbitration Award, the arbitrator is hereby directed to require the losing party (the party being awarded the least amount of money by the arbitrator, which, for the avoidance of doubt, shall be determined without regard to any statutory fines, penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid costs and fees of the Arbitration, and (b) reimburse the prevailing party for all reasonable attorneys’ fees, arbitrator costs and fees, deposition costs, other discovery costs, and other expenses, costs or fees paid or otherwise incurred by the prevailing party in connection with the Arbitration. 5. Arbitration Appeal. 5.1 Initiation of Appeal. Following the entry of the Arbitration Award, either party (the “Appellant”) shall have a period of thirty (30) calendar days in which to notify the other party (the “Appellee”), in writing, that the Appellant elects to appeal (the “Appeal”) the Arbitration Award (such notice, an “Appeal Notice”) to a panel of arbitrators as provided in Paragraph 5.2 below. The date the Appellant delivers an Appeal Notice to the Appellee is referred to herein as the “Appeal Date”. The Appeal Notice must be delivered to the Appellee in accordance with the provisions of Paragraph 4.1 above with respect to delivery of an Arbitration Notice. In addition, together with delivery of the Appeal Notice to the Appellee, the Appellant must also pay for (and provide proof of such payment to the Appellee together with delivery of the Appeal Notice) a bond in the amount of 110% of the sum the Appellant owes to the Appellee as a result of the Arbitration Award the Appellant is appealing. In the event an Appellant delivers an Appeal Notice to the Appellee (together with proof of payment of the applicable bond) in compliance with the provisions of this Paragraph 5.1, the Appeal will occur as a matter of right and, except as specifically set forth herein, will not be further conditioned. In the event a party does not deliver an Appeal Notice (along with proof of payment of the applicable bond) to the other party within the deadline prescribed in this Paragraph 5.1, such party shall lose its right to appeal the Arbitration Award. If no party delivers an Appeal Notice (along with proof of payment of the applicable bond) to the other party within the deadline described in this Paragraph 5.1, the Arbitration Award shall be final. The parties acknowledge and agree that any Appeal shall be deemed part of the parties’ agreement to arbitrate for purposes of these Arbitration Provisions and the Arbitration Act.
5.2 Selection and Payment of Appeal Panel. In the event an Appellant delivers an Appeal Notice to the Appellee (together with proof of payment of the applicable bond) in compliance with the provisions of Paragraph 5.1 above, the Appeal will be heard by a three (3) person arbitration panel (the “Appeal Panel”). (a) Within ten (10) calendar days after the Appeal Date, the Appellee shall select and submit to the Appellant the names of five (5) arbitrators that are designated as “neutrals” or qualified arbitrators by JAMS (https://www.jamsadr.com/) or other arbitration service provider agreed upon by the parties (such five (5) designated persons hereunder are referred to herein as the “Proposed Appeal Arbitrators”). For the avoidance of doubt, each Proposed Appeal Arbitrator must be qualified as a “neutral” with JAMS or other arbitration service provider agreed upon by the parties, and shall not be the arbitrator who rendered the Arbitration Award being appealed (the “Original Arbitrator”). Within five (5) calendar days after the Appellee has submitted to the Appellant the names of the Proposed Appeal Arbitrators, the Appellant must select, by written notice to the Appellee, three (3) of the Proposed Appeal Arbitrators to act as the members of the Appeal Panel. If the Appellant fails to select three (3) of the Proposed Appeal Arbitrators in writing within such 5-day period, then the Appellee may select such three (3) arbitrators from the Proposed Appeal Arbitrators by providing written notice of such selection to the Appellant. (b) If the Appellee fails to submit to the Appellant the names of the Proposed Appeal Arbitrators within ten (10) calendar days after the Appeal Date pursuant to subparagraph (a) above, then the Appellant may at any time prior to the Appellee so designating the Proposed Appeal Arbitrators, identify the names of five (5) arbitrators that are designated as “neutrals” or qualified arbitrators by JAMS or other arbitration service provider agreed upon by the parties (none of whom may be the Original Arbitrator) by written notice to the Appellee. The Appellee may then, within five (5) calendar days after the Appellant has submitted notice of its selected arbitrators to the Appellee, select, by written notice to the Appellant, three (3) of such selected arbitrators to serve on the Appeal Panel. If the Appellee fails to select in writing within such 5-day period three (3) of the arbitrators selected by the Appellant to serve as the members of the Appeal Panel, then the Appellant may select the three (3) members of the Appeal Panel from the Appellant’s list of five (5) arbitrators by providing written notice of such selection to the Appellee. (c) If a selected Proposed Appeal Arbitrator declines or is otherwise unable to serve, then the party that selected such Proposed Appeal Arbitrator may select one (1) of the other five (5) designated Proposed Appeal Arbitrators within three (3) calendar days of the date a chosen Proposed Appeal Arbitrator declines or notifies the parties he or she is unable to serve as an arbitrator. If at least three (3) of the five (5) designated Proposed Appeal Arbitrators decline or are otherwise unable to serve, then the Proposed Appeal Arbitrator selection process shall begin again in accordance with this Paragraph 5.2; provided, however, that any Proposed Appeal Arbitrators who have already agreed to serve shall remain on the Appeal Panel. (d) The date that all three (3) Proposed Appeal Arbitrators selected pursuant to this Paragraph 5.2 agree in writing (including via email) delivered to both the Appellant and the Appellee to serve as members of the Appeal Panel hereunder is referred to herein as the “Appeal Commencement Date”. No later than five (5) calendar days after the Appeal Commencement Date, the Appellee shall designate in writing (including via email) to the Appellant and the Appeal Panel the name of one (1) of the three (3) members of the Appeal Panel to serve as the lead arbitrator in the Appeal proceedings. Each member of the Appeal Panel shall be deemed an arbitrator for purposes of these Arbitration Provisions and the Arbitration Act, provided that, in conducting the Appeal, the Appeal Panel may only act or make determinations upon the approval or vote of no less than the majority vote of its members, as announced or communicated by the lead arbitrator on the Appeal Panel. If an arbitrator on the Appeal Panel ceases or is unable to act during the Appeal proceedings, a replacement arbitrator shall be chosen in accordance with Paragraph 5.2 above to continue the Appeal as a member of the Appeal Panel. If JAMS or other arbitration service provider agreed upon by the parties ceases to exist or to provide a list of neutrals, then the arbitrators for the Appeal Panel shall be selected under the then prevailing rules of the American Arbitration Association. (d) Subject to Paragraph 5.7 below, the cost of the Appeal Panel must be paid entirely by the Appellant. 5.3 Appeal Procedure. The Appeal will be deemed an appeal of the entire Arbitration Award. In conducting the Appeal, the Appeal Panel shall conduct a de novo review of all Claims described or otherwise set forth in the Arbitration Notice. Subject to the foregoing and all other provisions of this Paragraph 5, the Appeal Panel shall conduct the Appeal in a manner the Appeal Panel considers appropriate for a fair and expeditious disposition of the Appeal, may hold one or more hearings and permit oral argument, and may review all previous evidence and discovery, together with all briefs, pleadings and other documents filed with the Original Arbitrator (as well as any documents filed with the Appeal Panel pursuant to Paragraph 5.4(a) below). Notwithstanding the foregoing, in connection with the Appeal, the Appeal Panel shall not permit the parties to conduct any additional discovery or raise
any new Claims to be arbitrated, shall not permit new witnesses or affidavits, and shall not base any of its findings or determinations on the Original Arbitrator’s findings or the Arbitration Award. 5.4 Timing. (a) Within seven (7) calendar days of the Appeal Commencement Date, the Appellant (i) shall deliver or cause to be delivered to the Appeal Panel copies of the Appeal Notice, all discovery conducted in connection with the Arbitration, and all briefs, pleadings and other documents filed with the Original Arbitrator (which material Appellee shall have the right to review and supplement if necessary), and (ii) may, but is not required to, deliver to the Appeal Panel and to the Appellee a Memorandum in Support of the Appellant’s arguments concerning or position with respect to all Claims, counterclaims, issues, or accountings presented or pleaded in the Arbitration. Within seven (7) calendar days of the Appellant’s delivery of the Memorandum in Support, as applicable, the Appellee shall deliver to the Appeal Panel and to the Appellant a Memorandum in Opposition to the Memorandum in Support. Within seven (7) calendar days of the Appellee’s delivery of the Memorandum in Opposition, as applicable, the Appellant shall deliver to the Appeal Panel and to the Appellee a Reply Memorandum to the Memorandum in Opposition. If the Appellant shall fail to substantially comply with the requirements of clause (i) of this subparagraph (a), the Appellant shall lose its right to appeal the Arbitration Award, and the Arbitration Award shall be final. If the Appellee shall fail to deliver the Memorandum in Opposition as required above, or if the Appellant shall fail to deliver the Reply Memorandum as required above, then the Appellee or the Appellant, as the case may be, shall lose its right to so deliver the same, and the Appeal shall proceed regardless. (b) Subject to subparagraph (a) above, the parties hereby agree that the Appeal must be heard by the Appeal Panel within thirty (30) calendar days of the Appeal Commencement Date, and that the Appeal Panel must render its decision within thirty (30) calendar days after the Appeal is heard (and in no event later than sixty (60) calendar days after the Appeal Commencement Date). 5.5 Appeal Panel Award. The Appeal Panel shall issue its decision (the “Appeal Panel Award”) through the lead arbitrator on the Appeal Panel. Notwithstanding any other provision contained herein, the Appeal Panel Award shall (a) supersede in its entirety and make of no further force or effect the Arbitration Award (provided that any protective orders issued by the Original Arbitrator shall remain in full force and effect), (b) be final and binding upon the parties, with no further rights of appeal, (c) be the sole and exclusive remedy between the parties regarding any Claims, counterclaims, issues, or accountings presented or pleaded in the Arbitration, and (d) be promptly payable in United States dollars free of any tax, deduction or offset (with respect to monetary awards). Any costs or fees, including without limitation attorneys’ fees, incurred in connection with or incident to enforcing the Appeal Panel Award shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement. Judgment upon the Appeal Panel Award will be entered and enforced by a state or federal court sitting in the State of Delaware. 5.6 Relief. The Appeal Panel shall have the right to award or include in the Appeal Panel Award any relief which the Appeal Panel deems proper under the circumstances, including, without limitation, specific performance and injunctive relief, provided that the Appeal Panel may not award exemplary or punitive damages. 5.7 Fees and Costs. As part of the Appeal Panel Award, the Appeal Panel is hereby directed to require the losing party (the party being awarded the least amount of money by the arbitrator, which, for the avoidance of doubt, shall be determined without regard to any statutory fines, penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid costs and fees of the Arbitration and the Appeal Panel, and (b) reimburse the prevailing party (the party being awarded the most amount of money by the Appeal Panel, which, for the avoidance of doubt, shall be determined without regard to any statutory fines, penalties, fees, or other charges awarded to any part) the reasonable attorneys’ fees, arbitrator and Appeal Panel costs and fees, deposition costs, other discovery costs, and other expenses, costs or fees paid or otherwise incurred by the prevailing party in connection with the Arbitration (including without limitation in connection with the Appeal). 6. Miscellaneous. 6.1 Severability. If any part of these Arbitration Provisions is found to violate or be illegal under applicable law, then such provision shall be modified to the minimum extent necessary to make such provision enforceable under applicable law, and the remainder of the Arbitration Provisions shall remain unaffected and in full force and effect. 6.2 Governing Law. These Arbitration Provisions shall be governed by the laws of the State of Delaware without regard to the conflict of laws principles therein. 6.3 Interpretation. The headings of these Arbitration Provisions are for convenience of reference only and shall not form part of, or affect the interpretation of, these Arbitration Provisions.
6.4 Waiver. No waiver of any provision of these Arbitration Provisions shall be effective unless it is in the form of a writing signed by the party granting the waiver. 6.5 Time is of the Essence. Time is expressly made of the essence with respect to each and every provision of these Arbitration Provisions. [Remainder of page intentionally left blank]
Exhibit 10.6 CREDIT AGREEMENT This CREDIT AGREEMENT is entered into as of May 12, 2025, among ENERGY VAULT HOLDINGS, INC., a Delaware corporation (the “Borrower”), the Guarantors (defined herein), the lenders identified on the signature pages hereof (each of such lenders, together with its successors and permitted assigns, a “Lender”, and collectively, the “Lenders”), and CRESCENT COVE OPPORTUNITY LENDING, LLC, a Delaware limited liability company, as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Agent”). RECITALS The Borrower has requested that the Lenders make available to it a term loan facility in the aggregate principal amount of $10,000,000 for the general working capital needs of the Borrower. The Lenders are willing to make such loan to the Borrower on the terms and subject to the conditions set forth herein. AGREEMENT Accordingly, the Parties hereto agree as follows: 1. Definitions. Capitalized terms used herein shall have the meanings set forth in this Section 1. “Affiliate” means as to any Person, any other Person that, directly or indirectly through one or more intermediaries, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. “Agent” has the meaning set forth in the introductory paragraph. “Agent’s Account” has the meaning set forth in Section 6.1. “Agreement” means this Credit Agreement, as amended, restated, amended and restated, supplemented or otherwise modified from time to time. “Anti-Corruption Laws” means the FCPA, the U.K. Bribery Act of 2010, as amended, and all other applicable laws and regulations or ordinances concerning or relating to bribery or corruption in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business. “Anti-Money Laundering Laws” means the applicable laws or regulations in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing
2 business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto. “Applicable Rate” means the rate equal to twenty-four percent (24%) per annum. “Board” means the board of directors (or comparable managers) of a Loan Party or any committee thereof duly authorized to act on behalf of the board of directors (or comparable managers). “Board of Governors” means the Board of Governors of the Federal Reserve System of the United States (or any successor). “Borrower” has the meaning set forth in the introductory paragraph. “Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in the State of New York are authorized or required by law to close. “Capitalized Lease Obligation” means that portion of the obligations under a capital lease or finance lease that is required to be capitalized in accordance with GAAP. “Cash Equivalents” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than 270 days after its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc.; (c) certificates of deposit maturing no more than one (1) year after issue and issued by any bank organized under the laws of the United States or any State thereof or the District of Columbia or any United States branch of a foreign bank having at the date of acquisition thereof combined capital and surplus of not less than $1,000,000,000; (d) deposit accounts maintained with any bank that satisfies the criteria described in clause (c) above; and (e) money market funds publicly traded or regulated by a Governmental Authority all of whose assets are invested in cash equivalents of the type described in clauses (a) through (d) above. “Change of Control” means that (a) any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 20%, or more, of the Equity Interests of the Borrower having the right to vote for the election of members of the Board, or (b) the Borrower fails to own and control, directly or indirectly, (1) 100% of the Equity Interests of each other Loan Party other than Cetus Energy, Inc. and (2) less than 85% of the Equity Interests of Cetus Energy, Inc. “Closing Date” means the date of the making of the Loan under this Agreement. “Closing Fee” has the meaning set forth in Section 5.2.
3 “Code” means the Internal Revenue Code of 1986, as in effect from time to time. “Collateral” means all assets and interests in assets and proceeds thereof now owned or hereafter acquired by any Loan Party in or upon which a Lien is granted by such Person in favor of the Agent or the Lenders under any of the Loan Documents. “Collateral Documents” means, collectively, the Guaranty and Security Agreement, Deed of Trust, and any other agreements, instruments and documents executed in connection with this Agreement that are intended to create, perfect or evidence Liens to secure the Obligations, including all other security agreements, pledge agreements, financing statements and all other similar documents whether heretofore, now or hereafter executed by any Loan Party and delivered to the Agent. “Commitment” means, as to each Lender, its obligation to make a portion of the Loan to the Borrower pursuant to Section 2 in a principal amount set forth opposite such Lender’s name on Schedule 1 under the caption “Commitment”. The aggregate Commitment of all of the Lenders on the Closing Date shall be $10,000,000. “Commitment and Structuring Fee” has the meaning set forth in Section 5.1. “Control Agreement” has the meaning set forth in the Guaranty and Security Agreement. “Debt” of any Person, means all (a) indebtedness for borrowed money; (b) obligations for the deferred purchase price of property or services rendered, except trade payables incurred in the ordinary course of business and repayable in accordance with customary trade practices; (c) obligations evidenced by notes, bonds, debentures or other similar instruments; (d) Capitalized Lease Obligations and Synthetic Lease Obligations; (e) net obligations in respect of any interest rate swaps, currency exchange agreements, commodity swaps, caps, collar agreements or similar arrangements entered into by such Person providing for protection against fluctuations in interest rates, currency exchange rates or commodity prices or the exchange of nominal interest obligations, either generally or under specific contingencies; (f) obligations under acceptance facilities and letters of credit; (g) guaranties, endorsements (other than for collection or deposit in the ordinary course of business), and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any Person, or otherwise to assure a creditor against loss, in each case, in respect of indebtedness set out in clauses (a) through (f) of a Person; (h) indebtedness set out in clauses (a) through (g) of any Person other than a Loan Party secured by any lien on any asset of the such Loan Party, whether or not such indebtedness has been assumed by such Loan Party, and (i) any Disqualified Equity Interests of such Person. “Deed of Trust” means a Deed of Trust, Assignment of Leases and Rents, Security Agreement, Fixture Filing and Financing Statement to be made by the Grantor to a trustee reasonably acceptable to the Agent, for the benefit of Agent, as agent for itself and the Lenders, which shall be in form and substance reasonably satisfactory to the Agent, as the same may be
4 amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with its terms. “Default” means any of the events specified in Section 12 which constitutes an Event of Default or which, upon the giving of notice, the lapse of time, or both pursuant to Section 12 would, unless cured or waived, become an Event of Default. “Default Rate” means, at any time, the Applicable Rate plus thirty-six percent (36%) per annum. “Deposit Amount” has the meaning set forth in Section 15.2. “Disqualified Equity Interests” means any Equity Interests that, by their terms (or by the terms of any security or other Equity Interests into which they are convertible or for which they are exchangeable), or upon the happening of any event or condition (a) matures or are mandatorily redeemable (other than solely for Equity Interests that are not Disqualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loan), (b) are redeemable at the option of the holder thereof, in whole or in part (other than solely for Equity Interests that are not Disqualified Equity Interests), (c) provide for the mandatory scheduled payments of dividends in cash, or (d) are or become convertible into or exchangeable for Debt or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is 180 days after the Maturity Date. For clarity, convertible notes that are convertible only into Equity Interests of the Borrower that are not Disqualified Equity Interests shall not be Disqualified Equity Interests. “Equity Interests” means, with respect to a Person, all of the shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in such Person, whether voting or nonvoting, including capital stock (or other ownership or profit interests or units), preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act). “ERISA” is the Employee Retirement Income Security Act of 1974, and its regulations. “ERISA Affiliate” means any Person, trade or business (whether or not incorporated) that is or at any relevant time was treated as a single employer with the Borrower within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA. “Event of Default” has the meaning set forth in Section 12. “Exchange Act” means the Securities Exchange Act of 1934, as in effect from time to time. “FCPA” means the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder.
5 “GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time. “Governmental Authority” means the government of any nation or any political subdivision thereof, whether at the national, state, territorial, provincial, municipal or any other level, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of, or pertaining to, government (including any supranational bodies such as the European Union or the European Central Bank). “Grantor” means, initially, Cross Trails Energy Storage Property, LLC, and following a transfer permitted under Section 11.4(h), Energy Vault, Inc. “Guarantors” means Energy Vault, Inc., a Delaware corporation, Snyder Housing LLC, a Texas limited liability company, Cetus Energy LLC, a Delaware limited liability company, Cetus Energy, Inc., a Delaware corporation, Cross Trails Energy Storage Project Holdco LLC, a Delaware limited liability company, Cross Trails Energy Storage Project, LLC, a Delaware limited liability company, Energy Vault CDU Holdco, LLC, a Delaware limited liability company, Energy Vault CDU Project, LLC, a Delaware limited liability company, and each Person that becomes a guarantor after the date of this Agreement pursuant to Section 10.8, and each of them is a “Guarantor”. “Guaranty and Security Agreement” means the Guaranty and Security Agreement, dated as of the date hereof, by and among the Loan Parties party thereto from time to time and the Agent, as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with its terms. “Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of Title 11 of the United States Code as in effect from time to time or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, receiverships, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief. “Intellectual Property” has the meaning set forth in the Guaranty and Security Agreement. “Investment” has the meaning set forth in Section 11.5. “Law” as to any Person, means any law (including common law), statute, ordinance, treaty, rule, regulation, policy or requirement of any Governmental Authority and authoritative interpretations thereon, whether now or hereafter in effect, in each case, applicable to or binding on such Person or any of its properties or to which such Person or any of its properties is subject.
6 “Lender” and “Lenders” has the meaning set forth in the introductory paragraph. “Lien” means any mortgage, pledge, hypothecation, encumbrance, lien (statutory or other), charge or other security interest. “Liquidity” means, as of any date of determination, the aggregate amount of the Borrower’s cash and Cash Equivalents. “Loan” has the meaning set forth in Section 2.1. “Loan Document” means this Agreement, the Collateral Documents, any subordination or intercreditor agreement, any Control Agreement and all other agreements, instruments and other documents, whether now existing or hereafter in effect, executed and delivered by one or more Loan Parties to, or in favor of, the Agent or any Lender in connection with this Agreement. “Loan Exposure” means, with respect to any Lender, as of any date of determination (a) prior to the funding of the Loan, the amount of such Lender’s Commitment, and (b) after the funding of the Loan, the outstanding principal amount of the Loan held by such Lender. “Loan Parties” means collectively, the Borrower and each Guarantor, and each of them is a “Loan Party”. “Margin Stock” as defined in Regulation U of the Board of Governors as in effect from time to time. “Material Adverse Effect” means a material adverse effect on (a) the business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of the Borrower or the Loan Parties taken as a whole; (b) the validity or enforceability of this Agreement or any other Loan Document; (c) the perfection or priority of any Lien purported to be created under any Loan Document; (d) the rights or remedies of the Agent or any Lender hereunder or under any other Loan Document; or (e) any Loan Party’s ability to perform any of its material obligations hereunder or under any other Loan Document. “Maturity Date” means July 13, 2025. “Multiemployer Plan” has the meaning set forth in Section 9.10. “Nofar” means Nofar Energy Ltd., an Israeli company, or one or more Affiliates thereof. “Nofar Transaction” means the execution and delivery of, and performance under, an equipment order agreement between Nofar and Energy Vault, Inc. or one or more Affiliates thereof, pursuant to which Nofar shall, among other things, deliver to Energy Vault, Inc. a refundable cash deposit in an amount not to exceed $8,000,000.
7 “Nofar Transaction Account” means the account of Energy Vault, Inc. maintained at HSBC-US, account no. 30001014. “Nofar Transaction Permitted Lien Conditions” means that (a) Energy Vault, Inc. shall use the Nofar Transaction Account solely to hold the refundable cash deposit provided by Nofar pursuant to the Nofar Transaction, together with any interest earned on such deposit, (b) Energy Vault, Inc. shall not grant any Lien on the Nofar Transaction Account to any Person, other than a Lien in the nature of a contractual encumbrance in favor of Nofar pursuant to the documentation governing the Nofar Transaction, and (c) the Nofar Transaction has not been consummated or terminated. “Obligations” means all loans (including, for the avoidance of doubt, the Loan), debts, principal, interest (including any interest that accrues after the beginning of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), premiums, liabilities, obligations (including indemnification obligations), fees, costs and expenses (including any fees or expenses that accrue after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), guaranties, and all covenants and duties of any other kind and description owing by any Loan Party under or evidenced by this Agreement or any of the other Loan Documents, and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, liquidated or unliquidated, determined or undetermined, voluntary or involuntary, due, not due or to become due, sole, joint, several or joint and several, incurred in the past or now existing or hereafter arising, however arising, and including all interest not paid when due, and all other expenses or other amounts that any Loan Party is required to pay or reimburse by the Loan Documents or by law or otherwise in connection with the Loan Documents. Any reference in this Agreement or in the Loan Documents to the Obligations will include all or any portion of the Obligations and any extensions, modifications, renewals, or alterations of the Obligations, both prior and subsequent to any Insolvency Proceeding. “OFAC” means The Office of Foreign Assets Control of the U.S. Department of the Treasury. “OID Amount” means an amount equal to 5.00% of the aggregate principal amount of the Commitments with respect to the Loan on the Closing Date. “Order” as to any Person, means any order, decree, judgment, writ, injunction, settlement agreement, requirement or determination of an arbitrator or a court or other Governmental Authority, in each case, applicable to or binding on such Person or any of its properties or to which such Person or any of its properties is subject. “Organization Document” means (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the
8 certificate or articles of formation or organization and operating agreement or limited liability company agreement (or equivalent or comparable documents with respect to any non-U.S. jurisdiction); and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization (or equivalent or comparable documents with respect to any non-U.S. jurisdiction). “Parties” means, collectively, the Borrower, the Guarantors, the Lenders and the Agent. “Patriot Act” has the meaning set forth in Section 9.16. “Pension Plan” has the meaning set forth in Section 9.10. “Percentage Share” means, as of any date of determination, with respect to any Lender, a percentage determined by dividing the Loan Exposure of such Lender by the aggregate Loan Exposure of all Lenders. “Perfection Certificate” means the Perfection Certificate of the Loan Parties, dated as of the date hereof. “Permitted Debt” means (a) Debt existing or arising under this Agreement or the other Loan Documents, (b) Permitted Purchase Money Debt and any Refinancing Debt in respect of such Debt; (c) Debt incurred as a result of endorsing negotiable instruments received in the ordinary course of business; (d) Debt comprising Permitted Investments; (e) Debt incurred in respect of letters of credit or surety bonds, in each case, issued or posted for the purpose of supporting obligations of one or more Loan Parties under contracts (other than contracts for the repayment of borrowed money) entered into by such Loan Parties in the ordinary course of business in an aggregate outstanding amount not to exceed $20,000,000 at any time; (f) Debt existing on the date of this Agreement which is shown on Schedule 2, and (g) Debt in respect of corporate credit card programs incurred in the ordinary course of business in an aggregate outstanding amount not to exceed $250,000 at any time. “Permitted Investments” means (a) Investments (including Subsidiaries) existing on the date of this Agreement which are shown on the Perfection Certificate; (b) Investments consisting of Cash Equivalents; (c) Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course business of the Loan Parties; and (d) Investments consisting of deposit accounts in which the Agent has a perfected security interest. “Permitted Liens” means (a) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings; (b) Liens created pursuant to the Loan Documents; (c) purchase money Liens or the interests of lessors under capital leases to the extent that such Liens or interests secure Permitted Purchase Money Debt and so long as (x) such Lien attaches only to the asset purchased or acquired and the proceeds thereof, and (y) such Lien only secures
9 the Debt that was incurred to acquire the asset purchased or acquired; (d) Liens on cash collateral existing on the date hereof which are shown on Schedule 3; provided that, with respect to the Nofar Transaction Account, the Lien thereon shall be permitted so long as the Nofar Transaction Permitted Lien Conditions are satisfied at all times; (e) Liens of carriers, warehousemen, suppliers, or other Persons that are possessory in nature arising in the ordinary course of business so long as such Liens attach only to inventory, securing liabilities in the aggregate amount not to exceed $500,000 and which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto; (f) Liens to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations incurred in the ordinary course of business (other than Liens imposed by ERISA); (g) leases or subleases of real property granted in the ordinary course of any Loan Party’s business (or, if referring to another Person, in the ordinary course of such Person’s business), and leases, subleases, non-exclusive licenses or sublicenses of personal property (other than Intellectual Property) granted in the ordinary course of any Loan Party’s business (or, if referring to another Person, in the ordinary course of such Person’s business), if the leases, subleases, licenses and sublicenses do not prohibit granting the Agent a security interest therein; (h) non-exclusive licenses of Intellectual Property granted in the ordinary course of business; (i) Liens on the dispositions of the exclusive licenses referred to in Section 11.4(g); (j) Liens arising from attachments or judgments, orders, or decrees in circumstances not constituting an Event of Default; (k) customary Liens (including the right of set-off) in favor of a bank or other depository institution encumbering deposits (and not securing Debt for borrowed money) solely to the extent incurred in connection with the maintenance of deposit accounts in the ordinary course of business; (l) deposits made to secure the performance of bids, tenders, contracts (other than the repayment of borrowed money) or leases, or to secure statutory obligations or surety or appeal bonds, letters of credit, or similar obligations arising in the ordinary course of business; and (m) Liens incurred in the extension, renewal or refinancing of the Debt secured by Liens described in clauses (a) through (l), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the Debt may not increase. “Permitted Purchase Money Debt” means, as of any date of determination, Debt (other than the Obligations, but including Capitalized Lease Obligations), incurred after the Closing Date and at the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof, in an aggregate principal amount outstanding at any one time not in excess of $100,000. “Person” means any individual, corporation, limited liability company, trust, joint venture, association, company, limited or general partnership, unincorporated organization, Governmental Authority or other entity. “Plan” has the meaning set forth in Section 9.10.
10 “Refinancing Debt” means refinancings, renewals, or extensions of Debt so long as (a) such refinancings, renewals, or extensions do not result in an increase in the principal amount of the Debt so refinanced, renewed, or extended, other than by the amount of premiums paid thereon and the fees and expenses incurred in connection therewith and by the amount of unfunded commitments with respect thereto, (b) such refinancings, renewals, or extensions do not result in a shortening of the average weighted maturity (measured as of the refinancing, renewal, or extension) of the Debt so refinanced, renewed, or extended, nor are they on terms or conditions that, taken as a whole, are or could reasonably be expected to be materially adverse to the interests of the Agent or any Lender, (c) if the Debt that is refinanced, renewed, or extended was subordinated in right of payment to the Obligations, then the terms and conditions of the refinancing, renewal, or extension must include subordination terms and conditions that are at least as favorable to the Agent and the Lenders as those that were applicable to the refinanced, renewed, or extended Debt, and (d) the Debt that is refinanced, renewed, or extended is not recourse to any Person that is liable on account of the Obligations other than those Persons which were obligated with respect to the Debt that was refinanced, renewed, or extended. “Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates. “Sanctioned Entity” means (a) a country or territory or a government of a country or territory, (b) an agency of the government of a country or territory, (c) an organization directly or indirectly controlled by a country or territory or its government, or (d) a Person resident in or determined to be resident in a country or territory, in each case of clauses (a) through (d) that is a target of Sanctions, including a target of any country sanctions program administered and enforced by OFAC. “Sanctioned Person” means, at any time (a) any Person named on the list of Specially Designated Nationals and Blocked Persons maintained by OFAC, OFAC’s consolidated Non-SDN list or any other Sanctions-related list maintained by any Governmental Authority, (b) a Person or legal entity that is a target of Sanctions, (c) any Person operating, organized or resident in a Sanctioned Entity, or (d) any Person directly or indirectly owned or controlled (individually or in the aggregate) by or acting on behalf of any such Person or Persons described in clauses (a) through (c) above. “Sanctions” means individually and collectively, respectively, any and all economic sanctions, trade sanctions, financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes anti-terrorism laws and other sanctions laws, regulations or embargoes, including those imposed, administered or enforced from time to time by: (a) the United States of America, including those administered by OFAC, the U.S. Department of State, the U.S. Department of Commerce, or through any existing or future executive order, (b) the United Nations Security Council, (c) the European Union or any European Union member state, (d) His Majesty’s Treasury of the United Kingdom, or (e) any other Governmental Authority with jurisdiction over the Agent or any Lender or any Loan Party or any of their respective Subsidiaries or Affiliates.
11 “SEC” shall mean the U.S. Securities and Exchange Commission or any governmental authority succeeding to any of its principal functions. “Scurry Property Sale-Leaseback Transaction” shall mean the series of transactions pursuant to which the real property in Scurry County, Texas currently owned by Cross Trails Energy Storage Project, LLC will be transferred to Energy Vault, Inc., and then subsequently leased by Energy Vault, Inc. to Cross Trails Energy Storage Project, LLC and to Energy Vault CDU Project, LLC. “Solvent”: when used with respect to any Person, that: (a) such Person is not “insolvent” within the meaning of 11 U.S.C. Section 101(32) and the cases interpreting the same; (b) such Person is generally able to pay its debts as they become due; or (c) such Person does not have unreasonably small capital to carry on such Person’s business as theretofore operated and all businesses in which such Person is about to engage. “Subject Property” means the real property described on Exhibit A attached hereto. “Subsidiary” of a Person means a corporation, partnership, limited liability company, or other entity in which that Person directly or indirectly owns or controls the Equity Interests having ordinary voting power to elect a majority of the Board of such corporation, partnership, limited liability company, or other entity. “Synthetic Lease Obligations” means the monetary obligation of a Person under (a) a so- called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property (including sale and leaseback transactions) creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment). “Title Policy Requirements” means (i) receipt by the Agent of a Texas Land Title Association (TLTA) Form T-2 loan policy of title insurance issued by a title insurance company reasonably acceptable to the Agent insuring the first priority lien of the Deed of Trust in an amount acceptable to the Agent subject only to such exceptions approved by the Agent in its sole discretion and including such endorsements as are required by the Agent and available under Texas law, and (ii) the payment by the Borrower or the Grantor of the title insurance premiums and any search or title-related costs and all recording costs, intangible taxes and other fees and costs (including reasonable attorneys’ fees and expenses) incurred with respect to the issuance of such title insurance policy and the recording of the Deed of Trust. 2. Loan Disbursement Mechanics. 2.1 Loan. The Borrower hereby irrevocably requests, and subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties contained
12 herein, each Lender (severally, not jointly or jointly and severally) agrees to make its Percentage Share (in accordance with its Commitment) of a term loan to the Borrower on May 13, 2025 in a principal amount equal to $10,000,000 (the “Loan”). The Borrower hereby irrevocably authorizes and instructs the Agent to disburse the proceeds of the Loan, net of (i) the OID Amount, (ii) the Commitment and Structuring Fee, (ii) interest due and payable on the Loan for the period from the Closing Date to, but excluding, the Maturity Date thereafter, and (iii) the costs, expenses and fees, after application of the Deposit Amount, required to be paid pursuant to and in accordance with Section 15.2, in the amounts and in accordance with the wire transfer instructions listed on Exhibit B. 3. Repayment; Final Payment Date; Optional Prepayments; No Reborrowing. 3.1 Repayment of Principal and Interest. Interest accruing on the Loan from the Closing Date to, but excluding, the Maturity Date shall be due and payable to the Lenders in advance on the Closing Date. Interest payments shall not be refundable under any circumstances, including in connection with any prepayment hereunder. 3.2 Final Payment Date. Notwithstanding anything to the contrary contained herein, the aggregate unpaid principal amount of the Loan, all accrued and unpaid interest and all other amounts payable under this Agreement shall be due and payable on the Maturity Date or, if earlier, on the date on which the Obligations become due and payable pursuant to the terms of this Agreement. 3.3 Prepayment. (a) Optional Prepayment. The Borrower may, upon prior notice to the Lenders, at any time, prepay the Loan in whole but not in part; provided, that such notice must be received by the Agent at least one (1) Business Day prior to any date of prepayment, which notice shall be irrevocable. (b) Mandatory Prepayments. Within three (3) Business Days of the receipt by any Loan Party of proceeds of any voluntary or involuntary sale or disposition of assets of any Loan Party (including proceeds of any tax assets (including tax refunds, tax credits, and other tax benefits) and excluding any proceeds received in connection with the Scurry Property Sale-Leaseback Transaction), and proceeds of insurance or arising from casualty losses or condemnations and payments in lieu thereof, but excluding proceeds from sales or dispositions under clauses (a) through (f) of Section 11.4), the Borrower shall prepay the outstanding principal amount of the Obligations in an amount equal to 100% of such proceeds. 3.4 No Reborrowing. Any portion of the Loan repaid or prepaid may not be reborrowed.
13 4. Interest. 4.1 Interest Rate. Except as otherwise provided herein, the outstanding principal amount of the Loan made hereunder shall bear interest at the Applicable Rate from the Closing Date until the Loan is paid in full, whether at maturity, upon acceleration, by prepayment or otherwise. 4.2 Default Interest. (i) Automatically upon the occurrence and during the continuation of an Event of Default under Section 12.5 and (ii) upon the occurrence and during the continuation of any other Event of Default, at the election of the Agent, the outstanding principal balance of the Loan and all other Obligations shall bear interest at the Default Rate. For the avoidance of doubt in the case of an Event of Default described in clause (ii) above, the Agent or the Lenders may elect to impose the Default Rate effective as of the date of the occurrence of such Event of Default or as of any date after the occurrence of such Event of Default regardless of the date the Agent or the Lenders received notice of, or obtained knowledge of, such Event of Default. 4.3 Computation of Interest. All computations of interest shall be made on the basis of a year of 360 days and the actual number of days elapsed or included in any applicable period. Interest shall accrue on the Loan on the Closing Date, and shall not accrue on the Loan for the day on which it is paid. 4.4 Interest Rate Limitation. If at any time and for any reason whatsoever, the interest rate payable on the Loan shall exceed the maximum rate of interest permitted to be charged by the Lenders to the Borrower under applicable Law, that portion of each sum paid attributable to that portion of such interest rate that exceeds the maximum rate of interest permitted by applicable Law shall be deemed a voluntary prepayment of principal. 5. Commitment and Structuring Fee; OID Amount. 5.1 Commitment and Structuring Fee. The Borrower shall pay to the Agent, for the ratable benefit of the Lenders in accordance with their Percentage Shares of the Loan, a non- refundable closing and structuring fee in an amount equal to $150,000 (the “Commitment and Structuring Fee”), which fee shall be deemed fully earned and due and payable on the Closing Date. 5.2 OID Amount. The parties hereto intend to treat the OID Amount as original issue discount for U.S. federal and state income tax purposes to the extent permissible under applicable law. 6. Payment Mechanics.
14 6.1 Manner of Payments. All payments of interest and principal shall be made in lawful money of the United States of America no later than 12:00 PM, San Francisco time, on the date on which such payment is due by wire transfer of immediately available funds to the Agent’s account at a bank specified by the Agent in writing to the Borrower (the “Agent’s Account”), to be applied by the Agent ratably between the Lenders in accordance with their Percentage Shares. All payments by or on behalf of the Borrower hereunder shall be made without set off or counterclaim and in such amounts as may be necessary in order that all such payments (after deduction or withholding for or on account of any present or future taxes, levies, imposts, duties or other charges of whatsoever nature imposed by any Governmental Authority, other than any tax on or measured by the overall net income of each Lender pursuant to the income tax laws of the United States or the jurisdiction where such Lender resides) shall not be less than the amounts otherwise specified to be paid hereunder. 6.2 Application of Payments. All payments made hereunder shall be applied first to the payment of any fees or charges outstanding hereunder, second to accrued interest, and third to the payment of the principal amount outstanding under the Agreement. 6.3 Business Day Convention. Whenever any payment to be made hereunder shall be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension will be taken into account in calculating the amount of interest payable under this Agreement. 6.4 Evidence of Debt. The portion of the Loan made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Agent in the ordinary course of business. The accounts or records maintained by the Agent and each Lender shall be conclusive absent manifest error of the amount of the portion of the Loan made by each Lender to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Agent in respect of such matters, the accounts and records of the Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Agent, the Borrower shall execute and deliver to such Lender (through the Agent) a promissory note, which shall evidence such Lender’s portion of the Loan in addition to such accounts or records. Each Lender may attach schedules to its promissory note and endorse thereon the date, amount and maturity of its portion of the Loan and payments with respect thereto. 6.5 Rescission of Payments. If at any time any payment made by the Borrower under this Agreement is rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, the Borrower’s obligation to make such payment shall be reinstated as though such payment had not been made.
15 7. Collateral Documents. The Loan Parties’ performance of their obligations under the Loan Documents are secured by the security interests in the Collateral specified in the Collateral Documents. 8. Conditions Precedent. 8.1 Conditions to Effectiveness of this Agreement. The effectiveness of this Agreement and the obligation of the Lenders to make the Loan is subject to the fulfillment, to the satisfaction of the Agent and the Lenders, of each of the following conditions precedent: (a) The Agent shall have received each of the following documents, in form and substance satisfactory to the Agent, duly-executed, and each such document shall be in full force and effect: (i) this Agreement; (ii) the Guaranty and Security Agreement; (iii) the Perfection Certificate; (iv) a certificate from the Secretary or managing member, as applicable, of each Loan Party (A) attesting to the resolutions of such Loan Party’s Board authorizing its execution, delivery, and performance of this Agreement and the other Loan Documents, (B) attesting to the Organization Documents of such Loan Party as true, correct and complete, (C) authorizing specific officers of such Loan Party or specific persons on behalf of such Loan Party to execute the same, (D) attesting to the incumbency and signatures of such specific officers of such Loan Party and such specific persons, and (E) attesting to certificates of status with respect to such Loan Party, such certificates to be issued by the appropriate officer of the jurisdiction of organization of such Loan Party and each other jurisdiction in which such Loan Party’s failure to be duly qualified or licensed would constitute a Material Adverse Effect, which certificates shall indicate that such Loan Party is in good standing in such jurisdictions; (v) a certificate of an officer or managing member of each Loan Party, as applicable, certifying that each of the conditions specified in clauses (d), (e) and (f) of this Section 8.1 have been satisfied; and (vi) an opinion of the Loan Parties’ counsel. (b) The Agent shall have received forms of financing statements to be filed in such office or offices as may be necessary or, in the opinion of the Agent, desirable to perfect the Agent’s Liens in and to the Collateral (as defined in the Guaranty and Security Agreement).
16 (c) The Agent shall have received copies of the policies of insurance and certificates of insurance, as are required by Section 10.6, the form and substance of which shall be satisfactory to the Agent. (d) The representations and warranties of each Loan Party contained in this Agreement and any other Loan Document shall be true and correct in all material respects (without duplication of any materiality qualifier contained therein) on the date of this Agreement and on the Closing Date (other than such representations and warranties that specifically relate to a prior date, in which case such representations and warranties shall be true and correct in all material respects (without duplication of any materiality qualifier contained therein) as of such prior date). (e) No Default or Event of Default has occurred and is continuing or would result immediately before or after the making of the Loan. (f) Immediately before or after the making of the Loan, no material adverse change in the business, assets, liabilities, operations, or condition (financial or otherwise) of the Borrower, or in the facts and information regarding the Borrower as represented in writing during the loan approval process, has occurred that could reasonably be expected to cause the Loan to become delinquent or prevent the Borrower from performing its obligation. (g) All other documents and legal matters in connection with the transactions contemplated by this Agreement shall have been delivered, executed, or recorded and shall be in form and substance satisfactory to the Agent. 9. Representations and Warranties. Each Loan Party hereby represents and warrants to the Agent and the Lenders, as of the date made or deemed made, that: 9.1 Existence; Compliance with Laws. Each Loan Party is (a) duly organized, validly existing and in good standing under the laws of the state of its jurisdiction of organization and has the requisite power and authority, and the legal right, to own, lease and operate its properties and assets and to conduct its business as it is now being conducted and (b) in compliance in all material respects with all Laws and Orders. 9.2 Power and Authority. Each Loan Party has the power and authority, and the legal right, to execute and deliver this Agreement and each other Loan Document to which it is a party and to perform its obligations hereunder and thereunder. 9.3 Authorization; Execution and Delivery. The execution and delivery of this Agreement and each other Loan Document by each Loan Party that is a party thereto and the performance of its obligations hereunder and thereunder have been duly authorized by all necessary corporate or limited liability company action on the part of such Loan Party in
17 accordance with all applicable Laws. Each Loan Party has duly executed and delivered each Loan Document to which it is a party. 9.4 No Approvals. No consent or authorization of, filing with, notice to or other act by, or in respect of, any Governmental Authority or any other Person is required in order for any Loan Party to execute, deliver, or perform any of its obligations under any Loan Document to which it is a party except such consents, authorizations, filings, notices or acts that have been made or obtained and filings to perfect Liens created under the Collateral Documents. 9.5 No Violations. The execution and delivery by the Loan Parties of this Agreement and each other Loan Document to which it is a party and the consummation by such Loan Party of the transactions contemplated hereby and thereby do not and will not (a) violate any provision of the such Loan Party’s Organization Documents; (b) violate any material Law or Order applicable to such Loan Party or by which any of its properties or assets may be bound; or (c) constitute a default under any material agreement or contract by which such Loan Party may be bound. 9.6 Enforceability. Each Loan Document is a valid, legal and binding obligation of each Loan Party that is a party thereto, enforceable against such Loan Party in accordance with its terms except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 9.7 No Litigation. No action, suit, litigation, investigation or proceeding of, or before, any arbitrator or Governmental Authority is pending or, to the knowledge of any Loan Party, threatened in writing by or against any Loan Party or any of its property or assets (a) with respect to this Agreement, any other Loan Document or any of the transactions contemplated hereby or thereby or (b) that could reasonably be expected to materially adversely affect any Loan Party’s financial condition or the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party. 9.8 Environmental Matters. There is no contamination at, under or about any properties included in the Collateral specified in the Collateral Documents, or material violation of any environmental law with respect to such properties, nor has any Loan Party or any of its Subsidiaries received any notice of any such violation. 9.9 Taxes. The Loan Parties and their Subsidiaries have timely filed all tax returns and reports required to be filed and have paid all applicable federal, state and local franchise and income taxes which are due and payable, except for taxes that are being contested in good faith by appropriate proceedings and for which such Loan Party or such Subsidiary, as applicable, has set aside on its books adequate reserves. No Liens have been filed and no claims are being asserted with respect to any such taxes.
18 9.10 ERISA. Other than 401(k) and certain employee health and wellness plans, the Loan Parties do not maintain, participate in or contribute to any employee benefit plan subject to ERISA (any such plan, a “Plan”). Except as could not reasonably be expected to result in material liability to any Loan Party, (a) each Plan is in compliance with the applicable provisions of ERISA, the Code and other federal or state Laws and (b) there are no pending or, to the best knowledge of any Loan Party, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan. No Loan Party nor its Subsidiaries, nor any of their respective ERISA Affiliates, has now, or ever, sponsored, maintained, participated in, contributed to, or had any obligation to contribute to, or has any liability, contingent or otherwise (including any liability on account of any ERISA Affiliate) with respect to, (a) an “employee pension benefit plan” (as defined in Section 3(2) of ERISA), or any other plan that is or was subject to Title IV or Section 302 of ERISA or Sections 412 or 430 of the Code (a “Pension Plan”), or (b) a “multiemployer plan” within the meaning of Section 3(37) or 4001(a)(3) of ERISA (a “Multiemployer Plan”). No Loan Party nor any of its ERISA Affiliates nor any fiduciary of any Plan has engaged in a nonexempt prohibited transaction described in Sections 406 of ERISA or 4975 of the Code. 9.11 Financial Condition. The most recent financial statements of the Borrower and its Subsidiaries, if any, copies of which have been delivered to the Agent, have been prepared in accordance with GAAP and are true, complete and correct and fairly present in all material respects the financial condition of the Borrower and its Subsidiaries, including operating results, as of the accounting period referenced therein. There has not been a Material Adverse Effect since the date of the most recent audited financial statements delivered to the Agent prior to the date of this Agreement. 9.12 Default. No Default or Event of Default has occurred and is continuing. 9.13 OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws. No Loan Party or any of its Subsidiaries is in violation of any Sanctions. No Loan Party nor any of its Subsidiaries nor, to the knowledge of such Loan Party, any director, officer, employee, agent or Affiliate of such Loan Party or such Subsidiary (a) is a Sanctioned Person or a Sanctioned Entity, (b) has any assets located in Sanctioned Entities, or (c) derives revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Entities. Each of the Loan Parties and its Subsidiaries has implemented and maintains in effect policies and procedures reasonably designed to ensure compliance with Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. Each of the Loan Parties and its Subsidiaries, and to the knowledge of each such Loan Party, each director, officer, employee, agent and Affiliate of each such Loan Party and each such Subsidiary, is in compliance with all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. No proceeds of the Loan made hereunder will be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity, or otherwise used in any manner that would result in a violation of any Sanction,
19 Anti-Corruption Law or Anti-Money Laundering Law by any Person (including any Lender or other individual or entity participating in any transaction). 9.14 Subsidiaries. As of the date of this Agreement, no Loan Party has any Subsidiaries other than as set forth on Schedule 9.14. 9.15 Brokers. The Loan Parties have not contracted with any broker or finder to bring about the obtaining, making or closing of this Agreement or transactions contemplated by the Loan Documents, and no Loan Party nor any Affiliate thereof has any obligation to any Person in respect of any finder’s or brokerage fees in connection therewith. 9.16 Patriot Act. To the extent applicable, each Loan Party is in compliance, in all material respects, with the (a) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (b) Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001, as amended) (the “Patriot Act”). 9.17 Margin Stock. Neither any Loan Party nor any of its Subsidiaries owns any Margin Stock or is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. 9.18 Investment Company Status. No Loan Party or any Subsidiary is an investment company as defined in, or subject to regulation under, the Investment Company Act of 1940. 9.19 Solvency. Each Loan Party is Solvent. 9.20 Complete Disclosure. No statement or information contained in this Agreement, any other Loan Document, or any other document, certificate or statement furnished by or on behalf of any Loan Party, for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, contained as of the date such statement, information, document or certificate was so furnished, any untrue statement of a material fact or omitted to state a material fact necessary to make the statement contained herein or therein not misleading. Any projections included in such materials are based upon good faith estimates and assumptions believed by the Loan Parties to be reasonable at the time made and do not guarantee results. 10. Affirmative Covenants. Until all amounts outstanding in this Agreement have been paid in full, the Loan Parties shall: 10.1 Financial Reporting; Other Information. Deliver or provide to the Agent, in form and detail reasonably satisfactory to the Agent:
20 (a) By no later than ten (10) Business Days after the end of each month, a monthly detailed cash flow report, which shall include the following: (i) Accounts Payable. A schedule of all outstanding accounts payable, including vendor names, amounts due, and payment due dates for the upcoming 90 days. (ii) Accounts Receivable. A comprehensive aging report of all accounts receivable, categorized by 0-30, 31-60, 61-90, and 90+ days outstanding. (iii) Restricted Cash. Documentation of any restricted cash balances, including the nature of restrictions, amounts, and expected release dates. (iv) Projected Cash Inflows. A 90-day forecast of anticipated cash receipts from all sources, including customer payments, tax refunds, and other expected income. (v) Projected Cash Outflows. A 90-day forecast of anticipated cash disbursements, including vendor payments, payroll, taxes, debt service, and capital expenditures. (vi) Working Capital. A monthly calculation of working capital (current assets minus current liabilities) with explanations for any significant variances from prior periods. (vii) Extraordinary Items. Disclosure of any anticipated non- recurring cash inflows or outflows exceeding $500,000 within the next 90 days. (b) By no later than ten (10) Business Days after the end of each month (or, if an Event of Default has occurred and is continuing, more frequently if requested by the Agent), each Loan Party shall provide Agent with a written report of all new Patents, Trademarks or Copyrights (as such terms are defined in the Guaranty and Security Agreement), if any, that are registered or the subject of pending applications for registrations, and of all Intellectual Property Licenses (as such term is defined in the Guaranty and Security Agreement) that are material to the conduct of such Loan Party’s business, in each case, which were acquired or registered, or for which applications for registration were filed by any Loan Party during the prior period and any statement of use or amendment to allege use with respect to intent-to-use trademark applications. (c) Promptly, such additional information regarding the business, financial, legal or corporate affairs of any Loan Party or any Subsidiary thereof, or compliance with the terms of the Loan Documents, as the Agent or any Lender may from time to time reasonably request. 10.2 Maintenance of Existence. (a) Preserve, renew and maintain in full force and effect its corporate or organizational existence and (b) take all reasonable action to maintain
21 all rights, privileges and franchises necessary or desirable in the normal conduct of its business, except, in each case, where the failure to do so could not reasonably be expected to have a Material Adverse Effect. 10.3 Compliance. Comply with (a) all of the terms and provisions of its organizational documents; (b) its obligations under its material contracts and agreements; and (c) all Laws and Orders applicable to it and its business, except in each case where the failure to do so would not reasonably be expected to have a Material Adverse Effect. 10.4 Payment Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its material obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings, and reserves in conformity with GAAP with respect thereto have been provided on its books. 10.5 Notices of Material Events. Promptly, but in any event within two (2) Business Days after such event, notify the Agent: (a) of the occurrence of any Default ; (b) of any matter that has resulted or would reasonably be expected to result in a Material Adverse Effect; and (c) of any material change in accounting policies or financial reporting practices by any Loan Party or any Subsidiary thereof. 10.6 Insurance. Keep its business and the Collateral specified in the Collateral Documents insured for risks and maintain insurance policies in a form, with companies, and in amounts that are customary for companies of the Borrower’s size and in the Borrower’s industry and location and, in any event, in amount, adequacy and scope reasonably satisfactory to the Agent. All property policies shall have a lender’s loss payable endorsement showing the Agent as an additional loss payee and waive subrogation against the Agent, and all liability policies shall have a notice of cancellation endorsement and show, or have endorsements showing, the Agent as an additional insured. All policies (or the loss payable and additional insured endorsements) shall provide that the insurer shall give the Agent at least twenty (20) days’ notice before canceling, amending, or failing to renew its policy. At the Agent’s request, the Borrower shall deliver certified copies of policies and evidence of all premium payments. Proceeds under any policy shall, at the Agent’s option, be payable to the Agent on account of the Obligations under this Agreement. 10.7 Further Assurances. Upon the reasonable request of the Agent, promptly execute and deliver such further instruments and do or cause to be done such further acts as may
22 be necessary or advisable to carry out the intent and purposes of this Agreement and each other Loan Document. 10.8 Formation of Subsidiaries. At the time that any Loan Party forms any direct or indirect domestic Subsidiary or acquires any direct or indirect Subsidiary after the date of this Agreement (or such later date as permitted by the Agent in its sole discretion), such Loan Party shall (a) (x) cause any such new Subsidiary to provide to the Agent a guaranty or joinder to the Guaranty and Security Agreement, and (y) cause any such new Subsidiary to provide to the Agent such security documents, as well as appropriate financing statements, all in form and substance reasonably satisfactory to the Agent (including being sufficient to grant the Agent a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary), (b) provide to the Agent a pledge agreement and appropriate certificates and powers or financing statements, pledging all of the direct or beneficial ownership interest in such new Subsidiary reasonably satisfactory to the Agent, and (c) provide to the Agent all other documentation (which may include an opinion of counsel), which in its opinion is reasonably appropriate with respect to the execution and delivery of the applicable documentation referred to above. Any document, agreement, or instrument executed or issued pursuant to this Section 10.8 shall be a Loan Document. 10.9 OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws. Comply with all applicable Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. Each of the Loan Parties and its Subsidiaries shall implement and maintain in effect policies and procedures reasonably designed to ensure compliance by the Loan Parties and their Subsidiaries and their respective directors, officers, employees, agents and Affiliates with Sanctions, Anti- Corruption Laws and Anti-Money Laundering Laws. 10.10 Post-Closing. (a) Within ten (10) Business Days after the date of this Agreement (or such later date as may be agreed to by the Agent in its sole discretion), the Agent shall have received the original stock certificates representing 100% of the Equity Interests of Energy Vault, Inc. by Borrower, together with original executed transfer powers, in form and substance reasonably satisfactory to Agent. (b) Within ten (10) Business Days after the date of this Agreement (or such later date as may be agreed to by the Agent in its sole discretion), the Agent shall have received the original Deed of Trust, and any documents, certificates, forms or affidavits as may be required to record the Deed of Trust. (c) Within thirty (30) days after the date of this Agreement (or such later date as may be agreed to by the Agent in its sole discretion), the Agent shall have received a Control Agreement with respect to each account described on Schedule 4 hereto, excluding any account for which a Permitted Lien is listed on Schedule 3.
23 (d) Within thirty (30) days after the date of this Agreement (or such later date as may be agreed to by the Agent in its sole discretion), the Agent shall have received insurance endorsements required by Section 10.6, the form and substance of which shall be satisfactory to the Agent. (e) Within thirty (30) days after the date of this Agreement (or such later date as may be agreed to by the Agent in its sole discretion), the Title Policy Requirements shall have been satisfied. 11. Negative Covenants. Until all amounts outstanding under this Agreement have been paid in full, the Loan Parties shall not: 11.1 Indebtedness. Incur, create or assume any Debt, other than Permitted Debt. 11.2 Liens. Incur, create, assume or suffer to exist any Lien on any of its property or assets, whether now owned or hereinafter acquired except for Permitted Liens. 11.3 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into another Person. 11.4 Dispositions. Convey, sell, lease, license, assign, transfer, or otherwise dispose of (or enter into an agreement to convey, sell, lease, license, assign, transfer, or otherwise dispose of) any of its assets, other than (a) dispositions of obsolete, unnecessary or worn out property, whether now owned or hereafter acquired, in the ordinary course of business; (b) dispositions of inventory in the ordinary course of business; (c) dispositions consisting of Permitted Liens and Permitted Investments; (d) dispositions consisting of the sale or issuance of Equity Interests of the Borrower (other than Disqualified Equity Interests); (e) dispositions consisting of a Loan Party’s use or transfer of cash or Cash Equivalents in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents; (f) dispositions of non- exclusive licenses for the use of the Intellectual Property of the Loan Parties in the ordinary course of business; (g) dispositions of exclusive licenses existing on the date hereof for the use of intellectual property in respect of specific territories outside the United States; and (h) the disposition of real property in connection with the Scurry Property Sale-Leaseback Transaction, so long as, with respect to such transfer of the Subject Property, the Title Policy Requirements are satisfied, and upon the request of the Agent, the Loan Parties, as applicable, shall enter into any agreements or instruments as may be necessary or advisable to secure the Agent’s first priority lien on the Subject Property. 11.5 Loans, Advances and Investments. Make any investment in any Person in the form of loans, advances, guarantees, capital contributions, or acquisitions of Equity Interests, Debt or all or substantially all of the assets of any Person (or of any division or business line of such other Person), and any other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP (an “Investment”), except for Permitted Investments.
24 11.6 Restricted Payments. Pay any dividends or make any distribution or payment or redeem, retire or purchase any Equity Interests; provided, that (i) the Borrower may pay dividends solely in common stock, (ii) the Borrower may make cash payments in lieu of fractional shares to the extent such shares are otherwise permitted pursuant to this proviso, and (iii) each Subsidiary of a Loan Party may make distributions to such Loan Party. 11.7 Transactions With Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of the Loan Parties, except for (i) transactions that are in the ordinary course of the Loan Party’s business, upon fair and reasonable terms that are no less favorable to such Loan Party than would be obtained in an arm’s length transaction with a non-affiliated Person; (ii) transactions permitted by Section 11.6, (iii) the Scurry Property Sale- Leaseback Transaction and (iv) reasonable and customary compensation arrangements to employees, officers, and outside directors and indemnities provided for the benefit of directors, in each case in accordance with applicable law, in the ordinary course of business and consistent with industry practice. 11.8 Line of Business. Enter into any business, directly or indirectly, except for those businesses in which such Loan Party is engaged on the date of this Agreement or businesses that are reasonably related thereto. 11.9 Use of Proceeds. Use the proceeds of the Loan made hereunder for any purpose other than (a) on the Closing Date, to pay the fees, costs, and expenses incurred in connection with this Agreement and the other Loan Documents, and the transactions contemplated hereby and thereby, and (b) thereafter for general corporate purposes and to support the general working capital needs of the Borrower not in contravention of any Law or this Agreement or any other Loan Document; provided, that (x) no part of the proceeds of the Loan will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any such Margin Stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors, (y) no part of the proceeds of the Loan will be used, directly or to the Borrower’s knowledge after due care and inquiry, indirectly, to make any payments to a Sanctioned Entity or a Sanctioned Person, to fund any investments, loans or contributions in, or otherwise make such proceeds available to, a Sanctioned Entity or a Sanctioned Person, to fund any operations, activities or business of a Sanctioned Entity or a Sanctioned Person, or in any other manner that would result in a violation of Sanctions by any Person, and (z) no part of the proceeds of the Loan will be used, directly or to the Borrower’s knowledge after due care and inquiry, indirectly, in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Sanctions, Anti- Corruption Laws or Anti-Money Laundering Laws. 11.10 Amendments and Prepayments. (a) Optionally prepay, redeem, defease, purchase, or otherwise acquire any Debt of such Loan Party, other than the Obligations in accordance with this Agreement; or
25 (b) Directly or indirectly, amend, modify, or change any of the terms or provisions of the Organization Documents of such Loan Party if the effect thereof, either individually or in the aggregate, could reasonably be expected to be materially adverse to the interests of the Agent or any Lender. 11.11 ERISA Plans. (a) Adopt, sponsor, maintain, participate in, contribute to or assume an obligation to contribute to, or permit any ERISA Affiliate to adopt, sponsor, maintain, participate in, contribute to or assume an obligation to contribute to, any Pension Plan or Multiemployer Plan, or (b) acquire, or permit any ERISA Affiliate to acquire, an interest in any Person that causes such Person to become an ERISA Affiliate with respect to a Loan Party or with respect to any ERISA Affiliate if such Person sponsors, maintains, participates in or contributes to, or at any time in the six-year period preceding such acquisition has sponsored, maintained, participated in, or contributed to, any Pension Plan or any Multiemployer Plan. 11.12 Liquidity. Permit Liquidity, measured as of the last day of each calendar month, to be less than $15,000,000; provided, however, in the event the Borrower fails to comply with the foregoing covenant as of the last day of any calendar month, the Borrower may cure (and/or shall be deemed to have cured) an Event of Default arising out of a breach of such covenant by applying the proceeds of cash equity contributions (which shall not be Disqualified Equity Interests) in an amount equal to 100% of the amount sufficient to cause the Borrower to be in compliance with the foregoing covenant, after the last day of such calendar month and on or prior to the day that is seven (7) Business Days thereafter. 11.13 Market Capitalization. Permit the Borrower’s market capitalization to be less than $70,000,000 based on the closing price of Borrower’s common stock, on a fully-diluted basis, for each of five (5) consecutive trading days; provided, however, in the event the Borrower fails to comply with the foregoing covenant, the Borrower may cure (and/or shall be deemed to have cured) an Event of Default arising out of a breach of such covenant by making an optional prepayment hereunder in the amount of $2,500,000 on or prior to the day that is seven (7) Business Days after the last day of such five (5) consecutive trading day period. 12. Events of Default. The occurrence and continuance of any of the following shall constitute an Event of Default hereunder: 12.1 Failure to Pay. The Borrower fails to pay any principal amount of the Loan or interest or any other amount when due. 12.2 Breach of Representations and Warranties. Any representation or warranty made or deemed made by any Loan Party to the Agent or the Lenders herein or in any other Loan Document is incorrect in any material respect on the date as of which such representation or warranty was made or deemed made.
26 12.3 Breach of Covenants. Any Loan Party fails to observe or perform (a) any covenant, condition or agreement contained in Sections 10.1, 10.5, 10.6, 10.8, 10.9, or 10.10 or Section 11, or (b) any other covenant, obligation, condition or agreement contained in this Agreement or any other Loan Document other than those specified in clause (a) and Section 12.1 and such failure continues for 30 days after the occurrence thereof. 12.4 Cross-Defaults. Any Loan Party fails to pay when due any of its Debt having an outstanding principal amount in excess of $500,000 (other than Debt arising under this Agreement) or any interest or premium thereon when due (whether by scheduled maturity, acceleration, demand or otherwise) and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt. 12.5 Bankruptcy. (a) the Borrower or any of its Subsidiaries commences any case, proceeding or other action (i) under any existing or future Law relating to bankruptcy, insolvency, reorganization, or other relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts or (ii) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Borrower or any of its Subsidiaries makes a general assignment for the benefit of its creditors; (b) there is commenced against the Borrower or any of its Subsidiaries any case, proceeding or other action of a nature referred to in Section 12.5(a) above which (i) results in the entry of an order for relief or any such adjudication or appointment or (ii) remains undismissed, undischarged or unbonded for a period of 30 days; (c) there is commenced against the Borrower or any of its Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which has not been vacated, discharged, or stayed or bonded pending appeal within 30 days from the entry thereof; (d) the Borrower or any of its Subsidiaries takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in Section 12.5(a), Section 12.5(b) or Section 12.5(c) above; or (e) the Borrower or any of its Subsidiaries is generally not, or shall be unable to, or admits in writing its inability to, pay its debts as they become due. 12.6 Judgments. One or more judgments or decrees in an amount in excess of $500,000 (to the extent not adequately covered by insurance as to which a solvent and unaffiliated
27 insurance company has acknowledged coverage therefor) shall be entered against any Loan Party and such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof. 12.7 Change of Control. A Change of Control has occurred. 12.8 Guaranty. (a) The guaranty under the Guaranty and Security Agreement terminates or ceases for any reason to be in full force and effect other than in accordance with its terms; (b) any Guarantor does not perform any obligation or covenant under the Guaranty and Security Agreement and such failure continues beyond any applicable grace period; (c) any circumstance described in Sections 12.5 of this Agreement occurs with respect to any Guarantor, or (d) except as permitted by Section 11.3, the liquidation, winding up, or termination of existence of any Guarantor. 12.9 Loan Documents. Any material provision of any Loan Document for any reason ceases to be valid, binding and enforceable in accordance with its terms (or any Person party thereto shall challenge the enforceability of any Loan Document or shall assert in writing, or engage in any action or inaction that evidences its assertion, that any provision of any of the Loan Documents has ceased to be or otherwise is not valid, binding and enforceable in accordance with its terms). 12.10 Material Adverse Effect. The Agent reasonably determines in good faith that any Material Adverse Effect has occurred. 13. Remedies. Upon the occurrence of any Event of Default and at any time thereafter during the continuance of such Event of Default, the Agent may at its option, and at the instruction of the Lenders shall, by written notice to the Borrower (a) declare the entire principal amount of this Agreement, together with all accrued interest thereon and all other amounts payable hereunder, immediately due and payable; and/or (b) exercise any or all of its rights, powers or remedies under any Loan Document or applicable Law; provided, however, that, if an Event of Default described in Section 12.5 shall occur, the principal of and accrued interest on the Loan shall become immediately due and payable without any notice, declaration or other act on the part of the Agent or any Lender. 14. Agent. 14.1 Appointment and Authority. (a) Appointment and Authorization. Each of the Lenders hereby irrevocably appoints Crescent Cove Opportunity Lending, LLC to act on its behalf as its agent under this Agreement and the other Loan Documents, and all other Collateral Documents, guaranties and all other documents relating to the foregoing and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to the Agent by the terms hereof
28 or thereof, which include, without limitation, the sole and exclusive right and authority (to the exclusion of Lenders) to exercise remedies with respect to the Collateral in its discretion, and at the instruction of the Lenders, following the occurrence of an Event of Default, together with such actions and powers as are reasonably incidental thereto. The provisions of this Section are solely for the benefit of the Agent and the Lenders, and neither the Borrower nor any other Loan Party shall have rights as a third-party beneficiary of any of such provisions. (b) Authorization. Without limiting the generality of Section 14.1(a) above, the Agent shall have the sole and exclusive right and authority (to the exclusion of Lenders), and each Lender hereby irrevocably authorizes the Agent to: (i) release any lien on any Collateral granted to or held by the Agent under any Loan Document: (A) when all Obligations (other than contingent indemnification obligations) have been paid in full and the commitments of Lenders have terminated; (B) that is sold or otherwise disposed of or to be sold or otherwise disposed of as part of or in connection with any sale or other disposition permitted under the Loan Documents to a Person that is not and is not required to become a Loan Party; (C) if approved, authorized or ratified in writing by Lenders; or (D) in connection with any commercially reasonable foreclosure sale or other commercially reasonable disposition of Collateral after the occurrence of an Event of Default; (ii) to subordinate any Lien on any property granted to or held by the Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 11.2; and (iii) to release any Guarantor from its obligations under the Guaranty and Security Agreement if such Person ceases to be a Subsidiary as a result of a transaction permitted under the Loan Documents. (c) Binding Actions. Each Lender agrees that (i) any action taken by the Agent in accordance with the provisions of the Loan Documents, (ii) any action taken by the Agent in reliance upon the instructions of Lenders and (iii) the exercise by the Agent of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of Lenders. 14.2 Rights as a Lender. The person serving as the Agent shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the person serving as the Agent hereunder in its individual capacity. 14.3 Reliance by Agent. The Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument,
29 document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper person. 14.4 Delegation of Duties. The Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Agent. 14.5 Resignation of Agent. The Agent may at any time give notice of its resignation to Lenders and the Borrower. Upon receipt of any such notice of resignation, the Lenders shall have the right to appoint a successor Agent. If no such successor shall have been so appointed by Lenders within 30 days after the retiring Agent gives notice of its resignation. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the earlier of (i) the appointment of a successor Agent or (ii) a date that is 30 days after the date upon which retiring Agent gave notice of its resignation. 14.6 Non-Reliance on Agent. Each Lender acknowledges that it has, independently and without reliance upon the Agent and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. 14.7 No Requirement to Exercise Discretion. The Agent shall not be required to exercise any discretion or take, or to omit to take, any action, including with respect to enforcement or collection, except any action it is required to take or omit to take (i) under any Loan Document or (ii) pursuant to instructions from Lenders. 14.8 Administrative Role. Under the Loan Documents, the Agent (i) is acting solely on behalf of Lenders, with duties that are entirely administrative in nature, notwithstanding the use of the defined term “Agent”, the terms “agent” and similar terms in any Loan Document to refer to Agent, which terms are used for title purposes only, (ii) is not assuming any obligation under any Loan Document other than as expressly set forth therein or any role as agent, fiduciary or trustee of or for any Lender and (iii) shall have no implied functions, responsibilities, duties, obligations or other liabilities under any Loan Document, and each Lender hereby waives and agrees not to assert any claim against the Agent based on the roles, duties and legal relationships expressly disclaimed in clauses (i) through (iii) above. 14.9 Indemnification. The Lenders hereby indemnify the Agent in its capacity as such (to the extent not reimbursed by the Borrower) according to each Lender’s Percentage Share from and against any and all liabilities imposed on, incurred by or asserted against the Agent for any actions taken or omitted by the Agent under or in connection in connection with any Loan Document or any other documents contemplated by or referred to therein; provided, that no Lender shall be liable to the Agent to the extent such liability has resulted primarily from the gross negligence or willful misconduct of the Agent as determined by a court of competent jurisdiction
30 in a final non-appealable judgment or order. Agent shall not be required to take, or to omit to take, any action (i) unless, upon demand, the Agent receives an indemnification satisfactory to it from Lenders against all liabilities that, by reason of such action or omission, may be imposed on, incurred by or asserted against the Agent or any affiliate thereof or (ii) that is, in the opinion of the Agent or its counsel, contrary to any Loan Document or applicable law. 14.10 Waiver of Liability. The Agent shall not be liable for any action taken or omitted to be taken by it under or in connection with any Loan Document, and each Lender and the Loan Parties hereby waive and shall not assert any right, claim or cause of action based thereon, except to the extent of liabilities resulting primarily from the gross negligence or willful misconduct of the Agent or, as the case may be, such affiliate (each as determined in a final, non- appealable judgment by a court of competent jurisdiction) in connection with the duties expressly set forth herein. 14.11 No Duty to Inquire. The Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Agent’s lien thereon, or any certificate prepared by the Borrower or any Guarantor in connection therewith, nor shall the Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral. 14.12 Reimbursement of Expenses. Each Lender agrees to reimburse the Agent (to the extent not reimbursed by the Borrower) promptly upon demand for such Lender’s Percentage Share of any reasonable costs and expenses (including reasonable fees, charges and disbursements of financial, legal and other advisors and other taxes paid in the name of, or on behalf of, the Borrower) that may be incurred by or on behalf of the Agent in connection with the preparation, execution, delivery, administration, modification, consent, waiver or enforcement (whether through negotiations, through any work-out, bankruptcy, restructuring or other legal or other proceeding or otherwise) of, or legal advice in respect of its rights or responsibilities under, any Loan Document. To the extent that the Borrower for any reason fails to pay any amount required under the Loan Documents to be paid by it to the Agent (or any sub-agent thereof), each Lender severally agrees to pay to the Agent (or any sub-agent thereof) such Lender’s Percentage Share of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender); provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Agent (or any such sub-agent) in its capacity as such; provided, further, that no Lender shall be liable to the Agent to the extent such liability has resulted primarily from the gross negligence or willful misconduct of the Agent as determined by a court of competent jurisdiction in a final non-appealable judgment or order. 14.13 Co-Lenders. Lenders agree as follows:
31 (a) Payments. All payments payable under this Agreement shall be payable pursuant to the terms thereof including payment installments and shall be paid to the Agent for the pro rata benefit of the Lenders, unless any provision of this Agreement or any other Loan Documents shall specify otherwise. (b) Mutual Consent. Notwithstanding any provision in any Loan Documents granting a Lender the right to exercise a remedy, demand payment in full of the portion of the Loan payable to such Lender or undertake any action, a Lender shall not undertake any such action, unless all Lenders agree to exercise such remedy, demand such payment or undertake such action. 15. Miscellaneous. 15.1 Notices. (a) All notices, requests or other communications required or permitted to be delivered hereunder shall be delivered in writing, in each case to the address specified below or to such other address as such Party may from time to time specify in writing in compliance with this provision: (i) If to any Loan Party: c/o Energy Vault Holdings, Inc. 4165 East Thousand Oaks Blvd, Suite 100 Westlake Village, CA 91362 Attention: General Counsel E-Mail: Legal@Energyvault.com with a copy (which shall not constitute notice) to: Moses & Singer LLP The Chrysler Building, 405 Lexington Avenue New York, New York 10174 Attention: Paul M. Roder; and Liberty McAteer E-Mail: proder@mosessinger.com; and lmcateer@mosessinger.com
32 (ii) If to the Agent: Crescent Cove Opportunity Lending, LLC 1700 Montgomery Street, Suite 240 San Francisco, CA 94111 Attention: Jun Hong Heng E-Mail: junhong@crescentcove.com with a copy (which shall not constitute notice) to: Morgan, Lewis & Bockius LLP 300 South Grand Avenue, 22nd Floor Los Angeles, CA 90071 Attention: David V. Chang E-Mail: david.chang@morganlewis.com (b) Notices if (i) mailed by certified or registered mail or sent by hand or overnight courier service shall be deemed to have been given when received; (ii) sent by facsimile during the recipient’s normal business hours shall be deemed to have been given when sent (and if sent after normal business hours shall be deemed to have been given at the opening of the recipient’s business on the next Business Day); and (iii) sent by e-mail shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgment). 15.2 Expenses. (a) The Borrower shall reimburse the Agent on demand for all reasonable and documented out-of-pocket costs, expenses and fees (including reasonable expenses and fees of its counsel) incurred by the Agent in connection with the transactions contemplated hereby including the negotiation, documentation and execution of this Agreement and the other Loan Documents and the enforcement of the rights of the Agent and Lenders hereunder and thereunder; provided, however, that the $25,000 deposit received by the Agent prior to the Closing Date (the “Deposit Amount”) shall be applied toward the foregoing expenses. (b) Indemnification by the Borrower. The Borrower shall indemnify the Agent, each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the Borrower) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of
33 their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) the Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of hazardous materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any environmental liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower, and regardless of whether any Indemnitee is a party thereto; provided, that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee, (y) result from a claim brought by the Borrower against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrower has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction or (z) result from a claim not involving an act or omission of the Borrower and that is brought by an Indemnitee against another Indemnitee. (c) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, each Loan Party shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, the Loan, or the use of the proceeds thereof. No Indemnitee referred to Section 15.2(b) shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby except to the extent determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. (d) Survival. Each party’s obligations under this Section shall survive the termination of the Loan Documents and payment of the obligations hereunder. 15.3 Governing Law. This Agreement, the other Loan Documents and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement, the other Loan Documents (except, as to any other Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the law of the State of New York, except that at all times the provisions for the creation, perfection and enforcement of the liens and security interests created pursuant to the Deed of Trust shall be governed by and construed according to the law of the state in which the Subject Property is located, it being understood that, to the fullest extent permitted by the law of such state, except as set forth herein above, the law of
34 the State of New York shall govern the construction, validity and enforceability of this Agreement and the other Loan Documents and all of the Obligations arising hereunder or thereunder. 15.4 Consent to Jurisdiction. Each party agrees that all actions or proceedings arising in connection with this Agreement and the other Loan Documents shall be tried and litigated only in the State of California, the federal courts of the United States of America for the Northern District of California, and the appellate courts from any thereof; provided, that any suit seeking enforcement against any Collateral or other property may be brought, at the Agent’s option, in the courts of any jurisdiction where the Agent elects to bring such action or where such Collateral or other property may be found. Each party irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to the Loan Documents in any court referred to herein. Each party (i) irrevocably waives the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court and (ii) consents to service of process in the manner provided for notices in Section 15.1. Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable law. 15.5 JURY TRIAL WAIVER. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NEITHER THE AGENT, ANY LENDER, NOR ANY REPRESENTATIVE THEREOF HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS AGREEMENT. 15.6 JUDICIAL REFERENCE. IN THE EVENT ANY LEGAL PROCEEDING IS FILED IN A COURT OF THE STATE OF CALIFORNIA (THE “COURT”) BY OR AGAINST ANY PARTY HERETO IN CONNECTION WITH ANY CLAIM AND THE WAIVER SET FORTH IN SECTION 15.5 ABOVE IS NOT ENFORCEABLE IN SUCH PROCEEDING, THE PARTIES HERETO AGREE AS FOLLOWS: (a) WITH THE EXCEPTION OF THE MATTERS SPECIFIED IN SUBCLAUSE (b) BELOW, ANY CLAIM SHALL BE DETERMINED BY A GENERAL REFERENCE PROCEEDING IN ACCORDANCE WITH THE PROVISIONS OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1. THE PARTIES INTEND THIS GENERAL REFERENCE AGREEMENT TO BE SPECIFICALLY
35 ENFORCEABLE. VENUE FOR THE REFERENCE PROCEEDING SHALL BE IN THE COUNTY OF SAN FRANCISCO, CALIFORNIA. (b) THE FOLLOWING MATTERS SHALL NOT BE SUBJECT TO A GENERAL REFERENCE PROCEEDING: (A) NON-JUDICIAL FORECLOSURE OF ANY SECURITY INTERESTS IN REAL OR PERSONAL PROPERTY, (B) EXERCISE OF SELF- HELP REMEDIES (INCLUDING SET-OFF OR RECOUPMENT), (C) APPOINTMENT OF A RECEIVER, AND (D) TEMPORARY, PROVISIONAL, OR ANCILLARY REMEDIES (INCLUDING WRITS OF ATTACHMENT, WRITS OF POSSESSION, TEMPORARY RESTRAINING ORDERS, OR PRELIMINARY INJUNCTIONS). THIS AGREEMENT DOES NOT LIMIT THE RIGHT OF ANY PARTY TO EXERCISE OR OPPOSE ANY OF THE RIGHTS AND REMEDIES DESCRIBED IN CLAUSES (A) - (D) AND ANY SUCH EXERCISE OR OPPOSITION DOES NOT WAIVE THE RIGHT OF ANY PARTY TO PARTICIPATE IN A REFERENCE PROCEEDING PURSUANT TO THIS AGREEMENT WITH RESPECT TO ANY OTHER MATTER. (c) UPON THE WRITTEN REQUEST OF ANY PARTY, THE PARTIES SHALL SELECT A SINGLE REFEREE, WHO SHALL BE A RETIRED JUDGE OR JUSTICE. IF THE PARTIES DO NOT AGREE UPON A REFEREE WITHIN TEN (10) DAYS OF SUCH WRITTEN REQUEST, THEN, ANY PARTY SHALL HAVE THE RIGHT TO REQUEST THE COURT TO APPOINT A REFEREE PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 640(B). THE REFEREE SHALL BE APPOINTED TO SIT WITH ALL OF THE POWERS PROVIDED BY LAW. PENDING APPOINTMENT OF THE REFEREE, THE COURT SHALL HAVE THE POWER TO ISSUE TEMPORARY OR PROVISIONAL REMEDIES. (d) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE REFEREE SHALL DETERMINE THE MANNER IN WHICH THE REFERENCE PROCEEDING IS CONDUCTED INCLUDING THE TIME AND PLACE OF HEARINGS, THE ORDER OF PRESENTATION OF EVIDENCE, AND ALL OTHER QUESTIONS THAT ARISE WITH RESPECT TO THE COURSE OF THE REFERENCE PROCEEDING. ALL PROCEEDINGS AND HEARINGS CONDUCTED BEFORE THE REFEREE, EXCEPT FOR TRIAL, SHALL BE CONDUCTED WITHOUT A COURT REPORTER, EXCEPT WHEN ANY PARTY SO REQUESTS A COURT REPORTER AND A TRANSCRIPT IS ORDERED, A COURT REPORTER SHALL BE USED AND THE REFEREE SHALL BE PROVIDED A COURTESY COPY OF THE TRANSCRIPT. THE PARTY MAKING SUCH REQUEST SHALL HAVE THE OBLIGATION TO ARRANGE FOR AND PAY THE COSTS OF THE COURT REPORTER; PROVIDED THAT SUCH COSTS, ALONG WITH THE REFEREE’S FEES, SHALL ULTIMATELY BE BORNE BY THE PARTY WHO DOES NOT PREVAIL, AS DETERMINED BY THE REFEREE.
36 (e) THE REFEREE MAY REQUIRE ONE OR MORE PREHEARING CONFERENCES. THE PARTIES HERETO SHALL BE ENTITLED TO DISCOVERY, AND THE REFEREE SHALL OVERSEE DISCOVERY IN ACCORDANCE WITH THE RULES OF DISCOVERY, AND SHALL ENFORCE ALL DISCOVERY ORDERS IN THE SAME MANNER AS ANY TRIAL COURT JUDGE IN PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA. (f) THE REFEREE SHALL APPLY THE RULES OF EVIDENCE APPLICABLE TO PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA AND SHALL DETERMINE ALL ISSUES IN ACCORDANCE WITH CALIFORNIA SUBSTANTIVE AND PROCEDURAL LAW. THE REFEREE SHALL BE EMPOWERED TO ENTER EQUITABLE AS WELL AS LEGAL RELIEF AND RULE ON ANY MOTION WHICH WOULD BE AUTHORIZED IN A TRIAL, INCLUDING MOTIONS FOR DEFAULT JUDGMENT OR SUMMARY JUDGMENT. THE REFEREE SHALL REPORT HIS OR HER DECISION, WHICH REPORT SHALL ALSO INCLUDE FINDINGS OF FACT AND CONCLUSIONS OF LAW. THE REFEREE SHALL ISSUE A DECISION AND PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE, SECTION 644, THE REFEREE’S DECISION SHALL BE ENTERED BY THE COURT AS A JUDGMENT IN THE SAME MANNER AS IF THE ACTION HAD BEEN TRIED BY THE COURT. THE FINAL JUDGMENT OR ORDER FROM ANY APPEALABLE DECISION OR ORDER ENTERED BY THE REFEREE SHALL BE FULLY APPEALABLE AS IF IT HAS BEEN ENTERED BY THE COURT. (g) THE PARTIES RECOGNIZE AND AGREE THAT ALL CLAIMS RESOLVED IN A GENERAL REFERENCE PROCEEDING PURSUANT HERETO WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN CHOICE, EACH PARTY HERETO KNOWINGLY AND VOLUNTARILY AND FOR THEIR MUTUAL BENEFIT AGREES THAT THIS REFERENCE PROVISION SHALL APPLY TO ANY DISPUTE BETWEEN THEM THAT ARISES OUT OF OR IS RELATED TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. 15.7 Treatment of Certain Information; Confidentiality. Each of the Agent and the Lenders agree to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its branches and Affiliates and to its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners); (c) to the extent required by Laws or by any subpoena or similar legal process; (d) to any other party hereto; (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder;
37 (f) subject to an agreement containing provisions substantially the same as (or no less restrictive than) those of this Section, to (i) any assignee of or participant in, or any prospective assignee of or participant in, any of its rights and obligations under this Agreement, or (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder; (g) on a confidential basis to any rating agency in connection with rating the Borrower or its Subsidiaries; (h) with the consent of the Borrower; or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section, or (y) becomes available to the Agent, any Lender or any of their respective branches or Affiliates on a nonconfidential basis from a source other than the Borrower that is not known to be subject to a confidentiality obligation to the Borrower or (z) is independently discovered or developed by a party hereto without utilizing any Information received from the Borrower or violating the terms of this Section; or (j) to the extent required by a potential or actual insurer or reinsurer in connection with providing insurance, reinsurance or credit risk mitigation coverage under which payments are to be made or may be made by reference to this Agreement. For purposes of this Section, “Information” means all information received from the Borrower or any of its Subsidiaries relating to the Borrower or any of its Subsidiaries or any of their respective businesses, other than any such information that is available to the Agent or any Lender or on a nonconfidential basis prior to disclosure by the Borrower or any of its Subsidiaries. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. 15.8 Counterparts; Integration; Effectiveness. This Agreement, the other Loan Documents and any amendments, waivers, consents or supplements hereto and thereto may be executed in counterparts, each of which shall constitute an original, but all taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract between the Parties with respect to the subject matter hereof and supersede all previous agreements and understandings, oral or written, with respect thereto. This Agreement may be executed by means of (a) an electronic signature that complies with the federal Electronic Signatures in Global and National Commerce Act, state enactments of the Uniform Electronic Transactions Act, or any other relevant and applicable electronic signatures law; (b) an original manual signature; or (c) a faxed, scanned, or photocopied manual signature. Each electronic signature or faxed, scanned, or photocopied manual signature shall for all purposes have the same validity, legal effect, and admissibility in evidence as an original manual signature. Any Loan Party delivering an executed counterpart of this Agreement or the other Loan Documents by facsimile or other electronic format also shall deliver an original executed counterpart of this Agreement and the other Loan Documents but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement or such other Loan Documents.
38 15.9 Successors and Assigns. Each Lender may assign or grant a participation of any interest in, its rights and duties under this Agreement to any Person. No Loan Party may assign or transfer this Agreement or any of its rights hereunder without the prior written consent of the Agent. This Agreement shall inure to the benefit of, and be binding upon, the Parties and their permitted assigns. 15.10 Waiver of Notice. To the extent permitted by applicable law, the Borrower hereby waives demand for payment, presentment for payment, protest, notice of payment, notice of dishonor, notice of nonpayment, notice of acceleration of maturity and diligence in taking any action to collect sums owing hereunder. 15.11 Patriot Act; Due Diligence. Each Lender that is subject to the requirements of the Patriot Act hereby notifies the Loan Parties that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender to identify each Loan Party in accordance with the Patriot Act. 15.12 Interpretation. For purposes of this Agreement (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Any reference herein or in any other Loan Document to the satisfaction, repayment, or payment in full of all amounts outstanding under this Agreement or of the Obligations shall mean (a) the payment or repayment in full in immediately available funds of (i) the principal amount of, and interest accrued and unpaid with respect to, the outstanding Loan, together with the payment of any premium applicable to the repayment of the Loan, (ii) all expenses that have accrued hereunder and are unpaid regardless of whether demand has been made therefor, and (iii) all fees or charges that have accrued hereunder or under any other Loan Document and are unpaid, (b) the payment or repayment in full in immediately available funds of all other outstanding Obligations other than unasserted contingent indemnification Obligations, and (c) the termination of all of the commitments of the Lenders. The definitions given for any defined terms in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. Unless the context otherwise requires, references herein: (x) to Schedules, Exhibits and Sections mean the Schedules, Exhibits and Sections of 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. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.
39 15.13 Amendments and Waivers. No term of this Agreement may be waived, modified or amended except by an instrument in writing signed by each of the Parties hereto. Any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. 15.14 Headings. The headings of the various Sections and subsections herein are for reference only and shall not define, modify, expand or limit any of the terms or provisions hereof. 15.15 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising on the part of the Agent or any Lender, of any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 15.16 Severability. If any term or provision of this Agreement or any other Loan Document is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or such other Loan Document or invalidate or render unenforceable such term or provision in any other jurisdiction. 15.17 Marketing. The Agent shall have the right to include the Loan Parties in its marketing materials and publicly showcase the Loan Parties as a company in which the Lenders have invested. Such usage shall be subject to prior written notice to the Borrower and any applicable confidentiality or proprietary restrictions set forth elsewhere in this Agreement. [SIGNATURE PAGE FOLLOWS]
[Credit Agreement] IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first stated above. BORROWER: ENERGY VAULT HOLDINGS, INC., a Delaware corporation By: Name: Title: GUARANTORS: ENERGY VAULT, INC., a Delaware corporation By: Name: Title: SNYDER HOUSING LLC, a Texas limited liability company By: Name: Title: CETUS ENERGY LLC, a Delaware limited liability company By: Name: Title:
[Credit Agreement] CETUS ENERGY, INC., a Delaware corporation By: Name: Title: CROSS TRAILS ENERGY STORAGE PROJECT HOLDCO LLC, a Delaware limited liability company By: Name: Title: CROSS TRAILS ENERGY STORAGE PROJECT, LLC, a Delaware limited liability company By: Name: Title: ENERGY VAULT CDU HOLDCO, LLC, a Delaware limited liability company By: Name: Title:
[Credit Agreement] ENERGY VAULT CDU PROJECT, LLC, a Delaware limited liability company By: Name: Title:
[Credit Agreement] CRESCENT COVE OPPORTUNITY LENDING, LLC, a Delaware limited liability company, as a Lender and as the Agent By: _______________________________ Name: Jun Hong Heng Title: Managing Member CRESCENT COVE OPPORTUNITY LENDING B, LLC, a Delaware limited liability company, as a Lender By: Name: Jun Hong Heng Title: Managing Member CRESCENT COVE CAPITAL IV LENDING, LLC, a Delaware limited liability company, as a Lender By: Crescent Cove Advisors, LP Its: Manager By: Name: Jun Hong Heng Title: Chief Investment Officer
DB2/ 50828757.12 EXHIBIT A LEGAL DESCRIPTION OF SUBJECT PROPERTY DESCRIPTION, of a 20.000 acre tract of land situated in the Northwest Quarter (NW/4) of Section Number Fifteen (15) in Block 3, H&TC Railroad Co. Surveys, Abstract No. 369, Scurry County, Texas; said tract being part of that certain tract of land described in Warranty Deed to Grady Carl Williams recorded in Volume 271, Page 781 of the Deed Records, Scurry County, Texas; said 20.000 acre tract being more particularly described as follows: COMMENCING, at a 1/2-inch rebar with unreadable cap found in the centerline of Camp Springs Road at the northwest corner of said Section 15; said point also being the northeast corner of Section Number Sixteen (16) in Block 3, H&TC Railroad Co. Surveys, Abstract No. 2530, Scurry County, Texas and the northwest corner of that certain tract of land described in Right-Of-Way Deed to Scurry County, Texas recorded in Volume 138, Page 305 of the said Deed Records; THENCE, South 14 degrees 21 minutes 54 seconds East, departing the said centerline of Camp Springs Road and along the common line between said Section 15 and said Section 16 and the west line of said Scurry County tract, a distance of 40.02 feet to a 1/2-inch iron rod with “WESTWOOD PS” cap set at the POINT OF BEGINNING in the southerly right-of-way line of said Camp Springs Road; said point also being the southwest corner of said Scurry County tract; THENCE, North 77 degrees 29 minutes 29 seconds East, departing the said common line between the Section 15 and the Section 16 and along the said southerly right-of-way line of said Camp Springs Road and southerly line of said Scurry County tract, a distance of 804.42 feet to a 1/2-inch iron rod with “WESTWOOD PS” cap set for corner; THENCE, South 14 degrees 21 minutes 54 seconds East, departing the said southerly right-of-way line of said Camp Springs Road and southerly line of said Scurry County tract, a distance of 1,084.57 feet to a 1/2-inch iron rod with “WESTWOOD PS” cap set for corner; THENCE, South 77 degrees 38 minutes 02 seconds West, a distance of 804.49 feet to a 1/2-inch iron rod with “WESTWOOD PS” cap set for corner in the said common line between the Section 15 and the Section 16; THENCE, North 14 degrees 21 minutes 54 seconds West, along the said common line between the Section 15 and the Section 16, a distance of 1,082.57 feet to the POINT OF BEGINNING; CONTAINING 871,189 square feet or 20.000 acres of land, more or less.
DB2/ 50828757.12 EXHIBIT B FLOW OF FUNDS; WIRE INSTRUCTIONS The Agent is hereby directed by the Borrower to disburse the net proceeds of the Loan (“Net Proceeds”) in the amount set forth below on behalf of and at the direction of the Borrower to the accounts set forth below: Loan Amount $10,000,000.00 OID Amount $(500,000.00) Commitment and Structuring Fee $(150,000.00) Interest (May 13, 2025 – July 12, 2025) $(400,000.00) Background check and credit check $(3,718.00) Legal fees – Norton Rose $(6,500.00) Legal fees – Morgan Lewis $(137,000.00) Deposit Amount $25,000.00 Total $8,827,782.00 1. Net Proceeds in the amount of $110,000.00 to Moses & Singer LLP in accordance with the following wire instructions: Bank: Capital One, National Association Bank Address: 299 Park Avenue, 23rd Floor New York, New York 10171 Bank ABA Number: 021407912 Bank ACH Payment: 065000090 Bank SWIFT Code: HIBKUS44 (for international wire transfers) Our Account Name: Moses & Singer LLP Our Account Number: 7527681302 Reference: 021388-0101 2. Net Proceeds in the amount of $8,717,782.00 to Energy Vault, Inc. in accordance with the following wire instructions: Energy Vault, Inc. Bank: HSBC Bank ABA: 021001088 SWIFT: MRMDUS33 Account: 917024435
ACH Energy Vault, Inc. Bank: HSBC Bank ABA: 022000020 Account: 917024435 Account Confirmation: Michael Gervais 770-880-8745
SCHEDULE 1 COMMITMENTS Lender Commitment Percentage of Total Commitments Crescent Cove Opportunity Lending, LLC $5,645,703.00 56.45703% Crescent Cove Opportunity Lending B, LLC $3,123,815.00 31.23815% Crescent Cove Capital IV Lending, LLC $1,230,482.00 12.30482% Total $10,000,000.00 100.00%
SCHEDULE 2 PERMITTED DEBT 1. Obligations of Energy Vault, Inc. in respect of the below letters of credit. Bank Beneficiary Performance Total Start Expiry Auto-Renewed Fee Rate Status Ref # Cash collateralized LCs HSBC Pacific Gas & Electric Company 450,000 450,000 1/24/2023 1/13/2026 Yes 0.77 ISSUED SDCMTN583940 HSBC Pacific Gas & Electric Company 450,000 450,000 5/8/2023 5/10/2026 Yes 0.77 ISSUED SDCMTN608265 HSBC Pacific Gas & Electric Company 90,000 90,000 8/29/2024 8/28/2025 Yes 0.77 ISSUED SDCMTN609781 Total Cash Collateralized 990,000 990,000 LCs backed by Sureties Bank of Nova Scotia St. Gall Energy Storage I LLC (Jupiter) 3,800,000 3,800,000 6/9/2023 6/9/2025 Yes 0.40/2.60 ISSUED OSB270942NYA Lloyds Bank St. Gall Energy Storage II LLC (Jupiter) 9,731,000 9,731,000 11/14/2024 5/31/2025 Yes 2.80 ISSUED LBCMNY2024189 Total 13,531,000 13,531,000 Total LCs Outstanding 14,521,000 14,521,000
2. Obligations of Energy Vault, Inc. in respect of the below surety bonds. Sureties (Indemnity Agreement) Beneficiary (Project) Bank LC Performance / Warranty Contractor's License Payment Sales Tax Customs Total Start Expiry Fee Rate Indemnity Agreement Bond# Swiss Re Lloyds Bank (St. Gall Energy Storage II LLC) 9,731,000 9,731,000 11/14/2024 5/31/2025 2.80 SUR2223474 00 Ascot Bk of Nova Scotia (St. Gall Energy Storage I LLC Jupiter) 3,800,000 3,800,000 6/9/2023 6/9/2025 2.20/ 2.60 Ascot SURU221000 1841 Ascot Consumers Energy Company (IOSCO) 27,273,666 27,273,666 12/31/2024 Open 2.000 Ascot SURU221000 2697 Ascot Consumers Energy Company (Weadock) 40,910,499 40,910,499 12/30/2024 Open 2.000 Ascot SURU221000 2696 Arch State Of California 25,000 25,000 8/25/2022 Open 1.750 Arch SU 1160140 Arch Insurance State Of California 25,000 25,000 3/19/2024 Open Arch SU1195991 Atlantic Insur (Intact) Nevada Contractors State Board 50,000 50,000 12/15/2022 Open 1.500 Atlantic/Int act 800020793
Penn Insurance Nevada Energy (NVE) 13,358,350 13,358,350 12/29/2023 12/29/202 5 Penn SBP150041_0 05 Penn Insurance Nevada Energy (NVE) 2,200,000 2,200,000 5/30/2024 5/30/2026 SBP150041_0 07 Arch Insurance Stanton Battery Energy Storage LLC 12,973,000 12,973,000 10/16/2023 10/16/202 6 0.000 Arch SU1160142- M Arch Insurance SBES Holdco, LLC 500,000 500,000 11/30/2023 Upon Return 1.750 SU1195988 Penn Insurance AVS Industrial (Mechanic's Lien Jupiter) 1,889,337 1,889,337 5/21/2024 Upon Return SBP150041_0 06 Swiss Re Schindler Aufzüge AG (135,000 CHF) 163,498 163,498 2/21/2025 2/1/2026 03- 1034152595- 6 Swiss Re Schindler Aufzüge AG (135,000 CHF) 163,498 163,498 2/21/2025 2/1/2029 03- 1034152594- 7 Swiss Re Gridmatic Echinacea LLC (Cross Trails) 1,000,000 1,000,000 1/2/2025 Open 2223475 Swiss Re NESF BESS (AUD 3,156,821.91) 2,018,993 2,018,993 6/19/2024 Upon Return 1.250 2223466/8795 3 Swiss Re NESF BESS (AUD 9,470,465.72) 6,056,978 6,056,978 6/19/2024 Upon Return 1.250 2223464/8793 0
Swiss Re NESF BESS (AUD 3,156,821.91) 2,018,993 2,018,993 6/19/2024 Upon Return 1.250 2223465/8795 1 Swiss Re NESF BESS (AUD 21,095,435.04) 13,491,902 13,491,902 9/30/2025 Atlantic Insur (Intact) US Customs 6,000,000 6,000,000 12/5/2022 Open 1.500 Atlantic/Int act 22C001ZPP Atlantic Insur (Intact) State Of Nevada 887,491 887,491 2/22/2023 Open 1.500 Atlantic/Int act 800020799 Atlantic Specialty Insurance Cross Trails Energy Storage Project, LLC 65,000 65,000 8/1/2024 7/30/2026 Atlantic/Int act 800151859 13,531,00 0 116,137,398 100,000 7,946,315 887,491 6,000,000 144,602,20 4
SCHEDULE 3 PERMITTED LIENS Entity Institution Account Number Beneficiary or Project Currency Amount Start Expiry Energy Vault, Inc. Silicon Valley Bank 714025400224 Credit Card Collateral USD $200,000.00 4/28/2025 Open Energy Vault, Inc. Morgan Stanley 3304447959 ACEN bonds USD $4,000,000.00 5/5/2025 Open Energy Vault, Inc. HSBC-US 917024206 Letter of Credit USD $450,000 1/24/2023 1/13/2026 Energy Vault, Inc. HSBC-US 917024206 Letter of Credit USD $450,000 5/8/2023 5/10/2026 Energy Vault, Inc. HSBC-US 917024206 Letter of Credit USD $90,000 8/29/2024 8/28/2025 Energy Vault Inc. HSBC-US 30001014 Nofar Transaction USD $8,000,000 On or about May 12, 2025 N/A
SCHEDULE 4 ACCOUNTS Grantor Depository Bank Type of Account Acct. No. Energy Vault Inc. HSBC-US GOVERNMENT 6059; TREAS 6060 (HSBC ASSET MGMT) 30001014 Energy Vault Inc. HSBC-US DISB ZBA 917024192 Energy Vault Inc. HSBC-US RESTRICTED 917024206 Energy Vault Inc. HSBC-US UNRESTRICTED PORTION 917024206 Energy Vault Inc. HSBC-US AR ZBA 917024435 Energy Vault Inc. HSBC-US CONCENTRATION 917024451 Energy Vault Inc. HSBC-US SAVINGS 917024559 Energy Vault Inc. HSBC-US AUTO DEBITS ZBA 917024605 Cross Trails Energy Storage Project LLC HSBC-US MULTI PURPOSE ZBA 917025601 Cetus Energy Inc. HSBC-US STAND ALONE ACCOUNT 917025741 Energy Vault Inc. MORGAN STANLEY COLLATERAL ACCOUNT 612-081539-088 Energy Vault Inc. MORGAN STANLEY MMF 714025400224 Energy Vault Inc. SVB SVB CREDIT CARD COLLATERAL 3304447959 Energy Vault Inc. SVB CHECKING 3302273177
DB2/ 50828757.12 Cross Trails Energy Storage Project HoldCo LLC HSBC-US MULTI PURPOSE ZBA 917025601
SCHEDULE 9.14 SUBSIDIARIES 1. Energy Vault, Inc., a Delaware corporation 2. Snyder Housing LLC, a Texas limited liability company 3. Cetus Energy LLC, a Delaware limited liability company 4. Cetus Energy, Inc., a Delaware corporation 5. Cross Trails Energy Storage Project HoldCo LLC, a Delaware limited liability company 6. Cross Trails Energy Storage Project, LLC, a Delaware limited liability company 7. Energy Vault CDU HoldCo, LLC, a Delaware limited liability company 8. Energy Vault CDU Project, LLC, a Delaware limited liability company 9. Calistoga Resiliency Center HoldCo, LLC, a Delaware limited liability company 10. Calistoga Resiliency Center, LLC, a Delaware limited liability company 11. Energy Vault (Nantong) Co., Ltd, a Chinese corporation 12. Energy Vault SA, a Swiss corporation 13. Energy Vault Pty Ltd, an Australian corporation 14. Energy Vault Solutions UK Limited, a UK corporation
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULES 13a-14(a) AND 15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES OXLEY ACT of 2002
I, Robert Piconi, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Energy Vault Holdings, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 12, 2025
| Signature: | /s/ Robert Piconi | |||||||
| Title: | Chairman of the Board and Chief Executive Officer | |||||||
| (Principal Executive Officer) | ||||||||
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULES 13a-14(a) AND 15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES OXLEY ACT of 2002
I, Michael Beer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Energy Vault Holdings, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 12, 2025
| Signature: | /s/ Michael Beer | |||||||
| Title: | Chief Financial Officer | |||||||
| (Principal Financial Officer) | ||||||||
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
I, Robert Piconi, Chief Executive Officer of Energy Vault Holdings, Inc. (the “Company”), certify pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1. This Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended March 31, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
2. The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company, at the dates and for the periods presented in the financial statements included in this Report.
Date: May 12, 2025
| Signature: | /s/ Robert Piconi | |||||||
| Title: | Chairman of the Board and Chief Executive Officer | |||||||
| (Principal Executive Officer) | ||||||||
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Beer, Chief Financial Officer of Energy Vault Holdings, Inc. (the “Company”), certify pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1. This Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
2. The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company, at the dates and for the periods presented in the financial statements included in this Report.
Date: May 12, 2025
| Signature: | /s/ Michael Beer | |||||||
| Title: | Chief Financial Officer | |||||||
| (Principal Financial Officer) | ||||||||