VENU 8-K
Venu Holding Corp (VENU)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01 Entry into a Material Definitive Agreement.
Securities Purchase Agreement
On July 31, 2026 (the “Issuance Date”), Venu Holding Corporation (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional investor (the “Purchaser”) in connection with the issuance and sale by the Company of an aggregate of $25,000,000 in original principal amount of Senior Secured Convertible Debentures (the “Debentures”) to the Purchaser, which are convertible into shares of the Company’s common stock, par value $0.001 (“Common Stock”), and warrants to purchase up to 1,000,000 shares of Common Stock (the “Warrants”). The Debentures and the Warrants are immediately separable and were issued separately, but they were purchased together by the Purchaser in accordance with the Purchase Agreement.
The Purchase Agreement sets forth the terms and conditions governing the Company’s issuance and sale of the Debentures and the Warrants, including the respective closing obligations of the Company and the Purchaser. The Purchase Agreement also contains customary representations, warranties, and agreements of the Company and the Purchaser and provides for customary indemnification rights and obligations of the parties thereto.
Debentures
Pursuant to the Debentures, $12,500,000 of the original principal amount funded to the Company by the Purchaser on the Issuance Date (the “Holdback Amount”) will initially be held in an account as cash collateral for the Company’s obligations under the Debentures pending the Company’s delivery of an appraisal of the real property and improvements comprising the amphitheater it is developing in Broken Arrow, Oklahoma (“The Sunset BA”). If the appraisal is satisfactory to the Purchaser and the collateral agent appointed under the Purchase Agreement, the Holdback Amount will be released and delivered to the Company. If the appraisal is not delivered within 14 days after the Issuance Date or is not satisfactory to the Purchaser or the collateral agent, the Purchaser will have the option to apply the Holdback Amount to repay an equal portion of the principal amount of the Debentures, at par value and without payment of the Payment Premium (as defined below).
The Debentures will mature on July 31, 2027 (the “Maturity Date”), unless earlier converted or redeemed. The Debentures have an original issue discount of 5%. Accordingly, on the Issuance Date, the Company received gross proceeds of $11,875,000 before fees and expenses. If the Holdback Amount is subsequently released to the Company pursuant to the Debentures, the Company will receive additional gross proceeds of $11,875,000, resulting in aggregate gross proceeds to the Company of $23,750,000 before fees and expenses. After payment of applicable placement agent fees and offering expenses payable by the Company, the Company intends to use the resulting net proceeds from the sale of the Debentures and the Warrants primarily for the ongoing construction and development costs of The Sunset BA.
The Debentures do not bear interest unless and until the occurrence of an event of default described in the Debentures (an “Event of Default”), in which case the Debentures will accrue interest at a rate of 18% per annum for so long as such Event of Default remains uncured. Upon an Event of Default, the Purchaser may accelerate the Debentures and require all interest and other outstanding amounts under the Debentures to become immediately due and payable in cash, in each case subject to the terms of the Debentures. If an Event of Default remains uncured 30 days after its occurrence, then from and after such 30th day and for so long as the Event of Default continues, the Purchaser may convert all or any portion of the outstanding amounts under the Debentures at the Variable Price (as defined below) until all amounts outstanding under the Debentures have been repaid in full.
The Debentures constitute senior secured obligations of the Company and are secured pursuant to that certain Pledge and Security Agreement entered into by two of the Company’s majority-owned subsidiaries (of which the Company exercises 100% voting control), Sunset Ground at Broken Arrow, LLC and Sunset at Broken Arrow LLC (each, a “Grantor”). Under the Pledge and Security Agreement, the Debentures are secured by first-priority perfected security interests in substantially all of the tangible and intangible assets of each Grantor, subject to certain limitations, and by each Grantor’s pledge of a security interest in all of the equity interests in which such Grantor has any interest, together with all related proceeds thereof. The Company also pledged its membership interest in each Grantor as part of the collateral securing the Company’s obligations under the Debentures. In addition, the Debentures are secured by a first-priority Mortgage granted by Sunset Ground at Broken Arrow, LLC with respect to certain owned real property described therein and a first-priority Leasehold Mortgage granted by Sunset at Broken Arrow LLC with respect to certain leasehold interests described therein. Except for the assets of the Grantors, and the Company’s membership interests in those Grantors, no other Company assets or interests serve as collateral for the Debentures. Furthermore, the obligations under the Debentures, the Purchase Agreement, and all other documents identified as “Transaction Documents” under the Purchase Agreement are personally guaranteed by the Company’s chief executive officer pursuant to a Personal Guaranty.
At any time on or after the Issuance Date, the Debentures are convertible at the option of the Purchaser into shares of Common Stock at an initial conversion price of $7.50 per share (the “Fixed Price”), subject to adjustment as provided in the Debentures. Beginning on the earlier of (i) the date of the first disbursement in connection with any indebtedness constituting “Permitted C-PACE Indebtedness” under the Purchase Agreement, and (ii) the 75th day following the Issuance Date, the Company will be required to make monthly installment payments (each, a “Monthly Installment”) consisting of $5,000,000 of principal, the applicable payment premium on such principal amount, which is initially 15% but increases to 20% after the 75th day following the Issuance Date (the “Payment Premium”), and any accrued and unpaid interest (collectively, the “Installment Amount”), in accordance with the repayment schedule set forth in the Debentures. If the Company fails to timely pay any Monthly Installment when due (a “Payment Failure”), the Purchaser may elect to convert, on one or more occasions, all or part of the unpaid Installment Amount at any time after such Payment Failure has occurred at a variable price equal to 95% of the lowest daily volume weighted average price (the “VWAP”) of the Company’s Common Stock during the five consecutive trading days immediately preceding the applicable conversion date, subject to a floor price of $0.448, which is equal to 20% of the closing price of the Company’s Common Stock immediately prior to the execution of the Purchase Agreement (the “Variable Price”). Otherwise, for so long as the Company remains current on its payment obligations, the Debentures will be convertible only at the Fixed Price.
Under the Debentures, the Company is prohibited from issuing any Common Stock upon conversion of the Debentures if the issuance of such shares of Common Stock would exceed 11,767,980 shares (the “Exchange Cap”), which represents 19.99% of the Company’s issued and outstanding Common Stock as of the Issuance Date. The Exchange Cap will cease to apply if the Company obtains the approval of its shareholders for the issuance of shares of Common Stock in excess of the Exchange Cap (the “Shareholder Approval”), as required by the applicable rules of the NYSE American LLC. As a covenant under the Purchase Agreement, the Company is required to include a proposal to obtain the Shareholder Approval in the proxy statement for its next annual meeting of shareholders, and if it does not obtain the Shareholder Approval at such annual meeting, it is required to call a meeting every 90 days thereafter to seek the Shareholder Approval.
The Debentures also contain a beneficial ownership limitation that prohibits the Purchaser from converting the Debentures to the extent that, after giving effect to such conversion, the Purchaser and its affiliates would beneficially own more than 4.99% of the Company’s outstanding shares of Common Stock.
The Debentures provide the Company with an optional redemption right, pursuant to which the Company may redeem all or any portion of the amounts outstanding under the Debentures prior to the Maturity Date by delivering a redemption notice to the Purchaser, provided that the Company may only deliver such notice if the VWAP of the Company’s Common Stock is less than the Fixed Price on the date the notice is delivered, unless otherwise agreed by the Purchaser. Following receipt of a redemption notice, the Purchaser will have seven trading days to elect to convert all or any portion of the applicable redemption amount before the Company is required to pay the remaining redemption amount in cash.
The Debentures also provide for a mandatory redemption in connection with the Company’s existing, permitted at-the-market offering of shares of the Company’s Common Stock having an aggregate offering price of up to $25,000,000, which the Company is conducting pursuant to an ATM Sales Agreement with ThinkEquity LLC, dated June 12, 2026 (the “ATM Offering”). For so long as any Debentures are outstanding, if the Company issues and sells any shares of Common Stock under the ATM Offering (such sales, “ATM Sales”), the Company must apply 90% of the net proceeds from such ATM Sales toward its repayment obligations under the Debentures (a “Mandatory Redemption”). Within five business days of receiving net proceeds from ATM Sales, the Company must notify the Purchaser of the required Mandatory Redemption payment and, unless waived by the Purchaser, promptly pay such amount to the Purchaser. Any Mandatory Redemption payment will be applied first towards accrued and unpaid interest under the Debentures, then to the principal and the Payment Premium in respect of such principal.
Warrants
The Warrants are immediately exercisable from the Issuance Date and during the five-year period thereafter to purchase up to 1,000,000 shares of Common Stock at an exercise price of $5.00 per share, subject to certain customary adjustments. If the Holdback Amount currently held as cash collateral under the Debentures is applied to repay a portion of the principal amount of the Debentures, the number of shares of Common Stock issuable upon exercise of the Warrants will be reduced from 1,000,000 shares to 500,000 shares. No fractional shares of Common Stock will be issued by the Company in connection with the exercise of the Warrants.
If at the time the Warrants are exercised there is no effective registration statement registering the issuance of or the resale of the shares of Common Stock underlying the Warrants, the Purchaser can exercise the Warrants by “cashless exercise,” in which case the Purchaser would receive the net value of the Warrants in shares of Common Stock determined according to the formula set forth in the Warrants.
Pursuant to the Purchase Agreement, the right of the Purchaser to exercise the Warrants is subject to Exchange Cap limitations that operate in a manner consistent with the Exchange Cap limitations applicable to the Purchaser’s right to convert the Debentures. The Warrants also contain a beneficial ownership limitation that prohibits the Purchaser from exercising the Warrants to the extent that, after giving effect to such exercise, the Purchaser and its affiliates would beneficially own more than 4.99% of the Company’s outstanding shares of Common Stock. Under the Warrants, upon prior notice to the Company, the Purchaser may elect to increase such limitation to 9.99%, which increase will not become effective until the 61st day after such notice.
Placement Agent Warrants
The Company engaged ThinkEquity LLC as its exclusive placement agent (the “Placement Agent”) in connection with its offer and sale of the Debentures and the Warrants to the Purchaser under the Purchase Agreement. The Company agreed to pay the Placement Agent a cash fee equal to 6% of the gross proceeds received from the offering and to reimburse certain of the Placement Agent’s expenses related to the offering up to $100,000.
In addition, the Company agreed to issue warrants to the Placement Agent to purchase up to 200,000 shares of Common Stock (the “Placement Agent Warrants”). The Placement Agent Warrants are immediately exercisable upon issuance and for the five-year period thereafter at an exercise price of $6.25, subject to certain customary adjustments. If the Holdback Amount is applied to repay a portion of the principal amount of the Debentures, the number of shares of Common Stock issuable upon exercise of the Placement Agent Warrants will be reduced from 200,000 shares to 100,000 shares.
The issuance of the Debentures, the Warrants, the Placement Agent Warrants, and the shares of Common Stock issuable upon their conversion or exercise, as applicable, was registered pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-291873) filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 1, 2025 and declared effective on December 8, 2025, and the related base prospectus and prospectus supplement filed with the SEC on July 31, 2026.
The foregoing descriptions of the Debentures, the Warrants, the Placement Agent Warrants, the Purchase Agreement, the Security and Pledge Agreement, and the Personal Guaranty do not purport to be complete and are qualified in their entirety by reference to the full text of the form of Debenture, the form of Warrant, the form of Placement Agent Warrant, the Purchase Agreement, the Pledge and Security Agreement, and the Personal Guaranty, which are filed as Exhibits 4.1, 4.2, 4.3, 10.1, 10.2, and 10.3, respectively, to this Current Report on Form 8-K (this “Current Report”).
A copy of the opinion of Dykema Gossett PLLC relating to the legality of the issuance and sale of the Debentures, the Warrants, the Placement Agent Warrants, and the underlying shares of Common Stock is filed as Exhibit 5.1 to this Current Report.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 of this Current Report is incorporated by reference in this Item 2.03.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 4.1 | Form of Senior Secured Convertible Debenture | |
| 4.2 | Form of Warrant | |
| 4.3 | Form of Placement Agent Warrant | |
| 5.1* | Opinion of Dykema Gossett PLLC | |
| 10.1* | Securities Purchase Agreement, dated July 31, 2026, between the Company and the Purchaser | |
| 10.2* | Pledge and Security Agreement, dated July 31, 2026 | |
| 10.3* | Personal Guaranty, dated July 31, 2026 | |
| 23.1 | Consent of Dykema Gossett PLLC (included in Exhibit 5.1) | |
| 104 | Cover page Interactive Data File (embedded within the Inline XBRL document) |
| * | Certain schedules and exhibits have been omitted in accordance with Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished to the SEC upon request. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| VENU HOLDING CORPORATION | ||
| (Registrant) | ||
| Dated: August 3, 2026 | By: | /s/ J.W. Roth |
| J.W. Roth | ||
| Chief Executive Officer and Chairman |
Exhibit 4.1
VENU HOLDING CORPORATION
Senior Secured Convertible Debenture
Original Principal Amount: $25,000,000
Issuance Date: July 31, 2026
Number: 1A
FOR VALUE RECEIVED, VENU HOLDING CORPORATION, an entity organized under the laws of the State of Colorado (the “Company”), hereby promises to pay to the order of YA II PN, LTD., or its registered assigns (the “Holder”), the amount set out above as the Original Principal Amount (or such lesser amount as reduced pursuant to the terms hereof pursuant to repayment, redemption, conversion or otherwise, the “Principal”) and the Payment Premium, as applicable, in each case when due, and to pay interest (“Interest”) on any outstanding Principal at the applicable Interest Rate (as defined below) from the date set out above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether upon the Maturity Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Convertible Debenture (as amended, amended and restated, extended, supplemented or otherwise modified in writing from time to time, this “Debenture”) was originally issued pursuant to the Purchase Agreement dated as of July 31, 2026, between the Company and the Holder (as it may be amended from time to time, the “Purchase Agreement”). Certain capitalized terms used herein are defined in Section (12). Capitalized terms otherwise not defined herein have the meanings ascribed to them in the Purchase Agreement. The Company and the Holder are referred to herein at times, collectively, as the “Parties,” and each, a “Party.”
(1) GENERAL TERMS
(a) Maturity Date. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal, accrued and unpaid Interest, the Payment Premium, and any other amounts outstanding pursuant to the terms of this Debenture. The “Maturity Date” shall be July 31, 2027, as may be extended upon mutual written agreement of the Holder and the Company. Other than as specifically permitted by this Debenture, including Section 1(d) and Section 1(f), the Company may not prepay or redeem any portion of the outstanding Principal and accrued and unpaid Interest.
(b) Interest Rate and Payment of Interest. Interest shall accrue on the outstanding Principal balance hereof at an annual rate equal to 0% (“Interest Rate”), which Interest Rate shall increase to an annual rate of 18% upon the occurrence of an Event of Default (for so long as such event remains uncured). Interest shall be calculated based on a 365-day year and the actual number of days elapsed.
(c) Monthly Installment Payments. On or before each date (each, an “Installment Date”) set forth on the repayment schedule attached hereto as Exhibit II (the “Repayment Schedule”), the Company shall repay a portion of the outstanding balance of this Debenture in an amount equal (i) the installment principal amount set forth on the Repayment Schedule as of such Installment Date (or the outstanding Principal if less than such amount (the “Installment Principal Amount”)), plus (ii) the Payment Premium in respect of such Installment Principal Amount, plus (iii) accrued and unpaid interest hereunder as of each Installment Date (collectively, the “Installment Amount”).
(d) Redemptions.
(i) Optional Redemption. The Company at its option shall have the right, but not the obligation, to redeem (“Optional Redemption”) early a portion or all amounts outstanding under this Debenture as described in this Section; provided, that the Company provides the Holder with written notice (each, a “Redemption Notice”) of its desire to exercise an Optional Redemption, which Redemption Notice (i) shall be delivered to the Holder after the close of regular trading hours on a Trading Day, and (ii) may only be given if the VWAP of the Common Shares was less than the Fixed Price on the date such Redemption Notice is delivered, unless otherwise agreed by the Holder. Each Redemption Notice shall be irrevocable and shall specify the outstanding balance of the Debenture to be redeemed and the Redemption Amount. The “Redemption Amount” shall be an amount equal to (a) the outstanding Principal balance being redeemed by the Company plus (b) the Payment Premium in respect of such Principal amount plus (c) all accrued and unpaid interest hereunder as of the date of such redemption. After receipt of a Redemption Notice, the Holder shall have seven (7) Trading Days (beginning with the Trading Day immediately following the date such Redemption Notice is delivered to the Holder in accordance with this term of this Section 1(d)) to elect to convert all or any portion of this Debenture. On the eighth (8th) Trading Day following the delivery of the applicable Redemption Notice, the Company shall deliver to the Holder the Redemption Amount with respect to the Principal amount redeemed to the extent not converted and otherwise after giving effect to conversions or other payments made during such seven (7) Trading Day period.
(ii) Mandatory Redemption. If the Company is required to make a payment in cash from the receipt of proceeds from the issuance of Common Shares under the Permitted ATM (as defined in the Purchase Agreement) pursuant to Section 4(k) of the Purchase Agreement (a “Mandatory Redemption”), then within five (5) Business Days of receipt of the net proceeds from the Permitted ATM, the Company shall notify the Holder of the required payment amount (“Mandatory Redemption Amount”), and, unless waived by the Holder, the Company shall promptly pay such Mandatory Redemption Amount to the Holder. Any such payment received by the Holder shall be applied first towards accrued and unpaid interest hereunder, then to Principal and the Payment Premium in respect of such Principal amount.
(iii) Any Optional Redemption pursuant to Section 1(d)(i), or Mandatory Redemption pursuant to Section 1(d)(ii) paid in cash on or before any Installment Date shall have the effect of adjusting the Repayment Schedule by reducing the Installment Amount of future payments coming due in reverse chronological order (i.e., starting with the latest payments first).
(e) Payment Dates. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
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(f) Appraisal Holdback. Notwithstanding anything to the contrary in this Debenture, $12,500,000 of the Original Principal Amount funded by the Holder on the Issuance Date (the “Holdback Amount”) shall be held by the Collateral Agent in an account as cash collateral for the Company’s obligations under this Debenture until the Company delivers the Appraisal to the Holder and the Collateral Agent. Promptly after delivery of the Appraisal, (i) if the Appraisal is satisfactory to the Collateral Agent and the Holder, each in its sole discretion, the Holdback Amount shall be released from the lien of the Collateral Agent arising under this Section 1(f) and delivered to an account designated by the Company (without limiting any lien on such account or funds under the Security Agreement or any other Transaction Document), or (ii) if the Appraisal is not satisfactory to the Collateral Agent or the Holder, the Holder shall have the option to apply the Holdback Amount to repay, at par and without payment of the Payment Premium, that portion of the Principal equal to the Holdback Amount. If the Appraisal is not delivered within fourteen (14) days after the Issuance Date, it shall be deemed not satisfactory, and clause (ii) above shall apply.
(2) EVENTS OF DEFAULT.
(a) An “Event of Default,” wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body) shall have occurred:
(i) The Company’s failure to pay to the Holder any amount of Principal, Redemption Amount, Mandatory Redemption Amount, Payment Premium, Interest, or other amounts when and as due under this Debenture or any other Transaction Document including any applicable Installment Amount, within five (5) Business Days after such payment is due.
(ii) (A) The Company or any Significant Subsidiary shall commence, or there shall be commenced against the Company or any Significant Subsidiary any proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any Significant Subsidiary commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect relating to the Company or any Significant Subsidiary, in any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty one (61) days; (B) the Company or any Significant Subsidiary is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; (C) the Company or any Significant Subsidiary suffers any appointment of any custodian, private or court appointed receiver or the like for it or all or substantially all of its property which continues undischarged or unstayed for a period of sixty one (61) days; (D) the Company or any Significant Subsidiary makes a general assignment of all or substantially all of its assets for the benefit of creditors; (E) the Company or any Significant Subsidiary shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; (F) the Company or any Significant Subsidiary shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; (G) the Company or any Significant Subsidiary shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or (H) any corporate or other action is taken by the Company or any Significant Subsidiary for the purpose of effecting any of the foregoing;
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(iii) The Company or any Significant Subsidiary shall default, in any of its obligations under any note, debenture, mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the Company or any Significant Subsidiary in an amount exceeding $1,000,000, whether such indebtedness now exists or shall hereafter be created and such default is not cured within the time prescribed by documents governing such indebtedness or, if no such time is prescribed, within 30 Business Days of the default;
(iv) A final judgment or judgments for the payment of money in excess of $1,000,000 in the aggregate are rendered against the Company and/or any Significant Subsidiary and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged, settled or stayed pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any judgment which is covered by insurance or an indemnity from a creditworthy party shall not be included in calculating the amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company or such Significant Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance of such judgment;
(v) The Common Shares shall cease to be quoted or listed for trading, as applicable, on any Principal Market for a period of ten (10) consecutive Trading Days;
(vi) The Company or any Pledgor shall be a party to any Change of Control Transaction except for a Change of Control Transaction in which the Company repays all amounts outstanding pursuant to the terms of this Debenture simultaneously with or prior to the consummation of such Change of Control Transaction;
(vii) The Company’s (A) failure to deliver the required number of Common Shares to the Holder within two (2) Trading Days after the applicable Share Delivery Date (and which failure is not a result of any action or inaction on the part of the Holder) or (B) notice, written or oral, to any holder of this Debenture, including by way of public announcement, at any time, of its intention not to comply with a request for conversion of all or a portion of this Debenture into Common Shares that is tendered in accordance with the provisions of this Debenture at a time when the Holder is not in breach of any material term of the Purchase Agreement or this Debenture;
(viii) The Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined below) within five (5) Business Days after such payment is due;
(ix) The Company’s failure to timely file with the Commission any Periodic Report on or before the due date of such filing as established by the Commission, it being understood, for the avoidance of doubt, that due date includes any permitted filing deadline extension under Rule 12b-25 under the Exchange Act;
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(x) Any representation or warranty made or deemed to be made by or on behalf of the Company in or in connection with any Transaction Document, or any waiver hereunder or thereunder, shall prove to have been incorrect in any material respect (or, in the case of any such representation or warranty already qualified by materiality, such representation or warranty shall prove to have been incorrect) when made or deemed made;
(xi) (A) Any material provision of any Transaction Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder, ceases to be in full force and effect; (B) the Company or any other Person contests in writing the validity or enforceability of any provision of any Transaction Document; or (C) the Company denies in writing that it has any further liability or obligation under any Transaction Document, or purports in writing to revoke, terminate (other than in accordance with the relevant termination provisions) or rescind any Transaction Document;
(xii) The Company uses the proceeds of the issuance of this Debenture, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulations T, U and X of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof), or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose;
(xiii) Any Event of Default, or any breach of any material term of any in any Transaction Document (other than this Debenture); or
(xiv) The Company shall fail to observe or perform any material covenant, agreement or warranty contained in, or otherwise commit any material breach or default of any provision of this Debenture (except as may be otherwise covered by Sections (2)(a)(i) through (2)(a)(xiii) hereof) or any other Transaction Document, which is not cured or remedied within the time prescribed or if no time is prescribed within thirty (30) days;
(xv) An event or circumstance has occurred which has had a Material Adverse Effect;
(xvi) Any casualty, loss, damage, or destruction (whether or not covered by insurance), including as a result of fire, flood, storm, earthquake, explosion, or other casualty event, shall occur with respect to the real property and improvements known as the Regent Bank Amphitheater in Broken Arrow, Oklahoma (the “Amphitheater”) or any material portion thereof, and such casualty, loss, damage, or destruction materially impairs the use, operation, or value of the Amphitheater; or
(xvii) The Company or any Significant Subsidiary shall be delinquent in the payment of any amount due under any Permitted C-PACE Indebtedness (as defined in the Purchase Agreement), subject to any cure periods set forth in the definitive documents governing the Permitted C-PACE Indebtedness.
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(b) During the time that any portion of this Debenture is outstanding, if any Event of Default has occurred (other than an event with respect to the Company described in Section (2)(a)(ii)), the full unpaid Principal amount of this Debenture, together with the Payment Premium in respect of such Principal Amount that was due and payable on the date of the Event of Default and all interest and other amounts owing in respect of this Debenture to the date of acceleration, shall become, at the Holder’s election given by notice pursuant to Section (5), immediately due and payable in cash; provided that, in the case of any event with respect to the Company described in Section (2)(a)(ii), the full unpaid Principal amount of this Debenture, together with the Payment Premium in respect of such Principal Amount that was due and payable on the date of the Event of Default and all accrued and unpaid interest and other amounts owing in respect of this Debenture to the date of acceleration, shall automatically become due and payable, in each case without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company. The Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, (other than required notice of conversion) and the Holder may immediately enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by the Holder in writing at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.
(3) CONVERSION OF DEBENTURE. This Debenture shall be convertible into Common Shares, on the terms and conditions set forth in this Section (3).
(a) Conversion Right.
(i) Subject to the limitations of Section (3)(c), at any time or times on or after the Issuance Date, for so long as this Debenture remains outstanding, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount into fully paid and nonassessable Common Shares in accordance with Section (3)(b), at $7.50 per Common Share, subject to adjustment as provided herein (the “Fixed Price”).
(ii) “Conversion Amount” means the portion of the Principal, Interest and the Payment Premium, or other amounts outstanding under this Debenture to be converted, redeemed or otherwise with respect to which this determination is being made.
(iii) “Conversion Price” means, as of any Conversion Date or other date of determination either the Fixed Price or, with respect to an Alternate Conversion (as defined below) the Variable Price, as applicable.
(iv) The number of Common Shares issuable upon conversion of any Conversion Amount pursuant to this Section (3)(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price. The Company shall not issue any fraction of a Common Share upon any conversion. All calculations under this Section (3) shall be rounded to the nearest $0.001. If the issuance would result in the issuance of a fraction of a Common Share, the Company shall round such fraction of a Common Share up to the nearest whole share. The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Shares upon conversion of any Conversion Amount.
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(b) Mechanics of Conversion.
(i) Optional Conversion. To convert any Conversion Amount into Common Shares on any date (a “Conversion Date”), the Holder shall (A) transmit by email (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”) to the Company and (B) if required by Section (3)(b)(iii), surrender this Debenture to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking reasonably satisfactory to the Company with respect to this Debenture in the case of its loss, theft or destruction). On or before the first (1st) Trading Day following the date of receipt of a Conversion Notice (the “Share Delivery Date”), the Company shall, provided that the Transfer Agent is participating in the Depository Trust Company’s (“DTC”) Fast Automated Securities Transfer Program, instruct such transfer agent to credit such aggregate number of Common Shares to which the Holder shall be entitled to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system, or if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice, a certificate or book-entry position, registered in the name of the Holder or its designee, for the number of Common Shares to which the Holder shall be entitled, which certificates shall not bear any restrictive legend. If this Debenture is physically surrendered for conversion and the outstanding Principal of this Debenture is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Debenture and at its own expense, issue and deliver to the holder a new Debenture representing the outstanding Principal not converted. The Person or Persons entitled to receive the Common Shares issuable upon a conversion of this Debenture shall be treated for all purposes as the record holder or holders of such Common Shares upon the transmission of a Conversion Notice.
(ii) Company’s Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, on or prior to the applicable Share Delivery Date to issue and deliver a certificate to the Holder or credit the Holder’s balance account with DTC for the number of Common Shares to which the Holder is entitled upon such Holder’s conversion of any Conversion Amount (a “Conversion Failure”), and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) Common Shares to deliver in satisfaction of a sale by the Holder of Common Shares issuable upon such conversion that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out of pocket expenses, if any) for the Common Shares so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue such Common Shares) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Shares to which the Holder is entitled with respect to such Conversion Notice and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of Common Shares multiplied by (B) the Closing Price on the Conversion Date. For the avoidance of doubt, nothing herein shall limit the Holder’s right to pursue any other remedies available hereunder, at law or in equity, including, without limitation, a decree of specific performance or injunctive relief.
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(iii) Book-Entry. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Debenture in accordance with the terms hereof, the Holder shall not be required to physically surrender this Debenture to the Company unless (A) the full Conversion Amount represented by this Debenture is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Debenture upon physical surrender of this Debenture. The Holder and the Company shall maintain records showing the Principal and Interest converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Debenture upon conversion.
(c) Limitations on Conversions.
(i) Beneficial Ownership. The Holder shall not have the right to convert any portion of this Debenture to the extent that after giving effect to such conversion, the Holder, together with any affiliate thereof, would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 4.99% of the number of Common Shares outstanding immediately after giving effect to such conversion. Since the Holder will not be obligated to report to the Company the number of Common Shares it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of Common Shares in excess of 4.99% of the then outstanding Common Shares without regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the Principal amount of this Debenture is convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice for a Principal amount of this Debenture that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the conversion for the maximum Principal amount permitted to be converted on such Conversion Date in accordance with Section (3)(a) and, any Principal amount tendered for conversion in excess of the permitted amount hereunder shall remain outstanding under this Debenture. The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 65 days prior notice to the Company. Other Holders shall be unaffected by any such waiver.
(ii) Principal Market Limitation. Notwithstanding anything in this Debenture to the contrary, the Company shall not issue any Common Shares upon conversion of this Debenture, or otherwise, if the issuance of such Common Shares, together with any Common Shares issuable in connection with any other related transactions that may be considered part of the same series of transactions, would exceed the aggregate number Common Shares that the Company may issue in a transaction in compliance with the Company’s obligations under the rules or regulations of NYSE American and shall be referred to as the “Exchange Cap,” except that such limitation shall not apply if the Company’s stockholders have approved such issuances on such terms in excess of the Exchange Cap in accordance with NYSE American Rule 713. For the avoidance of doubt, the Exchange Cap applicable under this clause (ii) equals 11,767,980 Common Shares.
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(d) Other Provisions.
(i) All calculations under this Section (3) shall be rounded to the nearest $0.001 or whole share.
(ii) So long as this Debenture remains outstanding, the Company shall have reserved from its duly authorized share capital, and shall have instructed the Transfer Agent to irrevocably reserve, the maximum number of Common Shares issuable upon conversion of this Debenture (assuming for purposes hereof that (x) this Debenture is convertible at the Floor Price as of the date of determination, and (y) any such conversion shall not take into account any limitations on the conversion of the Debenture set forth herein (the “Required Reserve Amount”)), provided that at no time shall the number of Common Shares reserved pursuant to this Section (3)(d)(ii) be reduced other than pursuant to the conversion of this Debenture in accordance with their terms, and/or cancellation, or reverse stock split. If at any time while this Debenture remains outstanding, the Company does not have a sufficient number of authorized and unreserved Common Shares to satisfy the obligation to reserve for the issuance the Required Reserve Amount, the Company will promptly take all corporate action necessary to propose to a meeting of its shareholders an increase of its authorized share capital necessary to meet the Company’s obligations pursuant to this Debenture, and cause its board of directors to recommend to the shareholders that they approve such proposal. The Company covenants that, upon issuance in accordance with conversion of this Debenture in accordance with its terms, the Common Shares, when issued, will be validly issued, fully paid and nonassessable.
(iii) Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section (2) herein for the Company’s failure to deliver certificates representing Common Shares upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
(e) Adjustment of Conversion Price upon Subdivision or Combination of Common Shares. If the Company, at any time while this Debenture is outstanding, shall (i) pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Shares or any other equity or equity equivalent securities payable in Common Shares, (ii) subdivide outstanding Common Shares into a larger number of shares, (iii) combine (including by way of reverse stock split) outstanding Common Shares into a smaller number of shares, or (iv) issue by reclassification of Common Shares any shares of capital stock of the Company, then the Fixed Price and the Floor Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of Common Shares outstanding after such event. Any adjustment made pursuant to this Section shall become effective, in the case of a dividend distribution, immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution or, in the case of a subdivision, combination or re-classification, and shall become effective immediately after the effective date of such subdivision, combination or re-classification.
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(f) Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of Common Shares are entitled to receive securities or other assets with respect to or in exchange for Common Shares (a “Corporate Event”), the Company shall make appropriate provision to ensure that the Holder will thereafter have the right to receive upon a conversion of this Debenture, at the Holder’s option, (i) in addition to the Common Shares receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such Common Shares had such Common Shares been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Debenture) or (ii) in lieu of the Common Shares otherwise receivable upon such conversion, such securities or other assets received by the holders of Common Shares in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Debenture initially been issued with conversion rights for the form of such consideration (as opposed to Common Shares) at a conversion rate for such consideration commensurate with the Conversion Price. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Required Holders. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Debenture.
(g) Whenever the Conversion Price is adjusted pursuant to Section (3) hereof, the Company shall promptly provide the Holder with a written notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
(h) In case of any (1) merger or consolidation of the Company or any Pledgor with or into another Person, or (2) sale by the Company or any Pledgor of more than one-half of the assets of the Company in one or a series of related transactions, a Holder shall have the right to (A) exercise any rights under Section 2(b), (B) convert the aggregate amount of this Debenture then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Shares following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the Common Shares into which such aggregate Principal amount of this Debenture could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (C) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible Debenture with a Principal amount equal to the aggregate Principal amount of this Debenture then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible Debenture shall have terms identical (including with respect to conversion) to the terms of this Debenture, and shall be entitled to all of the rights and privileges of the Holder of this Debenture set forth herein and the agreements pursuant to which this Debenture was issued. In the case of clause (C), the conversion price applicable for the newly issued shares of convertible preferred stock or convertible debentures shall be based upon the amount of securities, cash and property that each Common Shares would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.
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(i) Alternate Conversions. In addition to any other remedies, the Holder shall have the right (but not the obligation): (i) in the case of a Payment Failure, to convert, on one or more occasions all or part of the applicable Installment Amount at any time after such Payment Failure has occurred at the Variable Price and (ii) in the case of any Event of Default, if such Event of Default has not been cured or waived in writing by the Holder within 30 days after the occurrence thereof (such 30th day after the occurrence of the Event of Default, the “Trigger Date”), to convert, on one or more occasions all or part of the Debenture at any time after the Trigger Date and so long as the applicable the applicable Event of Default is continuing at the Variable Price until all amounts outstanding under this Debenture have been repaid in full (in each case of (i) and (ii), an “Alternate Conversion”). Any Alternate Conversion shall be effected in accordance with Section (3) (and subject to the limitations set out in Section (3)(c)(i) and Section (3)(c)(ii)), but replacing the “Fixed Price” with the “Variable Price”, by designating in the Conversion Notice delivered that the Holder is electing to use the Variable Price for such conversion. For the avoidance of doubt, the Holder’s exercise of its right to effect Alternate Conversion under this Section 3(i) shall not be deemed an election of remedies with respect to a Payment Failure or other Event of Default and shall not limit the Holder’s right to pursue any other remedies available to it under this Debenture, the other Transaction Documents or under applicable laws.
(4) REISSUANCE OF THIS DEBENTURE.
(a) Transfer. If this Debenture is to be transferred, the Holder shall surrender this Debenture to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Debenture (in accordance with Section (4)(d)), registered in the name of the registered transferee or assignee, representing the outstanding Principal being transferred by the Holder (along with any accrued and unpaid interest thereof) and, if less than the entire outstanding Principal is being transferred, a new Debenture (in accordance with Section (4)(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of Section (3)(b)(iii) following conversion or redemption of any portion of this Debenture, the outstanding Principal represented by this Debenture may be less than the Principal stated on the face of this Debenture.
(b) Lost, Stolen or Mutilated Debenture. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Debenture, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and substance and, in the case of mutilation, upon surrender and cancellation of this Debenture, the Company shall execute and deliver to the Holder a new Debenture (in accordance with Section (4)(d)) representing the outstanding Principal.
(c) Debenture Exchangeable for Different Denominations. This Debenture is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Debenture or Debentures (in accordance with Section (4)(d)) representing in the aggregate the outstanding Principal of this Debenture, and each such new Debenture will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.
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(d) Issuance of New Debentures. Whenever the Company is required to issue a new Debenture pursuant to the terms hereof, such new Debenture (i) shall be of like tenor with this Debenture, (ii) shall represent, as indicated on the face of such new Debenture, the Principal remaining outstanding (or in the case of a new Debenture being issued pursuant to Section (4)(a) or Section (4)(c), the Principal designated by the Holder which, when added to the Principal represented by the other new Debenture(s) issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Debenture immediately prior to such issuance of such new Debenture), (iii) shall have an issuance date, as indicated on the face of such new Debenture, which is the same as the Issuance Date of this Debenture, (iv) shall have the same rights and conditions as this Debenture, and (v) shall represent accrued and unpaid Interest from the Issuance Date.
(5) NOTICES. Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing by letter or electronic mail (“e-mail”) and will be deemed to have been delivered (i) upon receipt, when delivered personally, (ii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, as applicable or (iii) receipt, when sent by e-mail, and, in each case of the foregoing clauses (i), (ii) and (iii), properly addressed to the party to receive the same. The addresses and e-mail addresses for such communications shall be:
| If to the Company, to: | Venu Holding Corporation |
1755 Telstar Drive, Suite 501 Colorado Springs, Colorado 80920 Telephone: (719) 895-5483 Attention: Chief Executive Officer E-Mail: [●] | |
| With Copy to: | Dykema Gosset PLLC 111 E. Kilbourn Avenue, Suite 1050 Milwaukee, Wisconsin 53202 Attention: Peter Waltz E-Mail: [email protected] |
| If to the Holder: | YA II PN, Ltd |
c/o Yorkville Advisors Global, LLC 1012 Springfield Avenue | |
| Mountainside, NJ 07092 | |
| Attention: Mark Angelo | |
| With copy to: | David Fine, Esq. c/o Yorkville Advisors Global, LP 1012 Springfield Avenue Mountainside, NJ 07092 Email: [●] and
Haynes and Boone, LLP 30 Rockefeller Plaza, 22nd Floor New York, New York 10112 Attention: Greg Kramer, Esq. Email: [email protected] |
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or at such other address and/or e-mail address and/or to the attention of such other person as the recipient party has specified by written notice given to each other party in accordance with this Section at least three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (a) given by the recipient of such notice, consent, waiver or other communication, (b) electronically generated by the sender’s email service provider containing the time, date, recipient email address or (c) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt from a nationally recognized overnight delivery service or receipt by e-mail in accordance with clause (i), (ii) or (iii) above, respectively.
(6) Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligations of the Company, which are absolute and unconditional, to pay the Principal of, and interest and other charges (if any) on, this Debenture at the time, place, and rate, and in the currency, herein prescribed. This Debenture is a direct obligation of the Company. As long as this Debenture is outstanding, the Company shall not and shall cause each of its Subsidiaries not to, without the consent of the Holder, enter into any agreement, arrangement or transaction in or of which the terms thereof would restrict, materially delay, conflict with or impair the ability of the Company to perform its obligations under the this Debenture, including, without limitation, the obligation of the Company to make cash payments hereunder.
(7) This Debenture shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Company, unless and to the extent converted into Common Shares in accordance with the terms hereof.
(8) CHOICE OF LAW; VENUE; WAIVER OF JURY TRIAL
(a) Governing Law. This Debenture and the rights and obligations of the Parties hereunder shall, in all respects, be governed by, and construed in accordance with, the laws (excluding the principles of conflict of laws) of the State of New York (the “Governing Jurisdiction”) (including Section 5-1401 and Section 5-1402 of the General Obligations Law of the State of New York), including all matters of construction, validity and performance.
(b) Jurisdiction; Venue; Service.
(i) The Company hereby irrevocably consents to the non-exclusive personal jurisdiction of the state courts of the Governing Jurisdiction and, if a basis for federal jurisdiction exists, the non-exclusive personal jurisdiction of any United States District Court for the Governing Jurisdiction.
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(ii) The Company agrees that venue shall be proper in any court of the Governing Jurisdiction selected by the Holder or, if a basis for federal jurisdiction exists, in any United States District Court in the Governing Jurisdiction selected by the Holder. The Company waives any right to object to the maintenance of any suit, claim, action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, in any of the state or federal courts of the Governing Jurisdiction on the basis of improper venue or inconvenience of forum.
(iii) Any suit, claim, action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or tort or otherwise, brought by the Company against the Holder arising out of or based upon this Debenture or any matter relating to this Debenture, or any other Transaction Document, or any contemplated transaction, shall be brought in a court only in the Governing Jurisdiction. The Company shall not file any counterclaim against the Holder in any suit, claim, action, litigation or proceeding brought by the Holder against the Company in a jurisdiction outside of the Governing Jurisdiction unless under the rules of the court in which the Holder brought such suit, claim, action, litigation or proceeding the counterclaim is mandatory, and not permissive, and would be considered waived unless filed as a counterclaim in the suit, claim, action, litigation or proceeding instituted by the Holder against the Company. The Company agrees that any forum outside the Governing Jurisdiction is an inconvenient forum and that any suit, claim, action, litigation or proceeding brought by the Company against the Holder in any court outside the Governing Jurisdiction should be dismissed or transferred to a court located in the Governing Jurisdiction. Furthermore, the Company irrevocably and unconditionally agrees that it will not bring or commence any suit, claim, action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Holder arising out of or based upon this Debenture or any matter relating to this Debenture, or any other Transaction Document, or any contemplated transaction, in any forum other than the courts of the State of New York sitting in New York County, and the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such suit, claim, action, litigation or proceeding may be heard and determined in such New York State Court or, to the fullest extent permitted by applicable law, in such federal court. The Company and the Holder agree that a final judgment in any such suit, claim, action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(iv) The Company and the Holder irrevocably consent to the service of process out of any of the aforementioned courts in any such suit, claim, action, litigation or proceeding by e-mail or the mailing of copies thereof by registered or certified mail postage prepaid, to it at the e-mail address or physical address, as applicable, provided for notices in this Debenture, such service to become effective thirty (30) days after the date of such e-mail or mailing, as applicable. The Company and the Holder each irrevocably waive any defense it may have on the grounds of insufficient or improper service with respect to service of process effected in accordance with this Section (8)(b)(iv).
(v) Nothing herein shall affect the right of the Holder to serve process in any other manner permitted by law or to commence legal proceedings or to otherwise proceed against the Company or any other Person in the Governing Jurisdiction or in any other jurisdiction.
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(c) THE PARTIES MUTUALLY WAIVE ALL RIGHT TO TRIAL BY JURY OF ALL CLAIMS OF ANY KIND ARISING OUT OF OR BASED UPON THIS DEBENTURE OR ANY MATTER RELATING TO THIS DEBENTURE, OR ANY OTHER TRANSACTION DOCUMENT, OR ANY CONTEMPLATED TRANSACTION. THE PARTIES ACKNOWLEDGE THAT THIS IS A WAIVER OF A LEGAL RIGHT AND THAT THE PARTIES EACH MAKE THIS WAIVER VOLUNTARILY AND KNOWINGLY AFTER CONSULTATION WITH COUNSEL OF THEIR RESPECTIVE CHOICE. THE PARTIES AGREE THAT ALL SUCH CLAIMS SHALL BE TRIED BEFORE A JUDGE OF A COURT HAVING JURISDICTION, WITHOUT A JURY.
(d) The Company expressly acknowledges and agrees that this Debenture constitutes an instrument for the payment of money only within the meaning of section 3213 of the New York Civil Practice Law and Rules (“CPLR §3213”), and that upon any default under or breach of the terms of this Debenture, the Holder may immediately commence an action by motion for summary judgment in lieu of complaint without any further notice or demand. The Company irrevocably waives (i) any right to require the Holder to commence any action by summons and complaint, (ii) any right to assert defenses, setoffs, counterclaims or delays in any CPLR §3213 proceeding (other than the defense of full payment of any amount that the Holder seeks to recover), and (iii) any right to object to the sufficiency of this Debenture as an instrument for the payment of money only within the meaning of CPLR §3213 and agrees not to assert that this Debenture is not such an instrument. The Company agrees that all amounts due under this Debenture shall be deemed liquidated, unconditional and immediately due and payable for purposes of CPLR §3213.
(9) If the Company fails to comply with the terms of this Debenture, then the Company shall reimburse the Holder promptly for all fees, costs and expenses, including, without limitation, attorneys’ fees and expenses incurred by the Holder in any action in connection with this Debenture, including, without limitation, those incurred: (i) during any workout, attempted workout, and/or in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations, (ii) collecting any sums which become due to the Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (iv) the protection, preservation or enforcement of any rights or remedies of the Holder.
(10) Any waiver by the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture. No provision of this Debenture may be waived or amended other than by a written agreement signed by the parties to this Debenture.
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(11) If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the Principal of or interest on this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Debenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such power as though no such law has been enacted.
(12) CERTAIN DEFINITIONS. For purposes of this Debenture, the following terms shall have the following meanings:
(a) “Appraisal” means an appraisal of the real property and improvements known as the Regent Bank Amphitheater in Broken Arrow, Oklahoma, prepared by a professional appraiser.
(b) “Bloomberg” means Bloomberg Financial Markets.
(c) “Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
(d) “Buy-In” shall have the meaning set forth in Section (3)(b)(ii).
(e) “Buy-In Price” shall have the meaning set forth in Section (3)(b)(ii).
(f) “Change of Control Transaction” means the occurrence of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty percent (50%) of the voting power of the Company (except that the acquisition of voting securities by the Holder or any other current holder of convertible securities of the Company shall not constitute a Change of Control Transaction for purposes hereof), (b) a replacement at one time or over time of more than one-half of the members of the board of directors of the Company (other than as due to the death or disability of a member of the board of directors) which is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors who are members on the date hereof), (c) the merger, consolidation or sale of fifty percent (50%) or more of the assets of the Company or any Subsidiary of the Company in one or a series of related transactions with or into another entity, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth above in (a), (b) or (c).
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(g) “Closing Price” means the price per share in the last reported trade of the Common Shares on a Principal Market or on the exchange which the Common Shares are then listed as quoted by Bloomberg.
(h) “Collateral Agent” has the meaning set forth in the Purchase Agreement.
(i) “Commission” means the Securities and Exchange Commission.
(j) “Common Shares” means the shares of common stock, par value $0.001, of the Company and stock of any other class into which such shares may hereafter be changed or reclassified.
(k) “Conversion Amount” shall have the meaning set forth in Section (3)(a)(ii).
(l) “Conversion Date” shall have the meaning set forth in Section (3)(b)(i).
(m) “Conversion Failure” shall have the meaning set forth in Section (3)(b)(ii).
(n) “Conversion Notice” shall have the meaning set forth in Section (3)(b)(i).
(o) “Conversion Price” shall have the meaning set forth in Section (3)(a)(iii).
(p) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(q) “Floor Price” solely with respect to the Variable Price, shall mean $0.448 per Common Share.
(r) “Fundamental Transaction” means any of the following: (1) the Company effects any merger or consolidation of the Company with or into another Person and the Company is the non-surviving company (other than a merger or consolidation with a wholly owned Subsidiary of the Company for the purpose of redomiciling the Company), (2) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (3) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Shares are permitted to tender or exchange their shares for other securities, cash or property, or (4) the Company effects any reclassification of the Common Shares or any compulsory share exchange pursuant to which the Common Shares is effectively converted into or exchanged for other securities, cash or property.
(s) “Installment Amount” shall have the meaning set forth in Section (1)(c).
(t) “Installment Date” shall have the meaning set forth in Section (1)(c).
(u) “Installment Principal Amount” shall have the meaning set forth in Section (1)(c).
(v) “Payment Failure” means the Company’s failure to pay any Installment Amount on the applicable Installment Date.
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(w) “Payment Premium” means 15% of the principal amount being repaid or redeemed; provided, that the Payment Premium shall increase to 20% of the principal amount being repaid or redeemed after the date that is 75 days following the Issuance Date.
(x) “Periodic Reports” shall mean all of the Company’s reports required to be filed by the Company with the Commission under applicable laws and regulations (including, without limitation, Regulation S-K), including annual reports (on Form 10-K), quarterly reports (on Form 10-Q), and current reports (on Form 8-K), for so long as any amounts are outstanding under this Debenture, provided that all such Periodic Reports include, when filed, all information, financial statements, audit reports (when applicable) and other information required to be included in such Periodic Reports in compliance with all applicable laws and regulations.
(y) “Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
(z) “Principal Market” means any of The New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market, and any successor to any of the foregoing markets or exchanges.
(aa) “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(bb) “Share Delivery Date” shall have the meaning set forth in Section (3)(b)(i).
(cc) “Significant Subsidiary” shall have the meaning set forth in Item 210 of Regulation S-X (or any successor provision); provided that, notwithstanding the foregoing, each of Sunset Ground at Broken Arrow, LLC, a Colorado limited liability company, and Sunset at Broken Arrow, LLC, a Colorado limited liability company, shall be deemed a “Significant Subsidiary” for all purposes of this Debenture. “Subsidiary” shall mean any Person in which the Company, directly or indirectly, (x) owns a majority of the outstanding capital stock or holds a majority of the equity or similar interest of such Person or (y) controls or operates all or substantially all of the business, operations or administration of such Person, and the foregoing are collectively referred to herein as “Subsidiaries.”
(dd) Intentionally omitted.
(ee) “Trading Day” means a day on which the Common Shares are quoted or traded on a Principal Market on which the Common Shares are then quoted or listed; provided, that in the event that the Common Shares are not listed or quoted, then Trading Day shall mean a Business Day.
(ff) “Transaction Document” means this Debenture and any and all other documents, agreements, instruments or other items executed or delivered in connection with this Debenture or any of the foregoing.
(gg) “Underlying Shares” means the Common Shares issuable upon conversion of this Debenture or as payment of interest in accordance with the terms hereof.
(hh) “Variable Price” means the lower of (A) the Fixed Price and (B) a price per share equal to 95% of the lowest daily VWAP during the five consecutive Trading Days immediately preceding the Conversion Date, but not lower than the Floor Price.
(ii) “VWAP” shall mean for any Trading Day, the volume weighted average price of the Common Shares on the Principal Market, for such Trading Day as reported by Bloomberg L.P. through its “HP” function.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused this Convertible Debenture to be duly executed by a duly authorized officer as of the date set forth above.
| COMPANY: | ||
| VENU HOLDING CORPORATION | ||
| By: | /s/ Jay William Roth | |
| Name: | Jay William Roth | |
| Title: | Chief Executive Officer | |
Signature Page to Senior Secured Convertible Debenture
| ACKNOWLEDGED AND AGREED: | ||
| HOLDER: | ||
| YA II PN, LTD. | ||
| By: | Yorkville Advisors Global, LP | |
| Its: | Investment Manager | |
| By: | Yorkville Advisors Global II, LLC | |
| Its: | General Partner | |
| By: | /s/ Matt Beckman | |
| Name: | Matt Beckman | |
| Title: | Manager | |
Acknowledgement to Senior Secured Convertible Debenture
EXHIBIT I
CONVERSION NOTICE
(To be executed by the Holder in order to Convert the Debenture)
TO: VENU HOLDING CORPORATION.
Via Email:
The undersigned hereby irrevocably elects to convert a portion of the outstanding and unpaid Conversion Amount of Debenture No. 1A into Common Shares of VENU HOLDING CORPORATION, according to the conditions stated therein, as of the Conversion Date written below.
| Conversion Date: | |
| Principal Amount to be Converted: | |
| Accrued Interest to be Converted: | |
| Total Conversion Amount to be converted: | |
| Fixed Price: | |
| Variable Price (if applicable): | |
| Applicable Conversion Price: | |
| Number of Common Shares to be issued: |
Please issue the Common Shares in the following name and deliver them to the following account:
Issue to:
Broker DTC Participant Code:
Account Number:
| Authorized Signature: | ||
| Name: | ||
| Title: |
EXHIBIT II
REPAYMENT SCHEDULE
| Principal Amount: | $ | 25,000,000 | ||
| Issuance Date: | 7/31/26 |
| Installment Date | Installment Principal Amount | Accrued and Unpaid Interest | Payment Premium (15%/20%) | Installment Amount | ||||||||||||
| Earlier of first C-PACE loan disbursement or 75th day after Issuance Date | $ | 5,000,000 | $ | 750,000 | $ | 5,750,000 | ||||||||||
| One month after earlier of first C-PACE loan disbursement or 75thth day following Issuance Date | $ | 5,000,000 | $ | 1,000,000 | $ | 6,000,000 | ||||||||||
| Two months after earlier of first C-PACE loan disbursement or 75 days following Issuance Date | $ | 5,000,000 | $ | 1,000,000 | $ | 6,000,000 | ||||||||||
| Three months after earlier of first C-PACE loan disbursement or 75 days following Issuance Date | $ | 5,000,000 | $ | 1,000,000 | $ | 6,000,000 | ||||||||||
| Four months after earlier of first C-PACE loan disbursement or 75 days following Issuance Date | $ | 5,000,000 | $ | 1,000,000 | $ | 6,000,000 | ||||||||||
| $ | 25,000,000 | $ | - | $ | 4,750,000 | $ | 29,750,000 | |||||||||
Exhibit 4.2
COMMON STOCK PURCHASE WARRANT
VENU HOLDING CORPORATION
| Warrant Shares: 1,000,000 | Initial Exercise Date: July 31, 2026 |
THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received (in connection with the issuance of the $25,000,000 secured convertible debenture to the Holder (as defined below) of even date) (the “Debenture”), YA II PN, LTD. or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on July 31, 2031 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Venu Holding Corporation, a Colorado corporation (the “Company”), up to 1,000,000 shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:
“1933 Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the 1933 Act.
“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“Board of Directors” means the board of directors of the Company.
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“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York are generally open for use by customers on such day.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.
“Common Stock Equivalents” means any securities of the Company 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.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Pledgor” shall have the meaning ascribed in the Securities Purchase Agreement.
“Registration Statement” means the effective registration statement with the Commission on Form S-3 (File No. 333-291873), filed December 1, 2025 and declared effective December 8, 2025, including the preliminary prospectus supplement, the base prospectus, and any prospectus supplement and all information, documents and exhibits filed with or incorporated by reference into such registration statement.
“Securities Purchase Agreement” means the Securities Purchase Agreement, dated July 31, 2026, by and among the Company and the Buyers signatory thereto.
“Trading Day” means a day on which the principal Trading Market is open for trading.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).
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“Transfer Agent” means Colonial Stock Transfer, the current transfer agent of the Company, with a mailing address of 7840 S 700 E, Sandy, Utah 84070, and any successor transfer agent of the Company.
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTCQB Venture Market (“OTCQB”) or the OTCQX Best Market (“OTCQX”) is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (“Pink Market”) operated by the OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“Warrants” means this Warrant and any other Common Stock Purchase Warrants issued by the Company pursuant to the Registration Statement and the Securities Purchase Agreement.
Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank, in either case in immediately available funds, unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee. The Company shall have no obligation to inquire with respect to or otherwise confirm the authenticity of the signature(s) contained on any Notice of Exercise nor the authority of the person so executing such Notice of Exercise. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
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b) Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $5.00, subject to adjustment hereunder (the “Exercise Price”).
c) Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance of, or the resale of, the Warrant Shares to (or by) the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
| (A) = | as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”) as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day; | |
| (B) = | the Exercise Price of this Warrant, as adjusted hereunder; and | |
| (X) = | the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise. |
If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the 1933 Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position contrary to this Section 2(c).
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d) Mechanics of Exercise.
i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) one (1) Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise. Notwithstanding the foregoing, with respect to any Notice(s) of Exercise delivered on or prior to 12:00 p.m. (New York City time) on the Initial Exercise Date, which may be delivered at any time after the time of execution of the Purchase Agreement, the Company agrees to deliver the Warrant Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Initial Exercise Date and the Initial Exercise Date shall be the Warrant Share Delivery Date for purposes hereunder, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received by such Warrant Share Delivery Date.
ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
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iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
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e) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith and the calculations required under this Section 2(e). To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. 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 upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
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Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Intentionally omitted.
c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
d) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). To the extent that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.
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e) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company or any Pledgor, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires 50% or more of the outstanding shares of Common Stock or 50% or more of the voting power of the common equity of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the same consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the term “Company” under this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction, each and every provision of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations of the Company prior thereto under this Warrant and the other Transaction Documents with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(e) regardless of (i) whether the Company has sufficient authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction occurs prior to the Initial Exercise Date.
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f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice to Holder.
i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company (or any of the Pledgors) is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email address as it shall appear upon the Warrant Register of the Company (unless such notice is filed with the Commission, which in such case, no additional notice is required to be provided to the Holder), at least 10 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
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h) Voluntary Adjustment By Company. Subject to the rules and regulations of the Trading Market, the Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.
i) Appraisal Holdback Reduction. If the Holder applies the Holdback Amount to repay a portion of the Principal pursuant to Section 1(f) of the Debenture because the Appraisal is not satisfactory or is not timely delivered, then, effective automatically upon such repayment, the number of Warrant Shares for which this Warrant is exercisable shall be reduced by fifty percent (50%), and the Exercise Price shall not be affected by such reduction. Capitalized terms used in this Section 3(i) and not otherwise defined herein have the meanings given to them in the Debenture.
Section 4. Transfer of Warrant.
a) Transferability. This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an executed assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
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Section 5. Miscellaneous.
a) No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the Company be required to net cash settle an exercise of this Warrant.
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares.
The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
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Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
e) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
f) No Restrictive Legends. The Warrant Shares shall not contain or bear any restrictive legends or transfer restrictions of any kind whatsoever, and, except as provided in Section 2(c), no legal opinion, other information or instructions shall be required of the Holder to exercise this Warrant.
g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
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h) Notices. Any and all notices or other communications or deliveries to be provided by the holders hereunder including, without limitation, any Notice of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company, at Venu Holding Corporation, 1755 Telstar Drive, Suite 501, Colorado Springs, Colorado 80920, Telephone: (719) 895-5483, or such other email address or address as the Company may specify for such purposes by notice to the Holder. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.
i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
| VENU HOLDING CORPORATION | ||
| By: | /s/ Jay William Roth | |
| Name: | Jay William Roth | |
| Title: | Chief Executive Officer | |
Signature Page to Common Stock Purchase Warrant
| ACKNOWLEDGED AND AGREED: | ||
| HOLDER: | ||
| YA II PN, LTD. | ||
| By: | Yorkville Advisors Global, LP | |
| Its: | Investment Manager | |
| By: | Yorkville Advisors Global II, LLC | |
| Its: | General Partner | |
| By: | /s/ Matt Beckman | |
| Name: | Matt Beckman | |
| Title: | Manager | |
Acknowledgment to Common Stock Purchase Warrant
NOTICE OF EXERCISE
To: VENU HOLDING CORPORATION
(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE OF HOLDER]
Name of Investing Entity: ________________________________________________________________________
Signature of Authorized Signatory of Investing Entity: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: ________________________________________________________________________________________
EXHIBIT B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
| Name: | |
| (Please Print) | |
| Address: | |
| (Please Print) | |
| Phone Number: | |
| Email Address: | |
| Dated: _______________ __, ______ | |
| Holder’s Signature: _______________________________ | |
| Holder’s Address: ________________________________ |
Exhibit 4.3
PLACEMENT AGENT’S WARRANT
VENU HOLDING CORPORATION
| Warrant Shares: 200,000 | Initial Exercise Date: July 31, 2026 |
THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, ThinkEquity LLC or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on July 31, 2031 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Venu Holding Corporation, a Colorado corporation (the “Company”), up to 200,000 shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b). This Warrant is issued pursuant to the Engagement Letter with the Placement Agent.
Section 1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:
“1933 Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the 1933 Act.
“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“Board of Directors” means the board of directors of the Company.
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“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York are generally open for use by customers on such day.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.
“Common Stock Equivalents” means any securities of the Company 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.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Engagement Letter” means the engagement letter dated June 26, 2026, as amended on July 16, 2026, by and between the Company and the Placement Agent.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Placement Agent” means ThinkEquity LLC.
“Registration Statement” means the effective registration statement with the Commission on Form S-3 (File No. 333-291873), filed December 1, 2025 and declared effective December 8, 2025, including the preliminary prospectus supplement, the base prospectus, and any prospectus supplement and all information, documents and exhibits filed with or incorporated by reference into such registration statement.
“Trading Day” means a day on which the principal Trading Market is open for trading.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).
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“Transfer Agent” means Colonial Stock Transfer, the current transfer agent of the Company, with a mailing address of 7840 S 700 E, Sandy, Utah 84070, and any successor transfer agent of the Company.
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTCQB Venture Market (“OTCQB”) or the OTCQX Best Market (“OTCQX”) is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (“Pink Market”) operated by the OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“Warrants” means this Warrant and any other Warrants issued by the Company pursuant to the Engagement Letter.
Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank, in either case in immediately available funds, unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee. The Company shall have no obligation to inquire with respect to or otherwise confirm the authenticity of the signature(s) contained on any Notice of Exercise nor the authority of the person so executing such Notice of Exercise. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
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b) Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $6.25, subject to adjustment hereunder (the “Exercise Price”).
c) Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance of, or the resale of, the Warrant Shares to (or by) the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
| (A) = | as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”) as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day; | |
| (B) = | the Exercise Price of this Warrant, as adjusted hereunder; and | |
| (X) = | the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise. |
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If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the 1933 Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position contrary to this Section 2(c).
| d) | Mechanics of Exercise. |
i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) one (1) Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise. Notwithstanding the foregoing, with respect to any Notice(s) of Exercise delivered on or prior to 12:00 p.m. (New York City time) on the Initial Exercise Date, which may be delivered at any time after the time of execution of the Purchase Agreement, the Company agrees to deliver the Warrant Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Initial Exercise Date and the Initial Exercise Date shall be the Warrant Share Delivery Date for purposes hereunder, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received by such Warrant Share Delivery Date.
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ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
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v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
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| e) | Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith and the calculations required under this Section 2(e). To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. 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 upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant. |
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Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Intentionally omitted.
c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
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d) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). To the extent that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.
e) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires 50% or more of the outstanding shares of Common Stock or 50% or more of the voting power of the common equity of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the same consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the term “Company” under this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction, each and every provision of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations of the Company prior thereto under this Warrant and the other Transaction Documents with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(e) regardless of (i) whether the Company has sufficient authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction occurs prior to the Initial Exercise Date.
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f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice to Holder.
i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email address as it shall appear upon the Warrant Register of the Company (unless such notice is filed with the Commission, which in such case, no additional notice is required to be provided to the Holder), at least 10 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
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h) Voluntary Adjustment By Company. Subject to the rules and regulations of the Trading Market, the Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.
i) Appraisal Holdback Reduction. Notwithstanding anything herein to the contrary, if in connection with that certain secured convertible debenture dated July 31, 2026, made by the Company in favor of the holder named therein (the “Debenture”) the debenture holder applies the Holdback Amount (as defined in the Debenture) to repay a portion of the Principal (as defined in the Debenture) pursuant to Section 1(f) of the Debenture because the Appraisal (as defined in the Debenture) is not satisfactory or is not timely delivered, then, effective automatically upon such repayment, the number of Warrant Shares for which this Warrant is exercisable shall be reduced by fifty percent (50%), and the Exercise Price shall not be affected by such reduction.
Section 4. Transfer of Warrant.
a) Transferability. This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an executed assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
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b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
Section 5. Miscellaneous.
a) No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the Company be required to net cash settle an exercise of this Warrant.
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
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c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares.
The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
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Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
e) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
f) No Restrictive Legends. The Warrant Shares shall not contain or bear any restrictive legends or transfer restrictions of any kind whatsoever, and, except as provided in Section 2(c), no legal opinion, other information or instructions shall be required of the Holder to exercise this Warrant.
g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
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h) Notices. Any and all notices or other communications or deliveries to be provided by the holders hereunder including, without limitation, any Notice of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company, at Venu Holding Corporation, 1755 Telstar Drive, Suite 501, Colorado Springs, Colorado 80920, Telephone: (719) 895-5483, or such other email address or address as the Company may specify for such purposes by notice to the Holder. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.
i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
| VENU HOLDING CORPORATION | ||
| By: | /s/ Jay William Roth | |
| Name: | Jay William Roth | |
| Title: | Chief Executive Officer | |
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NOTICE OF EXERCISE
| To: | VENU HOLDING CORPORATION |
(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE OF HOLDER]
Name of Investing Entity: ________________________________________________________________________
Signature of Authorized Signatory of Investing Entity: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: ________________________________________________________________________________________
EXHIBIT B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
| Name: | |
| (Please Print) | |
| Address: | |
|
|
(Please Print) |
| Phone Number: | |
| Email Address: | |
| Dated: _______________ __, ______ | |
| Holder’s Signature: _______________________ | |
| Holder’s Address: ________________________ |
Exhibit 5.1
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Dykema Gossett PLLC 111 E. Kilbourn Ave., Suite 1050 Milwaukee, WI 53202 www.dykema.com |
July 31, 2026
YA II PN, Ltd. (“YA”) and any other persons who are from time to time a Buyer under the SPA (as defined below) |
| Re: | Securities Purchase Agreement, dated as of July 31, 2026 (the “SPA”), by and between Venu Holding Corporation, a Colorado corporation (the “Company”), and YA as Buyer |
To the Addressee Set Forth Above:
We have acted as special counsel to: (a) the Company in connection with the Company’s entry into the SPA; and (b) Sunset Ground at Broken Arrow, LLC, a Colorado limited liability company and Sunset at Broken Arrow LLC, a Colorado limited liability company (“each a Pledgor”) in connection with each Pledgor’s entry into the Security Agreement (defined below). The opinions expressed hereby are being provided pursuant to Section 7(b) of the SPA. Capitalized terms used but not otherwise defined herein shall have the meanings given to such terms in the SPA. Each of YA and any other Buyer (as defined in the SPA) is sometimes referred to in this opinion letter as “you”. The Company and each Pledgor are collectively referred to herein as the “Transaction Parties” and are each a “Transaction Party”.
In connection with, and for purposes of, this opinion letter, we have examined, among other things, the following documents (each dated as of the date hereof, unless otherwise specified) (collectively, the “Transaction Documents”):
(a) the SPA;
(b) the Senior Secured Convertible Debenture issued by the Company in favor of YA in the original principal amount of U.S. $25,000,000 (the “Debenture”);
(c) the Common Stock Purchase Warrant to be delivered to YA in accordance with the SPA (the “Warrant”); and
(d) the Pledge and Security Agreement entered into by and among the Pledgors and YA (the “Security Agreement”).
| California | Illinois | Michigan | Minnesota | Texas | Washington, D.C. | Wisconsin |
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In addition to the Transaction Documents, we have also reviewed the following:
(a) the UCC-1 Financing Statements (the “Financing Statements”) with respect to the Company and each Pledgor, filed or to be filed in the State of Colorado and attached hereto as Exhibit A;
(b) the certificate or articles of formation (or the equivalent thereof), as applicable, and the bylaws or limited liability company agreement (or the equivalent thereof), as applicable, of each of the Transaction Parties, as in effect on the date hereof (collectively, the “Organizational Documents”);
(c) the records provided to us by each of the Transaction Parties of actions by the stockholders, board of directors, managers, members, general partner or other applicable authorizing body of each of the Transaction Parties;
(d) one or more certificates of certain officers or managing members of each of the Company and the Pledgors, dated the date hereof, as to certain facts relating to the Company;
(e) the Registration Statement and Prospectus (each, as defined in the SPA); and
(f) such other documents, instruments, and certificates of company and public officials as we have deemed necessary or appropriate for purposes of this opinion letter.
References in this opinion letter to the “UCC” shall mean the Uniform Commercial Code as in effect in any applicable jurisdiction, and references in this opinion letter to a particular state’s UCC mean the Uniform Commercial Code as in effect in such state.
As to certain questions of fact material to our opinions, we have relied upon certificates and statements of officers and other representatives of each of the Transaction Parties and certificates of, and other information provided by, public officials. Further, as to the certain matters of fact material to our opinions, we have relied on the accuracy of the representations and warranties of the Transaction Parties set forth in the Transaction Documents.
In rendering the opinions expressed below we have, with your consent and without investigation, relied upon the following assumptions:
(i) each natural person executing any of the Transaction Documents, or any other document reviewed in connection with this opinion letter, whether in an individual capacity or on behalf of a corporate or another organizational entity, had the requisite legal capacity and competence to execute such documents at the time of the execution thereof;
(ii) all the signatures, including, without limitation, electronic signatures, on each document in connection with which this opinion letter is rendered are genuine;
(iii) each Transaction Party’s Organizational Documents and other constituent documents have been adopted in accordance with all applicable legal requirements;
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(iv) all information required to be disclosed in connection with any consent or approval by the shareholders, board of directors, managers, members, general partner or other applicable authorizing body of any Transaction Party, and all information required to be disclosed in connection with any issue relevant to our opinions, including with respect to the adequacy of disclosures to any investor, has in fact been fully and fairly disclosed to all persons to whom it is required to be disclosed;
(v) all documents submitted to us as originals or duplicate originals are authentic, all documents submitted to us as facsimile, electronic or photostatic copies, whether certified or not, conform to authentic original documents, and the form and content of all Transaction Documents submitted to us as unexecuted drafts do not differ in any respect relevant to this opinion letter from the form and content of such Transaction Documents as executed and delivered;
(vi) all certificates and other statements, documents and records reviewed by us, and all representations, warranties, schedules and exhibits contained in the Transaction Documents, are complete and accurate, and there has been no relevant change or development between the dates of such certificates, statements, documents and records and the date of this opinion letter;
(vii) all parties to the Transaction Documents (a) are duly organized, validly existing, and in good standing under the laws of their respective jurisdictions of organization, (b) are duly qualified to transact business, and are in good standing, as foreign entities in all other jurisdictions where they are conducting their businesses or are otherwise required to be so qualified or in good standing, (c) have full power and authority to execute, deliver, and perform their obligations under such documents, and (d) have duly authorized, executed, and delivered such documents; provided, however, that we make none of the assumptions stated in this paragraph with respect to the Transaction Parties to the extent that we have opined to such matters herein;
(viii) each of the Transaction Documents constitutes the valid and binding obligation of each party to such Transaction Document, enforceable against such party in accordance with its terms; provided, however, that we do not make the assumption stated in this paragraph with respect to the Transaction Parties to the extent that we have opined to such matters herein;
(ix) that the status of the Transaction Documents as legally valid and binding obligations of each of the Transaction Parties is not affected by any (a) breaches of, or defaults under, agreements or instruments, (b) violations of statutes, rules, regulations or court or governmental orders, or (c) failures to obtain required consents, approvals or authorizations from, or make required registrations, declarations or filings with, any government, any state, or other political subdivision thereof, any agency, authority, court, or other entity exercising executive, legislative, judicial or administrative powers or functions of or pertaining to government (each of the foregoing being referred to herein as a “Governmental Authority”); provided, however that we do not make the assumption stated in this paragraph with respect to the Transaction Parties to the extent that we have opined to such matters herein;
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(x) each shareholder, member, manager or partner that is not a natural person has duly taken such internal actions (such as board, member, manager or partner approval) as may be necessary to enable such entity to duly act, and each such entity has duly acted (and has duly executed and delivered the consents, certificates and other documents (other than the Transaction Documents) to which such entity is a signatory, in such entity’s capacity as shareholder, member, manager or partner of any Transaction Party in connection with the approval and execution of the Transaction Documents by the Transaction Parties;
(xi) the descriptions of the Article 9 Collateral (as defined below) reasonably describe the property intended to be described as Article 9 Collateral;
(xii) (a) the applicable Transaction Party is the sole owner of the Article 9 Collateral (as defined below) that it purports to encumber in any of the Transaction Documents, (b) such Transaction Party has acquired good and sufficient title to each item of Article 9 Collateral existing on the date hereof and has “rights” in and to such Article 9 Collateral within the meaning of Section 4-9-203 of the Colorado UCC consistent with and sufficient for purposes of the Transaction Documents, (c) the same will be true of each item of Article 9 Collateral arising after the date hereof, and (d) value has been given; and
(xiii) the address of the secured party listed on the Financing Statements is an address from which information concerning the security interest may be obtained, and all information regarding the secured party on the Financing Statements is accurate and complete in all respects.
Based upon the foregoing and subject to the limitations, assumptions, qualifications and exceptions set forth herein, we are of the opinion that:
1. The Company is a corporation, validly existing and in good standing under the laws of the State of Colorado.
2. Each Pledgor is a limited liability company, validly existing and in good standing under the laws of the State of Colorado.
3. Each Transaction Party has the requisite corporate or limited liability company power and authority to execute and deliver each of the Transaction Documents to which it is a party and to perform its obligations thereunder, and all corporation or limited liability company action required to be taken by each Transaction Party to authorize the execution and delivery of each of the Transaction Documents to which it is a party and the performance of its obligations thereunder has been duly and validly taken.
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4. Each Transaction Party has duly executed and delivered each of the Transaction Documents to which it is a party.
5. The execution and delivery by each Transaction Party of the Transaction Documents to which it is a party, and the performance by such Transaction Party of its payment obligations thereunder, (a) do not presently require any approval from or filing with any Governmental Authority under Generally Applicable Law (as defined below) other than (i) such as have been obtained or made and are in full force and effect, (ii) filings necessary to release existing liens or to perfect liens created by the Transaction Documents, including, without limitation, the filing of the Financing Statements, and (iii) such as are required in the ordinary course of business of the Transaction Parties or the ownership or operation of their respective properties (b) do not violate (i) any of the existing terms, conditions or provisions of such Transaction Party’s Organizational Documents, or (ii) any existing New York statute or regulation or the Colorado Business Corporation Act (the “CBCA”) or the Colorado Limited Liability Company Act (the “CLLCA”) or, assuming the accuracy of the representations and warranties made by the Buyers in the SPA and the parties’ compliance with their obligations under the SPA, Generally Applicable Law, federal and Colorado and New York securities laws and regulations and the rules and regulations of the Principal Market.
6. Each of the Transaction Documents constitutes the valid and binding obligation of each Transaction Party that is a party thereto, enforceable against such Transaction Party in accordance with its terms.
7. The Conversion Shares have been duly authorized and, when issued and delivered in accordance with the terms of the Debenture will be validly issued, fully paid and nonassessable. The Conversion Shares have been reserved for issuance in accordance with the terms of the Debenture and the SPA.
8. The Warrant Shares have been duly authorized and, when issued and delivered in accordance with the terms of the Warrant will be validly issued, fully paid and nonassessable. The Warrant Shares have been reserved for issuance in accordance with the terms of the Warrant and the SPA.
9. The form of the Security Agreement is sufficient to create in favor of YA a security interest in all rights of each Transaction Party that is a grantor thereunder in those items and types of collateral described in the Security Agreement in which a security interest can be created under Article 9 of the New York UCC (the “Article 9 Collateral”).
10. The filing of the Financing Statement with respect to the Transaction Party named as debtor therein in the Office of the Secretary of State of the State of Colorado (the “Filing Office”) is sufficient to perfect (within the meaning of Article 9 of the Colorado UCC) a security interest in all rights of such Transaction Party in and to the Article 9 Collateral described in such Financing Statement, to the extent that a security interest in the Article 9 Collateral can be perfected under the Colorado UCC by the filing of a financing statement in the Filing Office. Assuming that the Financing Statement has been filed in the Filing Office and has not subsequently been released, terminated or modified, YA’s security interest in such Transaction Party’s rights in and to the Article 9 Collateral described in such Financing Statement has been perfected, to the extent that a security interest in the Article 9 Collateral can be perfected under the Colorado UCC by the filing of a financing statement in the Filing Office.
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11. No intangible or documentary stamp taxes, recording taxes, transfer taxes or similar charges, imposed by any government department or other taxing authority of or in the State of New York, are payable on account of the execution and delivery of the Transaction Documents, or the creation of the indebtedness evidenced by any of the Transaction Documents, other than nominal filing and recording fees.
12. Based solely upon our review of the information regarding the Company provided through the EDGAR System on the U.S. Securities and Exchange Commission’s (“SEC”) website and the Stop Orders page of the SEC’s website (http://www/sec.gov/litigation/stoporders.shtml) on the date hereof, the Registration Statement has become effective under the Securities Act of 1933 Act, as amended (the “1933 Act”), and to our knowledge, no stop order suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Prospectus has been issued under the 1933 Act, no notice of objection of the SEC to the use of such Registration Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the 1933 Act has been received by the Company, and no proceedings for such purposes have been instituted or are threatened by the SEC. The required filings of the Prospectus pursuant to Rule 424(b) promulgated pursuant to the 1933 Act have been made in the manner and within the time period required by Rule 424(b) (without reference to Rule 424(b)(8)).
13. Each of (a) the Registration Statement, as of the time it became effective and (b) the Prospectus, as of its date (in each case other than the financial statements and supporting schedules included therein, as to which no opinion need be rendered), complied as to form in all material respects with the requirements of the 1933 Act and the regulations promulgated thereunder.
The opinions set forth in Paragraphs 1 through 13 above are qualified in their entirety by the following:
A. This opinion letter is limited to the existing laws of the State of New York, the CBCA (without regard to judicial interpretation thereof or rules or regulations promulgated thereunder), the CLLCA (without regarding to judicial interpretation thereof or rules or regulations promulgated thereunder). the Colorado UCC (without regarding to judicial interpretation thereof or rules or regulations promulgated thereunder), and the federal laws of the United States of America. We express no opinion as to legal matters governed by other laws, and we disclaim any opinion as to the application or effect of any statute, rule, regulation, ordinance, order or other promulgation of any other jurisdiction. For purposes of this opinion letter, “Generally Applicable Law” means any law otherwise included within the scope of this opinion that New York attorney exercising customary professional diligence would reasonably be expected to recognize as being applicable to the Transaction Parties and the Transaction Documents. Our opinions are expressed only with respect to laws and regulations (including laws and regulations requiring any consent, approval, waiver, license or authorization or other action by or filing with any Governmental Authority) known to us that, in our experience, are applicable both to transactions of the type contemplated by the Transaction Documents and to general business organizations that are not engaged in regulated business activities, but without our having made any special investigation concerning any other laws or regulations, and we express no opinion as to the effect of any other laws or regulations. In addition, and without limiting the generality of the foregoing, we express no opinion as to any of the following laws, regulations or other governmental requirements or legal issues: (i) state and federal “blue sky” and securities laws and regulations (except with respect to the 1933 Act, to the extent of our opinion in Paragraphs 12 and 13), including, without limitation, laws and regulations relating to broker-dealer registration and laws and regulations relating to commodity (and other) futures and indices and other similar instruments; (ii) the rules and regulations of the Financial Industry Regulatory Authority, the New York Stock Exchange, or the Federal Reserve Board; (iii) fraudulent transfer and fraudulent conveyance laws and regulations; (iv) tax laws and regulations; (v) laws and regulations of general application to the extent they provide for criminal prosecution (e.g., mail fraud and wire fraud statutes); (vi) the statutes and ordinances, the administrative decisions, and the rules and regulations of counties, towns, municipalities, and special political subdivisions and other local or regional Governmental Authorities (whether created or enabled through legislative action at the federal, state, or regional level); (vii) environmental, zoning, land use, condominium, cooperative, subdivision, and other development laws and regulations, and laws and regulations concerning access by the disabled and building codes; (viii) laws and regulations to which any Transaction Party or the transactions contemplated by the Transaction Documents may be subject as a result of YA’s or any Buyer’s legal or regulatory status, any Buyer’s sale or transfer of the Debentures or interests therein, or YA’s or any Buyer’s involvement in the transactions contemplated by the Transaction Documents; (ix) compliance with fiduciary duty requirements; (x) usury laws and regulations; (xi) patent, copyright, trademark, and other intellectual property laws and regulations; (xii) antitrust and unfair competition laws and regulations; (xiii) pension and employee benefit laws and regulations; (xiv) and labor laws and regulations; (xv) health and safety laws and regulations; (xvi) racketeering laws and regulations; (xvii) laws and regulations concerning filing and notice requirements; (xviii) laws and regulations relating to money laundering or terrorism; (xix) laws, regulations and policies concerning national and local emergency; (xx) any healthcare laws and regulations; or (xxi) any judicial or administrative decisions to the extent they deal with any of the foregoing.
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B. The opinions set forth above are each subject to the effect of: (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, fraudulent conveyance, or other similar laws now or hereinafter in effect relating to or affecting the rights or remedies of creditors generally; (ii) general principles of equity including, without limitation, concepts of conscionability, materiality, reasonableness, good faith and fair dealing, and the possible unavailability of specific performance, injunctive relief or other equitable remedies, regardless of whether considered in a proceeding in equity or at law; and (iii) the applicability of other laws concerning the enforceability of certain of the remedial, waiver and other provisions of the Transaction Documents; however, subject to the other limitations set forth in this opinion, it is our opinion that the applicability of such laws referred to in clause (iii) will not render the Transaction Documents invalid as a whole or preclude (a) the judicial enforcement in accordance with applicable law of the obligation of the Company to repay as provided in the Debentures the principal, together with interest thereon (to the extent not deemed a penalty); (b) the acceleration of the obligation of the Company to repay such principal, together with such interest, upon a material default by the Company in the payment of such principal or interest or upon a material default by the Company in any other material provision of the Transaction Documents; and (c) the foreclosure in accordance with applicable law of the lien on and security interest in the Article 9 Collateral created by the Security Agreement upon maturity or upon acceleration pursuant to clause (b) above.
C. We express no opinion as to any agreement, instrument or other document referred to, or incorporated by reference, in any of the Transaction Documents, other than the Transaction Documents listed herein.
D. For the purposes of the opinions set forth in Paragraphs 1 and 2 hereof, we have relied exclusively on Certificates of Good Standing issued by the Secretary of State of the State of Colorado, and such opinions are not intended to provide any conclusion or assurance beyond that conveyed by such certificates.
E. We express no opinion as to any provision of the Transaction Documents purporting to: (i) establish evidentiary standards or to waive notice or other rights or defenses otherwise available at law or in equity, including without limitation, any waiver of the right to trial by jury or the applicable statute of limitations; (ii) grant or establish a power of attorney, irrevocable agency, trust or fiduciary relationship; (iii) authorize the transfer of collateral covered thereby before the occurrence of an event of default thereunder and prior to sale or other disposition of such collateral; (iv) grant any party the right to have a receiver appointed as a matter of right; (v) indemnify any party thereto or any other party from any liability arising out of or in connection with its own actions or omissions including, without limitation, the negligence, recklessness, willful misconduct or unlawful conduct of such party; (vi) restrict access to courts or to legal or equitable rights; (vii) authorize “self-help” remedies other than in accordance with applicable law; (viii) establish a standard of care owed by any party thereto to any other party; (ix) limit subrogation rights or the rights of third parties; (x) negate the effect of delay or omission of enforcement of rights or remedies; (xi) establish prohibitions against the transfer, alienation or hypothecation of property; (xii) require the marshalling of assets or waiver of the same; (xiii) authorize the transfer of assets that by their nature are non-transferable; (xiv) address sales in inverse order of alienation; (xv) allow YA or any Buyer (or any agent of YA or any Buyer) to take possession of any collateral prior to an order of a court of competent jurisdiction, valid foreclosure upon such collateral or full compliance by YA or such Buyer (or such agent) with applicable law; (xvi) require that any subsequent modifications or agreements with respect thereto be in writing; (xvii) establish that other provisions contained therein may not be eliminated by waiver or by conduct constituting estoppel; (xviii) affect the jurisdiction or venue of courts; (xix) establish conclusive presumptions with respect to prerequisites to the exercise of any remedies; (xx) establish standards of commercial reasonableness; (xxi) provide for methods or manners of giving notice or service by methods or manners different than that specified or required by applicable law; (xxii) allow a party to enter upon the property of another party without liability regardless of whether such entry would constitute a breach of the peace; (xxiii) provide that a lien or security interest applies to indebtedness that is not specifically described; (xxiv) require contribution, indemnification or exculpation in contravention of public policy; (xxv) provide that remedies are cumulative; (xxvi) provide that decisions by a party are conclusive; (xxvii) provide that time is of the essence; (xxviii) mandate contribution toward judgments or settlements among various parties; (xxix) provide for forfeitures of amounts deemed to constitute penalties; (xxx) provide for liquidated damages, acceleration of future amounts due (other than principal) without appropriate discount to present value, late charges, prepayment charges, or increased interest rates upon default; (xxxi) award attorneys’ fees and collection costs contrary to law or in amounts adjudicated to be unreasonable; (xxxii) require a party to perform its obligations under, or to cause any other person to perform its obligations under, or stating that any action will be taken as provided with, any other agreement; (xxxiii) provide for the confession of judgment; (xxxiv) relate to the application of insurance proceeds or condemnation awards; (xxxv) authorize the set off and application of any deposits held, or any other indebtedness owing, by YA or any Buyer (or any agent of YA or any Buyer) to or for the account of any Transaction Party; (xxxvi) allow the alteration of any guaranteed obligation, the impairment of any guarantor’s recourse against any primary obligor, or the release of a primary obligor (either directly or by electing a remedy which precludes a proceeding directly against the obligor) in each case without affecting the obligations of the guarantor; or (xxxvii) create a covenant running with the land.
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F. We express no opinion as to any choice of law provisions contained in the Transaction Documents.
G. Our opinions as to the validity, binding effect and enforceability of any Transaction Document do not constitute opinions as to the creation, existence, perfection, effect of perfection, or priority of any lien or security interest purported to be granted thereunder; opinions as to the creation or perfection of any lien or security interest are given, if at all, only to the extent expressly set forth in Paragraphs 9 and 10 and are subject to the assumptions, qualifications and limitations applicable to such opinions set forth in this opinion letter. Without limiting the generality of the foregoing, we express no opinion as to (i) the creation, perfection or enforceability of agricultural liens; (ii) the creation, perfection or enforceability of security interests in (a) property in which it is illegal or violative of governmental rules or regulations to grant a security interest (such as, for example, governmental permits and licenses), (b) general intangibles which terminate or become terminable if a security interest is granted therein, (c) property subject to negative pledge clauses of which you or any Buyer have knowledge, (d) leases, contracts, licenses, permits or other general intangibles or accounts, chattel paper, or promissory notes, the assignment of which or creation of a security interest in which requires the approval of the issuer thereof or the other parties thereto (except to the extent that restrictions on the creation, attachment, perfection or enforcement of a security interest therein are unenforceable under Sections 9-406. 9-407 or 9-408 of any applicable Uniform Commercial Code), (e) interests in or claims under a policy of insurance, vehicles, ships, vessels, barges, boats, railroad cars, locomotives or other rolling stock, aircraft, aircraft engines, propellers and related parts, and other property for which a state or federal statute or treaty (including without limitation any applicable Uniform Commercial Code) provides for registration or certification or specifies a place of filing different from that specified in Section 4-9-501 of the Colorado UCC, (f) tort claims, crops, farm products, equipment used in farming operations and accounts or general intangibles arising from or relating to the sale of farm products by a farmer, timber to be cut, fixtures, as-extracted collateral (including without limitation oil, gas, or other minerals and accounts arising out of the sale at the wellhead or minehead of oil, gas, or other minerals), consumer goods, goods for which a negotiable document of title has been issued, copyrights, patents and trademarks, other intellectual property rights, and rights and licenses thereunder; or (iii) the perfection of any security interest in deposit accounts, money, or letter-of-credit rights.
H. We express no opinion with respect to the enforceability of any security interest in any accounts, chattel paper, documents, instruments or general intangibles with respect to which the account debtor or obligor is the United States of America, any state, county, city, municipality or other governmental body, or any department, agency or instrumentality thereof.
I. We have made no examination of, and express no opinion as to, (i) the title or rights of the Transaction Parties to, and/or in, any property, including without limitation any of the Article 9 Collateral and any other property that any Transaction Party purports to pledge and/or encumber in any of the Transaction Documents, (ii) the descriptions of any of the Article 9 Collateral, and/or (iii) the existence of any liens, charges, security interests or encumbrances on any property.
J. We note that a security interest in “proceeds” (as defined in the UCC) of collateral is governed and restricted by Section 9-315 of the UCC.
K. We express no opinion regarding the enforceability of any provision of the Security Agreement that purports to authorize YA or any Buyer (or any agent of YA or any Buyer) to purchase at a private sale Article 9 Collateral that is not subject to widely distributed standard price quotations or sold on a recognized market.
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L. We express no opinion as to (i) any interest or other compensation paid or to be paid (or commitment to pay any compensation), directly or indirectly, to or for the benefit of the holder of the Debenture or any affiliate thereof, whether by Company or any other person, for the use, forbearance or detention of money, other than as expressly provided for in the Transaction Documents, and (ii) whether any interest or other compensation denominated as a fee, charge or disbursement is in fact a fee, charge or disbursement and not interest or compensation for the use, forbearance or detention of money, and (iii) whether any involuntary prepayment premium, make-whole payment or similar charge constitutes interest or compensation for the use, forbearance or detention of money, nor do we express any opinion as to the effect that the payment of such interest or compensation may have upon any of the opinions expressed herein. Furthermore, in rendering the opinions expressed herein, we have assumed that the First Closing Subscription Amount proceeds are and will be free of any requirement not contained in the Transaction Documents for reserves, restricted accounts or similar restrictions affecting the principal balance for interest calculation purposes.
M. To the extent, if any that any interest sought to be charged or collected under the Transaction Documents is deemed to constitute “interest on interest,” we express no opinion as to the enforceability or collectability thereof. Furthermore, to the extent that the Transaction Documents provide that late charges or default interest are calculated on a base that includes unpaid interest, such late charges or default interest may be characterized as “interest on interest” and be unenforceable or uncollectible.
N. Because applicable usury laws may prohibit charging and receiving, as well as contracting for, interest in excess of applicable legal ceilings, we have assumed that in administering the Transaction Documents YA (and any other each Buyer and any other holder of a Debenture) shall at all times comply strictly with all applicable laws relating to (i) the calculation, charging, taking, receiving and reserving of interest or any other compensation for the use, forbearance or detention of money and with the usury savings provisions in the Transaction Documents, taking into account all amounts that constitute interest or are required to be deducted from the principal amount of the Subscription Amount in order to determine the principal balance thereof for interest calculation purposes, and (ii) the cure of any usury violation.
O. Where statements in this opinion letter are qualified by the term “material” or “material adverse effect”, those statements involve judgments and opinions as to materiality or lack of materiality of any matter to the Transaction Parties or their businesses, prospects, assets or financial condition which are entirely those of the Transaction Parties, and their officers and directors, after having been advised by us as to the legal effect and consequences of such matters.
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P. As used herein, the terms “knowledge” or “best of our knowledge” mean, without investigation, analysis, or review of court or other public records or our files, or inquiry of persons, with respect to our firm, the actual, conscious awareness at the time this opinion letter is delivered of facts by those attorneys in this firm who have been actively involved in rendering legal services to the Transaction Parties in connection with the transactions contemplated by the Transaction Documents. We have made no, and disclaim any obligation to conduct any, independent verification or investigation (and have not caused the review of any court file or indices) of the existence or absence of the various factual matters contained herein, including, without limitation, such factual matters communicated to us by representatives of the Transaction Parties.
This opinion letter is solely for the benefit of the addressees hereof for the purpose served by Section 7(b) of the SPA. This opinion letter may not be relied upon in any manner by any other person and may not be disclosed, quoted, filed with a governmental agency or otherwise referred to without our prior written consent. Notwithstanding the foregoing, financial institutions that subsequently become Buyers under the SPA in accordance with the provisions thereof may rely on this letter as of the time of its delivery on the date hereof as if this letter were addressed to them. The opinions contained herein are expressly limited to the matters stated in Paragraphs 1 through 13 hereof, and no opinion is implied or may be inferred beyond the matters expressly stated. This opinion letter speaks as of the time of its delivery on the date hereof, and we undertake no, and disclaim any, duty to update or advise you of facts, circumstances, events or changes in the law that may hereafter be brought to our attention even if they may affect or modify the opinions expressed herein.
Respectfully Submitted,
Dykema Gossett PLLC
DYKEMA GOSSETT PLLC
Exhibit A
FINANCING STATEMENTS
[See Attached.]
Exhibit 10.1
Execution Version
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of July 31, 2026, is between Venu Holding Corporation, a company incorporated under the laws of the State of Colorado, with principal executive offices located at 1755 Telstar Drive, Suite 501, Colorado Springs, Colorado 80920 (the “Company”), and each of the investors listed on the Schedule of Buyers attached as Schedule I hereto (individually, a “Buyer” and collectively the “Buyers”).
WITNESSETH
WHEREAS, the Company and each Buyer desire to enter into this transaction for the Company to sell and the Buyers to purchase the Convertible Debentures (as defined below) and Warrants (as defined below) in a registered direct offering under the Securities Act of 1933, as amended (the “1933 Act”) pursuant to an effective Registration Statement on Form S-3 (File No. 333-291873) (the “Registration Statement”) filed with the Securities and Exchange Commission (the “SEC”) on December 1, 2025, and declared effective on December 8, 2025;
WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the Buyer(s), as provided herein, and the Buyer(s) shall purchase convertible debentures in the form attached hereto as “Exhibit A” (the “Convertible Debentures”) in the aggregate principal amount of $25,000,000 (the “Subscription Amount”), which shall be convertible into shares of the Company’s common stock, par value $0.001 per share (the “Common Shares”) (as converted, the “Conversion Shares”), which shall be purchased upon the signing of this Agreement (the “Closing”), at a purchase price equal to 95% of the Subscription Amount (the “Purchase Price”) in the respective amounts set forth opposite each Buyer(s) name on Schedule I to this Agreement;
WHEREAS, at the Closing the Company shall issue to the Buyer(s) warrants in the form attached hereto as “Exhibit B” (collectively, the “Warrants”) which shall exercisable into an aggregate of 1,000,000 Common Shares (the “Warrant Shares”) at an initial exercise price of $5.00 per share in the respective amounts set forth opposite each Buyer(s) name on Schedule I;
WHEREAS, on or before the Closing Date, the Pledgors (as defined below) are executing and delivering a Security Agreement (the “Security Agreement”) pursuant to which such Pledgors have agreed to provide a first priority lien on all of their assets, including the real property and improvements known as the Regent Bank Amphitheater in Broken Arrow, Oklahoma, as security for the obligations of the Company to the Buyers;
WHEREAS, contemporaneously with the execution and delivery of this Agreement, the Company is delivering Irrevocable Transfer Agent Instructions (the “Irrevocable Transfer Agent Instructions”) to its transfer agent in the form attached hereto as “Exhibit C;” and
WHEREAS, on or before the Closing Date, Mr. Jay William Roth, also known as “JW Roth” and “J.W. Roth,” an individual (“JW Roth”), shall enter into a global guaranty agreement (the “Global Guaranty”) in favor of the Buyer(s);
WHEREAS, the Convertible Debentures and the Conversion Shares the Warrants and the Warrant Shares are collectively referred to herein as the “Securities.”
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:
| 1. | PURCHASE AND SALE OF CONVERTIBLE DEBENTURES AND WARRANTS. |
(a) Purchase of Convertible Debentures. Subject to the satisfaction (or waiver in accordance with the terms of Section 9(k)) of the conditions set forth in Sections 6 and 7 below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company at the Closing, Convertible Debentures with principal amount corresponding to the Subscription Amount set forth opposite each Buyer’s name on Schedule I attached hereto and at the Closing, Warrants in the amount set forth opposite each Buyer’s name on the Schedule of Buyers attached as Schedule I hereto.
(b) Closing Date. The Closing shall occur remotely by conference call and electronic delivery of documentation. The date and time of the Closing shall be at 10:00 a.m., New York time, on the first Business Day after the date when the conditions to the Closing set forth in Sections 6 and 7 below are satisfied or waived (in accordance with the terms of Section 9(k)) (or such other date as is mutually agreed to by the Company and each Buyer) (the “Closing Date”). As used herein “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to remain closed.
(c) Form of Payment; Deliveries. Subject to the satisfaction (or waiver in accordance with the terms of Section 9(k)) of the terms and conditions of this Agreement, on the Closing Date, (i) the Buyers shall deliver to the Company, in immediately available funds to a bank account designated in writing by the Company, the Purchase Price for the Convertible Debentures to be issued and sold to such Buyer at the Closing, minus any fees or expenses to be paid directly from the proceeds of the Closing as set forth herein, and (ii) the Company shall deliver to each Buyer, Convertible Debentures which such Buyer is purchasing at the Closing with a principal amount corresponding with the Subscription Amount set forth opposite each Buyer’s name on Schedule of Buyers attached as Schedule I hereto, duly executed on behalf of the Company and Warrants in the amount set forth opposite each Buyer’s named on the Schedule of Buyers attached as Schedule I attached hereto, duly executed on behalf of the Company.
(d) Maximum Shares. Notwithstanding anything in this Agreement to the contrary, the Company shall not issue any Common Shares pursuant to the transactions contemplated hereby or any other Transaction Documents (as defined below) (including the Conversion Shares and Warrant Shares) if the issuance of Common Shares would exceed the aggregate number of Common Shares that the Company may issue in this transaction in compliance with the Company’s obligations under the rules or regulations of the NYSE American LLC (“NYSE American”) (the number of shares which may be issued without violating such rules and regulations is 11,767,980 and shall be referred to as the “Exchange Cap”), except that such limitation shall not apply in the event that the Company obtains the approval of its stockholders as required by the applicable rules of the NYSE American for issuances of Common Shares in excess of such amount. The Exchange Cap shall be appropriately adjusted for any stock dividend, stock split, reverse stock split or similar transaction.
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| 2. | BUYER’S REPRESENTATIONS AND WARRANTIES. |
Each Buyer, severally and not jointly, represents and warrants to the Company with respect to only itself that, as of the date hereof and as of the Closing Date:
(a) Organization; Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder.
(b) Authorization, Enforcement. The Transaction Documents to which each such Buyer is a party have been duly and validly authorized, executed and delivered on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with their terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
(c) No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the consummation by such Buyer of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of such Buyer, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except, in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.
(d) Certain Trading Activities. The Buyer has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with the Buyer, engaged in any transactions in the securities of the Company (including, without limitation, any short sales (as defined below) involving the Company’s securities) during the period commencing as of the time that the Buyer first contacted the Company or the Company’s agents regarding the specific investment in the Company contemplated by this Agreement, which was July 10, 2026, and ending immediately prior to the execution of this Agreement by such Buyer.
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(e) Not an Affiliate. The Buyer is not (i) an officer or director of the Company or any of its Subsidiaries, (ii) an “affiliate” (as defined in Rule 144) of the Company or any of its Subsidiaries or (iii) a “beneficial owner” of more than 10% of the Common Shares (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).
| 3. | REPRESENTATIONS AND WARRANTIES OF THE COMPANY. |
Except as set forth in the SEC Documents (as defined below) that are available on the SEC’s website through the EDGAR system at least one (1) Business Day prior to the date of this Agreement (unless the context provides otherwise), the Company hereby makes the representations and warranties set forth below to each Buyer:
(a) Organization and Qualification. The Company and each of its Subsidiaries are entities duly formed, validly existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their properties and to carry on their business as now being conducted and as presently proposed to be conducted. The Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect (as defined below). As used in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company and its Subsidiaries, taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or any other agreements or instruments to be entered into by the Company in connection herewith or therewith or (iii) the authority or ability of the Company to perform any of its obligations under any of the Transaction Documents. “Subsidiaries” means any Person in which the Company, directly or indirectly, owns a majority of the outstanding capital stock having voting power or holds a majority of the equity or similar interest of such Person, and each of the foregoing, is individually referred to herein as a “Subsidiary.”
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(b) Authorization; Enforcement; Validity. The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery 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 Convertible Debentures, the reservation for issuance and issuance of the Conversion Shares issuable upon conversion of the Convertible Debentures and the issuance of the Warrants, the reservation for issuance and issuance of the Warrant Shares issuable upon exercise thereof), have been duly authorized by the Company’s board of directors and no further filing, consent or authorization is required by the Company, its board of directors or its shareholders or other governmental body. This Agreement has been, and the other Transaction Documents to which the Company is a party will be at or prior to the Closing, duly executed and delivered by the Company, and this Agreement constitutes, and the other Transaction Documents to which the Company is a party, when duly executed and delivered in accordance with its terms by each of the parties thereto, will constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law. “Transaction Documents” means, collectively, this Agreement, the Convertible Debentures, the Global Guaranty, Security Agreement, Warrant, the Equity Pledge Agreement (as defined below), the Irrevocable Transfer Agent Instructions, the Mortgage (as defined below) and each other document identified by the Company and the Buyer(s) as a “Transaction Document,” all amendments, waivers, or supplements to any of the foregoing, all certificates and instruments delivered by the Company to the Buyer(s) in connection with the transactions contemplated hereby and thereby, as each may be amended from time to time
(c) Issuance of Securities. The issuance of the Securities has been duly authorized and, upon issuance and payment in accordance with the terms of the Transaction Documents the Securities shall be validly issued, fully paid and non-assessable and free from all preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances (collectively “Liens”) with respect to the issuance thereof. As of the Closing Date, the Company shall have reserved from its duly authorized capital stock not less than (i) the Required Reserve Amount (as defined herein) and (ii) all Warrant Shares. Upon issuance or conversion in accordance with the Convertible Debentures, the Conversion Shares, when issued, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Shares. Upon issuance pursuant to exercise in accordance with the Warrants, the Warrant Shares, when issued, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Shares.
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(d) No Conflicts. The execution, delivery and performance of the 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 Convertible Debentures, the Conversion Shares, the Warrants, the Warrant Shares, and the reservation for issuance of the Conversion Shares and Warrant Shares) will not (i) result in a violation of the Articles of Incorporation (as defined below), Bylaws (as defined below), certificate of formation, memorandum of association, articles of association, bylaws or other organizational documents of the Company or any of its Subsidiaries, or any capital stock or other securities of the Company or any of its Subsidiaries, (ii) conflict with, or constitute a default under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, U.S. federal and state securities laws and regulations, the securities laws of the jurisdictions of the Company’s incorporation or in which it or its subsidiaries operate and the rules and regulations of the NYSE American (the “Principal Market,” provided however, that in the event the Company’s Common Shares are ever listed or traded on any of the New York Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Select Market or the Nasdaq Global Market, the “Principal Market” shall mean that market on which the Common Shares is then listed or traded) and including all applicable laws, rules and regulations of the jurisdiction of incorporation of the Company) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, provided, in the case of clauses (ii) and (iii) above, except for such conflicts, defaults, rights, or violations that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(e) Consents. The Company is not required to obtain any consent from, authorization or order of, or make any filing or registration with (other than any filings as may be required by any federal or state securities agencies, the Principal Market, and the SEC), any Governmental Entity (as defined below) or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior to the Closing Date, and neither the Company nor any of its Subsidiaries are aware of any facts or circumstances which might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by the Transaction Documents. The Company is not in violation of the requirements of the Principal Market and has no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension of the Common Shares in the foreseeable future. The Company has notified the Principal Market of the issuance of all of the Securities hereunder, and the Principal Market has approved such notification and the consummation of the transactions contemplated by this Agreement. “Governmental Entity” means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state, local, municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a government or a public international organization or any of the foregoing.
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(f) Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii) to its knowledge, an “affiliate” (as defined in Rule 144 promulgated under the Securities Act (or a successor rule thereto) (collectively, “Rule 144”)) of the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner” of more than 10% of the Common Shares (as defined for purposes of Rule 13d-3 of the Exchange Act). The Company further acknowledges that no Buyer (nor any affiliate of any Buyer) is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s purchase of the Securities. The Company further represents to each Buyer that the Company’s decision to enter into the Transaction Documents to which it is a party has been based solely on the independent evaluation by the Company and its representatives.
(g) Registration. At the time the Registration Statement and any amendments thereto became effective, at the date of this Agreement and as of the Closing Date, the Registration Statement and any amendments thereto conformed and will conform in all material respects to the requirements of the 1933 Act and did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the base prospectus included therein and any amendments or supplements thereto (the “Base Prospectus”) and the prospectus supplement that is filed with the SEC and delivered by the Company to each Buyer at the Closing (the “Prospectus Supplement” and together with the Base Prospectus, the “Prospectus”), at the time such Prospectus was issued and at the Closing Date, conformed and will conform in all material respects to the requirements of the 1933 Act, including Rule 424(b) promulgated under the 1933 Act, and did not and will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company was at the time of the filing of the Registration Statement eligible to use Form S-3. The Company is eligible to use Form S-3 under the 1933 Act and it meets the transaction requirements as set forth in General Instruction I.B.1 of Form S-3.
(h) Dilutive Effect. The Company understands and acknowledges that the number of Conversion Shares may increase in certain circumstances. The Company further acknowledges its obligation to issue the Conversion Shares upon conversion of the Convertible Debentures or Warrant Shares upon exercise of the Warrants in accordance with the terms thereof is, absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.
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(i) Application of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, interested shareholders, business combination, poison pill (including, without limitation, any distribution under a rights agreement), shareholders rights plan or other similar anti-takeover provision under the Articles of Incorporation, Bylaws or other organizational documents or the laws of the jurisdiction of its incorporation or otherwise which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the Securities and any Buyer’s ownership of the Securities.
(j) SEC Documents; Financial Statements. Since November 12, 2024, the Company has timely filed all reports, schedules, forms, proxy statements, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act (all of the foregoing filed prior to the date hereof and all exhibits and appendices included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). The Company has delivered or has made available to the Buyers or their respective representatives true, correct and complete copies of each of the SEC Documents not available on the EDGAR system. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Exchange Act or the Securities Act, as applicable and none of the SEC Documents, at the time they were filed with the SEC, 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 the light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”), consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude 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 its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be material, either individually or in the aggregate). The reserves, if any, established by the Company or the lack of reserves, if applicable, are reasonable based upon facts and circumstances known by the Company on the date hereof and there are no loss contingencies that are required to be accrued by the Statement of Financial Accounting Standard No. 5 of the Financial Accounting Standards Board which are not provided for by the Company in its financial statements or otherwise. No other information provided by or on behalf of the Company to any of the Buyers which is not included in the SEC Documents contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein not misleading, in the light of the circumstance under which they are or were made. The Company is not currently contemplating to amend or restate any of the financial statements (including, without limitation, any notes or any letter of the independent accountants of the Company with respect thereto) included in the SEC Documents (the “Financial Statements”), nor is the Company currently aware of facts or circumstances which would require the Company to amend or restate any of the Financial Statements, in each case, in order for any of the Financials Statements to be in compliance with GAAP and the rules and regulations of the SEC. The Company has not been informed by its independent accountants that they recommend that the Company amend or restate any of the Financial Statements or that there is any need for the Company to amend or restate any of the Financial Statements.
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(k) Absence of Certain Changes. Since the date of the Company’s most recent audited financial statements contained in a Form 10-K, there has been no Material Adverse Effect, nor any event or occurrence specifically affecting the Company or its Subsidiaries that would be reasonably expected to result in a Material Adverse Effect. Since the date of the Company’s most recent audited financial statements contained in a Form 10-K, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any material assets, individually or in the aggregate, outside of the ordinary course of business (except as disclosed in SEC Documents) or (iii) made any material capital expenditures, individually or in the aggregate, outside of the ordinary course of business. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does the Company or any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. The Company and its Subsidiaries, individually and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Section 3(k), “Insolvent” means, (i) with respect to the Company and its Subsidiaries, on a consolidated basis, (A) the present fair saleable value of the Company’s and its Subsidiaries’ assets is less than the amount required to pay the Company’s and its Subsidiaries’ total Indebtedness (as defined below), (B) the Company and its Subsidiaries are unable to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (C) the Company and its Subsidiaries intend to incur or believe that they will incur debts that would be beyond their ability to pay as such debts mature; or (ii) with respect to the Company and each Subsidiary, individually, (A) the present fair saleable value of the Company’s or such Subsidiary’s (as the case may be) assets is less than the amount required to pay its respective total Indebtedness, (B) the Company or such Subsidiary (as the case may be) is unable to pay its respective debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (C) the Company or such Subsidiary (as the case may be) intends to incur or believes that it will incur debts that would be beyond its respective ability to pay as such debts mature. Neither the Company nor any of its Subsidiaries has engaged in any business or in any transaction, and is not about to engage in any business or in any transaction, for which the Company’s or such Subsidiary’s remaining assets constitute unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.
(l) No Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or circumstance has occurred or exists, or is reasonably expected to exist or occur specific to the Company, any of its Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition (financial or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws on a registration statement filed with the SEC relating to an issuance and sale by the Company of its Common Shares and which has not been publicly announced, (ii) could have a material adverse effect on any Buyer’s investment hereunder or (iii) would reasonably be expected to have a Material Adverse Effect.
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(m) Conduct of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term under its Articles of Incorporation, any certificate of designation, preferences or rights of any other outstanding series of preferred stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of formation, memorandum of association, articles of association, Articles of Incorporation or certificate of incorporation or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except in all cases for violations which would not reasonably be expected to have a Material Adverse Effect. Without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements of the Principal Market and has no knowledge of any facts or circumstances that could reasonably lead to delisting or suspension of trading of the Common Shares by the Principal Market in the foreseeable future. During the one year prior to the date hereof, (i) the Common Shares have been listed or designated for quotation on the Principal Market, (ii) trading in the Common Shares has not been suspended by the SEC or the Principal Market and (iii) the Company has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Common Shares from the Principal Market, which has not been publicly disclosed. The Company and each of its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any of its Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. There is no agreement, commitment, judgment, injunction, order or decree binding upon the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is a party which has or would reasonably be expected to have the effect of prohibiting or materially impairing any business practice of the Company or any of its Subsidiaries, any acquisition of property by the Company or any of its Subsidiaries or the conduct of business by the Company or any of its Subsidiaries as currently conducted other than such effects, individually or in the aggregate, which have not had and would not reasonably be expected to have a Material Adverse Effect on the Company or any of its Subsidiaries.
(n) Foreign Corrupt Practices. Neither the Company nor any of its Subsidiaries nor any director, officer, agent, employee, nor any other Person acting for or on behalf of the Company or any of its Subsidiaries (individually and collectively, a “Company Affiliate”) have violated the U.S. Foreign Corrupt Practices Act or any other applicable anti-bribery or anti-corruption laws, nor has any Company Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given, promised to give, or authorized the giving of anything of value, to any officer, employee or any other Person acting in an official capacity for any Governmental Entity to any political party or official thereof or to any candidate for political office (individually and collectively, a “Government Official”) or to any Person under circumstances where such Company Affiliate knew or was aware of a high probability that all or a portion of such money or thing of value would be offered, given or promised, directly or indirectly, to any Government Official, for the purpose, in violation of applicable law, of: (i) (A) influencing any act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official to do or omit to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing such Government Official to influence or affect any act or decision of any Governmental Entity, or (ii) assisting the Company or its Subsidiaries in obtaining or retaining business for or with, or directing business to, the Company or its Subsidiaries.
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(o) Equity Capitalization.
(i) Authorized and Outstanding Capital Stock. As of the date hereof, the authorized capital stock of the Company consists of (A) 144,000,000 shares of common stock, of which 58,869,339 are issued and outstanding (B) 1,000,00 shares of Class B Non-Voting Common Stock, of which 304,990 shares are issued and outstanding, and (B) 5,00,000 shares of preferred stock, of which 1,342 shares have been designated as Series B 4% Convertible Preferred Stock and 1,008 of such shares are issued and outstanding. As of the date hereof, the Company has reserved 36,302,992 Common Shares for issuance to parties or Persons who hold warrants exercisable to acquire Common Shares and 7,049,250 Common Shares for issuance to parties or Persons who stock options exercisable to acquire Common Shares.
(ii) Valid Issuance; Available Shares. All of such outstanding shares are duly authorized and have been validly issued and are fully paid and nonassessable. Set forth on Schedule 3(o) to this Agreement is the number of Common Shares that are, as of the date hereof, owned by Persons who are “affiliates” (as defined in Rule 405 of the Securities Act and calculated based on the assumption that only officers, directors and holders of at least 10% of the Company’s issued and outstanding Common Shares are “affiliates” without conceding that any such Persons are “affiliates” for purposes of federal securities laws) of the Company. To the Company’s knowledge, no Person owns 10% or more of the Company’s issued and outstanding Common Shares (calculated based on the assumption that all Convertible Securities (as defined below), whether or not presently exercisable or convertible, have been fully exercised or converted (as the case may be) taking account of any limitations on exercise or conversion (including “blockers”) contained therein without conceding that such identified Person is a 10% shareholder for purposes of federal securities laws). “Convertible Securities” means any capital stock or other security of the Company or any of its Subsidiaries that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any capital stock or other security of the Company (including, without limitation, Common Shares) or any of its Subsidiaries.
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(iii) Existing Securities; Obligations. Except as disclosed in the SEC Documents: (A) none of the Company’s or any Subsidiary’s shares, interests or capital stock is subject to preemptive rights or any other similar rights or Liens suffered or permitted by the Company or any Subsidiary; (B) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares, interests or capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries; (C) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the Securities Act (except pursuant to this Agreement); (D) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (E) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; and (F) neither the Company nor any Subsidiary has entered into any Variable Rate Transaction.
(iv) Organizational Documents. The Company has furnished to the Buyers or filed on EDGAR true, correct and complete copies of the Company’s Articles of Incorporation, as amended and as in effect on the date hereof (the “Articles of Incorporation”), and the Company’s bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all convertible securities and the material rights of the holders thereof in respect thereto.
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(p) Indebtedness and Other Contracts. Other than as set forth in Schedule 3(p) to this Agreement, neither the Company nor any of its Subsidiaries, (i) has any outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound, (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected to result in a Material Adverse Effect, (iii) has any financing statements securing obligations in any material amounts filed in connection with the Company or any of its Subsidiaries; (iv) is in violation of any term of, or in default under, any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (v) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries have any liabilities or obligations required to be disclosed in the SEC Documents which are not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or could not have a Material Adverse Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance with GAAP) (other than trade payables entered into in the ordinary course of business consistent with past practice), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; and (y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
(q) Litigation. Except as included in the SEC Documents, There is no action, suit, arbitration, proceeding, inquiry or investigation before or by the Principal Market, any court, public board, other Governmental Entity, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, the Common Shares or any of the Company’s or its Subsidiaries’ officers or directors, whether of a civil or criminal nature or otherwise, in their capacities as such, which would reasonably be expected to result in a Material Adverse Effect. After reasonable inquiry of its employees, the Company is not aware of any event which might result in or form the basis for any such action, suit, arbitration, investigation, inquiry or other proceeding. Without limitation of the foregoing, 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 of its Subsidiaries or any current or former director or officer of the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is the subject of any order, writ, judgment, injunction, decree, determination or award of any Governmental Entity that would reasonably be expected to result in a Material Adverse Effect.
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(r) Intellectual Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, original works of authorship, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications and registrations therefor (“Intellectual Property Rights”) necessary to conduct their respective businesses as now conducted and presently proposed to be conducted. None of the Company or any of its Subsidiaries own or have any patents. is set forth in the SEC Documents. Except as set forth in the SEC Documents, none of the Company’s Intellectual Property Rights have expired or terminated or have been abandoned or are expected to expire or terminate or are expected to be abandoned, within three years from the date of this Agreement. The Company does not have any knowledge of any infringement by the Company or its Subsidiaries of Intellectual Property Rights of others. There is no claim, action or proceeding being made or brought, or to the knowledge of the Company or any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries regarding its Intellectual Property Rights. Neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights.
(s) Environmental Laws. Except, in each case, as would not be reasonably anticipated to have a Material Adverse Effect, the Company and the Subsidiaries (a) are in compliance with any and all applicable laws relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants, (b) have received and hold all material permits, licenses or other approvals required of them under all such laws to conduct their respective businesses and (c) are in compliance with all material terms and conditions of any such permit, license or approval.
(t) Tax Status. The Company and each of its Subsidiaries (i) has timely made or filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company and its Subsidiaries know of no basis for any such claim. The Company is not operated in such a manner as to qualify as a passive foreign investment company, as defined in Section 1297 of the Code. The net operating loss carryforwards (“NOLs”) for United States federal income tax purposes of the consolidated group of which the Company is the common parent, if any, shall not be adversely effected by the transactions contemplated hereby. The transactions contemplated hereby do not constitute an “ownership change” within the meaning of Section 382 of the Code, thereby preserving the Company’s ability to utilize such NOLs.
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(u) Internal Accounting and Disclosure Controls. Subject the qualifications and disclosure set forth in the SEC Documents, the Company and each of its Subsidiaries maintains internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that is effective 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, including that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference. Subject the qualifications and disclosure set forth in the SEC Documents, the Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, as applicable, is accumulated and communicated to the Company’s management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure. Neither the Company nor any of its Subsidiaries has received any notice or correspondence from any accountant, Governmental Entity or other Person relating to any potential material weakness or significant deficiency in any part of the internal controls over financial reporting of the Company or any of its Subsidiaries.
(v) Investment Company Status. The Company is not, and upon consummation of the sale of the Securities will not be, an “investment company,” an affiliate of an “investment company,” a company controlled by an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.
(w) Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will be unable to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.
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(x) Manipulation of Price. Neither the Company nor any of its Subsidiaries has, and, to the knowledge of the Company, no Person acting on their behalf has, directly or indirectly, (i) taken any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company or any of its Subsidiaries to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company or any of its Subsidiaries.
(y) Intentionally Omitted.
(z) Shell Company Status. The Company is not, and has never been, an issuer identified in, or subject to, Rule 144(i).
(aa) Sanctions Matters. Neither the Company nor any of its Subsidiaries or, to the knowledge of the Company, any director, officer or controlled affiliate of the Company or any director or officer of any Subsidiary, is a Person that is, or is owned or controlled by a Person that is (i) the subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Asset Control (“OFAC”), the United Nations Security Council, the European Union, His Majesty’s Treasury, or other relevant sanctions authorities, including, without limitation, designation on OFAC’s Specially Designated Nationals and Blocked Persons List or OFAC’s Foreign Sanctions Evaders List or other relevant sanctions authority (collectively, “Sanctions”), or (ii) located, organized or resident in a country or territory that is the subject of Sanctions that broadly prohibit dealings with that country or territory (including, without limitation, the Crimea, Zaporizhzhia and Kherson regions, the Donetsk People’s Republic and Luhansk People’s Republic in Ukraine, Cuba, Iran, North Korea, Russia, Sudan and Syria (the “Sanctioned Countries”)). Neither the Company nor any of its Subsidiaries nor any director, officer or controlled affiliate of the Company or any of its Subsidiaries, has ever had funds blocked by a United States bank or financial institution, temporarily or otherwise, as a result of OFAC concerns.
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(bb) Disclosure. The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information concerning the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other Transaction Documents. The Company understands and confirms that each of the Buyers will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosures provided to the Buyers regarding the Company and its Subsidiaries, their businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the Company or any of its Subsidiaries, taken as a whole, are true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. All of the written information furnished after the date hereof by or on behalf of the Company or any of its Subsidiaries to each Buyer pursuant to or in connection with this Agreement and the other Transaction Documents, taken as a whole, will be true and correct in all material respects as of the date on which such information is so provided and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, liabilities, prospects, operations (including results thereof) or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure at or before the date hereof or announcement by the Company but which has not been so publicly disclosed. All financial projections and forecasts that have been prepared by or on behalf of the Company or any of its Subsidiaries and made available to the Buyers have been prepared in good faith based upon reasonable assumptions and represented, at the time each such financial projection or forecast was delivered to each Buyer, the Company’s best estimate of future financial performance (it being recognized that such financial projections or forecasts are not to be viewed as facts and that the actual results during the period or periods covered by any such financial projections or forecasts may differ from the projected or forecasted results). The Company acknowledges and agrees that no Buyer makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 2.
(cc) No Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents. In addition, on or prior to the date hereof, the Company had discussions with its accountants about its financial statements previously filed with the SEC. Based on those discussions, the Company has no reason to believe that it will need to restate any such financial statements or any part thereof.
| 4. | COVENANTS. |
(a) Reporting Status. For the period beginning on the date hereof, and ending 6 months after the date on which all the Convertible Debentures and Warrants are no longer outstanding (the “Reporting Period”), the Company shall file on a timely basis all reports required to be filed with the SEC pursuant to the Exchange Act, and the Company shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would no longer require or otherwise permit such termination.
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(b) Use of Proceeds. Neither the Company nor any Subsidiary will, directly or indirectly, use the proceeds of the transactions contemplated herein to repay any loans to any executives or employees of the Company or to make any payments in respect of any related party debt. Neither the Company nor any of its Subsidiaries will, directly or indirectly, use the proceeds from the transactions contemplated herein, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person (a) for the purpose of funding or facilitating any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions or is a Sanctioned Country, or (b) in any other manner that will result in a violation of Sanctions or Applicable Laws by any Person (including any Person participating in the transactions contemplated by this Agreement, whether as underwriter, advisor, investor or otherwise). For the past five years, neither the Company nor any of its Subsidiaries has engaged in, and is now not engaged in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions or was a Sanctioned Country. The Company shall not, without the prior written consent of the Buyer, loan, invest, transfer or “downstream” any cash proceeds, or assets or property acquired with cash proceeds from the issuance and sale of the Convertible Debentures to any Subsidiary, unless the Buyer and the Subsidiary enter into a guarantee in the form of the Global Guaranty.
(c) Listing. To the extent applicable, the Company shall maintain the listing or designation for quotation (as the case may be) of all of the Underlying Securities (as defined below) on the Principal Market for the Reporting Period. Neither the Company nor any of its Subsidiaries shall take any action which could be reasonably expected to result in the immediate delisting or suspension of the Common Shares on a Principal Market during the Reporting Period. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(c). “Underlying Securities” means the (i) the Conversion Shares and the Warrant Shares, and (ii) any common shares of the Company issued or issuable with respect to the Conversion Shares or the Warrant Shares, including, without limitation, (1) as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise and (2) shares of capital stock of the Company into which the shares of Common Shares are converted or exchanged without regard to any limitations on conversion of the Convertible Debentures or the exercise of the Warrants.
(d) Fees. The Company shall pay to YA II PN, Ltd, as the lead Buyer, a one-time due diligence and structuring fee of $25,000, which due diligence fee was previously received upon signing of the Term Sheet. The Company shall reimburse Yorkville Advisors Global, LP for its actual outside legal costs incurred in connection with the transactions contemplated by this Agreement, not to exceed $175,000 in the aggregate, and shall pay Yorkville Advisors Global, LP an initial deposit of $50,000 towards such outside legal fees. The Company authorizes each Buyer to deduct any fees due hereunder from the gross proceeds of the purchase of any Convertible Debentures.
(e) Pledge of Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees that, subject to compliance with applicable federal and state securities laws, the Securities may be pledged by a Buyer in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by a Buyer.
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(f) Disclosure of Transactions and Other Material Information.
(i) Disclosure of Transactions. The Company shall, on or before the first Business Day after the date of this Agreement, file with the SEC a current report on Form 8-K describing all the material terms of the transactions contemplated by the Transaction Documents in the form required by the Exchange Act and attaching all the material Transaction Documents (including, required exhibits, the “Current Report”). From and after the filing of the Current Report, the Company shall have publicly disclosed all material, non-public information (if any) provided to any of the Buyers by the Company or any of its Subsidiaries or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the filing of the Current Report, the Company acknowledges and agrees that any and all confidentiality or similar obligations with respect to the transactions contemplated by the Transaction Documents under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate.
(ii) Limitations on Disclosure. The Company shall not, and the Company shall cause each of its Subsidiaries and each of its and their respective officers, directors, employees and agents not to, provide any Buyer with any material, non-public information regarding the Company or any of its Subsidiaries from and after the date hereof without first obtaining the express prior written consent of such Buyer (which may be granted or withheld in such Buyer’s sole discretion). In the event of a breach of any of the foregoing covenants or any of the covenants or agreements contained in any other Transaction Document, by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees and agents (as determined in the reasonable good faith judgment of such Buyer), in addition to any other remedy provided herein or in the Transaction Documents, such Buyer shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such breach or such material, non-public information, as applicable, without the prior approval by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees or agents; provided, however, that such Buyer shall provide the Company with notice of the Buyer’s intent to make such a public disclosure no less than two Business Days prior to the public disclosure. No Buyer shall have any liability to the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees, affiliates, shareholders or agents, for any such disclosure. To the extent that the Company delivers any material, non-public information to a Buyer without such Buyer’s consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality with respect to, or a duty not to trade on the basis of, such material, non-public information. Subject to the foregoing, neither the Company, its Subsidiaries nor any Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, the Company shall be entitled, without the prior approval of any Buyer, to make any press release or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release). Without the prior written consent of the applicable Buyer (which may be granted or withheld in such Buyer’s sole discretion), the Company shall not (and shall cause each of its Subsidiaries and affiliates to not) disclose the name of such Buyer in any filing, announcement, release or otherwise except as may be required by applicable law or the rules and regulations of the Primary Market or the SEC. Notwithstanding anything contained in this Agreement to the contrary and without implication that the contrary would otherwise be true, the Company expressly acknowledges and agrees that no Buyer shall have (unless expressly agreed to by a particular Buyer after the date hereof in a written definitive and binding agreement executed by the Company and such particular Buyer (it being understood and agreed that no Buyer may bind any other Buyer with respect thereto)), any duty of confidentiality with respect to, or a duty not to trade on the basis of, any material, non-public information regarding the Company or any of its Subsidiaries.
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(iii) Other Confidential Information. Disclosure Failures. In addition to other remedies set forth in this Section 4(f), and without limiting anything set forth in any other Transaction Document, at any time after the Closing Date if the Company, any of its Subsidiaries, or any of their respective officers, directors, employees or agents, provides any Buyer with material non-public information relating to the Company or any of its Subsidiaries (each, the “Confidential Information”), the Company shall, on or prior to the applicable Required Disclosure Date (as defined below), publicly disclose such Confidential Information on a Current Report on Form 8-K or otherwise (each, a “Disclosure”). From and after such Disclosure, the Company shall have disclosed all Confidential Information provided to such Buyer by the Company or any of its Subsidiaries or any of their respective officers, directors, employees or agents. In addition, effective upon such Disclosure, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate. “Required Disclosure Date” means (x) if such Buyer authorized the delivery of such Confidential Information, either (I) if the Company and such Buyer have mutually agreed upon a date (as evidenced by an e-mail or other writing) of Disclosure of such Confidential Information, such agreed upon date or (II) otherwise, the seventh (7th) calendar day after the date such Buyer first received any Confidential Information or (y) if such Buyer did not authorize the delivery of such Confidential Information, the first (1st) Business Day after such Buyer’s receipt of such Confidential Information.
(g) Reservation of Shares. So long as any of the Convertible Debentures or Warrants, as applicable, remain outstanding, the Company shall have reserved from its duly authorized capital stock, and shall have instructed its transfer agent to irrevocably reserve, (i) the maximum number of shares of Common Shares issuable upon conversion of all Convertible Debentures (assuming for purposes hereof that (x) such Convertible Debentures are convertible at the Floor Price (as defined therein) as of the date of determination and (y) any such conversion shall not take into account any limitations on the conversion of the Convertible Debentures set forth therein) (the “Maximum Conversion Shares”) and (ii) the maximum number of Common Shares issuable upon exercise of the Warrants (assuming for purposes hereof that (x) such Warrants are exercised at the Exercise Price (as defined therein) as of the date of determination and (y) any such exercise shall not take into account any limitations on the exercise of the Warrants set forth therein) (collectively, the “Required Reserve Amount”); provided that at no time shall the number of shares of Common Shares reserved pursuant to this Section be reduced other than proportionally in connection with any conversion and/or redemption, or reverse stock split. If at any time the number of Common Shares authorized to be issued is not sufficient to meet the Required Reserve Amount, the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of stockholders to authorize additional shares to meet the Company’s obligations pursuant to the Transaction Documents, in the case of an insufficient number of authorized shares, recommending that stockholders vote in favor of an increase in such authorized number of shares sufficient to meet the Required Reserve Amount.
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(h) Shareholder Approval. In the proxy statement for the next annual meeting of the Company’s shareholders, which the Company shall hold no later than October 31, 2026, the Company shall include a proposal to obtain the Shareholder Approval (as defined herein), which shall be accompanied by a unanimous recommendation of the Board of Directors that such proposal be approved. The Company shall solicit proxies from its shareholders in connection therewith in the same manner as all other management proposals in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal and shall use its commercially reasonable efforts to obtain such Shareholder Approval. If the Company does not obtain Shareholder Approval at such annual meeting, the Company shall call a meeting every 90 days thereafter to seek Shareholder Approval until the earlier of the date Shareholder Approval is obtained or the Shares are no longer outstanding. “Shareholder Approval” means such approval as may be required by the applicable rules and regulations of the NYSE American from the shareholders of the Company with respect to the transactions contemplated by the Transaction Documents, including the issuance of all of the Underlying Shares in excess of 19.99% of the issued and outstanding Common Shares on the Closing Date.
(i) Conduct of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or regulation of any Governmental Entity, except where such violations would not reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.
(j) Prohibited Transactions. From the date hereof until all of the Convertible Debentures have been repaid or converted into Common Shares, the Company agrees not to directly or indirectly enter into any contract, agreement or other item that would restrict or prohibit any of the Company’s obligations to the Buyer(s) under the Transaction Documents, including, without limitation, any payments required to be made by the Company to the Buyer(s) under the Convertible Debentures.
(k) Indebtedness. From the date hereof until all the Convertible Debentures have been repaid, without the prior written consent of the Buyer, the Company shall not, and shall not permit any of its subsidiaries (whether or not a subsidiary on the date hereof) to, directly or indirectly (i) other than Permitted Indebtedness (as defined herein), enter into, create, incur, assume, guarantee or suffer to exist any Indebtedness, (ii) other than Permitted Liens (as defined herein), enter into, create, incur, assume or suffer to exist any Lien on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom, or (iii) amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially and adversely affects any rights of the holders of the Convertible Debentures, (iv) make any payments in respect of any related party debt, or (v) enter into, agree to enter into, or effect any Variable Rate Transaction other than with the Buyer and other than the Permitted ATM. For so long as any Convertible Debentures are outstanding, the Company shall use ninety percent (90%) of the net proceeds from the issuance and sale of Common Shares pursuant to the Permitted ATM to prepay the Convertible Debentures in accordance with Section(1)(d)(ii) of the Convertible Debentures.
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“Permitted ATM” means the Company’s ATM agreement with Think Equity LLC, dated June 12, 2026, and the issue and sale of Common Shares pursuant thereto.
“Permitted C-PACE Indebtedness” means Indebtedness incurred by the Company or any subsidiary in connection with one or more commercial property assessed clean energy financings or similar programs pursuant to which financing is repaid through assessments or similar charges imposed on the applicable real property; provided that such Indebtedness shall be used solely to finance or refinance energy efficiency, renewable energy, water conservation, resiliency, seismic, storm hardening or similar improvements to real property owned or leased by the Company or such subsidiary; provided further that any Lien securing such Indebtedness shall attach only to the real property and related improvements subject to the applicable assessment or similar charge, and shall be senior to the Liens in favor of the Buyer solely to the extent of any unpaid assessment installments and statutory delinquent interest then due thereunder, and shall otherwise remain subordinate to the Liens in favor of the Buyer.
“Permitted Indebtedness” shall mean: (i) indebtedness evidenced by the Convertible Debentures; (ii) indebtedness described in Schedule 3(p); (iii) indebtedness incurred solely for the purpose of financing the acquisition or lease of any equipment, including capital lease obligations with no recourse other than to such equipment; (iv) Permitted C-PACE Indebtedness, (v) up to $20,000,000 of Indebtedness secured by The Sunset El Paso amphitheater located in El Paso, Texas; provided, neither Pledgor shall be permitted to guaranty such Indebtedness or pledge any of their assets as security for so such Indebtedness, and (vi) any indebtedness (other than the indebtedness set out in (i) – (vi) above) incurred after the date hereof, provided that such indebtedness does not exceed $50,000 at any given time.
“Permitted Liens” shall mean (1) any security interest granted to the Buyers to secure the obligations under the Convertible Debentures, (2) any prior security interest granted to the Buyers, (3) existing Liens set forth on Schedule 3(p), (4) Liens arising in connection with the Permitted Indebtedness covered by clause (iii) of the Permitted Indebtedness definition above and; (5) inchoate Liens for taxes, assessments or governmental charges or levies not yet due, as to which the grace period, if any, related thereto has not yet expired, or being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with GAAP; (6) Liens of carriers, materialmen, warehousemen, mechanics and landlords and other similar Liens which secure amounts which are not yet overdue by more than 60 days or which are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP; (7) licenses, sublicenses, leases or subleases granted to other persons not materially interfering with the conduct of the business of the Company; (8) Liens securing capitalized lease obligations and purchase money indebtedness incurred solely for the purpose of financing an acquisition or lease; (9) easements, rights-of-way, restrictions, encroachments, municipal zoning ordinances and other similar charges or encumbrances, and minor title deficiencies, in each case not securing debt and not materially interfering with the conduct of the business of the Company and not materially detracting from the value of the property subject thereto; (10) Liens arising out of the existence of judgments or awards which judgments or awards do not constitute an Event of Default; (11) Liens incurred in the ordinary course of business in connection with workers compensation claims, unemployment insurance, pension liabilities and social security benefits and Liens securing the performance of bids, tenders, leases and contracts in the ordinary course of business, statutory obligations, surety bonds, performance bonds and other obligations of a like nature (other than appeal bonds) incurred in the ordinary course of business (exclusive of obligations in respect of the payment for borrowed money); (12) Liens in favor of a banking institution arising by operation of law encumbering deposits (including the right of set-off) and contractual set-off rights held by such banking institution and which are within the general parameters customary in the banking industry and only burdening deposit accounts or other funds maintained with a creditor depository institution; (13) usual and customary set-off rights in leases and other contracts; (14) escrows in connection with acquisitions and dispositions; and (15) liens securing Permitted C-PACE Indebtedness; and (16) royalties and other rights to revenue derived from the sale of the Company’s products that are granted in the ordinary course of business.
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“Variable Rate Transaction” shall mean a transaction in which the Company (i) issues or sells any equity, warrants, or debt securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional Common Shares either (A) at a conversion price, exercise price, exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the Common Shares at any time after the initial issuance of such security, 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 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 Shares (including, without limitation, any “full ratchet” or “weighted average” anti-dilution provisions, but not including any standard anti-dilution protection for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction), (ii) enters into or effects any agreement, including but not limited to an “equity line of credit,” “ATM agreement” or other continuous offering or similar offering of Common Shares, or (iii) enters into or effects any forward purchase agreement, equity pre-paid forward transaction or other similar offering of securities where the purchaser of securities of the Company receives an upfront or periodic payment of all, or a portion of, the value of the securities so purchased, and the Company receives proceeds from such purchaser based on a price or value that varies with the trading prices of the Common Shares.
(l) Short Sales and Hedging. Except as expressly set forth below, the Buyers covenant that from and after the date hereof through and ending when no Convertible Debentures remain outstanding (the “Restricted Period”), no Buyer, any persons or entities acting on its behalf (whether directly or indirectly), or any of its officers, or any entity managed or controlled by a Buyer (collectively, the “Restricted Persons” and each of the foregoing is referred to herein as a “Restricted Person”) shall engage in any short sale (as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of the Common Shares, either for its own principal account or for the principal account of any other Restricted Person, solely to the extent such short sale would or does establish a net short position in the Common Shares; provided, however, that this paragraph shall not apply to any affiliate of a Buyer, and such affiliate shall not be deemed a Restricted Person, that is engaged in trading activities unrelated to such Buyer’s investment in the Convertible Debentures and the Warrants, so long as customary information barriers are in place between such affiliate, on the one hand, and such Buyer and/or the other Restricted Persons, on the other hand, with respect to information relating to the Company, the Common Shares, the Convertible Debentures and the Warrants. Notwithstanding the foregoing, it is expressly understood and agreed that (1) nothing contained herein shall (without implication that the contrary would otherwise be true) prohibit any Restricted Person during the Restricted Period from: (ii) selling long (as defined under Rule 200 promulgated under Regulation SHO) Common Shares; or (ii) selling a number of Common Shares equal to the number of shares that such Restricted Person is entitled to receive, but has not yet received from the Company or the transfer agent, (A) upon the completion of a pending conversion of the Convertible Debentures for which a valid Conversion Notice (as defined in the Convertible Debentures) has been submitted to the Company pursuant to Section 4(b) of the Convertible Debentures or (B) upon the completion of a pending exercise of Warrants for which a valid Notice of Exercise (as defined in the Warrants) has been submitted to the Company pursuant to Section 2(a) of the Warrants, and (2) for the purposes of determining a net short position, the Buyers shall be considered long shares beneficially owned by the Buyers underlying the Convertible Debentures and the Warrants.
(m) Trading Information. Upon the Company’s request, each Buyer agrees to provide the Company with trading reports setting forth the number and average sales prices of Conversion Shares sold by the Buyer during the prior trading week.
(n) Permitted C-PACE Indebtedness. Each Buyer shall timely cooperate with any reasonable requests from the Company that the Company in its reasonable discretion deems necessary or appropriate to facilitate the Company (or a Subsidiary) receiving and executing upon the Permitted C-PACE Indebtedness, including granting any necessary consents, waivers, approvals, or making other accommodations that may be required by the Company, or the lender, sponsor, or financier for the Permitted C-PACE Indebtedness (which may include subordinating the Liens in favor of Buyer solely to the extent of any unpaid assessment installments and statutory delinquent interest then due under the Permitted C-PACE Indebtedness), in each case, that do not deprive, the Buyer of the expected benefits of the Transaction Documents and the transactions contemplated thereby in a material respect.
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(o) Collateral Agent. Each Buyer hereby (i) appoints YA II PN, LTD., as the collateral agent hereunder and under the other Transaction Documents (in such capacity, the “Collateral Agent”), and (ii) authorizes the Collateral Agent (and its officers, directors, employees and agents) to take such action on such Buyer’s behalf in accordance with the terms hereof and thereof. The Collateral Agent shall not have, by reason hereof or any of the other Transaction Documents, a fiduciary relationship in respect of any Buyer. Neither the Collateral Agent nor any of its officers, directors, employees or agents shall have any liability to any Buyer for any action taken or omitted to be taken in connection hereof or any other Security Document except to the extent caused by its own gross negligence or willful misconduct, and each Buyer agrees to defend, protect, indemnify and hold harmless the Collateral Agent and all of its officers, directors, employees and agents (collectively, the “Collateral Agent Indemnitees”) from and against any losses, damages, liabilities, obligations, penalties, actions, judgments, suits, fees, costs and expenses (including, without limitation, reasonable attorneys’ fees, costs and expenses) incurred by such Collateral Agent Indemnitee, whether direct, indirect or consequential, arising from or in connection with the performance by such Collateral Agent Indemnitee of the duties and obligations of Collateral Agent pursuant hereto or any of the Transaction Documents. The Collateral Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Buyers, and such instructions shall be binding upon all holders of Convertible Debentures; provided, however, that the Collateral Agent shall not be required to take any action which, in the reasonable opinion of the Collateral Agent, exposes the Collateral Agent to liability or which is contrary to this Agreement or any other Transaction Document or applicable law. The Collateral Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any telephone message believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this Agreement or any of the other Transaction Documents and its duties hereunder or thereunder, upon advice of counsel selected by it.
(p) Successor Collateral Agent.
(i) The Collateral Agent may resign from the performance of all its functions and duties hereunder and under the other Transaction Documents at any time by giving at least ten (10) Business Days’ prior written notice to the Company and each holder of Convertible Debentures. Such resignation shall take effect upon the acceptance by a successor Collateral Agent of appointment pursuant to clauses (ii) and (iii) below or as otherwise provided below. If at any time the Collateral Agent (together with its affiliates) beneficially owns less than $100,000 in aggregate principal amount of Convertible Debentures, the Buyers may, by written consent, remove the Collateral Agent from all its functions and duties hereunder and under the other Transaction Documents.
(ii) Upon any such notice of resignation or removal, the Buyers shall appoint a successor collateral agent. Upon the acceptance of any appointment as Collateral Agent hereunder by a successor agent, such successor collateral agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the collateral agent, and the Collateral Agent shall be discharged from its duties and obligations under this Agreement and the other Transaction Documents. After the Collateral Agent’s resignation or removal hereunder as the collateral agent, the provisions of this Section 4(p) shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Collateral Agent under this Agreement and the other Transaction Documents.
(iii) If a successor collateral agent shall not have been so appointed within ten (10) Business Days of receipt of a written notice of resignation or removal, the Collateral Agent shall then appoint a successor collateral agent who shall serve as the Collateral Agent until such time, if any, as the Buyers appoint a successor collateral agent as provided above.
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(iv) In the event that (x) a successor Collateral Agent is appointed pursuant to the provisions of this Section 4(p) that is not a Buyer or an affiliate of any Buyer, or (y) the Collateral Agent (or its successor), as applicable, notifies the Company that it wants to appoint such a successor Collateral Agent pursuant to the terms of this Section 4(p), the Company and each Subsidiary thereof covenants and agrees to promptly take all actions reasonably requested by the Buyers or the Collateral Agent (or its successor), as applicable, from time to time, to secure a successor Collateral Agent satisfactory to the requesting part(y)(ies), in their sole discretion, including, without limitation, by paying all reasonable and customary fees and expenses of such successor Collateral Agent, by having the Company and each Subsidiary thereof agree to indemnify any successor Collateral Agent pursuant to reasonable and customary terms and by each of the Company and each Subsidiary thereof executing a collateral agency agreement or similar agreement and/or any amendment to the Transaction Documents reasonably requested or required by the successor Collateral Agent.
| 5. | REGISTER; TRANSFER AGENT INSTRUCTIONS; NO LEGENDS. |
(a) Register. The Company shall maintain at its principal executive offices or with the Transfer Agent (or at such other office or agency of the Company as it may designate by notice to each holder of Securities), a register for the Convertible Debentures and Warrants in which the Company shall record the name and address of the Person in whose name the Convertible Debentures have been issued (including the name and address of each transferee), the amount of Convertible Debentures and Warrants held by such Person. The Company shall keep the register open and available at all times during business hours for inspection of any Buyer or its legal representatives. The Company hereby irrevocably agrees that it shall not require medallion guarantees in connection with any assignments or transfers of shares, warrants, etc. by each Buyer to any third party. The Company hereby authorizes its then-current transfer agent to rely on the foregoing and that the Company hereby indemnifies and agrees to hold its then-current transfer agent harmless from any liability related to its complying with the foregoing. Upon request by any Buyer, the Company further agrees to promptly provide its then-current transfer agent with additional authorizations or commercial reasonable indemnifications as may so request.
(b) No Legends. The Securities shall not contain or bear any restrictive legends or transfer restrictions of any kind whatsoever.
(c) Conversion and Exercise Procedures. The form of Conversion Notice included in the Convertible Debentures set forth the totality of the procedures required of the Buyers in order to convert the Convertible Debentures. Except as provided in Section 5(b), no additional legal opinion, other information or instructions shall be required of the Buyers to convert their Convertible Debentures. The form of Notice of Exercise included in the Warrants set forth the totality of the procedures required of the Buyers in order to exercise the Warrants. No legal opinion, other information or instructions shall be required of the Buyers to convert their Convertible Debentures or exercise their Warrants. The Company shall honor conversions of the Convertible Debentures and shall deliver the Conversion Shares in accordance with the terms, conditions and time periods set forth in the Convertible Debentures. The Company shall honor exercises of the Warrant and shall deliver the Warrant Shares in accordance with the terms, conditions and time periods set forth in the Warrants.
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| 6. | CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL. |
The obligation of the Company hereunder to issue and sell the Convertible Debentures and Warrants to each Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion in accordance with the terms of Section 9(k):
(a) Such Buyer shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.
(b) Such Buyer and each other Buyer shall have delivered to the Company the Purchase Price (less, in the case of any Buyer, the amounts withheld pursuant to Section 4(d), if any) for the Convertible Debentures and Warrants being purchased by such Buyer at the Closing by wire transfer of immediately available funds in accordance with a letter, duly executed by an officer of the Company, setting forth the wire amounts of each Buyer and the wire transfer instructions of the Company (the “Closing Statement”).
(c) The representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date), and such Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the Closing Date.
| 7. | CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE. |
The obligation of each Buyer hereunder to purchase its Convertible Debentures and Warrants at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit and may be waived by such Buyer at any time in its sole discretion in accordance with the terms of Section 9(k):
(a) The Company shall have duly executed and delivered to such Buyer each of the Transaction Documents to which it is a party and the Company shall have duly executed and delivered to such Buyer a Convertible Debenture with a principal amount corresponding to the Subscription Amount set forth opposite such Buyer’s name on the Schedule of Buyers attached as Schedule I for the Closing.
(b) Such Buyer shall have received the opinion of counsel to the Company, dated as of the Closing Date, in the form reasonably acceptable to such Buyer.
(c) The Company shall have delivered certified copies of its Articles of Incorporation and each Pledgor’s charter, as well as any operating agreements by or among the members of each Pledgor.
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(d) The Company shall have delivered to such Buyer a certificate evidencing the incorporation and good standing of the Company as of a date within ten (10) days of the Closing Date.
(e) Each and every representation and warranty of the Company shall be true and correct in all material respects (other than representations and warranties qualified by materiality, which shall be true and correct in all respects) as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions set forth in each Transaction Document required to be performed, satisfied or complied with by the Company at or prior to the Closing Date.
(f) The Common Shares (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not have been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market have been threatened, as of the Closing Date, either (I) in writing by the SEC or the Principal Market or (II) by receiving a notification from the Principal Market of falling below the minimum maintenance requirements of the Principal Market that either, is not subject to a cure period, or if subject to a cure period, such failure remains uncured after the expiration of the cure period.
(g) The Company shall have obtained all governmental, regulatory or third-party consents and approvals, if any, necessary for the sale of the Securities, including without limitation, those required by the Principal Market, if any.
(h) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.
(i) Since the date of execution of this Agreement, no event or series of events shall have occurred that has resulted in or would reasonably be expected to result in a Material Adverse Effect, or an Event of Default (as defined in the Convertible Debentures).
(j) The Company shall have filed with NYSE American a Supplemental Listing Application (the “SLAP”) covering the number of Conversion Shares equal to the Exchange Cap issuable pursuant to the Convertible Debentures and Warrant Shares issuable upon exercise of the Warrants, in each case to be issued at the Closing, and the NYSE American shall have approved the SLAP and authorized the listing of such Conversion Shares and Warrant Shares, subject only to official notice of issuance.
(k) Such Buyer shall have received the Closing Statement.
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(l) (i) From the date hereof to the applicable Closing Date, trading in the Common Shares shall not have been suspended by the SEC of the Principal Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the Closing), and (ii) at any time from the date hereof to the applicable Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on the Principal Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of each Buyer, makes it impracticable or inadvisable to purchase the Securities at the Closing.
(m) The board of directors of the Company has approved the transactions contemplated by the Transaction Documents; said approval has not been amended, rescinded or materially modified and remains in full force and effect as of such Closing, and a true, correct and complete copy of such resolutions duly adopted by the board of directors of the Company shall have been provided to the Buyers.
(n) The Company shall have delivered to the Buyer(s) a compliance certificate executed by an executive officer of the Company certifying that Company has complied with all of the conditions precedent to the applicable Closing set forth herein and which may be relied upon by the Buyer(s) as evidence of satisfaction of such conditions without any obligation to independently verify.
(o) Sunset Ground at Broken Arrow, LLC (“Sunset Ground”) and Sunset at Broken Arrow LLC (“Sunset Lessor” and together with Sunset Ground, the “Pledgors”) shall have executed and delivered a Fee and Leasehold Mortgage (the “Mortgage”), with Power of Sale, Fixture Filing, Security Agreement, Financing Statement, dated as of the Closing Date, granting the Buyer(s) a perfected, first priority security interest and mortgage in the real property and leasehold interest described therein.
(p) The equityholders of the Pledgors shall have executed and delivered the Equity Pledge Agreement (the “Equity Pledge Agreement”), dated as of the Closing Date, granting the Buyer(s) a perfected, first priority security interest and mortgage in the pledged equities described therein.
(q) The Buyer(s) shall have received an ALTA lender’s title insurance policy containing no exceptions other than Permitted Liens and such other exceptions as are reasonably acceptable to the Buyer(s), or an irrevocable title commitment to issue such policy, in form and substance reasonably satisfactory to the Buyer(s), insuring the Mortgage described in clause (o) above as a valid, perfected, first priority mortgage lien on the real property and leasehold interests described therein.
(r) The Company and the Pledgors shall have delivered to such Buyer such other documents, instruments or certificates relating to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.
(s) The Company shall have delivered the Prospectus to each Buyer.
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| 8. | TERMINATION. |
In the event that the Closing shall not have occurred with respect to a Buyer within ten (10) days of the date hereof, then that Buyer shall have the right to terminate its obligations under this Agreement with respect to itself at any time on or after the close of business on such date without liability of such Buyer to any other party; provided, however, (i) the right to terminate this Agreement under this Section 8 shall not be available to a Buyer if the failure of the transactions contemplated by this Agreement to have been consummated by such date is the result of such Buyer’s breach of this Agreement and (ii) the abandonment of the sale and purchase of the Convertible Debentures and Warrants shall be applicable only to such Buyer providing such written notice, provided further that no such termination shall affect any obligation of the Company under this Agreement to reimburse such Buyer for the expenses described herein. Nothing contained in this Section 8 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction Documents.
| 9. | MISCELLANEOUS. |
(a) Governing Law. This Agreement and the rights and obligations of the parties hereunder shall, in all respects, be governed by, and construed in accordance with, the laws (excluding the principles of conflict of laws) of the State of New York (including Section 5-1401 and Section 5-1402 of the General Obligations Law of the State of New York), including all matters of construction, validity and performance.
(b) Jurisdiction; Venue; Service.
(i) The Company hereby irrevocably consent to the non-exclusive personal jurisdiction of the state courts of the State of New York (the “Governing Jurisdiction”) and, if a basis for federal jurisdiction exists, the non-exclusive personal jurisdiction of any United States District Court for the Governing Jurisdiction.
(ii) The Company agrees that venue shall be proper in any court of the Governing Jurisdiction selected by the Buyers or, if a basis for federal jurisdiction exists, in any United States District Court in the Governing Jurisdiction. The Company waives any right to object to the maintenance of any suit, claim, action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, in any of the state or federal courts of the Governing Jurisdiction on the basis of improper venue or inconvenience of forum.
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(iii) Any suit, claim, action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or tort or otherwise, brought by the Company against the Buyer(s) arising out of or based upon this Agreement or any matter relating to this Agreement, or any other Transaction Document, or any contemplated transaction, shall be brought in a court only in the Governing Jurisdiction. The Company shall not file any counterclaim against the Buyer(s) in any suit, claim, action, litigation or proceeding brought by the Buyer(s) against the Company in a jurisdiction outside of the Governing Jurisdiction unless under the rules of the court in which the Buyer(s)brought such suit, claim, action, litigation or proceeding the counterclaim is mandatory, and not permissive, and would be considered waived unless filed as a counterclaim in the suit, claim, action, litigation or proceeding instituted by the Buyer(s) against the Company. The Company agrees that any forum outside the Governing Jurisdiction is an inconvenient forum and that any suit, claim, action, litigation or proceeding brought by the Company against the Buyer(s) in any court outside the Governing Jurisdiction should be dismissed or transferred to a court located in the Governing Jurisdiction. Furthermore, the Company irrevocably and unconditionally agrees that it will not bring or commence any suit, claim, action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Buyer(s) arising out of or based upon this Agreement or any matter relating to this Agreement, or any other Transaction Document, or any contemplated transaction, in any forum other than the courts of the State of New York sitting in New York County, and the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such suit, claim, action, litigation or proceeding may be heard and determined in such New York State Court or, to the fullest extent permitted by applicable law, in such federal court. The Company and the Buyer(s) agree that a final judgment in any such suit, claim, action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(iv) The Company and the Buyers irrevocably consent to the service of process out of any of the aforementioned courts in any such suit, claim, action, litigation or proceeding by the mailing of copies thereof by registered or certified mail postage prepaid, to it at the address provided for notices in this Agreement, such service to become effective thirty (30) days after the date of mailing.
(v) Nothing herein shall affect the right of the Buyers to serve process in any other manner permitted by law or to commence legal proceedings or to otherwise proceed against the Company or any other Person in the Governing Jurisdiction or in any other jurisdiction.
(c) THE PARTIES MUTUALLY WAIVE ALL RIGHT TO TRIAL BY JURY OF ALL CLAIMS OF ANY KIND ARISING OUT OF OR BASED UPON THIS AGREEMENT OR ANY MATTER RELATING TO THIS AGREEMENT, OR ANY OTHER TRANSACTION DOCUMENT, OR ANY CONTEMPLATED TRANSACTION. THE PARTIES ACKNOWLEDGE THAT THIS IS A WAIVER OF A LEGAL RIGHT AND THAT THE PARTIES EACH MAKE THIS WAIVER VOLUNTARILY AND KNOWINGLY AFTER CONSULTATION WITH COUNSEL OF THEIR RESPECTIVE CHOICE. THE PARTIES AGREE THAT ALL SUCH CLAIMS SHALL BE TRIED BEFORE A JUDGE OF A COURT HAVING JURISDICTION, WITHOUT A JURY.
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(d) Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
(e) Headings; Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.
(f) Entire Agreement, Amendments. This Agreement supersedes all other prior oral or written agreements between the Buyers, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the party to be charged with enforcement. As a material inducement for each Buyer to enter into this Agreement, the Company expressly acknowledges and agrees that (x) no due diligence or other investigation or inquiry conducted by a Buyer, any of its advisors or any of its representatives shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s representations and warranties contained in this Agreement or any other Transaction Document and (y) unless a provision of this Agreement or any other Transaction Document is expressly preceded by the phrase “except as disclosed in the SEC Documents,” nothing contained in any of the SEC Documents shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s representations and warranties contained in this Agreement or any other Transaction Document.
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(g) Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing by letter and email and will be deemed to have been delivered: upon the later of (A) either (i) receipt, when delivered personally or (ii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same and (B) receipt, when sent by electronic mail. The addresses and e-mail addresses for such communications shall be:
| If to the Company, to: | Venu Holding Corporation |
1755 Telstar Drive, Suite 501 | |
| Colorado Springs, Colorado 80920 | |
| Telephone: (719) 895-5483 | |
| Attention: Chief Executive Officer | |
| E-Mail: [●] | |
| With Copy to: | Dykema Gosset PLLC |
| 111 E. Kilbourn Avenue, Suite 1050 | |
| Milwaukee, Wisconsin 53202 | |
| Attention: Peter Waltz | |
| E-Mail: [email protected] |
If to a Buyer, to its address and e-mail address set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers,
| With copy to: | David Fine, Esq. |
| c/o Yorkville Advisors Global, LP | |
| 1012 Springfield Avenue | |
| Mountainside, NJ 07092 | |
| Email: [●] | |
| and | |
| Haynes and Boone, LLP | |
| 30 Rockefeller Plaza, 22nd Floor | |
| New York, New York 10112 | |
| Attention: Greg Kramer, Esq. | |
| Email: [email protected] |
or to such other address, e-mail address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) electronically generated by the sender’s e-mail service provider containing the time, date, recipient e-mail address or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively
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(h) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of any of the Convertible Debentures (but excluding any purchasers of Underlying Securities, unless pursuant to a written assignment by such Buyer). The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Buyers. In connection with any transfer of any or all of its Securities, a Buyer may assign all, or a portion, of its rights and obligations hereunder in connection with such Securities without the consent of the Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such transferred Securities.
(i) Indemnification.
(i) In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless each Buyer and each holder of any Securities and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (i) any misrepresentation or breach of any representation or warranty made by the Company in any of the Transaction Documents, (ii) any breach of any covenant, agreement or obligation of the Company or any Subsidiary contained in any of the Transaction Documents or (iii) any cause of action, suit, proceeding or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company or any Subsidiary) or which otherwise involves such Indemnitee that arises out of or results from (A) the execution, delivery, performance or enforcement of any of the Transaction Documents, (B) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, or (C) any disclosure properly made to such Buyer pursuant to Section 4(f), or (D) the status of such Buyer or holder of the Securities either as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents or as a party to this Agreement (including, without limitation, as a party in interest or otherwise in any action or proceeding for injunctive or other equitable relief). To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. Notwithstanding the foregoing, the Company shall not be liable to any Indemnitee to the extent an Indemnified Liability arises as a result of the gross negligence, fraud, or willful misconduct of such Indemnitee, or from any material breach by such Indemnitee of its representations, warranties, covenants, or agreements contained in this Agreement, in each case, as determined by a final, non-appealable judgment of a court of competent jurisdiction.
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(ii) Promptly after receipt by an Indemnitee under this Section 9(i) of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim in respect thereof is to be made against the Company under this Section 9(i), deliver to the Company a written notice of the commencement thereof, and the Company shall have the right to participate in, and, to the extent the Company so desires, to assume control of the defense thereof with counsel mutually reasonably satisfactory to the Company and the Indemnitee; provided, however, that an Indemnitee shall have the right to retain its own counsel with the fees and expenses of such counsel to be paid by the Company if: (A) the Company has agreed in writing to pay such fees and expenses; (B) the Company shall have failed promptly to assume the defense of such Indemnified Liability and to employ counsel reasonably satisfactory to such Indemnitee in any such Indemnified Liability; or (C) the named parties to any such Indemnified Liability (including any impleaded parties) include both such Indemnitee and the Company, and such Indemnitee shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnitee and the Company (in which case, if such Indemnitee notifies the Company in writing that it elects to employ separate counsel at the expense of the Company, then the Company shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Company), provided further, that in the case of clause (C) above the Company shall not be responsible for the reasonable fees and expenses of more than one (1) separate legal counsel for the Indemnitees. The Indemnitee shall reasonably cooperate with the Company in connection with any negotiation or defense of any such action or Indemnified Liability by the Company and shall furnish to the Company all information reasonably available to the Indemnitee which relates to such action or Indemnified Liability. The Company shall keep the Indemnitee reasonably apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. The Company shall not be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that the Company shall not unreasonably withhold, delay or condition its consent. The Company shall not, without the prior written consent of the Indemnitee, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnitee of a release from all liability in respect to such Indemnified Liability or litigation, and such settlement shall not include any admission as to fault on the part of the Indemnitee. Following indemnification as provided for hereunder, the Company shall be subrogated to all rights of the Indemnitee with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the Company within a reasonable time of the commencement of any such action shall not relieve the Company of any liability to the Indemnitee under this Section 9(i), except to the extent that the Company is materially and adversely prejudiced in its ability to defend such action.
(iii) The indemnification required by this Section 9(i) shall be made by periodic payments of the amount thereof during the course of the investigation or defense, within ten (10) days after bills supporting the Indemnified Liabilities are received by the Company.
(iv) The indemnity agreement contained herein shall be in addition to (A) any cause of action or similar right of the Indemnitee against the Company or others, and (B) any liabilities the Company may be subject to pursuant to the law.
(j) 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.
(k) No Waiver. Any waiver by a party of any breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. No provision of this Agreement may be waived or amended other than by a written agreement signed by the parties to this Agreement. No custom or practice of the parties at variance with the terms hereof shall constitute a waiver by any party of its right to exercise any right, power or remedy available to it hereunder or any other right, power or remedy or to demand strict compliance with the terms of this Agreement.
[REMAINDER PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.
COMPANY: | ||
| VENU HOLDING CORPORATION | ||
| By: | /s/ Jay William Roth | |
| Name: | Jay William Roth | |
| Title: | Chief Executive Officer | |
| 35 |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.
BUYER: | ||
| YA II PN, LTD. | ||
| By: | Yorkville Advisors Global, LP | |
| Its: | Investment Manager | |
| By: | Yorkville Advisors Global II, LLC | |
| Its: | General Partner | |
| By: | /s/ Matt Beckman | |
| Name: | Matt Beckman | |
| Title: | Manager | |
| 36 |
LIST OF EXHIBITS:
EXHIBIT A: FORM OF CONVERTIBLE DEBENTURES
EXHIBIT B: FORM OF WARRANTS
EXHIBIT C: FORM OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
| 37 |
EXHIBIT A
FORM OF CONVERTIBLE DEBENTURES
| 38 |
EXHIBIT B
FORM OF WARRANTS
| 39 |
EXHIBIT C
FORM OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
COMPANY LETTERHEAD
July [______], 2026
Colonial Stock Transfer
7840 S 700 E
Sandy, Utah 84070
Phone: (801) 355-5740
Fax: (801) 355-6505
Ladies and Gentlemen:
Venu Holding Corporation, a Colorado corporation (the “Company”) and YA II PN, LTD. (the “Investor”) have entered into a Securities Purchase Agreement dated as of _____________, 2026 (the “Agreement”), providing for the issuance of Convertible Debentures in the aggregate principal amount of $25,000,000 (the “Debentures”) convertible into shares of common stock, par value $0.001 per share, of the Company (“Common Shares”) and warrants (the “Warrants”) to purchase 1,000,000 Common Shares at an exercise price of $5.00 per share.
A copy of the form of Debentures is attached hereto. You should familiarize yourself with your issuance and delivery obligations, as Transfer Agent, contained therein. The shares to be issued are to be registered in the names of the registered holder of the securities submitted for conversion.
You are hereby irrevocably authorized and instructed to reserve a sufficient number of Common Shares of the Company for issuance upon full conversion of the Debentures in accordance with the terms thereof. The number of Common Shares so reserved is shall initially be [________________] shares, as may be increased by the Company in accordance with the Agreement.
The ability to convert the Debentures and the exercise the Warrants in a timely manner is a material obligation of the Company pursuant to such securities. Your firm is hereby irrevocably authorized and instructed to issue Common Shares of the Company (without any restrictive legend) to the Investors without any further action or confirmation by the Company: (A) upon your receipt from any Investor of a notice of conversion under the Debentures executed by the Investor (“Conversion Notice”) or a notice of exercise under the Warrants executed by the Investor (“Notice of Exercise”) and (B) the number of shares to be issued is less than 4.99% of the total issued common stock of the Company. The Debentures and Warrants were issued in a registered direct offering and accordingly shall not bear any restrictive legends.
The Company hereby requests that your firm act immediately, without delay and without the need for any action or confirmation by the Company with respect to the issuance of Common Shares pursuant to any Conversion Notices or Notices of Exercise received from any Investor.
The Company shall indemnify you and your officers, directors, principals, partners, agents and representatives, and hold each of them harmless from and against any and all loss, liability, damage, claim or expense (including the reasonable fees and disbursements of its attorneys) incurred by or asserted against you or any of them arising out of or in connection with the instructions set forth herein, the performance of your duties hereunder and otherwise in respect hereof, including the costs and expenses of defending yourself or themselves against any claim or liability hereunder, except that the Company shall not be liable hereunder as to matters in respect of which it is determined that you have acted with gross negligence or in bad faith. You shall have no liability to the Company in respect to any action taken or any failure to act in respect of this if such action was taken or omitted to be taken in good faith, and you shall be entitled to rely in this regard on the advice of counsel.
The Board of Directors of the Company has approved the foregoing (irrevocable instructions) and does hereby extend the Company’s irrevocable agreement to indemnify your firm for all loss, liability or expense in carrying out the authority and direction herein contained on the terms herein set forth.
The Investors are intended to be and are third party beneficiaries hereof, and no amendment or modification to the instructions set forth herein may be made without the consent of each such Investor.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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| Very truly yours, | ||
| COMPANY NAME | ||
| By: | ||
| Name: | ||
| Title: | CEO | |
| Acknowledged and Agreed: | ||
| YA II PN, Ltd. | ||
| By: | ||
| Name: | ||
| Date: | ||
| Acknowledged and Agreed: | ||
| Colonial Stock Transfer | ||
| By: | ||
| Name: | ||
| Title: | ||
| Date: | ||
| 41 |
SCHEDULE I
SCHEDULE OF BUYERS
| (a) | (b) | (c) | (d) | |||||||||
| Buyer | Subscription Amount of Convertible Debentures | Purchase Price (95% of Subscription Amount) | Warrant Shares | |||||||||
| YA II PN, Ltd. | ||||||||||||
| 1012 Springfield Avenue | $ | 25,000,000 | $ | 23,750,000 | 1,000,000 | |||||||
| Mountainside, NJ 07092 | ||||||||||||
| Email: [●] | ||||||||||||
| Aggregate: | $ | 25,000,000.00 | $ | 23,750,000 | 1,000,000 | |||||||
| Legal Representative’s Address and E-Mail Address | ||||||||||||
| David Fine, Esq. | ||||||||||||
| 1012 Springfield Avenue | ||||||||||||
| Mountainside, NJ 07092 | ||||||||||||
| Email: [●] | ||||||||||||
| 42 |
Exhibit 10.2
Execution Version
PLEDGE AND security AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”) dated as of July 31, 2026 (the “Closing Date”), is entered into among SUNSET GROUND AT BROKEN ARROW, LLC, a Colorado limited liability company (“Sunset Ground”), and SUNSET AT BROKEN ARROW LLC, a Colorado limited liability company (“Sunset Broken Arrow” and, together with Sunset Ground, the “Grantors” and each a “Grantor”), and YA II PN, LTD., a Cayman Islands exempt limited partnership, as collateral agent for the Buyers (in such capacity, together with its successors, “Collateral Agent”). Reference is made to that certain Securities Purchase Agreement, dated as of July 31, 2026 (as amended, restated, supplemented or otherwise modified from time to time, the “Securities Purchase Agreement”), by and among Venu Holding Corporation, a Colorado corporation (the “Company”), and each buyer identified on the signature pages thereto (each, including its successors and assigns, a “Buyer” and collectively, the “Buyers”). It is a condition to the Securities Purchase Agreement that the parties hereto enter into this Agreement to grant a security interest in the Collateral (as defined herein).
The parties hereto hereby agree as follows:
1. defined terms. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth on Exhibit A or ascribed thereto in the Securities Purchase Agreement or the Convertible Debentures (as defined in the Securities Purchase Agreement). All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein. As used in this Agreement, the word “shall” is mandatory, the word “may” is permissive, the word “or” is not exclusive, the words “includes” and “including” are not limiting, the singular includes the plural, and numbers denoting amounts that are set off in brackets are negative. Unless otherwise specified, all references in this Agreement or any Annex or Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule” shall refer to the corresponding Section, subsection, Exhibit, Annex, or Schedule in or to this Agreement. For purposes of this Agreement, whenever a representation or warranty is made to a Person’s knowledge or awareness, knowledge or awareness means the actual knowledge, after reasonable investigation, of any Responsible Officer of such Person.
2. CREATION OF SECURITY INTEREST
2.1 Grant of Security Interest. Each Grantor hereby grants to Collateral Agent, for the ratable benefit of the Buyers, to secure the payment and performance in full of all of the Obligations, a continuing security interest in, and pledges to Collateral Agent, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof. If the Securities Purchase Agreement is terminated, Collateral Agent’s Lien in the Collateral shall continue until the Obligations (other than contingent indemnification obligations as to which no claim has been asserted or is known to exist) are repaid in full in cash. Each Grantor acknowledges that the security interest granted herein is not a mere formality but a fundamental part of the bargained-for consideration in connection with the transactions contemplated by the Transaction Documents.
2.2 Priority of Security Interest. Each Grantor represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens). If a Grantor shall acquire a commercial tort claim with a potential recovery in excess of Seventy-Five Thousand Dollars ($75,000), such Grantor shall promptly notify Collateral Agent in writing and deliver such other information and documents as Collateral Agent may reasonably require to take any further action necessary or advisable to perfect Collateral Agent’s Lien in such commercial tort claim. If a Grantor shall acquire an instrument whose value exceeds Seventy-Five Thousand Dollars ($75,000), then such Grantor shall promptly notify Collateral Agent and deliver the same together with an instrument of transfer and any necessary endorsement, all in form satisfactory to Collateral Agent; provided that no Grantor shall be required to deliver any instrument that constitutes Excluded Property.
2.3 Authorization to File Financing Statements. Each Grantor hereby authorizes Collateral Agent to file at any time financing statements, continuation statements and amendments thereto with all appropriate jurisdictions to perfect or protect Collateral Agent’s interest or rights hereunder. Such financing statements may describe the Collateral as all assets of such Grantor.
2.4 Pledge of Equity Interests. Each Grantor hereby pledges, assigns and grants to Collateral Agent a security interest in all the Equity Interests in which such Grantor has any interest, together with all proceeds and substitutions thereof, all cash, stock and other moneys and property paid thereon, all rights to subscribe for securities declared or granted in connection therewith, and all other cash and noncash proceeds of the foregoing, as security for the performance of the Obligations. On the Closing Date, the certificate or certificates for such Equity Interests (if any), to the extent certificated, will be delivered to Collateral Agent, accompanied by a stock power or other appropriate instrument of assignment duly executed in blank. To the extent required by the terms and conditions governing the Equity Interests in which a Grantor has an interest, upon request by the Collateral Agent, each Grantor shall cause the books of each Person whose Equity Interests are part of the Collateral and any transfer agent to reflect the pledge of the Equity Interests. Upon the occurrence and during the continuance of an Event of Default hereunder, Collateral Agent may effect the transfer of any securities included in the Collateral (including but not limited to the Equity Interests) into the name of Collateral Agent and cause new certificates representing such securities to be issued in the name of Collateral Agent or its transferee. Each Grantor will execute and deliver such documents, and take or cause such actions to be taken, as Collateral Agent may request to perfect or continue the perfection of Collateral Agent’s security interest in the Equity Interests. Unless an Event of Default shall have occurred and be continuing, each Grantor shall be entitled to exercise any voting rights with respect to the Equity Interests in which it has an interest and to give consents, waivers and ratifications in respect thereof, provided that after notice from Collateral Agent following an Event of Default or if a Grantor has commenced an Insolvency Proceeding, such Grantor’s rights to exercise voting rights with respect to such Equity Interests shall be automatically terminated, and in any event, no vote shall be cast or consent, waiver or ratification given or action taken which would be inconsistent with any of the terms of the Transaction Documents or which would constitute or create any violation of any of such terms. All such rights to vote and give consents, waivers and ratifications shall terminate upon the occurrence and during the continuance of an Event of Default.
3. Covenants; REPRESENTATIONS
Each Grantor hereby agrees to do all of the following:
3.1 Insurance
(a) Ensure that proceeds in excess of $50,000 per occurrence payable under any property insurance policy with respect to Collateral are, at Collateral Agent’s option, payable to Collateral Agent. Proceeds below this threshold may be used by Grantors for repair or replacement, for the ratable benefit of Buyers, on account of the Obligations. To that end, all property policies shall have a lender’s loss payable endorsement showing Collateral Agent as lender loss payable, all liability policies shall show, or have endorsements showing, Collateral Agent as an additional insured, in each case, in form reasonably satisfactory to Collateral Agent and as set forth on Exhibit B.
(b) Notwithstanding the foregoing, (a) so long as no Event of Default has occurred and is continuing, the Grantors shall have the option of applying the proceeds of any casualty policy up to Fifty Thousand Dollars ($50,000) in the aggregate per fiscal year toward the prompt replacement or repair of destroyed or damaged property; provided that any such replaced or repaired property (i) shall be of equal or like value as the replaced or repaired Collateral and (ii) shall be Collateral in which Collateral Agent has been granted a first priority security interest and (b) after the occurrence and during the continuance of an Event of Default, all such proceeds shall, at the option of Collateral Agent, be payable to Collateral Agent, for the ratable benefit of Buyers, on account of the Obligations.
(c) At Collateral Agent’s request, each Grantor shall deliver certified copies of insurance policies and evidence of all premium payments. Each provider of any such insurance required under this Section 3.1 shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to Collateral Agent, that it will give Collateral Agent thirty (30) days prior written notice (or at least ten (10) days’ prior written notice for non-payment of premium) before any such policy or policies shall be canceled.
(d) If any Grantor fails to obtain insurance as required under this Section 3.1 or to pay any amount or furnish any required proof of payment upon Collateral Agent’s request, and such failure continues for ten (10) Business Days following written notice from Collateral Agent, Collateral Agent may obtain such insurance or make such payment, Collateral Agent may make all or part of such payment or obtain such insurance policies required in this Section 3.1 and take any action under the policies as Collateral Agent deems prudent or may direct.
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3.2 Collateral Accounts.
Each Grantor shall not establish or maintain any Collateral Account other than (i) Collateral Accounts identified in the Perfection Certificate and subject to an Account Control Agreement in form and substance satisfactory to the Collateral Agent and (ii) Excluded Accounts. Each Grantor shall cause each bank, broker, securities intermediary or other financial institution at or with which any Collateral Account is maintained, other than Excluded Accounts, to execute and deliver an Account Control Agreement in form and substance satisfactory to the Collateral Agent. With respect to any Collateral Account existing on the Closing Date, such Account Control Agreement shall be delivered on or before the Closing Date or such later date as the Collateral Agent may agree in writing in its sole discretion. No Grantor shall establish any new Collateral Account, or transfer any funds or assets into any new Collateral Account, unless and until such Collateral Account is subject to an Account Control Agreement in form and substance satisfactory to the Collateral Agent, other than Excluded Accounts. Each Grantor shall provide Collateral Agent written notice at least five (5) Business Days prior to establishing any new Collateral Account, identifying the name and address of the applicable financial institution, the name in which the account will be held, the purpose of the account and the complete account number therefor. If (x) any account ceases to qualify as an Excluded Account, or (y) any new Collateral Account is established, then the applicable Grantor shall, within twenty (20) days after such event, cause such account to be subject to an Account Control Agreement in form and substance satisfactory to the Collateral Agent. Except for Collateral Accounts identified in the Perfection Certificate or in a notice timely delivered pursuant to this Section 3.2, no Grantor shall maintain any Collateral Account.
3.3 Property Locations.
(a) Provide to Collateral Agent at least ten (10) days’ prior written notice before adding any new offices or business or Collateral locations, including warehouses (unless such new offices or business or Collateral locations qualify as Excluded Locations).
(b) With respect to any property or assets of a Grantor located with a third party, including a bailee, datacenter or warehouse (other than Excluded Locations), such Grantor shall, if requested in writing by Collateral Agent, use its commercially reasonable efforts to cause such third party to execute and deliver a Collateral Access Agreement for such location, including an acknowledgment from each of the third parties that it is holding or will hold such property, subject to Collateral Agent’s security interest. The Grantors shall ensure that (i) the Collateral is located only at the locations identified in the Perfection Certificate and other Permitted Locations and (ii) the Collateral is not in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate.
(c) With respect to any property or assets of a Grantor located on leased premises (other than Excluded Locations), such Grantor shall, if requested in writing by Collateral Agent, use its commercially reasonable efforts to cause such third party to execute and deliver a Collateral Access Agreement for such location.
3.4 Equipment.
(a) With respect to any Equipment that operates using embedded proprietary software subject to a license from the manufacturer or a third party, each Grantor shall (i) maintain all such software licenses in full force and effect and (ii) promptly notify Collateral Agent of any default, termination, or threatened termination of any such license material to the business of the Grantors.
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3.5 Perfection Certificate.
(a) In connection with this Agreement, each Grantor has delivered to Collateral Agent a completed certificate signed by a Responsible Officer of the Grantors entitled “Perfection Certificate” (as updated from time to time pursuant to this Section 3.5, the “Perfection Certificate”). Except to the extent the Grantors have provided notice thereof in accordance with Section 3.5(b), each Grantor shall ensure that (i) each Grantor’s exact legal name is that indicated on the Perfection Certificate and on the signature page hereof; (ii) each Grantor is an organization of the type and is organized in the jurisdiction set forth in the Perfection Certificate; (iii) the Perfection Certificate accurately sets forth each Grantor’s organizational identification number or accurately states that such Grantor has none; (iv) the Perfection Certificate accurately sets forth each Grantor’s place of business, or, if more than one, its chief executive office or principal place of business as well as such Grantor’s mailing address (if different than its chief executive office or principal place of business); (v) except as set forth in the Perfection Certificate, each Grantor (and each of its predecessors) has not, in the past five (5) years, changed its jurisdiction of formation, organizational structure or type, or any organizational number assigned by its jurisdiction; and (vi) all other information set forth on the Perfection Certificate pertaining to each Grantor and each of its Subsidiaries is accurate and complete in all material respects (it being understood and agreed that each Grantor may from time to time update certain information in the Perfection Certificate after the date hereof to the extent permitted by one or more specific provisions in this Agreement).
(b) No Grantor shall (i) engage in any business other than the businesses currently engaged in by such Person, as applicable, or any line of business reasonably complimentary, ancillary or otherwise related thereto; (ii) cease doing business, or liquidate or dissolve; or (iii) without at least ten (10) days prior written notice to Collateral Agent, change its jurisdiction of organization, change its organizational structure or type, change its legal name, change its organizational number (if any) assigned by its jurisdiction of organization, or change its chief executive office or principal place of business.
(c) The Grantors shall deliver an updated Perfection Certificate within sixty (60) days of the end of each fiscal year and, in any event, promptly and in no event later than five (5) Business Days after any Grantor obtains knowledge of any information contained in the then-current Perfection Certificate becoming inaccurate, incomplete or misleading in any material respect.
3.6 Representations Regarding Collateral. Each Grantor jointly and severally, represent and warrant to Collateral Agent and each Buyer that the following are, and after giving effect to the Transaction Documents will be, true, correct and complete (it being agreed to and understood that the Grantors shall be deemed to have made and remade the following representations and warranties only on the Closing Date and on each date of an extension of credit or investment pursuant to the Convertible Debentures or the Securities Purchase Agreement):
(a) Each Grantor has good title to, rights in, and the power to transfer each item of the Collateral upon which it purports to grant a Lien pursuant to this Agreement, free and clear of any and all Liens except Permitted Liens.
(b) Except for the Collateral Accounts described in the Perfection Certificate or in a notice timely delivered pursuant to Section 3.2, no Grantor has any Collateral Accounts at or with any bank, broker or other financial institution, and each Grantor has taken such actions as are necessary to give Collateral Agent a perfected security interest therein as required pursuant to the terms of the Transaction Documents.
(c) The Collateral is located only at the locations identified in the Perfection Certificate and other Permitted Locations. The Collateral is not in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate.
(d) Each Grantor is the sole owner of the Intellectual Property which it owns or purports to own and which is material to its business except for (i) open-source software and (ii) over-the-counter software that is commercially available to the public. To such Grantor’s knowledge, no written claim has been made and remains pending alleging that any material Intellectual Property owned by such Grantor violates the rights of any third party.
(e) Each Grantor represents and warrants that it has good and marketable title to all Equipment included in the Collateral, free and clear of all Liens other than Permitted Liens. All Equipment included in the Collateral is located on premises that are owned or leased by a Grantor.
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(f) The real estate listed in the Perfection Certificate constitutes all of the real estate of each Grantor. Each of the Grantors has good record title or valid leasehold interests in all real estate and personal property and valid leasehold interests in all leased personal property, except for Permitted Liens.
(g) All written information and certificates furnished by or on behalf of any Grantor to the Collateral Agent or any Buyer in connection with or pursuant to this Agreement or any other Transaction Document are, taken as a whole, true, correct and complete in all material respects as of the date furnished and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading.
3.7 C-PACE Financing. In the event any Grantor obtains or seeks to obtain financing under a commercial property assessed clean energy program or similar program established under applicable law with respect to energy efficiency, renewable energy, water conservation, resiliency or other qualifying improvements to real property owned or leased by such Grantor (a “C-PACE Financing”), such Grantor shall provide the Collateral Agent with not less than fifteen (15) days’ prior written notice thereof, together with complete copies of all proposed C-PACE documentation (including any assessment contract, program approval documents, proposed lienholder consent forms, and a summary of all material terms). The Collateral Agent shall consider in good faith any request to execute a customary lienholder consent in connection with such C-PACE Financing; provided that the Collateral Agent shall be obligated to consider such request in good faith only with respect to consents (x) in connection with C-PACE Financing that constitutes Permitted C-PACE Indebtedness, (y) that would impair the priority of its Lien only on the specific real property subject to the Permitted C-PACE Indebtedness, and (z) on terms otherwise consistent with clause (6) of the definition of Permitted Liens. For the avoidance of doubt, a “customary lienholder consent” shall not include any agreement that subordinates the priority of the Collateral Agent’s Lien except to the extent expressly required by clause (6) of the definition of Permitted Liens and applicable Oklahoma law. Nothing in this provision shall require the Collateral Agent to execute any consent, and the Collateral Agent’s sole obligation hereunder is to consider any such request in good faith.
4. Collateral AGENT’S RIGHTS AND REMEDIES
4.1 Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, Collateral Agent is entitled, at the direction of Buyers, to do any or all of the following:
(a) verify the amount of, demand payment of and performance under, and collect any Accounts and General Intangibles, settle or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order that Collateral Agent may determine is advisable, and notify any Person owing each Grantor money of Collateral Agent’s security interest in such funds;
(b) make any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the Collateral;
(c) ratably apply to the Obligations any amount held by Collateral Agent owing to or for the credit or the account of each Grantor;
(d) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral;
(e) deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any Account Control Agreement or similar agreements providing control of any Collateral;
(f) demand and receive possession of any Grantor’s books and records; and
(g) exercise all rights and remedies available to Collateral Agent and Buyers under the Transaction Documents or at law or equity, including all remedies provided under the Code (including disposal of the Collateral pursuant to the terms thereof).
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Grantors shall assemble the Collateral if Collateral Agent requests and make it available as Collateral Agent designates. Collateral Agent may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Each Grantor grants Collateral Agent a license to enter and occupy any of its premises, without charge, to exercise any of Collateral Agent’s rights or remedies. Collateral Agent is hereby granted a non-exclusive, royalty-free license or other right to use, without charge, such Grantor’s labels, Patents, Copyrights, mask works, rights of use of any name, trade secrets, trade names, Trademarks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Collateral Agent’s exercise of its rights under this Section, such Grantor’s rights under all licenses and all franchise agreements inure to Collateral Agent’s benefit. If, after the acceleration of the Indebtedness, any Grantor receives proceeds of Collateral, such Grantor shall deliver such proceeds to Collateral Agent, for the ratable benefit of Buyers, to be applied to the Obligations. Grantors shall fully cooperate with Collateral Agent to (i) submit any notices, filings, submissions, or other documents to enable Collateral Agent to exercise all rights and remedies available to Collateral Agent pursuant to this Agreement and the other Transaction Documents (including but not limited to submission of any change of ownership or information notices), and (ii) structure arrangements contemplated hereby in a manner that maximizes Collateral Agent’s rights in the Collateral to the greatest extent permitted by applicable law, including directing payments to Collateral Accounts.
4.2 Power of Attorney. Each Grantor hereby irrevocably appoints Collateral Agent as its lawful attorney-in-fact, exercisable solely upon the occurrence and during the continuance of an Event of Default, to: (a) send requests for verification of Accounts or notify Account Debtors of Collateral Agent’s security interest and Liens in the Collateral; (b) endorse such Grantor’s name on any checks or other forms of payment or security; (c) sign such Grantor’s name on any invoice or bill of lading for any Account or drafts against Account Debtors schedules and assignments of Accounts, verifications of Accounts, and notices to Account Debtors; (d) settle and adjust disputes and claims about the Accounts directly with Account Debtors, for amounts and on terms Collateral Agent determines reasonable; (e) make, settle, and adjust all claims under such Grantor’s insurance policies; (f) pay, contest or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; (g) transfer the Collateral into the name of Collateral Agent or a third party as the Code permits; (h) dispose of the Collateral and (i) take such other actions as Collateral Agent determines to be necessary or advisable for the purpose of maintaining, preserving or protecting the Collateral or any of the rights, remedies, powers or privileges of Collateral Agent under this Agreement or the other Transaction Documents. Each Grantor further hereby appoints Collateral Agent (and any of Collateral Agent’s partners, managers, officers, agents or employees) as its lawful attorney-in-fact, with full power of substitution, regardless of whether or not an Event of Default has occurred or is continuing to sign each Grantor’s name on any documents and other Security Instruments necessary to perfect or continue the perfection of, or maintain the priority of, Collateral Agent’s security interest in the Collateral. Collateral Agent’s foregoing appointment as such Grantor’s attorney in fact, and all of Collateral Agent’s rights and powers, coupled with an interest, are irrevocable until all Obligations (other than contingent indemnification obligations as to which no claim has been asserted or is known to exist) have been fully repaid, in cash, and otherwise fully performed and all obligations under the Convertible Debentures have been terminated.
4.3 Protective Payments. If a Grantor fails to obtain the insurance called for by Section 3.1 or fails to pay any premium thereon or fails to pay any other amount which such Grantor is obligated to pay under this Agreement or any other Transaction Document which are required to preserve the Collateral, Collateral Agent may obtain such insurance or make such payment, but only after providing the applicable Grantor with at least five (5) Business Days’ prior written notice as a reasonable opportunity to cure the same, except in exigent circumstances where the Collateral Agent reasonably determines that immediate action is necessary to prevent cancellation of insurance or material impairment of Collateral, and all amounts so paid by Collateral Agent are Buyer Expenses and immediately due and payable, bearing interest at the then highest rate applicable to the Obligations, and secured by the Collateral. Collateral Agent will make reasonable efforts to provide Grantors with notice of Collateral Agent obtaining such insurance at the time it is obtained or within a reasonable time thereafter. No payments by Collateral Agent are deemed an agreement to make similar payments in the future or Collateral Agent’s waiver of any Event of Default.
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4.4 Application of Payments and Proceeds Upon Default. If an Event of Default has occurred and is continuing, Collateral Agent shall have the right to apply in any order any funds in its possession, whether payments, proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, or otherwise, to the Obligations, for the ratable benefit of Buyers. Collateral Agent shall pay any surplus to the Grantors by credit to the Deposit Account designated by the Grantors or as directed by a court of competent jurisdiction. Grantors shall remain liable to Collateral Agent and Buyers for any deficiency. If Collateral Agent, directly or indirectly, enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, Collateral Agent may either reduce the Obligations by the principal amount of the purchase price or defer the reduction of the Obligations until the actual receipt by Collateral Agent of cash or immediately available funds therefor.
4.5 Collateral Agent’s Liability for Collateral. So long as Collateral Agent complies with reasonable secured lender practices regarding the safekeeping of the Collateral in the possession or under the control of Collateral Agent and applicable law, Collateral Agent shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Each Grantor bears all risk of loss, damage or destruction of the Collateral. Notwithstanding anything to the contrary herein, at any time Collateral Agent may, but is not required to, take such actions as Collateral Agent deems necessary or advisable to perfect, maintain the perfection or priority of, or protect the enforceability of, Collateral Agent’s Liens in the Collateral, including filing financing statements, continuation statements and amendments, obtaining lien searches and taking other ministerial or protective actions with respect to the Collateral; provided that, unless an Event of Default has occurred and is continuing, Collateral Agent shall not exercise remedies against the Collateral solely pursuant to this sentence.
4.6 No Waiver; Remedies Cumulative. Any failure by Collateral Agent, at any time or times, to require strict performance by each Grantor of any provision of this Agreement or any other Transaction Document shall not waive, affect, or diminish any right of Collateral Agent thereafter to demand strict performance and compliance herewith or therewith. Collateral Agent’s rights and remedies under this Agreement and any other Transaction Document are cumulative. Collateral Agent has all rights and remedies provided under the Code, by law, or in equity. Collateral Agent’s exercise of one right or remedy is not an election and shall not preclude Collateral Agent from exercising any other remedy under this Agreement or other remedy available at law or in equity, and any waiver of any Event of Default is not a continuing waiver. Any delay in exercising any remedy is not a waiver, election, or acquiescence.
4.7 Demand Waiver. Each Grantor waives presentment, demand and notice of default.
5. NOTICES
All notices, consents, requests, approvals, demands, or other communication by any party to this Agreement must be in writing and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or certified mail, with proper postage prepaid; (b) when sent by electronic mail upon transmission; (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address, or email address indicated below. Collateral Agent, Buyers and Grantors may change their respective mailing or electronic mail addresses by giving the other party written notice thereof in accordance with the terms of this Section 5.
| If to a Grantor: | SUNSET GROUND AT BROKEN ARROW, LLC
and SUNSET AT BROKEN ARROW, LLC c/o Venu Holding Corporation 1755 Telstar Drive, Suite 501 Colorado Springs, Colorado 80920 Attention: CEO & Managing Member E-mail: [●] |
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| With a copy, not constituting notice, to: | Dykema Gosset PLLC 111 E. Kilbourn Avenue, Suite 1050 Milwaukee, Wisconsin 53202 Attention: Peter Waltz E-Mail: [email protected]
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| If to Collateral Agent: | YA II PN, LTD. c/o Yorkville Advisors Global, LLC 1012 Springfield Avenue Mountainside, NJ 07092 Attention: Mark Angelo Email: [●]
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| With a copy to (but not constituting notice): | HAYNES AND BOONE LLP 30 Rockefeller Plaza, 26th Floor New York, New York 10112 Attention: Greg Kramer Email: [email protected] |
6. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without regard to principles of conflicts of law. Each Grantor hereby submits to the exclusive jurisdiction of the State and Federal courts in New York County, City of New York, New York; provided, however, that nothing in this Agreement shall be deemed to operate to preclude Collateral Agent from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of or Collateral Agent. Each Grantor expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and each Grantor hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Each Grantor hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to each Grantor at the address set forth in, or subsequently provided by such Grantor in accordance with, Section 5 hereof and that service so made shall be deemed completed upon the earlier to occur of such Grantor’s actual receipt thereof or three (3) Business Days after deposit in the U.S. mails, proper postage prepaid. Each Grantor hereby expressly waives any claim to assert that the laws of any other jurisdiction govern this Agreement.
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ALL OF THE PARTIES HERETO EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OR ANYWHERE ELSE, EACH Grantor AGREES THAT IT SHALL NOT SEEK FROM COLLATERAL AGENT UNDER ANY THEORY OF LIABILITY (INCLUDING ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
This Section 6 shall survive the termination of this Agreement.
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7. GENERAL PROVISIONS
7.1 Termination; Survival; Release of Collateral. All covenants, representations and warranties made in this Agreement continue in full force until this Agreement has terminated pursuant to its terms and all Obligations (other than contingent indemnification obligations as to which no claim has been asserted or is known to exist and any other obligations which, by their terms, are to survive the termination of this Agreement) have been satisfied in full, in cash and the Convertible Debentures have been paid in full and all obligations thereunder and under the Transaction Documents are terminated (such date, the “Discharge Date”). Those obligations that are expressly specified in this Agreement as surviving this Agreement’s termination shall continue to survive notwithstanding this Agreement’s termination. Promptly after the Discharge Date, Buyers shall direct Collateral Agent to deliver evidence of the release of Collateral (at the Grantors’ expense) which release shall occur reasonably promptly following the Discharge Date.
7.2 Successors and Assigns. This Agreement binds and is for the benefit of the successors and permitted assigns of each party. No Grantor may assign this Agreement or any rights or obligations except in connection with a permitted assignment of such Grantor’s rights or obligations under the Securities Purchase Agreement.
7.3 Amendments in Writing; Waiver; Integration. No purported amendment or modification of this Agreement, or waiver, discharge or termination of any obligation under this Agreement, shall be effective except in a writing agreed to by the Collateral Agent and the affected Grantors, pursuant to an agreement in writing by the parties thereto, and in case of this Agreement, pursuant to an agreement in writing entered into by Buyers, Grantors and Collateral Agent. Without limiting the generality of the foregoing, no oral promise or statement, nor any action, inaction, delay, failure to require performance or course of conduct shall operate as, or evidence, an amendment, supplement or waiver of any provision of any Transaction Document. Any waiver granted shall be limited to the specific circumstance expressly described in it and shall not apply to any subsequent or other circumstance, whether similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waivers.
7.4 Appointment of Collateral Agent. Each Buyer hereby appoints Collateral Agent to act on behalf of Buyers as collateral agent under this Agreement and the other Transaction Documents, and to hold and enforce any and all Liens on Collateral granted by any of the Grantors to secure any of the Obligations. The provisions of this Section 7.4 are solely for the benefit of Collateral Agent and Buyers.
7.5 Other Provisions. The terms of Sections 5.5, 5.6, 5.8, 5.9, 5.10, 5.11, 5.13, 5.14, 5.15 and 5.20 of the Securities Purchase Agreement are incorporated herein by reference, it being understood that references to the “parties” shall include Collateral Agent.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the Closing Date.
| GRANTORS: | ||
| SUNSET GROUND AT BROKEN ARROW, LLC | ||
| By: | Sunset at Broken Arrow LLC | |
| Its: | Manager | |
| By: | /s/ Jay William Roth | |
| Name: | Jay William Roth | |
| Title: | Manager | |
| SUNSET AT BROKEN ARROW LLC | ||
| By: | /s/ Jay William Roth | |
| Name: | Jay William Roth | |
| Title: | Manager | |
[Venu – Pledge and Security Agreement Signature Page]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the Closing Date.
COLLATERAL AGENT: | ||
| YA II PN, LTD. | ||
| By: | Yorkville Advisors Global, LP | |
| Its: | Investment Manager | |
| By: | Yorkville Advisors Global II, LLC | |
| Its: | General Partner | |
| By: | /s/ Matt Beckman | |
| Name: | Matt Beckman | |
| Title: | Manager | |
[Venu – Pledge and Security Agreement Signature Page]
Exhibit A
Defined terms
“Account Control Agreement” means any control agreement entered into among the depository institution at which a Grantor maintains a Deposit Account or the securities intermediary or commodity intermediary at which a Grantor maintains a Securities Account or a Commodity Account, one or more Grantors, and Collateral Agent pursuant to which Collateral Agent, for the benefit of Buyers, obtains control (within the meaning of the Code) over such Deposit Account, Securities Account, or Commodity Account, in each case in form and substance satisfactory to Collateral Agent.
“Buyer Expenses” means (a) all fees costs, and expenses (including reasonable, documented and out-of-pocket attorneys’ fees and expenses), of Collateral Agent or Buyers for preparing, amending, negotiating, administering, filing or recording any Transaction Document (including financing statements), including filing or recording fees, public record searches, notarization, courier and messenger services, real estate surveys, background checks, title policies and endorsements and environmental audits, (c) reasonable, documented and out-of-pocket fees and expenses of Collateral Agent or any Buyer in connection with any field examination, audit, appraisal or valuation permitted under the Transaction Documents, (d) all reasonable, documented and out-of-pocket costs and expenses (including taxes and insurance premiums) required to be paid by a Grantor or any of its Subsidiaries under any Transaction Document that are paid or advanced by Collateral Agent or any Buyer, and (e) any documented and out of pocket expenses of Collateral Agent or any Buyer (including reasonable attorneys’, accountants’, consultants’ and other advisors’ fees and expenses) incurred in connection with terminating, defending or enforcing the Transaction Documents (including during the continuance of an Event of Default) or in connection with the enforcement, protection or realization upon the Collateral (including, without limitation, those incurred in connection with any appeal, Insolvency Proceeding, “workout” or “restructuring” concerning any Grantor or any of its Subsidiaries or in exercising rights or remedies under the Transaction Documents, irrespective of whether a lawsuit or other adverse proceeding is brought), or otherwise incurred with respect to a Grantor or in connection with the transactions contemplated by the Transaction Documents.
“Code” means the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of New York; provided, that, to the extent that the Code is used to define any term herein or in any Transaction Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Collateral Agent’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the State of New York, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.
“Collateral” means any and all properties, rights and assets of the Grantors party hereto described on Exhibit C, and any Equity Interests pledged pursuant to Section 2.4 hereof, in each case other than Excluded Property. For the avoidance of doubt, Collateral shall not include any property or asset of Venu Holding Corporation or any other affiliate or subsidiary of any Grantor unless such Person is a Grantor under this Agreement and such property or asset is expressly included in the Collateral.
“Collateral Access Agreement” means a landlord waiver, bailee letter, or other agreement, in form and substance reasonably satisfactory to the Collateral Agent, pursuant to which a third party in possession or control of any Collateral, or the owner or operator of any premises on which any Collateral is stored or located, (a) acknowledges the Collateral Agent’s security interest in such Collateral, (b) waives or subordinates any Lien or claim such third party may have with respect to such Collateral, and (c) agrees to provide the Collateral Agent with access to such premises to exercise its rights and remedies with respect to such Collateral upon the occurrence and during the continuance of an Event of Default.
“Collateral Account” means any Deposit Account, Securities Account or Commodity Account of a Grantor.
“Commodity Account” means any “commodity account” as defined in the Code with such additions to such term as may hereafter be made.
“Copyrights” means any and all copyright rights, copyright applications, copyright registrations and like protections of a Person in each work of authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.
“Deposit Account” means any “deposit account” as defined in the Code with such additions to such term as may hereafter be made, and includes any checking account, savings account or certificate of deposit.
“Equity Interests” means, with respect to any Person, any of the shares of capital stock of (or other ownership, membership or profit interests in) such Person, any of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership, membership or profit interests in) such Person, any of the securities convertible into or exchangeable for shares of capital stock of (or other ownership, membership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and any of the other ownership, membership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
“Excluded Accounts” means (i) Collateral Accounts with a balance or maintaining assets valued not greater than $50,000 individually and $75,000 in the aggregate at any time and (ii) Collateral Accounts used exclusively for payroll, payroll taxes and other employee wage and benefit payments, provided that (A) such Collateral Accounts have been identified as such to Collateral Agent on the Perfection Certificate or, if any such Collateral Account is designated as such following the Closing Date, on the then-next Perfection Certificate delivered, and (B) the aggregate balance maintained in such Collateral Accounts shall not exceed the amount necessary to pay payroll, payroll taxes and other employee wage and benefit payments in the then-next payroll period.
“Excluded Locations” means the following locations where Collateral may be located from time to time: (a) locations where mobile office equipment (e.g. laptops, mobile phones and the like) may be located with employees in the Ordinary Course of Business, and (b) other locations where, in the aggregate for all such locations, less than $75,000 of Collateral is located, provided that the chief executive office or principal place of business of any Grantor shall not constitute an Excluded Location.
“Excluded Property” means:
(a) any property or property right of a Person to the extent and for so long as the grant of a security interest pursuant to the Transaction Documents in such Person’s right, title or interest therein (1) is prohibited by applicable Law or regulation (including restrictions in respect of margin stock, fraudulent conveyance, preference, thin capitalization or other similar laws or regulations), or (2) requires government or regulatory consents that have not been obtained (other than from a Grantor of the Company, or an Affiliate of a Grantor or the Company) (it being understood that the Grantors, the Company and their Affiliates shall use commercially reasonable efforts to obtain such consent if requested by the Collateral Agent) (in each case of the foregoing clauses (1) and (2), other than to the extent such prohibition, requirement or right would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Code (or any successor provision or provisions) of any relevant jurisdiction or any other applicable Law (including the U.S. Bankruptcy Code) or principles of equity), other than the proceeds and receivables of such property or property right the assignment of which is expressly deemed effective under the Code or other applicable Law notwithstanding such prohibition, requirement or right to the extent such proceeds are not otherwise Excluded Property; provided, however, that such security interest shall attach immediately and automatically without further action when such prohibition, requirement or right is repealed, rescinded or otherwise ceases to be effective;
(b) any lease, license or other agreement to the extent that a grant of a security interest therein would violate or invalidate such lease, license or agreement or create a right of termination in favor of any other party thereto (other than the Company, the Grantors or their Affiliates) after giving effect to the applicable anti-assignment provisions of the Code or any other applicable requirement of Law;
(c) any governmental licenses or state or local licenses, franchises, charters and authorizations, if and for so long as the grant of such security interest shall constitute or result in (1) the abandonment, invalidation or unenforceability of any right, title or interest of any Grantor therein or (2) a breach or a right of termination in favor of any other party thereto (other than in favor of the Company, the Grantors or their Affiliates) pursuant to the terms of, or a default under any such license, franchise, charter or authorization (in each case of the foregoing clauses (1) and (2), other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9- 409 of the Code (or any successor provision or provisions) of any relevant jurisdiction or any other applicable Law (including the U.S. Bankruptcy Code) or principles of equity), other than the proceeds and receivables of any such license, franchise, charter or authorization the assignment of which is expressly deemed effective under the Code or other applicable Law notwithstanding such prohibition or restriction to the extent such proceeds are not otherwise Excluded Property; provided, however, that such security interest shall attach immediately at such time as the condition causing such abandonment, invalidation or unenforceability shall be remedied and to the extent severable, shall attach immediately to any portion of such license, franchise, charter or authorization that does not result in any of the consequences specified in clauses (1) and (2) above;
(d) any Excluded Account and any cash, cash equivalents, securities, investment property or amounts on deposit therein;
(e) any “intent-to-use” applications for Trademark or service mark registrations filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. §1051 or similar laws in other jurisdictions, unless and until an Amendment to Allege Use or a Statement of Use under Section 1(c) or 1(d) of the Lanham Act (or the equivalent in any applicable jurisdiction) has been filed and accepted by the United States Patent and Trademark Office, to the extent, if any, that, and solely during the period, if any, in which the grant of a security interest therein would impair the validity or enforceability of such intent-to-use application under applicable federal law; and
(f) particular assets if and for so long as, in the reasonable judgment of the Collateral Agent and the Grantor, the cost, difficulty, burden or consequences of obtaining, perfecting or maintaining a security interest in such assets exceeds the practical benefits to the Collateral Agent and the Buyers afforded thereby;
provided that, notwithstanding the foregoing, (A) the Grantors may in their sole discretion elect to exclude any property from the definition of “Excluded Property”, and (B) a security interest shall be, and pursuant to this Agreement is, granted in (I) any property immediately upon such property ceasing to be Excluded Property and (II) any and all Proceeds, products, substitutions and replacements of Excluded Property to the extent such proceeds, products, substitutions and replacements do not themselves constitute Excluded Property.
“General Intangibles” means all “general intangibles” as defined in the Code in effect on the Closing Date with such additions to such term as may hereafter be made, and includes without limitation, all Intellectual Property, claims, income and other tax refunds, security and other deposits, payment intangibles, contract rights, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind.
“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, 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 supra-national bodies such as the European Union or the European Central Bank).
“Insolvency Proceeding” means any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, proceedings seeking an order to stay the rights of creditors, or proceedings seeking reorganization, arrangement, or other relief.
“Intellectual Property” means, with respect to any Grantor (or, as applicable, any of its Subsidiaries), all of such Person’s right, title, and interest in and to the following:
(a) its Copyrights, Trademarks and Patents;
(b) any and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-how, operating manuals;
(c) any and all source code;
(d) any and all design rights which may be available to such Person;
(e) any and all claims for damages by way of past, present and future infringement of any of the foregoing, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the Intellectual Property rights identified above; and
(f) all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.
“Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, governmental or regulatory licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.
“Obligations” means all loans, advances, debts, liabilities, obligations, covenants, or duties for the performance of obligations or the payment of monetary amounts (whether or not such performance is then required or contingent, or such amounts are fixed or determined, and whether or not the claim for any such amount is reduced to judgment or liquidated), whether voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, whether or not from time to time decreased or extinguished and later increased, created or incurred, whether or not recovery of any such obligation may be barred by a statute of limitations or whether or not such obligation may otherwise be or become unenforceable, owing by the Company or any Grantor to any Buyer, the Collateral Agent, or any Indemnitee, arising under or in connection with any of the Transaction Documents, whether now existing or hereafter arising, including: (a) all principal, premium (if any), redemption payments, interest (including any interest that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in such Insolvency Proceeding), fees, costs, charges, liquidated damages and expenses under the Convertible Debentures; (b) all indemnification obligations under or in connection with the Transaction Documents; (c) all fees, costs and expenses payable to the Collateral Agent or any Buyer under any Transaction Document; (d) Buyer Expenses; and (e) all other monetary and performance obligations of the Company or any Grantor under any Transaction Document, including all renewals, extensions, amendments and modifications of any of the foregoing. For the avoidance of doubt, the Obligations include all obligations of the Company under the Convertible Debentures, the Securities Purchase Agreement, the Warrants and the other Transaction Documents that the Grantors have agreed to secure pursuant to this Agreement.
“Ordinary Course of Business” means, in respect of any transaction involving any Person, the ordinary course of such Person’s business as conducted by any such Person in accordance with (a) the usual and customary customs and practices in the kind of business in which such Person is engaged, and (b) the past practice and operations of such Person, and in each case, undertaken by such Person in good faith and not for purposes of evading any covenant or restriction in any Transaction Document.
“Patents” means all patents, patent applications and like protections of a Person including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same and all rights therein provided by international treaties or conventions.
“Permitted Liens” means: (1) Liens in favor of the Collateral Agent to secure the Obligations; (2) Liens for taxes, assessments or governmental charges not yet due or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP; (3) mechanics’, materialmen’s, carriers’, workers’ or repairmen’s Liens arising in the ordinary course of business securing amounts not yet overdue by more than sixty (60) days or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP; (4) easements, rights-of-way, restrictions, encroachments, zoning ordinances and other similar charges or encumbrances not securing debt and not materially interfering with the use or operation of the Collateral; (5) Liens disclosed on a schedule of existing Liens delivered to, and expressly approved in writing by, the Collateral Agent on or prior to the Closing Date; provided that (a) such Liens secure only the obligations specifically described on such schedule, in the amounts set forth thereon, (b) such Liens attach only to the assets specifically identified on such schedule and do not extend to any other Collateral, additions, accessions, substitutions or proceeds except to the extent expressly approved by the Collateral Agent, (c) such Liens are not renewed, extended, amended, supplemented or otherwise modified in any manner that increases the amount secured thereby, expands the property subject thereto, changes the priority thereof, or is otherwise adverse to the Collateral Agent or the Buyers, and (d) if requested by the Collateral Agent, the applicable lienholder shall have entered into an intercreditor, subordination, landlord waiver, bailee waiver, payoff, release or similar agreement in form and substance satisfactory to the Collateral Agent; and (6) Liens securing the Permitted C-PACE Indebtedness of Sunset Broken Arrow; provided that (a) the Grantors shall deliver to the Collateral Agent true, correct and complete copies of all documentation evidencing such C-PACE Indebtedness, assessment, lien or charge, including any mortgage-holder consent, assessment contract and county or program approval documents, prior to the effectiveness thereof, (b) all amounts payable in respect thereof shall be kept current at all times, (c) any priority of such assessment, lien or charge over the Liens of the Collateral Agent shall be limited solely to the extent required by applicable Oklahoma law and only with respect to unpaid assessment installments, required statutory delinquent interest, and legal fees incurred in connection with a foreclosure of such lien pursuant to applicable Oklahoma law, and (d) the terms of such C-PACE Indebtedness, assessment, lien or charge shall not impair the Collateral Agent’s rights or remedies with respect to any Collateral other than the specific real property subject to such assessment, except to the extent expressly required by applicable Oklahoma law.
“Permitted Locations” means, collectively, the following locations where Collateral may be located from time to time: (a) locations identified in the Perfection Certificate or from time to time identified to Collateral Agent in accordance with applicable Transaction Documents and (b) the Excluded Locations.
“Responsible Officer” means with respect to any Person, any of the Chief Executive Officer, President or Chief Financial Officer of such Person.
“Securities Account” means any “securities account” as defined in the Code with such additions to such term as may hereafter be made.
“Security Instrument” means any security agreement, assignment, pledge agreement, financing or other similar statement or notice, continuation statement, other agreement or instrument, or any amendment or supplement to any thereof, creating, governing or providing for, evidencing or perfecting any security interest or Lien.
“Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company or joint venture, association or other entity (i) of which any general partnership interest, (ii) of which more than fifty percent (50%) of the stock, limited liability company interest, joint venture interest or other Equity Interest which by the terms thereof has the ordinary voting power to elect the Board or other governing body of such entity is, at the time as of which any determination is being made, owned, controlled or held, directly or indirectly, by such Person or (iii) that is otherwise Controlled, directly or indirectly, by such Person. Unless the context otherwise requires, each reference to a Subsidiary herein shall be a reference to any direct or indirect Subsidiary of the Grantors.
“Trademarks” means any trademark and service mark rights of a Person, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business connected with and symbolized by such trademarks.
EXHIBIT B
REQUIREMENTS FOR INSURANCE DOCUMENTATION
EXHIBIT C
COLLATERAL DESCRIPTION
The Collateral consists of all of each Grantor’s right, title and interest in and to the following property wherever located, whether now owned or existing or hereafter acquired, created or arising, in each case other than Excluded Property:
All goods, Accounts, Equipment, real property, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles, Intellectual Property, commercial tort claims, Documents, Instruments (including any promissory notes), Chattel Paper (whether tangible or electronic), cash, Deposit Accounts, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other Investment Property, Supporting Obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and all of each Grantor’s Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds (both cash and non-cash) and insurance proceeds of any or all of the foregoing, but excluding, in each case, all Excluded Property.
Exhibit 10.3
PERSONAL GUARANTY
THIS PERSONAL GUARANTY (as amended, restated, supplemented or otherwise modified from time to time in accordance with the provisions hereof, this “Guaranty”), dated as of July 31, 2026, is made by Jay William Roth (the “Guarantor”) in favor of YA II PN, Ltd., a Cayman Islands exempt limited partnership (together with its successors and assigns, the “Holder”).
1. Guaranty. In consideration of the substantial direct and indirect benefits derived by the Guarantor from (i) the investments or extensions of credit made by the Holder under that certain Securities Purchase Agreement, dated as of the date hereof (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”), by Venu Holding Corporation, a Colorado corporation (the “Company”) and the Holder, (ii) the Senior Secured Convertible Debentures issued thereunder (the “Debentures”) and (iii) the Warrants issued thereunder (the “Warrants”), the parties hereby agree as follows:
1.1 Capitalized terms used herein but not otherwise defined shall have the respective meanings given such terms in the Purchase Agreement. “Transaction Parties” means the Company and each other Person (other than the Holder) that is or becomes a party to any Transaction Document, or any Person who is otherwise subject to or liable thereunder, including the Pledgors (as defined in the Purchase Agreement), and “Transaction Party” means any of them.
1.2 The Guarantor absolutely, unconditionally and irrevocably guarantees, as primary obligor and not merely as surety, the punctual payment and performance, when due, whether at stated maturity, by acceleration or otherwise, of all present and future obligations, liabilities, covenants and agreements required to be observed, performed, or paid by (x) the Company under the Purchase Agreement, the Debentures and the other Transaction Documents and (y) each of the other Transaction Parties under each Transaction Document to which each such Transaction Party may be a party, whether for principal, interest (including interest accrued after the commencement of any insolvency, bankruptcy or reorganization of the Company), costs, expenses and fees and agrees to pay any and all costs, fees and expenses incurred by the Holder in any way related to the enforcement or protection of the Holder’s rights hereunder or under any documents executed in connection with the Purchase Agreement, the Debentures and the Warrants, and each of the other “Obligations” as defined in the Security Agreement (collectively, the “Obligations”).
1.3 Notwithstanding any provision herein contained to the contrary, the Guarantor’s liability with respect to the Obligations shall be limited to an amount not to exceed, as of any date of determination, the amount that could be claimed by the Holder from the Guarantor without rendering such claim voidable or avoidable under Section 548 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law.
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2. Guaranty of Payment Absolute and Unconditional. This Guaranty is a guaranty of payment and not of collection. This Guaranty is absolute and shall apply to all Obligations whenever arising. The Guarantor agrees that other than as set forth in this Section 2 the Holder need not attempt to collect any Obligations from any other Transaction Party or to realize upon any collateral for all or any part of the Obligations (the “Collateral”) to enforce the obligations hereunder. The Guarantor guarantees that the Obligations will be paid strictly in accordance with the terms of the Purchase Agreement, the Debentures and the Warrants and the other Transaction Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Holder with respect thereto. The obligations of the Guarantor under this Guaranty are independent of the Obligations, and a separate action or actions may be brought and prosecuted against the Guarantor and/or any other Transaction Party and one or more Transaction Parties may be joined in any such action or actions. The liability of the Guarantor under this Guaranty constitutes a primary obligation and not a contract of surety, and to the extent permitted by law, shall be irrevocable, continuing, absolute and unconditional.
3. Waivers. The Guarantor hereby irrevocably waives any defenses he may now or hereafter have in any way relating to any or all of the following, other than defenses based on payment in full or satisfaction in full of the Obligations:
3.1 Any lack of validity or enforceability of the Obligations or of any agreement or instrument relating thereto.
3.2 Any limitation of liability or recourse in any other Transaction Document or arising under any law.
3.3 Any claim or defense that this Guaranty was made without consideration or is not supported by adequate consideration.
3.4 The taking or accepting of any other security or guaranty for, or right of recourse with respect to, any or all of the Obligations.
3.5 Any release, surrender, abandonment, exchange, alteration, sale or other disposition, subordination, deterioration, waste, failure to protect or preserve, impairment, or loss of, or any failure to create or perfect any lien or security interest with respect to, or any other dealings with, any collateral or security at any time existing or purported, believed or expected to exist in connection with any or all of the Obligations, including any impairment of Guarantor’s recourse against any Person or collateral.
3.6 Any change in the time, manner or place of payment of, or in any other term of any of the Obligations, or any other amendment or waiver of, or any consent to depart from, the agreements entered into by the parties, without notice to Guarantor, including, without limitation, any increase in the Obligations resulting from the extension of additional credit to the Company or otherwise.
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3.7 Any taking, exchange, release, subordination or non-perfection of any Collateral or the property, or any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Obligations.
3.8 Promptness, diligence, notice of acceptance and any other notice with respect to any of the Obligations and this Guaranty, and any requirement that the Holder exhausts any right or take any action against any Transaction Party or any other person or entity or any Collateral or any of the property (other than as set forth in Section 2). The Guarantor acknowledges that he will receive direct and indirect benefits from the financing arrangements contemplated herein and that the waiver set forth in this Section 3.8 is knowingly made in contemplation of such benefits.
3.9 Any right to revoke this Guaranty and acknowledges that this Guaranty is continuing in nature and applies to all presently existing and future Obligations.
3.10 Any other circumstance (including, without limitation, any statute of limitations) or manner of administering the Obligations or any existence of, or reliance on, any representation by the Holder that might vary the risk of the Guarantor or otherwise operate as a defense available to, or a legal or equitable discharge of, the Guarantor, the Company, any Transaction Party or any other surety.
3.11 Any suretyship defenses that Guarantor has or would have under applicable law.
3.12 Guarantor represents, warrants, and agrees that, the Obligations are not subject to any offset or defense against the Holder, the Company or any other Transaction Party of any kind, and Guarantor specifically waives his right to assert any such defense or right of offset.
3.13 The Guarantor hereby waives any right to require the Holder to proceed against the Company, any other Transaction Party, any other guarantor, or any Collateral, or to pursue any other remedy in the Holder’s power, before proceeding against the Guarantor under this Guaranty. The Guarantor further waives any right to require the Holder to marshal any assets or collateral in favor of the Guarantor or against or in payment of any or all of the Obligations.
3.14 To the maximum extent permitted by applicable law, the Guarantor hereby waives any and all rights, benefits, and protections afforded by any and all applicable exemption laws, including without limitation, the exemptions provided under the laws of the State of Florida or any other jurisdiction in which the Guarantor may reside or own assets (other than the homestead exemption under Article X, Section 4 of the Florida Constitution to the extent such exemption may not be waived as a matter of law). The Guarantor represents that he has been advised by independent counsel regarding the nature and extent of such exemptions and has knowingly and voluntarily agreed to waive the same.
3.15 The Guarantor shall not make any transfer of assets if such transfer is made with the intent to hinder, delay, or defraud Holder in violation of applicable fraudulent transfer laws. Nothing in this Guaranty shall constitute a waiver of any exemption, homestead, tenancy by the entirety, retirement account, insurance, annuity or similar protection that cannot be waived or is otherwise available to Guarantor under applicable law.
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3.16 To the extent the Guarantor holds any assets as a tenant by the entirety with his spouse (or in any other form of joint ownership that provides creditor protection under applicable law), the Guarantor hereby waives, to the maximum extent permitted by applicable law, any protection afforded by such form of ownership as against the Holder’s rights under this Guaranty. The Guarantor shall use commercially reasonable efforts to cause his spouse to join in any such waiver to the extent required to make such waiver effective.
4. Reinstatement. This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be returned by the Holder or any other entity for any reason, including upon the insolvency, bankruptcy or reorganization of the Company or any other Transaction Party (and whether as a result of any demand, settlement, litigation or otherwise), all as though such payment had not been made.
5. Subrogation. The Guarantor will not exercise any rights that he may now or hereafter acquire against the Company, any other Transaction Party or other guarantors that arise from the existence, payment, performance or enforcement of Guarantor’s obligations under this Guaranty, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Company, any other Transaction Party or other guarantors, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security solely on account of such claim, remedy or right, unless and until all of the Obligations and all other amounts payable to the Holder under the Purchase Agreement, the Debentures and the Warrants and the other Transaction Documents shall have been indefeasibly paid in full. The foregoing is solely a subordination of the timing of the Guarantor’s exercise of such rights during the pendency of the Obligations, and does not constitute, and shall not be construed as, a waiver, release or permanent relinquishment of any right of subrogation, reimbursement, contribution, indemnification or other right of the Guarantor, all of which are expressly preserved and, upon payment in full in cash of the Obligations, shall vest in and become exercisable by the Guarantor as provided below.
If any payment is made under this Guaranty by or on behalf of Guarantor (including by way of exercise by Holder of any rights and remedies under this Guaranty), after indefeasible payment in full in cash of (i) all Obligations and (ii) all other amounts payable to the Holder under the Purchase Agreement, the Debentures and the Warrants and the other Transaction Documents, the Guarantor shall automatically and by operation of law be subrogated to, and shall succeed to, all of the rights, remedies, claims, liens, security interests, mortgages and other interests of the Holder in respect of the Obligations and the Collateral, to the extent of all amounts so paid by or on behalf of the Guarantor, and the Holder will, promptly upon Guarantor’s request and expense, execute and deliver to Guarantor, without recourse (except that the Holder shall represent and warrant that it has not previously assigned, released, discharged or subordinated the rights, liens or interests being transferred and that it holds the same free and clear of any lien, claim or encumbrance created by or through the Holder), appropriate assignments and other documents and instruments reasonably requested by the Guarantor necessary to evidence and confirm the transfer by subrogation to Guarantor of an interest in the Obligations resulting from such payment.
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Promptly (and in any event within ten (10) Business Days) following payment in full in cash of the Obligations, and to the extent of the amounts paid by or on behalf of the Guarantor under this Guaranty, the Holder shall assign and transfer to the Guarantor, without recourse (except for the limited representation set forth above), all of the Holder’s right, title and interest in and to the Obligations, the Transaction Documents and all Collateral, guaranties, liens, mortgages, security interests and other credit support securing, supporting or evidencing the Obligations, in each case without any release, discharge, satisfaction or subordination thereof.
6. Subordination. If, for any reason, any Transaction Party is now or hereafter becomes indebted to Guarantor for debt for borrowed money (such indebtedness and all interest thereon being referred to as the “Affiliated Debt”), such Affiliated Debt shall, at all times be subordinate in all respects to the full payment and performance of the Obligations by such Transaction Party, and the Guarantor shall not be entitled to enforce or receive payment thereof until all of the Obligations have been fully paid and performed by the Company. The Guarantor agrees that any liens, mortgages, deeds of trust, security interests, judgment liens, charges or other encumbrances any Transaction Party’s assets securing the payment of the Affiliated Debt shall be and remain subordinate and inferior to any liens, security interests, judgment liens, charges or other encumbrances upon any Transaction Party’s assets securing the payment of the Obligations, and without the prior written consent of the Holder, as determined and communicated by the Holder, the Guarantor shall not exercise or enforce any creditor’s rights of any nature against any Transaction Party to collect the Affiliated Debt. There is no agreement, indenture, contract or instrument to which the Guarantor is subject or by which the Guarantor may be bound that requires the subordination in right of payment of the Obligations under this Guaranty to any other obligations of the Guarantor. In the event of the receivership, bankruptcy, reorganization, arrangement, debtor’s relief or other insolvency proceedings involving any Transaction Party as a debtor, the Holder shall have the right and authority, either in its own name or as attorney-in-fact for the Guarantor (and the Guarantor hereby appoints the Holder as his attorney-in-fact solely and exclusively for the purpose of effectuating the terms of this Guaranty), to file such proof of debt, claim, petition or other documents and to take such other steps as are necessary to prove the Holder’s rights hereunder. Such appointment of the Holder as attorney-in-fact is irrevocable and coupled with an interest.
Any sum paid to the Guarantor in violation of this Section 6 shall be held in trust for the benefit of the Holder, segregated from other funds of the Guarantor, and promptly paid or delivered to the Holder in the same form as so received to be credited against the Obligations. For the avoidance of doubt, and without limiting any other provision of this Guaranty, this Section 6 shall survive the Guarantor’s performance of his obligations hereunder until the Obligations have been satisfied in full in cash by, or on behalf of, the Company.
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7. Insolvency. Should the Guarantor become insolvent, or fail to pay his debts generally as they become due, or voluntarily seek, consent to, or acquiesce in the benefit or benefits of any debtor relief law, or become a party to (or be made the subject of) any proceeding provided for by any debtor relief law (other than as a creditor or claimant) that could suspend or otherwise adversely affect the rights and remedies of the Holder granted hereunder, then, in any such event, the Obligations shall be, as between Guarantor, on the one hand, and the Holder, on the other hand, a fully matured, due, and payable obligation of Guarantor to the Holder (without regard to whether any Transaction Party is then in default under the Purchase Agreement, the Debentures and the Warrants or any other Transaction Document or whether the Obligations, or any part thereof is then due and owing by any Transaction Party to the Holder), payable in full by Guarantor to the Holder upon demand of the Holder, which shall be the estimated amount owing in respect of the contingent claim created hereunder.
8. Representations and Warranties. The Guarantor represents and warrants that the following are true and correct:
8.1 The Guarantor is an adult individual residing in the State of Florida and is sui juris.
8.2 The Guarantor is not under any legal or judicial restraint that would prevent or prohibit Guarantor from entering into this Guaranty on his own behalf. Guarantor is not in any respect incompetent or lacking legal authority to enter into this Guaranty.
8.3 The execution, delivery and performance of this Guaranty, the performance of Guarantor’s obligations hereunder, and the incurrence of the Obligations, now or hereafter owing, do not require any approval or consent of, or filing with, any Governmental Authority or other Person (or such approvals and consents have been obtained and delivered to the Holder) and are not in contravention of any provision of law applicable to Guarantor.
8.4 The Guarantor has duly executed and delivered this Guaranty. This Guaranty constitutes the valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or similar laws affecting the enforcement of creditors’ rights and equitable principles generally.
8.5 Guarantor’s execution, delivery and performance of this Guaranty does not and will not conflict with or constitute a default under (or an event which with notice or lapse of time or both would become a default under) or give to others any rights of termination, acceleration or cancellation of, any indenture, loan or credit agreement, or any lease or other agreement or instrument, to which Guarantor is party or by which he is (or his assets are) bound.
8.6 Guarantor has filed all tax returns which are required to be filed (or obtained proper extensions of time for the filing thereof) and has paid, or made adequate provision for the payment of, all taxes which have or may become due pursuant to said returns or to assessments received.
8.7 The financial statements and other information pertaining to Guarantor submitted to Holder are true, complete and correct in all material respects and do not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein not misleading.
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8.8 There is no litigation, at law or in equity, or any proceeding before any federal, state, provincial or municipal board or other governmental or administrative agency pending or, to the knowledge of Guarantor, threatened, or any basis therefor, which involves a risk of any material judgment or liability not fully covered by insurance (other than any deductible) which is likely to be adversely determined, and no judgment, decree, or order of any federal, state, provincial or municipal court, board or other governmental or administrative agency has been issued against Guarantor.
8.9 The transactions contemplated by the Purchase Agreement will result in material benefits to Guarantor.
8.10 The Guarantor is represented by legal counsel and other professional advisers who are, in each case, unaffiliated with the Holder, and who by reason of their business or financial knowledge and experience have the capacity to protect the Guarantor’s interests in connection with the transactions contemplated by this Guaranty and the other Transaction Documents.
8.11 Guarantor (a) has not entered into this Guaranty with the actual intent to hinder, delay, or defraud any creditor and (b) has received reasonably equivalent value in exchange for the Obligations hereunder.
8.12 The Guarantor has received and reviewed the Purchase Agreement, the Debentures and the Warrants and the other Transaction Documents.
8.13 Guarantor is not a “foreign person” within the meaning of Section 1445(1)(3) of the Internal Revenue Code.
9. Covenants. The Guarantor covenants and agrees that, until such time as the Debentures and Warrants shall have been repaid or exercised in full and no amounts remain outstanding thereunder:
9.1 The Guarantor will furnish or cause to be furnished to the Holder: (a) upon request by the Holder, copies of all income tax returns of the Guarantor and any requests for extensions of filing deadlines, within ten (10) days of such request; (b) annual personal financial statements no later than forty five (45) days after the last day after each calendar year; (c) an updated personal financial statement promptly upon the request of the Holder at any time; and (d) such other reasonable and relevant financial and other information related to the Guarantor as the Holder may from time to time reasonably request. All financial statements delivered hereunder shall be certified by the Guarantor as true, complete, and correct in all material respects as of the date thereof.
9.2 The Guarantor will cause each other Transaction Party to comply with all if its respective obligations under the Transaction Documents.
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9.3 The Guarantor shall not sell, transfer, convey, assign, or otherwise dispose of any assets having an aggregate value in excess of $250,000 in any calendar year (other than in the ordinary course of the Guarantor’s personal affairs and consistent with the Guarantor’s historical practices) without the prior written consent of the Holder.
9.4 [Reserved.]
9.5 The Guarantor shall promptly (and in any event within five (5) Business Days) notify the Holder in writing of: (a) any material adverse change in the Guarantor’s financial condition; (b) any litigation, arbitration, or governmental proceeding pending or threatened against the Guarantor involving an amount in excess of $500,000; (c) any lien, encumbrance, or judgment filed or entered against the Guarantor or any of his assets; and (d) any change in the Guarantor’s state of residence.
10. PURCHASE AGREEMENT AND DEBENTURES. THE PURCHASE AGREEMENT, THE DEBENTURES, THE WARRANTS, AND THE OTHER TRANSACTION DOCUMENTS, AND ALL OF THE TERMS THEREOF, ARE INCORPORATED HEREIN BY REFERENCE, THE SAME AS IF STATED VERBATIM HEREIN, AND GUARANTOR AGREES THAT THE HOLDER MAY EXERCISE ANY AND ALL RIGHTS GRANTED TO IT UNDER THE PURCHASE AGREEMENT, THE DEBENTURES, THE WARRANTS, THE OTHER TRANSACTION DOCUMENTS AND ANY DOCUMENT ENTERED INTO IN CONNECTION THERETO WITHOUT AFFECTING THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY.
11. Guarantor Events of Default. Each of the following shall constitute a “Guarantor Event of Default” hereunder: (a) any representation or warranty made by the Guarantor in this Guaranty shall prove to have been incorrect in any material respect when made; (b) the Guarantor shall fail to perform or observe any covenant or agreement contained in this Guaranty and such failure shall continue unremedied for ten (10) Business Days after written notice thereof from the Holder or, if such failure cannot reasonably be cured within ten (10) Business Days in the sole determination of the Collateral Agent, Guarantor fails to commence cure within such period and diligently pursue such cure to completion within ten (10) days; (c) a final judgment or judgments for the payment of money in excess of $500,000 in the aggregate shall be rendered against the Guarantor and shall not, within thirty (30) days after entry thereof, be bonded, discharged, settled, or stayed pending appeal; or (d) the Guarantor shall default in any of his obligations under any note, debenture, guaranty, credit agreement, or other instrument evidencing indebtedness for borrowed money or obligations to third parties in an amount exceeding $500,000, and such default shall continue beyond any applicable grace period; (e) the Guarantor shall die or become incapacitated (as defined in Section 12 below). Upon the occurrence of a Guarantor Event of Default, the Holder may, by written notice to the Guarantor, declare all Obligations to be immediately due and payable under this Guaranty, without presentment, demand, protest, or other notice of any kind, all of which are hereby waived by the Guarantor. A Guarantor Event of Default shall be deemed an “Event of Default” under (2)(a)(xiii) of the Debentures.
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12. Death or Incapacity. The Guarantor’s obligations under this Guaranty shall survive the death or incapacity of the Guarantor and shall be binding upon the Guarantor’s estate, heirs, executors, administrators, personal representatives, and successors. For purposes of this Guaranty, “incapacity” means a determination by a court of competent jurisdiction that the Guarantor is unable to manage his own financial affairs. Upon the death or incapacity of the Guarantor, the Holder shall have the right (but not the obligation) to declare all Obligations immediately due and payable under this Guaranty. The Guarantor shall maintain in effect at all times during the term of this Guaranty such estate planning arrangements as are necessary to ensure that his estate and personal representatives will have the authority and resources to satisfy the Obligations hereunder.
13. Indemnification and Survival. Without limitation on any other obligations of Guarantor or remedies of the Holder under this Guaranty, Guarantor shall, to the fullest extent permitted by law, indemnify, defend and save and hold harmless the Holder from and against, and shall pay within ten (10) Business Days, any and all damages, losses, liabilities and expenses (including reasonable attorneys’ fees and expenses and the allocated costs and disbursements of the Holder’s legal counsel) that may be suffered or incurred by the Holder in connection with or as a result of any failure of any Obligations to be the legal, valid and binding obligations of the Transaction Parties enforceable against the Transaction Parties in accordance with their terms, provided that such indemnity shall not, as to the Holder, be available to the extent such losses, claims, damages, liabilities or related expenses have resulted from the gross negligence or willful misconduct of the Holder. The obligations of the Guarantor under this paragraph shall survive the payment in full of the Obligations and termination of this Guaranty.
14. Miscellaneous. The parties further agree as follows:
14.1 Expenses. The Guarantor shall pay to the Holder, within ten (10) Business Days, the amount of any and all reasonable and documented out-of-pocket expenses, including, without limitation, attorneys’ fees, legal expenses and brokers’ fees, which the Holder may incur in connection with (a) exercise or enforcement of any of the rights, remedies or powers of the Holder hereunder or with respect to any or all of the Obligations, (b) any amendment, modification, or waiver of this Guaranty, (c) any workout, restructuring, or bankruptcy or insolvency proceeding, and (d) domesticating, enforcing, or executing upon any judgment obtained under this Guaranty in the State of Florida or any other jurisdiction, including in each case all costs and expenses incurred on appeal.
14.2 Waivers, Amendments, Remedies. No course of dealing by the Holder and no failure by the Holder to exercise, or delay by the Holder in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, and no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right, remedy or power of the Holder. No amendment, modification or waiver of any provision of this Guaranty and no consent to any departure by the Guarantor therefrom, shall, in any event, be effective unless contained in a writing signed by the Holder, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. The rights, remedies and powers of the Holder, not only hereunder, but also under any instruments and agreements evidencing or securing the Obligations and under applicable law are cumulative, and may be exercised by the Holder from time to time in such order as the Holder may elect.
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14.3 Notices. All notices or other communications given or made hereunder shall be in writing and shall be personally delivered or deemed delivered on the first business day following delivery by electronic means to the applicable party at such party’s address set forth below or to such other address as either party shall hereafter give to the other by notice duly made under this Section:
Guarantor:
Jay William Roth
1755 Telstar Drive, Suite 501
Colorado Springs, CO 80920
Telephone: (719) 895-5483
E-mail: [●]
With CC to:
Venu Holding Corporation
Attn: General Counsel
1755 Telstar Drive, Suite 501
Colorado Springs, CO 80920
Telephone: (719) 895-5483
E-mail: [●]
the Holder:
YA II PN, Ltd.
c/o Yorkville Advisors Global, LLC
1012 Springfield Avenue
Mountainside, NJ 07092
Attention: Mark Angelo
Telephone:
Email: [●]
With a copy to:
Haynes and Boone, LLP
30 Rockefeller Plaza, 22nd Floor
New York, New York 10112
Attention: Greg Kramer, Esq.
Email: [email protected]
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14.4 Term; Binding Effect. This Guaranty shall (a) remain in full force and effect until payment and satisfaction in full of all of the Obligations; (b) be binding upon the Guarantor and his successors and permitted assigns; and (c) inure to the benefit of the Holder and its successors and assigns. Upon the payment in full of the Obligations and termination of the Purchase Agreement, the Debentures and the Warrants (i) this Guaranty shall terminate and (ii) the Holder will, upon the Guarantor’s request and at the Guarantor’s expense, execute and deliver to the Guarantor such documents as the Guarantor shall reasonably request to evidence such termination, all without any representation, warranty or recourse whatsoever.
14.5 Satisfaction of Obligations. For all purposes of this Guaranty, the payment in full of the Obligations shall be conclusively deemed to have occurred when the Obligations shall have been indefeasibly paid.
14.6 Successors and Assigns. The benefits of this Guaranty may be assigned or transferred to any assignee of the Holder’s rights under the Purchase Agreement, the Debentures and the Warrants. The Guarantor may not assign or transfer his obligations under this Guaranty without the prior written consent of the Holder (and any assignment in contravention herewith shall be null and void). For the avoidance of doubt, the Holder is an express third-party beneficiary of this Guaranty.
14.7 Counterparties, Execution. This Guaranty may be executed in any number of counterparts and by the different signatories hereto on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument. This Guaranty may be executed by facsimile signature and delivered by facsimile transmission.
14.8 Governing Law. This Guaranty 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 Guaranty and the transactions contemplated hereby shall be governed by, and construed in accordance with, the laws of the State of New York.
14.9 Submission to Jurisdiction. The Guarantor irrevocably and unconditionally agrees that he will not commence any action, litigation or proceeding of any kind whatsoever, whether in law or equity, or whether in contract or tort or otherwise, against the Holder, in any way relating to this Guaranty or the transactions contemplated hereby, in any forum other than the courts of the State of New York located in New York City, New York or of the United States District Court for the Southern District of New York and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the exclusive jurisdiction of such courts and agrees that any such action, litigation or proceeding may be brought in any such New York state court or, to the fullest extent permitted by applicable law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing herein or in the Purchase Agreement, the Debentures and the Warrants shall affect any right that the Holder may otherwise have to bring any action or proceeding relating to this Guaranty against the Guarantor or his properties in the courts of any jurisdiction, including, without limitation, the state and federal courts of the State of Florida. The Guarantor irrevocably consents to the jurisdiction of the state and federal courts of the State of Florida for purposes of enforcement or domestication of any judgment obtained against the Guarantor under this Guaranty and waives any objection to venue or jurisdiction in connection therewith.
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14.10 Waiver of Venue. The Guarantor irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that he may now or hereafter have to the venue of any such action or proceeding in any such court referred to in Section 12.9. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
14.11 Service of Process. Each party hereto irrevocably consents to the service of process in the manner provided for notices in Section 12.3 and agrees that nothing herein will affect the right of any party hereto to serve process in any other manner permitted by applicable law.
14.12 Spousal Consent. Guarantor shall provide the Holder with a spousal consent for this Guaranty, in the form attached hereto as Exhibit A.
14.13 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS GUARANTY, THE PURCHASE AGREEMENT, THE DEBENTURES, THE WARRANTS, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY. EACH PARTY HERETO (A) CERTIFIES THAT NO AGENT, ATTORNEY, REPRESENTATIVE OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF LITIGATION, AND (B) ACKNOWLEDGES THAT SUCH PARTY AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
14.14 FINAL AGREEMENT. THIS GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, the parties hereto have executed this Guaranty as of the date first above written.
| GUARANTOR | |
| /s/ Jay William Roth | |
| Jay William Roth |
[Personal Guaranty Signature Page]
Acknowledged and Agreed:
YA II PN, LTD.
| By: | Yorkville Advisors Global, LP | |
| Its: | Investment Manager | |
| By: | Yorkville Advisors Global II, LLC | |
| Its: | General Partner | |
| By: | /s/ Matt Beckman | |
| Name: | Matt Beckman | |
| Title: | Manager | |
| Date: | July 31, 2026 |
ACCEPTED AND AGREED TO:
[Personal Guaranty Signature Page]
EXHIBIT A
SPOUSAL CONSENT