Exhibit 10.1
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made and entered into by and among CSRE PROPERTIES SANDERSVILLE, LLC, a Georgia limited liability company, having a mailing address at 2380 Godby Road, College Park, Georgia 30349 (“Purchaser”), LUNA SQUARES, LLC (f/k/a Innovative Property Management, LLC), a Delaware limited liability company, having a mailing address of Level 5, 97 Pacific Highway, North Sydney, NSW 2060 Australia (“Luna”), MAWSON INFRASTRUCTURE GROUP, INC., a Delaware corporation having a mailing address of Level 5, 97 Pacific Highway, North Sydney, NSW 2060 Australia (“MIG”) and Luna and MIG are collectively referred to as (“Seller”)), and CLEANSPARK, INC., a Nevada corporation having its principal executive office at 2370 Corporate Circle, Suite 160, Henderson, Nevada 89074 (“Parent”). The effective date of this Agreement (the “Effective Date”) shall be the day on which this Agreement is fully executed by Purchaser and Seller.
WITNESSETH:
WHEREAS, Luna currently leases approximately 16.35 acres of land located at 2015 George Lyons Parkway, Sandersville, Washington County, Georgia 31082, as further described by the survey on Exhibit A attached hereto and incorporated herein by these references pursuant to that Lease Agreement (the “Initial Lease”) dated August 12, 2020, between the Development Authority of Washington County (“Development Authority”) and Luna, as amended by that certain First Amendment to Lease Agreement and Exercise of Option to Lease on an Additional Four Adjoining Acres, dated February 23, 2021 (the “First Amendment”), and Second Amendment to Lease Agreement, dated August 24, 2021 (the “Second Amendment,” together with the Initial Lease, First Amendment and Second Amendment, are collectively referred to as the “Lease” and real property subject to the Lease as described on Exhibit A to this Agreement, is referred to as the “Land”); and
WHEREAS, Luna has agreed to assign the Lease to Purchaser; and sell to Purchaser all of Luna’s interests under the Lease to all improvements situated thereon if any, and certain personal property listed on Schedule 1, attached hereto and incorporated herein by this reference (“Personal Property”), and all of Luna’s rights, easements and appurtenances now or hereafter belonging thereto under the Lease (all such assets, including, but not limited to, the Lease, any improvements on the Land, any easements or appurtenances related thereto and the Personal Property are collectively referred to as the “Property”), all in accordance with the terms and conditions described herein.
WHEREAS, As part of the transaction MIG, the sole shareholder and parent company of Seller, will be selling or causing one or more of its Affiliates to sell mining equipment as set forth in Section 21 of this Agreement which is a material aspect of this entire transaction and will benefit from the transaction and is a party to this Agreement.
WHEREAS, Purchaser is a subsidiary of Parent, and Parent will benefit from Seller’s purchase of the Property and, accordingly, has agreed to pay a portion of the consideration therefor, in accordance with the terms and conditions described herein.
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NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
(a) Upon and subject to the terms and conditions contained herein, and subject to Section 1(b), at the Closing, Purchaser hereby agrees to assume and to pay, perform, and discharge when due the following, and only the following, liabilities of Luna arising from and after the Closing Date (collectively, the “Assumed Liabilities”):
(i) the liabilities of Luna arising under the Lease to the extent arising after the Closing; and
(ii) the liabilities arising under the Assigned Contracts and Non-Land Leases that, by the terms of such Assigned Contracts and Non-Land Leases, arise after the Closing, relate solely to periods following the Closing and are to be observed, paid, performed or discharged, as the case may be, in each case at any time after the Closing Date, but only to the extent that such liabilities do not arise from or relate to: (A) any breach of or default by Seller under this Agreement or any Assigned Contracts and Non-Land Leases; (B) any violation or claim of a violation (or alleged violation) of any Law by Seller; or (C) any Retained Liability.
(b) Purchaser will not assume, and Purchaser will have no liability for, any liabilities, Taxes (including all Taxes, whether assessed or unassessed applicable to the cryptocurrency mining facility, the Land or any of the Property, in each case attributable to all pre-Closing tax periods prior to the Closing) (collectively, “Pre-Closing Taxes”) or contracts of Seller of any kind, character or description, other than the Assumed Liabilities (collectively, the “Retained Liabilities”); it being understood that Purchaser is expressly disclaiming any express or implied assumption of any Retained Liabilities.
(c) The Assumed Liabilities and the Retained Liabilities will survive the Closing.
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4.4 At the Closing, Purchaser and Seller shall provide the Escrow Agent with joint instructions directing the Escrow Agent to pay the Earnest Money to Seller.
5. SURVEY AND LEGAL DESCRIPTION AND POWER DEPOSITS.
5.1 Prior to the Inspection Date (as herein defined), Purchaser, in its sole discretion and at its sole cost and expense, may obtain a current ALTA/NSPS survey of the Land and improvements by a surveyor licensed in the State of Georgia (the “Survey”). If the legal description of the Land prepared on the basis of the Survey materially differs from the legal description attached hereto as Exhibit “A”, Luna shall, at the Purchaser’s request, execute and deliver to Purchaser at Closing an amendment of the Lease, containing a legal description of the Land based upon the Survey and shall use reasonable good faith efforts, which shall not require Luna to expend or pay any funds or agree to incur any additional obligations or liabilities to have it executed and delivered by the Development Authority. The Parties agree that the Closing is not conditional upon Purchaser obtaining its desired amendments prior to Closing.
5.2 At least three days prior to Closing, Seller shall cause City of Sandersville (“City”) to provide to Purchaser documentation evidencing the amount of deposits held by City in accordance with CEPS (as defined in Section 10.2 below), less any liabilities owed by MIG to the City of Sandersville (the “Power Deposits”). At the Closing (as defined in Section 10.1 below), unless the City of Sandersville has agreed in writing to pay the Power Deposits to MIG at the Closing, Purchasers shall pay MIG the amount of any deposits held by the City. If Purchaser has paid the Power Deposits to MIG at the Closing and MIG subsequently receives any amounts from the City of Sandersville that relate to the Power Deposits, then MIG must promptly upon becoming aware of the
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payments notify Purchaser and transfer those amounts to Purchaser. For the avoidance of doubt, the payment of the Power Deposits to MIG are in addition to the Purchase Price.
6. TITLE TO THE LAND AND PROPERTY.
Luna’s
7. AMENDMENTS TO LEASE. Purchaser has identified certain amendments that Purchaser desires to make to the Lease. Seller agrees to use reasonable good faith efforts, which shall not require Luna to expend or pay any funds or to agree to incur any additional obligations or liabilities to assist Purchaser to obtain an executed amendment to the Lease for the period up to Closing and for
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a further 30 days after Closing. The Parties agree that the Closing is not conditioned upon Purchaser obtaining its desired amendments prior to Closing.
8. INSPECTION.
Further, in addition to any other obligation to assist Purchaser in connection with Purchaser’s due diligence, Seller shall provide Purchaser with access during normal business hours (where records, information and other materials cannot be sent electronically or via hard photocopies, which information should be sent electronically or via photocopies where practical) to Seller’s business and financial records regarding the GA Business, and the Land and Property, including physical, title and/or environmental studies and other real estate records and such other business information regarding the GA Business reasonably requested by Purchaser that are in Seller’s possession or control or are reasonably, readily available to Seller. Seller will coordinate all site visits with Purchaser.
9. PARENT AND MIG GUARANTEE.
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10. THE CLOSING.
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For the avoidance of doubt, this formula will operate in the following manner:
ii. If all Co-Location MDC’s are emptied on the 196th day post-Closing, Luna would receive 84% of the Earn-out Parent Shares and for every day thereafter on which the Co-Location MDCs are emptied (assuming they are all emptied on the same day) such percentage would be reduced by an additional 1 percentage point until one hundred (100) days following the 180th day post Closing, when such Earn-Out Shares can no longer be earned.
iii. Assuming there are fifteen (15) total Effective Date Co-Location MDCs, and if five (5) Co-location MDCs are emptied on or before the 195th day post-Closing, and the remaining ten (10) Co-location MDCs are emptied on the 200th day post-Closing, Luna will receive shares as follows:
Step 1 Co-location MDC’s emptied on day 195: (x) Earnout Share Number divided by (y) 15 multiplied by (z) 5; plus,
Step 2 Co-location MDC’s emptied on day 200: (x) Earnout Share Number minus 20% of the Earnout Share Number divided by (y) 15 multiplied by (z) 10.
For the sake of example from (iii) above, if there are 1,000,000 Earnout Shares, Luna would receive:
Step 1 Co-location MDC’s emptied on day 195: (x) 1,000,000 divided by (y) 15 multiplied by (z) 5 = 333,333.33
Step 2 Co-location MDC’s emptied on day 200: (x) 1,000,000 less 20%=800,000 divided by (y) 15 multplied by (z) 10 = 533,333.33
Step 3= Add up results from Step 1 and Step 2 such that 333,333.33 + 533,333.33 = 866,667 Parent Shares.
(b) The parties hereto understand and agree that (i) neither Parent nor Purchaser nor any of their respective affiliates is obligated to take any action to cause the Co-location MDCs to be emptied and made available for use by Purchaser or otherwise to facilitate Luna’s earning of the Earn-Out Parent Shares, other than to allow Seller and its representatives access to the Land and the Co-location MDCs during normal business hours in order to undertake the necessary work to qualify for the Earn-out Parent Shares, (ii) neither Parent nor Purchaser nor any of their respective affiliates will
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have any liability for the failure of Luna to earn any of the Earn-out Parent Shares, (iii) the contingent rights to earn and receive the Earn-Out Parent Shares shall not be represented by any form of certificate or other instrument, are not transferable and do not constitute an equity or ownership interest in Parent or Purchaser, and (iv) no interest shall be payable with respect to the Earn-Out Parent Shares. In this section, "Co-location MDC” means a modular data center on the Land occupied by Luna Squares LLC, or its customer’s mining equipment at the Effective Date, and “Effective Date Co-location MDCs” is the number of Co-location MDCs as at the Effective Date.
(c) Seller shall use best efforts to cause the Co-Location MDCs to become Empty Co-location MDCs on or before the date which is 90 days after the Closing Date, and in any event on or before the date which is 180 days after the Closing Date.
(d) Parent shall take such actions to register with the SEC the resale of the Closing Parent Shares and the Earn-out Parent Shares, and actions in connection therewith, as are set forth on Schedule 10.3 (the provisions of which are incorporated into this Section 10.3(d) as if set forth directly herein).
11. CASUALTY AND CONDEMNATION. Until the purchase of the Property has been consummated by Purchaser, all risk of loss, damage, or destruction respecting the Property (whether by fire, flood, tornado, or other casualty, or by the exercise of the power of eminent domain, or otherwise) shall be borne by Seller. In the event of any material damage to or destruction of the Property or any material portion thereof or in the event of any taking or threat of taking by condemnation (or any conveyance in lieu thereof) of the Property or any material portion thereof by
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anyone having the power of eminent domain, Purchaser shall, by written notice to Seller delivered within ten (10) Business Days of receiving written notice from Seller of such event, elect to: (i) terminate this Agreement and all of Purchaser’s obligations under this Agreement, whereupon the Earnest Money shall be returned to Purchaser by Seller, and this Agreement shall terminate and neither Seller nor Purchaser shall have any right, duty or obligation under this Agreement, except for any obligations that survive the termination; or (ii) consummate the purchase of the Property without a reduction in the Purchase Price. If Purchaser does not elect to terminate this Agreement pursuant to this Section 11, then Seller shall on the Closing Date pay to Purchaser all insurance proceeds then received by Seller and all condemnation awards and compensation then received by Seller with respect to the Property. In addition, Seller shall transfer and assign to Purchaser, in form reasonably satisfactory to Purchaser, all rights and claims of Seller with respect to payment for damages and compensation relating to the Property on account of such damage, destruction or taking.
12. TERMINATION AND DEFAULT.
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(i) in the event of a termination pursuant to Section 12.1.2.3 and such termination is based upon identifying an event, fact, condition that has a material adverse effect on the Land, Property or Purchaser’s Intended Business or would be significant and detrimental to a reasonable buyer’s evaluation of the GA Business and/or its decision to consummate the acquisition, or an event, fact or condition, including but not limited to matters of title or survey, which renders ten percent (10%) or more of the Land or Property unusable or otherwise unavailable for Purchaser’s Intended Business thereon, the Purchaser may terminate this Agreement and the Earnest Money will be returned to Purchaser and this Agreement shall be void subject to obligations that expressly survive termination and Purchaser shall receive the Earnest Money from the Escrow Agent. The parties agree that Purchaser may not terminate under this Section 12.2.2(i) due to general economic conditions or regulatory conditions such as the fluctuations of the price of Bitcoin, a regulatory change impacting
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the blockchain industry generally or a change to the Bitcoin algorithm (e.g. from proof of work to proof of stake verification mechanism for Bitcoin).
(ii) in the event of a termination pursuant to Section 12.1.2.3 and such termination is not the result of a material adverse effect outlined in Section 12.2.2.(i), then Purchaser may terminate and Purchaser shall pay to Seller an amount equal to $3,400,000 (the “Liquidated Damages”), which shall be paid in part by delivery of the Earnest Money to Seller by the Escrow Agent. The Seller, Purchaser and Parent acknowledge that it is impossible to estimate more precisely the damages which might be suffered by Seller upon Purchaser’s determination not to Close the transactions contemplated by this Agreement as permitted by Section 12.1.2.3 and Seller’s receipt of the Liquidated Damages is intended not as a penalty, but as liquidated damages. The right to receive and retain the Liquidated Damages as liquidated damages is Seller’s sole and exclusive remedy in the event of a termination pursuant to Section 12.1.2.3, the parties agreeing that the Liquidated Damages is a reasonable pre-estimate of Seller’s probable loss in the event of such an occurrence, and upon such payment of the Liquidated Damages to Seller, Seller hereby waives and releases any right to (and hereby covenants that it shall not) sue Purchaser or Parent: (i) for specific performance of this Agreement, or (ii) to recover actual damages in excess of the Liquidated Damages. Purchaser and Parent hereby waive and release any right to (and hereby covenants that it shall not) sue Seller or seek or claim a refund of said Liquidated Damages (or any part thereof) on the grounds it is unreasonable in amount and exceeds Seller’s actual damages or that its retention by Seller constitutes a penalty and not agreed upon and reasonable liquidated damages; and
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13. SELLER’S REPRESENTATIONS. As an inducement to Purchaser to enter into this Agreement and to purchase the Property and Parent to issue Closing Parent Shares and any Earn-out Parent Shares, MIG and Luna jointly and severally warrants and represents to Purchaser and Parent (except as set forth in the Disclosure Schedules delivered together with this Agreement, provided that any section of the Disclosure Schedules lists an item or information in such a way as to make its relevance to the disclosure required by or provided in another section of the Disclosure Schedules or the statements contained in any section reasonably apparent, such item or information shall be deemed to have been disclosed in or with respect to such other section, notwithstanding the omission of an appropriate cross-reference to such other section or the omission of a reference in the particular representation and warranty to such section of the Disclosure Schedules) as of the Effective Date and as of the Closing Date as follows in this Section 13.
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13.6 Absence of Indebtedness and Undisclosed Liabilities. Except as and to the extent reflected in the latest balance sheet included in the Latest Balance Sheet, GA Business did not have, as of the date of the Latest Balance Sheet (the “Latest Balance Sheet Date”), any Indebtedness or other material liabilities (other than obligations of continued performance under contracts and other commitments and arrangements entered into in the ordinary course of the GA Business and consistent with past practice), and except as described on Schedule 13.6, GA Business has not incurred any material liabilities since the Latest Balance Sheet Date, except for current liabilities for trade or business obligations incurred in connection with the purchase of goods or services in the ordinary course of the GA Business and consistent with past practice.
13.7 Absence of Certain Changes or Events. Since June 30, 2022, except as contemplated by this Agreement or disclosed on Schedule 13.7, Seller has conducted the GA Business in the ordinary course consistent with past practice and as of Closing there has not been:
13.8 Assigned Contracts and Non-Land Leases. Schedule 13.8 contains a true and complete list of the Assigned Contracts and Non-Land Leases for Seller. The Assigned Contracts and
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Non-Land Leases are in full force and effect and have not been amended, extended or otherwise modified (whether orally or in writing). Seller, under any Assigned Contracts and Non-Land Leases, or to Seller’s Knowledge, as of the date of this Agreement, any other party thereto, is not in default under any Assigned Contracts or Non-Land Leases (a “default” being defined for purposes hereof as an actual default beyond any notice and cure period). All terms of each of the Assigned Contracts and Non-Land Leases are set forth in writing, and true and complete written copies of all Assigned Contracts and Non-Land Leases have been provided to Purchaser.
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“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER.”
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14. REPRESENTATIONS OF PURCHASER AND PARENT.
14.1 Representations of Purchaser. As an inducement to Seller to enter into this Agreement and to sell the Property, Purchaser represents and warrants to Seller as of the Effective Date and as of the Closing Date as follows:
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14.2 Representations of Parent. As an inducement to Seller to enter into this Agreement and to sell the Property, Parent represents and warrants to Seller that, except as as set forth in the SEC Documents (as defined below) or otherwise disclosed in writing to Seller:
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15. GENERAL COVENANTS.
15.1 Employment Matters.
(a) On or before three (3) days prior to Closing, Purchaser may interview all Business Personnel, provided that Purchaser is not obligated to hire any of those employees. Subject to applicable legal requirements, Purchaser will have reasonable access to personnel records (including employment eligibility verification, performance appraisals and disciplinary actions) for the purpose of preparing for and conducting employment interviews with Business Personnel and will conduct the interviews as expeditiously as reasonably possible prior to the Closing Date. Access will be provided by Seller upon reasonable prior notice during normal business hours. On or prior to the Closing Date, Purchaser will provide Seller with a list of Business Personnel that Purchaser may offer to employ, subject to satisfactory completion of Purchaser’s customary pre-employment screening procedures.
(b) Effective as of the Closing Date, Seller will terminate, or cause its applicable Affiliate to terminate, all Business Personnel who are hired by Purchaser immediately after the Closing (collectively, the “Hired Employees”). Seller
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agrees that Purchaser retains discretion concerning the employees to whom Purchaser will decide to offer employment following the Closing and concerning the terms and conditions of their employment. No provision of this Section 15.1 will create any third party beneficiary or other rights in any current or former employee or independent contractor in respect of continued or resumed employment or engagement in connection the Property, or with Purchaser, and no provision of this Section 15.1 will create any rights in any such Persons in respect of any benefits that may be provided under any plan or arrangement that Purchaser might establish.
(c) On or before the next regularly scheduled payroll date after the Closing Date, Seller will pay all Business Personnel (including all Hired Employees), the wages, benefits and other amounts due under any Benefit Plan maintained by Seller due or accrued to them as of the Effective Time, including accrued vacation amounts and any accrued amounts under any bonus or other Benefit Plan. Seller is solely responsible for any notification and liability under the WARN Act and any similar Law relating to any termination of any of the employees of Seller from employment with Seller occurring at any time prior to the Closing Date or on the Closing Date in connection with the acquisition. Seller is responsible for all liabilities for employee or independent contractor compensation and benefits accrued or otherwise arising out of services rendered by their employees and independent contractors prior to the Closing or arising by reason of actual, constructive or deemed termination of their service relationship with Seller at Closing, including all costs relating to the continuation of health benefits under COBRA, with respect to Business Personnel (and their “qualified beneficiaries,” as defined in COBRA) who are not Hired Employees at any time and with respect to all Hired Employees (and their qualified beneficiaries) for whom a “qualifying event” (as defined in COBRA) occurs as of or prior to the Effective Time.
(d) Seller is responsible for all severance payments and similar obligations owed (or that may be owed) to Business Personnel (whether or not they become Hired Employees) for any event(s) through the Closing Date. Seller is responsible for any and all employment related costs and claims related to the Business Personnel through the Closing Date. Purchaser is responsible for any and all employment related costs and claims related to Hired Employees arising from any event(s) or circumstance(s) after the Closing Date.
15.2 Non-Assignment of Certain Contracts and Non-Land Leases. If any Assigned Contract or Non-Land Lease restricts or prohibits the transfer or assignment thereof or provides that it may not be transferred or assigned without the consent of another Person and for which the appropriate consent to the transfer and assignment thereof is not obtained, then at Purchaser’s option, Seller will, to the extent reasonably necessary in order to provide the benefits thereof to Purchaser, at the cost of Seller, cooperate with Purchaser in any reasonable arrangement that Purchaser specifies which is designed to provide the benefits thereof to Purchaser.
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15.3 Permits. For a period of up to 3 months after Closing, Seller will assist and reasonably cooperate with Purchaser, at no additional cost or liability to Seller, in the transfer of all Permits needed for Purchaser’s operation of the cryptocurrency mining facility after the Closing. If the transfer of any such Permits is prohibited by Law or (in Purchaser’s reasonable judgment) would be overly burdensome, then Seller will use good faith efforts to assist Purchaser, at no additional cost or liability to Seller, in obtaining such Permit(s) in Purchaser’s own name.
15.4 Closing Agreements. At the Closing on the Closing Date, each of Purchaser and Seller will sign and deliver or cause to be delivered to each other their respective documentation required in Section 10.2 or as otherwise reasonably required by the Purchaser.
15.5 Inspection of Records. Seller will, subject to MIG and Parent entering into a new Non-Disclosure Agreement with MIG on substantially the same terms as the last such agreement between them, make its books and records (including work papers in the possession of its accountants) available for inspection and copying by Purchaser and/or its Representatives for reasonable business purposes at all reasonable times during normal business hours, for a three (3)-year period after the Closing Date, with respect to all transactions of the cryptocurrency mining facility occurring prior to and relating to the Closing, and the historical financial condition, assets, liabilities, operations and cash flows of the cryptocurrency mining facility.
15.6 SEC Financial Statements.
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15.7 Operations of Purchaser and Property. Upon execution of this Agreement and through Closing, Seller shall operate the cryptocurrency mining facility in the ordinary course of business and shall not take nor allow any of the actions enumerated in 13.7 to occur without Purchaser’s written consent; provided that Seller may engage in ordinary course of business curtailment practices when it comes to mining equipment and related electrical power usage.
15.8 Payment of Connected Vendors. The Seller shall pay all amounts over $2,000 (“De Minimus Amount”) due and payable to vendors or suppliers associated with the GA Business within 14 days after Closing. If the aggregate amount of all De Minimus Amounts exceeds $20,000, then Seller must pay that amount to Purchaser within 15 days of receiving evidence reasonably satisfactory to Seller. Notwithstanding this section 15.8, Purchaser will not be assuming any Seller liabilities to vendors or suppliers under this Agreement.
15.9 Change in Circumstances. Prior to the Closing, Seller shall promptly supplement the Disclosure Schedules with respect to any matter hereafter arising or of which it becomes aware after the date hereof in order to keep the Disclosure Schedule true, complete and correct (each such supplement, a “Schedule Supplement”). No Disclosure Supplement shall be taken
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into account in determining whether the condition set forth in Section 16.2 is satisfied; provided, however, that after the Closing, any Disclosure Supplement that includes only information regarding an event or circumstance occurring or arising after the Effective Date that is a Force Majeure event shall be included in the Disclosure Schedules for purposes of determining whether there has been a breach of any representation and warranty made by Seller in Section 13 as of the Closing Date (but not, for the avoidance of doubt, any representation and warranty made by Seller in Section 13 as of the Effective Date). “Force Majeure” shall mean any event or circumstance as a result of acts of nature (including fire, fire, flood, lightening strike, earthquake, storm, hurricane or other natural disaster), war, invasion, act of foreign enemies, hostilities (whether war is declared or not), civil war, rebellion, revolution, insurrection, military or usurped power or confiscation, terrorist activities, nationalization, government sanction, blockage, embargo, labor dispute, strike, lockout or interruption.
16. PURCHASER’S AND PARENT’S CONDITIONS. The obligations of Purchaser and Parent to consummate the transactions contemplated under this Agreement are subject to the following conditions in this Section 16.
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18.01 Right of First Refusal. Seller hereby grants on behalf of itself and any applicable Affiliates (individually, “Selling Party”, and, collectively, “Selling Parties”) to Purchaser a right of first refusal (“Right of First Refusal”) for a period ending on the first anniversary of the Closing Date (the “ROFR Period”) with respect to such Selling Party’s potential sale of (i) the cryptocurrency mining facilities, mining assets, or properties leased, owned, controlled or operated by a Selling Party as of the Effective Date and set out in Schedule 18.01; and (ii) any other U.S. facilities or properties in which a Selling Party acquires an interest (whether in fee or by leasehold or other interest granting such Selling Party ownership or control of such facilities or properties) during the ROFR Period and commences the development or operation of cryptocurrency mining thereon in the United States of America (individually, “Other Mining Property”). If, at any time during the ROFR Period, Selling Party (or Selling Parties) receives an offer or offers from an unrelated third party
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(“Third-Party Offeror”) to purchase or lease any or all of the Other Mining Property, and said offer or offers are on terms acceptable to MIG’s Board of Directors, such Selling Party (or Selling Parties) shall give written notice thereof to Purchaser specifying the following: (a) the notice address for such Selling Party (or Selling Parties); (b) year-to-date financial statements (if available); (c) most recent year-end financial statements (if available); (d) subject facility or property and mining data; and (e) a true and correct copy of the Third-Party Offeror’s offer or offers with only the Third-Party Offeror’s identity redacted (the “Selling Party ROFR Notice”). Within fourteen (14) days after Purchaser’s receipt of the Selling Party ROFR Notice, Purchaser shall deliver written notice to the applicable Selling Party (or Selling Parties) in accordance with the Selling Party ROFR Notice exercising Purchaser’s Right of First Refusal (the “ROFR Exercise Notice”) with respect to the subject Other Mining Property and agreeing to purchase or lease the subject Other Mining Property on substantially similar terms to those contained in the Third Party Offeror’s offer or offers. If Purchaser timely delivers its ROFR Exercise Notice, then Selling Party (or Selling Parties) shall immediately decline or reject the Third Party Offeror’s offer or offers and, if applicable, terminate any definitive agreements entered into by the Selling Party (or Selling Parties) and such Third Party Offeror related to the subject Other Mining Property, and the Selling Party (or Selling Parties) and Purchaser shall in good faith enter into a purchase agreement (or lease agreement) on terms reasonably similar to those set forth in the Third Party Offer’s offer or offers, but modified for such sale or lease, as the case may be. Should Purchaser (1) fail to timely deliver its ROFR Exercise Notice, or (2) decline to exercise its Right of First Refusal as to the subject Other Mining Property, then Purchaser’s Right of First Refusal only with respect to such subject Other Mining Property under this Section 18.01 shall be deemed waived, and Seller Party (or Selling Parties) shall be free to sell or lease, as the case may be, such Other Mining Property to such Third-Party Offeror within one hundred twenty (120) days after the expiration of the fourteen (14) day period prescribed herein and upon terms substantially similar to Third-Party Offeror’s offer or offers, but in no event shall the purchase price (or lease rental) be less than the amount set forth in Third-Party Offeror’s offer or offers. Should the one hundred twenty (120) day period pass without such sale or lease occurring, the terms of this Right of First Refusal shall continue in full force and effect as to the subject Other Mining Property, and the applicable Selling Party (or Selling Parties), if it receives an offer or offers to purchase or lease such Other Mining Property from a Third Party Offeror during the ROFR Period, shall again comply with all the terms of this Section 18.01.
In addition to the foregoing, during the fourteen (14) day period after Purchaser’s receipt of the Selling Party ROFR Notice, starting with the date of the receipt of the Selling Party ROFR Notice, the applicable Selling Party (or Selling Parties) shall permit Purchaser and its agents reasonable access during business hours to the subject Other Mining Property from time to time for the purpose of inspecting, studying, measuring and otherwise analyzing the same. Any sale or lease of the Other Mining Property in violation of the terms of this Agreement shall be null and void.
18.02 Right of First Offer. Seller hereby grants on behalf of itself and any Selling Parties to Purchaser a right of first offer (“Right of First Offer”) for a period of one hundred eighty (180) days after the Closing Date (the “ROFO Period”) with respect to Other Mining Property. If, at any time during the ROFO Period, a Selling Party (or Selling Parties) decides to sell or lease any or all of the Other Mining Property to an unrelated third party, such Selling Party (or Selling Parties) shall give written notice thereof to Purchaser specifying the following: (i) the notice address for such Selling Party (or Selling Parties); (ii) year-to-date financial statements (if available); (iii) most recent year-end financial statements (if available); (iv) subject facility or property and mining data; and (v)
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whether such Selling Party (or Selling Parties) seeks a sale or a lease of such Other Mining Property and any particular minimum or required terms as determined by MIG’s Board of Directors (the “Selling Party ROFO Notice”). Within fourteen (14) days after Purchaser’s receipt of the Selling Party ROFO Notice, Purchaser shall deliver written notice to the applicable Selling Party (or Selling Parties) in accordance with the Selling Party ROFO Notice exercising Purchaser’s Right of First Offer with respect to the subject Other Mining Property and agreeing to purchase or lease the subject Other Mining Property on substantially similar terms to those contained in this Agreement (the “Offer”), but with business terms provided that would be acceptable to Purchaser. If Purchaser timely delivers the Offer, then Selling Party (or Selling Parties) shall review the Offer and decide whether or not to sell or lease the Other Mining Property on the terms contained in the Offer within ten (10) days of its receipt of the Offer and shall deliver such decision, in writing, to Purchaser during such ten (10) day period. Should the applicable Selling Party (or Selling Parties) decide to accept Purchaser’s Offer, then Selling Party (or Selling Parties) and Purchaser shall in good faith enter into a purchase agreement (or lease agreement) on terms reasonably similar to those set forth in this Agreement and the Offer, but modified for such sale or lease, as the case may be. Should (1) Purchaser fail to timely deliver its Offer, or (2) the applicable Selling Party (or Selling Parties) reject or decline such Offer, then Purchaser’s Right of First Offer only with respect to such subject Other Mining Property under this Section 18.02 shall be deemed null and void, and Seller Party (or Selling Parties) shall be free to sell or lease such Other Mining Property to an unrelated third party within one hundred twenty (120) days after the expiration of the fourteen (14) day period (if Purchaser fails to timely deliver the Offer) or the ten (10) day period (if Purchaser timely delivers the Offer and Seller Party (or Seller Parties) reject or decline such Offer), as the case may be and prescribed herein, and upon terms substantially similar to Purchaser’s Offer, but in no event shall the purchase price (or lease rental) be less than the amount set forth in Purchaser’s Offer, if given. Should the one hundred twenty (120) day period pass without such sale or lease occurring, the terms of this Right of First Offer shall continue in full force and effect as to the subject Other Mining Property, and the applicable Selling Party (or Selling Parties), if it desires to sell or lease such Other Mining Property during the ROFO Period, shall again comply with all the terms of this Section 18.02.
In addition to the foregoing, during the fourteen (14) day period after Purchaser’s receipt of the Selling Party ROFO Notice, starting with the date of the receipt of the Selling Party ROFO Notice, the applicable Selling Party (or Selling Parties) shall permit Purchaser and its agents reasonable access during business hours to the subject Other Mining Property from time to time for the purpose of inspecting, studying, measuring and otherwise analyzing the same. Any sale or lease of the Other Mining Property in violation of the terms of this Agreement shall be null and void.
18.02 Termination right. MIG may terminate both the Right of First Refusal and the Right of First Offer in writing to the Purchaser if any of the Parties hereto become engaged in material litigation or arbitration related to the Transaction Documents.
19.01 Seller Financing. Seller shall provide seller financing for a portion of the Purchase Price as described in Section 3 above pursuant to the following terms (the “Seller Financing”). Seller shall provide a loan at Closing in the principal amount of Three Million and No/100 Dollars ($3,000,000.00) (“Total Loan Amount”). The interest rate shall be eight percent (8%) per annum, compounded monthly on any amounts outstanding. Default interest
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of 15% per annum will apply to any amounts unpaid when due. The Total Loan Amount with accrued but unpaid interest shall be repaid at the end of sixty (60) days after Closing. The Seller Financing will be evidenced by a secured promissory note substantially in the form in Exhibit “G” (the “Note”) and all obligations due under the Note shall be guaranteed by Parent and secured by a first priority security interest in the assets being sold by Seller to Purchaser, substantially in the form in Exhibit “G” (the “Security Agreement”).
19.02 Megawatt Earnout.
(a) The Seller shall be entitled to an additional Two Million and No/100 Dollars ($2,000,000.00) (“Megawatt Earnout”), if and only if, the following condition is satisfied: the Purchaser receives written confirmation reasonably acceptable to Purchaser that it will be able to utilize at least an additional 150 MW of power on the Land (the “Power Confirmation”), beyond the current 80MW of power on the Land as of the Effective Date. Once the Power Confirmation condition has been satisfied, the Megawatt Earnout payment shall be made on the later of the following events to occur: (x) sixty (60) days after Closing or (y) ten (10) Business Days after satisfaction of the Power Confirmation condition. Whichever party receives the Power Confirmation must immediately notify the other party.
(b) In the event that the Power Confirmation confirms that Purchaser will be able to utilize more than 80 MW but less than 230 MW (in total) on the Land, then the Seller is entitled to a pro-rata portion of the Megawatt Earnout in an amount equal to Two Million and No/100 Dollars ($2,000,000.00) multiplied by a fraction: (x) the numerator of which is (1) the amount of power that is more than 80 MW but less than 230 MW (in total on the Land) that is confirmed, less (2) 80MW and (y) the denominator of which is 150MW. Such pro-rated amount will be payable to Seller upon the later of the following events to occur: (x) sixty (60) days after Closing or (y) ten (10) Business Days after satisfaction of the Power Confirmation Condition. The maximum amount payable to Seller under this 19.2(b) is $2,000,000.
For avoidance of doubt and by way of example if the Power Confirmation states that a total of 140MW will be available then the amount due to Luna under Section 19.2(b) is equal to:
Step 1: $2,000,000 multiplied by (x) (1) 140MW - (2) 80MW/ (y) 150MW
Step 2: $2,000,000 multipled by (x) 60MW/ (y) 150MW
Step 3: $2,000,000 multiplied by 40%= $800,000 which is due to Luna.
(c) If a Power Confirmation is not received by the 6th month anniversary of the Closing Date, then Purchaser is not obligated to pay any Megawatt Earnout to Luna and it is null and void and of no further force and effect.
(d)The Parties must use best efforts to obtain Power Confirmation of the additional 150 MW.
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22.1 Survival.
(a) All of the covenants and agreements made by Purchaser, Parent, MIG and Luna hereunder will survive the execution and delivery of this Agreement and the Closing until they are satisfied in full or by their nature expire. All of the representations, warranties, and Closing certifications of Luna and MIG will survive the execution and delivery of this Agreement and the Closing hereunder for a period of twelve (12) months following the Closing Date; provided, however, that: (a) the representations, warranties and Closing certifications made in or pursuant to Sections 13.1, 13.2, 13.14, 13.16(a) (first sentence only) and 3.19 (collectively, the “Luna and MIG Fundamental Representations”) will survive the execution and delivery of this Agreement and the Closing for the maximum time permitted by applicable law; (b) Claims related to fraud, intentional misrepresentation will survive indefinitely; and (c) Claims related to Sections 22.2(b), (c) or (d) will survive until the date on which the respective applicable statute of limitations has expired. If a Claim for breach of a representation or warranty is asserted prior to the termination of the applicable survival period, the Claim will survive until resolved (and will not be affected by expiration of the survival period for the representation and warranty).
(b) All of the covenants and agreements made by Parent and Purchaser hereunder will survive the execution and delivery of this Agreement and the Closing until they are satisfied in full or by their nature expire. All of the representations, warranties, and Closing certifications of Purchaser and Parent will survive the execution and delivery of this Agreement and the Closing hereunder for a period of twelve (12) months following the Closing Date; provided, however, that: (a) the representations, warranties and Closing certifications made in or pursuant to Sections 14.1(a), 14.1(b), 14.2(a), 14.2(b) and 14(e) (collectively, the “Purchaser and Parent Fundamental Representations”) will survive the execution and delivery of this Agreement and the Closing for the maximum time permitted by applicable law; (b) Claims related to fraud, intentional misrepresentation will survive indefinitely; and (c) Claims related to Sections 22.3(b), (c) or (d) will survive until the date on which the respective applicable statute of limitations has expired. If a Claim for breach of a representation or warranty is asserted prior to the termination of the applicable survival period, the Claim will survive until resolved (and will not be affected by expiration of the survival period for the representation and warranty).
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22.2 Indemnification by Seller. Subject to the limitations set forth in this Section 22, MIG and Luna will jointly and severally, defend, save and hold Parent, Purchaser and their respective Representatives, and its and their respective successors and assigns (collectively, “Purchaser Indemnitees”) harmless from and against all demands, claims, allegations, assertions, actions or causes of action, assessments, losses, damages, obligations, liabilities, costs and expenses, including reasonable legal fees, interest, penalties, and all reasonable amounts paid in investigation, defense or settlement of any of the foregoing, whether or not involving any third party claim, and whether or not formal legal proceedings are instituted (collectively, “Damages”), required to be paid by, or incurred by Purchaser Indemnitees, directly or indirectly, in connection with, arising out of, or which would not have occurred but for:
(a) Luna, MIG or Cosmos’s breach of any representation or warranty of Luna, MIG or Cosmos contained in this Agreement, any Transaction Document or any certificate or document furnished pursuant hereto or thereto by Luna, MIG or Cosmos;
(b) Luna, MIG or Cosmos’s breach or non-fulfillment by Luna, MIG or Cosmos’s, as applicable, of any covenant or agreement made by Luna, MIG or Cosmos’s in this Agreement or any Transaction Document, including failure to pay any Retained Liability as and when due;
(c) all Pre-Closing Taxes; or
(d) any brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by any such Person with Seller in connection with any of the transactions contemplated by this Agreement.
For the purposes of this Section 22, the representations and warranties of Luna and MIG in this Agreement and in any Transaction Document that are qualified by materiality or material adverse effect will be deemed to be made without such materiality or material adverse effect qualifiers for the purpose of determining the amount of Damages relating to a breach of any such representation or warranty and only for such purpose.
22.3 Indemnification by Purchaser and Parent. Purchaser and Parent will jointly and severally indemnify, defend, save and hold Seller and their Representatives, and their respective successors and assigns (collectively, “Seller Indemnitees”) harmless from and against any and all Damages asserted against, imposed upon, resulting to, required to be paid by, or incurred by Seller Indemnitees, directly or indirectly, in connection with, arising out of, which could result from, or which would not have occurred but for:
(a) Purchaser or Parent’s breach of any representation or warranty of contained in this Agreement, any Transaction Document or any certificate or document furnished pursuant hereto or thereto by Purchaser or Parent;
(b) Purchaser or Parent’s breach or non-fulfillment by Purchaser or Parent, as applicable, of any covenant or agreement made by Purchaser or Parent in this Agreement or any Transaction Document;
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(c) the failure to pay or perform any Assumed Liabilities; and/or
(d) any brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by any such Person with either Purchaser or Parent in connection with any of the transactions contemplated by this Agreement.
For the purposes of this Section 22, the representations and warranties of Purchaser and Parent in this Agreement and in any Transaction Document that are qualified by materiality or material adverse effect will be deemed to be made without such materiality or material adverse effect qualifiers for the purpose of determining the amount of Damages relating to a breach of any such representation or warranty and only for such purpose.
22.4 Certain Limitations. The indemnification provided for in Section 22.2 and Section 22.3 shall be subject to the following limitations:
(a) No Purchaser Indemnitee will be entitled to recover Damages pursuant to Section 22.2, and Luna and MIG will not be liable to any Purchaser Indemnitee for any Damages, until the aggregate amount of all Damages in respect to Indemnification under Section 22.2(a) exceed $20,000 (the “Luna and MIG Basket”) in which event Luna and MIG will only be required to pay or be liable for all Damages that exceed the Luna and MIG Basket. The aggregate amount of all Damages for which MIG and Luna will be liable pursuant to Section 22.2(a) will not exceed $3,300,000.00 (the “Luna and MIG Cap”), except in the case of breaches of Fundamental Representations (in which case the Cap will be equal to the Purchase Price (the “Luna and MIG Fundamental Cap”). No Purchaser Indemnitee will be entitled to recover Damages pursuant to Section 22.2 and Luna and MIG will not be liable to any Purchaser Indemnitee for any Damages which when aggregated with any amounts previously paid or to be paid by Luna or MIG pursuant to Section 22.2 would be in excess of the Purchase Price.
(b) No Seller Indemnitee will be entitled to recover Damages pursuant to Section 22.3, and Purchaser and Parent will not be liable to any Seller Indemnitee for any Damages, until the aggregate amount of all Damages in respect to Indemnification under Section 22.3(a) exceed $20,000 (the “Purchaser and Parent Basket”) in which event Purchaser and Parent will only be required to pay or be liable for all Damages that exceed the Purchaser and Parent Basket. The aggregate amount of all Damages for which Purchaser and Parent will be liable pursuant to Section 22.2(a) will not exceed $3,300,000.00 (the “Purchaser and Parent Cap”), except in the case of breaches of Fundamental Representations (in which case the Cap will be equal to $11,000,000.00 (the “Purchaser and Parent Fundamental Cap”). Except for failure to pay the Closing Purchase Price, no Seller Indemnitee will be entitled to recover Damages pursuant to Section 22.3 and Parent and Purchaser will not be liable to any Seller Indemnitee for any Damages which when aggregated with any amounts previously paid or to be paid by Purchaer or Parent pursuant to Section 22.3 would be in excess of the the sum of (a) $11,000,000 plus (b) the value of the Parent Shares actually received by Luna under Section 10.3 whose value is determined as of the Effective Date (based upon the volume weighted average price of the Parent Common Stock over the five trading days immediately preceding the Effective Date).
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(c) The limitations set forth in Section 22.4(a) and Section 22.4(b) will not apply to Damages based upon, arising out of, with respect to or by reason of any fraud, intentional misrepresentation or willful misconduct by Purchaser, Parent, Luna or MIG, as applicable.
(d) If any Damages incurred by an indemnified party results in any entitlement to insurance recovery to such party then the amount of such damages payable by the indemnifying party will be adjusted to reflect such benefit, net of any reasonable costs of recovery.
(d) The Purchaser Indemnitee’s right to indemnification, payment, reimbursement, or other remedy for Damages shall be satisfied (a) first, by set off against the Seller Financing, to the extent of the amount then owed to Seller under the Seller Financing; (b) second, to the extent that the amount then owed to Seller under the Seller Financing is not sufficient, by withholding (and not issuing to Luna) shares of Parent Common Stock (valued at $4.0876 per share, subject to appropriate adjustment for any stock splits, stock combinations, stock dividends, recapitalizations or similar events occurring after the date hereof) that would otherwise be issued to Luna as Earn-out Shares pursuant to Section 10.3(a), and (c) if a and b are not sufficient directly against Luna and MIG.
(e) The parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims after the Closing for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of the Agreement, shall be pursuant to the indemnification provisions set forth in this Section 22. In furtherance of the foregoing, each party hereby waives, to the fullest extent permitted under law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement it may have against the other parties hereto and their Affiliates and each of their respective representatives arising under of based upon any law, except pursuant to the indemnification provisions set forth in this Section 22. Nothing in this 22.4(e) shall limit any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled pursuant to Section 12.
22.5 Notice of Claims. If any Purchaser Indemnitee or any Seller Indemnitee (an “Indemnified Party”) believes that it has suffered or incurred or will suffer or incur any Damages for which it is entitled to indemnification under this Section 22, such Indemnified Party will so notify the party or parties from whom indemnification is being claimed (the “Indemnifying Party”) with reasonable promptness and reasonable particularity in light of the circumstances then existing. The notice provided by the Indemnified Party to the Indemnifying Party will describe the Claim or other event or circumstance in reasonable detail and will indicate the amount (estimated, if necessary, and to the extent feasible) of the Damages that have been or may be suffered by the Indemnified Party. The failure of an Indemnified Party to give any notice required by this Section 22.4 will not affect any of such party’s rights under this Section 24 or otherwise, except and only to the extent that such failure is prejudicial to the rights or obligations of the Indemnifying Party or if such notice is not provided prior to expiration of the survival period set forth in Section 22.1.
22.6 Opportunity to Defend Third Party Claims. If any Indemnified Party receives notice of the assertion by any Person (other than the other Party) of any Claim or the commencement of any litigation, alternate dispute resolution, investigation or other proceeding that is subject to indemnification hereunder, the Indemnifying Party has the right to defend that Claim with counsel of its choice reasonably satisfactory to the Indemnified Party, but only if: (i) within twenty (20) days
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following the receipt of notice of the Claim, the Indemnifying Party notifies the Indemnified Party in writing that the Indemnifying Party will indemnify the Indemnified Party from and against the entirety of any Damages the Indemnified Party may suffer resulting from, relating to, arising out of, or attributable to the Claim; (ii) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Claim and pay, in cash, all Damages the Indemnified Party may suffer resulting from, relating to, arising out of, or attributable to the Claim; (iii) the Claim involves only money Damages and does not seek an injunction or other equitable relief; (iv) settlement of, or an adverse judgment with respect to, the Claim is not in the good faith judgment of the Indemnified Party likely to establish a precedential custom or practice materially adverse to the continuing business interests of the Indemnified Party or its Affiliates; (v) the Claim does not involve any Governmental Authority, and (vi) the Indemnifying Party continuously conducts the defense of the Claim actively and diligently. Otherwise, the Indemnified Party may defend and control the defense of such Claim at the Indemnifying Party’s expense; provided, the Indemnified Party will proceed diligently and in good faith with respect thereto.
As long as the Indemnifying Party is conducting the defense of the Claim in accordance with this Section 22.5: (a) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Claim; (b) the Indemnified Party will not consent to the entry of any Order with respect to the Claim without the prior written consent of the Indemnifying Party (not to be withheld unreasonably); and (c) the Indemnifying Party will not consent to the entry of any Order with respect to the Claim without the prior written consent of the Indemnified Party (not to be withheld unreasonably; provided, that it will not be deemed to be unreasonable for an Indemnified Party to withhold its consent with respect to any finding of or admission (1) of any breach or violation of any Law, Order or Permit, (2) of any violation of the rights of any Person, or (3) which the Indemnified Party believes could have a material impact on the Indemnified Party’s business or any other actions to which the Indemnified Party is a party or to which the Indemnified Party has a good faith belief it may become party).
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(a) MIG and Parent are corporations listed on NASDAQ and subject to vaiours ruls and laws relating to disclosure. None of the parties hereto nor any of their respective affiliates shall make any public announcement regarding this Agreement or the terms and conditions hereof or transactions contemplated hereby without first consulting with the other party, and considering their reasonable requests in good faith. Nothing in the section prevents a party from making any SEC filing in any form the party reasonably believes is required by law including the Exchange Act and the Securities Act..
(b) Seller acknowledges and agrees that the protection of the Confidential Information of the cryptocurrency mining facility is necessary to protect and preserve the value of the Property. Therefore, Seller hereby agrees for a period of three (3) years after the Closing not to disclose to any unauthorized Persons or use for their own account or for the benefit of any third party any Confidential Information, whether or not such information is embodied in
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writing or other physical form, unless and to the extent that the Confidential Information loses its status as Confidential Information other than as a result of the fault of Seller or the fault of any other Person bound by a duty of confidentiality to Purchaser or Seller. Seller agrees to deliver to Purchaser at the Closing, and at any other time Purchaser may request, all electronic files, documents and other materials that contain any Confidential Information and any other Confidential Information that Seller may then possess or have under its control. Upon Purchaser’s request, Seller will permanently delete or destroy, and/or confirm the permanent deletion or destruction of, any Confidential Information, except that Seller may retain a copy of Confidential Information solely as necessary for archival purposes to establish its rights and obligations under this Agreement or to investigate and defend any claims that may relate to pre-Closing periods.
“Affiliate” with respect to any Person, means any other Person directly or indirectly controlling,
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controlled by, or under common control with such Person. “Control” with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, including the power to direct the disposition of assets in a trust or similar relationship.
“Assigned Contracts” means the contracts set out in Schedule 1.1.
“Benefit Plans” means all employee benefit plans as defined in Section 3(3) of ERISA and all other material employee benefit arrangements and obligations that are legally enforceable, to provide benefits, other than wages and salary, as compensation for services rendered to current or former directors, employees or agents of the GA Business or an ERISA Affiliate, including employment agreements, severance agreements, executive compensation arrangements, incentive programs or arrangements, sick leave and sick pay, vacation pay, severance pay policies, plant closing benefits, salary continuation for disability, consulting or other compensation arrangements, housing or other assistance, workers’ compensation, deferred compensation, bonus, equity or phantom equity programs, pension arrangements, retirement plans, profit sharing programs, hospitalization, medical insurance, life insurance, tuition reimbursement or scholarship programs, any plans providing benefits or payments in the event of a change of control, change in ownership, or sale of a substantial portion (including all or substantially all) of the assets of any business of Seller, other than Multiemployer Plans, maintained by Seller or an ERISA Affiliate or to which Seller or an ERISA Affiliate has contributed or is or was obligated to make payments or under which Seller or an ERISA Affiliate could have any liability, in each case with respect to any current or former employees, directors or agents of Seller or an ERISA Affiliate during the last six (6) years.
“Business Day” means any day other than a Saturday, Sunday or a day on which banks in Atlanta, Georgia are authorized or obligated by applicable Law to close or are otherwise generally closed.
“Closing Parent Shares” means 1,590175 shares of Parent Common Stock (subject to appropriate adjustment for any stock splits, stock combinations, stock dividends, recapitalizations or similar event occurring after the date hereof and prior to the Closing Date).
“Code” means the Internal Revenue Code of 1986.
“Confidential Information” means any and all data and information relating to the GA Business’ cryptocurrency mining facility, its activities, business, or customers that (i) was disclosed to Seller or of which Seller became aware as a consequence of its ownership of, management or, or other involvement with the GA Business; (ii) has value to the GA Business itself; and (iii) is not generally known outside of Seller. “Confidential Information” includes the following types of information regarding, related to, or concerning the cryptocurrency mining facility: trade secrets; product lists and specifications; data; know how; formulae; compositions; processes; designs; sketches; graphs; drawings; samples; inventions and ideas; past, current and planned research and development; current and planned sales and marketing methods and processes; loyalty program information; customer lists, current and anticipated customer requirements; price lists and pricing policies; market studies (including analysis of new markets and locations); business plans; improvements;
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information and competitive strategies of Sellers; historical financial statements; financial projections and budgets; historical and projected sales; capital spending budgets and plans; the names and backgrounds of key personnel, contractors, agents, suppliers and potential suppliers; personnel training and related techniques and materials; purchasing methods and related techniques; information regarding competitors; and any and all notes, analysis, compilations, studies, summaries and other material prepared by or for Sellers containing or based, in whole or in part, upon any information included in the foregoing. “Confidential Information” also includes combinations of information or materials which individually may be generally known outside of the Seller, but for which the nature, method, or procedure for combining such information or materials is not generally known outside of Seller. In addition to data and information relating to the cryptocurrency mining facility, “Confidential Information” also includes any and all data and information relating to or concerning a third party that otherwise meets the definition set forth above, that was provided or made available to Seller by such third party, and that the Seller has a duty or obligation to keep confidential. This definition does not limit any definition of “confidential information” or any equivalent term under state or federal law. “Confidential Information” does not include information that (i) has become generally available to the public by the act of one who has the right to disclose such information without violating any right or privilege of Purchaser, the cryptocurrency mining facility, and (ii) that is otherwise in the public domain or generally known in the car washing industry other than by violation of any confidentiality agreement.
“Earn-out Share Number” means means 1,100,890 shares of Parent Common Stock (subject to appropriate adjustment for any stock splits, stock combinations, stock dividends, recapitalizations or similar event occurring after the date hereof and prior to the Closing Date).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means any corporation or other business entity that is included in a controlled group of corporations within which Seller are also included, as provided in Section 414(b) of the Code; or which is a trade or business under common control with Sellers, as provided in Section 414(c) of the Code; or which constitutes a member of an affiliated service group within which Sellers are also included, as provided in Section 414(m) of the Code.
“Exchange Act” means the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder.
“Financial Statements” has the meaning given to such term in Section 13.5.
“Fraud” whether capitalized or lowercase, means as finally determined by a court of competent jurisdiction, an actual, intentional and knowing common law fraud (and not a constructive fraud or negligent misrepresentation or omission) by Seller (with respect to the making of the representations and warranties set forth in Section 13 of this Agreement or any certificate delivered pursuant to this Agreement) or Purchaser or Parent (with respect to the making of the representations and warranties set forth in Section 14 of this Agreement or any certificate delivered pursuant to this Agreement).
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“GA Business” means the cryptocurrency mining and co-location hosting operations and business conducted by MIG, Luna and their Affiliates solely on the Land and solely using the Property and the mining equipment being sold pursuant to the ESPA.
“GAAP” means United States generally accepted accounting principles in effect from time to time.
“Governmental Authorities” means all agencies, authorities, bodies, boards, commissions, courts, instrumentalities, legislatures and offices of any nature whatsoever of any government, quasi-governmental unit or political subdivision, whether foreign, federal, state, county, district, municipality, city or otherwise.
“Indebtedness” means at a particular time, without duplication, (a) any indebtedness for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money, (b) any indebtedness evidenced by any note, bond, debenture or other debt security, (c) any indebtedness for the deferred purchase price of properties or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise (other than trade payables and other current liabilities incurred in the ordinary course of business which are not more than thirty (30) days past due based on their invoice date), (d) any commitment by which a Person assures a creditor against loss (including contingent reimbursement obligations with respect to letters of credit), (e) any indebtedness guaranteed in any manner by a Person (including guarantees in the form of an agreement to repurchase or reimburse), (f) any obligations under capitalized leases with respect to which a Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or with respect to which obligations a Person assures a creditor against loss, (g) any indebtedness secured by a Lien on a Person’s assets, and (h) any accrued interest, penalties or prepayment fees related to the foregoing.
“Law” or “Laws” means any federal, state, foreign or local statute, law, ordinance, regulation, rule, code, Order, other requirement or rule of law (including common law).
“Lien” means any mortgage, deed to secure debt, deed of trust, or other similar financing instrument, lien (including mechanics, warehousemen, laborers and landlords liens), claim, pledge, charge, community property interest, equitable interest, right of way, easement, encroachment, security interest, preemptive right, right of first refusal or similar restriction or right, option, judgment, title defect or encumbrance.
“Knowledge” means when referencing the knowledge of Seller, means the actual knowledge of a particular fact or other matter being possessed as of the pertinent date by James Manning or Liam Wilson after reasonable investigation.
“Non-Land Leases” means the non-land leases set out in Schedule 1.1.
“Parent Common Stock” means the common stock of Parent, par value $0.001 per share.
“Permitted Lien” means (a) Liens for Taxes not yet due and payable, (b) statutory Liens of landlords, (c) Liens of carriers, warehousemen, mechanics, materialmen and repairmen incurred in the ordinary course of business, and (d) Liens on goods in transit incurred pursuant to documentary letters of credit, in each case arising in the ordinary course of business.
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“Person” means an individual, corporation, partnership, limited partnership, limited liability company, limited liability partnership, syndicate, trust, association, entity or government or political subdivision, agency or instrumentality of a government.
“Personal Data” means any data that identifies or is capable of identifying an individual, or is otherwise defined as personal information, personal data, sensitive personal data, personal identifiable information, personal health information, non-public personal information or similar terms under applicable Laws.
“Representatives” means, with respect to any party to this Agreement, such party’s Affiliates and its and their respective directors, managers, officers, employees, attorneys, accountants, representatives, and other agents.
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933 and the rules and regulations promulgated thereunder.
“Seller MAE” means any event, effect, circumstance, change, occurrence, fact or development that is materially adverse to the business or financial condition of the GA Business or the consummation of the transactions contemplated by this Agreement, in each case taken as a whole; provided, however, that the foregoing will not include any event, effect, circumstance, change, occurrence, fact or development resulting from or relating to (i) general business or economic conditions, (ii) national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States or any of its territories, possessions or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, (iii) financial, banking or securities markets in general, including any disruption thereof and any decline in the price of any security or any market index or any change in prevailing interest rates; (iv) any action required or permitted by this Agreement or any action taken (or omitted to be taken) with the written consent of or at the written request of Purchaser; (v) any matter of which Purchaser is aware on the date hereof; (vii) the announcement, pendency or completion of the transactions contemplated by this Agreement, including losses or threatened losses of employees, customers, suppliers, distributors or others having relationships with the Company; (ix) any failure by the Company to meet any internal or published projections, forecasts or revenue or earnings predictions; (x) any epidemics, pandemics, disease outbreaks, public health emergencies, or other force majeure events, or (xi) the price or value of Bitcoin.
“Taxes” means: (a) any and all taxes, fees, levies, duties, tariffs, imposts and other charges of any kind, imposed by any Governmental Authority or taxing authority, including taxes or other charges on, measured by, or with respect to income, franchise, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added or gains taxes; license, registration and documentation fees; and customers’ duties, tariffs and similar charges; (b) any liability for the
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payment of any amounts of the type described in (a) as a result of being a member of an affiliated, combined, consolidated or unitary group for any taxable period; (c) any liability for the payment of amounts of the type described in (a) or (b) as a result of being a transferee of, or a successor in interest to, any Person or as a result of an express or implied obligation to indemnify any Person; and (d) any and all interest, penalties, additions to tax and additional amounts imposed in connection with or with respect to any amounts described in (a), (b) or (c).
“Tax Returns” means any return, report, statement, form or other documentation (including any additional or supporting material and any amendments or supplements) filed or maintained, or required to be filed or maintained, with respect to or in connection with the calculation, determination, assessment or collection of any Taxes.
“Transaction Document(s)” means, collectively, this Agreement and each of the other agreements and instruments to be executed and delivered by all or some of the Parties in connection with the consummation of the Acquisition, including, without limitation, the Lease Assignment and Assumption (including Development Authority consent), any other bills of sale/assignment and assumption agreements utilized to effectuate the Closing, General Assignment and Assumption, Colocation Agreement, Assignment and Assumption of CEPS, the Note, the Security Agreement, and the EPSA.
“WARN Act” means the Worker Adjustment and Retraining Notification Act.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have duly signed, sealed, and delivered this Agreement on the dates set forth opposite their signatures.
Dated as to Purchaser: September 8, 2022
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PURCHASER:
CSRE PROPERTIES SANDERSVILLE, LLC, a Georgia limited liability company
By: CSRE Property Management Company, LLC, a Georgia limited liability company, its Manager
By: CleanSpark, Inc., a Nevada corporation, its Manager
By: /s/ Zachary K. Bradford Zachary K. Bradford, President
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| PARENT:
CLEANSPARK, INC. a Nevada corporation
By: /s/ Zachary K. Bradford Name: Zachary K. Bradford Title: President
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Dated as to Seller: September 8, 2022
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SELLER:
LUNA SQUARES, LLC (f/k/a Innovative Property Management, LLC), a Delaware limited liability company
By: /s/ James Manning Name: James Manning Title: ____________________
MAWSON INFRASTRUCTURE GROUP, INC., a Delaware corporation
By: /s/ James Manning Name: James Manning Title: ____________________
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