# EDGAR Filing Document

**Accession Number:** 0000064463
**File Stem:** 0001493152-23-010333
**Filing Date:** 2023-3
**Character Count:** 1207978
**Document Hash:** 5f76ef29675d99cff139c2ee999c3874
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001493152-23-010333.hdr.sgml**: 20230331

**ACCESSION NUMBER**: 0001493152-23-010333

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 124

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230331

**DATE AS OF CHANGE**: 20230331

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Soluna Holdings, Inc
- **CENTRAL INDEX KEY:** 0000064463
- **STANDARD INDUSTRIAL CLASSIFICATION:** FINANCE SERVICES [6199]
- **IRS NUMBER:** 141462255
- **STATE OF INCORPORATION:** NV
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-40261
- **FILM NUMBER:** 23788346

**BUSINESS ADDRESS:**
- **STREET 1:** 325 WASHINGTON AVENUE EXTENSION
- **CITY:** ALBANY
- **STATE:** NY
- **ZIP:** 12205
- **BUSINESS PHONE:** 518-218-2500

**MAIL ADDRESS:**
- **STREET 1:** 325 WASHINGTON AVENUE EXTENSION
- **CITY:** ALBANY
- **STATE:** NY
- **ZIP:** 12205

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MECHANICAL TECHNOLOGY INC
- **DATE OF NAME CHANGE:** 19920703

?xml version="1.0" encoding="utf-8"?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-K**

---

| | |
|:---|:---|
| ☒ | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
| <br> **For the fiscal year ended December 31, 2022** | <br> **For the fiscal year ended December 31, 2022** |
| **OR** | **OR** |
| ☐ | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
| **For the transition period from** _____to _____ | **For the transition period from** _____to _____ |

---

**Commission File Number: 001-40261**

**Soluna Holdings, Inc.**

**(Exact name of registrant as specified in its charter)**

---

| | |
|:---|:---|
| **<u>Nevada</u>** | **<u>14-1462255</u>** |
| **State or other jurisdiction** | **(I.R.S. Employer** |
| **of incorporation or organization** | **Identification No.)** |

---

---

| |
|:---|
| **325 Washington Avenue Extension, Albany, New York 12205** |
| **(Address of principal executive offices)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Zip Code)** |

---

**(518) 218-2550** 

**(Registrant's telephone number, including area code)**

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading symbol(s)** | **Name of each exchange on which registered** |
| Common Stock, par value $0.001 per share | SLNH | The Nasdaq Stock Market LLC |
| 9.0% Series A Cumulative Perpetual Preferred Stock, par value $0.001 per share | SLNHP | The Nasdaq Stock Market LLC |

---

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ <br> Non-accelerated filer ☒ Smaller reporting company ☒ <br> Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 30, 2022 (based on the closing price of $4.07 per share on the Nasdaq Stock Market LLC for that date) was $39,047,018.

As of March 28, 2023, the Registrant had 24,676,680 shares of common stock outstanding.

Documents incorporated by reference: Portions of the registrant's Proxy Statement for its 2023 Annual Meeting of Shareholders are incorporated by reference into Part III of this Form 10-K.

**INDEX TO FORM 10-K**

---

| | | |
|:---|:---|:---|
|  |  | Page |
| **[PART I](#akh_001)** | **[PART I](#akh_001)** | **[PART I](#akh_001)** |
| Item 1. | [Business](#akh_002) | 4 |
| Item 1A. | [Risk Factors](#akh_003) | 12 |
| Item 1B. | [Unresolved Staff Comments](#akh_004) | 29 |
| Item 2. | [Properties](#akh_005) | 29 |
| Item 3. | [Legal Proceedings](#akh_006) | 29 |
| Item 4. | [Mine Safety Disclosures](#akh_007) | 29 |
| **[PART II](#akh_008)** | **[PART II](#akh_008)** | **[PART II](#akh_008)** |
| Item 5. | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#akh_009) | 30 |
| Item 6. | [Selected Financial Data](#akh_010) | 31 |
| Item 7. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#akh_011) | 31 |
| Item 7A. | [Quantitative and Qualitative Disclosures About Market Risk](#akh_012) | 44 |
| Item 8. | [Financial Statements and Supplementary Data](#akh_013) | 44 |
| Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#akh_014) | 44 |
| Item 9A. | [Controls and Procedures](#akh_015) | 44 |
| Item 9B. | [Other Information](#akh_016) | 45 |
| Item 9C. | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#akh_017) | 45 |
| **[PART III](#akh_018)** | **[PART III](#akh_018)** | **[PART III](#akh_018)** |
| Item 10. | [Directors, Executive Officers and Corporate Governance](#akh_019) | 46 |
| Item 11. | [Executive Compensation](#akh_020) | 46 |
| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#akh_021) | 46 |
| Item 13. | [Certain Relationships and Related Transactions, and Director Independence](#akh_022) | 46 |
| Item 14. | [Principal Accounting Fees and Services](#akh_023) | 46 |
| **[PART IV](#akh_024)** | **[PART IV](#akh_024)** | **[PART IV](#akh_024)** |
| Item 15. | [Exhibits, Financial Statement Schedules](#akh_025) | 47 |
| Item 16. | [Form 10-K Summary](#akh_026) | 52 |

---

**Cautionary Note Regarding Forward-Looking Statements**

This Annual Report on Form 10-K, including the discussion in this section*,* contains forward-looking statements that involve risks and uncertainties. Any statements herein that are not statements of historical fact may be forward-looking statements. When we use the words "anticipate," "estimate," "plans," "projects," "continuing," "ongoing," "expects," "management believes," "we believe," "we intend," "should," "could," "may," "will," and similar words or phrases, we are identifying forward-looking statements which may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. In making these forward-looking statements, the Company has assumed that the current market will continue and grow and that the risks listed below will not adversely impact the Company.

By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predicted outcomes may not occur or may be delayed. Forward-looking statements may relate to future financial conditions, results of operations, plans, objectives, performance or business developments. These statements speak only as of the date they are made and are based on information currently available and on the then current expectations and assumptions concerning future events, which are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from that which was expressed or implied by such forward-looking statements, including, but not limited to, risks and uncertainties related to:

● the availability of financing opportunities, risks associated with economic conditions, dependence on management and conflicts of interest;

● the ability to service debt obligations and maintain flexibility in respect of debt covenants;

● economic dependence on regulated terms of service and electricity rates;

● the speculative and competitive nature of the technology sector;

● ability of the Company to attract and retain hosted customers for its hosting operations ;

● dependency in continued growth in blockchain and cryptocurrency usage;

● lawsuits and other legal proceedings and challenges;

● conflict of interests with directors and management;

● government regulations;

● The ability of the Company to construct and complete the anticipated expansion of our data centers; and

● other factors beyond the Company's control.

Other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information include, among others, risks relating to: the Company's limited operating history; future capital needs and uncertainty of additional financing; share price fluctuations; the need for the Company to manage its planned growth and expansion; cybersecurity threats and hacking; possibility of cessation of monetization of cryptocurrencies; limited history of de-centralized financial system; technological obsolescence and difficulty in obtaining hardware; price volatility of cryptocurrencies; the May 2020 and any future Bitcoin halving events cryptocurrency network difficulty and impact of increased global computing power; economic dependence on regulated terms of service and electricity rates risks; future profits/losses and production revenues/expenses; cryptocurrency exchanges are new and mostly unregulated; discretion regarding by the Company of available funds; political and regulatory risk; permits and licenses; server failures; global financial conditions; tax consequences; environmental regulations; environmental liability; erroneous transactions and human error; the continued development of existing and planned facilities; risks of non-availability of insurance; competition; reliance on key personnel; credit risk; uncertainty of widespread use of cryptocurrency; interest rate risk; fluctuations in currency exchange rates; controlling shareholder risk; and COVID-19 pandemic risk. Particular factors which could impact future results of the business of the Company include but are not limited to: the construction and operation of blockchain infrastructure may not occur as currently planned, or at all; expansion may not materialize as currently anticipated, or at all; the digital currency market; the ability to successfully mine digital currency; revenue may not increase as currently anticipated, or at all; it may not be possible to profitably liquidate the current digital currency inventory, or at all; a decline in digital currency prices may have a significant negative impact on operations; the volatility of digital currency prices; the anticipated sustainability of the renewable energy on which the Company depends at economical prices for the purposes of cryptocurrency mining; the ability to complete current and future financings; any regulations or laws that will prevent the Company from operating its business; historical prices of digital currencies and the ability to mine digital currencies that will be consistent with historical prices.

Except as may be required by applicable law, we do not undertake or intend to update or revise our forward-looking statements and we assume no obligation to update any forward-looking statements contained in this registration statement. Thus, assumptions should not be made that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements.

**PART I**

**Item 1: Business**

*Unless the context requires otherwise in this Annual Report on Form 10-K ("Annual Report"), the terms "SHI," the "Company," "we," "us," and "our" refer to Soluna Holdings, Inc. together with its consolidated subsidiaries, "SCI" refers to Soluna Computing, Inc , formerly known as EcoChain, Inc.. Other trademarks, trade names, and service marks used in this Annual Report on Form 10-K are the property of their respective owners.*

**Overview and Recent Developments** 

Soluna Holdings, Inc. ("SHI", "Company", "our"), formerly known as Mechanical Technology, Incorporated was incorporated in Nevada on March 24, 2021, and is the successor to Mechanical Technology, Inc., which was incorporated in the State of New York in 1961, as a result of a merger which became effective on March 29, 2021, and is headquartered in Albany, New York. Effective November 2, 2021, the Company changed its name from "Mechanical Technology, Incorporated" (or "MTI") to "Soluna Holdings, Inc."

Until the Sale (as defined below), we also operated though our wholly-owned subsidiary, MTI Instruments, an instruments business engaged in the design, manufacture and sale of vibration measurement and system balancing solutions, precision linear displacement sensors, instruments and system solutions, and wafer inspection tools. MTI Instruments was incorporated in New York on March 8, 2000. MTI Instruments' products consisted of engine vibration analysis systems for both military and commercial aircraft and electronic gauging instruments for position, displacement and vibration application within the industrial manufacturing markets, as well as in the research, design and process development markets. These systems, tools and solutions were developed for markets and applications that require consistent operation of complex machinery and the precise measurements and control of products, processes, and the development and implementation of automated manufacturing and assembly. On December 17, 2021, we announced that we had entered into a non-binding letter of intent with a potential buyer (the "Buyer") regarding the potential sale of MTI Instruments (the "LOI") to an unrelated third party. Pursuant to the LOI, the Buyer would acquire 100% of the issued and outstanding common stock of MTI Instruments. As a result of the foregoing, the MTI Instruments business was reported as discontinued operations in the consolidated financial statements as of December 31, 2021 and prior periods within our Annual Report on Form 10-K for the year ended December 31, 2021, as was filed with the SEC on March 31, 2022, as well as in these consolidated financial statements for the year ended December 31, 2022 (the "Annual Report"). On April 11, 2022, we consummated the sale of MTI Instruments, ('the Sale")., MTI Instruments ceased to be our wholly-owned subsidiary, and, as a result, we have exited the instruments business.

On April 11, 2022, SHI entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") with NKX Acquiror, Inc. (the "Purchaser"), pursuant to which the Company sold on such date all of the issued and outstanding shares of capital stock of its wholly-owned subsidiary, MTI Instruments, for approximately $9.4 million in cash, subject to certain adjustments as set forth in the Stock Purchase Agreement (the "Sale"). The consideration paid by the Purchaser to the Company was based on an aggregate enterprise value of approximately $10.75 million. The Company recognized a gain on the sale of approximately $7.8 million.

***<u>Project Edith</u>***

The Edith project is a project permitted to consume up to 3.3 MegaWatts ("MW") located in Wenatchee, Washington. The data center was acquired from the estate of the GigaWatt bankruptcy in May 2020. The project operates in a district with increasing power rates. At the time of Soluna's acquisition (May 2020), the peak power rate, which does not include all charges to the facility was at 2.68 cents kWh, forecasting to increase 3.62 cents kWh by January 2025.

In the first quarter of 2022, the ETH ("Ethereum") foundation made it clear that the merge to proof-of-stake was happening and graphics processing unit ("GPU") mining was going to be challenged going forward. In the early summer of 2022, Soluna began to seek a buyer for the assets. Soluna ultimately sold the GPU mining assets and other mining equipment in September 2022 for $790 thousand. Soluna has committed to providing certain facilities contracts at cost plus a markup to facilitate the continued operations for the mining assets for the new ownership.

***<u>Project Marie</u>***

On December 30, 2021, Soluna MC Borrowing 2021-1 LLC (the "Borrower"), an indirect wholly owned subsidiary of the Company entered into a Master Equipment Finance Agreement (the "MEFA") with NYDIG ABL LLC ("NYDIG") as lender, servicer and collateral agent (the "NYDIG facility"). The Master Agreement outlined the framework for a financing up to approximately $14.4 million in aggregate equipment financing.

In January 2022, Soluna began investing capital into Project Marie to upgrade the facility to support 20 MW of power consumption and create power efficiencies in the main leased building. These upgrades were completed in February of 2022. In January, Soluna completed the roll out of legacy hosting customers at the facility to be replaced with proprietary mining equipment.

In March and April, the facility experienced several unplanned outages due to issues with electrical infrastructure owned by CC Metals and Alloys, LLC ("CCMA"). Despite these setbacks, the facility was able to recover and continue to run at a steady hashrate throughout the course of the year. When the Bitcoin downturn hit, the Marie facility took initiative to ensure maximum efficiency of the miner inventory and also took action to reduce site-level expenses.

Project Marie power was impacted by increased Financial Conduit Authority ("FCA") changes in late summer which were at levels not seen in many years. To further reduce risk to contribution margin, the company began contract negotiations with the 10 MW hosting customer at the site whose renewal was due in September. These negotiations resulted in a more favorable fee structure that positioned the company to better navigate the FCA volatility and the broader Bitcoin economics.

With the decline in the price of Bitcoin that occurred during 2022, by September 2022, the cashflows from Marie became inadequate to fully service the NYDIG loan. After discussions with NYDIG, two separate monthly waivers of payments for September and October 2022 were agreed. By November 2022, however, the Borrower failed to make its payment, and subsequently, on December 20, 2022, the Borrower received a Notice of Acceleration and Repossession (the "NYDIG Notice") from NYDIG with respect to the MEFA, by and between Borrower and NYDIG. The obligations of Borrower under the MEFA and reflected in the NYDIG Notice are ring-fenced to Borrower and its direct parent company, Soluna MC LLC. The Company is not a party to any guaranty, collateral agreement or other support agreement with or for the benefit of NYDIG. Borrower had entered into a dialogue with NYDIG to resolve the matters set forth in the NYDIG Notice.

The NYDIG Notice states that (a) Borrower failed to observe or perform certain covenants, conditions or agreements contained in the MEFA and such failure continued unremedied for a period of ten days after Borrower's knowledge of such breach, which resulted in an event of default under the MEFA, and (b) Borrower defaulted under the guaranty, collateral agreement, or other support agreement, which resulted in an event of default under the MEFA. In addition, the NYDIG Notice states that Borrower failed to pay certain payments of principal and interest under the MEFA when due, which failure also constituted an event of default under the MEFA. As a result of the foregoing events of default, and pursuant to the MEFA, NYDIG (x) declared the principal amount of all loans due and owing under the MEFA and all accompanying Loan Documents (as defined in the MEFA) to be due and immediately payable, (y) imposed a default rate of interest on any outstanding principal amount of each loan (together with all then unpaid interest accruing thereon) and all other obligations under the MEFA and the Loan Documents, and (z) demanded the return of all equipment subject to the MEFA and the Loan Documents.

On February 23, 2023, NYDIG proceeded to foreclose on all of the collateral securing the MEFA, which resulted in a reportable disposition of all of the Company's mining assets at the site and certain of the operating assets of Project Marie. Additionally, NDYIG has stated its intention to pursue SCI, the parent company of Guarantor, under a piercing of the corporate veil claim relating to Defendants' debts and liabilities under the loan documents. SCI denies any such liability and has filed a complaint for a declaratory judgment against NYDIG in the Eighth Judicial District Court in Clark County, Nevada on March 16, 2023 seeking a declaratory judgment as to such matter. In a related development, also on February 23, 2023, the Borrower received a notice of termination of the Management and Hosting Services Agreement with CC Metals and Alloys, LLC. As a result of this action and certain other characteristics of the facility, the Company elected to shut down the Marie facility, and has impaired certain property, plant, and equipment assets that were at the Marie facility. The Company believes it will maximize its profits and return on assets by concentrating its personnel and capital on its Dorothy Facility.

***<u>Project Sophie</u>***

By April 8, 2022, older machines (Bitmain S9s) at Sophie were replaced with newer models growing the hashrate and a power usage effectiveness and consuming over 20 MW of energy. In May of 2022, the Project Sophie team moved into the completed offices, added a new asphalt road, and upgraded the network infrastructure on the site. In June and July of 2022, the site exceeded previous mining hashrates by installing new Bitmain S19s and replacing S9 machines. Project Sophie has also hosted a series of curtailment and MaestroOS control system, our proprietary load monitoring management system, demonstrations with leading renewable energy companies and capital providers, further enhancing the site's performance.

***<u>Project Dorothy</u>***

The Dorothy Project is a 100 MW Soluna modular data center co-located at the Briscoe Wind Farm in Silverton, Texas. It was acquired as part of the merger with Soluna Callisto in October 2021, discussed in further details on Footnote 5 on the consolidated financial statements. The initial 50MW phase of the project includes 44 modular data center buildings in two sub-phases, Dorothy 1A and Dorothy 1B. Each of these phases is 25 MW each. Dorothy is the second modular data center built using Soluna's proprietary design and software. The facility is designed to consume the wasted electricity from the wind farm and the grid. It incorporates learnings and enhancements from the Sophie project.

*Permitting and Construction:*

In March 2022, Soluna began site level construction via an early access agreement with the landowner and Briscoe Wind Farm, LLC., to place the concrete pad and erection of the site's main warehouse. In April of 2022, the procurement of internet service providers began. By May 2022, the company began erecting the prefabricated modular data center buildings and trenching for underground electrical conduits.

On June 15, 2022, the Electric Reliability Council of Texas ("<u>ERCOT</u>"), the Texas independent system operator, formed a new taskforce, Large Flexible Load Interconnection Taskforce ("LTLTF" of "LFL") to deal with the overwhelming increase in new load interconnection requests related to Bitcoin Mining. The new task force's charter focused on studying the systems impact of these data centers and to establish a new interim process for approval. The new process included the addition of new technical studies and modeling to ensure the reliability of the electrical system. Briscoe, Oncor and Soluna collaborated on completing the required technical studies throughout the summer and early fall of 2022.

On October 31, 2022, after the completion of required studies, the Briscoe Wind Farm submitted a revised Resource Asset Registration Forms ("RARF") to ERCOT requesting the addition of the Dorothy Project as a 100 MW behind-the-meter load and to initiate the modeling process. On December 8, 2022, the Briscoe/Soluna project was approved by the ERCOT modeling team. On December 19, 2022, all required studies were approved and the Dorothy Project received a "Met Planning" approval from ERCOT LFL.

While these ERCOT approvals were being obtained, through the summer and fall of 2022, Soluna continued the construction of Dorothy erecting more buildings, installing power infrastructure, completing the warehouse and office buildings, including ancillary HVAC and power. From September to December 2022, all mechanical and electrical construction was completed for Dorothy 1A. On October 15, 2022, Dorothy 1B's construction was officially paused. In March 2023, the data center's substation interconnection was completed, and Dorothy 1B's construction was resumed and the site's network and Supervisory Control and Data Acquisition systems were installed.

*Project-level Financing:*

On April 22, 2022, SCI signed definitive agreements with funds managed by Spring Lane Capital ("SLC") to provide a $35 million pool of capital for financing Soluna projects co-located with renewable energy projects. At least $12.5 million of the pool was earmarked for the Dorothy Project. In July 2022, Soluna began drawing down on the SLC capital to finance Dorothy construction and return capital to the Company for past funding. In exchange for SLC's contributions, the Company and Spring Lane were issued approximately 68% and 32% of the Class B Membership Interests in Soluna DVSL ComputeCo, LLC ("DVSL"). The Company consolidated the accounts of DVSL, a Variable Interest Entity ("VIE"), as of December 31, 2022.

On March 10, 2023, SCI completed the final tranche of a series of project-level agreements for $7.5 million of capital to fund the first 25 MW of the Dorothy Facility and corporate expenses from funds managed by SLC. This additional capital will be used to help complete the substation interconnection and the final stages of the Dorothy Facility, and corporate operations of Soluna. SLC has been a strategic partner for Soluna at the project and corporate levels of the business since 2022. In this series of transactions, SLC has increased its stake in DVSL from approximately 32% to 85% and has in turn reduced SCI's ownership from 68% to 15%. After SLC realizes an 18% Internal Rate of Return hurdle on its investments, Soluna retains the right to 50% of the profits on Soluna DVSL ComputeCo.

The second 25 MW being developed as part of the Dorothy Facility, the ownership of which is held within Soluna DV ComputeCo, LLC ("DV"), remains indirectly wholly owned by the Company.

*Operating Definitive Agreements with Counter Parties:* 

Throughout 2022 SCI's corporate development continued to negotiate the definitive documents with Golden Spread Electric Cooperative, Inc., a Texas cooperative corporation ("GSEC") and Lighthouse Electric Cooperative, Inc., a Texas cooperative corporation ("LHEC"), Oncor Electric Delivery, LLC ("Oncor") and Briscoe Wind Farm, LLC's various sponsors and financing parties ("Briscoe"). These agreements were finalized in March 2023 (see below).

On March 2, 2023, Soluna DV Services, LLC, a Nevada limited liability company ("<u>ServeCo</u>") and an indirect wholly-owned subsidiary of the Company, entered into a series of agreements with Briscoe, (b) GSEC, and (c) LHEC. All the agreements were effective as of February 24, 2023 (the "<u>Effective Date</u>"). The Company is developing a modular data center in phases (the "<u>Dorothy Facility</u>"). The two phases of the Dorothy Facility will have a peak demand of 50 megawatts, and if, upon mutual agreement, all four phases are completed, the data center will have an estimated peak demand of 150 megawatts. The Dorothy Facility will be located next to, and supplied energy from, Briscoe's 150-megawatt wind farm located at or near Briscoe and Floyd Counties, Texas (the "<u>Briscoe Wind Farm</u>"). Under the agreements, LHEC and GSEC will supply the Dorothy Facility with energy from the Briscoe Wind Farm and the ERCOT market.

ServeCo and LHEC entered into an Agreement for Electric Service to Soluna DV Services, LLC (the "<u>Retail Agreement</u>") for resale of energy supplied from the Briscoe Wind Farm and the ERCOT market delivered by GSEC for service to the energy load of the Dorothy Facility. As noted above, GSEC has by separate agreement arranged to purchase power at wholesale from Briscoe or to deliver and purchase power from the ERCOT market to serve LHEC with electric power and energy for resale to ServeCo for service to the Dorothy Facility. The initial term of the Retail Agreement is five years, with up to five extension terms of one year each unless terminated by LHEC or ServeCo.

ServeCo and Briscoe also entered into a Cooperation Agreement (the "<u>Cooperation Agreement</u>"), pursuant to which Briscoe and ServeCo agreed to certain rights, obligations, and restrictions with respect to the real property of the Dorothy Facility and the construction, interconnection, permitting, operation, maintenance, removal, and decommissioning of the Dorothy Facility and applicable credit support. Soluna DV ComputeCo, LLC, a Delaware limited liability company and an indirect wholly-owned subsidiary of the Company and Soluna DVSL ComputeCo, LLC, a Delaware limited liability company and an indirect wholly-owned subsidiary of the Company became parties to the Cooperation Agreement by each entering into a Joinder Agreement on the Effective Date. Unless terminated sooner in accordance with its terms, the term of the Cooperation Agreement is from the Effective Date until the expiration or termination of the Power Purchase Agreement, by and between Briscoe and GSEC, dated as of the Effective Date (the "<u>PPA</u>").

ServeCo, Briscoe, LHEC, and GSEC also entered into a Performance and Net Energy Security Agreement (the "<u>PSA</u>"), pursuant to which ServeCo will provide certain credit support to LHEC in connection with its obligations under the Retail Agreement and the other transaction agreements. The PSA is effective on the Effective Date and will remain in effect for 18 months following the later of the termination of the Retail Agreement or the termination of the PPA.

On the Effective Date, ServeCo and Alice Fay Grabbe ("<u>Owner</u>") entered into a Lease Agreement (the "<u>Lease</u>") to lease certain real property located in Briscoe County, Texas for the Dorothy Facility. Unless terminated sooner in accordance with its terms, the initial term of the Lease is five years. The initial term of the Lease will automatically extend for five additional one-year periods, unless terminated by ServeCo or Owner.

***<u>Company Organization</u>***

Our website is at <u>http://www.solunacomputing.com</u>. Information contained on our website does not constitute part of and is not incorporated into this Annual Report.

The corporate organizational structure as of December 31, 2022, of SHI appears below.

![](form10-k_001.jpg)

Effective January 1, 2023, SLC increased its stake in Soluna DVSL ComputeCo from approximately 32% to 85% and has in turn reduced SCI's ownership from 68% to 15%.

***<u>Notice of Potential Delisting</u>***

On December 21, 2022, the Company received a letter (the "Nasdaq Notice") from the Listing Qualifications Staff of The NASDAQ Stock Market LLC ("Nasdaq") indicating that, based upon the closing bid price of the Company's common stock (the "Common Stock") for the last 30 consecutive business days, the Common Stock no longer meets the requirement to maintain a minimum closing bid price of $1.00 per share, as set forth in Nasdaq Listing Rule 5550(a)(2). The Notice has no immediate effect on the listing of the Company's Common Stock on the Nasdaq Capital Market.

In accordance with NASDAQ Listing Rule 5810(c)(3)(A), the Company has a grace period of 180 calendar days, or until June 21, 2023, to regain compliance with the minimum closing bid price requirement for continued listing. In order to regain compliance, the minimum closing bid price per share of the Company's Common Stock must be at least $1.00 for a minimum of ten consecutive business days.

***<u>Results of Special Meeting of Stockholders on March 10, 202</u>****<u>3</u>*

The Company held the Special Meeting of stockholders on March 10, 2023, in which the following items were approved by the Company's stockholders:

● **Proposal No. 1**: The Company's stockholders approved (a) the issuance of shares of the Company's common stock to certain investors pursuant to a Securities Purchase Agreement dated December 5, 2022 entered into among the Company and such investors (the "December 2022 Purchase Agreement"), (b) the issuance of shares of the Company's common stock upon the exercise of warrants issued to such investors pursuant to the December 2022 Purchase Agreement, and (c) the issuance of additional shares of the Company's common stock, and the issuance of shares of the Company's common stock upon the exercise of additional related warrants, upon the exercise of options granted to such investors under the December 2022 Purchase Agreement, in each case as required by the terms of the December 2022 Purchase Agreement and Nasdaq Listing Rules.

● **Proposal No. 2**: The Company's stockholders approved (a) adjustments to the conversion price of outstanding convertible promissory notes, (b) adjustments to the exercise price of outstanding warrants to purchase the Company's common stock held by the holders of outstanding convertible promissory notes, (c) the issuance of shares of the Company's common stock upon the conversion of such convertible promissory notes, and (d) the issuance of shares of the Company's common stock upon the exercise of such warrants to purchase the Company's common stock, in each case as required by the terms of the December 2022 Purchase Agreement and Nasdaq Listing Rules.

● **Proposal No. 3**: The Company's stockholders approved the Soluna Holdings, Inc. Third Amended and Restated 2021 Stock Incentive Plan, (the "Third Amended and Restated 2021 Plan"), which amended and restated the Soluna Holdings, Inc. Second Amended and Restated 2021 Stock Incentive Plan, to, among other things, increase the number of shares of the Company's common stock reserved for issuance thereunder, on a quarterly basis, to 18.75% of the shares of the Company's common stock outstanding as of the first trading day of each quarter, and allow the Company to grant awards of shares of the Company's 9.0% Series A Cumulative Perpetual Preferred Stock (with and without restrictions); and

● **Proposal No. 4**: The Company's stockholders approved the Soluna Holdings, Inc. 2023 Stock Incentive Plan, (the "2023 Plan"), which sets the number of shares of the Company's common stock reserved for issuance thereunder, on a quarterly basis, to 9.75% of the shares of the Company's common stock outstanding as of the first trading day of each quarter.

**<u>Business Segments</u>**

**Cryptocurrency Proprietary Mining Segment**

SCI engages in cryptocurrency mining by which transactions between cryptocurrency users are verified and added to the blockchain public ledger. Cryptocurrency mining also introduces new cryptocurrency coins into the existing circulating supply, facilitating a peer-to-peer decentralized network without the need for a third-party central authority.

***<u>Cryptocurrency Mining Revenue</u>***

SCI recognizes revenue when the related cryptocurrencies are converted to U.S. dollars through its accounts with Coinbase and Bittrex, cryptocurrency exchanges (i.e., a platform that facilitates the exchange of cryptocurrencies for other assets, such as conventional money or other digital currencies). SCI exchanges cryptocurrency to U.S. dollars through the Coinbase and Bittrex account daily. SCI primarily mines Bitcoin and in prior years and to a lesser degree, in 2022, mined Ethereum, Ethereum Classic LiteCoin, RavenCoin, Zcash, and Sia. The type of cryptocurrency mined is based specifically on the installed cryptocurrency miner, in each of the Company's data centers, as each miner can mine only one type of cryptocurrency at a time. The miners perform complex computations at a speed referred to as the "hash rate." SCI participates in mining pools where our miners' computations are combined with those of other miners owned by others to place blocks on the blockchain, which generates the relevant Proof of Work and related cryptocurrency reward. The mining pool operator uses software to track contributions to the pool made by all the miners and allocates the newly minted cryptocurrency to each participant in the pool based on their pro rata contributions. SCI monitors its contributions to each pool and the distribution of the relevant cryptocurrency to ensure that SCI receives the correct amount of cryptocurrency. The cryptocurrencies allocated to SCI are automatically issued to its Coinbase and Bittrex accounts either daily or based on reaching a threshold level of a mined coin as established by SCI with the pools. Certain coins, such as Sia and Zcash are converted to Bitcoin by the pool prior to being transferred to SCI's Coinbase and Bittrex accounts. Coinbase and Bittrex conversions to U.S. dollars are initiated daily by SCI. Coinbase and Bittrex converts the coins to U.S. dollars based on the coin price at the time of the transfer. The U.S. dollars are then transferred to SCI's bank account.

***<u>Cryptocurrency Data Hosting Services Segment</u>***

The Company has entered into customer hosting contracts whereby the Company provides electrical power and network connectivity to cryptocurrency mining customers, in exchange for a fixed rate per megawatt-hour ("MWh") ("Contract Capacity"), and a share of mining profits. The majority of the Company's hosting services were located at the Project Marie facility. The Company allocated approximately 10 MWs to hosted customers. The hosting fee is paid monthly in advance. The actual monthly amounts are calculated after the close of each month and reconciled to the monthly advance based on the clauses contained in the ASIC respective contracts. Monthly advanced payments and customer deposits are reflected as other liabilities. Customer contract security deposits are made at the time the contract is signed and held until the conclusion of the contract relationship. In August of 2022, the Company executed a change in the hosting contract at Project Marie, in which the Company moved to charging a flat fee per month, with the electricity charges then treated as a pass-through and in turn not recognized as revenue. The Company still receives a profit share component from this hosting contract. On February 23, 2023, the Borrower received a notice of termination of the Management and Hosting Services Agreement with CC Metals and Alloys, LLC. As a result of this action and certain other characteristics of the facility (see above), the Company elected to shut down the Marie facility. The Company expects future hosting contracts to have an electricity pass-through impact, operations overhead fee component, and profit share elements noted above.

*<u>Cryptocurrency Assets for both Mining and Hosting services</u>*

 

Soluna engages in the design, development and building of site locations that are employed to host certain cryptocurrency assets, known as miners. Soluna constructs and builds these data centers employing certain know how. These site location facilities contain certain buildings called modular data centers, electrical equipment including transformers, switch gear and busways, racking and other equipment.

Cryptocurrency assets, known as miners, consist of hardware and software that perform the computations needed to mine cryptocurrencies, as discussed under "Cryptocurrency Revenue" above, and as such are the source of the associated revenues generated by a cryptocurrency mine, including SCI's. SCI has several thousand miners in service, mostly Bitmains, that generate Bitcoin. For a number of reasons, including (i) that SCI purchases miners in the secondary market from a number of different sellers, and (ii) that the price fluctuates because of supply and demand, as well as changes in the price of the specific cryptocurrency that can be mined by the miner purchased, which in turn drives the cost of the miners, the cost of purchasing these assets fluctuates regularly.

**Bitcoin Mining Ecosystem and Competitive Landscape**

Bitcoin miners compete on a global basis and organize themselves in a wide range of structures from individuals using one or more systems to run mining operations to industrial-scale data centers with thousands of systems. The zero-sum, winner take-all approach results in an intense focus on innovation in hardware, software, facility design, and power procurement strategies. Miners may organize themselves into pools, which creates a more stable revenue stream aggregating their hashrate with other miners. The mining business is global and is not dominated by any particular individual or organization.

The Cambridge Bitcoin Electricity Consumption Index estimates that hashrate is distributed globally on the following basis (January - 2022):<sup>1</sup>

● United States - 37.8%

● China - 21.1%

● Kazakhstan - 13.2%

● Canada - 6.5%

● Russia - 4.7%

● All others - 16.7%

<sup>1</sup> <u>https://ccaf.io/cbeci/mining_map</u>

The Company differentiates its strategy in three principal ways:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Focus
 on Stranded Renewable Energy: We believe that our emphasis on using renewable energy sources
 for our mining operations, including stranded renewables, provides us with a long-term competitive
 advantage. Stranded renewables refer to clean energy resources that are underutilized due
 to their remote locations or grid constraints. By tapping into these stranded resources,
 we reduce bitcoin mining's environmental impact while taking advantage of the excess
 capacity that would otherwise go to waste. Also, leveraging sustainable power sources such
 as solar, wind, and hydroelectric allows us to benefit from the long-term secular cost advantages
 associated with these sources. As the demand for clean energy increases, there will be increases in technology improvements, government support, and other emerging technologies in which
will drive the cost of renewable
 energy production to decrease, ultimately lowering our operational expenses and
 allowing us to preserve our competitive differentiation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Operations
 in the United States: Our strategic decision to establish operations in the United States,
 particularly in Texas and Kentucky, allows us to capitalize on these region's relatively
 stable regulatory environments. The United States has a well-established legal framework
 that provides clearer guidance on cryptocurrency and blockchain technology compared to other
 jurisdictions. Additionally, both Texas and Kentucky have become a hub for cryptocurrency
 mining due to abundant and affordable energy resources, business-friendly regulations, and
 political support for the industry. By situating our operations in this region, we benefit
 from a more predictable regulatory regime, which minimizes potential disruptions to our business
 and enhances our competitive position.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Diversification
 of Revenue Streams: In addition to our core Bitcoin mining operations, we have expanded our
 business model to host other miners and, in the future, may expand into other various types
 of computing workloads, providing us with a more stable revenue mix. By offering our state-of-the-art
 infrastructure, renewable energy sources, and competitive pricing, we generate additional,
 more predictable income while promoting the use of clean energy within the mining industry. Furthermore,
 the Company is exploring opportunities to accommodate other high-performance computing
 needs, such as artificial intelligence, machine learning, and data analytics. This diversification
 strategy helps us mitigate the risks associated with the volatile nature of the cryptocurrency
 market and strengthens our competitive position in the broader technology landscape.

Notwithstanding these competitive advantages, we continue to face stiff competition from other cryptocurrency mining companies, some of which may have greater financial, technical, and operational resources. Our primary competitors are:

● Core Scientific, Inc.

● Marathon Digital Holdings, Inc.

● Riot Blockchain, Inc.

● CleanSpark Inc

● Cipher Mining, Inc.,

● Bitfarms Ltd

● HIVE Blockchain Technologies, Ltd.,

● Argo Blockchain PLC

● Hut 8 Mining Corp.

● Iris Energy

● Terawulf Inc

● Bit Digital Inc

● Digihost Technology Inc

● DMG Blockchain Solutions

● Applied Digital Corp.

● Stronghold Digital Mining

● Sphere 3dD Corp.

● Mawson Infrastructure Group

● Greenidge Generation

As the industry evolves, new entrants may emerge, and existing competitors may adopt new strategies or technologies that could potentially challenge our position. To stay competitive, we remain committed to continuously improving our mining efficiency, investing in advanced technologies, and closely monitoring regulatory developments to navigate the dynamic competitive landscape effectively.

**Intellectual Property**

The production of Bitcoin is governed by open source software and in addition relies upon internally developed software and design methodologies which it protects as trade secrets.

Soluna has filed eight provisional patent applications with the U.S. Patent and Trade Market Office. These patents pertain to the technologies related to the Modular Data Center (MDC) concept employed by the Company such as their modular architecture, cooling technology, simulations technology and overall technologies related to the control of the data center. There are also provisional patents regarding the variable power consumption of the data center and the local co-optimization of power generation supply with demand. Provisional patent applications must be converted into full patent applications within one year of filing.

Soluna also filed two full patent applications, both of which are utility patents. The first is related to the modular data center, specifically the layout of the buildings (modules) on a site. The layout as well as specific elements are critical elements which drive our efficiency.

The second full application is around the local co-optimization of power generation supply with demand generated using a data center. This patent outlines the methodology of having an independently metered load co-located with power generation.

There can be no assurance that any of the Company's patent applications will be granted, or if granted, will convey any competitive advantage to the Company. Enforcing patents is a timely and expensive process and the Company may not have sufficient resources to pursue any infringement.

Soluna has a registered trademark for the Company name.

**Equity investment – Harmattan Energy, Ltd ("HEL")** 

Simultaneously with entering into the January 2020 Operating and Management Agreement with HEL, the Company, pursuant to a purchase agreement it entered into with HEL, made a strategic investment in HEL by purchasing 158,730 Class A Preferred Shares of HEL for an aggregate purchase price of $500,000. After acceptance of the Deliverables, as required by the terms of the purchase agreement, the Company purchased an additional 79,365 Class A Preferred Shares of HEL for an aggregate purchase price of $250,000. The Company also has the right, but not the obligation, to purchase additional equity securities of HEL and its subsidiaries (including additional Class A Preferred Shares of HEL) if HEL secures certain levels or types of project financing with respect to its own wind power generation facilities. The Company has additionally entered into a Side Letter Agreement, dated January 13, 2020, with Soluna Technologies Investment I, LLC, a Delaware limited liability company that owns, on a fully diluted basis, 61.5% of HEL and is controlled by a Brookstone Partners-affiliated director of the Company. The Side Letter Agreement provides for the transfer to the Company of additional Class A Preferred Shares of HEL in the event HEL issues additional equity below agreed-upon valuation thresholds.

Several of HEL's equity holders are affiliated with Brookstone Partners, the investment firm that holds an equity interest in the Company through Brookstone Partners Acquisition XXIV, LLC. One of our Brookstone-affiliated directors serves as a director and is currently acting President of HEL, and the other Brookstone-affiliated director and the Company's CEO, has an ownership interest in HEL. During the year ended December 31, 2022, the Company had performed an impairment assessment and noted that the full amount of $750,000 for the Company's investment in HEL had been impaired and written off the books for fiscal year 2022.

**Existing or Probable Governmental Regulations**

 

**Regulatory**

Cryptocurrency mining is largely an unregulated activity at both the state and federal level. We anticipate that cryptocurrency mining will face increased regulation in the near and long-term. We cannot predict how future regulations may affect our business or operations. State regulation of cryptocurrency mining is important with respect to where we conduct our mining operations. Our Dorothy Project is located in the State of Texas. To the extent that there is any state regulation, Texas is one of the most favorable regulatory environments for cryptocurrency miners.

In March 2022, the United States announced plans to establish a unified federal regulatory regime for cryptocurrency, and a group of United States Senators sent a letter to the United States Treasury Department asking Treasury Secretary Yellen to investigate Treasury's ability to monitor and restrict the use of cryptocurrencies to evade sanctions imposed by the United States. We are unable to predict the impact that any new regulations may have on our business at the time of filing this Annual Report. We continue to monitor and proactively engage in dialogue on legislative matters related to our industry.

On August 17, 2022, the Committee on Energy and Commerce of the U.S. House of Representatives sent letters to other public companies with Bitcoin mining operations requesting information related to the environmental impact and energy consumption of the recipients.

In September 2022, the White House issued a report regarding the Climate and Energy Implications of Crypto-Assets in the United States. The report states that the Department of Energy and Environmental Protection Agency should initiate a process to solicit data and develop environmental performance and energy conservation standards for crypto-asset technologies, including mining equipment. Should such measures prove ineffective at achieving the Administration's environmental goals, the report calls for the Administration to explore executive actions and legislation to limit or eliminate the use of high energy intensity consensus mechanisms for crypto-asset mining.

We are unable to predict the impact that any new standards, legislation, or regulations may have on our business at the time of filing this Annual Report. We continue to monitor and proactively engage in dialogue on regulatory and legislative matters related to our industry.

Further, in December 2022 the SEC's Division of Corporation Finance issued guidance advising companies to disclose exposure and risk to the cryptocurrency market. While the focus is on digital asset managers and exchanges, and not Bitcoin miners, the failure of such large asset managers and exchanges may create increased price volatility of Bitcoin. Soluna does not store our Bitcoin on such exchanges; however, we may be impacted by such failures.

In January 2023, the Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation issued a joint statement discouraging banks from doing business with clients in crypto-asset industries. In January 2023, the Federal Reserve also issued a policy statement broadening its authority to cover state-chartered banks.

Also in January 2023, the House of Representatives announced its first ever Financial Services Subcommittee on Digital Assets and the intention to develop a regulatory framework for the digital asset industry. Bipartisan leadership of the Senate Banking Committee announced that goal as well.

As the regulatory and legal environment evolves, we may become subject to new laws, such as further regulation by the SEC and other agencies, which may affect our mining and other activities. For additional discussion regarding our belief about the potential risks existing and future regulation pose to our business, see Part I, Item 1A. "Risk Factors" of this Annual Report.

**Environmental**

There are increasing concerns over the quantity of energy, particularly from non-renewable sources, used for Bitcoin mining and its effects on the environment. Many media reports focus exclusively on the energy requirements of Bitcoin mining and cite it as an environmental concern. However, those reports tend to omit discussion of the positive contributions associated with Bitcoin mining to other customers on the electrical grid. Bitcoin mining operations present a stable demand for energy and can be quickly curtailed, uniquely positioning businesses that engage in Bitcoin mining to respond to increased electricity demand in emergency situations. Overall, our operations incentivize new power generation development, and our actions help to reduce the frequency and impact of power failures and electricity price surges.

**Human Capital Resources**

As of March 20, 2023, we had 32 employees, including 30 full-time employees, 1 part-time employee, and 1 full-time consultant consisting of nine SHI employees (six are in finance and three executives), 23 SCI employees. Of the SCI employees one was in finance, fourteen in operations, one in corporate development, four in technology and engineering, and two executives. The operations personnel include both individuals directly involved in the strategy of our data centers as well as data center maintenance and supervisory roles. Certain positions within our organization require industry-specific technical knowledge. We have been successful in attracting and retaining qualified technical personnel for these positions. None of our employees are covered by any collective bargaining agreement.

Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, engaging, incentivizing, and integrating our existing and additional employees. The Company supports its employees through a competitive compensation package, including company equity, generous health benefits and a flexible PTO policy. We have a combination of remote and on-site employees.

**Insurance** 

The Company and its subsidiaries maintains insurance policies with reputable insurers against such risks and in such amounts as management has determined to be prudent for our operations and that we believe are similar in scope and coverage in all material respects to insurance policies maintained by other similarly situated businesses. These policies include coverages for D&O, Builders Risk, Property, General Liability, Auto and other casualty lines of business.

**Item 1A. Risk Factors**

*Our business, financial condition and operating results are subject to a number of risk factors, both those that are known to us and identified below and others that may arise from time to time. These risk factors could cause our actual results to differ materially from those suggested by forward-looking statements in this Annual Report on Form 10-K (this "Report") and elsewhere, and may adversely affect our business, financial condition or operating results. If any of these risk factors should occur, moreover, the trading price of our securities could decline, and investors in our securities could lose all or part of their investment in our securities. These risk factors, along with other information contained in this Report, should be carefully considered in evaluating our prospects.* 

**Risks Relating to the Company and its Growth Strategy** 

***The Company's ability to operate as a going concern is in doubt.***

The audit opinion and notes that accompany the Company's Consolidated Financial Statements disclose a going concern qualification to its ability to continue in business. The accompanying Consolidated Financial Statements have been prepared under the assumption that the Company will continue as a going concern. The Company has incurred losses resulting in an accumulated deficit of $221.8 million as of December 31, 2022, and further losses are anticipated in the development of its business.

The accompanying Consolidated Financial Statements has shown that the Company did not generate sufficient revenue to generate net income and has negative working capital as of December 31, 2022. The Company's ability to continue as a going concern is dependent on its ability to raise capital to fund its future data centers and working capital requirements or its ability to profitably execute its business plan. The Company's plans for the long-term return to and continuation as a going concern include financing its future operations through sales of its Common Shares and/or debt. Additionally, the volatility in capital markets and general economic conditions in the U.S. and elsewhere can pose significant challenges to raising the required funds. These factors raise substantial doubt about the Company's ability to continue as a going concern.

The Company's consolidated financial statements do not give effect to any adjustments required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying Consolidated Financial Statements.

**We may not be able to refinance, extend or repay our substantial indebtedness owed to our convertible note debt holders, which would have a material adverse effect on our financial condition and ability to continue as a going concern.** 

We anticipate that we will need to raise a significant amount of debt or equity capital in the near future in order to repay our outstanding debt obligations owed to our convertible noteholders when they mature. On October 25, 2021, the Company issued to certain institutional investors secured convertible notes in the aggregate principal amount of approximately $16.3 million for an aggregate purchase price of $15.0 million. Through original issuance until March 23, 2023, the noteholders have converted approximately $5.2 million of debt. As of March 23, 2023, we owed our convertible debt holders approximately $11.6 million of principal which is currently due on April 25, 2023. If we are unable to raise sufficient capital to repay these obligations at maturity and we are otherwise unable to extend the maturity dates or refinance these obligations, we would be in default. We cannot provide any assurances that we will be able to raise the necessary amount of capital to repay these obligations or that we will be able to extend the maturity dates or otherwise refinance these obligations. Upon a default in the convertible debt our convertible debt holders would have the right to exercise its rights and remedies to collect, which would include foreclosing on our assets. Accordingly, a default would have a material adverse effect on our business and, if our convertible noteholders exercise its rights and remedies, we would likely be forced to seek bankruptcy protection.

***We may be impacted by macroeconomic conditions due to global pandemics, epidemics or outbreaks of disease and the resulting global supply chain crisis.***

Global trade conditions and consumer trends that originated during the COVID-19 pandemic continue to persist and may also have long-lasting adverse impact on us and our industry. There are continued risks arising from new pandemics, epidemics or outbreaks of disease, and ongoing COVID-19 related issues which have exacerbated port congestion and intermittent supplier shutdowns and delays, resulting in additional expenses to expedite delivery of new miners, as well as critical materials needed for our expansion plans. Further, miner manufacturers have been impacted by the constrained supply of the semiconductors used in the production of the highly specialized ASIC chips miners rely on, and increased labor costs to manufacture new miners as workforces and global supply chains continue to be affected by COVID-19 and may further be affected by global outbreaks of various epidemics or disease, ultimately leading to continually higher prices for new miners. Thus, until the global supply chain crisis is resolved, and these extraordinary pressures are alleviated, we expect to continue to incur higher than usual costs to obtain and deploy new miners and we may face difficulties obtaining the new miners we need at prices or in quantities we find acceptable, if at all, and our business and results of operations may suffer as a result.

In addition, labor shortages resulting from the pandemic may lead to increased difficulty and labor costs in hiring and retaining the highly qualified and motivated people we need to conduct our business and execute on our strategic growth initiatives. Sustaining our growth plans will require the ongoing readiness and solvency of our suppliers and vendors, a stable and motivated production workforce, and government cooperation, each of which may be affected by macroeconomic factors outside of our immediate control.

We cannot predict the duration or direction of current global trends or their sustained impact. Ultimately, we continue to monitor macroeconomic conditions to remain flexible and to optimize and evolve our business as appropriate, and we will have to accurately project demand and infrastructure requirements globally and deploy our workforce and capital resources accordingly. If we experience unfavorable global market conditions, or if we cannot or do not maintain operations at a scope that is commensurate with such conditions or are later required to or choose to suspend such operations again, our business, prospects, financial condition and operating results may be harmed.

***We expect the cost of acquiring new miners to continue to be affected by the global supply chain crisis.***

Similarly, the global supply chain crisis, coupled with increased demand for computer chips, has created a shortfall of semiconductors, resulting in challenges for the supply chain and production of the miners we employ in our Bitcoin mining operations. The miners are highly specialized servers built around ASIC chips, which very few manufacturers are able to produce in sufficient scale and quality to suit our operations. As a result, the cost to produce these miners has increased, and their manufacturers have passed on increased costs of production to purchasers like us. Therefore, until the global supply chain crisis is resolved, and these extraordinary pressures are alleviated, we expect to continue to incur higher than usual costs to obtain and deploy new miners, which could adversely affect our financial condition and results of operations.

***Construction of our future facilities potentially exposes us to additional risks.***

We intend to continue constructing modular data centers in addition to our Dorothy Facility, which potentially exposes us to significant risks we may otherwise not be exposed to, including risks related to, among other sources: construction delays; lack of availability of parts and/or labor, increased prices as a result, in part to inflation, and delays for data center equipment; labor disputes and work stoppages, including interruptions in work due to pandemics, epidemics, and other health risks; unanticipated environmental issues and geological problems; delays related to permitting and approvals to open from public agencies and utility companies; and delays in site readiness leading to our failure to meet commitments made in connection with such expansion.

All construction related projects depend on the skill, experience, and attentiveness of our personnel throughout the design and construction process. Should a designer, general contractor, significant subcontractor or key supplier experience financial problems or other problems during the design or construction process, we could experience significant delays, increased costs to complete the project and/or other negative impacts to our expected returns.

If we are unable to overcome these risks and additional pressures to complete our expansion projects in a timely manner, if at all, we may not realize their anticipated benefits, and our business and financial condition may suffer as a result.

***We may have difficulty in obtaining banking services for our cryptocurrency activities.***

While the banking authorities in the United States do not prohibit banks from providing banking services to cryptocurrency-related businesses such as the Company, the Federal Reserve, the FDIC and the Office of the Comptroller of the Currency have issued directives to banks in the United relating to their crypto-asset risks and as a result a significant number of banks have determined to limit such activities. Accordingly, we have had, and may have in the future have, difficulty in opening bank accounts, obtaining letters of credit and generally access to the banking system.

***We may be unable to obtain additional funding to scale the SCI hosting and proprietary cryptocurrency mining business to a larger-scale business.***

We are considering further increasing the size of our business as we seek to leverage our experience and expertise in area of hosting and proprietary cryptocurrency mining operations. To do so, however, we will need to raise additional debt and/or equity financing, which may not be available to us on acceptable terms or at all. Failure to generate adequate cash from our operations or find sources of funding would require us to scale back or curtail our operations or expansion efforts, including limiting our ability to expand the SCI hosting and cryptocurrency business to a larger-scale operation, and would have an adverse impact on our business and financial condition. If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests, and the per-share value of our Common Stock could decline. Furthermore, if we engage in additional debt financing, the holders of debt likely would have priority over the holders of Common Stock on order of payment preference. We may be required to accept terms that restrict our ability to incur additional indebtedness or take other actions including terms that require us to maintain specified liquidity or other ratios that could otherwise not be in the interests of our stockholders.

 ****

***We rely upon strategic partners to finance certain of our facilities.***

In order to complete construction of the first phase of our Dorothy Facility we have partnered with Spring Lane Capital, which provided $14.0 in funding to complete construction and fund corporate expenses, and we may seek similar funding completion of subsequent phases of the Dorothy Facility and our other projects in development. As a result, we will be requiring financing assistance as well as cooperation in significant operation decisions affecting the projects. If we are unable to obtain strategic partners for our projects or if we and our partners disagree on matters affecting our projects, our growth, prospects and financial results may be adversely affected.

***The lack of regulation of digital asset exchanges which Bitcoin, and other cryptocurrencies, are traded on, may expose us to the effects of negative publicity resulting from fraudulent actors in the cryptocurrency space, and can adversely affect an investment in the Company.***

The digital asset exchanges on which Bitcoin is traded are relatively new and largely unregulated. Many digital asset exchanges do not provide the public with significant information regarding their ownership structure, management teams, corporate practices, or regulatory compliance. As a result, the marketplace may lose confidence in, or may experience problems relating to, such digital asset exchanges, including prominent exchanges handling a significant portion of the volume of digital asset trading. In 2022, a number of digital asset exchanges filed for bankruptcy proceedings and/or became the subjects of investigation by various governmental agencies for, among other things, fraud, causing a loss of confidence and an increase in negative publicity for the digital asset ecosystem. As a result, many digital asset markets, including the market for Bitcoin, have experienced increased price volatility. The Bitcoin ecosystem may continue to be negatively impacted and experience long term volatility if public confidence decreases.

These events are continuing to develop, and it is not possible to predict, at this time, every risk that they may pose to us, our service providers, or the digital asset industry as a whole. A perceived lack of stability in the digital asset exchange market and the closure or temporary shutdown of digital asset exchanges due to business failure, hackers or malware, government-mandated regulation, or fraud, may reduce confidence in digital asset networks and result in greater volatility in cryptocurrency values. These potential consequences of a digital asset exchange's failure could adversely affect an investment in us.

Recent events in the industry, such as filing for and seeking protection of Chapter 11 proceedings by major market participants, may have significant impact on further development and acceptance of digital asset networks and digital assets as they exposed how unpredictable and turbulent the digital assets industry can be. Specifically, the Chapter 11 Bankruptcy filings of digital asset exchanges FTX Trading Ltd., et al. ("FTX") (including its affiliated hedge fund, Alameda Research LLC) was unexpected and significantly reduced confidence in the digital assets industry as it was one of the largest and considered among safest digital asset trading platforms. Furthermore, it also revealed potential systemic risks and industry contagion as a significant number of other major market participants were affected by FTX's Chapter 11 filing – namely, among others, BlockFi Inc., et al. ("BlockFi"), as one of the largest digital assets lending companies. At this time, we believe that there are no significant exposures of our business to any of the industry participants who filed for Chapter 11 bankruptcy; however, such failure of key institutions in the cryptocurrency asset industry highlights the risk of systemic interconnectedness between major market participants and the effect it could have on the industry as a whole.

The closure and temporary shutdown of major digital asset exchanges and trading platforms, such as FTX, due to fraud or business failure, has disrupted investor confidence in cryptocurrencies and led to a rapid escalation of oversight of the digital asset industry. Thus, the failures of key market participants and systemic contagion risk is expected to, as a consequence, invite stricter regulatory scrutiny. All this could have a negative impact on further development and acceptance of digital asset networks and digital assets, including Bitcoin.

***Bitcoin market exposure to financially troubled cryptocurrency-based companies.***

The failure of several crypto platforms has impacted and may continue to impact the broader crypto economy; the full extent of these impacts may not yet be known. Bitcoin is part of the cryptocurrency environment and is subject to price volatility resulting from financial instability, poor business practices, and fraudulent activities of players in the cryptocurrency market. When investors in cryptocurrency and cryptocurrency-based companies experience financial difficulty as a result of price volatility, poor business practices, and/or fraud, it has caused, and may cause additional, loss of confidence in the cryptocurrency space, reputational harm to cryptocurrency assets, heightened scrutiny by regulatory authorities and law makers, and a steep decline in the value of Bitcoin, among other material impacts. Such adverse effects have affected, and may in the future affect, the profitability of our Bitcoin mining operations and our ability to obtain a profit from hosting institutional-scale data center clients.

***Our business plan is heavily dependent upon acquisitions and strategic alliances and our ability to identify, acquire or ally on appropriate terms, and successfully integrate and manage any acquired companies or alliances will impact our financial condition and operating results.***

Part of our strategy to grow our business is dependent on the acquisition of other entities or businesses in the future that complement our current products, enhance our market coverage or technical capabilities, or offer growth opportunities. We may also need to form strategic alliances or partnerships in order to remain competitive in our market. We may not be able, however, to identify and successfully negotiate suitable acquisitions alliances, obtain any financing necessary for such acquisitions on satisfactory terms or otherwise complete any such acquisitions or alliances. Further, any acquisition or alliance may require a significant amount of management's time and financial resources to complete; furthermore, such acquisitions, strategic alliances or partnerships could be difficult to integrate, disrupt our business and dilute stockholder value.

For example, in January 2020, the Company formed SCI as its wholly owned subsidiary to pursue a new business line focused on cryptocurrency and the blockchain ecosystem. In October 2021, Soluna Computing became a wholly owned subsidiary of SCI pursuant to a merger. Prior to the merger, Soluna Computing had assisted us in developing and operating the cryptocurrency mining facility through contractual arrangements. In May 2022, SCI secured an investment by Spring Lane Capital into the first 25 MW of Project Dorothy. Spring Lane initially invested $3.85 million and agreed to fund thirty-two percent (32%) of further costs throughout 2022 subject to a ceiling amount of $12.5 million. Later, on March 10, 2023, Spring Lane agreed to increase its participation in this first 25 MW for an additional $7.5 million, plus a similar share of all additional costs incurred during 2023 to complete the project, with a ceiling of total invested through March 10, 2023, plus an additional $3.0 million.

In the future, we may acquire or form strategic alliances or partnerships with other businesses in order to remain competitive or to acquire new technologies. Acquisitions, alliances and investments involve numerous risks, including:

● the potential failure to achieve the expected benefits of the combination, acquisition or alliance;

● difficulties in and the cost of integrating operations, technologies, services and personnel;

● difficulty of assimilating geographically dispersed operations and personnel of the companies we acquire or ally with;

● impairment of relationships with employees, customers, vendors, distributors or business partners of either an acquired business or our own;

● unanticipated difficulties in conforming business practices, policies, procedures, internal controls and financial records of acquisitions with our own;

● the potential inability to successfully integrate acquired operations and products or to realize cost savings or other anticipated benefits from integration;

● diversion of financial and managerial resources from existing operations;

● risk of entering new markets in which we have little or no experience or where competitors may have stronger market positions;

● potential write-offs of acquired assets or investments and potential financial and credit risks associated with acquired customers;

● inability to generate sufficient revenue to offset acquisition or investment costs;

● the risk of cancellation or early termination of an alliance by either party;

● potential unknown liabilities associated with the acquired businesses;

● unanticipated expenses related to acquired technology and its integration into the existing businesses;

● negative impact to our results of operations because of the depreciation and amortization of amounts related to acquired intangible assets, fixed assets and deferred compensation, and the loss of acquired deferred revenue and unbilled deferred revenue;

● loss of key employees or customers of acquired companies;

● potential disruption of our business or the acquired business;

● inability to accurately forecast the performance of recently acquired businesses, resulting in unforeseen adverse effects on our operating results;

● the tax effects of any acquisitions; and

● Adverse accounting impact to our results of operations.

Our failure to successfully manage our recent acquisition of Soluna Computing or these investments by Spring Lane into the first 25 MW of Project Dorothy, or other future acquisitions, strategic alliances or partnerships could seriously harm our operating results. In addition, our stockholders would be diluted if we finance the future acquisitions, strategic alliances or partnerships by incurring convertible debt or issuing equity securities.

We cannot offer any assurance that we will be able to identify, complete or successfully integrate any suitable acquisitions or suitable alliances. Even if successfully negotiated and closed, any acquisitions or alliances may not yield expected synergies, may not advance our business strategy as expected, may fall short of expected return-on-investment targets, or may otherwise fail to achieve their objectives or perform as contemplated and not prove successful. Companies that we acquire may operate with different cost and margin structures, which could further cause fluctuations in our operating results and adversely affect our business, financial condition and results of operations.

**Risks Related to our SCI Business and Cryptocurrency**

***We have a history of operating losses, and we may report additional operating losses in the future.***

Our primary focus is on the hosting and proprietary cryptocurrency mining business, and we have recorded historical losses and negative cash flow from our operations when the value of Bitcoin we and our hosted customers mine does not exceed associated costs. Further, as part of our strategic growth plans, we have made capital investments in expanding and vertically integrating our mining operations, increased our employee base, and incurred additional costs associated with owning and operating a self-mining facility. However, future market prices of Bitcoin are difficult to predict, and we cannot guarantee that our future revenues will exceed our associated costs.

***SCI has a limited operating history, and we may not recognize operating income from the SCI line of business in the future.***

SCI began operations in January 2020 and therefore is subject to all the risks inherent in a newly established business venture in a rapidly developing and changing industry. SCI's limited operating history also makes it difficult to evaluate SCI's current business and its future prospects. SCI has not yet been able to confirm that its business model can or will be successful over the long term, and we may not ever continue to recognize operating income from this business. Our projections for its growth have been developed internally and may not prove to be accurate. SCI's operating results will likely fluctuate moving forward as we focus on growing our operations and as the market prices of Bitcoin and other cryptocurrencies fluctuate. We may need to make business decisions that could adversely affect SCI's operating results, such as modifications to its business structure or operations. In addition, we expect additional growth in this business, which could place significant demands on SCI's and the Company's management and other resources and require us to continue developing and improving our operational, financial and other internal controls. SCI may not be able to address these challenges in a cost-effective manner or at all. If we do not effectively manage SCI's growth, it may not be able to execute on its business plan, respond to competitive pressures or take advantage of market opportunities, and our business, financial condition and results of operations could be materially harmed.

Given SCI's early-stage status, without positive operating income, there is a substantial risk regarding SCI's ability to succeed. You should consider our business and prospects in light of these risks and the risks and difficulties that we will encounter as we continue to develop our business model. We may not be able to address these risks and difficulties successfully, which would materially harm our business and operating results, and we could be forced to terminate our business, liquidate our assets and dissolve, and you could lose part or all of your investment.

***Prices of cryptocurrencies are extremely volatile, and if our mined cryptocurrencies are converted into dollars when such values are low, we may not recognize the income from the conversion of the mined cryptocurrencies that we were expecting.***

The fluctuating prices of cryptocurrencies represent significant uncertainties for SCI's business. A variety of factors, known and unknown, may affect price and valuation, including, but not limited to (i) the supply of such cryptocurrencies; (ii) global blockchain asset demand, which can be influenced by the growth of retail merchants' and commercial businesses' acceptance of blockchain assets like cryptocurrencies as payment for goods and services, the security of online cryptocurrency exchanges and networks and digital wallets that hold blockchain assets, the perception that the use and holding of blockchain assets is safe and secure, and the regulatory restrictions on their use; (iii) investors' expectations with respect to the rate of inflation; (iv) changes in the software, software requirements or hardware requirements underlying a blockchain network; (v) changes in the rights, obligations, incentives or rewards for the various participants in a blockchain network; (vi) currency exchange rates; (vii) fiat currency withdrawal and deposit policies of cryptocurrency exchanges and networks and liquidity on such exchanges and networks; (viii) interruptions in service from or failures of major cryptocurrency exchanges and networks; (ix) investment and trading activities of large subscribers, including private and registered investment funds, that may directly or indirectly invest in blockchain assets; (x) monetary policies of governments, trade restrictions, currency devaluations and revaluations; (xi) regulatory measures, if any, that affect the use of blockchain assets; (xii) the maintenance and development of the open-source software protocol of the cryptocurrency networks; (xiii) global or regional political, economic or financial events and situations; (xiv) expectations among blockchain participants that the value of blockchain assets will soon change; and (xv) a decrease in the price of blockchain assets that may have a material adverse effect on SCI's financial condition and operating results. If our mined cryptocurrencies are converted into dollars when their values are low, we may not recognize the income from the conversion of the mined cryptocurrencies that we were expecting. Further, the extreme swings in value can make it difficult for us to develop reasonable financial plans and projections with respect to SCI's business.

***The Company's business model is evolving and is subject to various uncertainties.***

The likelihood of the Company's success must be considered in light of our ability to generate revenues by providing relevant services to our partners in an uncertain industry or industries, including the cryptocurrency and blockchain industry in which we currently operate and the data center development industry in which we intend to operate, which, in the Company's view, creates and will continue to create an uncertain business environment for the Company. As the Company's business model evolves, it is possible that we will decide to modify our business strategy and commence operations in an entirely different industry than the ones in which the Company currently operates. The Company cannot offer any assurance that these or any other modifications will be successful or will not result in harm to our business. We may not be able to manage our growth effectively, which could damage our reputation, limit our growth, and negatively affect our operating results. Further, the Company cannot provide any assurance that it will successfully identify all emerging trends and growth opportunities in any particular business sector and the Company may lose out on business opportunities. Additionally, current global and regional economic conditions may have a material effect on the demand for the Company's services, which could also materially affect the Company's partners. Deterioration in the global macroeconomic environment or in certain regions could impact the Company's financial condition and operations and, depending upon the severity and duration of these factors, the Company's profitability and liquidity position could be negatively impacted. All such circumstances could have a material adverse effect on the Company's business, prospects and/or operations.

***SCI may not be able to continue to develop its technology and keep pace with technological developments, expand its mining operations or otherwise compete with other companies, some of whom have greater resources and experience.***

We do not have the resources to compete with larger cryptocurrency mining entities at this time and may not be able to compete successfully against present or future competitors. The cryptocurrency industry has attracted various high-profile and well-established operators, some of which have substantially greater liquidity and financial resources than we do. With the limited resources we have available, we may experience great difficulties in expanding and improving our network of miners to remain competitive, and we may not be in a position to construct additional operational cryptocurrency mines.

Rapid technological change is a current feature of the cryptocurrency industry, including hosting and proprietary cryptocurrency mining, and we cannot provide assurance that we will be able to achieve the technological advances, in a timely manner or at all, that may be necessary for us to remain competitive or that certain of our equipment will not become obsolete. Our ability to anticipate and manage changes in technology standards on a timely basis will be a significant factor in our ability to remain competitive. We may not be successful, generally or relative to our competitors, in timely implementing new technology into our systems, or doing so in a cost-effective manner. During the course of implementing any such new technology into our operations, we may experience system interruptions and failures. Further, if due to technological developments we need to replace our miners entirely to remain competitive in the market, there can be no assurance that we will be able to do so on a cost-effective basis or in a timely manner, particularly in light of the long production period to manufacture and assemble cryptocurrency miners, potential large-scale purchases of miners from existing competitors and new entrants into the industry. Furthermore, there can be no assurance that we will recognize, in a timely manner or at all, the benefits that we may expect as a result of our implementing new technology into our operations. As a result, our business, prospects, and operations may suffer, and there may be adverse effects on our financial condition and on the market prices of our securities.

In addition, competition from existing and future competitors, particularly the other North American companies that may have access to greater volumes of competitively priced energy, could result in our inability to secure acquisitions and partnerships that we may need to expand our business in the future. This competition from other entities with greater resources, experience and reputations may result in our failure to maintain or expand our business. If we are unable to expand and remain competitive, our business could be negatively affected which would have an adverse effect on the trading prices of our securities, which in turn would harm investors in our Company.

***Regulatory changes or actions may alter the nature of an investment in us or restrict the use of cryptocurrencies in a manner that adversely affects our business, prospects, or operations.***

As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies; certain governments have deemed them illegal, and others have allowed their use and trade without restriction, while in some jurisdictions, such as in the United States, subject the mining, ownership and exchange of cryptocurrencies to extensive, and in some cases overlapping, unclear and evolving regulatory requirements.

For example, in January 2023, the Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation issued a joint statement effectively discouraging banks from doing business with clients in crypto-asset industries, which could potentially create challenges regarding access to financial services. In January 2023, the Federal Reserve also issued a policy statement broadening its authority to cover state-chartered institutions. Moreover, in January 2023, the White House issued a statement cautioning deepening ties between crypto-assets and the broader financial system. Meanwhile, the SEC has announced several actions aimed at curtailing activities it deems sales of unregistered securities.

However, also during January of 2023, the U.S. House of Representatives announced its first ever Financial Services Subcommittee on Digital Assets and the intention to develop a regulatory framework for the use and trade of digital assets and related financial services products in the United States. Bipartisan leadership of the Senate Banking Committee announced a similar objective.

Given the difficulty of predicting the outcomes of ongoing and future regulatory actions and legislative developments, it is possible that they could have a material adverse effect on our business, prospects or operations.

***Bitcoin and Bitcoin mining, as well as cryptocurrencies generally, may be made illegal in certain jurisdictions, including the ones we operate in, which could adversely affect our business prospects and operations.***

Although we do not anticipate any material adverse regulations on Bitcoin mining in our jurisdictions of operation, it is possible that state or federal regulators may seek to impose harsh restrictions or total bans on cryptocurrency mining which may make it impossible for us to do business without relocating our mining operations, which could be very costly and time consuming. Further, although Bitcoin and Bitcoin mining, as well as cryptocurrencies generally, are largely unregulated in most countries (including the United States), regulators in certain jurisdictions may undertake new or intensify existing regulatory actions in the future that could severely restrict the right to mine, acquire, own, hold, sell, or use cryptocurrency or to exchange it for traditional fiat currency such as the United States dollar. Such restrictions may adversely affect us as the large-scale use of cryptocurrencies as a means of exchange is presently confined to certain regions globally. Such circumstances could have a material adverse effect on our business, prospects or operations and potentially the value of any Bitcoin or other cryptocurrencies we or our hosted customers mine, and thus harm our investors.

***Our interactions with a blockchain may expose us to specially designated nationals ("SDN") or blocked persons and new legislation or regulation could adversely impact our business or the market for cryptocurrencies.***

The Office of Financial Assets Control ("OFAC") of the U.S. Department of Treasury requires us to comply with its sanction program and not conduct business with persons named on its SDN list. However, because of the pseudonymous nature of blockchain transactions we may inadvertently and without our knowledge engage in transactions with persons named on OFAC's SDN list. Our Company's policy prohibits any transactions with such SDN individuals, but we may not be adequately capable of determining the ultimate identity of the individual with whom we transact with respect to selling cryptocurrency assets. We are unable to predict the nature or extent of new and proposed legislation and regulation affecting the cryptocurrency industry, or the potential impact of the use of cryptocurrencies by SDN or other blocked or sanctioned persons, which could have material adverse effects on our business and our industry more broadly. Further, we may be subject to investigation, administrative or court proceedings, and civil or criminal monetary fines and penalties as a result of any regulatory enforcement actions, all of which could harm our reputation and affect the value of our securities.

***Security breaches could result in a loss of our cryptocurrencies.***

Security breaches including computer hacking or computer malware have been a consistent concern in the cryptocurrency industry. This could involve hacking in which an unauthorized person obtains access to the systems or information and can cause harm by the transmission of virus or the corruption of data. These breaches may occur due to an action by an outside party or by the error and negligence of an employee. We primarily rely on the Luxor mining pool and SCI's cryptocurrencies are stored with exchanges such as Coinbase prior to selling them. If any breach were to occur of our security system, operations or third-party platforms, the result could cause a loss of our cryptocurrencies, loss of confidential or proprietary information, force the Company to cease operations or could cause damage to the reputation of the Company. If an actual or perceived attack were to occur, the market perception of the Company may be damaged, which could adversely affect potential and current investments in the Company and reduce demand for our securities and cause a reduction in our share prices.

***Incorrect or fraudulent cryptocurrency transactions may be irreversible.***

It is possible that, through computer or human error, theft or criminal action, our cryptocurrency could be transferred in incorrect amounts or to unauthorized third parties or accounts. In general, cryptocurrency transactions are irreversible, and stolen or incorrectly transferred cryptocurrencies may be irretrievable, and we may have extremely limited or no effective means of recovering any losses as a result of an incorrect transfer or theft. As a result, any incorrectly executed or fraudulent cryptocurrency transactions could adversely affect our business, operating results and financial condition.

***The impact of geopolitical and economic events on the supply and demand for Bitcoin and other cryptocurrencies is uncertain.***

Geopolitical crises may motivate large-scale purchases of Bitcoin and other cryptocurrencies, which could rapidly increase the price of Bitcoin and other cryptocurrencies. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior dissipates, adversely affecting the value of the cryptocurrencies that we or our hosted customers mine. Alternatively, as an emerging asset class with limited acceptance as a payment system or commodity, global crises and general economic downturn may discourage investment in cryptocurrencies as investors focus their investment on less volatile asset classes as a means of hedging their investment risk.

Cryptocurrencies, which are relatively new, are subject to supply and demand forces. How such supply and demand will be impacted by geopolitical events is largely uncertain but could be harmful to us and investors in our securities. Political or economic crises may motivate large-scale acquisitions or sales of cryptocurrencies either globally or locally. Such events could have a material adverse effect on our ability to continue as a going concern or to pursue our strategy at all, which could have a material adverse effect on our business, prospects or operations and potentially the value of any cryptocurrencies that we or our hosted customers mine.

***The failure of cryptocurrencies to become widely accepted and/or used as a medium of exchange and method of payment could adversely affect our business, prospects and financial condition.***

The use of cryptocurrencies in the retail and commercial marketplace, despite sporadic adoption, is currently limited. A significant portion of cryptocurrency demand is generated by investors seeking a long-term store of value or speculators seeking to profit from the short- or long-term holding of the asset. Price volatility, slow processing speeds and high transaction costs undermine Bitcoin's and other cryptocurrencies' ability to be used as a medium of exchange, as retailers are less likely to accept it as a direct form of payment. Large-scale acceptance of cryptocurrencies as a means of payment has not, and may never, occur.

The relative lack of acceptance of cryptocurrencies in the retail and commercial marketplace, or a reduction of such use, limits the ability of end users to use them to pay for goods and services. Such lack of acceptance or a decline in acceptance could have a material adverse effect on the value of the cryptocurrencies that we or our hosted customers mine, the viability of cryptocurrency mining as a business, and our ability to continue as a going concern or to pursue our business strategy, which could have a material adverse effect on our business, prospects, operations and financial condition, as well as on the market value of our securities.

***Proposed development of a cryptocurrency, as well as the eventual likely development of government-backed digital*** ***currencies and the development of cryptocurrencies by other tech companies, may adversely affect the value of Bitcoin and other existing, or even future, cryptocurrencies.***

In May 2019, Facebook, now named Meta, announced its plans for a cryptocurrency then called Libra and later called Diem, which faced significant objections and concerns from governments, legislators and regulators. Following such objections and concerns, Diem's development was abandoned, and its assets (including both the technology and intellectual property) sold to Silvergate Capital Corp., the holding company for Silvergate Bank, based in La Jolla, California, on January 31, 2022. Silvergate Capital Corp. was understood to be seeking to introduce a new digital currency using these recently purchased assets by the end of 2022. While that did not happen, Silvergate's efforts could encourage other financial institutions or even other technology companies and other entities to develop their own cryptocurrencies, which could negatively impact the value of existing cryptocurrencies. Further, in the event that government-backed digital currencies, which regulators in several countries are already considering or even developing, are developed and widely adopted, that could be likely to have a negative impact on the existing currencies including larger widespread adoption and potentially impacting the market share by non-government digital currency. Additional cryptocurrencies are introduced to the market frequently, and although some have gained popularity as some features have been different than Bitcoin, Bitcoin remains the market leader. As cryptocurrency adoption grows, the likelihood increases that additional cryptocurrency will be introduced and gain popularity against Bitcoin, potentially negatively impacting the value of Bitcoin and perhaps other cryptocurrencies.

***Cryptocurrencies face significant scaling and adoption obstacle issues which may lessen the demand for our services over time.***

Cryptocurrencies, including Bitcoin, face significant scaling and adoption issues, which may lessen the demand for our services over time. The current limitations of transaction throughput, high transaction fees, and extended processing times hinder widespread adoption and reduce the feasibility of cryptocurrencies as a daily payment method. As the industry attempts to address these challenges through protocol upgrades, second-layer solutions, and alternative consensus mechanisms, there is no guarantee that such solutions will be widely adopted or successful in resolving these issues. Should the scaling and adoption challenges persist or worsen, the demand for cryptocurrencies may decline, negatively impacting our mining operations and revenue. Furthermore, the emergence of new cryptocurrencies employing alternative, more scalable technologies could lead to a shift in market preferences, diminishing the value of the cryptocurrencies we mine and potentially affecting our business prospects and profitability

***Because our most of our and our hosted customers' miners are designed specifically to mine Bitcoin and may not be readily adaptable to mining other cryptocurrencies, a sustained decline in Bitcoin's value could adversely affect our business and results of operations*.**

We and our hosted customers have invested substantial capital in acquiring miners designed specifically to mine Bitcoin as efficiently and as rapidly as possible on our assumption that we will be able to use them to mine Bitcoin and generate revenue from our operations. Therefore, our mining and hosting operations focus primarily on mining Bitcoin, and our revenue is largely based on the value of Bitcoin. Accordingly, if the value of Bitcoin declines and fails to recover, for example, because of the development and acceptance of competing blockchain platforms or technologies, including competing cryptocurrencies which our miners or our customers' miners may not be able to mine, the revenue we generate from our operations will likewise decline. Moreover, we may not be able to successfully repurpose our operations in a timely manner, if at all, if we or our customers decide to switch to mining a different cryptocurrency (or to another purpose altogether) following a sustained decline in Bitcoin's value or if Bitcoin is replaced by another cryptocurrency. This could have a material adverse effect on our business, prospects, operations and financial condition, as well as on the market value of our securities.

***The Dorothy Facility is subject to a five-year ground lease, and if we are unable to renew its term, we may be unable to fully realize the anticipated benefits of the ongoing development of the site.***

The Dorothy Facility is subject to a ground lease with an initial term of five years, followed by five one-year renewal options, unless terminated earlier. The long-term success of our plans for the Dorothy Facility is largely based on our ability to maintain the lease in effect and to renew it going forward. If we fail to maintain the lease or renew it once its initial term expires and the landlord us to vacate the premises, we will likely incur significant costs in relocating our operations, if we could do so at all, and our operations would be interrupted during such relocation. Further, if we fail to renew the lease on terms favorable to us, and our costs are increased, then we may not realize the anticipated benefits of our investment in the facility or any future development of its remaining available capacity. Any disruptions or changes our present relationship with the landlord for the Dorothy Facility could disrupt our business and our results of operations negatively.

***The properties*** ***included in our mining and hosting facility network may experience damages, including damages that are not covered by insurance.***

Our current mining operation for Project Sophie is, and any future mines or hosting facility we establish will be, subject to a variety of risks relating to physical condition and operation, including:

● the presence of construction or repair defects or other structural or building damage;

● any noncompliance with or liabilities under applicable environmental, health or safety regulations or requirements or building permit requirements; and

● any damage resulting from natural disasters, such as hurricanes, earthquakes, fires, floods and windstorms.

For example, the currently operating Sophie facility, or the future Dorothy facility could be rendered inoperable, temporarily or permanently, as a result of a fire or other natural disaster or by a terrorist or other attack on the mine. The security and other measures we take to protect against these risks may not be sufficient. Additionally, our mines could be materially adversely affected by a power outage, loss of access to the electrical grid, or loss by the grid of cost-effective sources of electrical power generating capacity. Given the power requirement, it would not be feasible to run miners on back-up power generators in the event of a power outage. Our insurance covers the replacement cost of any lost or damaged miners but does not cover any interruption of our mining activities; our insurance therefore may not be adequate to cover the losses we suffer as a result of any of these events. In the event of an uninsured loss, including a loss in excess of insured limits, at any of the mines in our network, such mines may not be adequately repaired in a timely manner or at all and we may lose some or all of the future revenues anticipated to be derived from such mines. The potential impact on our business is currently magnified because we are currently operating only a single mine.

***SCI's reliance on a third-party mining pool service provider for our mining revenue payouts may have a negative impact on SCI's operations. The same may be true in the case of SCI's likely hosted customers.***

We and many Bitcoin miners use a third–party mining pool to receive our mining rewards from the network. Cryptocurrency mining pools allow miners to combine their computing power, increasing their chances of solving a block and getting paid by the network. The rewards are distributed by the pool operator, proportionally to our contribution to the pool's overall mining power, used to generate each block. Should the pool operator's system suffer downtime due to a cyber-attack, software malfunction, or similar issues, it will negatively impact our ability to mine and receive revenue. Furthermore, we and many other Bitcoin miners are dependent on the accuracy of the mining pool operator's recordkeeping to accurately record the total processing power provided to the pool for a given Bitcoin mining application in order to assess the proportion of that total processing power we provided. While we have internal methods of tracking both our power provided and the total used by the pool, the mining pool operator uses its own recordkeeping to determine our proportion of a given reward. We and other miners have little means of recourse against the mining pool operator if we determine that the proportion of the reward that the mining pool operator pays out to us is incorrect, other than leaving the pool. If we are unable to consistently obtain accurate proportionate rewards from our mining pool operator, we may experience reduced reward for our efforts, which would have an adverse effect on our results of operations and financial condition.

***Over time, incentives for Bitcoin miners to continue to contribute processing power to the Bitcoin network may transition from a set reward to transaction fees. If the incentives for Bitcoin mining are not sufficiently high, we and our hosted customers may not have an adequate incentive to continue to mine.***

In general, as the number of Bitcoin rewards awarded for solving a block in a blockchain decreases, our ability to achieve profitability also decreases. Decreased use and demand for Bitcoin rewards may adversely affect our incentive to expend processing power to solve blocks. If the Bitcoin rewards for solving blocks and transaction fees are not sufficiently high, fewer Bitcoin miners will mine. At insufficiently attractive rewards, our costs of operations in total may exceed our revenues from Bitcoin mining and from hosting customers engaged in Bitcoin mining

To incentivize Bitcoin miners to continue to contribute processing power to the Bitcoin network, such network may either formally or informally transition from a set reward to transaction fees earned upon solving a block. This transition could be accomplished either by Bitcoin miners independently electing to record in the blocks they solve only those transactions that include payment of a transaction fee or by the Bitcoin network adopting software upgrades that require the payment of a minimum transaction fee for all transactions. If as a result transaction fees paid for Bitcoin transactions become too high, Bitcoin users may be reluctant to transfer Bitcoin or accept Bitcoin as a means of payment, and existing users may be motivated to hold existing Bitcoin and switch from Bitcoin to another digital asset or back to fiat currency for transactions, diminishing the aggregate amount of available transaction fees for Bitcoin miners. Such reduction would adversely impact our results of operations and financial condition.

***The Bitcoin reward for successfully uncovering a block will halve several times in the future, and Bitcoin's value may not adjust to compensate us for the reduction in the rewards we receive from our Bitcoin mining efforts.***

Halving is a process designed to control the overall supply and reduce the risk of inflation in cryptocurrencies using a proof of work consensus algorithm. At a predetermined block, the Bitcoin mining reward is cut in half, hence the term "halving." For Bitcoin, the reward was initially set at 50 Bitcoin currency rewards per block, and this was cut in half to 25 on November 28, 2012 at block 210,000, then again to 12.5 on July 9, 2016 at block 420,000. The most recent halving for Bitcoin occurred on May 11, 2020 at block 630,000 and the reward was reduced to 6.25. It is expected that the next halving will likely occur in 2024. This process will reoccur until the total amount of Bitcoin currency rewards issued reaches 21 million, which is expected around the year 2140. While Bitcoin prices have had a history of fluctuations around the halving of its rewards, there is no guarantee that the price change will be favorable or would compensate for the reduction in mining reward. If a corresponding and proportionate increase in the trading prices of Bitcoin or a proportionate decrease in mining difficulty does not follow these anticipated halving events, the revenue we and our hosted customers earn from our Bitcoin mining operations could see a corresponding decrease, which could have a material adverse effect on our business and operations.

***We may not be able to realize the benefits of forks, and forks in a digital asset network may occur in the future, which may affect the value of the cryptocurrencies that we mine.***

To the extent that a significant majority of users and miners on a cryptocurrency network install software that changes the cryptocurrency network or properties of a cryptocurrency, including the irreversibility of transactions and limitations on the mining of new cryptocurrency, the cryptocurrency network would be subject to new protocols and software. If less than a significant majority of users and miners on the cryptocurrency network consent to the proposed modification, however, and the modification is not compatible with the software prior to its modification, a "fork" of the network would occur, with one prong of the network running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two versions of the cryptocurrency running in parallel yet lacking interchangeability and necessitating exchange-type transaction to convert currencies between the two forks. After a fork, it may be unclear which fork represents the original asset and which is the new asset.

If we hold a specific cryptocurrency at the time of a hard fork into two cryptocurrencies, industry standards would dictate that we would be expected to hold an equivalent amount of the old and new assets following the fork. We may not, however, be able to secure or realize the economic benefit of the new asset. Our business may be adversely impacted by forks in an applicable cryptocurrency network.

***As the aggregate amount of computing power, or hash rate, in the Bitcoin network increases, the amount of Bitcoin earned per unit of hash rate decreases; as a result, in order to maintain our market share, we may have to incur significant capital expenditures in order to expand our fleet of miners.***

The aggregate computing power of the global Bitcoin network has generally grown over time, and we expect it to continue to grow in the future. To the extent the global hash rate continues to increase, the market share of and the amount of Bitcoin rewards paid to any fixed fleet of miners will decrease. Therefore, in order to maintain our market share, we may be required to expand our mining fleet, which may require significant capital expenditures. If we can't acquire sufficient numbers of new miners or access sufficient capital to fund our expenditures, our results of operations and financial condition could be adversely materially affected. While a business strategy focused on hosting could mitigate some of this risk, the fact that hosted clients are ultimately exposed to similar such risk allows for the continued possibility that this could have an adverse effect on our business operations, strategy and financial performance.

***Climate change, and the regulatory and legislative developments related to climate change, may materially adversely affect our business and financial condition.***

The potential physical impacts of climate change on our operations are highly uncertain and would be particular to the geographic circumstances in areas in which we operate or in which our third-party providers operate. These may include changes in rainfall and storm patterns and intensities, water shortages, changing sea levels and changing temperatures. The impacts of climate change may materially and adversely impact the cost, production and financial performance of our operations. Further, any impacts to our business and financial condition as a result of climate change are likely to occur over a sustained period of time and are therefore difficult to quantify with any degree of specificity. For example, extreme weather events may result in adverse physical effects on portions of our infrastructure, which could disrupt our supply chain and ultimately our business operations.

In addition, a number of governments or governmental bodies have introduced or are contemplating legislative and regulatory changes in response to the potential impact of climate change. Companies across many industries are facing increasing scrutiny related to their environmental, social, and governance ("ESG") practices. Investor advocacy groups, certain institutional investors, investment funds and other influential investors are also increasingly focused on ESG practices and in recent years have placed increasing importance on the non-financial impacts of their investments. Given the very significant amount of electrical power required to operate cryptocurrency miners, as well as the environmental impact of mining for the rare earth metals used in the production of mining servers, the cryptocurrency mining industry may become a target for future environmental and energy regulation, and any such regulation may not distinguish between cryptocurrency mining powered partially by renewable energy, as is much of SCI's business, and cryptocurrency mining using traditional (i.e. fossil fuel) sources of energy. Legislation and increased regulation regarding climate change could impose significant costs on us and our suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting, and other costs to comply with such regulations. Any future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations. Furthermore, increased public awareness and concern regarding environmental risks, including global climate change, may result in increased public scrutiny of our business and our industry, and our management team may divert significant time and energy away from our operations and towards responding to such scrutiny and reassuring our employees. Given the political significance and uncertainty around the impact of climate change and how it should be addressed, we cannot predict how legislation and regulation will affect our financial condition, operating performance and ability to compete. Any of the foregoing could result in a material adverse effect on our business, prospects and financial condition.

***Our business could be harmed by prolonged power and internet outages, shortages, or capacity constraints.***

Our operations require a significant amount of electrical power and access to high-speed internet to be successful. If we are unable to secure sufficient electrical power, or if we lose internet access for a prolonged period, we may be required to reduce our operations or cease them altogether. If this occurs, our business and results of operations may be materially and adversely affected.

***We are subject to risks associated with our need for significant electrical power.***

Our operations have required significant amounts of electrical power, and, as we continue to expand our mining fleet and begin to operate our Dorothy Facility, we anticipate our demand for electrical power will continue to grow. The fluctuating price of electricity we require for our operations, and to power our expansion, may inhibit our profitability. If we are unable to continue to obtain sufficient electrical power on a cost-effective basis, we may not realize the anticipated benefits of our significant capital investments.

***Changing environmental regulation and public energy policy may expose our business to new risks.***

Our and our hosted customers' Bitcoin mining operations require a substantial amount of power and can only be successful, and ultimately profitable, if the costs incurred, including for electricity, are lower than the revenue we generate from operations. As a result, any mine we or our hosted customers establish can only be successful if we can obtain sufficient electrical power for that mine on a cost-effective basis, and our establishment of new mines requires us to find locations where that is the case. For instance, our plans and strategic initiatives for the Dorothy Facility are based, in part, on our understanding of current environmental and energy regulations, policies, and initiatives enacted by federal and Texas regulators. If new regulations are imposed, or if existing regulations are modified, the assumptions we made underlying our plans and strategic initiatives may be inaccurate, and we may incur additional costs to adapt our planned business, if we are able to adapt at all, to such regulations.

In addition, there continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty for our business because the cryptocurrency mining industry, with its high energy demand, may become a target for future environmental and energy regulation. New legislation and increased regulation regarding climate change could impose significant costs on us and our suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting, and other costs to comply with such regulations. Further, any future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations.

For example, in September 2022, the White House issued a report regarding the Climate and Energy Implications of Crypto-Assets in the United States. The report states that the Department of Energy and Environmental Protection Agency should initiate a process to solicit data and develop environmental performance and energy conservation standards for crypto-asset technologies, including mining equipment. Should such measures prove ineffective at achieving the Administration's environmental goals, the report calls for the Administration to explore executive actions and legislation to limit or eliminate the use of high energy intensity consensus mechanisms for crypto-asset mining in the United States.

***We may be affected by price fluctuations in the wholesale and retail power markets.***

While the majority of our power and hosting arrangements contain fixed power prices, some also contain certain price adjustment mechanisms in case of certain events. Furthermore, a portion of our power and hosting arrangements includes merchant power prices, or power prices reflecting market movements. Market prices for power, generation capacity and ancillary services, are unpredictable. Over the past year, the market prices for power have generally been increasing, driven in part by the price increases in various commodities, including natural gas. Depending upon the effectiveness of any price risk management activity undertaken by us, an increase in market prices for power, generation capacity, and ancillary services may adversely affect our business, prospects, financial condition, and operating results. Long- and short-term power prices may fluctuate substantially due to a variety of factors outside of our control, including, but not limited to:

● increases and decreases in generation capacity;

● changes in power transmission or fuel transportation capacity constraints or inefficiencies;

● volatile weather conditions, particularly unusually hot or mild summers or unusually cold or warm winters;

● technological shifts resulting in changes in the demand for power or in patterns of power usage, including the potential development of demand-side management tools, expansion and technological advancements in power storage capability and the development of new fuels or new technologies for the production or storage of power;

● federal and state power, market and environmental regulation and legislation; and

● changes in capacity prices and capacity markets.

If we are unable to secure power supply at prices or on terms acceptable to us, it would have a material adverse effect on our business, prospects, financial condition, and operating results.

***If federal or state legislatures or agencies initiate or release tax determinations that change the classification of cryptocurrencies as property for tax purposes (in the context of when such cryptocurrencies are held as an investment), such determination could have a negative tax consequence on us.***

Current Internal Revenue Service guidance indicates that digital assets such as Bitcoin should be treated and taxed as property, and that transactions involving the payment of Bitcoin for goods and services should be treated as barter transactions. While this treatment creates a potential tax reporting requirement for any circumstance where the ownership of a cryptocurrency passes from one person to another, it preserves the right to apply capital gains treatment to those transactions which may adversely affect our results of operations.

**Risks Related to our Company Generally**

***Our confidentiality agreements with employees and others may not adequately prevent disclosure of our trade secrets and other proprietary information, which could limit our ability to compete.***

While we are currently in the process of applying for patents with respect to SCI's business, presently we rely on trade secrets to protect our proprietary technology and processes. Despite such protection, however, it is possible that a third party may copy or otherwise obtain and use our U.S. Patent and Trademark Office-registered or other proprietary information without our authorization, and trade secrets can be difficult to protect. Policing unauthorized use of our intellectual property and trade secrets is difficult, particularly in light of the global nature of the Internet and because the laws of other countries may afford us little or no effective protection of our intellectual property. Potentially expensive litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Additionally, we enter into confidentiality and intellectual property assignment agreements with our employees, consultants and other advisors. These agreements generally require that the other party keep confidential and not disclose to third parties' confidential information developed by the party under such agreements or made known to the party by us during the course of the party's relationship with us. Our employees, consultants and other advisors, however, may not honor these agreements and enforcing a claim that a party illegally obtained and is using our trade secrets is difficult, expensive and time-consuming and the outcome is unpredictable. Our failure to obtain and maintain trade secret protection could adversely affect our competitive position.

***We rely on highly skilled personnel and the continuing efforts of our executive officers and, if we are unable to retain, motivate or hire qualified personnel, our business may be severely disrupted. In addition, increased labor costs and the unavailability of skilled workers could hurt our business, financial condition and results of operations.***

Our performance largely depends on the talents, knowledge, skills, know-how and efforts of highly skilled individuals and in particular, the expertise held by our Chief Executive Officer, Michael Toporek of SHI, and Chief Executive Officer, John Belizaire of SCI. His absence, were it to occur, would materially and adversely impact development and implementation of our projects and businesses. Our future success depends on our continuing ability to identify, hire, develop, motivate and retain highly skilled personnel for all areas of our organization. Our continued ability to compete effectively depends on our ability to attract, among others, new technology developers and to retain and motivate our existing contractors. If one or more of our executive officers or other key personnel are unable or unwilling to continue in their present positions, we may not be able to replace them readily, if at all. In such case, our business may be severely disrupted, and we may incur additional expenses to recruit and retain new officers or other key personnel. In addition, if any of our executives or key personnel joins a competitor or forms a competing company, we may lose customers.

In addition, we compete with other businesses in our industries and other similar employers to attract and retain qualified personnel with the technical skills and experience required to successfully operate our businesses. The demand for skilled workers is high and the supply is limited, and a shortage in the labor pool of skilled workers or other general inflationary pressures or changes in applicable laws and regulations could make it more difficult for us to attract and retain personnel and could require us to enhance our wage and benefits packages, which could increase our operating costs.

***Brookstone XXIV currently has a controlling interest in the Company due to the number of shares of common stock that it beneficially owns and its designation of two of our directors.***

As of March 28, 2023 , Brookstone XXIV owned approximately 15.2% of the Company's outstanding shares of Common Stock and has designated two directors that sit on our nine-member Board. Accordingly, Brookstone XXIV has the ability to exert a significant degree of influence or actual control over our management and affairs and, as a practical matter, will control corporate actions requiring stockholder approval, irrespective of how our other stockholders may vote, including the election of directors, amendments to our articles of incorporation, as amended ("Articles of Incorporation") and our bylaws ("Bylaws"), and the approval of mergers and other significant corporate transactions, including a sale of substantially all of our assets, and Brookstone XXIV may vote its shares in a manner that is adverse to the interests of our minority stockholders. This concentration of voting control could deprive holders of our Common Stock of an opportunity to receive a premium for their shares of our Common Stock as part of a sale of the Company. Further, Brookstone XXIV's control position might adversely affect the market prices of our securities to the extent investors perceive disadvantages in owning shares of a company with a controlling stockholder.

***Brookstone XXIV and its director designees may acquire interests and positions that could present potential conflicts with our and our stockholders' interests.***

Brookstone XXIV and its director designees may make investments in companies and may, from time to time, acquire and hold interests in businesses that compete directly or indirectly with us. Brookstone XXIV and its director designees may also pursue, for their own accounts, acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities might not be available to us. As part of our sale of 3,750,000 shares of our Common Stock to Brookstone XXIV in October 2016 and as required by Brookstone XXIV as a condition to purchasing the shares, our Board renounced, to the extent permitted by applicable law, the Company's expectancy with respect to being offered an opportunity to participate in any business opportunity that is discovered by or presented to a director designee (a "Business Opportunity"), whether in such director designee's capacity as a director of the Company or otherwise. Accordingly, the interests of Brookstone XXIV and the designated directors with respect to a Business Opportunity may supersede ours, and Brookstone XXIV or its affiliates or the Brookstone XXIV-designated directors may be involved with businesses that compete with us and may pursue opportunities for the sole benefit of Brookstone XXIV and its affiliates without our involvement, for which we have limited recourse. Such actions on the part of Brookstone XXIV or its director designees could have a material adverse effect on our business, financial condition, results of operations and cash flows.

In addition, Michael Toporek, the Company's Chief Executive Officer, serves as the Managing General Partner of Brookstone XXIV. As a result of the potential conflicts inherent in his serving in both roles, it is possible that Mr. Toporek could make decisions that benefit Brookstone XXIV at the expense of the Company.

***Insiders continue to have substantial control over the Company.***

As of March 28, 2023 , the Company's directors and executive officers held the current right to vote approximately 18.7% of the Company's outstanding voting stock. Of this total, 15.2% was owned or controlled by Brookstone XXIV, for which Michael Toporek, the Company's Chief Executive Officer, also serves as Managing General Partner. In addition, the Company's directors and executive officers have the right to acquire additional shares of our Common Stock by exercising their equity awards under our equity compensation plans, which could increase their voting percentage significantly. As a result, Mr. Toporek acting alone, and/or many of the Company's officers and directors acting together, may have the ability to exert significant control over the Company's decisions and control the management and affairs of the Company, and also to determine the outcome of matters submitted to stockholders for approval, including the election or removal of a director, and any merger, consolidation or sale of all or substantially all of the Company's assets. Accordingly, this concentration of ownership may harm the future market prices of our securities by:

● delaying, deferring or preventing a change in control of the Company;

● impeding a merger, consolidation, takeover or other business combination involving the Company; or

● discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company.

***We are subject to complex environmental, health and safety laws and regulations that may expose us to significant liabilities for penalties, damages or costs of remediation or compliance.***

We are subject to various federal, state, local and foreign environmental, health and safety laws and regulations. These laws and regulations govern matters such as: the emission and discharge of hazardous materials into the ground, air or water; the generation, use, storage, handling, treatment, packaging, transportation, exposure to, and disposal of hazardous and biological materials, including recordkeeping, reporting and registration requirements; and the health and safety of our employees. We may incur significant additional costs beyond those currently contemplated to comply with these regulatory requirements. Further, if we fail to comply with these requirements we may be exposed to fines, penalties and/or interruptions in our operations that could have a material adverse effect on our business, operating results and financial condition. Certain environmental laws may impose strict, joint and several liability for costs required to clean up and restore sites where hazardous substances have been disposed or otherwise released into the environment, even under circumstances where the hazardous substances were released by prior owners or operators, or the activities conducted and from which a release emanated complied with applicable law.

Further, existing regulations, particularly in the environmental area, could be revised or reinterpreted, or new laws and regulations could be adopted or become applicable to us or our facilities and future changes in environmental laws and regulations could occur, including potential regulatory and enforcement developments related to air emissions, any of which could result in significant additional costs. Any of the foregoing could have a material adverse effect on our results of operations and financial condition.

**General Risk Factors** 

***We are heavily dependent on our senior management, and a loss of a member of our senior management team could cause the market prices of our securities to suffer.***

If we lose the services of Michael Toporek, our Chief Executive Officer and a member of our board of directors, John Belizaire, SCI's Chief Executive Officer and member of our board of directors, Philip Patman, Jr., our Chief Financial Officer, and/or certain key employees, we may not be able to find appropriate replacements on a timely basis, and our business could be adversely affected. We do not currently maintain key life insurance policies on these officers or key employees. Our existing operations and continued future development depend to a significant extent upon the performance and active participation of these individuals and certain key employees. We may not be successful in retaining the services of these individuals, and if we were to lose any of these individuals, we may not be able to find appropriate replacements on a timely basis and our financial condition and results of operations could be materially adversely affected.

***We may incur losses and liabilities in the course of business that could prove costly to defend or resolve.***

Companies that operate in one or more of the businesses that we operate face significant legal risks. There is a risk that we could become involved in litigation wherein an adverse result could have a material adverse effect on our business and our financial condition. There is a risk of litigation generally in conducting a commercial business, and we are, at times, involved in commercial disputes with third parties, such as customers, distributors and vendors. These risks often may be difficult to assess or quantify and their existence and magnitude often remain unknown for substantial periods of time. We may incur significant legal expenses in defending against litigation.

***We may become subject to claims of infringement or misappropriation of the intellectual property rights of others, which could prohibit us from selling our products, require us to obtain licenses from third parties or to develop non-infringing alternatives, and subject us to substantial monetary damages and injunctive relief.***

We may receive notices from third parties that the manufacture, use or sale of any products we develop infringes upon one or more claims of their patents. Moreover, because patent applications can take many years to issue, there may be currently pending applications, unknown to us, that may later result in issued patents that materially and adversely affect our business. Third parties could also assert infringement or misappropriation claims against us with respect to our future product offerings, if any. We cannot be certain that we have not infringed the intellectual property rights of any third parties. Any infringement or misappropriation claim could result in significant costs, substantial damages and our inability to manufacture, market or sell any of our product offerings that are found to infringe another person's patent. Even if we were to prevail in any such action, the litigation could result in substantial cost and diversion of resources that could materially and adversely affect our business. If a court determined, or if we independently discovered, that our product offerings violated third-party proprietary rights, there can be no assurance that we would be able to re-engineer our product offerings to avoid those rights or obtain a license under those rights on commercially reasonable terms, if at all. As a result, we could be prohibited from selling products that are found to infringe upon the rights of others. Even if obtaining a license were feasible, it may be costly and time-consuming. A court could also enter orders that temporarily, preliminarily, or permanently enjoin us from making, using, selling, offering to sell or importing our products that are found to infringe on third parties' intellectual property rights, or could enter orders mandating that we undertake certain remedial actions. Further, a court could order us to pay compensatory damages for any such infringement, plus prejudgment interest, and could in addition treble the compensatory damages and award attorneys' fees. Any such payments could materially and adversely affect our business and financial condition.

***If we are unable to protect our information systems against service interruption or failure, misappropriation of data or breaches of security, our operations could be disrupted, we could be subject to costly government enforcement actions and private litigation and our reputation may be damaged.***

Our business involves the collection, storage and transmission of personal, financial or other information that is entrusted to us by our customers and employees. Our information systems also contain the Company's proprietary and other confidential information related to our business. Our efforts to protect such information may be unsuccessful due to the actions of third parties, computer viruses, physical or electronic break-ins, catastrophic events, employee error or malfeasance or other attempts to harm our systems. As the techniques used to obtain unauthorized access, disable or degrade service or sabotage systems, change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or timely implement adequate preventative measures. We could also experience a loss of critical data and delays or interruptions in our ability to manage inventories or process transactions. Some of our commercial partners, such as those that help us maintain our website, may receive or store information provided by us or our users through our website. If these third parties fail to adopt or adhere to adequate information security practices or fail to comply with our policies in this regard, or in the event of a breach of their networks, our customers' or employees' information may be improperly accessed, used or disclosed.

If our systems are harmed or fail to function properly, we may need to expend significant financial resources to repair or replace systems or to otherwise protect against security breaches or to address problems caused by breaches. If we experience a significant security breach or fail to detect and appropriately respond to a significant security breach, we could be exposed to costly legal actions against us in connection with such incidents, which could result in orders or judgments forcing us to pay damages or fines or to take certain actions with respect to our information systems. Any incidents involving unauthorized access to or improper use of user information, or incidents that are a violation of our online privacy policies, could harm our brand reputation and diminish our competitive position. Any of these events could have a material and adverse effect on our business, reputation or financial results. Our insurance policies carry coverage limits, which may not be adequate to reimburse us for losses caused by security breaches.

***Our risk management process may not identify all risks that we are subject to and will not eliminate all risk.***

Our Enterprise Risk Management ("ERM") process seeks to identify and address significant risks. Our ERM process uses the most recent integrated risk framework in *Internal Control — Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission to assess, manage and monitor risks. We believe that risk-taking is an inherent aspect of the pursuit of our growth and performance strategy. Our goals are to proactively manage risks in a structured approach in conjunction with strategic planning, with the intent to preserve and enhance shareowner value, and to manage prudently, rather than wholly avoiding, risks. We can mitigate risks and their impact on the Company, however, only to a limited extent, and no ERM process can identify all risks that we may face. Therefore, there may be risks that we are currently unaware of, that may develop in the future or that we currently consider immaterial. Further, our management of risks may prove inadequate. The emergence of risks of which we were unaware or are unable to manage could have a material adverse effect on our business, prospects, financial condition and results of operations.

***The Company's officers and directors are indemnified against certain conduct that may prove costly to defend.***

Our Articles of Incorporation and Bylaws generally provide broad indemnification to our officers and directors against judgments, fines, amounts paid in settlement and expenses, including attorneys' fees actually incurred in connection with most actions or proceedings to which they are or are threatened to be made a party that relates to their service as an officer or director, except as limited as set forth therein. We are also obligated to advance expenses as they are incurred by a director or officer in defending an action or proceeding prior to final disposition upon receipt of an undertaking by the applicable person to repay such advanced amount if the advancement is ultimately found to not be permitted by law or otherwise.

In addition, the Nevada Revised Statutes (the "NRS") provides that no director or officer is individually liable for damages as a result of an act or failure to act in his or her capacity as a director or officer except if (i) the presumption that such director or officer acted in good faith, on an informed basis and with a view to the interests of the Company is rebutted, and (ii) it is proven that such director's or officer's act or failure to act constituted a breach of his or her fiduciary duties as a director or officer, and such breach involved intentional misconduct, fraud or a knowing violation of law. Consequently, subject to the applicable provisions of the NRS and to certain limited exceptions in the Articles of Incorporation and Bylaws, the Company's officers and directors will not be liable to the Company or to its stockholders for monetary damages resulting from their conduct as an officer or director. As a result, we may have to spend significant resources indemnifying our officers and directors or paying for damages caused by their conduct.

 ****

***The requirements of being a public company may strain our resources and divert management's attention.***

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act), the Dodd-Frank Wall Street Reform and Consumer Protection Act and other applicable securities rules and regulations. The Exchange Act requires, among other things, that we file annual and current reports with the SEC with respect to our business and operating results. Compliance with these rules and regulations increases our legal and financial compliance costs, makes some activities more difficult, time-consuming, or costly, and increases demand on our systems and resources. As a result of disclosure of information in this Report and in filings required of a public company, our business and financial condition is more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert resources of our management and harm our business and operating results.

**Risks Related to our Securities**

***The market price of our securities are likely be volatile, which may cause investment losses for our shareholders.***

The market price of our securities has been and is likely to continue to be volatile, and investors in our securities may experience a decrease, which could be substantial, in the value of their securities or the loss of their entire investment in the Company for a number of reasons, including reasons unrelated to our operating performance or prospects. The market price of our securities could be subject to wide fluctuations in response to a broad and diverse range of factors, including those described elsewhere in this "Risk Factors" section as well as the following:

● announcements by us regarding liquidity, significant acquisitions, equity investments and divestitures, addition or loss of significant customers and contracts, capital expenditure commitments and litigation;

● our issuance of securities or debt, particularly if in connection with acquisition activities;

● the sale of a significant number of shares of our common stock by shareholders;

● recent changes in financial condition or results of operations, such as in earnings, revenues or other measure of company value;

● general market and economic conditions; and

● announcements of technological innovations or new product introductions by us or our competitors.

Further, broad market and industry factors may have a material adverse effect on the market price of our securities regardless of our actual operating performance.

In addition, stock markets have experienced in the past and may in the future experience a high level of price and volume volatility, and the market prices of equity securities of many companies have experienced in the past and may in the future experience wide price fluctuations not necessarily related to the operating performance of such companies. These broad market fluctuations may adversely affect the market price of our securities.

Finally, our relatively small public float and daily trading volume have in the past caused, and may in the future result in, significant volatility in the price of our securities. As of December 31, 2022, we had approximately 14,195,402 shares of our common stock outstanding held by non-affiliates and 3,055,190 shares of our Series A Preferred Stock outstanding held by non-affiliates. Our daily trading volume for the year ended December 31, 2022, averaged approximately 119,105 shares of common stock and 18,645 shares of Series A Preferred Stock.

***Because there has been limited precedent set for financial accounting of Bitcoin and other cryptocurrency assets, the determination that we have made for how to account for cryptocurrency assets transactions may be subject to change.***

Because there has been limited precedent set for the financial accounting of cryptocurrencies and related revenue recognition and no official guidance has yet been provided by the FASB or the SEC, it is unclear how companies may in the future be required to account for cryptocurrency transactions and assets and related revenue recognition. A change in regulatory or financial accounting standards could result in the necessity to change our accounting methods and restate our financial statements. Such a restatement could adversely affect the accounting for our newly mined cryptocurrency rewards and more generally negatively impact our business, prospects, financial condition and results of operations. Such circumstances would have a material adverse effect on our ability to continue as a going concern or to pursue our new strategy at all, which would have a material adverse effect on our business, prospects or operations as well as and potentially the value of any cryptocurrencies we hold or expect to acquire for our own account and harm our investors.

***If we are not able to comply with the applicable continued listing requirements or standards of Nasdaq, Nasdaq could delist our common stock or Series A Preferred Stock or broker-dealers may be discouraged from effecting transactions in shares of our securities.***

Our common stock became listed and commenced trading on Nasdaq on March 23, 2020, and our Series A Preferred Stock commenced trading on Nasdaq on August 19, 2021. In order to maintain such listings, we must satisfy minimum financial and other continued listing requirements and standards, including those regarding director independence and independent committee requirements, minimum stockholders' equity, minimum share price and certain corporate governance requirements. We have been given notice by NASDAQ that by virtue of our common stock trading below the $1.00 minimum bid price requirement, we will be subject to delisting unless prior to June 21, 2023, the closing bid price exceeds $1.00 for twenty consecutive trading days. While the Company may seek to satisfy this requirement by a reverse stock split, there can be no assurances that we will be able to comply with such applicable listing standards. If we fail to do so, Nasdaq may delist our common stock and Series A Preferred Stock, which would likely have an adverse impact on the market price and liquidity of such securities.

In addition, our shares of common stock have in the past constituted, and may again in the future constitute, "penny stock" within the meaning of Section 3(a)(51) of the Exchange Act and Rule 3a-51-1 thereunder, and so will be subject to the "penny stock" rules adopted under Section 15(g) (now 15(h)) of the Exchange Act. The penny stock rules generally apply to companies whose common stock is not listed on a national securities exchange and trades at less than $5.00 per share, other than companies that have had average revenue of at least $6,000,000 for the last three years or that have tangible net worth of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stocks to persons other than "established customers" complete certain documentation, make suitability inquiries of investors, and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If our common stock is subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our common stock. If the common stock is subject to the penny stock rules, investors will find it more difficult to dispose of their shares of our common stock.

***Raising additional funds through debt or equity financing could be dilutive and may cause the market price of our securities to decline. We still may need to raise additional funding which may not be available on acceptable terms, or at all. Failure to obtain additional capital may force us to delay, limit or terminate our product development efforts or other operations.***

To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a shareholder. Furthermore, any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our products and services. In addition, the sale of a significant number of our shares of common stock, either by us or by our shareholders (in particular Brookstone, our largest shareholder) could depress the price of our securities.

We may continue to seek funds through equity or debt financings, collaborative or other arrangements with corporate sources, or through other sources of financing. Additional funding may not be available to us on acceptable terms, or at all. Any failure to raise capital as and when needed, as a result of insufficient authorized shares or otherwise, could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies.

**Item 1B: Unresolved Staff Comments**

Not applicable.

**Item 2: Properties**

We lease approximately 3,478 square feet of office, in Albany, New York, which houses the corporate offices of SHI. The current lease agreement expires on December 31, 2024.

SCI leases approximately 19,000 square feet of space in four buildings in East Wenatchee, Washington. The space is currently used for hosted operations. The current lease agreements expire for one building on June 30, 2024, for another on November 30, 2024, and for the remaining two buildings on July 31, 2023.

On March 4, 2021, Soluna SW, LLC acquired a 3.2-acre tract of real property located in Murray, Kentucky on which it has built an energy-efficient cryptocurrency mining facility that includes 22 buildings for the Company's miners.

On February 24, 2023, Soluna DV Services, LLC entered into a lease agreement for a 33.19-acre tract of land in Briscoe County, Texas. The Agreement is for an Initial Term that expires on the date five years from the Service Date with the right to extend the term of the Agreement for five additional one year terms.

We believe these facilities are generally well-maintained and adequate for the Company's current needs and for expansion, if required.

**Item 3: Legal Proceedings**

At any point in time, we may be involved in various lawsuits or other legal proceedings. Such lawsuits could arise from the sale of products or services or from other matters relating to our regular business activities, compliance with various governmental regulations and requirements, or other transactions or circumstances.

We have been named as a party in the December 19, 2019 United States Environmental Protection Agency ("EPA") Demand Letter regarding the Malta Rocket Fuel Area Superfund Site ("Site") located in Malta and Stillwater, New York, in connection with an alleged release of hazardous materials into the environment. The EPA is seeking reimbursement of response costs from all named parties in the amount of approximately $358 thousand plus interest in connection with the investigation and disposal activities associated with the various drum caches discovered at the Site, issuance of the Explanation of Significant Differences ("ESD") of the Site, and implementation of the work contemplated by the ESD. We consider the likelihood of a material adverse outcome with respect to this matter to be remote and do not currently anticipate that any expense or liability that we may incur as a result of this matter in the future will be material to the Company's business or financial condition. Further, we are not presently involved in any other litigation that we believe is likely, individually or in the aggregate, to have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

NYDIG filed a complaint against Soluna MC Borrowing 2021-1 LLC ("Borrower") and Soluna MC LLC ("Guarantor", and together with Borrower, "Defendants") in Marshall Circuit Court of the Commonwealth of Kentucky on December 29, 2022 regarding a series of loans made by NYDIG to Borrower pursuant to a master equipment finance agreement that were secured by certain assets of Borrower and guaranteed by Guarantor pursuant to a written guaranty agreement executed by Guarantor. The Court issued on February 15, 2023, an agreed order granting NYDIG's motion for writ of possession which, among other things, ordered parties to provide NYDIG access to the collateral described therein and preserved the rights of NYDIG to pursue a deficiency judgment against the Defendants. Also on February 15, 2023, the Defendants filed their answer and affirmative defenses in this proceeding. The Defendants believe that NYDIG has liquidated some of the collateral securing the loans and anticipate that NYDIG will complete the liquidation of collateral and continue to prosecute the complaint to obtain a judgment against the Defendants. Additionally, NDYIG has stated its intention to pursue SCI, the parent company of Guarantor, under a piercing of the corporate veil claim relating to Defendants' debts and liabilities under the loan documents. SCI denies any such liability and has filed a complaint for a declaratory judgment against NYDIG in the Eighth Judicial District Court in Clark County, Nevada on March 16, 2023, seeking a declaratory judgment as to such matter.

**Item 4: Mine Safety Disclosures**

Not applicable.

**PART II**

**Item 5: Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities**

**Market Information**

Our common stock is listed on the Nasdaq Capital Market under the trading symbol "SLNH." The Company's preferred stock is listed on Nasdaq Capital Market under the trading symbol "SLNHP."

**Holders**

We have one class of common stock, par value $.001, and are authorized to issue 75,000,000 shares of common stock. Each share of the Company's common stock is entitled to one vote on all matters submitted to shareholders. As of December 31, 2022, there were 18,694,206 shares of common stock issued and outstanding. As of March 28, 2023, there were approximately 162 shareholders of record of the Company's common stock. The number of shareholders of record does not reflect the number of persons whose shares are held in nominee or "street" name accounts through brokers.

**Dividends**

As of December 31, 2022, we had 3,061,245 shares of our of 9.0% Series A Cumulative Perpetual Preferred Stock outstanding, which pursuant to the Certificate of Designations, Preferences and Rights of 9.0% Series A Cumulative Perpetual Preferred Stock ("Series A Preferred Stock"), of the Company entitle such holders to dividends, when, as and if declared by the board of directors of the Company (the "Board of Directors") (or a duly authorized committee of the Board of Directors), payable monthly in arrears on the final day of each month, beginning August 31, 2021. During the year ended December 31, 2022 and 2021, the Board declared and paid the Company aggregate dividends on the shares of Series A Preferred Stock of approximately $3.9 million and $630 thousand, respectively. The Board of Directors had not declared any Series A Preferred Stock dividends beginning October 2022 through the date of this report, as such the Company has accumulated approximately $1.7 million of dividends in arrears on the Series A Preferred Stock through December 31, 2022.

The Company's Series B Preferred Stock includes a 10% accruing dividend compounded daily for 12 months from the original issue date of July 20, 2022, that may be paid in cash or stock at the Company's option at the earlier of (i) the date the Series B Preferred Stock is converted, or (ii) the Series B Dividend Termination Date. As of December 31, 2022, the Company has accrued $236 thousand for dividend payable for the Series B preferred stock. In addition, under the Securities Purchase Agreement relating the Series B Preferred Stock the holder has certain consent rights to future equity offerings and rights of first refusal for three years from the original issue date. The Company can obtain a waiver of such rights if it pays to the holder an amount equal to 10% of the capital raised in such offerings (payable in cash or at the option of the Company in the same securities issued in such offering), until the holder has received, an aggregate of $10,000,000 less any profit the holder has received from ownership of the shares, whether through dividends or other distributions, payments of fees, or gains on the sale of the preferred stock.

The Company does not intend to pay dividends on our common stock and do not anticipate or contemplate paying cash dividends on our common stock in the foreseeable future. We currently intend to use all available funds to develop our business. We can give no assurance that we will ever have excess funds available to pay dividends. Any future determination as to the payment of dividends will depend upon critical requirements and limitations imposed by our credit agreements, if any, and such other factors as our Board of Directors may consider.

**Item 6: Selected Financial Data**

Not applicable.

**Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations**

*The following discussion of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements, which involve risk and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors, including those discussed in Item 1A: "Risk Factors" and elsewhere in this Annual Report.*

**Recent Developments and Trends**

We used the net proceeds of our debt financing in 2022, common and preferred stock offerings, and securities purchase agreement in December 2022 primarily for the construction of Project Dorothy, which is anticipated to launch in fiscal year 2023, additional miners for our cryptocurrency mining facilities in Kentucky to continue to expand our growth in those facilities, and operational expenses for our SHI parent and SCI business unit.

**Industry Trends**

During 2022, we observed several companies in the Bitcoin ecosystem experience significant challenges and initiate bankruptcy proceedings due to the significant decline in the price of Bitcoin and other national and global macroeconomic factors. We anticipate this trend will likely continue as companies attempt to shift their business models to operate on significantly compressed margins. The dramatic increase in the price of Bitcoin observed in the market during prior years caused many companies to over-leverage themselves, thus operating in an unsustainable way given the recent instability in the price of Bitcoin. Soluna looks to continue to build and develop at Project Dorothy and to demonstrate the cost effectiveness of our business model and generate growth opportunities by increasing our project pipelines. We are continuously evaluating strategic opportunities which we may decide to undertake as part of our strategic growth initiatives; however, we can offer no assurances that any strategic opportunities which we decide to undertake will be achieved on the schedule or within the budget we anticipate, if at all, in our competitive and evolving industry. See Part I, Item 1A. "Risk Factors" of this Annual Report for additional discussion regarding potential impacts our competitive and evolving industry may have on our business.

 

 

*Miner Purchases and Deployments*

As of December 31, 2022, we had purchased, received and/or deployed the following miners:

---

| | |
|:---|:---|
|  | **Number of**<br>**Miners** |
| Miners deployed as of January 1, 2022 | 13240 |
| Miners received and deployed in the year ended December 31, 2022 | 12289 |
| Miners in storage as of December 31, 2022, not deployed | (7876) |
| Miners collateralized as of December 31, 2022, for repossession | (3416) |
| Miners held for sale as of December 31, 2022 | (1835) |
| Miners disposed or sold in the year ended December 31, 2022 | (7331) |
| Total Active and Unencumbered Miners as of December 31, 2022 | 5071 |

---

**Results of Operations**

***Results of Operations for the Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021.***

 ****

The following table summarizes changes in the various components of our net loss during the year ended December 31, 2022 compared to the year ended December 31, 2021.

---

| | | | | |
|:---|:---|:---|:---|:---|
| (Dollars in thousands) | **Year**<br>**Ended**<br>**December 31,<br> 2022** | **Year<br> Ended**<br> **December 31,<br> 2021** | **$**<br> **Change** | **% <br> Change** |
| Cryptocurrency mining revenue | $24409 | 10932 | 13477 | 123% |
| Data hosting revenue | $4138 | 3413 | 725 | 21% |
| Operating costs and expenses: |  |  |  |  |
| Cost of cryptocurrency mining revenue, exclusive of depreciation | $14281 | 3504 | 10777 | 308% |
| Depreciation costs associated with cryptocurrency mining | $18708 | 2122 | 16586 | 782% |
| Cost of data hosting revenue | $3517 | 2444 | 1073 | 44% |
| General and administrative expenses, exclusive of depreciation and amortization | $19203 | 9170 | 10033 | 109% |
| Depreciation and amortization associated with general and administrative expenses | $9506 | 1581 | 7925 | 501% |
| Impairment on equity investment | $750 |  | 750 | 100% |
| Impairment on fixed assets | $47372 |  | 47372 | 100% |
| Operating loss | $(84790) | (4476) | (80314) | 1794% |
| Other income, net | $22 | 11 | 11 | 100% |
| Interest expense | $(8375) | (1879) | (6496) | 346% |
| Loss on sale of fixed assets | $(4089) |  | (4089) | (100)% |
| Loss on debt extinguishment and revaluation, net | $(11130) |  | (11130) | (100)% |
| Loss before income taxes from continuing operations | $(108362) | (6344) | (102018) | 1608% |
| Income tax benefit (expense) from continuing operations | $1346 | (44) | 1390 | (3159)% |
| Net loss from continuing operations | $(107016) | (6388) | (100628) | 1575% |
| Income before income taxes from discontinued operations (including gain on sale of MTI Instruments of $7,751 for the year ended December 31, 2022) | $7921 | 1087 | 6834 | 629% |
| Income tax benefit from discontinued operations | $- | 40 | (40) | (100)% |
| Net income from discontinued operations | $7921 | 1127 | 6794 | 603% |
| Net loss | $(99095) | (5261) | (93834) | 1784% |
| Net loss attributable to non-controlling interest | $(380) |  | (380) | (100)% |
| Net loss attributable to Soluna Holdings, Inc. | $(98715) | (5261) | (93454) | 1776% |

---

***Cryptocurrency Mining Revenue***: Cryptocurrency revenue consists of revenue recognized from SCI's cryptocurrency mining operations. Cryptocurrency mining revenue was approximately $24.4 million for the year ended December 31, 2022, respectively, compared to $10.9 million for the year ended December 31, 2021, respectively. We maintained our facility in Washington (Project Edith) and in 2021 added two new mining site operations in Murray, Kentucky (Project Sophie) and Calvert City, Kentucky (Project Marie), however only Project Edith and Project Sophie sites were operational in the first nine months of fiscal year 2021, and operations for Project Sophie site did not begin to ramp up until the fourth quarter of 2021. Megawatts deployed increased from approximately 2 megawatts at the beginning of 2021 and increased slowly in fiscal year 2021 to 20 megawatts for the Project Marie facility and 25 megawatts for the Project Sophie facility for the year ended December 31, 2022. This growth in capacity and expected hashrate contributed to the growth in the business for the year-ended December 31, 2022.

***Data Hosting Revenue***: In August 2021, SCI began cryptocurrency hosting services in which SCI provided energized space and operating services to third-party mining companies who located their mining hardware at one of SCI's mining locations, in which SCI would receive a fee per miner installed, revenue share and if additional services were rendered, an additional service fee was charged to the outside parties. In August of 2022, the Company saw a decline in data hosting revenue per month due to a change in contract terms in which the Company changed to charging a lower flat fee per month as compared to the previous fees charged by miner; the electricity expense is now treated as a pass-through item and thus does not get recognized as revenue. This change resulted in less risk for the Company, and higher margins. The Company still receives a profit share component from the hosting contract. The data hosting revenues for the year ended December 2022 and 2021 is primarily attributed to the Project Marie mining site. The Company's data hosting revenue was approximately $4.2 million for the year ended December 31, 2022, respectively, compared to $3.4 million in data hosting revenue for the year ended December 31, 2021.

 ****

***Cost of Cryptocurrency Revenue****:* Cost of cryptocurrency revenue includes direct utility costs, site overhead expenses, depreciation expenses, as well as operations management overhead costs that relate to the operations of SCI's cryptocurrency mining facilities in Washington and facilities in Kentucky. Going forward, cost of cryptocurrency revenue will include any additional SCI cryptocurrency mining facilities that are part of the Company's future pipeline.

Cost of cryptocurrency mining revenue, exclusive of depreciation costs, was approximately $14.2 million for the year ended December 31, 2022, respectively, compared to approximately $3.5 million for the year ended December 31, 2021, respectively. Depreciation costs associated with cryptocurrency revenue was approximately $18.7 million year ended December 31, 2022, respectively, compared to $2.1 million for the year ended December 31, 2021, respectively. As noted above, SCI's ramp up for cryptocurrency mining operations happened throughout 2021 and the first quarter of 2022. Project Sophie mining site did not energize until the fourth quarter of 2021. Therefore, there was a significant variance in cryptocurrency mining revenue and associated costs for the year ended December 31, 2022 when compared to December 31, 2021. As the Company began increasing its capacity, the associated costs began to increase. As noted above, depreciation costs associated with cryptocurrency mining revenue began to significantly increase as miners and equipment were being installed into operations and depreciated over their useful life.

***Cost of Data Hosting Revenue:*** Cost of data hosting revenue includes utility charges, site overhead expenses, and other charges. These expenses are allocated based on the cost driving activity.

Cost of data hosting revenue was approximately $3.5 million for the year ended December 31, 2022, compared to $2.4 million for the year ended December 31, 2021. As noted above, SCI began hosting services in August 2021, in which expenses were allocated based on the cost driving activity, and as operations began to increase, the Company incurred higher cost of revenue. As noted in the data hosting revenue, the Company changed contract terms in August 2022, and as a result, the cost of revenue began declining in the third and fourth quarter of 2022 compared to the previous year.

***General and Administrative Expenses:***

General and administrative expenses include cash and non-cash compensation, benefits and related costs in support of our general corporate functions, including general management, finance and accounting, human resources, marketing, information technology, corporate development, and legal services.

 

General and administrative expenses, exclusive of depreciation and amortization for the year ended December 31, 2022, increased by $10.0 million or 109%, to $19.2 million from $9.2 million for the year ended December 31, 2021. This increase was a result of expenses incurred in the year ended December 31, 2022, that had significant fluctuations compared to the year ended December 31, 2021, related to the hiring of new employees for the Soluna Callisto transactions (i.e.: salary, stock-based compensation and future pipeline expenses), as well as from changes in a number of our traditional general and administrative expenses.

Salaries, benefits and other employee related expenses increased by $4.6 million during the year ended December 31, 2022 compared to the year ended December 31, 2021. Approximately $3.7 million related to salary and fringe benefits for new employees of Soluna Callisto in connection with the October 2021 acquisition and the subsequent hires, as compared to payroll expenses associated with SCI for just over 2 months as of December 31, 2021, in which there was only 16 SCI employees. As of December 31, 2022, SCI had 25 employees. Approximately $1.2 million related to additional hires for supporting a larger corporate organization for SHI including more accounting functionality, compliance and financial planning. Employee recruitment expense increased approximately $180 thousand due to growing the Company and hiring of temporary help for some of the plant locations. Also, travel and business expenses of employees increased $356 thousand due the growth of Company for fiscal year 2022, expanding services and potential pipeline projects. Salaries, benefits and other employee related expenses was offset with a decrease in bonuses of $244 thousand due to cost constraints as of the end of the year for fiscal 2022.

Stock-based compensation costs included within G&A expenses increased by $1.8 million during the year ended December 31, 2022 compared to the year ended December 31, 2021, due to grants of restricted stock units and options granted to members of our board of directors, executives and employees, including the new employees hired by SCI.

Consulting and professional services increased by $959 thousand million during the year ended December 31, 2022 compared to the year ended December 31, 2021 due to required valuations of complex transactions, advisory fees for complex accounting research matters, and pipeline development project costs, in which the Company involves multiple consultants to help build out future plans.

Legal fees increased by approximately $1.5 million during year ended December 31, 2022 compared to the year ended December 31, 2021 due to legal expenses of approximately $1.2 million in relation to Project Dorothy. This included legal costs around the agreements with the affiliated parties, the power purchase agreement, and Spring Lane agreements. In addition there was an increase of approximately $500 thousand in relation to general corporate matters associated with the growth of the business, higher fees for annual filing and additional corporate filings such as 8Ks, and the special proxy meetings that occurred during the fiscal year 2022, offset with declines of approximately $200 thousand in legal fees for other SCI operations in Kentucky.

Insurance expenses increased by approximately $661 thousand during the year ended December 31, 2022 compared to the year ended December 31, 2021, due to an increase in general business insurance, as well as directors and officers insurance of $221 thousand. Also, there were project level insurance costs of $440 thousand for Project Marie in Kentucky that was related to the NYDIG financing.

Audit and tax fees increased by $609 thousand for the year ended December 31, 2022, compared to the year ended December 31, 2021. This was due to increased fees for the fiscal year 2021 audit, as well as to the nature of the Company's operations changing from an instrumentation business to a cryptocurrency mining business.

Office and general information and technology expenses increased by approximately $437 thousand during the year ended December 31, 2022, compared to the year ended December 31, 2021, due to an increase in general office expense of about $115 thousand and software license expenses of $322 thousand, as the company was working on developing and growing new technology to help build a stronger and more efficient internal infrastructure.

The company incurred operations and management expenses paid to Soluna BC for the year ended December 31, 2021, which were not paid for the year ended December 31, 2022. These amounts in 2021 totaled $1.0 million, as the operation and management fee agreements creating these expenses ended on October 21, 2021.

 ****

***Depreciation and Amortization associated with general and administrative expenses:*** Depreciation and amortization expense for the year ended December 31, 2022, totaled approximately $9.5 million, respectively, compared to $1.6 million for the year ended December 31, 2021. This increase was mainly related to amortization expense related to the strategic pipeline contract that was acquired in October 2021, as well as small increases in depreciation expenses related to general and administrative items.

***Impairment on Equity Investment***: During the year ended December 31, 2022, the Company fully impaired the equity method investment of $750 thousand due to current projections with the equity investment in HEL.

***Impairment on Fixed Assets:*** During the year ended December 31, 2022, the Company concluded that there were impairment indicators on property, plant and equipment associated with the S-9 and L3 miners in storage. As a result, a quantitative impairment analysis was required throughout the fiscal year of 2022. As such, the Company reassessed its estimates and forecasts throughout the fiscal year of 2022, to determine the fair values of the S-9 and L3 miners held in storage. As a result of the analysis, as of year ended December 31, 2022, the Company concluded the carrying amount of the property, plant and equipment associated with the S-9 and L3 miners exceeded their fair value, which resulted in impairment charges of $2.0 million on the consolidated statements of operations for the year ended December 31, 2022.

In addition, the Company assessed the active miners in operations and determined that based on Bitcoin pricing and other market factors, there has been a decline in the market value of the active miners in the Company's operations. As a result, a quantitative impairment analysis was required throughout the fiscal year of December 31, 2022. As such, the Company reassessed its estimates and forecasts throughout the fiscal year of December 31, 2022, to determine the undiscounted cash flows to determine whether the miners would be recoverable. It was determined based on the analysis, that the undiscounted cash flow with residual value was less than the net book value as of December 31, 2022, confirming the existence of a triggering event, and therefore required an impairment to be recognized. Based on the fair value of the active miners compared to the net book value, the Company decided to recognize an impairment of approximately $39.3 million for the year ended December 31, 2022.

As of December 31, 2022, the Company had M20 miners and M21 miners in service at the Sophie location. Of these miners a portion of the miners was planned to be sold in the near future. The remaining M20 and M21 miners were to be disposed of as they had no value and were not being used. Prior to year-end, the Company had a business opportunity to sell the non-disposed miners which received Board approval, and therefore all the remaining assets were classified as assets held for sale. As a result, a quantitative impairment analysis was required as of December 31, 2022. The Company was not generating positive cash inflows and there had been a significant decline in the market value of miners based on the hashrate index. As a result of the fair value analysis as of December 31, 2022, the Company concluded the carrying amount of the property, plant and equipment associated with the M20 and M21 miners exceeded its fair value of $295 thousand, which resulted in impairment charges of approximately $1.8 million on the consolidated statements of operations for the year ended December 31, 2022.

As of December 31, 2022, the Company has equipment held at vendor including switchgears, transformers, busways and bus plugs. The Company had discussions with a potential buyer and approval of its Board of Directors for sale of the switchgears held at vendor. There has not been a final sale, but the Company has received a purchase order for the switchgear, subject to inspection of the equipment and final sale. Because the sale of the equipment held at vendor would mean the equipment is not being used for its intended purpose, the Company performed a fair value analysis as of December 31, 2022, and concluded the carrying amount of the equipment held at vendor exceeded its fair value of $916 thousand, which resulted in an impairment charge of $1.9 million on the consolidated statements of operations for the year ended December 31, 2022.

Due to the close of operations for Project Marie that occurred subsequent to year-end, the Company will dispose of approximately $1.7 million worth of leasehold improvements and general electrical upgrades and equipment which were attached to the facility which could not be salvaged for any value with the operations ceasing. As the NYDIG repossession and potential foreclosure were conditions that existed prior to year-end, the Company impaired the $1.7 million of assets as of year-end. Also, the Company will have equipment held for sale for the first quarter of 2023, in which based on a fair value analysis compared to the Company's net book value of the equipment still held, would cause an impairment of approximately $700 thousand, therefore total impairment for the Project Marie assets not attached with the collateralized NYDIG assets was approximately $2.4 million for year-ended December 31, 2022.

***Operating Loss:*** Operating loss increased to $84.8 million for the year ended December 31, 2022, from $4.5 million during the year ended December 31, 2021. This $80.3 million loss increase for the year ended December 31, 2022, was the result of the non-cash impairments of fixed assets of $47.4 million, additional depreciation and amortization expense of $24.5 million and increases in general, and administrative expenses, exclusive of depreciation and amortization of $10.0 million for items not incurred in the prior year related to the significant growth in the SCI operations, which led to increased revenue and costs in the year ended December 31, 2022.

***Interest Expense:*** Interest expense for the year ended December 31, 2022 was $8.4 million primarily related to $6.7 million of interest expense in relation to the October Secured Notes issued on October 25, 2021 and certain promissory notes issued in each of February, March, and April 2022 and repaid as part of the offering of Series A preferred stock in June 2022. Interest expense of $1.7 million for the year ended December 31, 2022, respectively was also incurred under the NYDIG facility and due to its December 2022 default. Interest expense for the year ended December 31, 2021 was $1.9 million and mainly related to the interest expense in relation to the Notes that were issued at the end of October 2021.

***Loss on Debt Extinguishment and Revaluation***: During the fiscal year ended December 31, 2022, the Company entered into the Addendum and Addendum Amendment in which per guidance in ASC 470 the October Secured Notes were treated as a debt extinguishment in our consolidated financial statements. The Company incurred a loss on the fair value valuation of approximately of approximately $12.9 million for the debt extinguishment and revaluation of debt through September 31, 2022. The Company did a fair value assessment of the Notes as of December 31, 2022 and recognized a gain from previous valuation of $1.8 million; therefore, the net loss for extinguishment and revaluation for the year ended December 31, 2022 was approximately $11.1 million. The Company did not incur a loss on debt for the year ended December 31, 2021. See Note 9.

***Loss on Sale of Fixed Assets:*** The Company incurred a $4.1 million loss for the year ended December 31, 2022, in connection with the disposal of miners and equipment with a net book value of approximately $6.9 million for the year ended December 31, 2022 in which the Company received proceeds of $2.8 million for year ended December 31, 2022. There were no such disposals on equipment for the year ended December 31, 2021.

***Income Tax Benefit (Expense) from Continuing Operations:*** Income tax benefit from continuing operations for the year ended December 31, 2022 was $1.3 million, compared to an income tax expense from continuing operations of $44 thousand for the year ended December 31, 2021. The increase in income tax benefit for the year ended December 31, 2022 was mainly related to deferred tax amortization impact of acquiring an asset in a transaction that is not a business combination when the amount paid exceeds the tax basis on the acquisition date. As such, the Company is required to adjust the value of the strategic contract pipeline by approximately $10.9 million at inception date on (October 29, 2021), which was recorded as a deferred tax liability. This amount will be amortized over the life of the asset. For the year ended December 31, 2022, the Company amortized $2.2 million, respectively. Income tax benefit from continuing operations was offset by a $295 thousand deferred tax expense incurred in the second quarter of 2022 related to increasing the Company's valuation allowance associated with the deferred tax asset, as well as a $503 thousand deferred tax state adjustment. Income tax expense for the year ended December 31, 2021 was $44 thousand and was primarily a result a change in the valuation allowance for the year offset with temporary timing differences. Our effective income tax rate for the years ended December 31, 2022 and 2021 were 1.0% and 1.0%.

***Net Loss from Continuing Operations:*** Net loss from continuing operations for the year ended December 31, 2022 was $107.0 million, compared to net loss from continuing operations of $6.3 million for the year ended December 31, 2021. The increase in loss for the year ended December 31, 2022 were the result of the factors noted above, including expenses not incurred in the prior year period, such as a full year of amortization expense for the strategic pipeline contract intangible, depreciation on miners installed, impairments on fixed assets, and revaluation of debt and interest costs, the cost of utilities to operate the Company's two facilities in Kentucky, and noncash compensation expense related to equity awards, partially offset by increases in cryptocurrency mining revenue and data hosting revenue.

***Net Income from Discontinued Operations:*** As of December 31, 2022, the Company's MTI Instruments business was reported as discontinued operations up to the date of the sale on April 11, 2022. For the year ended December 31, 2022, the Company's net income from discontinued operations was $7.9 million compared to $1.1 million for the year ended December 31, 2021. This was primarily due to the $7.7 million gain on the sale of MTI Instruments offset with MTI Instruments only having approximately three months of operations prior to the sale on April 11, 2022, compared to a full year of operations in 2021.

***Net Loss:*** Net loss for the year ended December 31, 2022 was $99.0 million, compared to net loss of approximately $5.3 million for the year ended December 31, 2021, respectively, primarily as a result of the factors noted above as related to net loss from continuing operations, as the Company continues to grow and build out its operations for the future.

***Net Loss attributable to non-controlling interest:*** Net loss attributable to non-controlling interest for the year ended December 31, 2022 was $380 thousand in relation to the Company's DVSL entity. There was no comparable balance for the year ended December 31, 2021.

**Non-GAAP Measures**

In addition to financial measures calculated in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"), we also use "Adjusted EBITDA." Adjusted EBITDA is a non-GAAP financial measure defined as net income (loss) from continuing operations before interest, taxes, depreciation and amortization ("EBITDA") adjusted to eliminate the effects of certain non-cash, non-recurring items, that we believe do not reflect our ongoing strategic business operations. Management believes that Adjusted EBITDA results in a performance measurement that represents a key indicator of the Company's business operations of cryptocurrency mining and hosting customers engaged in cryptocurrency mining.

We believe Adjusted EBITDA can be an important financial measure because it allows management, investors, and the Board to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by making such adjustments. Non-GAAP financial measures are subject to material limitations as they are not in accordance with, or a substitute for, measurements prepared in accordance with U.S. GAAP. For example, we expect that stock-based compensation costs, which is excluded from the non-GAAP financial measures, will continue to be a significant recurring expense over the coming years and is an important part of the compensation provided to certain employees, officers, and directors. Similarly, we expect that depreciation and amortization of fixed assets will continue to be a recurring expense over the term of the useful life of the assets.

Adjusted EBITDA is provided in addition to and should not be considered to be a substitute for, or superior to net income, the comparable measure calculated in accordance with U.S. GAAP. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income, diluted earnings per share or any other performance measure calculated in accordance with U.S. GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. Adjusted EBITDA has limitations as an analytical tool, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under U.S. GAAP.

Reconciliations of Adjusted EBITDA to net income from continuing operations, the most comparable U.S. GAAP financial metric, for historical periods are presented in the table below:

---

| | | |
|:---|:---|:---|
| (Dollars in thousands) | **Years Ended** <br> **December 31,** | **Years Ended** <br> **December 31,** |
|  | **2022** | **2021** |
| Net loss from continuing operations | $(107016) | $(6388) |
| Interest expense | 8375 | 1879 |
| Income tax (benefit) expense | (1346) | 44 |
| Depreciation and amortization | 28214 | 3703 |
| **EBITDA** | (71773) | (762) |
| **Adjustments: Non-cash items** |  |  |
| Stock-based compensation costs | 3852 | 1941 |
| Loss on sale of fixed assets | 4089 |  |
| Loss on debt extinguishment and revaluation, net | 11130 |  |
| Impairment of equity investment | 750 |  |
| Impairment on fixed assets | 47372 |  |
| **Adjustments: Non-recurring items** |  |  |
| Exchange registration expenses |  | 293 |
| Adjusted EBITDA | $(4580) | $1472 |

---

**Liquidity and Capital Resources**

Several key indicators of our liquidity are summarized in the following table:

---

| | | |
|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** |
| <br>(Dollars in thousands) | **2022** | **2021** |
| Cash | $1136 | $10258 |
| Restricted cash | 685 |  |
| Working capital (deficit) | (24874) | 9299 |
| Net loss from continuing operations | (107016) | (6388) |
| Net income from discontinued operations | 7921 | 1127 |
| Net cash provided by (used in) operating activities | (6118) | 4635 |
| Net cash provided by operating activities for discontinued operations | 369 | 917 |
| Purchase of property, plant and equipment | (63684) | (45792) |
| Cash dividends paid on preferred stock | (3852) | (630) |

---

The significant losses generated by the Company's cryptocurrency mining and hosting operations were due to ERCOT delays, power price spikes in Kentucky and decline in market price of miners due to the substantial decline in the U.S. dollar value of Bitcoin. The Company had a consolidated accumulated deficit of approximately $221.8 million as of December 31, 2022. As of December 31, 2022, the Company had negative working capital of approximately $24.9 million, a line of credit outstanding of $350 thousand, $13.0 million outstanding principal in notes payable that may be converted to common stock, and a subsidiary of the Company that defaulted on equipment financing and has a current outstanding loan of $10.5 million. The Company had outstanding commitments as of December 31, 2022, related to SCI for $0.9 million in capital expenditures, and approximately $1.1 million of cash available to fund its operations.

Based on business developments, including changes in production levels, staffing requirements, and network infrastructure improvements, we will require additional capital equipment in the foreseeable future. With the Company's shift in focus of the business, and the sale of the MTI Instruments business that occurred in April 2022, the Company has now exited the instrumentation business and is focused on developing and monetizing green, zero-carbon computing and cryptocurrency mining facilities, as well as facilities capable of hosting customers engaged in cryptocurrency mining.

We plan to continue funding operations from our current cash position and our projected 2023 cash flows pursuant to management's plans. If necessary, we may also seek to supplement our resources by increasing credit facilities to fund operational working capital and capital expenditure requirements. We expect to fund growth, including additional development and build-outs of data centers through project-level capital raising and equity sale activities, to the extent that we can successfully raise capital through sales of additional debt or equity securities, as well as a variety of project specific funding options. Any additional financing, if required, may not be available to us on acceptable terms or not at all.

As shown in the accompanying financial statements, the Company did not generate sufficient revenue to generate net income and has negative working capital as of December 31, 2022. In addition, the Company has seen a decline in the price of Bitcoin during the second and third quarter of fiscal year 2022, which has had and could continue to have material and negative impacts to our operations, although has slowly been increasing in the fourth quarter of fiscal year 2022 and into the first quarter of 2023. These factors, among others, indicate that there is substantial doubt about the Company's ability to continue as a going concern within one year after issuance of the financial statements as of December 31, 2022, or March 31, 2023.

Further, various macroeconomic factors could adversely affect our business and the results of our operations and financial condition, including changes in inflation, interest rates and overall economic conditions. For instance, inflation could negatively impact the Company by increasing our labor costs, through higher wages and higher interest rates. If inflation or other factors were to significantly increase our business costs, our ability to develop our current projects may be negatively affected. Interest rates, the liquidity of the credit markets and the volatility of the capital markets could also affect the operation of our business and our ability to raise capital in order to fund our operations. If our revenue estimates are off either in timing or amount, or if cash generated from operations is insufficient to satisfy the operational working capital and capital expenditure requirements, the Company plans to implement additional steps to ensure liquidity including, but not limited to, the deferral of planned capital spending and/or delaying existing or pending product development initiatives; alternatively, the Company may be required to obtain credit facilities or other loans, if available, to fund these initiatives. However, the Company is actively monitoring this situation and the possible effects on our financial condition, liquidity, operations, suppliers, and the industry.

**Operating Activities**

Net cash used in operating activities from continuing operations was approximately $6.1 million for the year ended December 31, 2022. Cash was used in operations by a net loss from continuing operations of $107.0 million, less non-cash items of $97.7 million, consisting primarily of $28.2 million of amortization and depreciation expense for the year for the intangible asset acquired in 2021 and significant additions in fixed assets, approximately $3.9 million in stock-based compensation expense, $4.1 million in loss on sale of fixed assets, $47.4 million in impairment of fixed assets, $750 thousand for impairment on equity investment, $11.1 million on loss on debt extinguishment and revaluation, and $6.5 million for amortization of deferred financing costs and discount on notes payables issued during the year, offset with $1.4 million in deferred income tax benefits.

Net cash provided by operating activities from continuing operations was approximately $4.6 million during the year ended December 31, 2021. Cash was provided from operations by a net loss of $6.4 million, less non-cash items of $7.8 million, consisting primarily of $3.7 million of amortization and depreciation expense for the year for the intangible asset acquired and significant additions in fixed assets, approximately $2.0 million in stock-based compensation expense, and $1.9 million for amortization of deferred financing costs and discount on notes payables issued during the year. The change in asset and liabilities of $3.3 million consisted primary of increases in accounts payable and accrued liabilities of $5.0 million offset by $2.2 million with increases in accounts receivable, prepaids and other assets, and other long- term assets.

Net cash provided by operating activities from discontinued operations was $369 thousand for the year ended December 31, 2022 compared to $917 thousand for net cash provided by operating activities for the year ended December 31, 2021, respectively. The relative changes in assets and liabilities were comparable between the two periods.

**Investing Activities**

Net cash used in investing activities from continuing operations during the year ended December 31, 2022 was approximately $54.7 million compared to $57.3 million for the year ended December 31, 2021. For the year ended December 31, 2022, we had $63.7 million worth of capital expenditures, less a net change in deposits on equipment of $6.4 million, and $2.6 million in proceeds from the sale of equipment. For the year ended December 31, 2021, we had $45.8 million in capital expenditures and $9.9 million additions for net change in deposits on equipment, and $1.6 million of cash purchased on intangible assets in relation to the asset acquisition in the prior year.

Net cash provided by investing activities from discontinued operations during the year ended December 31, 2022 was approximately $9.1 million compared to net cash used in investing activities from discontinued operations of $37 thousand during the year ended December 31, 2021. The change represented the net cash proceeds from the sale of MTI Instruments of $9.4 million for the year ended December 31, 2022.

**Financing Activities**

Net cash provided by financing activities was approximately $42.9 million during year ended December 31, 2022, which consisted primarily of $14.7 million in net proceeds from the sale of Series A and Series B Preferred Stock, $23.9 million in net proceeds from notes and short-term debt issuances, and $2.3 million in net proceeds from a common offering and securities purchase offering. Proceeds of $779 thousand were also received in relation to common stock warrant exercises. During the year ended December 31, 2022, the Company made cash dividend payments of approximately $3.8 million to holders of its Series A Preferred Stock. Also, in the year ended December 31, 2022, the Company had a contribution of $4.8 million from its non-controlling interest in DVSL.

In the year ended December 31, 2021, net cash provided by financing activities was approximately $59.3 million, which consisted of the common stock capital raise and preferred stock raises that totaled approximately $40.7 in net proceeds. The Company also received proceeds from a notes issuance of $15 million less costs associated of $1.3 million. The Company also exercised warrants totaling approximately $4.6 million and had stock option exercises of approximately $100 thousand. The Company borrowed $1.0 million under their line of credit and made cash dividend payments to preferred stockholders of around $630 thousand.

On June 9, 2022, we entered into an At-the-Market Issuance Sales Agreement (the "Sales Agreement") with Univest Securities, LLC ("Univest") pursuant to which we may sell, at our option, up to an aggregate of $10 million in shares of Series A Preferred Stock, with a $25.00 liquidation preference per share (the "ATM Shares") through Univest, as sales agent. Sales of the ATM Shares made pursuant to the Sales Agreement, if any, will be made under the Company's previously filed and currently effective shelf Registration Statement on Form S-3 (File No. 333-261427) and related prospectus supplement thereto. As of December 31, 2022, no ATM Shares have been sold pursuant to the Sales Agreement. Moreover, prior to any sales under the Sales Agreement, the Company will deliver a placement notice to Univest that will set the parameters for such sale of the ATM Shares, including the number of ATM Shares to be sold, the time period during which sales are requested to be made, any limitation on the number of ATM Shares that may be sold in any one trading day and any minimum price below which sales may not be made. Subject to the terms and conditions of the Sales Agreement, Univest may sell the ATM Shares, if any, only by methods deemed to be an "at the market" offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the "Securities Act") including, without limitation, sales made directly through the Nasdaq or any other trading market on which the ATM Shares are listed or quoted or to or through a market maker. In addition, subject to the terms and conditions of the Sales Agreement, with the Company's prior written consent, Univest may also sell ATM Shares by any other method permitted by law, or as may be required by the rules and regulations of Nasdaq or such other trading market on which the Company's common stock is listed or quoted, including, but not limited to, in negotiated transactions. Univest will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the ATM Shares in accordance with the terms of the Sales Agreement and any applicable placement notice. The Company cannot provide any assurances that Univest will sell any ATM Shares pursuant to the Sales Agreement, and as noted above, none were during 2022.

***Debt***

On September 15, 2021, the Company entered into a $1.0 million unsecured line of credit with KeyBank, that will, among other things, allow the Company to request loans and to use the proceeds of such loans for working capital and other general corporate purposes. The line of credit bears interest at a rate of Prime + 0.75% per annum (6.25% interest rate as of September 30, 2022). Accrued interest is due monthly and principal is due in full following KeyBank's demand. As of December 31, 2021, the entire line of credit of $1.0 million was drawn and outstanding. As of December 31, 2022, $650 thousand of the line has been paid down; therefore $350 thousand of the line of credit remains outstanding. The Company has been repaying weekly principal on the KeyBank facility each week since the beginning of September 2022. The Company does not plan to draw down on the line of credit in the foreseeable future. In addition, future drawdown may require pre-approval by KeyBank.

On October 25, 2021, the Company issued to certain institutional investors secured convertible notes in the aggregate principal amount of approximately $16.3 million for an aggregate purchase price of $15.0 million. The notes are convertible, subject to certain conditions, at any time at the option of the investors, into an aggregate of 1,776,073 shares of the Company's common stock. On July 19, 2022, the Company entered into the Addendum with the Noteholders to amend the terms the October Secured Notes. Pursuant to the Addendum, a portion of the October Secured Notes would be converted and may be redeemed in three tranches, with each tranche of $1,100,000 required to be converted into common stock in each case at the then in effect conversion price of the October Secured Notes, with such price, prior to each conversion, to be reduced (but not increased) to a 20% discount to the 5-day VWAP of the Company's common stock. In addition, the Noteholders may require the Company to redeem up to $2,200,000 worth of October Secured Notes in connection with each tranche at a rate of $1.20 for every $1.00 owed, less the amount of October Secured Notes converted during such tranche, not including the required conversion amount if the Noteholders are unable to convert out of such amount of the October Secured Notes in each tranche. The Company is also required to deposit up to $1,950,000 in an escrow account in connection with each tranche to satisfy any redemptions, except with respect to the first tranche as provided in the Addendum Amendment. The Addendum also provides the right for the Company to pause the commencement of the conversion of the second and third tranches each for 45 days in the event the Company pursues an equity financing. Since inception, the Company has converted down approximately $3.8 million on the convertible debt. On September 13, 2022, the Company entered into the Addendum Amendment with the Noteholders to amend the terms to extend the maturity date to April 15, 2023, and increase the principal amount of the October Secured Notes by approximately $520 thousand for a total outstanding principal amount of approximately $13 million. The events of default stated in the Notice of Acceleration and Repossession defined below with NYDIG constituted a cross-default under the terms of secured convertible notes issued to the Noteholders. In addition to such cross-default, the failure of the Company pursuant to the Addendum dated as of July 19, 2022, to escrow an aggregate amount of $950,000 for the benefit of the Noteholders by December 21, 2022, constitutes an event of default under the Notes. Due to the defaults noted, the Company did not enter into the second and third tranche of conversions. As such, beginning on November 30, 2022, the Company has been accruing interest of 18% per annum on the outstanding principal amount due to the default which amounted to $202 thousand as of December 31, 2022. On March 10, 2023, the Company entered into a Second Addendum Amendment with the Noteholders, in which the Company paid approximately $617 thousand through the Company's restricted escrow accounts and contemporaneously with the payment, the Noteholders waived all existing events of default arising under the convertible notes.

On January 14, 2022, the Company effected an initial drawdown under the Master Equipment Finance Agreement with NYDIG in the aggregate principal amount of approximately $4.6 million that bore interest at 14%. On January 26, 2022, the Company had a subsequent drawdown of $9.6 million. On December 20, 2022, Soluna MC Borrowing 2021-1 LLC ("Borrower") received a Notice of Acceleration and Repossession (the "NYDIG Notice") from NYDIG with respect to the Master Agreement, by and between Borrower and NYDIG. The obligations of Borrower under the Master Agreement and reflected in the NYDIG Notice are ring-fenced to Borrower and its direct parent company, Soluna MC LLC. The Company is not a party to any guaranty, collateral agreement or other support agreement with or for the benefit of NYDIG. As such, the principal balance of $10.5 million as of December 31, 2022 became due immediately and the Borrower shall bear interest, at a rate per annum equal to 2.0% plus the rate per annum otherwise applicable to such obligations set forth in the Master Agreement. As of December 31, 2022, the Borrower incurred accrued interest and penalty of approximately $274 thousand.

On May 3, 2022, SCI entered into the Contribution Agreement with Spring Lane, pursuant to which Spring Lane agreed, pursuant to the terms and conditions of such agreement, to the Spring Lane Commitment. We anticipate that these capital contributions, once deployed into the projects, will help develop up to three behind-the-meter (BTM) projects designed to convert wasted renewable energy into clean computing services such as Bitcoin mining and artificial intelligence. The Contribution Agreement outlines the framework for the Spring Lane Commitment; however, neither we nor Spring Lane are obligated to complete any projects under such agreement and any actual capital contributions are subject to various conditions precedent, including the receipt of requisite lender and other consents, acceptance by Spring Lane of specific projects and negotiations of agreements regarding those projects, including milestones and structure. In partial consideration of the amendment to the October notes discussed above, the investors agreed to release certain collateral covered by their security agreement to permit the Company to proceed forward with the initial first 25 MW phase of Project Dorothy, which has been extensively funded by Spring Lane, which the Company expects to complete in the near future. On August 5, 2022, the Company entered into the Dorothy Contribution Agreement with Spring Lane for an initial funding of up to $12.5 million for Project Dorothy. SCI completed a final tranche of a series of project-level agreements for $7.5 million on March 10, 2023 of capital to fund the first 25 MW of Project Dorothy and corporate expenses from funds managed by Spring Lane Capital. Concurrently with the Sale for $7.5 million, the Company, Spring Lane, Devco and the Project Company entered into (a) the Fourth Amended and Restated Limited Liability Company Agreement of the Project Company, dated as of March 10, 2023, which is an amendment and restatement of the Third Amended and Restated Limited Liability Company Agreement of the Project Company dated as of March 3, 2023, and (b) the Amended and Restated Contribution Agreement, dated as of March 10, 2023 an amendment and restatement of the Contribution Agreement dated as of August 5, 2022. The Fourth Amended and Restated Limited Liability Company Agreement provides for certain updates in respect of Spring Lane's majority ownership. The Amended and Restated Contribution Agreement reflects updated pro rata member funding percentages as a result of the Sale as well as updated contribution caps for each of the Company and Spring Lane. For clarity, these agreements have primarily only an indirect effect on the second 25 MW of Project Dorothy, in which the Company continues to indirectly wholly own.

***The COVID-19 Pandemic***

In response to the COVID-19 global pandemic, the Company has implemented procedures to support flexible working arrangements for its workforce based on business needs. While these measures have been necessary and appropriate, they may result in additional costs and may adversely impact the Company's business and financial performance. As the Company's response to the pandemic evolves, the Company may incur additional costs and will potentially experience adverse impacts to its business, each of which are uncertain at this time.

**Critical Accounting Policies and Significant Judgments and Estimates**

The prior discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. Note 2 of the Consolidated Financial Statements included in this Annual Report on Form 10-K includes a summary of our most significant accounting policies. The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure of assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, income taxes and share-based compensation. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Periodically, our management reviews our critical accounting estimates with the Audit Committee of our Board of Directors.

The significant accounting policies that we believe are most critical to aid in fully understanding and evaluating our consolidated financial statements include the following:

***Revenue Recognition, Accounts Receivable, and Allowance for Doubtful Accounts****.* 

Cryptocurrency revenue consists of revenue recognized from SCI's cryptocurrency mining facility. Revenue is recognized at the cryptocurrency's realized cash value based upon the rates at cryptocurrency exchanges where we are registered. Cryptocurrencies are earned when the miners solve complex computations and cryptocurrency is issued as a result. The mined cryptocurrency is immediately paid to the Coinbase wallet. Cryptocurrency is converted to U.S. dollars on a daily basis. Also, the Company has entered into customer hosting contracts whereby the Company provides electrical power to cryptocurrency mining customers, and the customers pay a stated amount per megawatt-hour ("MWh") ("Contract Capacity") as well as a share of the coins mined. The fee is paid monthly in advance. The actual monthly amounts are calculated after the close of each month and reconciled to the monthly advance.

Trade accounts receivable are stated at the invoiced amount billed to customers and do not bear interest. An allowance for doubtful accounts, if necessary, represents our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine the allowance based on historical write-off experience and current exposures identified. We review our allowance for doubtful accounts monthly. We review past due balances over 90 days and over a specified amount individually for collectability. We review all other balances on a pooled basis by type of receivable. We charge off account balances against the allowance when we believe it is probable the receivable will not be recovered. We do not have any off-balance-sheet credit exposure related to our customers.

***Asset Acquisition.***

As the discussed above, on October 29, 2021, we closed the Soluna Callisto acquisition, pursuant to an Agreement and Plan of Merger dated as of August 11, 2021, by and among the Company, SCI and Soluna Callisto. The purpose of the transaction was for SCI to acquire substantially all of the assets (other than those assets physically located in Morocco) formerly held by HEL, which assets consisted of Soluna Callisto's existing pipeline of certain cryptocurrency mining projects that HEL previously transferred to Soluna Callisto, and to provide SCI with the opportunity to directly employ or retain the services of four individuals whose services it had retained through HEL prior to the merger. As a result of the merger, each share of common stock of Soluna Callisto issued and outstanding immediately prior to the effective time of the merger, other than shares owned by the Company or any of our subsidiaries, was cancelled and converted into the right to receive a proportionate share of up to 2,970,000 shares (the "Merger Shares") of the Company's common stock payable upon the achievement of certain milestones within five years after the effective date in the merger, as set forth in the merger agreement and the schedules thereto (the "Merger Consideration").

In connection with the Soluna Callisto acquisition, effective as of October 29, 2021, pursuant to the terms of a termination agreement dated as of August 11, 2021 by and among the Company, SCI, and HEL, on November 5, 2021, SCI paid HEL $725,000 and SHI issued to HEL 150,000 shares of SHI common stock (the "Termination Shares"). SCI also reimbursed HEL $75,000 for transaction-related fees and expenses. SHI included the termination costs as part of asset acquisition per ASC 805-50. Based on the closing price of the SHI common stock on Nasdaq on November 5, 2021, SHI has valued the aggregate termination consideration at approximately $1.9 million.

The acquisition was accounted for, for purposes of GAAP, using the asset acquisition method of accounting under the Financial Accounting Standards Board's Accounting Standards Codification ("ASC") 805-50. SHI determined that it acquired in the acquisition a group of similar identifiable assets (primarily, the "strategic pipeline contract" of certain cryptocurrency mining projects), which it classified as an intangible asset for accounting purposes. As a result, SHI's acquisition of the set of assets and activities that it acquired will constitute an asset acquisition, as opposed to a business acquisition, under ASC 805. ASC 805-50 provides that assets acquired in an asset acquisition are measured based on the costs of the acquisition, which is the consideration that the acquirer transfers to the seller and includes direct transaction costs related to the acquisition. SHI includes Soluna Callisto's results of operations in our results of operations beginning on the effective date of the of the acquisition, October 29, 2021.

***Fair Value Measurement.***

The estimated fair value of certain financial instruments, including cash, accounts receivable and short-term debt approximates their carrying value due to their short maturities and varying interest rates. "Fair value" is the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation methods, the Company is required to provide the following information according to the fair value accounting standards. These standards established a fair value hierarchy as specified that ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities are classified and disclosed in one of the following three categories:

---

| | |
|:---|:---|
| **Level 1:** | Quoted market prices in active markets for identical assets or liabilities, which includes listed equities. |
| **Level 2:** | Observable market-based inputs or unobservable inputs that are corroborated by market data. These items are typically priced using models or other valuation techniques. These models are primarily financial industry-standard models that consider various assumptions, including the time value of money, yield curves, volatility factors, as well as other relevant economic measures. |
| **Level 3:** | These use unobservable inputs that are not corroborated by market data. These values are generally estimated based upon methodologies utilizing significant inputs that are generally less observable from objective sources. |

---

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The Company had Warrants included within the SPA agreement as noted in Note 9. The Warrants are considered freestanding equity-classified instruments due to their detachable and separately exercisable features and meet the indexation criteria within derivative accounting. Accordingly, the Warrants are presented as a component of Stockholders' Equity in accordance with derivative accounting.

Following the debt extinguishment on July 19, 2022 as noted further in Note 9, the Convertible Notes will be recorded at fair value upon issuance (e.g., upon execution of the Addendum) per guidance within ASC 480, and at each subsequent reporting period, with changes in fair value reported in earnings.

Consistent with the guidance in purchase accounting, the value of the Strategic Pipeline Contract as of the acquisition date was estimated using an expected value approach, which probability-weights various future outcomes and uses certain Level 3 inputs.

The Company's equipment miners are classified in Level 2 of the fair value hierarchy due to the quoted market prices for similar assets.

As of December 31, 2022, and 2021, the fair values of cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, and accrued expenses approximated their carrying values because of the short-term nature of these instruments.

***Share-Based Payments****.*

We grant options to purchase our common stock and award restricted stock to our employees and directors under our equity incentive plans. The benefits provided under these plans are share-based payments and we account for stock-based awards exchanged for employee service in accordance with the appropriate share-based payment accounting guidance. Stock-based compensation represents the cost related to stock-based awards granted to employees and directors. We measure stock-based compensation cost at grant date based on the estimated fair value of the award and recognize the cost as expense on a straight-line basis in accordance with the vesting of the options (net of estimated forfeitures) over the option's requisite service period. We estimate the fair value of stock-based awards on the grant date using a Black-Scholes valuation model. We use the fair value method of accounting with the modified prospective application, which provides for certain changes to the method for valuing share-based compensation. The valuation provisions apply to new awards and to awards that are outstanding on the effective date and subsequently modified.

The determination of the fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate, and expected dividends.

Theoretical valuation models and market-based methods are evolving and may result in lower or higher fair value estimates for share-based compensation. The timing, readiness, adoption, general acceptance, reliability, and testing of these methods is uncertain. Sophisticated mathematical models may require voluminous historical information, modeling expertise, financial analyses, correlation analyses, integrated software and databases, consulting fees, customization, and testing for adequacy of internal controls.

For purposes of estimating the fair value of stock options granted using the Black-Scholes model, we use the historical volatility of our stock for the expected volatility assumption input to the Black-Scholes model, consistent with the accounting guidance. The risk-free interest rate is based on the risk-free zero-coupon rate for a period consistent with the expected option term at the time of grant. The expected option term is calculated based on our historical forfeitures and cancellation rates.

***Income Taxes.***

We are subject to income taxes in the U.S. (federal and state). As part of the process of preparing our consolidated financial statements, we calculate income taxes for each of the jurisdictions in which we operate. This involves estimating actual current taxes due together with assessing temporary differences resulting from differing treatment for tax and accounting purposes that are recorded as deferred tax assets and liabilities, loss carryforwards, and tax credit carryforwards, for which income tax benefits are expected to be realized in future years. Deferred tax assets are reported net of a valuation allowance when it is more likely than not that a tax benefit will not be realized. The effect on deferred taxes of a change in tax rates is recognized in the period that includes the enactment date.

Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, and any valuation allowance recorded against our net deferred tax assets. We considered all available evidence, both positive and negative, such as historical levels of income and future forecasts of taxable income amongst other items in determining our valuation allowance. In addition, our assessment requires us to schedule future taxable income in accordance with accounting standards that address income taxes to assess the appropriateness of a valuation allowance, which further requires the exercise of significant management judgment.

We account for taxes in accordance with the asset and liability method of accounting for income taxes. Under this method, we must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The impact of our reassessment of our tax positions for these standards did not have a material impact on its results of operations, financial condition, or liquidity.

We are also currently subject to audit in various jurisdictions, and these jurisdictions may assess additional income tax liabilities against us. Developments in an audit, litigation, or in applicable laws, regulations, administrative practices, principles, and interpretations could have a material effect on our operating results or cash flows in the period or periods in which such developments occur, as well as for prior and in subsequent periods.

Tax laws, regulations, and administrative practices in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes. There are many transactions that occur during the ordinary course of business for which the ultimate tax determination is uncertain. Our effective tax rates could be affected by numerous factors, such as intercompany transactions, earnings being lower than anticipated in jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, the applicability of special tax regimes, losses incurred in jurisdictions for which we are not able to realize the related tax benefit, changes in foreign currency exchange rates, entry into new businesses and geographies, changes to our existing businesses and operations, acquisitions and investments and how they are financed, changes in our stock price, changes in our deferred tax assets and liabilities and their valuation, and changes in the relevant tax, accounting, and other laws, regulations, administrative practices, principles, and interpretations.

***Impairment of long-lived assets.***

Management reviews long-lived assets, including finite lived intangible assets, property, plant and equipment, and other assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset, asset group, or investment may not be recoverable.

Recoverability of assets to be held and used are measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. Because the impairment test for long-lived assets held in use is based on estimated undiscounted cash flows, there may be instances where an asset or asset group is not considered impaired, even when its fair value may be less than its carrying value, because the asset or asset group is recoverable based on the cash flows to be generated over the estimated life of the asset or asset group. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

**Factors Expected to Affect Our Future Results**

We expect our revenues to comprise a combination of: (i) block rewards in Bitcoin, which are fixed rewards programmed into the Bitcoin software that are awarded to a miner or a group of miners for solving the cryptographic problem required to create a new block on a given blockchain and (ii) transaction fees in Bitcoin, which are flexible fees earned for verifying transactions in support of the blockchain and (iii) hosting revenues whereby the Company provides electrical power and network connectivity to cryptocurrency mining customers, and the customers pay a stated amount and rate.

Our revenues are directly impacted by changes in the market value of Bitcoin. For example, the average Bitcoin price for 2020 and 2021 was $11,057 and $47,385, respectively. Bitcoin price generally declined throughout 2022. As of December 31, 2022, the price of Bitcoin was $16,526. Furthermore, block rewards are fixed, and the Bitcoin network is designed to periodically reduce them through halving. Currently the block rewards are fixed at 6.25 Bitcoin per block, and it is estimated that it will halve again to 3.125 Bitcoin in April 2024. The halving events happen without any regard to ongoing demand, meaning that if the ongoing demand remains the same after a halving event, whatever demand was being met by new supply will be restricted, which may necessitate an adjustment of the price of Bitcoin, though there is no definitive evidence of a causal link between Bitcoin's programmatic decrease in supply and broadening demand. Once the halving occurs, we expect that it could have a negative impact on our revenues as the reward for each Bitcoin mines will be reduced.

Bitcoin miners also collect transaction fees for each transaction they confirm. Miners validate unconfirmed transactions by adding the previously unconfirmed transactions to new blocks in the blockchain. Miners are not forced to confirm any specific transaction, but they are economically incentivized to confirm valid transactions as a means of collecting fees. Miners have historically accepted relatively low transaction confirmation fees, because miners have a very low marginal cost of validating unconfirmed transactions; however, unlike the fixed block rewards, transaction fees may vary, depending on the consensus set within the network.

As the use of the Bitcoin network expands and the total number of Bitcoin available to mine and, thus, the block rewards, declines over time, we expect the mining incentive structure to transition to a higher reliance on transaction confirmation fees, and the transaction fees to become a larger proportion of the revenues to miners. These changes could have an indirect effect on our revenues from hosted customers engaging in cryptocurrency mining.

**Recent Accounting Pronouncements**

A discussion of recently adopted and new accounting pronouncements is included in Note 2 of the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.

**Item 7A. Quantitative and Qualitative Disclosures About Market Risk**

Not applicable.

**Item 8: Financial Statements and Supplementary Data**

The Company's Consolidated Financial Statements begin on page F-1 and are incorporated in this Item 8 by reference.

**Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure** 

Not applicable.

**Item 9A: Controls and Procedures**

**(a) Evaluation of Disclosure Controls and Procedures**

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of SHI's disclosure controls and procedures as of December 31, 2022. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a 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 SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. We recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and we necessarily apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2022, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

**(b) Management's Report on Internal Control Over Financial Reporting**

Management of our Company is responsible for establishing and maintaining adequate internal control over financial reporting, as that term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a process designed 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.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including the principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth in *Internal Control—Integrated Framework* (2013 version) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation using the criteria set forth in *Internal Control—Integrated Framework,* Management has concluded that our internal control over financial reporting was effective as of December 31, 2022.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Our report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only Management's Report in this annual report.

---

| |
|:---|
| */s/ Michael Toporek* |
| Chief Executive Officer |
| (Principal Executive Officer) (Principal Executive Officer) |

---

---

| |
|:---|
| */s/ Philip Patman, Jr.* |
| Chief Financial Officer |
| (Principal Financial Officer) |

---

**(c) Changes in Internal Control over Financial Reporting**

There have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our fiscal quarter ended December 31, 2022 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

**Item 9B: Other Information**

Not applicable

**Item 9C: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections**

Not applicable

**PART III**

**Item 10: Directors, Executive Officers and Corporate Governance**

*<u>Code of Conduct and Ethics:</u>* We have adopted a Code of Conduct and Ethics for employees, officers and directors. A copy of the Code of Conduct and Ethics is available on our website at https://www.solunacomputing.com under Investors, Governance Documents.

The remaining information required by this Item 10 is incorporated herein by reference to the information appearing under the captions "Information about our Directors," "Executive Officers," "Board of Director Meetings and Committees – Audit Committee" and "Section 16(a) Beneficial Ownership Reporting Compliance" in our definitive Proxy Statement for our 2023 Annual Meeting of Shareholders to be filed with the SEC on or before April 30, 2023.

**Item 11: Executive Compensation**

The information required by this Item 11 is incorporated herein by reference to the information appearing under the caption "Executive Compensation" in the Company's definitive Proxy Statement for our 2023 Annual Meeting of Shareholders to be filed with the SEC on or before April 30, 2023.

**Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters**

The information required by this Item 12 is incorporated herein by reference to information appearing under the caption "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" in our definitive Proxy Statement for our 2023 Annual Meeting of Shareholders to be filed with the SEC on or before April 30, 2023.

**Item 13: Certain Relationships and Related Transactions, and Director Independence**

The information required by this Item 13 is incorporated herein by reference to the information appearing under the captions "Certain Relationships and Related Transactions" and "Information about our Directors" in our definitive Proxy Statement for the 2023 Annual Meeting of Shareholders to be filed with the SEC on or before April 30, 2023.

**Item 14: Principal Accounting Fees and Services**

The information required by this Item 14 is incorporated herein by reference to the information appearing under the caption "Independent Registered Public Accounting Firm" in our definitive Proxy Statement for the 2023 Annual Meeting of Shareholders to be filed with the SEC on or before April 30, 2023.

**PART IV**

**Item 15: Exhibits, Financial Statement Schedules**

**15(a) (1) Financial Statements:** The financial statements filed herewith are set forth on the Index to Consolidated Financial Statements on page F-1 of the separate financial section which accompanies this Report, which is incorporated herein by reference.

**15(a) (2) Financial Statement Schedules:** Financial statement schedules not listed have been omitted because they are either not required, not applicable, or the information has been included elsewhere in the consolidated financial statements or notes thereto.

**15(a) (3)**

---

| | |
|:---|:---|
| Exhibit |  |
| Number | Description |
| 2.1 | [Agreement and Plan of Merger dated August 11, 2021, by and among Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, SCI Merger Sub, Inc., and Soluna Callisto Holdings Inc., formerly known as Soluna Computing, Inc. (incorporated by reference from Exhibit 2.1 of the Company's Form 8-K Report filed August 12, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000340/g082297_ex2-1.htm) |
| 3.1 | [Articles of Incorporation of Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated (incorporated by reference from Exhibit 3.1 of the Company's Form 10-K Report for the year ended December 31, 2020).](http://www.sec.gov/Archives/edgar/data/0000064463/000100329721000039/exhibit3-1.htm) |
| 3.2 | [Articles of Merger filed with the Secretary of State of Nevada (incorporated by reference from Exhibit 3.3 of the Company's Form 10-K Report for the year ended December 31, 2020).](http://www.sec.gov/Archives/edgar/data/64463/000100329721000039/exhibit3-3.htm) |
| 3.3 | [Certificate of Merger filed with the Department of State of New York (incorporated by reference from Exhibit 3.4 of the Company's Form 10-K Report for the year ended December 31, 2020).](http://www.sec.gov/Archives/edgar/data/64463/000100329721000039/exhibit3-4.htm) |
| 3.4 | [Certificate of Amendment filed with the Secretary of State of Nevada dated June 9, 2021 (incorporated by reference from Exhibit 3.1 of the Company's Form 8-K Report filed June 15, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000192/g082217_ex3-1.htm) |
| 3.5 | [Certificate of Amendment to Articles of Incorporation filed with the Secretary of State of Nevada on November 2, 2021 (incorporated by reference from Exhibit 3.1 of the Company's Form 8-K Report filed November 4, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000632/g082430_ex3-1.htm) |
| 3.6 | [Bylaws of the Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, (incorporated by reference from Exhibit 3.2 of the Company's Form 10-K Report for the year ended December 31, 2020).](http://www.sec.gov/Archives/edgar/data/64463/000100329721000039/exhibit3-2.htm) |
| 3.7 | [Certificate of Designations, Preferences and Rights of 9.0% Series A Cumulative Perpetual Preferred Stock filed with the Secretary of State of the State of Nevada on August 18, 2021 (Incorporated by reference to the Company's Form 8-A, filed with the SEC on August 19, 2021).](https://www.sec.gov/Archives/edgar/data/64463/000175392621000384/g082310_ex4-1.htm) |
| 3.8 | [Certificate of Amendment to Certificate of Designations, Preferences and Rights of 9.0% Series A Cumulative Perpetual Preferred Stock, filed with the Secretary of State of the State of Nevada on December 22, 2021 (Incorporated by reference to the Company's Form 8-K Report filed with the SEC on December 29, 2021).](https://www.sec.gov/Archives/edgar/data/64463/000175392621000837/g082532_ex4-1.htm) |
| 3.9 | [Certificate of Amendment to Certificate of Designations, Preferences and Rights of 9.0% Series A Cumulative Perpetual Preferred Stock, filed with the Secretary of State of the State of Nevada on April 21, 2022 (Incorporated by reference to the Company's Form 8-K Report filed with the SEC on April 27, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622000586/g082991_ex4-1.htm) |
| 3.10 | [Certificate of Designation of Series B Convertible Preferred Stock, filed with the Nevada Secretary of State on July 20, 2022.](https://www.sec.gov/Archives/edgar/data/64463/000175392622000942/g083091_ex4-1.htm) |
| 4.1 | [Form of Common Purchase Warrant (incorporated by reference from Exhibit 4.3 of the Company's Registration Statement on Form S-1/A filed April 12, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000089/g082117_ex4-3.htm) |
| 4.2 | [Form of Underwriters' Warrant (incorporated by reference from Exhibit 4.4 of the Company's Registration Statement on Form S-1/A filed April 12, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000089/g082117_ex4-4.htm) |
| 4.3 | [Form of Warrant Agent Agreement between Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, and American Stock Transfer & Trust Company, LLC (incorporated by reference from Exhibit 4.1 of the Company's Form 8-K Report filed April 29, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000104/g082141_ex4-3.htm) |
| 4.4 | [Certificate of Designations, Preferences and Rights of 9.0% Series A Cumulative Perpetual Preferred Stock filed with the Secretary of State of the State of Nevada on August 18, 2021 (incorporated by reference from Exhibit 4.1 of the Company's Form 8-A filed August 19, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000384/g082310_ex4-1.htm) |
| 4.5 | [Certificate of Amendment to Certificate of Designations, Preferences and Rights of 9.0% Series A Cumulative Perpetual Preferred Stock, filed with the Secretary of State of the State of Nevada on December 22, 2021 (incorporated by reference from Exhibit 4.1 of the Company's Form 8-K Report filed December 29, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000837/g082532_ex4-1.htm) |
| 4.6 | [Form of 9.0% Series A Cumulative Perpetual Preferred Stock Certificate (incorporated by reference from Exhibit 4.2 of the Company's Form 8-K Report filed August 23, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000398/g082320_ex4-2.htm) |
| 4.7 | [Form of Secured Convertible Note issued by the Company pursuant to and in accordance with the Securities Purchase Agreement dated as of October 20, 2021 (incorporated by reference from Exhibit 4.1 of the Company's Form 8-K Report filed October 25, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000582/g082394_ex4-1.htm) |

---

---

| | |
|:---|:---|
| 4.8 | [Form of Class A Common Stock Purchase Warrant issued by the Company pursuant to and in accordance with the Securities Purchase Agreement dated as of October 20, 2021 (incorporated by reference from Exhibit 4.2 of the Company's Form 8-K Report filed October 25, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000582/g082394_ex4-2.htm) |
| 4.9 | [Form of Class B Common Stock Purchase Warrant issued by the Company pursuant to and in accordance with the Securities Purchase Agreement dated as of October 20, 2021 (incorporated by reference from Exhibit 4.3 of the Company's Form 8-K Report filed October 25, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000582/g082394_ex4-3.htm) |
| 4.10 | [Form of Class C Common Stock Purchase Warrant issued by the Company pursuant to and in accordance with the Securities Purchase Agreement dated as of October 20, 2021 (incorporated by reference from Exhibit 4.4 of the Company's Form 8-K Report filed October 25, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000582/g082394_ex4-4.htm) |
| 4.11 | [Form of Representative's Warrant (incorporated by reference from Exhibit 4.2 of the Company's Form 8-K Report filed December 29, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000837/g082532_ex4-2.htm) |
| 4.12 | [Form of Class D Common Stock Purchase Warrant (Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on September 14, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622001256/g083193_ex4-1.htm) |
| 4.13 | [Form of Class E Common Stock Purchase Warrant (Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on September 14, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622001256/g083193_ex4-2.htm) |
| 4.14 | [Form of Class F Common Stock Purchase Warrant (Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on September 14, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622001256/g083193_ex4-3.htm) |
| 4.15 | [Form of Class G Common Stock Purchase Warrant (Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on September 14, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622001256/g083193_ex4-4.htm) |
| 4.16 | [Description of Securities (incorporated by reference from Exhibit 4.13 of the Company's Form 10-K as of December 31, 2021 filed March 31, 2022)](https://www.sec.gov/Archives/edgar/data/64463/000175392622000384/g082656_ex4-13.htm) |
| 10.1+ | [Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, Amended and Restated 2012 Equity Incentive Plan (incorporated by reference from Exhibit 10.3 of the Company's Form 10-K Report for the year ended December 31, 2016).](http://www.sec.gov/Archives/edgar/data/64463/000100329717000043/exhibit103.htm) |
| 10.2+ | [Form of Restricted Stock Agreement Notice for Board of Directors and Employees for Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, 2012 Equity Incentive Plan (incorporated by reference from Exhibit 10.2 of the Company's Form 10-Q Report for the quarter ended June 30, 2012).](http://www.sec.gov/Archives/edgar/data/64463/000100329712000350/ex10-2.htm) |
| 10.3+ | [Form of Incentive Stock Option Notice for Employees for Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, 2012 Equity Incentive Plan (incorporated by reference from Exhibit 10.3 of the Company's Form 10-Q Report for the quarter ended June 30, 2012).](http://www.sec.gov/Archives/edgar/data/64463/000100329712000350/es10-3.htm) |
| 10.4+ | [Form of Non-Qualified Stock Option Notice for Employees for Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, 2012 Equity Incentive Plan (incorporated by reference from Exhibit 10.4 of the Company's Form 10-Q Report for the quarter ended June 30, 2012).](http://www.sec.gov/Archives/edgar/data/64463/000100329712000350/ex10-4.htm) |
| 10.5+ | [Form of Non-Qualified Stock Option Notice for Board of Directors for Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, 2012 Equity Incentive Plan (incorporated by reference from Exhibit 10.5 of the Company's Form 10-Q Report for the quarter ended June 30, 2012).](http://www.sec.gov/Archives/edgar/data/64463/000100329712000350/es10-5.htm) |
| 10.6+ | [Form of Restricted Stock Award Agreement under the Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, Amended and Restated 2012 Equity Incentive Plan (incorporated by reference from Exhibit 10.8 of the Company's Registration Statement on Form 10 filed March 4, 2020).](http://www.sec.gov/Archives/edgar/data/64463/000100329720000003/exhibit10-8.htm) |
| 10.7+ | [Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, 2014 Equity Incentive Plan (incorporated by reference to Exhibit A to the Registrant's Proxy Statement on Schedule 14A filed with the Commission on April 25, 2014).](http://www.sec.gov/Archives/edgar/data/64463/000100329714000209/esproxy.htm) |
| 10.8+ | [Form of Restricted Stock Grant Agreement under the Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, 2014 Equity Incentive Plan (incorporated by reference from Exhibit 10.10 of the Company's Registration Statement on Form 10 filed March 4, 2020).](http://www.sec.gov/Archives/edgar/data/64463/000100329720000003/exhibit10-10.htm) |
| 10.9+ | [Form of Nonstatutory Stock Option Grant Agreement under the Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, 2014 Equity Incentive Plan (incorporated by reference from Exhibit 4.3 of the Company's Registration Statement on Form S-8 (File No. 333-196989) filed with the Commission on June 24, 2014).](http://www.sec.gov/Archives/edgar/data/64463/000100329714000324/es4-3.htm) |
| 10.10+ | [Form of Incentive Stock Option Grant Agreement under the Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, 2014 Equity Incentive Plan (incorporated by reference from Exhibit 4.4 of the Company's Registration Statement on Form S-8 (File No. 333-196989) filed with the Commission on June 24, 2014).](http://www.sec.gov/Archives/edgar/data/64463/000100329714000324/es4-4.htm) |
| 10.11+ | [Amended and Restated Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, 2021 Stock Incentive Plan (incorporated by reference to Exhibit A to the Registrant's Proxy Statement on Schedule 14A filed with the Commission on October 7, 2021)](http://www.sec.gov/Archives/edgar/data/64463/000175392621000548/g082379_def14a.htm) |

---

---

| | |
|:---|:---|
| 10.12+ | [Form of Stock Option Agreement under the Amended and Restated Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, 2021 Stock Incentive Plan (incorporated by reference from Exhibit 10.11 of the Company's Form 10-K Report for the year ended December 31, 2021.)](https://www.sec.gov/Archives/edgar/data/64463/000175392622000384/g082656_ex10-12.htm) |
| 10.13+ | [Form of Restricted Stock Agreement under the Amended and Restated Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, 2021 Stock Incentive Plan (incorporated by reference from Exhibit 10.13 of the Company's Form 10-K Report for the year ended December 31, 2021.)](https://www.sec.gov/Archives/edgar/data/64463/000175392622000384/g082656_ex10-13.htm) |
| 10.14+ | [Form of Restricted Stock Unit Agreement under the Amended and Restated Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, 2021 Stock Incentive Plan (incorporated by reference from Exhibit 10.14 of the Company's Form 10-K Report for the year ended December 31, 2021.)](https://www.sec.gov/Archives/edgar/data/64463/000175392622000384/g082656_ex10-14.htm) |
| 10.15+ | [Second Amended And Restated 2021 Stock Incentive Plan (Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on June 1, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622000835/g083045_ex10-1.htm) |
| 10.16+ | [Form of Option Agreement for the Second Amended And Restated 2021 Stock Incentive Plan (Incorporated by reference as Exhibit 10.7 to the Company's Current Report on Form 10-Q filed with the SEC on August 15, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622001071/g083127_ex10-7.htm) |
| 10.17+ | [Form of Restricted Stock Agreement for the Second Amended And Restated 2021 Stock Incentive Plan (Incorporated by reference as Exhibit 10.8 to the Company's Current Report on Form 10-Q filed with the SEC on August 15, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622001071/g083127_ex10-8.htm) |
| 10.18+ | [Form of Restricted Stock Unit Agreement for the Second Amended And Restated 2021 Stock Incentive Plan (Incorporated by reference as Exhibit 10.9 to the Company's Current Report on Form 10-Q filed with the SEC on August 15, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622001071/g083127_ex10-9.htm) |
| 10.19 | [Securities Purchase Agreement dated as of October 21, 2016, by and between Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, and Brookstone Partners Acquisition XXIV, LLC (incorporated by reference from Exhibit 10.22 of the Company's Form 8-K Report filed October 21, 2016).](http://www.sec.gov/Archives/edgar/data/64463/000100329716000855/e10-22.htm) |
| 10.20 | [Registration Rights Agreement dated as of October 21, 2016, by and between Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, and Brookstone Partners Acquisition XXIV, LLC (incorporated by reference from Exhibit 10.23 of the Company's Form 8-K Report filed October 21, 2016).](http://www.sec.gov/Archives/edgar/data/64463/000100329716000855/e10-23.htm) |
| 10.<u>21</u> | [Form of Option Exercise and Stock Transfer Restriction Agreement between Soluna Holdings, Inc. and its Chief Executive Officer, Chief Financial Officer and Non-Employee Directors (incorporated by reference from Exhibit 10.24 of the Company's Form 8-K Report filed October 21, 2016).](http://www.sec.gov/Archives/edgar/data/64463/000100329716000855/e10-24.htm) |
| 10.22 | [Class A Preferred Share Purchase Agreement dated January 13, 2020, among Harmattan Energy, Ltd., formerly known as Soluna Technologies, Ltd., Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, and the other investors set forth on Exhibit A thereto (incorporated by reference from Exhibit 10.21 of the Company's Registration Statement on Form 10 filed March 4, 2020).](http://www.sec.gov/Archives/edgar/data/64463/000100329720000003/exhibit10-21.htm) |
| 10.23 | [Amended and Restated Contingent Rights Agreement dated November 5, 2021, by and between Harmattan Energy, Ltd. and Soluna Holdings, Inc. (incorporated by reference from Exhibit 10.26 of the Company's 10-K as of December 31, 2021)](https://www.sec.gov/Archives/edgar/data/64463/000175392622000384/g082656_ex10-26.htm) |
| 10.24 | [Side Letter Agreement dated January 13, 2020, by and between Harmattan Energy, Ltd., formerly known as Soluna Technologies, Ltd., and Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated (incorporated by reference from Exhibit 10.23 of the Company's Registration Statement on Form 10 filed March 4, 2020).](http://www.sec.gov/Archives/edgar/data/64463/000100329720000003/exhibit10-23.htm) |
| 10.25 | [Sale Order dated May 18, 2020, by and between GigaWatt, Inc. and the United States Bankruptcy Court Eastern District of Washington (incorporated by reference from Exhibit 10.32 of the Company's Registration Statement on Form 10 filed September 30, 2020).](http://www.sec.gov/Archives/edgar/data/64463/000100329720000026/ex10-32.htm) |
| 10.26 | [Intellectual Property Assignment Agreement dated May 20, 2020, by and between Mark D. Waldron, as Chapter 11 Trustee and Soluna Computing, Inc., formerly known as EcoChain, Inc (incorporated by reference from Exhibit 10.35 of the Company's Registration Statement on Form 10 filed September 30, 2020).](http://www.sec.gov/Archives/edgar/data/64463/000100329720000026/ex10-35.htm) |
| 10.27 | [Assignment of Lease Agreements dated February 4, 2020, by and between, on the one hand, David M. Carlson, Dorrinda M. Carlson, Enterprise Focus, Inc. and, on the other hand, Mark D. Waldron, in his capacity as the Chapter 11 Trustee (incorporated by reference from Exhibit 10.37 of the Company's Registration Statement on Form 10 filed September 30, 2020).](http://www.sec.gov/Archives/edgar/data/64463/000100329720000026/ex10-37.htm) |
| 10.28 | [Commercial Lease dated August 1, 2018, by and between TNT Business Complexes, LLC and Enterprise Focus, Inc. and Dave Carlson (incorporated by reference from Exhibit 10.38 of the Company's Registration Statement on Form 10 filed September 30, 2020).](http://www.sec.gov/Archives/edgar/data/64463/000100329720000026/ex10-38.htm) |
| 10.29 | [Commercial Lease dated November 14, 2014, by and between TNT Business Complexes, LLC and Dave Carlson /Enterprise Focus, Inc. (incorporated by reference from Exhibit 10.39 of the Company's Registration Statement on Form 10 filed September 30, 2020).](http://www.sec.gov/Archives/edgar/data/64463/000100329720000026/ex10-39.htm) |
| 10.30 | [October 21, 2019 Certified Letter Regarding Option to Extend Commercial Lease dated November 14, 2014, by and between TNT Business Complexes, LLC and Dave Carlson /Enterprise Focus, Inc (incorporated by reference from Exhibit 10.40 of the Company's Registration Statement on Form 10 filed September 30, 2020).](http://www.sec.gov/Archives/edgar/data/64463/000100329720000026/ex10-40.htm) |
| 10.31 | [Amendment of Commercial Lease Agreement dated January 28, 2020, by and between Mark Waldron, as Chapter 11 Trustee and TNT Business Complexes, LLC (incorporated by reference from Exhibit 10.41 of the Company's Registration Statement on Form 10 filed September 30, 2020).](http://www.sec.gov/Archives/edgar/data/64463/000100329720000026/ex10-41.htm) |

---

---

| | |
|:---|:---|
| 10.32 | [Industrial Power Contract dated February 22, 2021, by and between Soluna SW LLC, formerly known as EcoChain Wind, LLC, and a West Kentucky Rural Electric Cooperative Collaboration (incorporated by reference from Exhibit 10.1 of the Company's Form 10-Q Report for the quarter ended June 30, 2021)](http://www.sec.gov/Archives/edgar/data/64463/000100329721000061/exhibit10-1.htm) |
| 10.33 | [Form of Purchase Agreement dated as of April 11, 2021, by and between Soluna MC LLC, formerly known as EcoChain Block, LLC, and Seller (incorporated by reference from Exhibit 10.1 of the Company's Form 8-K Report filed April 12, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000095/g082131_ex10-1.htm) |
| 10.34 | [Form of Power Supply Agreement dated as of May 3, 2021, by and between Soluna MC LLC, formerly known as EcoChain Block, LLC, and a power-providing cooperative (incorporated by reference from Exhibit 10.3 of the Company's Form 8-K Report filed May 4, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000124/g082184_ex10-3.htm) |
| 10.35 | [Form of Transition Services Agreement dated as of May 3, 2021, by and between Soluna MC LLC, formerly known as EcoChain Block, LLC, and a power-providing cooperative (incorporated by reference from Exhibit 10.4 of the Company's Form 8-K Report filed May 4, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000124/g082184_ex10-4.htm) |
| 10.36 | [Form of Guaranty of Rent dated as of May 3, 2021, by and between Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, and a power-providing cooperative (incorporated by reference from Exhibit 10.5 of the Company's Form 8-K Report filed May 4, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000124/g082184_ex10-5.htm) |
| 10.37 | [Termination Agreement dated August 11, 2021, by and among Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, Soluna Computing, Inc., formerly known as EcoChain, Inc., and Harmattan Energy, Ltd. (incorporated by reference from Exhibit 10.1 of the Company's Form 8-K Report filed August 12, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000340/g082297_ex10-1.htm) |
| 10.38 | [Securities Purchase Agreement dated October 20, 2021, by and between Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, and accredited investors (incorporated by reference from Exhibit 10.1 of the Company's Form 8-K Report filed October 25, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000582/g082394_ex10-1.htm) |
| 10.39 | [Registration Rights Agreement dated October 25, 2021, by and between the Company and accredited investors (incorporated by reference from Exhibit 10.2 of the Company's Form 8-K Report filed October 25, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000582/g082394_ex10-2.htm) |
| 10.40 | [Security Agreement dated October 25, 2021, by and among the Company, MTI Instruments and Soluna Computing, Inc., formerly known as EcoChain, Inc., Soluna MC LLC, formerly known as EcoChain Block LLC, and Soluna SW LLC, formerly known as EcoChain Wind LLC, and Collateral Services LLC (incorporated by reference from Exhibit 10.3 of the Company's Form 8-K Report filed October 25, 2021).](http://www.sec.gov/Archives/edgar/data/64463/000175392621000582/g082394_ex10-4.htm) |
| 10.41 | [Master Equipment Finance Agreement, dated as of December 30, 2021 by and between Soluna MC Borrowing 2021-1 LLC and NYDIG ABL LLC (incorporated by reference from Exhibit 10.1 of the Company's Form 8-K Report filed January 18, 2022).](http://www.sec.gov/Archives/edgar/data/64463/000175392622000066/g082544_ex10-1.htm) |
| 10.42 | [Digital Asset Account Control Agreement, effective as of December 30, 2021 by and among Soluna MC Borrowing 2021-1 LLC, NYDIG ABL LLC and NYDIG Trust Company LLC (incorporated by reference from Exhibit 10.2 of the Company's Form 8-K Report filed January 18, 2022).](http://www.sec.gov/Archives/edgar/data/64463/000175392622000066/g082544_ex10-2.htm) |
| 10.43 | [Guaranty Agreement, dated as of December 30, 2021 by Soluna MC LLC, in favor of NYDIG ABL LLC (incorporated by reference from Exhibit 10.3 of the Company's Form 8-K Report filed January 18, 2022).](http://www.sec.gov/Archives/edgar/data/64463/000175392622000066/g082544_ex10-3.htm) |
| 10.44 | [Consent and Waiver Agreement, dated January 13, 2022, by and among the Company and the purchasers signatory to the Securities Purchase Agreement, dated as of October 20, 2021 (incorporated by reference from Exhibit 10.4 of the Company's Form 8-K Report filed January 18, 2022).](http://www.sec.gov/Archives/edgar/data/64463/000175392622000066/g082544_ex10-4.htm) |
| 10.45+ | [Employment Agreement, by and between Soluna Holdings, Inc. and Michael Toporek, dated as of January 14, 2022 (incorporated by reference from Exhibit 10.1 of the Company's Form 8-K Report filed January 21, 2022).](http://www.sec.gov/Archives/edgar/data/64463/000175392622000098/g082575_ex10-1.htm) |
| 10.46 | [Stock Purchase Agreement, dated as of April 11, 2022, by and between Soluna Holdings, Inc. and NKX Acquiror, Inc. (Incorporated by reference to the Company's Current Report on Form 8-K Report filed with the SEC on April 15, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622000525/g082970_ex10-1.htm) |
| 10.47 | [Form of Note by and between Soluna Holdings, Inc. and certain institutional lenders (incorporated by reference from Exhibit 10.53 of the Company's Form 10-K Report for the year ended December 31, 2021 filed on March 31, 2022.)](https://www.sec.gov/Archives/edgar/data/64463/000175392622000384/g082656_ex10-53.htm) |
| 10.48 | [Commercial Security Agreement, by and between Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, and KeyBank National Association, dated September 15, 2021 (incorporated by reference from Exhibit 10.54 of the Company's Form 10-K Report for the year ended December 31, 2021 filed on March 31, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622000384/g082656_ex10-54.htm) |
| 10.49 | [Promissory Note, by and between Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated, and KeyBank National Association, dated September 15, 2021 (incorporated by reference from Exhibit 10.55 of the Company's Form 10-K Report for the year ended December 31, 2021 filed on March 31, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622000384/g082656_ex10-55.htm) |
| 10.50 | [Underwriting Agreement, by and between the Company and Univest Securities, LLC, dated October 24, 2022 (Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on October 26, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000149315222029639/ex1-1.htm) |
| 10.51 | [Form of Underwriter's Warrant (Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on October 26, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000149315222029639/ex4-1.htm) |

---

---

| | |
|:---|:---|
| 10.52+ | [Employment Agreement, by and between Soluna Holdings, Inc. and Philip F. Patman, Jr, dated as of July 29, 2022 (Incorporated by reference to the Company's Current Report on Form 8-K Report filed with the SEC on August 3, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622001004/g083120_ex10-1.htm) |
| 10.53 | [Form of Addendum by and between the Company, Collateral Agent, and each purchaser identified on Schedule A hereto (Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on July 20, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622000942/g083091_ex10-1.htm) |
| 10.54 | [Form of Securities Purchase Agreement by and among the Company and the purchasers signatory thereto (Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on July 20, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622000942/g083091_ex10-2.htm) |
| 10.55 | [Form of Leak-Out Agreement by and between the Company and the signatory thereto (Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on July 20, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622000942/g083091_ex10-3.htm) |
| 10.56 | [At-the-Market Issuance Sales Agreement, dated June 9, 2022, by and between the Company and the Univest Securities, LLC (Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on June 9, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622000862/g083056_ex1-1.htm) |
| 10.57 | [Contribution Agreement by and between Soluna Holdings, Inc., Soluna SLC Fund I Projects Holdco, LLC, Soluna DV Devco, LLC, and Soluna DVSL ComputeCo, LLC, dated as of August 5, 2022 (Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 11, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622001052/g083132_ex10-1.htm) |
| 10.58 | [Form of Addendum Amendment by and Between the Company and the signatories thereof, dated September 13, 2022 (Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on September 14, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622001256/g083193_ex10-1.htm) |
| 10.59 | [Form of Series B Consent by and between the Company and the signatory thereof, dated September 13, 2022 (Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on September 14, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000175392622001256/g083193_ex10-2.htm) |
| 10.60 | [Form of Securities Purchase Agreement by and between the Company and the purchasers named therein, dated December 5, 2022 (Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on December 5, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000149315222034422/ex10-1.htm) |
| 10.61 | [Form of Warrant (Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on December 5, 2022).](https://www.sec.gov/Archives/edgar/data/64463/000149315222034422/ex4-1.htm) |
| 10.62+ | [Soluna Holdings, Inc. Third Amended and Restated 2021 Stock Incentive Plan (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on March 13, 2023)](https://www.sec.gov/Archives/edgar/data/64463/000149315223007465/ex10-1.htm) |
| 10.63+ | [Soluna Holdings, Inc. 2023 Stock Incentive Plan (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on March 13, 2023)](https://www.sec.gov/Archives/edgar/data/64463/000149315223007465/ex10-2.htm) |
| 10.64 | [Purchase of Membership Interests of Soluna DVSL Computeco LLC dated March 10, 2023](ex10-64.htm) |
| 10.65 | [Fourth Amended and Restated LLC Agreement Soluna DVSL Computeco LLC](ex10-65.htm) |
| 10.66 | [Data Facility Lease](ex10-66.htm) |
| 10.67 | [Amended and Restated Contribution Agreement dated March 10, 2023](ex10-67.htm) |
| 10.68 | [Power Purchase Agreement with Lighthouse Electric Cooperative, Inc. dated February 24, 2023](ex10-68.htm) |
| 10.69 | [Second Addendum Amendment dated as of March 3, 2023 with Convertible Noteholders](ex10-69.htm) |
| 21 | [Subsidiaries of Soluna Holdings, Inc.](ex21.htm) |
| 23.1 | [Consent of UHY LLP.](ex23-1.htm) |
| 31.1 | [Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ex31-1.htm) |
| 31.2 | [Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ex31-2.htm) |
| 32.1 | [Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ex32-1.htm) |
| 32.2 | [Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ex32-2.htm) |
| 101.INS | Inline XBRL Instance Document |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline XBRL Taxonomy Definition Linkbase Document |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

# Certain portions of this exhibit have been omitted based upon a request for confidential treatment. The omitted portions have been filed with the Securities and Exchange Commission pursuant to our application for confidential treatment. The items are identified in the exhibit with "\*\*".

+ Represents management contract or compensation plan or arrangement.

**Item 16: Form 10-K Summary**

None.

**Signatures**

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | **SOLUNA HOLDINGS, INC**. | **SOLUNA HOLDINGS, INC**. |
| Date: March 31, 2023 | By: | */s/ Michael Toporek* |
|  |  | Michael Toporek |
|  |  | Chief Executive Officer |
| Date: March 31, 2023 | By: | */s/ Philip Patman, Jr.* |
|  |  | Philip Patman, Jr. |
|  |  | Chief Financial Officer |

---

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| Signature | Title | Date |
| */s/ Michael Toporek* | Chief Executive Officer, Director |  |
| Michael Toporek | (Principal Executive Officer) | March 31, 2023 |
| */s/ Philip Patman, Jr.* | Chief Financial Officer |  |
| Philip Patman, Jr. | (Principal Financial Officer) | March 31, 2023 |
| */s/ Jessica L. Thomas* | Chief Accounting Officer |  |
| Jessica L. Thomas | (Principal Accounting Officer) | March 31, 2023 |
| */s/ William Phelan* | Chairman |  |
| William Phelan |  | March 31, 2023 |
| */s/ Edward R. Hirshfield* | Director |  |
| Edward R. Hirshfield |  | March 31, 2023 |
| */s/ Matthew E. Lipman* | Director |  |
| Matthew E. Lipman |  | March 31, 2023 |
| */s/ Thomas J. Marusak* | Director |  |
| Thomas J. Marusak |  | March 31, 2023 |
| */s/ David C. Michaels* | Director |  |
| David C. Michaels |  | March 31, 2023 |
| */s/ William Hazelip* | Director |  |
| William Hazelip |  | March 31, 2023 |
| */s/ John Belizaire* | Director |  |
| John Belizaire |  | March 31, 2023 |
| */s/ John Bottomley* | Director |  |
| John Bottomley |  | March 31, 2023 |

---

**SOLUNA HOLDINGS, INC. AND SUBSIDIARIES**

**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
|  | Page |
| [Report of Independent Registered Public Accounting Firm](#akh_027) (PCAOB ID:1195) | F-2 to F-4 |
| Consolidated Financial Statements: |  |
| &nbsp;&nbsp;&nbsp;[Balance Sheets as of December 31, 2022 and 2021](#akh_028) | F-5 |
| &nbsp;&nbsp;&nbsp;[Statements of Operations for the Years Ended December 31, 2022 and 2021](#akh_029) | F-6 |
| &nbsp;&nbsp;&nbsp;[Statements of Changes in Equity for the Years Ended December 31, 2022 and 2021](#akh_030) | F-7 |
| &nbsp;&nbsp;&nbsp;[Statements of Cash Flows for the Years Ended December 31, 2022 and 2021](#akh_031) | F-8 |
| [Notes to Consolidated Financial Statements](#akh_032) | F-9 to F-45 |

---

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and

Stockholders of Soluna Holdings, Inc. and Subsidiaries

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheets of Soluna Holdings, Inc. and Subsidiaries (the Company) as of December 31, 2022 and 2021, and the related consolidated statements of operations, changes in equity, and cash flows for each of the years in the two-year period ended December 31, 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

**Substantial Doubt about the Company's Ability to Continue as a Going Concern**

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and had significant accumulated deficit and negative working capital that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

**Basis for Opinion**

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

**Critical Audit Matters**

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

***Impairment Analysis of Intangible Assets***

 ****

Description of the Matter

As discussed in Note 6 to the financial statements, the Company has strategic pipeline contracts related to the Company's business. These contracts relate to the potential renewable energy data centers that the Company is in the process of completing. As of December 31, 2022, the book value of the strategic pipeline contracts totaled $46.9 million with accumulated amortization of $10.9 million.

We identified the impairment analysis of the strategic pipeline contract intangible assets triggered by the impairment indicators as a critical audit matter because the analysis includes significant estimates, assumptions and judgments. Specifically, the determination of the fair value of the strategic pipeline contracts was based on the status of the projects, undiscounted cash flows and the probability of realization of the benefit. The determination of the intangible fair value required management to make significant judgments, including the appropriateness of the valuation model and the reasonableness of estimates and assumptions included in the model. Changes in these estimates and assumptions could have a significant impact on the fair value of the intangible assets. Auditing these elements involved especially challenging auditor judgment due to the subjectivity and the nature and extent of audit effort required to address the matter, including the extent of specialized skills or knowledge needed.

How We Addressed the Matter in Our Audit

We gained an understanding of certain internal controls over the Company's process to analyze the intangible asset for impairment, including controls related to the Company's valuation. For example, we gained an understanding of controls over the estimation process supporting the valuation of the strategic pipeline contracts intangible asset, which included controls over management's review of assumptions used in its valuation model.

To test the estimated fair value of the strategic pipeline contracts, we performed audit procedures that included, among others, evaluating the valuation methodology used by the Company's valuation specialist, and evaluating the reasonableness of the key assumptions used to determine the estimated fair value. We utilized our firm's valuation specialists to assist with the evaluation of the methodology used by management and significant assumptions included in the fair value estimate, including testing the likelihood of various scenarios. For example, we compared the Company's budgets and forecasts and reviewed the status of the projects used as part of the determination of the likelihood of the various scenarios. We performed a sensitivity analysis over key assumptions used in the model. We also evaluated the adequacy of the Company's disclosures included in Note 2 and Note 6 in relation to this valuation.

***Fair value of the Warrants and Convertible Note***

 ****

Description of the Matter

As discussed in Note 13 to the financial statements, the Company offered a total of approximately 9 million common stock purchase warrants. The fair value of the warrants, as of the issuance date, was $15 million. The Company uses option pricing models to estimate the fair value of the warrants using various market-based inputs. The debt modification addendum on July 19, 2022, as described in Note 9, resulted in deemed extinguishment of the old convertible note, and the new convertible note was accounted for under the fair value method on a recurring basis in accordance with ASC 480.

We identified the assessment of the measurement of fair value of the warrants and convertible note as a critical audit matter. Specifically, there was a high degree of subjectivity and judgment in evaluating the determination of the expected volatility inputs used in the option pricing models for the warrants. Historical, implied, and peer group volatility levels provide a range of possible expected volatility inputs and the fair value estimates for the warrants are sensitive to the expected volatility inputs.

How We Addressed the Matter in Our Audit

The primary procedures we performed to address this critical audit matter included gaining an understanding of certain internal controls over the Company's process to measure the fair value of the warrants and convertible note. This included controls related to the evaluation of observable market information used in the determination of the expected volatility inputs. We also involved our firm's valuation professionals with specialized skills and knowledge, who assisted in:

● evaluating the expected volatility inputs by comparing them against a volatility range that was independently developed in consideration of historical, implied, and peer group volatility information; and

● developing an estimate of the convertible note and warrants' fair value using the independently developed volatility range and comparing it to the value calculated by the Company.

***Impairment Analysis of Fixed Assets***

 ****

Description of the Matter

As described in Note 2 to the financial statements, the Company' performed a quarterly assessment of the status of its long-lived assets at each subsidiary for potential impairment. The results of the analysis performed, the Company had impaired approximately $47.4 million of property, plant and equipment. The Company's recorded impairment includes an assessment of the fair value of the property plant and equipment utilizing factors such as market value of comparable equipment for sale, the Hashrate Index and Luxor ASIC Trading Desk Market Update.

We identified the impairment analysis of the fixed assets as a critical audit matter due to the significant estimates, assumptions, and judgment used by management when evaluating the fair value of fixed assets. This led to a high degree of auditor judgment and subjectivity in performing procedures on management's assessment of the valuation of the fixed assets.

How We Addressed the Matter in Our Audit

We gained an understanding of certain internal controls over the Company's impairment assessment process, including controls related to the valuation of fixed assets, and the review of activity that could result in changes to the Company's valuation. Since impairment of fixed assets was material during the year ended December 31, 2022 and complex, we performed the following:

● Independently assessing the relevance and reliability of the inputs into the valuation assessment, such as the Hashrate Index and Luxor ASIC Trading Desk Market Update.

● Evaluating the valuation for the fixed assets through independently comparing with prices of similar assets found through third party resources, as well as subsequent disposals or sales.

/s/ UHY LLP

We have served as the Company's auditor since 2021.

Albany, New York

March 31, 2023

**Soluna Holdings, Inc. and Subsidiaries**

**Consolidated Balance Sheets**

**As of December 31, 2022 and December 31, 2021** 

(Dollars in thousands, except per share)

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2022** | **December 31,**<br>**2021** |
| **Assets** |  |  |
| **Current Assets:** |  |  |
| &nbsp;&nbsp;&nbsp;Cash | $1136 | $10258 |
| &nbsp;&nbsp;&nbsp;Restricted cash | 685 |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable | 320 | 531 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 1326 | 977 |
| &nbsp;&nbsp;&nbsp;Deposits on equipment | 1175 | 10188 |
| &nbsp;&nbsp;&nbsp;Current assets associated with discontinued operations |  | 3028 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Current Assets | 4642 | 24982 |
| **Other assets** | 1150 | 1121 |
| **Equity investment** |  | 750 |
| **Property, plant and equipment, net** | 42504 | 44597 |
| **Intangible assets, net** | 36432 | 45839 |
| **Operating lease right-of-use assets** | 233 | 405 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Assets** | $84961 | $117694 |
| **Liabilities and Stockholders' Equity** |  |  |
| **Current Liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $3548 | $2958 |
| &nbsp;&nbsp;&nbsp;Accrued liabilities | 2721 | 2859 |
| &nbsp;&nbsp;&nbsp;Line of credit | 350 | 1000 |
| &nbsp;&nbsp;&nbsp;Convertible notes payable | 11737 | 7121 |
| &nbsp;&nbsp;&nbsp;Current portion of debt | 10546 |  |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 453 | 316 |
| &nbsp;&nbsp;&nbsp;Operating lease liability | 161 | 184 |
| &nbsp;&nbsp;&nbsp;Income taxes payable |  | 2 |
| &nbsp;&nbsp;&nbsp;Current liabilities associated with discontinued operations |  | 1243 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Current Liabilities | 29516 | 15683 |
| **Other liabilities** | 203 | 509 |
| **Long term debt** |  |  |
| **Operating lease liability** | 84 | 237 |
| **Deferred tax liability, net** | 8886 | 10277 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities** | 38689 | 26706 |
| **Commitments and Contingencies (Note 14)** |  |  |
| **Stockholders' Equity:** |  |  |
| &nbsp;&nbsp;&nbsp;9.0% Series A Cumulative Perpetual Preferred Stock, par value $0.001 per share, $25.00 liquidation preference; authorized 6,040,000; 3,061,245 shares issued and outstanding as of December 31, 2022 and 1,252,299 shares issued and outstanding as of December 31, 2021 | 3 | 1 |
| &nbsp;&nbsp;&nbsp;Series B Preferred Stock, par value $0.0001 per share, authorized 187,500; 62,500 shares issued and outstanding as of December 31, 2022 and 0 shares issued and outstanding as of December 31, 2021 |  |  |
| &nbsp;&nbsp;&nbsp;Common stock, par value $0.001 per share, authorized 75,000,000; 19,712,722 shares issued and 18,694,206 shares issued and outstanding as of December 31, 2022 and 14,769,699 shares issued and 13,754,206 shares issued and outstanding as of December 31, 2021 | 20 | 15 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 277410 | 227790 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (221769) | (123054) |
| &nbsp;&nbsp;&nbsp;Common stock in treasury, at cost, 1,018,516 shares at December 31, 2022 and 1,015,493 shares at December 31, 2021 | (13798) | (13764) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Soluna Holdings, Inc. Stockholders' Equity** | 41866 | 90988 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-Controlling Interest | 4406 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Stockholders' Equity** | 46272 | 90988 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities and Stockholders' Equity** | $84961 | $117694 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**Soluna Holdings, Inc. and Subsidiaries**

**Consolidated Statements of Operations**

**For the Years Ended December 31, 2022 and 2021**

(Dollars in thousands, except per share)

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| Cryptocurrency mining revenue | $24409 | $10932 |
| Data hosting revenue | 4138 | 3413 |
| &nbsp;&nbsp;&nbsp;Total revenue | 28547 | 14345 |
| Operating costs: |  |  |
| &nbsp;&nbsp;&nbsp;Cost of cryptocurrency mining revenue, exclusive of depreciation | 14281 | 3504 |
| &nbsp;&nbsp;&nbsp;Depreciation costs associated with cryptocurrency mining | 18708 | 2122 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cost of cryptocurrency mining revenue | 32989 | 5626 |
| &nbsp;&nbsp;&nbsp;Cost of data hosting revenue | 3517 | 2444 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;General and administrative expenses, exclusive of depreciation and amortization | 19203 | 9170 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization associated with general and administrative expenses | 9506 | 1581 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total general and administrative expenses | 28709 | 10751 |
| Impairment on equity investment | 750 |  |
| Impairment on fixed assets | 47372 | - |
| Operating loss | (84790) | (4476) |
| Interest expense | (8375) | (1879) |
| Loss on debt extinguishment and revaluation, net | (11130) |  |
| Loss on sale of fixed assets | (4089) |  |
| Other income, net | 22 | 11 |
| Loss before income taxes from continuing operations | (108362) | (6344) |
| Income tax benefit (expense) from continuing operations | 1346 | (44) |
| Net loss from continuing operations | (107016) | (6388) |
| Income before income taxes from discontinued operations (including gain on sale of MTI Instruments of $7,751 for year ended December 31, 2022) | 7921 | 1087 |
| Income tax benefit from discontinued operations | - | 40 |
| &nbsp;&nbsp;&nbsp;Net income from discontinued operations | 7921 | 1127 |
| Net loss | (99095) | (5261) |
| (Less) Net loss attributable to non-controlling interest | 380 | - |
| Net loss attributable to Soluna Holdings, Inc. | $(98715) | $(5261) |
| Basic and Diluted (loss) earnings per common share: |  |  |
| Net loss from continuing operations per share (Basic & Diluted) | $(7.42) | $(0.59) |
| Net income from discontinued operations per share (Basic & Diluted) | $0.53 | $0.09 |
| &nbsp;&nbsp;&nbsp;Basic & Diluted loss per share | $(6.89) | $(0.50) |
| Weighted average shares outstanding (Basic and Diluted) | 14982510 | 11840242 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**Soluna Holdings, Inc. and Subsidiaries**

**Consolidated Statements of Changes in Equity**

**For the Years Ended December 31, 2022 and 2021**

(Dollars in thousands, except per share)

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Common Stock** | **Common Stock** | | | **Treasury Stock** | **Treasury Stock** | | |
|  | **Series A<br> Shares** | **Amount** | **Series B<br> Shares** | **Amount** | **Shares** | **Amount** |<br>**Additional Paid-in<br> Capital** |<br>**Accumulated Deficit** | **Shares** | **Amount** |<br>**Non-<br> Controlling<br> Interest** |<br>**Total**<br> **Stockholders'<br> Equity** |
| **January 1, 2021** |  | $— |  | $— | 10750100 | $11 | $137462 | $(117793) | 1015493 | $(13764) | $— | $5916 |
| Net loss |  |  |  |  |  |  |  | (5261) |  |  |  | (5261) |
| Preferred dividends distribution |  |  |  |  |  |  | (630) |  |  |  |  | (630) |
| Stock-based compensation |  |  |  |  |  |  | 2021 |  |  |  |  | 2021 |
| Issuance of shares – preferred offering | 1252299 | 1 |  |  |  |  | 25056 |  |  |  |  | 25057 |
| Issuance of shares – stock offering |  |  |  |  | 2782258 | 3 | 15400 |  |  |  |  | 15403 |
| Issuance of shares – option exercises |  |  |  |  | 123400 |  | 102 |  |  |  |  | 102 |
| Issuance of shares – warrant exercises |  |  |  |  | 581610 | 1 | 4792 |  |  |  |  | 4793 |
| Issuance of shares- Notes conversion |  |  |  |  | 150000 |  | 1377 |  |  |  |  | 1377 |
| Issuance of shares- termination shares |  |  |  |  | 150000 |  | 1917 |  |  |  |  | 1917 |
| Warrants issued in relation to debt financing |  |  |  |  |  |  | 7037 |  |  |  |  | 7037 |
| Share consideration of asset acquisition |  |  |  |  |  |  | 33000 |  |  |  |  | 33000 |
| Issuance of shares-restricted stock |  |  |  |  | 232331 |  | 256 |  |  |  |  | 256 |
| **December 31, 2021** | 1252299 | $1 |  | $— | 14769699 | $15 | $227790 | $(123054) | 1015493 | $(13764) | $— | $90988 |
| Net loss |  |  |  |  |  |  |  | (98715) |  |  | (380) | (99095) |
| Preferred dividends distribution-Series A |  |  |  |  |  |  | (3852) |  |  |  |  | (3852) |
| Preferred dividends-Series B |  |  |  |  |  |  | (236) |  |  |  |  | (236) |
| Stock-based compensation |  |  |  |  |  |  | 3857 |  |  |  |  | 3857 |
| Issuance of shares – preferred offering | 666089 | 1 |  |  |  |  | 9750 |  |  |  |  | 9751 |
| Issuance of shares – common offering |  |  |  |  | 1388889 | 1 | 1582 |  |  |  |  | 1583 |
| Issuance of shares – Securities Purchase offering |  |  |  |  | 1125000 | 1 | 768 |  |  |  |  | 769 |
| Restricted stock units vested |  |  |  |  | 49519 |  |  |  |  |  |  |  |
| Issuance of shares – warrant exercises |  |  |  |  | 94500 |  | 779 |  |  |  |  | 779 |
| Issuance of shares- Notes conversion |  |  |  |  | 1032580 | 1 | 3294 |  |  |  |  | 3295 |
| Issuance of shares - Series B preferred offering |  |  | 62500 |  |  |  | 4994 |  |  |  |  | 4994 |
| Issuance of shares – option exercises |  |  |  |  | 177425 |  | 153 |  |  |  |  | 153 |
| Issuance of shares-restricted stock |  |  |  |  | 9750 |  | 36 |  |  |  |  | 36 |
| Promissory note conversion to preferred shares | 1142857 | 1 |  |  |  |  | 13894 |  |  |  |  | 13895 |
| Treasury Shares conversion |  |  |  |  |  |  |  |  | 3023 | (34) |  | (34) |
| Surrender of warrants for common shares |  |  |  |  | 726576 | 1 | (347) |  |  |  |  | (346) |
| Warrants and valuation issued in relation to debt financing |  |  |  |  |  |  | 14948 |  |  |  |  | 14948 |
| Issuance of common shares in relation to preferred & common offerings |  |  |  |  | 338784 | 1 |  |  |  |  |  | 1 |
| Contribution to Non-Controlling interest |  |  |  |  |  |  |  |  |  |  | 4786 | 4786 |
| **December 31, 2022** | 3061245 | $3 | 62500 | $— | 19712722 | $20 | $277410 | $(221769) | 1018516 | $(13798) | $4406 | $46272 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**Soluna Holdings, Inc. and Subsidiaries**

**Consolidated Statements of Cash Flows**

**For the Year Ended December 31, 2022 and 2021**

(Dollars in thousands)

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** |
| **Operating Activities** |  |  |
| Net loss | $(99095) | $(5261) |
| Net income from discontinued operations (including gain on sale of MTI Instruments of $7,751 for the year ended December 31, 2022) | (7921) | (1127) |
| Net loss from continuing operations | (107016) | (6388) |
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation expense | 18731 | 2124 |
| &nbsp;&nbsp;&nbsp;Amortization expense | 9483 | 1579 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation | 3673 | 1941 |
| &nbsp;&nbsp;&nbsp;Consultant stock compensation | 179 | 104 |
| &nbsp;&nbsp;&nbsp;Deferred income taxes | (1388) | 41 |
| &nbsp;&nbsp;&nbsp;Impairment on fixed assets | 47372 |  |
| &nbsp;&nbsp;&nbsp;Amortization of operating lease asset | 202 | 169 |
| &nbsp;&nbsp;&nbsp;Impairment on equity investment | 750 |  |
| &nbsp;&nbsp;&nbsp;Loss on debt extinguishment and revaluation, net | 11130 |  |
| &nbsp;&nbsp;&nbsp;Amortization on deferred financing costs and discount on notes | 6538 | 1876 |
| &nbsp;&nbsp;&nbsp;Loss on sale of fixed assets | 4089 |  |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable | 211 | (471) |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 146 | (956) |
| &nbsp;&nbsp;&nbsp;Other long-term assets | (29) | (812) |
| &nbsp;&nbsp;&nbsp;Accounts payable | 553 | 2765 |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 137 | 316 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | (197) | (156) |
| &nbsp;&nbsp;&nbsp;Other liabilities | (308) | 306 |
| &nbsp;&nbsp;&nbsp;Accrued liabilities | (374) | 2197 |
| Net cash (used in) provided by operating activities | (6118) | 4635 |
| Net cash provided by operating activities- discontinued operations | 369 | 917 |
| **Investing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;Purchases of property, plant, and equipment | (63684) | (45792) |
| &nbsp;&nbsp;&nbsp;Purchases of intangible assets | (76) | (1567) |
| &nbsp;&nbsp;&nbsp;Proceeds from disposal on property, plant, and equipment | 2605 |  |
| &nbsp;&nbsp;&nbsp;Deposits of equipment, net | 6441 | (9909) |
| Net cash used in investing activities | (54714) | (57268) |
| Net cash provided by (used in) investing activities- discontinued operations | 9084 | (37) |
| **Financing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from preferred offerings | 16658 | 27965 |
| &nbsp;&nbsp;&nbsp;Proceeds from common stock offering | 2858 | 17250 |
| &nbsp;&nbsp;&nbsp;Proceeds from notes and debt issuance | 30543 | 15000 |
| &nbsp;&nbsp;&nbsp;Costs of preferred offering | (1910) | (2707) |
| &nbsp;&nbsp;&nbsp;Costs of common stock offering | (504) | (1847) |
| &nbsp;&nbsp;&nbsp;Costs of notes and short-term debt issuance | (2078) | (1338) |
| &nbsp;&nbsp;&nbsp;Cash dividend distribution on preferred stock | (3852) | (630) |
| &nbsp;&nbsp;&nbsp;Borrowings under line of credit |  | 1000 |
| &nbsp;&nbsp;&nbsp;Payments on NYDIG loans and line of credit | (4491) |  |
| &nbsp;&nbsp;&nbsp;Contributions from non-controlling interest | 4786 |  |
| &nbsp;&nbsp;&nbsp;Proceeds from stock option exercises | 153 | 102 |
| &nbsp;&nbsp;&nbsp;Proceeds from common stock warrant exercises | 779 | 4586 |
| Net cash provided by financing activities | 42942 | 59381 |
| (Decrease) increase in cash & restricted cash-continuing operations | (17890) | 6748 |
| Increase in cash & restricted cash- discontinued operations | 9453 | 880 |
| Cash & restricted cash – beginning of period | 10258 | 2630 |
| Cash & restricted cash – end of period | $1821 | $10258 |
| **Supplemental Disclosure of Cash Flow Information** |  |  |
| &nbsp;&nbsp;&nbsp;Noncash equipment financing | 4620 |  |
| &nbsp;&nbsp;&nbsp;Interest paid on NYDIG loans and line of credit | 1311 | 6 |
| &nbsp;&nbsp;&nbsp;Proceed receivable from sale of MTI Instruments | 295 |  |
| &nbsp;&nbsp;&nbsp;Notes converted to common stock | 3295 |  |
| &nbsp;&nbsp;&nbsp;Warrant consideration in relation to promissory notes and convertible notes | 14602 |  |
| &nbsp;&nbsp;&nbsp;Promissory note conversion to preferred shares | 15236 |  |
| &nbsp;&nbsp;&nbsp;Noncash proceed on sale of equipment | 210 |  |
| &nbsp;&nbsp;&nbsp;Purchase of miner equipment using restricted stock |  | (207) |
| &nbsp;&nbsp;&nbsp;Registration fees in prepaids and accounts payable |  | (200) |
| &nbsp;&nbsp;&nbsp;Termination shares issued in conjunction with merger for intangible assets |  | 1917 |
| &nbsp;&nbsp;&nbsp;Warrants exercised prior to year-end not received until subsequent period |  | 206 |
| &nbsp;&nbsp;&nbsp;Share consideration in relation to strategic pipeline contract |  | 33000 |
| &nbsp;&nbsp;&nbsp;Deferred tax liability in relation to strategic pipeline contract |  | 10934 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**Notes to Consolidated Financial Statements**

**1. Nature of Operations**

Description of Business

*Unless the context requires otherwise in these notes to the consolidated financial statements, the terms "SHI," the "Company," "we," "us," and "our" refer to Soluna Holdings, Inc. together with its consolidated subsidiaries, "SCI" refers to Soluna Computing, Inc, formerly known as EcoChain, Inc., and "MTI Instruments" refers to MTI Instruments, Inc..*

Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated was incorporated in Nevada on March 24, 2021, and is the successor to Mechanical Technology, Inc., which was incorporated in the State of New York in 1961, as a result of a merger which became effective on March 29, 2021, and is headquartered in Albany, New York. Effective November 2, 2021, the Company changed its name from "Mechanical Technology, Incorporated" to "Soluna Holdings, Inc."

SCI was incorporated in Delaware on January 8, 2020 as EcoChain, Inc., which operates cryptocurrency mining facilities that performs proprietary mining and data hosting services that integrates with the cryptocurrency blockchain network. Through the October 2021 acquisition by EcoChain, Inc. of an entity at the time named Soluna Computing, Inc., SCI also has a pipeline of certain cryptocurrency mining projects previously owned by Harmattan Energy, Ltd. ("HEL") (formerly known as Soluna Technologies, Ltd.), a Canadian corporation incorporated under the laws of the Province of British Colombia that develops vertically-integrated, utility-scale computing facilities focused on cryptocurrency mining and cutting-edge blockchain applications. Following such acquisition, on November 15, 2021, SCI completed its conversion and redomicile to Nevada and changed its name from "EcoChain, Inc." to "Soluna Computing, Inc.". The following day, the acquired entity, Soluna Computing, Inc., changed its name to "Soluna Callisto Holdings Inc." ("Soluna Callisto"). We earn revenue from this business as the mined cryptocurrencies are converted into U.S. dollars. In fiscal year 2021, SCI began mining operations in Murray, Kentucky, ("Project Sophie") and Calvert City, Kentucky, ("Project Marie"). Project Marie had performed hosting services and proprietary mining in which 10 megawatts were used for hosting services and 10 megawatts was used for proprietary mining through the end of February 2023, at which time the facility had shut down. Project Sophie currently operates fully on proprietary mining with a capacity of 25 megawatts. On September 17, 2022, SCI sold specified assets consisting mainly of mining equipment and other general equipment items to a buyer at its Wenatchee, Washington location, ("Project Edith"). Soluna has committed to providing certain facilities contracts at cost plus a markup to facilitate the continued operations for the sold mining assets, on behalf of the new ownership. We have a development site in Texas ("Project Dorothy") for a potential of up to 100 megawatts to be built at a wind farm with initial energization of 50 megawatts, in which the Company has obtained approval from the ERCOT and expects to begin energization in fiscal year 2023. The Company as of December 31, 2022, has a 67.8% ownership interest in Soluna DVSL ComputeCo, LLC ("DVSL") in which is included within the Project Dorothy site, as discussed further in Note 18, and subsequent to year-end, had a reduction in ownership to 15% as discussed further in Note 20.

Until the Sale (as defined below), we also operated though our wholly owned subsidiary, MTI Instruments, an instruments business engaged in the design, manufacture and sale of vibration measurement and system balancing solutions, precision linear displacement sensors, instruments and system solutions, and wafer inspection tools. MTI Instruments was incorporated in New York on March 8, 2000. MTI Instruments' products consisted of engine vibration analysis systems for both military and commercial aircraft and electronic gauging instruments for position, displacement and vibration application within the industrial manufacturing markets, as well as in the research, design and process development markets. These systems, tools and solutions were developed for markets and applications that require consistent operation of complex machinery and the precise measurements and control of products, processes, and the development and implementation of automated manufacturing and assembly. On December 17, 2021, we announced that we had entered into a non-binding letter of intent with a potential buyer (the "Buyer") regarding the potential sale of MTI Instruments (the "LOI") to an unrelated third party. Pursuant to the LOI, the Buyer would acquire 100% of the issued and outstanding common stock of MTI Instruments. As a result of the foregoing, the MTI Instruments business was reported as discontinued operations in our consolidated financial statements as of December 31, 2021 and prior periods included in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 31, 2022 (the "Prior Year Annual Report"), as well as in these consolidated financial statements as of December 31, 2022. On April 11, 2022, we consummated the Sale, MTI Instruments ceased to be our wholly-owned subsidiary and, as a result, we have exited the instruments business. See Note 14 for additional information on the Sale.

On April 11, 2022, SHI entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") with NKX Acquiror, Inc. (the "Purchaser"), pursuant to which the Company sold on such date all of the issued and outstanding shares of capital stock of its wholly-owned subsidiary, MTI Instruments, for approximately $9.4 million in cash, subject to certain adjustments as set forth in the Stock Purchase Agreement (the "Sale"). The consideration paid by the Purchaser to the Company was based on an aggregate enterprise value of approximately $10.75 million. The Company recognized a gain on sale of approximately $7.8 million.

***Going Concern and Liquidity***

The Company's financial statements as of December 31, 2022 have been prepared using generally accepted accounting principles in the United States of America ("U.S. GAAP") applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As shown in the accompanying financial statements, the Company did not generate sufficient revenue to generate net income and has negative working capital as of December 31, 2022. In addition, the Company has seen a decline in the price of Bitcoin, especially in the second and third quarters of fiscal year 2022 due its volatility, which had a material and negative impact to our operations, however, did some improvement in the fourth quarter of 2022. These factors, among others indicate that there is substantial doubt about the Company's ability to continue as a going concern within one year after issuance of these financial statements as of December 31, 2022, or March 31, 2023.

The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. In the near term, management is evaluating and implementing different strategies to obtain financing to fund the Company's expenses and growth to achieve a level of revenue adequate to support the Company's current cost structure. Financing strategies may include, but are not limited to, stock issuances, project level equity, debt borrowings, partnerships and/or collaborations. If the Company is unable to meet its financial obligations, it could be forced to restructure or refinance, seek additional equity capital or sell its assets. The Company might then be unable to obtain such financing or capital or sell its assets on satisfactory terms. There can be no assurance that additional financing will be available to the Company when needed or, if available, that it can be obtained on commercially reasonable terms. If the Company is not able to obtain the additional financing on a timely basis, if and when it is needed, it will be forced to delay or scale down some or all of its development activities or perhaps even cease the operation of its business.

In addition, as discussed above and further in Notes 16, and 17, the Company sold the MTI Instruments business in April 2022 to focus on developing and monetizing green, zero-carbon computing and cryptocurrency mining facilities. The Company received approximately $9.0 million in cash, net of transaction costs, from the Sale.

To further implement management's strategy, the Company entered into transactions to (i) recapitalize and negotiate revised terms with senior secured lenders, which released collateral (thus enabling execution of the project financing strategy), (ii) provide a means for Noteholders (as defined in Note 9) to reduce the Company's debt through the equity markets, and (iii) issue and sell $5.0 million in a new series of preferred stock. In addition, in May 2022, SCI entered into a structural understanding with Soluna SLC Fund I Projects Holdco LLC ("Spring Lane"), a Delaware limited liability company, pursuant to which Spring Lane agreed to provide up to $35.0 million in project financing subject to various milestones and conditions precedent; following the recapitalization and restructuring discussed above, and in August 2022, the Company entered into an agreement with Spring Lane for an initial funding of up to $12.5 million from the previously agreed-upon $35.0 million commitment from Spring Lane for Project Dorothy for a 32% ownership as of year-end. As of December 31, 2022, the Company had received approximately $4.8 million worth of contributions from Spring Lane.

Soluna MC Borrowing 2021-1, received a Notice of Acceleration and Repossession (the "NYDIG Notice") from NYDIG ABL LLC ("NYDIG") with respect to the Master Equipment Finance Agreement, dated as of December 30, 2021 (the "MEFA"), by and between Borrower and NYDIG. The obligations of Borrower under the MEFA and reflected in the NYDIG Notice were ring-fenced to Borrower and its direct parent company, Soluna MC LLC. The approximate aggregate principal and interest outstanding under the MEFA and the Loan Documents as of end of the year were approximately $10.8 million. On February 23, 2023, NYDIG proceeded to foreclose on all of the collateral securing the MEFA, which resulted in a reportable disposition of all of the Company's mining assets at the site and certain of the operating assets of Project Marie. The total net book value of the collateralized assets that were repossessed totaled $3.5 million. Additionally, NDYIG has stated its intention to pursue SCI, the parent company of Guarantor, under a piercing of the corporate veil claim relating to Defendants' debts and liabilities under the loan documents. SCI denies any such liability and has filed a complaint for a declaratory judgment against NYDIG in the Eighth Judicial District Court in Clark County, Nevada on March 16, 2023 seeking a declaratory judgment as to such matter.

In October 2022, the Company issued a convertible promissory note to Spring Lane (the "Spring Lane Note") with an aggregate principal amount of $850 thousand. Upon closing of the October 2022 Offering, the Company issued to Spring Lane an aggregate of 593,065 shares of common stock upon the automatic conversion of the Spring Lane Note, equal to the aggregate principal amount of $850,000 and accrued and unpaid interest thereon at the same price per share as the October 2022 Offering noted below. On October 24, 2022, the Company entered into an Underwriting Agreement with Univest Securities, LLC in connection with the offer and sale to such underwriter, in a firm commitment public offering of 1,388,889 shares of the Company's common stock, par value $0.001 per share at a price to the public of $1.44 per share ("October 2022 Offering"). The aggregate gross proceeds were approximately $2.0 million before deducting underwriting discounts and commissions of 8.0% ($0.16 million) and other offering fees and expenses, resulting in aggregate net proceeds to the Company of approximately $1.6 million.

On December 5, 2022, the Company entered into a securities purchase agreement with the purchasers named therein of 1,125,000 shares of the Company's common stock, par value $0.001 per share and associated warrants to purchase up to 2,250,000 shares of common stock at a price of $0.76 per share and associated Warrants, with the investors in the Offering having the right to purchase additional shares of Common Stock and related warrants in up to two subsequent placements ("December Offering").

Subsequent to year-end, the Company has entered into six separate promissory notes for a total of $900 thousand at an interest rate of 15%. In March, 2023, we retired two of these promissory notes for a total of $300 thousand, leaving $600 thousand still outstanding, using proceeds from a subsequent placement of the aforementioned December Offering.

Also, beginning in February and concluding on March 10, 2023 the Company entered into a series of Purchase and Sale Agreements with Spring Lane for a total purchase price of $7.5 million for the sale of Series B membership interests owned by SHI. The capital was funded and used to help complete the substation interconnection and the final stages of Project Dorothy, Soluna's flagship project in West Texas, and corporate operations and general expenses of Soluna. In this series of transactions, Spring Lane increased its stake in Soluna DVSL ComputeCo from approximately 32% to 85% and reduced SCI's ownership from 68% to 15%.

In addition to the proceeds from the foregoing transactions and together with the Company's cash on hand for available use of approximately $1.1 million as of December 31, 2022, the Company will need additional capital raising activities, to meet its outstanding commitments relating to capital expenditures as of December 31, 2022 of $0.9 million and other operational needs, as well as additional needs during 2023 and management continues to evaluate different strategies to obtain financing to fund operations. However, management cannot provide any assurances that the Company will be successful in accomplishing additional financing or any of its other plans. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The COVID-19 global pandemic has been unprecedented and unpredictable, and the impact is likely to continue to result in significant national and global economic disruption, which may adversely affect our business. Although the Company has experienced some minor changes to our miner shipments due to disruptions in the global supply chain, the Company does not expect any material impact on our long-term strategic plans, our operations, or our liquidity due to the impacts of COVID-19. Further, various macroeconomic factors could adversely affect our business and the results of our operations and financial condition, including changes in inflation, interest rates and overall economic conditions. For instance, inflation could negatively impact the Company by increasing our labor costs, through higher wages and higher interest rates. If inflation or other factors were to significantly increase our business costs, our ability to develop our current projects may be negatively affected. Interest rates, the liquidity of the credit markets and the volatility of the capital markets could also affect the operation of our business and our ability to raise capital in order to fund our operations. However, the Company is actively monitoring this situation and the possible effects on our financial condition, liquidity, operations, suppliers, and the industry.

**2.** **Accounting Policies**

***Principles of Consolidation***

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, SCI. All intercompany balances and transactions are eliminated in consolidation.

***Reclassification***

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations or net assets. The reclassifications relate to the presentation of discontinued operations-held for sale.

***Correction of an Error***

During the year-end December 31, 2021, the Company recorded cash preferred dividend distributions of $630 thousand in the Annual Report presentation as an increase within accumulated deficit. However, in the absence of retained earnings, cash dividends should generally be charged to Additional-Paid-in Capital ("APIC"). This treatment is supported by Accounting Standards Codification ("ASC") 480-10-S99-2, which requires accretion of redeemable preferred stock to be charged to APIC in the absence of retained earnings. As the Company did not have accumulated profit (i.e.: absence of retained earnings), the preferred cash dividends should have been charged to APIC.

The following tables present the effects of the correction of the prior period error to the Consolidated Statement of Equity:

Schedule of Error Correction in Condensed Consolidated Statement of Equity

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Preferred Stock** | **Preferred Stock** | **Common Stock** | **Common Stock** | | | **Treasury Stock** | **Treasury Stock** | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Additional**<br> **Paid-in**<br>**Capital** | **Accumulated**<br>**Deficit** | **Shares** | **Amount** | **Total**<br> **Stockholders'**<br>**Equity** |
| **September 30, 2021** | 806585 | $1 | 13732713 | $14 | $172898 | $(120419) | 1015493 | $(13764) | $38730 |
| Adjustment for correction of an error-Preferred dividends |  |  |  |  | (176) | 176 |  |  |  |
| **Balance September 30, 2021-as adjusted** | 806585 | $1 | 13732713 | $14 | $172722 | $(120243) | 1015493 | $(13764) | $38730 |
| **December 31, 2021** | 1252299 | $1 | 14769699 | $15 | $228420 | $(123684) | 1015493 | $(13764) | $90988 |
| Adjustment for correction of an error-Preferred dividends |  |  |  |  | (630) | 630 |  |  |  |
| **December 31, 2021-as adjusted** | 1252299 | $1 | 14769699 | $15 | $227790 | $(123054) | 1015493 | $(13764) | $90988 |

---

***Use of Estimates***

 ****

The consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

***Property, Plant, and Equipment***

 ****

Property, plant and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives as follows:

---

| | |
|:---|:---|
| Leasehold improvements | Lesser of the life of the lease or the useful life of the improvement |
| Computers and related software | 3 to 5 years |
| Cryptocurrency miners | 3 years |
| Machinery and equipment | 8 to 15 years |
| Office furniture, equipment and fixtures | 2 to 10 years |
| Buildings | 30-40 years |
| Purchased pre-fabricated buildings | 15-20 years |

---

Significant additions or improvements extending assets' useful lives are capitalized; normal maintenance and repair costs are expensed as incurred. The costs of fully depreciated assets remaining in use are included in the respective asset and accumulated depreciation accounts. When items are sold or retired, related gains or losses are included in net (loss) income.

***Intangible assets***

Intangible assets include the Strategic Pipeline Contract with an estimated useful life of 5 years, assembled workforce of individuals included as part of the asset acquisition with an estimated useful life of 5 years and patents with an estimated useful life of 15-25 years. The Company amortizes the intangible assets over their estimated useful lives on a straight-line basis. The Company does not recognize internally developed patents as intangible assets, however legal costs associated with defending such patents are capitalized as long-lived assets.

***Income Taxes***

 ****

The Company is subject to income taxes in the U.S. (federal and state). As part of the process of preparing our consolidated financial statements, the Company calculates income taxes for each of the jurisdictions in which the Company operates. This involves estimating actual current taxes due together with assessing temporary differences resulting from differing treatment for tax and accounting purposes that are recorded as deferred tax assets and liabilities, loss carryforwards and tax credit carryforwards, for which income tax benefits are expected to be realized in future years. A valuation allowance has been established to reduce deferred tax assets, if it is more likely than not that all, or some portion, of such deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized in the period that includes the enactment date.

Significant management judgment is required in determining the Company's provision for income taxes, deferred tax assets and liabilities, and any valuation allowance recorded against the Company's net deferred tax assets. The Company considers all available evidence, both positive and negative, such as historical levels of income and future forecasts of taxable income amongst other items in determining the Company's valuation allowance. In addition, the Company's assessment requires the Company to schedule future taxable income in accordance with accounting standards that address income taxes to assess the appropriateness of a valuation allowance, which further requires the exercise of significant management judgment.

The Company accounts for taxes in accordance with the asset and liability method of accounting for income taxes. Under this method, the Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The impact of the Company's reassessment of its tax positions for these standards did not have a material impact on its results of operations, financial condition, or liquidity.

The Company is currently subject to audit in various jurisdictions, and these jurisdictions may assess additional income tax liabilities against us. Developments in an audit, litigation, or in applicable laws, regulations, administrative practices, principles, and interpretations could have a material effect on the Company's operating results or cash flows in the period or periods in which such developments occur, as well as for prior and in subsequent periods.

Tax laws, regulations, and administrative practices in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating the Company's provision and accruals for these taxes. There are many transactions that occur during the ordinary course of business for which the ultimate tax determination is uncertain. The Company's effective tax rates could be affected by numerous factors, such as intercompany transactions, earnings being lower than anticipated in jurisdictions where the Company has lower statutory rates and higher than anticipated in jurisdictions where the Company has higher statutory rates, the applicability of special tax regimes, losses incurred in jurisdictions for which the Company is not able to realize the related tax benefit, changes in foreign currency exchange rates, entry into new businesses and geographies, changes to its existing businesses and operations, acquisitions and investments and how they are financed, changes in the Company's stock price, changes in its deferred tax assets and liabilities and their valuation, and changes in the relevant tax, accounting, and other laws, regulations, administrative practices, principles, and interpretations.

***Equity Investment – Harmattan Energy Limited***

The Company owns approximately 1.79% of HEL's outstanding stock, calculated on a fully-diluted basis, as of December 31, 2022 and 2021. The equity investment in HEL is carried at the cost of investment and was $0 following the impairment of the equity investment as of December 31, 2022. Previously, it was $750 thousand as of December 31, 2021.

***Equity Investments without Readily Determinable Fair Values***

Our equity investment in HEL is accounted for under the measurement alternative. Equity securities measured and recorded using the measurement alternative are recorded at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes. Adjustments resulting from impairments and observable price changes are recorded in the income statement. There was an impairment recognized for the full amount of $750 thousand in fiscal year 2022. No impairment was recognized in fiscal year 2021.

***Equity Method Investments***

 ****

The Company's consolidated net income or loss will include our proportionate share, if any, of the net income or loss of our equity method investee. When the Company records its proportionate share of net income, it increases equity income (loss), net in our consolidated statements of operations and our carrying value in that investment. Conversely, when the Company records its proportionate share of a net loss, it decreases equity income (loss), net in our consolidated statements of operations and our carrying value in that investment. When the Company's carrying value in an equity method investee company has been reduced to zero, no further losses are recorded in the Company's financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized.

As of December 31, 2022, the Company owned approximately 47.5% of MeOH Power, Inc.'s outstanding common stock, or 75,049,937 shares. The number of shares of MeOH Power, Inc.'s common stock authorized for issuance is 240,000,000 as of December 31, 2022. The Company records its investment in MeOH Power, Inc. using the equity method of accounting. The fair value of the Company's interest in MeOH Power, Inc. has been determined to be $0 as of December 31, 2022 and December 31, 2021, based on MeOH Power, Inc.'s net position and expected cash flows.

***Variable Interest Entities***

Variable Interest Entities ("VIEs") are entities that, by design, either (i) lack sufficient equity to permit the entity to finance its activities independently, or (ii) have equity holders that do not have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the entity's expected losses, or the right to receive the entity's expected residual returns. The Company consolidates a VIE when it is the primary beneficiary, which is the party that has both (i) the power to direct the activities that most significantly impact the VIE's economic performance and (ii) through its interests in the VIE, the obligation to absorb expected losses or the right to receive expected benefits from the VIE that could potentially be significant to the VIE.

The Company consolidates the accounts of Soluna DVSL ComputeCo, LLC ("DVSL"), a VIE, in which the Company holds a 67.8% equity interest as of December 31, 2022, and which was created in order to construct, own, operate and maintain multi-purpose data centers in order to support the mining of cryptocurrency assets, batch processing and other non-crypto related activities. DVSL was designed by Soluna to create an entity for outside investors to invest in specific projects. The creation of DVSL resulted in Soluna, through its equity interest in DVSL, absorbing operational risk that the entity was created to create and distribute, resulting in Soluna having a variable interest in DVSL. Soluna is the primary beneficiary of DVSL, due to its role as the manager handling the day-to-day activities of DVSL and its majority ownership of Class B Units of DVSL, and thus has the power to direct the activities of DVSL that most significantly impact the performance of DVSL and has the obligation to absorb losses or gains of DVSL that could be significant to Soluna. DVSL is a VIE of Soluna as DVSL is structured with non-substantive voting rights.

***Non-Controlling Interests***

The ownership interest held by owners other than the Company in less than wholly-owned subsidiaries are classified as non-controlling interests. The value attributable to the non-controlling interests is presented on the consolidated balance sheets separately from the equity attributable to the Company. Net income (loss) attributable to non-controlling interests are presented separately on the consolidated statements of operations and consolidated statements of comprehensive income, respectively.

***Fair Value Measurement***

 ****

The estimated fair value of certain financial instruments, including cash, accounts receivable and short-term debt approximates their carrying value due to their short maturities and varying interest rates. "Fair value" is the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation methods, the Company is required to provide the following information according to the fair value accounting standards. These standards established a fair value hierarchy as specified that ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities are classified and disclosed in one of the following three categories:

---

| | |
|:---|:---|
| **Level 1:** | Quoted market prices in active markets for identical assets or liabilities, which includes listed equities. |
| **Level 2:** | Observable market-based inputs or unobservable inputs that are corroborated by market data. These items are typically priced using models or other valuation techniques. These models are primarily financial industry-standard models that consider various assumptions, including the time value of money, yield curves, volatility factors, as well as other relevant economic measures. |
| **Level 3:** | These use unobservable inputs that are not corroborated by market data. These values are generally estimated based upon methodologies utilizing significant inputs that are generally less observable from objective sources. |

---

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

On October 25, 2021, pursuant to a securities purchase agreement dated October 20, 2021 (the "SPA), the Company issued to certain accredited investors Class A, Class B and Class C common stock purchase warrants (collectively, the "Warrants") to purchase up to an aggregate of 1,776,073 shares of common stock (the "Warrant Shares"), at an exercise price $12.50, $15 and $18 per share, respectively. The Warrants are considered freestanding equity-classified instruments due to their detachable and separately exercisable features and meet the indexation criteria within derivative accounting. Accordingly, the Warrants are presented as a component of Stockholders' Equity in accordance with derivative accounting.

The fair value of the Warrants were determined to be $8.29 per Class A Warrant, $8.10 per Class B warrant, and $7.95 per Class C warrant as of the valuation date, using Monte Carlo simulations and certain Level 3 inputs. As noted in Note 9, the Company entered into an Addendum and Addendum Amendment in which the Company surrendered their Class B and Class C warrants in exchange for Class D common stock purchase warrants at an exercise price of $3.50 per share, Class E common stock purchase warrants of common stock at an exercise price of $4.50 per share, Class F common stock purchase warrants of common stock at an exercise price of $5.50 per share, and Class G common stock purchase warrants of common stock at an exercise price of $7.50, in which had fair values to be determined at $2.24 for Class D, $2.18 for Class E, $2.13 for Class F, and $2.08 for Class G, respectively. Any modifications of the warrants were subsequently revalued. Inherent in a Monte Carlo simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock warrants based on implied volatility from its traded warrants and historical volatility of select peers' common stock with a similar expected term of the Warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield on the grant date with a maturity similar to the expected remaining term of the warrants. The expected term of the Warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company expects to remain at zero.

Following the debt extinguishment on July 19, 2022 as noted further in Note 9, the Convertible Notes will be accounted for under the fair value method on a recurring basis upon issuance (e.g., upon execution of the Addendum) per guidance within ASC 480, and at each subsequent reporting period, with changes in fair value reported in earnings. Although the Notes are not being accounted for under 825-10, the substance of the debt is considered to be the same and is therefore considered outside the scope of ASC 470-60. As such, the Company performed a fair value analysis of the Convertible Notes. For the year-ended December 31, 2022, the Company had Monte Carlo simulations run-out for the expected conversion dates of the Convertible Notes using risk free rates, annual volatility, daily trading volumes, likely conversion profiles, and other assumptions based on principal and accrued interest as of the year-end. The Company determined the fair value of the Convertible Notes uses certain Level 3 inputs.

*Changes in Level 3 Financial Liabilities Carried at Fair Value*

**

---

| | |
|:---|:---|
| (in thousands) |  |
| Balance, July 19, 2022 (date of Addendum of convertible notes) | $14610 |
| Conversions of debt | (1100) |
| Total revaluation loss | 597 |
| Balance, September 13, 2022 | 14107 |
| Total revaluation gains | (1853) |
| Balance, December 31, 2022 | $12254 |

---

Following the debt extinguishment on July 19, 2022 as noted further discussed in Note 9, the Convertible Notes will be accounted for under the fair value method on a recurring basis upon issuance (e.g., upon execution of the Addendum) per guidance within ASC 480, and at each subsequent reporting period, with changes in fair value reported in earnings. The Company had a subsequent Addendum Amendment on September 13, 2022, which caused a revaluation of the fair value on the executed Addendum Amendment date.

Consistent with the guidance in purchase accounting, the value of the pipeline of certain cryptocurrency mining projects previously owned by HEL acquired in the Soluna Callisto acquisition in October 2021 as of the acquisition date was estimated using an expected value approach, which probability-weights various future outcomes and uses certain Level 3 inputs. Included in those inputs are the following key assumptions: expected growth in share price at a risk-free rate in the risk-neutral framework based on U.S. Treasury Rates as of the valuation date, volatility of share price based on historical equity volatilities of comparable companies over a lookback period, assessments associated with qualified projects based on assessment on timing of payments and assessment of active megawatt scenarios and the associated probabilities. The resulting amounts are then discounted to present value through use of a discount rate that considers, among other things, the risk of the payments, credit risk of the Company, and overall weighted average cost of capital of the acquired business. The resulting calculations resulted in an estimated fair value of the acquired assets and consideration paid in common stock of approximately $33 million, which was included as part of the consideration paid in the Soluna Callisto acquisition. As noted in Note 5, Accounting Standards Codification ("ASC") 805-50 provides that assets acquired in an asset acquisition are measured based on the costs of the acquisition, which is the consideration that the acquirer transfers to the seller and includes direct transaction costs related to the acquisition in which costs were an additional $3.5 million including as part of the acquired assets. For assessment on the fair value of the strategic pipeline for impairment analysis, the Company looks at fair value based on projected construction costs, likely operating margins, timing of payments, assessment of active megawatts scenarios, and the associated probabilities of completion of future projects, with other factors noted above.

***Revenue Recognition***

*Cryptocurrency Mining Revenue*

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principles of the revenue standard are that a company should recognize revenue to depict the transfer of promised good or services to customers in an amount that reflects the consideration to which the company expects to be entitled for those goods or services. The following five steps are applied to achieve that core principle:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Step 1: Identify the contract with the customer

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Step 2: Identify the performance obligations in the contract

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Step 3: Determine the transaction price

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Step 4: Allocate the transaction price to the performance obligations in the contract

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Step 5: Recognize revenue when the Company satisfies a performance obligation

In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606's definition of a "distinct" good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity's promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct.

The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Variable consideration

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Constraining estimates of variable consideration

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● The existence of a significant financing component in the contract

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Noncash consideration

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Consideration payable to a customer

Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.

Providing computing power to solve complex cryptographic algorithms in support of the Bitcoin blockchain (in a process known as "solving a block") is an output of the Company's ordinary activities. The provision of providing such computing power is the only performance obligation in the Company's contracts with mining pool operators. The transaction consideration the Company receives, if any, is noncash consideration, which the Company measures at fair value on the date received, which is not materially different than the fair value at contract inception or the time the Company has earned the award from the pools. The consideration is all variable. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is no significant financing component in these transactions.

Fair value of the cryptocurrency award received is determined using the quoted price of the related cryptocurrency where the Company is registered at the time of receipt. The mined cryptocurrency is immediately paid to the Coinbase and Bittrex wallet. Cryptocurrency is converted to U.S. dollars nearly everyday, as SCI is not in the business of accumulating material amounts of cryptocurrency on its balance sheet.

*Data center hosting*

The Company has entered customer hosting contracts whereby the Company provides electrical power and network connectivity to cryptocurrency mining customers, and the customers pay a stated amount per megawatt-hour ("MWh") ("Contract Capacity"), a fixed rate, as well as a share of the coins mined. The fee is generally paid monthly in advance. The actual monthly amounts are calculated after the close of each month and reconciled to the monthly advance based on the clauses contained in the respective contracts. If any shortfalls due to outages are experienced, service level credits may be made to customers to offset outages which prevented them from cryptocurrency mining. Monthly advanced payments and customer deposits are reflected as other liabilities. Customer contract security deposits are made at the time the contract is signed and held until the conclusion of the contract relationship.

Deferred revenue is primarily from advance monthly payments received and revenue is recognized when service is completed.

***Cost of Cryptocurrency Mining and Data Center Hosting Revenue***

 ****

Cost of cryptocurrency mining and data center hosting revenue includes direct utility costs as well as overhead costs that relate to the operations of SCI's cryptocurrency mining facility.

***Accounts Receivable and Allowance for Doubtful Accounts***

 ****

Trade accounts receivable are stated at the invoiced amount billed to customers and do not bear interest. An allowance for doubtful accounts, if necessary, represents the Company's best estimate of the amount of probable credit losses in its existing accounts receivable. The Company determines the allowance based on historical write-off experience and current exposures identified. The Company reviews its allowance for doubtful accounts monthly. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis by type of receivable. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered. The Company does not have any off-balance-sheet credit exposure related to its customers. The Company's allowance for doubtful accounts was $0 at both December 31, 2022 and December 31, 2021.

Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 20 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of the Company's invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from its customers.

The Company recognizes an asset for the incremental costs of obtaining a contract with a customer, if the Company expects the benefit of those costs to be longer than one year. As of December 31, 2022 and December 31, 2021, the Company has recorded no capitalized costs to obtain a contract.

***Employee Receivables***

Certain employees have a receivable due to the Company related to the vesting of stock awards, in which $120 thousand and $0 were outstanding as of December 31, 2022 and December 31, 2021, respectively. The balance is currently included within Prepaid and other assets for $26 thousand and within the Other Assets-long-term for $94 thousand in the consolidated financial statements.

 ****

***Deposits on equipment***

As of December 31, 2022 and 2021, the Company had approximately $1.2 million and $10.2 million in deposits on equipment, that had not yet been received by the Company as of the year end. Once the Company receives such equipment in the subsequent period, the Company will reclassify such balance into Property, Plant, and Equipment.

***Long-Lived Assets***

 ****

The Company accounts for impairment or disposal of long-lived assets, which include property, plant, and equipment and also finite-lived intangible assets, in accordance with accounting standards that address the financial accounting and reporting for the impairment or disposal of long-lived assets, specify how impairment will be measured, and how impaired assets will be classified in the consolidated financial statements. On a quarterly basis, the Company analyzes the status of its long-lived assets at each subsidiary for potential impairment. Recoverability of assets to be held and used are measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. Because the impairment test for long-lived assets held in use is based on estimated undiscounted cash flows, there may be instances where an asset or asset group is not considered impaired, even when its fair value may be less than its carrying value, because the asset or asset group is recoverable based on the cash flows to be generated over the estimated life of the asset or asset group. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. During the year ended December 31, 2022, the Company has impaired approximately $47.4 million of property, plant, and equipment, and there was no impairment for the intangible assets for the year ended December 31, 2022. There was no impairment of property, plant, and equipment and intangible assets during the year ended December 31, 2021.

***Cash and Cash Equivalents***

 ****

Cash and cash equivalents consist of cash and highly liquid short-term investments with original maturities of less than three months.

***Restricted Cash***

Restricted cash relates to cash that is legally restricted as to withdrawal and usage or is being held for a specific purpose and thus not available to the Company for immediate or general business use. As of December 31, 2022 and 2021, the Company had approximately $685 thousand and $0. The balance in restricted cash relates to funds held in an escrow account due to sales of equipment that were executed in fiscal year 2022, in which the Company can release to the convertible noteholders only if they request their share of funds. If no funds are distributed to the convertible noteholders from the escrow account by December 31, 2023, the funds may be used for general purposes for the Company.

***Net (loss) Income per Share***

 ****

The Company computes basic income per common share by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted income per share reflects the potential dilution, if any, computed by dividing income by the combination of dilutive common share equivalents, comprised of shares issuable under outstanding investment rights, warrants and the Company's share-based compensation plans, and the weighted average number of common shares outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money stock options, which are calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of a stock option and the amount of compensation cost, if any, for future service that the Company has not yet recognized are assumed to be used to repurchase shares in the current period.

***Share-Based Payments***

 ****

The Company grants options to purchase our common stock and awards restricted stock to our employees and directors under our equity incentive plans. The benefits provided under these plans are share-based payments and the Company accounts for stock-based awards exchanged for employee service in accordance with the appropriate share-based payment accounting guidance. Stock-based compensation represents the cost related to stock-based awards granted to employees and directors. The Company measures stock-based compensation cost at grant date based on the estimated fair value of the award and recognizes the cost as expense on a straight-line basis in accordance with the vesting of the options (net of estimated forfeitures) over the option's requisite service period. The Company estimates the fair value of stock-based awards on the grant date using a Black-Scholes valuation model. The Company uses the fair value method of accounting with the modified prospective application, which provides for certain changes to the method for valuing share-based compensation. The valuation provisions apply to new awards and to awards that are outstanding on the effective date and subsequently modified. Under the modified prospective application, prior periods are not revised for comparative purposes. Stock-based compensation expense is recorded in the lines titled "Cost of product revenue-included in discontinued operations," "Selling, general and administrative expenses," and "Research and product development expenses-included in discontinued operations" in the Consolidated Statements of Operations based on the employees' respective functions.

The Company records deferred tax assets for awards that potentially can result in deductions on the Company's income tax returns based on the amount of compensation cost that would be recognized upon issuance of the award and the Company's statutory tax rate. All income tax effects of awards, including excess tax benefits, recognized on stock-based compensation expense are reflected in the Consolidated Statements of Operations as a component of the provision for income taxes on a prospective basis.

The determination of the fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company's stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the Company's expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate, and expected dividends.

Theoretical valuation models and market-based methods are evolving and may result in lower or higher fair value estimates for share-based compensation. The timing, readiness, adoption, general acceptance, reliability, and testing of these methods is uncertain. Sophisticated mathematical models may require voluminous historical information, modeling expertise, financial analyses, correlation analyses, integrated software and databases, consulting fees, customization, and testing for adequacy of internal controls.

For purposes of estimating the fair value of stock options granted using the Black-Scholes model, the Company uses the historical volatility of its stock for the expected volatility assumption input to the Black-Scholes model, consistent with the accounting guidance. The risk-free interest rate is based on the risk-free zero-coupon rate for a period consistent with the expected option term at the time of grant. The expected option term is calculated based on our historical forfeitures and cancellation rates.

The fair value of restricted stock awards is based on the market close price per share on the grant date. The Company expenses the compensation cost of these awards as the restriction period lapses, which is typically a one- to three-year service period to the Company. The shares represented by restricted stock awards are outstanding at the grant date, and the recipients are entitled to voting rights with respect to such shares upon issuance.

***Notes payable***

The Company records notes payable net of any discount or premiums. Discounts and premiums are amortized as interest expense or income over the life of the note in such a way as to result in a constant rate of interest when applied to the amount outstanding at the beginning of any given period.

***Concentration of Credit Risk***

 ****

Financial instruments that subject the Company to concentrations of credit risk principally consist of cash equivalents and trade accounts receivable. The Company's trade accounts receivable are from data hosting revenue with the Company's customers throughout the year. The Company does not require collateral and has not historically experienced significant credit losses related to receivables from individual customers or groups of customers in any particular industry or geographic area. The Company requires that hosting customers make a prepayment of the next month's estimated expenses or make a security deposit to the Company.

The Company has cash deposits in excess of federally insured limits but does not believe them to be at risk.

***Other Comprehensive Income***

 ****

The Company had no other comprehensive income items for the years ended December 31, 2022 and 2021.

***Leases***

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ("ROU") assets and operating lease liability on our consolidated balance sheets. The Company did not have any finance leases as of December 31, 2022 or December 31, 2021.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU assets also include any lease payments made and excludes lease incentives and initial direct costs incurred. The Company's lease terms may include options to extend or terminate its leases when it is reasonably certain that the Company will exercise those options. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For real estate leases, the Company accounts for lease components together with non-lease components (e.g., common-area maintenance).

***Accounting Updates Not Yet Effective***

Changes to U.S. GAAP are established by the Financial Accounting Standards Board ("FASB") in the form of accounting standard updates ("ASUs") to the FASB's Accounting Standards Codification (ASC). The Company considered the applicability and impact of all ASUs. ASUs not mentioned below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations.

In June 2016, the FASB issued ASU 2016-13 (Financial Instruments - Credit Losses (Topic 326)) and its subsequent amendments to the initial guidance within ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10, ASU 2019-11 and ASU 2020-02, respectively (collectively, Topic 326). Topic 326 changes how entities will measure credit losses for most financial assets and certain other instruments that are not accounted for at fair value through net income. This standard replaces the existing incurred credit loss model and establishes a single credit loss framework based on a current expected credit loss model for financial assets carried at amortized cost, including loans and held-to- maturity debt securities. The current expected loss model requires an entity to estimate credit losses expected over the life of the credit exposure upon initial recognition of that exposure when the financial asset is originated or acquired, which will generally result in earlier recognition of credit losses. This standard also requires expanded credit quality disclosures. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. This standard also simplifies the accounting model for purchased credit-impaired debt securities and loans. This standard will affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2018-19 clarifies that receivables arising from operating leases are accounted for using lease guidance and not as financial instruments. ASU 2019-04 clarifies that equity instruments without readily determinable fair values for which an entity has elected the measurement alternative should be remeasured to fair value as of the date that an observable transaction occurred. ASU 2019-05 provides an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost. This standard should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. This standard will be effective for the Company for annual and interim reporting periods beginning on or after December 15, 2022, and while early adoption is permitted, the Company does not expect to elect that option. The Company evaluated the impact of the adoption of this standard on its consolidated financial statements, including assessing and evaluating assumptions and models to estimate losses. The Company notes that currently this ASU will not have a material impact on its consolidated financial statements.

**3.** **Accounts Receivable** 

Accounts receivables consist of the following at:

---

| | | |
|:---|:---|:---|
| (Dollars in thousands) | **December 31,<br> 2022** | **December 31,<br> 2021** |
| Data Hosting | $53 | 450 |
| Other receivable | 267 | 81 |
| &nbsp;&nbsp;&nbsp;Total | $320 | $531 |

---

Included in other receivable as of December 31, 2022, was a related party receivable of $247 thousand with Spring Lane in relation to Project Dorothy. No related party receivable was noted as of December 31, 2021.

**4.** **Property, Plant and Equipment**

Property, plant and equipment consist of the following at:

Schedule of Property, Plant and Equipment

---

| | | |
|:---|:---|:---|
| (Dollars in thousands) | **December 31,<br> 2022** | **December 31,<br> 2021** |
| Land | $52 | $52 |
| Land improvements | 488 | 238 |
| Buildings | 6351 | 5650 |
| Leasehold improvements | 59 | 317 |
| Vehicles | 15 | 15 |
| Computers and related software | 7248 | 30890 |
| Machinery and equipment | 3295 | 2588 |
| Office furniture and fixtures | 22 | 22 |
| Equipment held for sale | 295 |  |
| Construction in progress | 26175 | 7590 |
|  | 44000 | 47362 |
| Less: Accumulated depreciation | (1496) | (2765) |
|  | $42504 | $44597 |

---

Depreciation expense was approximately $18.7 million and $2.1 million for the years ended December 31, 2022 and 2021, respectively. Repairs and maintenance expense was $76 thousand and $77 thousand for the years ended December 31, 2022 and 2021, respectively.

The Company incurred a $4.1 million loss for the year ended December 31, 2022 in connection with the disposal of miners and equipment with a net book value of approximately $6.9 million in which the Company received proceeds of $2.8 million for year ended December 31, 2022. There were no such disposals on equipment for the year ended December 31, 2021.

During the year ended December 31, 2022, the Company concluded that there were impairment indicators on property, plant and equipment associated with the S-9 and L3 miners in storage. As a result, a quantitative impairment analysis was required throughout the fiscal year of 2022. As such, the Company reassessed its estimates and forecasts throughout the fiscal year of 2022, to determine the fair values of the S-9 and L3 miners held in storage. As a result of the analysis, as of year ended December 31, 2022, the Company concluded the carrying amount of the property, plant and equipment associated with the S-9 and L3 miners exceeded its fair value, which resulted in impairment charges of $1.9 million on the consolidated statements of operations for the year ended December 31, 2022.

In addition, the Company assessed the active miners in operations and determined there has been a decline in the market value of the active miners in the Company's operations. As a result, a quantitative impairment analysis was required as of December 31, 2022. As such, the Company reassessed its estimates and forecasts as of December 31, 2022, to determine the undiscounted cash flows to determine whether the miners would be recoverable. It was determined based on the analysis, that the undiscounted cash flow with residual value was less than the net book value as of December 31, 2022, confirming the existence of a triggering event, and therefore required an impairment to be recognized. Based on the fair value of the active miners compared to the net book value, the Company recorded an impairment charge of approximately $39.4 million to be recognized on the consolidated statements of operations for the year ended December 31, 2022.

As of December 31, 2022, the Company had M20 miners and M21 miners in service at the Sophie location. Of these miners a portion of the miners were planned to be sold in the near future. The remaining M20 and M21 miners were to be disposed of as they had no value and were not being used. Prior to year-end, the Company had a business opportunity to sell the non-disposed miners in which received board of directors approval and therefore all the remaining assets were classified as assets held for sale included within property, plant, equipment on the balance sheet due to a policy election. As a result, a quantitative impairment analysis was required as of December 31, 2022. The Company was not generating positive cash inflows and there had been a significant decline in the market value of miners based on the hashrate index. As a result of the fair value analysis as of December 31, 2022, the Company concluded the carrying amount of the property, plant and equipment associated with the M20 and M21 miners exceeded its fair value of $295 thousand, which resulted in impairment charges of approximately $1.8 million on the consolidated statements of operations for the year ended December 31, 2022. Subsequent to year-end the M20 and M21 miners were sold, in which the Company incurred a loss on sale subsequent to year-end for $77 thousand.

As of December 31, 2022, the Company has equipment held at vendor including switchgears, transformers, busways and bus plugs. The Company had discussions with a potential buyer and board of directors approval for sale of the switchgears held at vendor. There has not been a final sale but there has been activity around interest and potential sales prices. The company has a purchase order received for the switchgear, subject to inspection of the equipment and final sale. The sale of the equipment held at vendor would mean the equipment is not being used for its intended purpose. As such, the Company reassessed its estimates and forecasts as of December 31, 2022, to determine the fair values of the equipment held at vendor. As a result of the fair value analysis as of December 31, 2022, the Company concluded the carrying amount of the equipment held at vendor exceeded its fair value of $916 thousand, which resulted in an impairment charge of $1.9 million on the consolidated statements of operations for the year ended December 31, 2022.

On February 23, 2023, NYDIG proceeded to foreclose on all of the collateral securing the MEFA, which resulted in a reportable disposition of all of the Company's mining assets at the site and certain of the operating assets of Project Marie. The total net book value of the collateralized assets that were repossessed totaled $3.5 million in which were written off the Company's books in the first quarter of 2023, offset the outstanding loan. In addition, due to the subsequent event of the foreclosure on the collateral assets and ceasing of the Marie operations as discussed in Note 20, this created an impairment trigger for the Company to reassess the fixed assets for the year-ended December 31, 2022, due to conditions existing as of December 31, 2022, although the close of operations didn't occur until February of 2023. Due to the closure of operations for Project Marie, the Company will dispose of approximately $1.7 million worth of leasehold improvements and general electrical upgrades and equipment which were attached to the facility which could not be salvaged for any value with the operations ceasing, and therefore the Company impaired those assets for the full amount as of December 31, 2022. Also, the Company will have equipment held for sale due to the closure of the Marie facility in the first quarter of 2023, in which based on a fair value analysis compared to the Company's net book value of the equipment still held will have an impairment of approximately $700 thousand to be recorded on the consolidated statements of operations for the year ended December 31, 2022. As a result, the total impairment for the Marie assets not attached to the collateralized NYDIG assets was approximately $2.4 million for the year-ended December 31, 2022.

**5.** **Asset Acquisition**

As discussed above in Note 1, on October 29, 2021, the Company completed the Soluna Callisto acquisition pursuant to an Agreement and Plan of Merger dated as of August 11, 2021, by and among the Company, SCI and Soluna Callisto (the "Merger Agreement"). The purpose of the transaction was (i) for SCI to acquire substantially all of the assets (other than those assets physically located in Morocco) formerly held by HEL, which assets consisted of Soluna Callisto's existing pipeline of certain cryptocurrency mining projects that HEL previously transferred to Soluna Callisto and (ii) to provide SCI with the opportunity to directly employ or retain the services of four individuals whose services it had retained through HEL prior to the merger. As a result of the merger, each share of common stock of Soluna Callisto issued and outstanding immediately prior to the effective time of the merger, other than shares owned by the Company or any of our subsidiaries, was cancelled and converted into the right to receive a proportionate share of up to 2,970,000 shares (the "Merger Shares") of the Company's common stock payable upon the achievement of certain milestones within five years after the effective date in the merger, as set forth in the merger agreement and the schedules thereto (the "Merger Consideration"). See Note 11 for further information regarding our relationship with HEL.

The acquisition was accounted for, for purposes of U.S. GAAP, using the asset acquisition method of accounting under the ASC 805-50. We determined that we acquired in the acquisition a group of similar identifiable assets (primarily, the "strategic pipeline contract" of certain cryptocurrency mining projects), which we classified as an intangible asset for accounting purposes. As a result, our acquisition of the set of assets and activities constituted an asset acquisition, as opposed to a business acquisition, under ASC 805. ASC 805-50 provides that assets acquired in an asset acquisition are measured based on the costs of the acquisition, which is the consideration that the acquirer transfers to the seller and includes direct transaction costs related to the acquisition. We included Soluna Callisto's results of operations in our results of operations beginning on the effective date of the acquisition.

*Termination Consideration*

In connection with the Soluna Callisto acquisition, effective as of October 29, 2021, pursuant to the terms of a termination agreement (the "Termination Agreement") dated as of August 11, 2021, by and among the Company, SCI, and HEL, on November 5, 2021, SCI paid HEL $725,000 and SHI issued to HEL 150,000 shares of our common stock (the "Termination Shares"). SCI also reimbursed $75,000 to HEL for transaction-related fees and expenses. SHI included the termination costs as part of asset acquisition per ASC 805-50. Based on the closing price of SHI common stock on The Nasdaq Stock Market LLC ("Nasdaq") on November 5, 2021, SHI valued the aggregate termination consideration at approximately $1.9 million.

*Merger Consideration*

The fair value of the Merger Consideration included various assumptions, including those related to the allocation of the estimated value of the maximum number of Merger Shares (2,970,000 shares) issuable as Merger Consideration, which issuance is contingent on the achievement of certain milestones of generating active Megawatts from Qualified Projects in which the Cost Requirement is satisfied within five years after the effective date of the merger, as set forth in the Merger Agreement and the schedules thereto, as set forth below. The Merger Consideration and the timing of the payment thereof is subject to the following qualifications and limitations:

1a) Upon the Company achieving each one active MegaWatts ("Active MWs") from the projects in which the cost requirement is satisfied, SHI shall issue to HEL 19,800 shares for each one MW up to a maximum 150 Active MW.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. If,
 on or before June 30, 2022, SCI or Soluna Callisto directly or indirectly achieved at least 50 active MWs from one or more of three
 current projects as set forth in the Merger Agreement that satisfy the Cost Requirement as defined within the Merger Agreement, then
 the Merger Shares would have been issued at an accelerated rate of 29,700 Merger Shares for each of such first 50 Active MW, such
 that the Merger Shares in respect of the remaining 100 Active MWs (if any) would have been issued at a reduced rate of 14,850 Merger
 Shares per Active MW (as of December 31, 2022, the Company did not achieve this milestone) ;

ii. If,
 by June 30, 2023, SCI or Soluna Calisto fail to achieve directly or indirectly (other than pursuant to a Portfolio Acquisition) at
 least 50 Active MW from Projects that satisfy the Cost Requirement, then the maximum aggregate number of Merger Shares shall be reduced
 from 2,970,000 to 1,485,000 ;

iii. No
 Merger Shares will be issued to HEL without our prior written consent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv. Issuance
 of the Merger Shares will also be subject to the continued employment with or engagement by SCI or the surviving corporation of (A)
 John Belizaire and (B) at least two of Dipul Patel, Mohammed Larbi Loudiyi, (through ML&K Contractor), and Phillip Ng at the
 time that such Merger Shares are earned. If both (A) and (B) cease to be satisfied on or prior to the date that all Merger Shares
 are earned (such date, a "Trigger Date"), then "Qualified Projects" for purposes of determining Merger Shares
 shall only apply to those Qualified Projects that are in the pipeline as of the Trigger Date. For these purposes, if any such individual's
 employment or service relationship with SCI is terminated without cause, as a result of his death or disability, or with good reason
 (as such terms are defined in the employment and consulting agreements), such individual shall be deemed to continue to be employed
 or engaged by SCI for these purposes;

v. If
 SHI or SCI consummates a Change of Control before the fifth anniversary of the date of the closing of the merger, then we will be
 obligated to issue all of the unissued Merger Shares (subject to (ii) and (iii) above). The Merger Agreement defines "Change
 of Control" as (A) the sale, exchange, transfer, or other disposition of all or substantially all of the assets of us or SCI,
 (B) our failure to continue to own (directly or indirectly) 100 % of the outstanding equity securities of SCI and/or the surviving
 corporation, or (C) a merger, consolidation, or other transaction in which the holders of SHI's, SCI's, or the surviving
 corporation's outstanding voting securities immediately prior to such transaction own, immediately after such transaction,
 securities representing less than 50 % of the voting power of the corporation or other entity surviving such transaction (excluding
 any such transaction principally for bona fide equity financing purposes, so long as, in the case of SHI or SCI (but not the surviving
 corporation) such transactions, individually and in the aggregate, do not result in a change in membership of such entity's
 board of directors so that the persons who were members of the board of directors immediately prior to the first such transaction
 constitute less than 50% of the board membership at any time after such transaction(s) are consummated). Notwithstanding the foregoing,
 a transaction shall not constitute a Change of Control if its sole purpose is to change the state of SHI's or SCI's incorporation
 or to create a holding company that will be owned in the same proportions by the persons who held SHI's or SCI's securities
 immediately prior to such transaction; and

vi. if
 on any of the fifth anniversary of the effective time of the merger, a facility has not become a
 Qualified Facility and therefore is not taken into consideration in the calculation of Active MW because any of the elements set
 forth in the definition of "Qualified Facility" as defined in the Merger Agreement have not been met for reasons beyond
 the reasonable control of SCI's management team, but SCI's management team is then actively engaged in the process of
 completing and is diligently pursuing the completion of the missing elements, then (A) the target dates set forth above shall be
 extended for an additional 90 days, and (B) additional extensions of time may be granted by our Board of Directors (the "Board")
 in its commercially reasonable discretion, in each case for the purpose of enabling SCI's management team to complete the steps
 needed to qualify the facility as a Qualified Facility.

The number of Merger Shares is also subject to customary anti-dilution adjustments in the event of any stock split, stock consolidation, stock dividend, or similar event involving the shares of our common stock. Based on the assessment performed, the fair value of the merger consideration as of October 29, 2021 was approximately $33.0 million.

Based on management's evaluation, management concluded that due to the high volatility of its share price, the low probability of not achieving the MW targets, and the fact the value associated with meeting the performance measures is not intended to drive the number of shares to be issued, but rather act as a proxy for and driver of share value, the monetary value of the obligation at inception is predominantly a function of equity shares. As such, the merger consideration will be treated as equity as ASC 480-10-25-14 is not applicable since the monetary value of the Merger Shares is not (1) fixed, or (2) dependent on (i) variations in something other than the fair value of the Company's equity shares, or (ii) variations inversely related to changes in the fair value of the Company's equity shares and is instead exposed to changes in the fair value of the Company's share price, and as such does not represent a liability under ASC 480. The economic risks and characteristics of the share consideration are clearly and closely related to a residual equity interest since the underlying (i.e., the incremental shares of common stock delivered upon achievement of each MW target) will participate in the increase in value of the common equity of the Company, similar to a call option on common stock. Based on guidance in ASC 815-40-25-7 through 25-35, the share consideration is considered to be indexed to the Company's stock and meets the additional criteria for equity classification.

**6.** **Intangible Assets**

Intangible assets consisted of the following as of December 31, 2022:

Schedule of Intangible Assets

---

| | | | |
|:---|:---|:---|:---|
| (Dollars in thousands) | **Intangible Assets** | **Accumulated<br> Amortization** | **Total** |
| Strategic pipeline contract | $46885 | $10940 | $35945 |
| Assembled workforce | 500 | 117 | 383 |
| Patents | 110 | 6 | 104 |
| Total | $47495 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 11063 | $36432 |

---

Intangible assets consisted of the following as of December 31, 2021:

---

| | | | |
|:---|:---|:---|:---|
| (Dollars in thousands) | **Intangible Assets** | **Accumulated<br> Amortization** | **Total** |
| Strategic pipeline contract | $46885 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1562 | $45323 |
| Assembled workforce | 500 | 17 | 483 |
| Patents | 33 |  | 33 |
| Total | $47418 | $1579 | $45839 |

---

Amortization expense for the year ended December 31, 2022 and 2021 was approximately $9.5 million and $1.6 million.

The strategic pipeline contract relates to supply of a critical input to our digital mining business. The Company has analyzed this strategic pipeline contract similar to a permit for future benefit. The strategic pipeline contract relates to potential renewable energy data centers that fit in the alignment of the Company structure to expand operations of the Company's new focus in their business.

The Company expects to record amortization expense of intangible assets over the next five years and thereafter as follows:

Schedule of Amortization Expense of Intangible Assets

---

| | |
|:---|:---|
| (Dollars in thousands) |  |
| **Year ending December 31,** |  |
| 2023 | $9482 |
| 2024 | 9482 |
| 2025 | 9482 |
| 2026 | 7903 |
| 2027 | 5 |
| Thereafter | 78 |
| &nbsp;&nbsp;&nbsp;Total | $36432 |

---

**7.** **Income Taxes**

Income tax expense (benefit) for each of the years ended December 31 consists of the following:

---

| | | |
|:---|:---|:---|
| (Dollars in thousands) | **2022** | **2021** |
| Federal | $— | $— |
| State | 44 | 3 |
| Deferred | (1390) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 41 |
| Total | $(1346) | $44 |

---

The significant components of deferred income tax expense (benefit) from operations for each of the years ended December 31 consists of the following:

---

| | | |
|:---|:---|:---|
| (Dollars in thousands) | **2022** | **2021** |
| Deferred tax (expense) benefit | $(12760) | $(574) |
| Net operating loss carry forward | (7361) | (1589) |
| Valuation allowance | 18731 | 2204 |
|  | $(1390) | $41 |

---

The Company's effective income tax rate from operations differed from the Federal statutory rate for each of the years ended December 31 as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Federal statutory tax rate | 21% | 21% |
| Change in valuation allowance | (17) | (35) |
| State taxes, net of federal benefit |  | 1 |
| Expiration of stock option |  | 2 |
| Loss on extinguishment of debt | (2) |  |
| Change in UTP |  | 9 |
| Federal tax benefits, R&D |  | 1 |
| Other deferred Adjustments | (1) | 2 |
| Tax rate | 1% | 1% |

---

***Deferred Tax (Liabilities) Assets:***

Deferred tax (liabilities) assets are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates. Temporary differences, net operating loss carryforwards and tax credit carryforwards that give rise to deferred tax assets and liabilities are summarized as follows as of December 31:

---

| | | |
|:---|:---|:---|
| (Dollars in thousands) | **2022** | **2021** |
| Deferred tax assets: |  |  |
| &nbsp;&nbsp;&nbsp;Accruals and reserves | $251 | $76 |
| &nbsp;&nbsp;&nbsp;Net operating loss | 19137 | 11777 |
| &nbsp;&nbsp;&nbsp;Property, plant and equipment | 10093 |  |
| &nbsp;&nbsp;&nbsp;Stock options | 996 | 278 |
| &nbsp;&nbsp;&nbsp;Research and development tax credit | 174 | 144 |
| &nbsp;&nbsp;&nbsp;Deferred tax assets | 30651 | 12275 |
| Valuation allowance | (30651) | (11921) |
| Deferred tax assets, net of valuation allowance |  | 354 |
| Deferred tax liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Property, plant and equipment |  | (61) |
| &nbsp;&nbsp;&nbsp;Intangibles | (8886) | (10570) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred tax liabilities | (8886) | (10631) |
| Deferred tax (liabilities) assets | $(8886) | $(10277) |

---

In connection with the strategic contract pipeline acquired in the Soluna Callisto acquisition as further discussed in Note 6, ASC 740-10-25-51 requires the recognition of a deferred tax impact of acquiring an asset in a transaction that is not a business combination when the amount paid exceeds the tax basis on the acquisition date. As such, the Company is required to adjust the value of the strategic contract pipeline by approximately $10.9 million and this amount will be amortized over the life of the asset.

***Valuation Allowance:***

The Company believes that the accounting estimate for the valuation of deferred tax assets is a critical accounting estimate because judgment is required in assessing the likely future tax consequences of events that have been recognized in our financial statements or tax returns. The Company based the estimate of deferred tax assets and liabilities on current tax laws and rates and, in certain cases, business plans and other expectations about future outcomes.

As a result of its assessment in 2022, the Company increased its valuation allowance against its deferred tax assets. The increase in the valuation allowance caused incremental tax expense of $18.7 million to be recognized in 2022. The increase of the valuation allowance was based upon the uncertainty surrounding the Company's projected future taxable income, causing the Company to evaluate what portion of the Company's deferred tax assets it believes are more likely than not to be realized. The Company has determined that it will not generate sufficient levels of pre-tax earnings in the future to realize the deferred tax assets relating to net operating loss carryforwards and research and development credit carryforwards recorded on the balance sheet as of December 31, 2022.

The valuation allowance on December 31, 2022 and 2021 was $30.7 million and $11.9 million, respectively. Activity in the valuation allowance for deferred tax assets is as follows as of December 31:

---

| | | |
|:---|:---|:---|
| (Dollars in thousands) | **2022** | **2021** |
| Valuation allowance, beginning of year | $11921 | $9717 |
| Net operating (loss) income | 7361 | 2179 |
| Property, plant and equipment | 10093 |  |
| Stock options | 996 |  |
| Research and development credit | 30 | 25 |
| Accrued expenses | 251 |  |
| Valuation allowance, end of year | $30651 | $11921 |

---

***Net operating losses:***

As of December 31, 2022, the Company has unused Federal net operating loss carryforwards of approximately $89.3 million. Of these, none will expire in 2022, $52 million will expire between now and 2035, and the remainder being carried forward indefinitely.

The Company's and/or its subsidiaries' ability to utilize their net operating loss carryforwards may be significantly limited by Section 382 of the IRC of 1986, as amended, if the Company or any of its subsidiaries undergoes an "ownership change" as a result of changes in the ownership of the Company's or its subsidiaries' outstanding stock pursuant to the exercise of the warrants or otherwise.

***Unrecognized tax benefits:***

The Company has unrecognized tax benefits of $0 and $0 thousand as of December 31, 2022 and 2021.

Additionally, the Company does not have uncertain tax positions that it expects will increase or decrease within twelve months of this reporting date. The Company recognizes interest and penalties related to uncertain tax positions as a component of tax expense. The Company did not recognize any interest or penalties in 2022 and 2021.

The Company files income tax returns, including returns for its subsidiaries, with federal and state jurisdictions. The Company is no longer subject to IRS or state examinations for any periods prior to 2019, although carryforward attributes that were generated prior to 2019 may still be adjusted upon examination by the IRS if they either have been or will be used in a future period.

**8.** **Accrued Liabilities**

Accrued liabilities consist of the following at:

---

| | | |
|:---|:---|:---|
| (Dollars in thousands) | December 31, <br> 2022 | December 31,<br> 2021 |
| Salaries, wages and related expenses | $178 | $611 |
| Liability to shareholders for previous acquisition | 363 | 363 |
| Legal, audit, tax and professional fees | 214 | 363 |
| Sales tax accrual |  | 248 |
| Development fees |  | 373 |
| Hosting and utility fees | 626 | 626 |
| Interest payable | 477 |  |
| Dividend payable | 243 |  |
| Construction fees | 590 |  |
| Other | 30 | 275 |
| &nbsp;&nbsp;&nbsp;Total | $2721 | $2859 |

---

**9. Debt**

Debt consists of the following:

***Convertible Notes Payable***

(Dollar in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Maturity Date** | **Interest Rate** | **December 31,<br> 2022** | **December 31,<br> 2021** |
| Convertible Note | April 25, 2023 | 18% | $12254 | $14927 |
| Less: debt discount |  |  |  | 967 |
| Less: discount from issuance of warrants |  |  | 475 | 5747 |
| Less: debt issuance costs |  |  | 42 | 1092 |
| Total convertible notes, net of discount and issuance costs |  |  | $11737 | $7121 |

---

On October 25, 2021, pursuant to a Securities Purchase Agreement (the "October SPA"), the Company issued to certain accredited investors (the "Noteholders") (i) secured convertible notes in an aggregate principal amount of $16.3 million for an aggregate purchase price of $15 million (collectively, the "October Secured Notes"), which were, subject to certain conditions, convertible at any time by the investors, into an aggregate of 1,776,073 shares of the Company's common stock, at a price per share of $9.18 and (ii) Class A, Class B and Class C common stock purchase warrants (collectively, the "October Warrants") to purchase up to an aggregate of 1,776,073 shares of common stock, at an initial exercise price of $12.50, $15 and $18 per share, respectively. The October Warrants are legally detachable and can be separately exercised immediately for five years upon issuance, subject to applicable Nasdaq rules.

The October Secured Notes, subject to an original issue discount of 8%, had a maturity date (the "Maturity Date") of October 25, 2022, which was extended to April 25, 2023 pursuant to the Addendum Amendment (as defined below), upon which date the October Secured Notes shall be payable in full. Commencing on the Maturity Date and also five (5) days after the occurrence of any Event of Default (as defined in the October Secured Notes), interest on the October Secured Notes will accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. If any Event of Default or a Fundamental Transaction (as defined in the October Secured Notes) or a Change of Control (as defined in the October Secured Notes) occurs, the outstanding principal amount of the October Secured Notes, liquidated damages and other amounts owing in respect thereof through the date of acceleration, will become, at the Noteholder's election, immediately due and payable in cash at the Mandatory Default Amount (as defined in the October Secured Notes). The October Secured Notes may not be prepaid, redeemed or mandatorily converted without the consent of the Noteholders. The obligations of the Company pursuant to the October Secured Notes are (i) secured to the extent and as provided in the Security Agreement, dated as of October 25, 2021, by and among the Company, MTI Instruments and SCI, Soluna MC, LLC and Soluna SW, LLC (both of which are wholly owned subsidiaries of SCI, and together with MTI Instruments and SCI, the "Subsidiary Guarantors"), and Collateral Services LLC (the "Collateral Agent"), as collateral agent for the Noteholders; and (ii) guaranteed, jointly and severally, by the Subsidiary Guarantors pursuant to each Subsidiary Guaranty, dated as of October 25, 2021, by and among each Subsidiary Guarantor and the Noteholders signatory to the October SPA, subject to subsequent modifications pursuant to the Addendum, the Addendum Amendment and the NYDIG Transactions.

On July 19, 2022, the Company entered into an addendum to the October SPA (the "Addendum"), pursuant to which a portion of the October Secured Notes would be converted and may be redeemed in three tranches, with each tranche of $1,100,000 required to be converted into common stock in each case at the then in effect conversion price of the October Secured Notes, with such price, prior to each conversion, to be reduced (but not increased) to a 20% discount to the 5-day volume weighted average price ("VWAP") of the Company's common stock. In addition, the Noteholders may require the Company to redeem up to $2,200,000 worth of October Secured Notes in connection with each tranche at a rate of $1.20 for every $1.00 owed, less the amount of October Secured Notes converted during such tranche, not including the required conversion amount if the Noteholders are unable to convert out of such amount of the October Secured Notes in each tranche. The Company is also required to deposit up to $1,950,000 in an escrow account in connection with each tranche to satisfy any redemptions, except with respect to the first tranche as provided in the Addendum Amendment (as defined below). The Addendum also provides the right for the Company to pause the commencement of the conversion of the second and third tranches each for 45 days in the event the Company pursues an equity financing. Pursuant to the Addendum, the exercise price of the Class A Warrants and Class B Warrants and certain other warrants to purchase up to 85,000 shares of common stock issued to the Noteholders on January 13, 2022, was reduced from $13.26 to $9.50 per share. In addition, the Company agreed to exchange the Class C Warrants for 296,013 shares of common stock, which exchanges were completed between July 25, 2022 and August 1, 2022.

On September 13, 2022, the Company and the Noteholders entered into an agreement further amending the Addendum (the "Addendum Amendment"), which among other matters, extended the Maturity Date of the October Secured Notes by six months to April 25, 2023, and increased the principal amount of the October Secured Notes by an aggregate of $520,241 for a total outstanding principal amount of $13,006,022. Also pursuant to the Addendum Amendment, $1.0 million previously deposited by the Company and held in escrow pursuant to the Addendum, was released back to the Company upon signing of the Addendum Amendment; however, on or before October 17, 2022, the Company (i) must deposit $1,000,000 into escrow as the Third Deposit, (ii) will not be required to make the second deposit of $1,950,000 pursuant to the Addendum and the Addendum Agreement, or redeem the first tranche of October Secured Notes. Additionally, the First Reconcile Date was extended to October 12, 2022. The Company gave notice to the Noteholders on October 10, 2022 that the Company would be conducting an equity financing This in turn paused the commencement of (a) the Second Conversion and the Second Reconcile Date, and (b) the Third Conversion and the Third Reconcile Date, in each case, for forty-five (45) Trading Days, each as defined in the Addendum. This also had the effect of pausing the Company's requirement to make the Third Deposit of $1,000,000 under the October Purchase Agreement as amended by the Addendum, for 45 Trading Days. The 45 day trading window opened on December 20, 2022 to allow the Noteholders to apply the 20% discount to the 5-day VWAP of the Company's stock. In addition, pursuant to the Addendum Agreement, the Company issued to the Noteholders (i) 430,564 shares of the common stock ("New Shares") in exchange for the Class B warrants, (ii) Class D common stock purchase warrants to purchase up to an aggregate of 1,000,000 shares of common stock at an exercise price of $3.50 per share, (iii) Class E common stock purchase warrants to purchase up to an aggregate of 1,000,000 shares of common stock at an exercise price of $4.50 per share, (iv) Class F common stock purchase warrants to purchase up to an aggregate of 1,000,000 shares of common stock at an exercise price of $5.50 per share, and (v) Class G common stock purchase warrants to purchase up to an aggregate of 1,000,000 shares of common stock at an exercise price of $7.50 per share (together, the "New Warrants"). The New Warrants are exercisable immediately and have exercise period of 5 years from the issuance date.

Pursuant to the Addendum, between July 21, 2022 to August 3, 2022, the October Secured Notes with an aggregate principal amount of $1,100,000 converted into 293,350 shares of common stock, at the conversion price of $3.75. Pursuant to the Addendum and Addendum Amendment, the Company evaluated whether the new addendums qualified as debt modification or debt extinguishment, and based on ASC 470, Debt, the Company determined the Addendum and Addendum Amendment to fall under Debt Extinguishment and the Company would be required to fair value the new debt, and in turn write off the existing debt on the books. Based on the Company's assessment, an extinguishment of debt of approximately $12.8 million was recorded in July and September of 2022 based on the Addendum and Addendum Amendment, the October Secured Notes had an aggregate principal amount of approximately $13.0 million and a fair value of approximately $14.1 million outstanding after the debt extinguishment. The fair value of the New Warrants issued to the Noteholders was approximately $8.6 million and recorded as part of the loss on extinguishment of debt. The residual fair value of the New Warrants issued to non-lenders was $892 thousand and was recorded as equity with the offset as debt discount against the residual proceeds, in which $417 thousand has been amortized for the year ended December 31, 2022. All the original debt issuance costs were written off with the extinguishment of the debt, and with the Addendum Amendment, the Company had debt issuance costs of approximately $77 thousand in which $35 thousand has been amortized for the year ended December 31, 2022. As of the year ended December 31, 2022, the Company had to fair value the outstanding debt, in which it was determined to be approximately $12.3 million of a principal outstanding balance of approximately $13.0 million, in which the change in valuation compared to September 2022 when the Company had an extinguishment recorded, was recorded as a revaluation gain for the year ended December 31, 2022.

In accordance with the most favored nation provision ("MFN Provision"), following the issuance of the December 2022 Shares and the December 2022 Warrants, we reduced the conversion price of the October Secured Notes to $0.76 per share. We held a special meeting on March 10, 2023 of our stockholders for the purpose of obtaining stockholder approval a reduction in the conversion price of the October Secured Notes, subject to a conversion price floor of $0.30 per share, which amount represented the closing price of our Common Stock on the Nasdaq Stock Market on January 3, 2023, the first trading day of the 2023 fiscal year.

In connection with the December 2022 Offering, we also agreed to amend certain existing warrants to purchase up to an aggregate of: (i) 592,024 shares of our Common Stock at an exercise price of $9.50 per share and an expiration date of October 25, 2026; (ii) 1,000,000 shares of our Common Stock at an exercise price of $3.50 per share and with an expiration date of September 13, 2027; (iii) 1,000,000 shares of our Common Stock at an exercise price of $4.50 per share and with an expiration date of September 13, 2027; (iv) 1,000,000 shares of our Common Stock at an exercise price of $5.50 per share and with an expiration date of September 13, 2027; (v) 1,000,000 shares of our Common Stock at an exercise price of $7.50 per share and an expiration date of September 13, 2027; and (vi) 85,000 shares of Common Stock at an exercise price of $9.50 and an expiration date of January 14, 2025, held by the Noteholders (collectively, the "Noteholder Warrants") so that the amended Noteholder Warrant would have an exercise price of $0.76 per share. The Company evaluated the warrant exercise price adjustment from the values noted above to $0.76 noting the total dollar value impact in which the Noteholder Warrant's new fair value, as a result of the exercise price revision, exceeded the previous warrant instrument was approximately $370 thousand, the Company deemed the change in exercise price was in contemplation with the December 2022 offering, as such was recognized as a deferred cost of the offering against the proceeds.

The events of default stated in the Notice of Acceleration and Repossession defined below with NYDIG Financing constituted a cross-default under the terms of secured convertible notes issued to the Noteholders. In addition to such cross-default, the failure of the Company pursuant to the Addendum dated as of July 19, 2022, to escrow an aggregate amount of $950,000 for the benefit of the Noteholders by December 21, 2022, constituted an event of default under the Notes. Due to the defaults noted, the Company did not enter into the second and third tranche of conversions. As such, beginning on November 30, 2022, the Company has been accruing interest of 18% per annum on the outstanding principal amount due to the default which amounted to $202 thousand as of December 31, 2022. On March 10, 2023, the Company entered into a Second Addendum Amendment with the Noteholders, in which the Company paid approximately $617 thousand through the Company's restricted escrow accounts and contemporaneously with the payment, the Noteholders waived all existing events of default arising under the convertible notes.

**Promissory Notes**

On February 22, 2022, the Company issued to certain institutional lenders (the "Lenders") promissory notes in an aggregate principal amount of $7.6 million for an aggregate purchase price of $7.6 million (collectively, the "First Tranche Notes"). The Notes were issued as the first tranche of an aggregate financing of $20.0 million. On March 10, 2022, the Company issued to the lenders a second tranche of an aggregate principal amount of $2.4 million (the "Second Tranche Notes"). On April 13, 2022, the Company issued to the Lenders a third tranche of promissory notes in an aggregate principal amount of $10.0 million for an aggregate purchase price of $10.0 million (the "Third Tranche Notes" and, together with the First Tranche Notes and Second Tranche Notes, the "Notes") along with Class D common stock purchase warrants (collectively, the "Warrants") to purchase up to an aggregate of 1,000,000 shares of common stock of the Company, at an exercise price of $11.50 per share. The Warrants were immediately exercisable for two years upon issuance, subject to applicable Nasdaq rules.

The exercise of the Warrants is subject to beneficial ownership limitations such that the Lenders may not exercise the Warrants to the extent that such exercise would result in each of the Lenders being the beneficial owner in excess of 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 such exercise, which beneficial ownership limitation may be increased or decreased up to 9.99% upon notice to the Company, provided that any increase in such limitation will not be effective until 61 days following notice to the Company.

The total fair value of the Warrants, as of the issuance date, was $5.32 million and is recorded as equity with the offset recorded as a debt discount against the net proceeds. The proceeds of $20.0 million were allocated between the Promissory Notes and the Warrants, in which the discount related to the warrants is being amortized based on the straight-line method through the date of Maturity. None of the Warrants have been exercised and exchanged for the Company's common stock as of December 31, 2022.

On April 29, 2022, the Company issued in a registered direct offering 1,142,857 shares of Series A Cumulative Perpetual Preferred Stock, par value $0.001 per share, of the Company (the "Series A Preferred Stock") to the Lenders, at an offering price of $17.50 per share, the same price as the public offering price of the shares of Series A Preferred Stock in the underwritten public offering completed concurrently, in full satisfaction of the Company's obligations under the outstanding Notes in an aggregate amount of $20 million. As of December 31, 2022, the entire principal and interest for the promissory notes had been fully paid and satisfied.

***NYDIG Financing***

Schedule of Financing Debt

---

| | | | |
|:---|:---|:---|:---|
|  | Maturity Dates | Interest Rate | December 31, 2022 |
| NYDIG Loans #1-11 | April 25, 2023 thru January 25, 2027\* | 12% thru 15 | $14387 |
| Less: principal payments |  |  | 3841 |
| Less: debt issuance costs |  |  | - |
| Total outstanding debt |  |  | $10546 |

---

\* Due to event of default- the entire NYDIG Financing became current, see note below.

On December 30, 2021, Soluna MC Borrowing 2021-1 LLC (the "Borrower"), an indirect wholly owned subsidiary of the Company entered into a Master Equipment Finance Agreement (the "Master Agreement") with NYDIG ABL LLC ("NYDIG") as lender, servicer and collateral agent (the "NYDIG facility"). The Master Agreement outlined the framework for a financing up to approximately $14.4 million in aggregate equipment financing. Subsequently, the parties negotiated the specific terms of each equipment financing transaction as well as the terms upon which the Noteholders would consent to the transactions contemplated by the Master Agreement.

On January 14, 2022, the Borrower effected an initial drawdown under the Master Agreement in the aggregate principal amount of approximately $4.6 million that bore interest at 14% and was to be repaid over 24 months. On January 26, 2022, the Borrower had a subsequent drawdown of $9.8 million. As part of the transactions contemplated under the Master Agreement, (i) the Company's indirect wholly owned subsidiary, Soluna MC LLC, formerly EcoChain Block LLC ("Guarantor"), which is the owner of 100% of the equity interests of Borrower, executed a Guaranty Agreement in favor of NYDIG, as lender, dated as of December 30, 2021 (the "Guaranty Agreement"), (ii) Borrower has granted a lien on, and security interest in, all of its assets to NYDIG, as collateral agent, (iii) Guarantor entered into an equipment financing arrangement on assets purchased with the borrowed funds, (iv) Borrower would borrow from NYDIG the loans as forth in certain loan schedules (the "Specified Loans"), and (v) Borrower had executed a Digital Asset Account Control Agreement (the "ACA Wallet Agreement") with NYDIG, as collateral agent and secured party, and NYDIG Trust Company LLC, as custodian, dated as of December 30, 2021, as well as such other agreements related to the foregoing as mutually agreed (collectively, the "NYDIG Transactions").

In connection with the NYDIG Transactions, on January 13, 2022, the Company entered into a Consent and Waiver Agreement, dated as of January 13, 2022 (the "Consent"), with the Noteholders, in connection with the October SPA, pursuant to which the Noteholders agreed to waive any lien on, and security interest in, certain assets, provided various contingencies are fulfilled, and each Noteholder who acquired October Secured Notes having a principal amount of not less than $3,000,000 agreed to waive its rights under Section 4.17 of the October SPA to participate in Subsequent Financings (as defined in the October SPA) with respect to the NYDIG Transactions and any additional loans under the MEFA that only finance the purchase of equipment from NYDIG, in order to consent to the NYDIG Transactions. Pursuant to the Consent, the Noteholders also waived the current requirement of the October SPA and the other transaction documents (collectively, the "SPA Documents") that the Borrower become an Additional Debtor (as defined in the Security Agreement) and execute an Additional Debtor Joinder (as defined in the Security Agreement) for so long as the Specified Loans were outstanding, and NYDIG would not have entered into a subordination or intercreditor agreement with respect to the Guaranty. Further, pursuant to the Consent, the Noteholders waived the right to accelerate the Maturity Date of the October Secured Notes and the right to charge a default rate of interest on such Notes, in each case, with respect to certain changes in names of, and jurisdiction of incorporation, of the Debtors (as defined in the SPA Documents), which waiver would not waive any other Event of Default (as defined in any of the SPA Documents), known or unknown, as of the date of Consent.

Promptly after the date of the Consent, the Company issued warrants to purchase up to 85,000 shares of common stock to the Noteholder holding the largest outstanding principal amount of October Secured Notes as of the date of the Consent. Such warrants were substantially in form similar to the other warrants held by the Noteholders. Such warrants were exercisable for three years from the date of the Consent at an exercise price of $9.50 per share. On December 5, 2022, the exercise price of the warrants were reduced to an exercise price of $0.76 per share, effective with the closing of the Securities Purchase Agreement Offering on December 5, 2022.

The Company, through the Borrower, was required to make average monthly principal and interest payments to NYDIG of approximately $730 thousand on initial drawdown in aggregate principal amount of approximately $4.6 million bearing interest at 14%, and a subsequent drawdown of $9.8 million.

On December 20, 2022, the Borrower received a Notice of Acceleration and Repossession (the "NYDIG Notice") from NYDIG with respect to the Master Agreement, by and between Borrower and NYDIG. The obligations of Borrower under the Master Agreement and reflected in the NYDIG Notice are ring-fenced to Borrower and its direct parent company, Soluna MC LLC. The Company is not a party to any guaranty, collateral agreement or other support agreement with or for the benefit of NYDIG. Borrower has entered into a dialogue with NYDIG to resolve the matters set forth in the NYDIG Notice.

The NYDIG Notice states that (a) Borrower failed to observe or perform certain covenants, conditions or agreements contained in the Master Agreement and such failure continued unremedied for a period of ten days after Borrower's knowledge of such breach, which resulted in an event of default under the Master Agreement, and (b) Borrower defaulted under the guaranty, collateral agreement, or other support agreement, which resulted in an event of default under the Master Agreement. In addition, the NYDIG Notice states that Borrower failed to pay certain payments of principal and interest under the Master Agreement when due, which failure also constituted an event of default under the Master Agreement. As a result of the foregoing events of default, and pursuant to the Master Agreement, NYDIG (x) declared the principal amount of all loans due and owing under the Master Agreement and all accompanying Loan Documents (as defined in the Master Agreement) to be due and immediately payable, (y) imposed a default rate of interest on any outstanding principal amount of each loan (together with all then unpaid interest accruing thereon) and all other obligations under the Master Agreement and the Loan Documents, and (z) demanded the return of all equipment subject to the Master Agreement and the Loan Documents. As such, the principal balance of $10.5 million became due immediately and the Borrower was to bear interest, at a rate per annum equal to 2.0% plus the rate per annum otherwise applicable to such obligations set forth in the Master Agreement. Also, as the Company was not able to obtain a waiver, the outstanding deferred financing costs were written off. As of December 31, 2022, the Borrower had incurred accrued interest and penalty of approximately $274 thousand. On February 23, 2023 NYDIG proceeded to foreclose on all of the collateral securing the MEFA, and repossessed the collateralized assets that totaled approximately $3.5 million. See Note 20 for further discussion on the NYDIG repossession. Additionally, NDYIG has stated its intention to pursue SCI, the parent company of Guarantor, under a piercing of the corporate veil claim relating to Defendants' debts and liabilities under the loan documents. SCI denies any such liability and has filed a complaint for a declaratory judgment against NYDIG in the Eighth Judicial District Court in Clark County, Nevada on March 16, 2023 seeking a declaratory judgment as to such matter.

***Line of Credit with KeyBank***

On September 15, 2021, the Company entered into a $1.0 million unsecured line of credit with KeyBank National Association ("KeyBank"), that will, among other things, allow the Company to request loans and to use the proceeds of such loans for working capital and other general corporate purposes (the "KeyBank facility"). The line of credit bears interest at a rate of Prime + 0.75% per annum (8.25% interest rate as of December 31, 2022). Accrued interest is due monthly and principal is due in full following KeyBank's demand. As of December 31, 2021, the entire line of credit of $1.0 million was drawn and outstanding. As of December 31, 2022, $650 thousand of outstanding balance has been paid down; therefore $350 thousand of the amount drawn under the line of credit remained outstanding. The Company has been repaying weekly principal on the KeyBank facility each week since the beginning of September 2022. The Company does not plan to draw down on the line of credit in the foreseeable future. In addition, future drawdowns may require pre-approval by KeyBank.

**10. Stockholders' Equity**

***Preferred Stock***

The Company has two series of preferred stock outstanding: the Series A Preferred Stock, with a $25.00 liquidation preference; and the Series B Convertible Preferred Stock, par value $0.0001 per share, with a stated value equal to $100.00 (the "Series B Preferred Stock"). As of December 31, 2022 and December 31, 2021, there were 3,061,245and 1,252,299shares of Series A Preferred Stock issued and outstanding, respectively, and as of December 31, 2022 and December 31, 2021 there was 62,500 and 0 shares of Series B Preferred Stock issued and outstanding, respectively.

*Series B Preferred Stock*

On July 19, 2022, the Company entered into a Securities Purchase Agreement (the "Series B SPA") with an accredited investor (the "Series B Investor") pursuant to which the Company sold to the Series B Investor 62,500 shares of Series B Preferred Stock, for a purchase price of $5,000,000. The shares of Series B Preferred Stock are initially convertible, subject to certain conditions, into 1,155,268 shares of common stock, at a price per share of $5.41 per share, a 20% premium to the closing price of the common stock on July 18, 2022, subject to adjustment as set forth in the Certificate of Designations of Preferences, Rights and Limitations for the Series B Preferred Stock ("Series B Certificate of Designations").

In addition, on July 19, 2022, the Company issued to the Series B Investor common stock purchase warrants (the "Series B Warrants") to purchase up to an aggregate of 1,000,000 shares of common stock at an initial exercise price of $10.00 per share. The Series B Investor is entitled to exercise the Series B Warrants at any time on or after the date that is 180 days following the issue date and on or prior to January 19, 2028. On the closing date of the next public offering of the common stock or other securities, the exercise price of the Series B Warrants is to adjust to a price equal to the lower of (a) the exercise price then in effect, or (b) the price of the warrants issued in the Company's next public offering, or if no warrants are issued in the Company's next public offering, 110% of the price per share of the common stock issued in the Company's next public offering. In addition, upon the Series B Closing, the Series B Investor delivered to the Company for cancellation an outstanding warrant to acquire 1,000,000 shares of common stock at an exercise price of $11.50 per share previously issued on April 13, 2022, in connection with the Notes.

***Common Stock***

The Company has one class of common stock, par value $0.001 per share. Each share of the Company's common stock is entitled to one vote on all matters submitted to stockholders. As of December 31, 2022, and December 31, 2021, there were 18,694,206 and 13,754,206 shares of common stock issued and outstanding, respectively.

***Dividends***

Pursuant to the Certificate of Designations, Preferences and Rights of 9.0% Series A Cumulative Perpetual Preferred Stock of the Company, dividends, when, as and if declared by the Board (or a duly authorized committee of the Board), will be payable monthly in arrears on the final day of each month, beginning August 31, 2021. During the year ended December 31, 2022 and 2021, the Board declared and paid the Company aggregate dividends on the shares of Series A Preferred Stock of approximately $3.9 million and $630 thousand, respectively. The Board of Directors had not declared any Series A Preferred Stock dividends beginning October 2022 through the date of this report, as such the Company has accumulated approximately $1.7 million of dividends in arrears on the Series A Preferred Stock through December 31, 2022.

The Company's Series B Preferred Stock includes a 10% accruing dividend compounded daily for 12 months from the original issue date of July 20, 2022 that may be paid in cash or stock at the Company's option at the earlier of (i) the date the Series B Preferred Stock is converted, or (ii) the Series B Dividend Termination Date. As of December 31, 2022, the Company has accrued $236 thousand for dividend payable for the Series B preferred stock.

***Reservation of Shares***

The Company had reserved shares of common stock for future issuance as follows as of December 31, 2022:

Schedule of Reserved Shares of Common Stock for Future Issuance

---

| | |
|:---|:---|
| Stock options outstanding | 1309789 |
| Restricted stock units outstanding | 830590 |
| Warrants outstanding | 9902232 |
| Common stock available for future equity awards or issuance of options | 114725 |
| Number of common shares reserved | 12157336 |

---

***Placement Agent Agreements***

On September 13, 2022, the Company entered into a placement agent agreement with Univest Securities LLC ("Univest") in which all of the 486,309 outstanding warrants held with Univest which were earned through previous equity offerings would be revised to a new exercise price value of $4.33 per warrant.

Additionally, on December 2, 2022, the Company entered into an additional placement agency agreement with, pursuant to which Univest agreed to serve as the exclusive placement agent for the Company on a reasonable best-efforts basis in connection with the December Offering. Pursuant to the additional Placement Agency Agreement, the Company agreed to pay to Univest (i) a fee in shares of Common Stock equal to 7% of the Shares issued and sold in the Offering (excluding any securities that may be issued pursuant to the Options or upon exercise of the Warrants) (the "***Placement Agent Shares***"), (ii) 431,014 restricted shares of Common Stock in relation to Univest's role in the underwritten offering that closed on October 26, 2022 (the "***October Shares***"), and (iii) an additional fee of warrants to purchase the number of shares of Common Stock equal to 7% of the number of Shares issued and sold in the December Offering (excluding any securities that may be issued pursuant to the Options or upon exercise of the Warrants) in the form substantially similar as the Warrants (the "***Placement Agent Warrants***", and together with the Placement Agent Shares and the October Shares, the "***Placement Agent Securities***"), each such issuance to Univest (and/or its designees) subject to and upon obtaining the appropriate approval by stockholders required by the applicable rules and regulations of the Nasdaq. As of December 31, 2022, the Company had approximately $300 thousand in consideration for the Placement Agent Shares as a deferred cost of the offerings against the proceeds, in which such amounts are charged through equity. Approval by the shareholders took place during a Special Shareholder meeting on March 10, 2023; therefore the shares and warrants were issued subsequent to year-end.

**11.** **Retirement Plan**

The Company maintains a voluntary savings and retirement plan under IRC Section 401(k) covering substantially all employees. Employees must complete six months of service and have attained the age of twenty-one prior to becoming eligible for participation in the plan. The Company plan allows eligible employees to contribute a percentage of their compensation on a pre-tax basis and the Company matches employee contributions, on a discretionary basis, currently in an amount equal to 100% of the first 3% and 50% of the next 2% of the employee's salary, subject to annual tax deduction limitations. Effective January 1, 2017, Company matching contributions are vested immediately. Company matching contributions were $177 thousand, which $19 thousand related to discontinued operations, and $99 thousand, which includes $81 thousand related to discontinued operations for 2022 and 2021, respectively. The Company may also make additional discretionary contributions in amounts as determined by management and the Board of Directors. There were no additional discretionary contributions by the Company for the years 2022 or 2021.

**12.** **Net (loss) income per Share**

The following table sets forth the reconciliation of the numerators and denominators of the basic and diluted per share computations for continuing operations for the years ended December 31:

Schedule of Basic and Diluted Per Share Computations for Continuing Operations

---

| | | |
|:---|:---|:---|
| (Dollars in thousands, except shares) | **2022** | **2021** |
| **<u>Numerator:</u>** |  |  |
| Net loss from continuing operations | $(107016) | $(6388) |
| Net income from discontinued operations | 7921 | 1127 |
| Net loss | $(99095) | $(5261) |
| Less: Preferred Dividend | (4088) | (630) |
| Balance | $(103183) | $(5891) |
| **<u>Denominator:</u>** |  |  |
| **Basic and Diluted EPS:** |  |  |
| Common shares outstanding, beginning of period | 11840242 | 9734607 |
| &nbsp;&nbsp;&nbsp;Weighted average common shares issued during the period | 3142268 | 2105635 |
| Denominator for basic earnings per common shares — |  |  |
| &nbsp;&nbsp;&nbsp;Weighted average common shares | 14982510 | 11840242 |

---

The Company notes as continuing operations was in a net loss for fiscal year 2022 and 2021, as such basic and diluted EPS is the same balance as continuing operations acts as the control amount in which would cause antidilution. Not included in the computation of earnings per share, assuming dilution, for the year ended December 31, 2022, were options to purchase 1,309,789 shares of the Company's common stock, 830,590 nonvested restricted stock units, 9,902,232 outstanding warrants not exercised, and shares of common stock issuable upon the conversion of a portion of the October Secured Notes pursuant to the Addendum, as discussed in Note 9. These potentially dilutive items were excluded because the calculation of incremental shares resulted in an anti-dilutive effect.

Not included in the computation of earnings per share, assuming dilution, for the year ended December 31, 2021, were options to purchase 991,550 shares of the Company's common stock, 160,473 nonvested restricted stock units, 2,193,512 outstanding warrants not exercised, and 1,626,073 shares of convertible notes outstanding. These potentially dilutive items were excluded because the calculation of incremental shares resulted in an anti-dilutive effect.

**13.** **Stock Based Compensation**

Stock-based incentive awards are provided to employees and directors under the terms of the Company's 2012 Equity Incentive Plan (the 2012 Plan), which was amended and restated as of October 20, 2016, 2014 Equity Incentive Plan (the 2014 Plan), and the 2021 Equity Incentive Plan, which was amended and restated effective as of October 29, 2021 and May 27, 2022, respectively, (collectively, the Plans). Awards under the Plans have generally included at-the-money options and restricted stock grants.

The 2012 Plan was adopted by the Company's Board of Directors on April 14, 2012, and approved by its stockholders on June 14, 2012. The 2012 Plan was amended and restated by the Board of Directors effective October 20, 2016. The October 2016 amendment allowed for the award agreement, or another agreement entered into between the Company and the award grantee to vary the method of exercise of options issued under the 2012 Plan and an agreement entered into between the Company and the award grantee to vary the provisions governing expiration of options or other awards under the 2012 Plan following termination of the award recipient. The 2012 Plan provides an initial aggregate number of 600,000 shares of common stock that may be awarded or issued. The number of shares that may be awarded under the 2012 Plan and awards outstanding may be subject to adjustment on account of any recapitalization, reclassification, stock split, reverse stock split and other dilutive changes in our common stock. Under the 2012 Plan, the Board of Directors is authorized to issue stock options (incentive and nonqualified), stock appreciation rights, restricted stock, restricted stock units and other stock-based awards to employees, officers, directors, consultants and advisors of the Company and its subsidiaries. Incentive stock options may only be granted to employees of the Company and its subsidiaries.

The 2014 Plan was adopted by the Company's Board of Directors on March 12, 2014, and approved by its stockholders on June 11, 2014. The 2014 Plan provides an initial aggregate number of 500,000 shares of common stock that may be awarded or issued. The number of shares that may be awarded under the 2014 Plan and awards outstanding may be subject to adjustment on account of any stock dividend, spin-off, stock split, reverse stock split, split-up, recapitalization, reclassification, reorganization, combination or exchange of shares, merger, consolidation, liquidation, business combination, exchange of shares or the like. Under the 2014 Plan, the Board-appointed administrator of the 2014 Plan is authorized to issue stock options (incentive and nonqualified), stock appreciation rights, restricted stock, restricted stock units, phantom stock, performance awards and other stock-based awards to employees, officers and directors of, and other individuals providing bona fide services to or for, the Company or any affiliate of the Company. Incentive stock options may only be granted to employees of the Company and its subsidiaries.

The Company's 2021 Plan was adopted by the Board on February 12, 2021, and approved by the stockholders on March 25, 2021. The 2021 Plan was amended and restated effective as of October 29, 2021, and May 27, 2022, respectively. The 2021 Plan authorizes the Company to issue shares of common stock upon the exercise of stock options, the grant of restricted stock awards, and the conversion of restricted stock units (collectively, the "Awards"). The Compensation Committee has full authority, subject to the terms of the 2021 Plan, to interpret the 2021 Plan and establish rules and regulations for the proper administration of the 2021 Plan. Subject to certain adjustments as provided in the 2021 Plan, the maximum aggregate number of shares of the Company's common stock that may be issued under the 2021 Plan (i) pursuant to the exercise of options, (ii) as shares or restricted stock and (iii) in settlement of RSUs shall be limited to (A) during the Company's fiscal year ending December 31, 2021 (the "2021 Fiscal Year"), 1,460,191 Shares, (B) for the period from January 1, 2022 to June 30, 2022, fifteen percent (15%) of the number of Shares outstanding on January 3, 2022, which was the first trading day of 2022, and (C) beginning with the third quarter of the Company's fiscal year ending December 31, 2022 (the "2022 Fiscal Year"), fifteen percent (15%) of the number of Shares outstanding as of the first trading day of each quarter, net of any Shares awarded in the previous quarter(s). Subject to certain adjustments as provided in the 2021 Plan, (i) shares subject to the 2021 Plan shall include shares reverted back to the Company pursuant the 2021 Plan in a prior year or quarter, as applicable, as provided herein and (ii) the number of shares that may be issued under the 2021 Plan may never be less than the number of shares that are then outstanding under (or available to settle existing) Awards. For purposes of determining the number of shares available under the 2021 Plan, shares withheld by the Company to satisfy applicable tax withholding or exercise price obligations pursuant to the 2021 Plan shall be deemed issued under this Plan. In the event that, prior to the date on which the 2021 Plan shall terminate, any Award granted under the 2021 Plan expires unexercised or unvested or is terminated, surrendered, or cancelled without the delivery of shares of common stock, or any Awards are forfeited back to the Company, then the shares of common stock subject to such Award may be made available for subsequent Awards under the terms of the 2021 Plan.

During the fiscal year ended December 31, 2022, the Company granted options to purchase 539,064 shares of the Company's common stock under the 2021 Plan, of which all were vested as of December 31, 2022 with an exercise price of $0.95 per share, based on the closing market price plus 25% of the Company's common stock on the date of the grant. Using a Black-Scholes Option Pricing Model, the weighted average fair value of these options was $0.59 per share and was estimated at the date of grant.

During the fiscal year ended December 31, 2022, the Company did not award shares of restricted common stock under the 2021 Plan.

During the fiscal year ended December 31, 2022, the Company awarded 725,433 restricted stock units under the 2021 Plan, valued at $1.12 through $10.85 per share based on the closing market price of the Company's common stock on the date of the grant, with a weighted average fair value of $7.22 per share. 306,500 shares of common stock shall vest as follows: 37% vesting 12 months from the date of the grant, 33% vesting 24 months from the date of the grant, and 30% vesting 36 months from the date of the grant, in each case subject to the reporting person remaining in the service of the Company on each such vesting date. 195,003 shares of common stock shall vest as follows: 25% of such restricted stock units shall vest on the first anniversary, and the remaining shares shall vest ratably over the succeeding 36-month period, with (1/36) of such vesting on the last day of each such calendar month. 177,000 shares of common stock shall vest 50% on December 1, 2023, and 50% on December 1, 2024. 46,498 shares of common stock are performance-based awards that will vest in the following year in January 2023 based on approval of the Board based on achievement of key performance objectives. The remaining 432 shares of common stock are performance-based awards that were granted and vested during January 2022 as approved by the Board based on the achievement of key performance objectives during the prior year.

During the fiscal year ended December 31, 2021, the Company granted options to purchase 716,200 shares of the Company's common stock under the 2021 Plan, of which 186,200 shares immediately vested with an exercise price of $7.52 per share, based on the closing price plus 10% of the Company's common stock on the date of the grant. The remaining 530,000 shares will vest in equal installments of 33 1/3% on each of the three anniversaries of the date of the grant. The weighted exercise price of these options is $7.08 per share and was based on the closing market price of the Company's common stock on the dates of grant. Using a Black-Scholes Option Pricing Model, the weighted average fair value of these options was $5.04 per share and was estimated at the date of grant.

During the fiscal year ended December 31, 2021, the Company awarded 201,926 shares of restricted common stock under the 2021 Plan, 47,500 shares of valued at $11.10 per share and 154,426 shares valued at $12.23 per share based on the closing market price of the Company's common stock on the date of the award. 47,500 of the shares will be restricted for one year, with the entire award vesting on the first anniversary of the award date. For the remaining 154,426 shares, 33 1/3% of the shares will vest on the first anniversary of the award date, and the remaining shares shall vest ratably over the succeeding 24-month period, with (1/24) of such remaining shares vesting on the last day of each calendar month.

During the fiscal year ended December 31, 2021, the Company awarded 160,473 restricted stock units under the 2021 Plan, valued ranging from $11.10-$16.61 per share based on the closing market price of the Company's common stock on the date of the grant. For 15,000 restricted stock units, 33 1/3% of such restricted stock units will vest on each of the first three anniversaries of the date of the grant. For 121,822 restricted stock units, 25% of the grant shares shall vest on the first anniversary of the effective time, and the remaining 75% shall vest over the succeeding 36-month period, with (1/36) of such remaining grant shares vest on the last day of the calendar month. For 14,782 shares, 25% of such restricted stock units shall vest after six months of the award, and the remaining shares shall vest ratably over the succeeding 36-month period, with (1/36) of such vesting on the last day of each such calendar month. For 8,869 shares, they are performance-based awards that will vest in the following year in January based on approval of the Board of Directors based on achievement of key performance objectives.

In connection with the sale of shares of common stock to Brookstone, the Company entered into an Option Exercise and Stock Transfer Restriction Agreement (collectively, the Option and Transfer Agreements) with its Chief Executive Officer, its Chief Financial Officer and each of its non-employee directors (collectively, the Insiders). The Option and Transfer Agreements amend the stock option grant agreements between the Company and each Insider with respect to an option granted under and modify the terms of any option to purchase common stock held by each such Insider (collectively, Options) granted under, the Plans. The Option and Transfer Agreements restrict the aggregate amount of shares of common stock for which the Insiders may exercise Options during calendar years 2016, 2017, 2018 and 2019, and provide for a modified procedure for exercising Options in order to ensure the limit on the aggregate amount of Options that may be exercised in any such year is not exceeded. Such amendments and modifications also operate to, except with respect to the termination of Options in connection with an Insider's termination of employment or service in connection with misconduct as described in the Option and Transfer Agreements, (i) remove all references to an expiration of the exercisability of such Options within a special, delineated time period following the termination of service to or employment by the Company, and (ii) provide that all vested Options are exercisable by the Insider until default expiration under the applicable Plan (i.e., ten years from the date of grant). If an Option and Transfer Agreement is terminated, the limitations on Option exercises described above will terminate, but the exercisability of the Insider's vested Options until default expiration under the applicable Plan and stock option agreement (i.e., ten years from the date of grant) will survive indefinitely.

Stock-based compensation expense for the years ended December 31, 2022, and 2021 was generated from stock option and restricted stock awards. Stock options are awards that allow holders to purchase shares of the Company's common stock at a fixed price. Certain options granted may be fully or partially exercisable immediately, may vest on other than a four-year schedule or vest upon attainment of specific performance criteria. Restricted stock awards generally vest one to three years after the date of grant, although certain awards may vest immediately or vest upon attainment of specific performance criteria. Option exercise prices are generally equivalent to the closing market value price of the Company's common stock on the date of grant. Unexercised options generally terminate ten years after date of grant.

The following table presents the weighted-average assumptions used for options granted under the 2021 Plan:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Option term (years) | 4.95 | 4.04 |
| Volatility | 110.21% | 108.33% |
| Unvested forfeiture rate | 0.00% | 0.18% |
| Risk-free interest rate | 3.93% | 0.84% |
| Dividend yield | 0.00% | 0.00% |
| Weighted-average fair value per option granted | $0.59 | $5.04 |

---

No options were granted under the 2014 Plan and the 2012 Plan for the years ended December 31, 2022, and 2021, respectively.

Share-based compensation expense recognized in the Consolidated Statements of Operations is based on awards ultimately expected to vest, therefore, awards are reduced for estimated forfeitures. The accounting standard requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Total share-based compensation expense, related to the Company's share-based awards, recognized for the years ended December 31, was included within the representative group comprised as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| (Dollars in thousands) |  |  |
| Cost of cryptocurrency revenue | $67 | $3 |
| General and administrative | 3785 | 1938 |
| Share-based compensation expense | $3852 | $1941 |

---

Total unrecognized compensation costs related to non-vested stock options as of December 31, 2022 and December 31, 2021 is approximately $1.0 million and $1.9 million, respectively, and is expected to be recognized over a weighted-average remaining vesting period of approximately 1.36 years and 2.34 years, respectively.

Presented below is a summary of the Company's stock option activity for the Plans for the years ended December 31:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Shares under option, beginning | 991550 | 398750 |
| Granted | 539064 | 716200 |
| Exercised | (177425) | (123400) |
| Forfeited | (10750) |  |
| Expired/canceled | (32650) |  |
| Shares under option, ending | 1309789 | 991550 |
| Options exercisable | 953956 | 385800 |
| Remaining shares available for granting of options | 114725 | 392717 |

---

The weighted average exercise price for the Company's stock option activity for the Plans is as follows for each of the years ended December 31:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Shares under option, beginning | $5.44 | $0.87 |
| Granted | $0.95 | $7.20 |
| Exercised | $0.86 | $0.83 |
| Forfeited | $10.39 | $— |
| Expired/canceled | $7.84 | $— |
| Shares under option, ending | $4.11 | $5.44 |
| Options exercisable, ending | $3.13 | $4.10 |

---

The following table summarizes information for options outstanding and exercisable for the Plans as of December 31, 2022:

Summary of Option Outstanding and Exercisable

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Outstanding** | **Outstanding** | **Outstanding** | **Outstanding** | **Exercisable** | **Exercisable** | **Exercisable** |
|<br>**Exercise<br> Price Range** |<br>**Number** | **Weighted Average**<br>**Remaining**<br>**Contractual Life** | **Weighted**<br>**Average**<br>**Exercise<br> Price** |<br>**Number** | **Weighted Average**<br>**Remaining**<br>**Contractual Life** | **Weighted**<br>**Average**<br>**Exercise Price** |
| $0.70 - $6.83 | 635189 | 4.87 | $0.95 | 622689 | 4.82 | $0.95 |
| $6.84 - $11.00 | 659600 | 5.64 | $7.00 | 326267 | 4.90 | $7.17 |
| $11.00 - $11.10 | 15000 | 8.23 | $11.10 | 5000 | 8.23 | $11.10 |
|  | 1309789 | 5.30 | $4.11 | 953956 | 4.87 | $3.13 |

---

The aggregate intrinsic value (i.e., the difference between the closing stock price and the price to be paid by the option holder to exercise the option) is $0 for the Company's outstanding options and $0 for the exercisable options as of December 31, 2022. The amounts are based on the Company's closing stock price of $0.26 as of December 31, 2022.

Non-vested restricted stock activity is as follows for the year ended December 31:

Summary of Non Vested Restricted Stock

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Non-vested restricted stock balance, beginning January 1 | 405367 | 80930 |
| Non-vested restricted stock granted | 725433 | 362399 |
| Vested restricted stock |  |  |
| Non-vested restricted stock exercised | (193249) | (37962) |
| Non-vested restricted stock forfeited/expired | (106961) |  |
| Non-vested restricted stock balance, ending December 31 | 830590 | 405367 |

---

The weighted average fair value price for the Company's restricted stock activity for the Plans is as follows for each of the years ended December 31:

Summary of Weighted Average Fair Value Price Restricted Stock Activity

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Restricted stock, beginning | $11.28 | $1.48 |
| Granted | $7.22 | $12.43 |
| Exercised | $9.81 | $1.34 |
| Forfeited/ expired | $9.42 | $— |
| Restricted stock, ending | $8.36 | $11.28 |

---

As of December 31, 2022 and 2021 there was approximately $4.8 million and $3.1 million, respectively of unrecognized compensation cost related to restricted stock plans. This cost is expected to be recognized over a remaining period of 2.37 years and 3.18 years, respectively.

**Stock Warrants:**

The following is a summary of common stock warrant activity during the year ended December 31, 2021.

---

| | | |
|:---|:---|:---|
|  | **Number of <br> Warrant<br> Shares** | **Weighted <br> Average <br> Exercise Price ($)** |
| Balance, December 31, 2020 |  | $— |
| Granted | 2775122 | 12.67 |
| Exercised | (581610) | 8.24 |
| Forfeited/ Expired |  |  |
| Balance, December 31, 2021 | 2193512 | $13.85 |

---

The following is a summary of common stock warrant activity during the year ended December 31, 2022.

---

| | | |
|:---|:---|:---|
|  | **Number of <br> Warrant <br> Shares** | **Weighted <br> Average <br> Exercise Price ($)** |
| Balance, December 31, 2021 | 2193512 | $13.85 |
| Granted | 8987269 | 2.31 |
| Exercised | (94500) | 8.24 |
| Forfeited/ Expired | (1184049) | 9.50 |
| Balance, December 31, 2022 | 9902232 | $2.29 |

---

As of December 31, 2022, the outstanding warrants have a weighted average remaining term of 3.99 years.

**14.** **Commitments and Contingencies**

**Commitments:**

***Leases***

The Company determines whether an arrangement is a lease at inception. The Company has operating leases for certain manufacturing, laboratory, office facilities and certain equipment. The leases have remaining lease terms of less than one year to less than five years. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of December 31, 2022 and December 31, 2021, the Company has no assets recorded under finance leases.

Lease expense for these leases is recognized on a straight-line basis over the lease term. For the twelve months ended December 31, total lease costs are comprised of the following:

---

| | | |
|:---|:---|:---|
| (Dollars in thousands) |  |  |
|  | **2022** | **2021** |
| Operating lease cost | $202 | $169 |
| Short-term lease cost |  |  |
| &nbsp;&nbsp;&nbsp;Total net lease cost | $202 | $169 |

---

Short-term leases are leases having a term of twelve months or less. The Company recognizes short-term leases on a straight-line basis and does not record a related lease asset or liability for such leases.

Supplemental cash flows information related to leases for the twelve months ended December 31 was as follows:

---

| | | |
|:---|:---|:---|
| (Dollars in thousands) |  |  |
|  | **2022** | **2021** |
| Cash paid for amounts included in the measurement of lease liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Operating cash flows from operating leases | $197 | $156 |
| Non-Cash Activity Right-of-use assets obtained in exchange for lease obligations: |  |  |
| &nbsp;&nbsp;&nbsp;Operating leases | $20 | $131 |

---

Supplemental balance sheet information for the twelve months ended December 31 was as follows:

---

| | | |
|:---|:---|:---|
| (Dollars in thousands, except lease term and discount rate) |  |  |
|  | **2022** | **2021** |
| Operating leases: |  |  |
| &nbsp;&nbsp;&nbsp;Operating lease ROU asset | $233 | $405 |
| &nbsp;&nbsp;&nbsp;Current operating lease liabilities | $161 | $184 |
| &nbsp;&nbsp;&nbsp;Non-current operating lease liabilities | 84 | 237 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating lease liabilities | $245 | $421 |
| Operating leases: |  |  |
| &nbsp;&nbsp;&nbsp;ROU assets | $655 | $635 |
| &nbsp;&nbsp;&nbsp;Asset lease expense | (422) | (230) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ROU assets, net | $233 | $405 |
| Weighted Average Remaining Lease Term (in years): |  |  |
| &nbsp;&nbsp;&nbsp;Operating leases | 1.5 | 2.38 |
| Weighted Average Discount Rate: |  |  |
| &nbsp;&nbsp;&nbsp;Operating leases | 3.83% | 3.83% |

---

Maturities of operating lease liabilities are as follows for the year ending December 31:

---

| | |
|:---|:---|
| (Dollars in thousands) |  |
|  | **2022** |
| 2023 | $168 |
| 2024 | 85 |
| 2025 | - |
| &nbsp;&nbsp;&nbsp;Total lease payments | 253 |
| Less: imputed interest | (8) |
| &nbsp;&nbsp;&nbsp;Total lease obligations | 245 |
| Less: current obligations | 161 |
| &nbsp;&nbsp;&nbsp;Long-term lease obligations | $84 |

---

**Contingencies:**

***Spring Lane Capital Contingency***

The Company has a potential contingency associated with an agreement with Spring Lane of up to $250 thousand which would be reduced by a proportion of funding received from Spring Lane up to the $35.0 million aggregate contribution cap. The Company considers the probability of a payment for the contingency to be remote.

***Legal***

We are subject to legal proceedings, claims and liabilities which arise in the ordinary course of business. When applicable, we accrue for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Legal fees are charged to expense as they are incurred.

The Company has been named as a party in the December 19, 2019 United States Environmental Protection Agency ("EPA") Demand Letter regarding the Malta Rocket Fuel Area Superfund Site (Site) located in Malta and Stillwater, New York in connection with an alleged release of hazardous materials into the environment. The EPA is seeking reimbursement of response costs from all named parties in the amount of approximately $358,000 plus interest in connection with the investigation and disposal activities associated with the various drum caches discovered at the Site, issuance of the Explanation of Significant Differences ("ESD") of the Site, and implementation of the work contemplated by the ESD. The Company considers the likelihood of a material adverse outcome to be remote and does not currently anticipate that any expense or liability it may incur as a result of these matters in the future will be material to the Company's financial condition.

NYDIG filed a complaint against a subsidiary of Company, Soluna MC Borrowing 2021-1, LLC ("Borrower") and Soluna MC, LLC, as Guarantor ("Guarantor"), and together with Borrower, ("Defendants") in Marshall Circuit Court of the Commonwealth of Kentucky on December 29, 2022 regarding a series of loans made by NYDIG to Borrower pursuant to a master equipment finance agreement that were secured by certain assets of Borrower and guaranteed by Guarantor pursuant to a written guaranty agreement executed by Guarantor. The Court issued on February 15, 2023 an agreed order granting NYDIG's motion for writ of possession which, among other things, ordered parties to provide NYDIG access to the collateral described therein and preserved the rights of NYDIG to pursue a deficiency judgment against the Defendants. Also on February 15, 2023, the Defendants filed their answer and affirmative defenses in this proceeding. The Defendants believe that NYDIG has liquidated some of the collateral securing the loans and anticipate that NYDIG will complete the liquidation of collateral and continue to prosecute the complaint to obtain a judgment against the Defendants. Additionally, NDYIG has stated its intention to pursue SCI, the parent company of Guarantor, under a piercing of the corporate veil claim relating to Defendants' debts and liabilities under the loan documents. SCI denies any such liability and has filed a complaint for a declaratory judgment against NYDIG in the Eighth Judicial District Court in Clark County, Nevada on March 16, 2023 seeking a declaratory judgment as to such matter.

**15. Related Party Transactions**

***MeOH Power, Inc.***

On December 18, 2013, MeOH Power, Inc. and the Company executed a Senior Demand Promissory Note (the "Note") in the amount of $380 thousand to secure the intercompany amounts due to the Company from MeOH Power, Inc. upon the deconsolidation of MeOH Power, Inc. Interest accrues on the Note at the Prime Rate in effect on the first business day of the month, as published in the Wall Street Journal. At the Company's option, all or part of the principal and interest due on this Note may be converted to shares of common stock of MeOH Power, Inc. at a rate of $0.07 per share. Interest began accruing on January 1, 2014. The Company recorded a full allowance against the Note. As of December 31, 2022 and December 31, 2021, $341 thousand and $329 thousand, respectively, of principal and interest are available to convert into shares of common stock of MeOH Power, Inc. Any adjustments to the allowance are recorded as miscellaneous expense during the period incurred.

***Legal Services***

During the years ended December 31, 2022 and December 31, 2021, the Company incurred $22 thousand and $19 thousand, respectively, to Couch White, LLP for legal services associated with contract review. A partner at Couch White, LLP is an immediate family member of one of our Directors.

***HEL Transactions***

On January 8, 2020, the Company formed SCI as a wholly-owned subsidiary to pursue a new business line focused on cryptocurrency and the blockchain ecosystem. In connection with this new business line, SCI established a facility to mine cryptocurrencies and integrate with the blockchain network. Pursuant to an Operating and Management Agreement dated January 13, 2020, by and between SCI and HEL, HEL assisted the Company, and later SCI, in developing, and is now operating, the cryptocurrency mining facility. The Operating and Management Agreement required, among other things, that HEL provide project sourcing services to SCI, including acquisition negotiations and establishing an operating model, investments/financing timeline, and a project development path, as well as developmental and operational services, as directed by SCI, with respect to the applicable cryptocurrency mining facility in exchange for SCI's payment to HEL of a one-time management fee ranging from $65,000 to $350,000 and profit-based success payments in the event that SCI achieved explicit profitability thresholds. These agreements also provided that once aggregate earnings before interest, taxes, depreciation, and amortization of the applicable mine exceeded the total amount of funding provided by SCI to HEL (whether pursuant to the applicable agreement or otherwise) for the purposes of creating, developing, assembling, and constructing the mine, HEL was entitled to ongoing success payments of 20.0% of the earnings before interest, taxes, depreciation, and amortization of the mine. $237 thousand of payments were made for fiscal year 2021, as certain thresholds pursuant to the Operating and Management Agreement were achieved.

Pursuant to the Operating and Management Agreement, during the developmental phase of the cryptocurrency mining facility, which ended on March 14, 2020, HEL gathered and analyzed information with respect to SCI's cryptocurrency mining efforts and produced budgets, financial models, and technical and operational plans, including a detailed business plan, that it delivered to SCI in March 2020 (the "Deliverables"), all of which was designed to assist with the efficient implementation of a cryptocurrency mine. The agreement provided that, following SCI's acceptance of the Deliverables, which occurred on March 23, 2020, HEL, on behalf of SCI, would commence operations of the cryptocurrency mine in a manner that would allow SCI to mine and sell cryptocurrency. In that regard, on May 21, 2020, SCI acquired the intellectual property of GigaWatt, Inc. ("GigaWatt") and certain other property and rights of GigaWatt associated with GigaWatt's operation of a crypto-mining operation located in Washington State. The acquired assets formed the beginning of SCI's cryptocurrency mining operation. SCI sells all cryptocurrency it mines for U.S. dollars and is not in the business of accumulating cryptocurrency on the Company's balance sheet for speculative gains. On October 22, 2020, SCI loaned HEL $112 thousand to acquire additional assets from the bankruptcy trustee for GigaWatt's assets. On the same day, HEL transferred title of the assets to SCI, which under the terms thereof paid off the note.

On November 19, 2020, SCI and HEL entered into a second Operating and Management Agreement related to a potential location for a cryptocurrency mine in the southeast United States. In accordance with the terms of the agreement, which are consistent with the first Operating and Management Agreement noted above, HEL was entitled to ongoing success payments of 20.0% of the earnings before interest, taxes, depreciation and amortization of the mine. SCI paid HEL $221 thousand for the fiscal year ended December 31, 2021 related to the one-time fees.

On December 1, 2020, SCI and HEL entered into a third Operating and Management Agreement with respect to a potential location for a cryptocurrency mine in the Southwestern United States. In accordance with the terms of the agreement, which are consistent with the first Operating and Management agreement noted above, HEL is entitled to ongoing success payments of 20.0% of the earnings before interest, taxes, depreciation and amortization of the mine. SCI did not make any payments in 2021 as this target location did not meet the business requirements to continue pursuing the potential acquisition, and as a result SCI did not make any further payments to HEL under this agreement.

On February 8, 2021, SCI and HEL entered into a fourth Operating and Management Agreement related to a potential location for a cryptocurrency mine in the Southeast United States. In accordance with the terms of the agreement, which are consistent with the first Operating and Management agreement noted above, HEL is entitled to ongoing success payments of 20.0% of the earnings before interest, taxes, depreciation and amortization of the mine. SCI paid HEL $544 thousand for the fiscal year ended December 31, 2021 in relation to the one-time fees.

For the fiscal year ended December 31, 2021, the Company paid $245 thousand in expense reimbursements and other related fees in addition to the Operating and Management payments.

Each Operating and Management Agreement, all of which were terminated effective November 5, 2021, pursuant to the Termination Agreement, among other things, required that HEL provide project sourcing services to SCI, including acquisition negotiations and establishing an operating model, investments/financing timeline, and project development path. The Company made one final payment to HEL in the first quarter of 2022 of $50 thousand to settle all final Operating and Management Agreements.

Simultaneously with entering into the initial Operating and Management Agreement with HEL, the Company, pursuant to a purchase agreement it entered into with HEL, made a strategic investment in HEL by purchasing 158,730 Class A Preferred Shares of HEL for an aggregate purchase price of $500 thousand on January 13, 2020. After acceptance of the Deliverables, as required by the terms of the purchase agreement, on March 23, 2020, the Company purchased an additional 79,365 Class A Preferred Shares of HEL for an aggregate purchase price of $250 thousand. The Company also has the right, but not the obligation, to purchase additional equity securities of HEL and its subsidiaries (including additional Class A Preferred Shares of HEL) if HEL secured certain levels or types of project financing with respect to its own wind power generation facilities. Each preferred share may be converted at any time and without payment of additional consideration, into Common shares. The Company additionally entered into a Side Letter Agreement, dated January 13, 2020, with HEL Technologies Investment I, LLC, a Delaware limited liability company that owns, on a fully diluted basis, 57.9% of HEL and is controlled by a Brookstone Partners-affiliated director of the Company. The Side Letter Agreement provides for the transfer to the Company, without the payment of any consideration by the Company, of additional Class A Preferred Shares of HEL in the event HEL issues additional equity below agreed-upon valuation thresholds.

As discussed above, on October 29, 2021, we completed the Soluna Callisto acquisition pursuant to the Merger Agreement. The purpose of the transaction was for SCI to acquire substantially all of the assets (other than those assets physically located in Morocco) formerly held by HEL, which assets consisted of SCI's existing pipeline of certain cryptocurrency mining projects that HEL previously transferred to SCI, which was formed expressly for this purpose, and to provide SCI with the opportunity to directly employ or retain the services of four individuals whose services it had retained through HEL prior to the merger. As a result of the merger, each share of common stock of Soluna Callisto issued and outstanding immediately prior to the effective time of the merger, other than shares owned by the Company or any of our subsidiaries, was cancelled and converted into the right to receive a proportionate share of the Merger Consideration.

In connection with the Soluna Callisto acquisition, effective as of October 29, 2021, upon and subject to the terms and conditions of the Termination Agreement, on November 5, 2021: (1) the existing Operating and Management Agreements between HEL and SCI were terminated in all respects; and (2)(A) SCI paid HEL $725,000, (B) SHI issued to HEL the Termination Shares, and (C) HEL and SHI entered into an Amended and Restated Contingent Rights Agreement that, among other things, amended the existing Contingent Rights Agreement by and between HEL and SHI, dated January 13, 2020, to provide SHI the right to invest directly in certain cryptocurrency mining opportunities being pursued by HEL. SHI filed a registration statement with the SEC to register the resale of the Termination Shares on February 14, 2022.

Please see Note 5 for additional information regarding the Soluna Callisto acquisition and related transactions.

Several of HEL's equity holders are affiliated with Brookstone Partners, the investment firm that holds an equity interest in the Company through Brookstone Partners Acquisition XXIV, LLC. The Company's two Brookstone-affiliated directors also serve as directors and, in one case, as an officer, of HEL and also have ownership interest in HEL. In light of these relationships, the various transactions by and between the Company and SCI, on the one hand, and HEL, on the other hand, were negotiated on behalf of the Company and SCI via an independent investment committee of the Board and separate legal representation. The transactions were subsequently unanimously approved by both the independent investment committee and the full Board.

Five of the Company's directors have various affiliations with HEL.

Michael Toporek, the Chief Executive Officer and a director of the Company, owns (i) 90% of the equity of Soluna Technologies Investment I, LLC, which owns 57.9% of HEL and (ii) 100% of the equity of MJT Park Investors, Inc., which owns 3.1% of HEL, in each case, on a fully-diluted basis. Mr. Toporek does not own directly, or indirectly, any equity interest in Tera Joule, LLC, which owns 9.2% of HEL; however, as a result of his 100% ownership of Brookstone IAC, Inc., which is the manager of Tera Joule, LLC, he has dispositive power over the equity interests that Tera Joule owns in HEL.

In addition, one of the Company's directors, Matthew E. Lipman, serves as a director and currently acting as President of HEL. Mr. Lipman does not directly own any equity interest in Tera Joule, LLC, which owns 9.2% of HEL; however, as a result of his position as a director and officer of Brookstone IAC, Inc., which is the manager of Tera Joule, LLC, he has dispositive power over the equity interests that Tera Joule owns in HEL. As a result, the approximate dollar value of the amount of Mr. Toporek's and Mr. Lipman's interest in the Company's transactions with HEL for the year ended December 31, 2022 was $0 and $0.

John Belizaire and John Bottomley, who were elected to the Board upon the effective time of SCI's acquisition of Soluna Callisto, serve as directors of HEL. In addition, Mr. Belizaire is the beneficial owner of 1,317,567 shares of common stock of HEL and 102,380 Class Seed Preferred shares, which are convertible into 86,763 shares of common stock of HEL. These interests give Mr. Belizaire an ownership of 10.54% in HEL. Mr. Belizaire also owns an interest in HEL indirectly through his 5.0139% interest of Tera Joule, LLC's 965,945 Class Seed Preferred shares, which are convertible into 818,596 shares of common stock of HEL. Mr. Bottomley is the beneficial owner of 96,189, or approximately 0.72%, of the outstanding shares of common stock of HEL.

Finally, William P. Phelan, Chairman of the Board, served as an observer on HEL's board of directors on behalf of the Company through March 2021.

The Company's investment in HEL was initially carried at the cost of investment and was $750 thousand. Based on evaluation of projections for the Company's investment in HEL, the Company fully impaired the equity investment of $750 thousand as of December 31, 2022, writing it down to $0.

The Company owned approximately 1.79% of HEL, calculated on a converted fully-diluted basis, as of December 31, 2022. The Company may enter into additional transactions with HEL in the future.

**16.** **Discontinued Operations-Held for Sale**

As described in Note 1, the Company entered into a Stock Purchase Agreement with Purchaser, pursuant to which the Company sold on April 11, 2022 all of the issued and outstanding shares of capital stock of its wholly-owned subsidiary, MTI Instruments for approximately $9.0 million in cash, net of transaction costs. As of December 31, 2022, our Instrumentation business segment was classified as discontinued operations in our financial statements for all periods presented. The Company incurred approximately a $7.5 million pretax gain on sale of MTI Instruments for the year ended December 31, 2022. The Company's consolidated balance sheets and consolidated statements of operations report discontinued operations separate from continuing operations. The Company's consolidated statements of equity and statements of cash flows combine continuing and discontinued operations.

Set forth below are the results of the discontinued operations:

---

| | | |
|:---|:---|:---|
| (Dollars in thousands) | **2022** | **2021** |
| Product revenue | $1799 | $7147 |
| Cost of sales | 728 | 2358 |
| Research and development | 398 | 1525 |
| Selling, general, and administrative | 573 | 2198 |
| Other income, net | - | 21 |
| Income from discontinued operations before the gain on disposal and income taxes | 100 | 1087 |
| Pretax gain on sale of MTI Instruments | 7751 |  |
| Income tax benefit | 70 | 40 |
| Net income from discontinued operations | $7921 | $1127 |

---

The following table summarizes information about assets and liabilities from discontinued operations held for sale as of December 31, 2022 and December 31, 2021:

(Dollars in thousands)

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2022** | **December 31,**<br>**2021** |
| **Assets held for sale from discontinued operations:** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; - | $1189 |
| &nbsp;&nbsp;&nbsp;Inventories |  | 964 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets |  | 54 |
| Property, plant and equipment, net |  | 92 |
| Deferred tax assets, net |  | 101 |
| Operating lease right-of-use assets | - | 628 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Assets held for sale from discontinued operations** | $- | $3028 |
| **Liabilities held for sale from discontinued operations:** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $- | $136 |
| &nbsp;&nbsp;&nbsp;Accrued liabilities |  | 479 |
| &nbsp;&nbsp;&nbsp;Operating lease liability | - | 628 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities held for sale from discontinued operations** | $- | $1243 |

---

**17. MTI Instruments Sale**

As described in Note 1, the Company entered into a Stock Purchase Agreement with Purchaser, pursuant to which the Company sold on April 11, 2022 all of the issued and outstanding shares of capital stock of our wholly-owned subsidiary, MTI Instruments for an all-cash purchase price of $10.75 million, subject to working capital and certain other adjustments as set forth in the Stock Purchase Agreement. The purchase price did not include specified debt of MTI Instruments, which is the responsibility of the Company. This debt was transferred to the Purchaser at the date of Sale and is included in the closing balance sheet as shown below, which resulted in a reduction in the consideration payable to the Company.

The following table presents the gain associated with the Sale.

(Dollars in thousands)

---

| | |
|:---|:---|
|  | **As of April 11,**<br>**2022** |
| Consideration received | $10750 |
| &nbsp;&nbsp;&nbsp;Plus: closing cash | 1 |
| &nbsp;&nbsp;&nbsp;Less: transaction costs | (908) |
| &nbsp;&nbsp;&nbsp;Less: closing indebtedness | (483) |
| &nbsp;&nbsp;&nbsp;Plus: new working capital adjustments | 19 |
| Adjusted consideration received | 9379 |
| Cash | 1 |
| Accounts receivable, net | 1119 |
| Inventories | 888 |
| Prepaid expense and other current assets | 42 |
| Operating lease right-of-use assets | 579 |
| Deferred tax assets | 171 |
| Property, plant and equipment, net | 76 |
| &nbsp;&nbsp;&nbsp;**Total assets** | 2876 |
| Accounts payable | 122 |
| Accrued liabilities | 547 |
| Operating lease liability | 579 |
| &nbsp;&nbsp;&nbsp;**Total liabilities** | 1248 |
| &nbsp;&nbsp;&nbsp;**Net assets transferred** | 1628 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Gain on sale** | $7751 |

---

**18. VARIABLE INTEREST ENTITY**

On January 26, 2022, DVSL was created in order to construct, own, operate and maintain variable data centers in order to support the mining of cryptocurrency assets, batch processing and other non-crypto related activities (collectively, the "Project"). On May 3, 2022, SCI entered into a Bilateral Master Contribution Agreement (the "Bilateral Contribution Agreement") with Spring Lane Capital, pursuant to which Spring Lane agreed, pursuant to the terms and conditions of such agreement, to make one or more capital contributions to, and in exchange for equity in, SCI or one of its subsidiaries up to an aggregate amount of $35 million to fund certain projects to develop green data centers co-located with renewable energy assets (the "Spring Lane Commitment"). We anticipate that these capital contributions, once deployed into the projects, will help develop up to three behind-the-meter (BTM) projects designed to convert wasted renewable energy into clean computing services such as Bitcoin mining and artificial intelligence. The Bilateral Contribution Agreement outlines the framework for the Spring Lane Commitment; however, neither we nor Spring Lane are obligated to complete any projects under such agreement and any actual capital contributions are subject to various conditions precedent, including the receipt of requisite lender and other consents, acceptance by Spring Lane of specific projects and negotiations of agreements regarding those projects, including milestones and structure. In partial consideration of the amendment to the October Secured Notes discussed above, the investors agreed to release certain collateral covered by their security agreement to permit the Company to proceed forward with the initial phase of Project Dorothy, which we expect to be partially funded by Spring Lane, which the Company expects to complete in the near future.

On August 5, 2022, the Company entered into a Contribution Agreement (the "Dorothy Contribution Agreement") with Spring Lane, Soluna DV Devco, LLC ("Devco"), an indirect wholly-owned subsidiary of SCI, and DVSL an entity formed in order to further the Company's development for the first 25 MW of Project Dorothy, (each, a "Party" and, together, the "Parties"). Pursuant to the Dorothy Contribution Agreement, the Company committed to a capital contribution of up to approximately $26.3 million to DVSL (the "Company Commitment"), and on August 5, 2022, the Company was deemed to have contributed approximately $8.1 million, through payment of capital expenditures and development costs made on behalf of DVSL by the Company prior to August 5, 2022. Further under the Agreement, Spring Lane committed to a capital contribution of up to $12.5 million to DVSL (the "Spring Lane Dorothy Commitment"), and as of December 31, 2022, Spring Lane contributed approximately $4.8 million. Under the Dorothy Contribution Agreement, the Company and Spring Lane have committed to make subsequent contributions, up to their respective Company Commitment and Spring Lane Dorothy Commitment amounts, on a pro rata basis, upon receipt of a contribution request from DVSL, as set forth in the Dorothy Contribution Agreement and subject to the satisfaction of certain conditions described therein. The proceeds of any subsequent commitments will be applied to pay project costs in accordance with the project budget.

In exchange for their contributions, the Company and Spring Lane were issued 67.8% and 32.2% of the Class B Membership Interests in DVSL, respectively, and were admitted as Class B members of DVSL. Further pursuant to the Agreement, DVSL issued 100% of its Class A Membership Interests to Devco. The Dorothy Contribution Agreement contains customary indemnification provisions, liquidation provisions and governance provisions with respect to DVSL. The Parties also entered into an Amended and Restated Limited Liability Company Agreement of DVSL providing for the governance of DVSL.

Soluna evaluated this legal entity under *ASC 810, Consolidations* and based on the following factors, determined that DVSL is a variable interest entity that should be consolidated into Soluna, with a non-controlling interest recorded to account for Spring Lane's equity ownership of the Company. Soluna has a variable interest in DVSL. The entity was designed by Soluna to create an entity for outside investors to invest in specific projects. The creation of this entity resulted in Soluna, through its equity interest in DVSL, absorbing operational risk that the entity was created to create and distribute, resulting in Soluna having a variable interest in DVSL.

DVSL is a variable interest entity of Soluna due to DVSL being structured with non-substantive voting rights. This is due to two factors being met as outlined in *ASC 810-10-15-14* that require the Variable Interest Entity model to be followed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. The
 voting rights of Soluna are not proportional to their obligation to absorb the expected losses of the legal entity. Soluna gave Spring
 Lane veto rights over significant decisions, which results in Soluna having fewer voting rights than their obligation to absorb the
 expected losses of the legal entity.

b. Substantially
 all of DVSL's activities are conducted on behalf of Soluna, who has disproportionally fewer voting rights.

Also, Soluna is the primary beneficiary due to having the power to direct the activities of DVSL that most significantly impact the performance of the Company due to its role as the manager handling the day-to-day activities of DVSL as well as majority ownership of Class B Units and has the obligation to absorb losses or gains of DVSL that could be significant to Soluna.

Accordingly, the accounts of DVSL are consolidated in the accompanying unaudited condensed financial statements.

The carrying amount of the VIE's assets and liabilities was as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2022** | **December 31,<br> 2021** |
| Current assets: |  |  |
| Cash and cash equivalents | $15 | $&nbsp;&nbsp;&nbsp;&nbsp; - |
| Other receivable-current | 247 | - |
| Total current assets | 262 |  |
| Property, plant, and equipment | 13673 | - |
| Total assets | $13935 | $- |
| Current liabilities: |  |  |
| Due from – intercompany | $241 | $- |
| Total current liabilities | 241 | - |
| Total liabilities | $241 | $- |

---

The summarized operating results of the VIE's are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the year ended** | **For the year ended** |
|  | **December 31,<br>** <br>**2022** | **December 31,<br>** <br>**2021** |
| Cost of Sales | $55 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; - |
| General and administrative expense | 1127 | - |
| Net loss | $1182 | $- |

---

Subsequent to year-end, based on a Purchase and Sales agreement defined in Note 20, and for the sum of approximately $7.5 million, the Company's ownership in DVSL was reduced from 67.8% to 15%; see Footnote 20 for further details.

**19.** **Segment Information** 

The Company applies ASC 280, *Segment Reporting*, in determining its reportable segments. As of December 31, 2022, the Company had two reportable segments in Continuing Operations: Cryptocurrency Mining and Data Center Hosting. The Company notes that previously there was an additional segment: Test and Measurement Instrumentation, however as discussed in Notes 1, 16, and 17, the Company sold MTI Instruments in April 2022, and therefore classified this segment as discontinued operations. The guidance requires that segment disclosures present the measure(s) used by the Chief Operating Decision Maker ("CODM") to decide how to allocate resources and for purposes of assessing such segments' performance. The Company's CODM is comprised of several members of its executive management team who use revenue and cost of revenues of both reporting segments to assess the performance of the business of our reportable operating segments.

No operating segments have been aggregated to form the reportable segments. The Company does not allocate all assets to the reporting segments as these are managed on an entity-wide basis. Therefore, the Company does not separately disclose the total assets of its reportable operating segments.

The Cryptocurrency Mining segment generates revenue from the cryptocurrency the Company earns through its mining activities. The Data Center Hosting segment generated revenue from contracts for the provision/consumption of electricity and operation of the data center from the Company's high performance computing facility that was located in Calvert City, Kentucky, known as Project Marie. As of February 28, 2023, this facility had been closed.

For the year ended December 31, 2022 and 2021, approximately 5% and 34% of the Company's cryptocurrency mining revenue was generated from Project Edith (data center located in Wenatchee, Washington), 41% and 41% from Project Marie, and 54% and 25% from Project Sophie (data center located in Murray, Kentucky), respectively. 100% of the Company's data center hosting revenue was generated from Project Marie from hosting with customers for the years ended December 31, 2022 and 2021.

The Company evaluates performance based on profit or loss from operations before income taxes, accounting changes, items management does not deem relevant to segment performance, and interest income and expense. Inter-segment sales and expenses are not significant. Non-cash items of depreciation and amortization are included within both costs of sales and selling, general and administrative expenses.

The following table details revenue and cost of revenues for the Company's reportable segments for years ended December 31, 2022 and 2021, and reconciles to net loss on the consolidated statements of operations:

---

| | | |
|:---|:---|:---|
| (Dollars in thousands) | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2022** | **2021** |
| **Reportable segment revenue:** |  |  |
| Cryptocurrency mining revenue | $24409 | $10932 |
| Data hosting revenue | 4138 | 3413 |
| Total segment and consolidated revenue | 28547 | 14345 |
| **Reportable segment cost of revenue:** |  |  |
| Cost of cryptocurrency mining revenue, inclusive of depreciation | 32989 | 5626 |
| Cost of data hosting revenue | 3517 | 2444 |
| **Total segment and consolidated cost of revenues** | 36506 | 8070 |
| **Reconciling items:** |  |  |
| General and administrative expenses | 28709 | 10751 |
| Impairment on fixed assets | 47372 |  |
| Impairment on equity investment | 750 |  |
| Interest expense | 8375 | 1879 |
| Loss on debt extinguishment and revaluation | 11130 |  |
| Loss on sale of fixed assets | 4089 |  |
| Other income, net | (22) | (11) |
| Income tax (benefit) expense from continuing operations | (1346) | 44 |
| Net loss from continuing operations | (107016) | (6388) |
| &nbsp;&nbsp;&nbsp;Income before income tax from discontinued operations (including gain on sale of MTI Instruments of $$7,751 for the year ended December 31, 2022) | 7921 | 1087 |
| &nbsp;&nbsp;&nbsp;Income tax benefit from discontinued operations | - | 40 |
| Net income from discontinued operations | 7921 | 1127 |
| Net loss | (99095) | (5261) |
| (Less) Net loss attributable to non-controlling interest | 380 | - |
| Net loss attributable to Soluna Holdings, Inc. | $(98715) | $(5261) |
| Capital expenditures | 63684 | 45792 |
| Depreciation and amortization | 28214 | 3703 |

---

**20. Subsequent Events**

**<u>NYDIG Notice and Repossession of Collateralized Assets</u>**

As previously disclosed in Footnotes 9 and 14, on December 20, 2022, Soluna MC Borrowing 2021-1 LLC ("Borrower"), an indirect wholly owned subsidiary of Soluna Holdings, Inc. (the "Company"), received a Notice of Acceleration and Repossession (the "NYDIG Notice") from NYDIG ABL LLC ("NYDIG") with respect to the Master Equipment Finance Agreement, dated as of December 30, 2021 (the "MEFA"), by and between Borrower and NYDIG. The assets which secure the MEFA represent substantially all of the Company's mining assets at the site and certain of the operating assets of Project Marie, a 20 MW facility located in Kentucky. The obligations of Borrower under the MEFA and reflected in the NYDIG Notice are ring-fenced to Borrower and its direct parent company, Soluna MC LLC. The Company is not a party to any guaranty, collateral agreement or other support agreement with or for the benefit of NYDIG. The approximate aggregate principal and interest outstanding under the MEFA as of December 20, 2022, were $10.8 million. According to NYDIG's analysis of the value of the equipment, NYDIG asserts a recent market value of this equipment at approximately $3.8 million.

On February 23, 2023, NYDIG proceeded to foreclose on all of the collateral securing the MEFA, which resulted in a reportable disposition of all of the Company's mining assets at the site and certain of the operating assets of Project Marie. Additionally, NDYIG has stated its intention to pursue SCI, the parent company of Guarantor, under a piercing of the corporate veil claim relating to Defendants' debts and liabilities under the loan documents. SCI denies any such liability and has filed a complaint for a declaratory judgment against NYDIG in the Eighth Judicial District Court in Clark County, Nevada on March 16, 2023 seeking a declaratory judgment as to such matter. In a related development, also on February 23, 2023, the Borrower received a notice of termination of the Management and Hosting Services Agreement with CC Metals and Alloys, LLC. As a result of this action and certain other characteristics of the facility, the Company elected to shut down the Marie facility. The Company believes it will maximize its profits and return on assets by concentrating its personnel and capital on its Dorothy Facility.

With the notice of termination of the Management and Hosting Services from CCMA, the Company notes that this event triggered the impairment of the remaining fixed assets at the Marie facility. Based on the closure of operations on Project Marie, the Company performed an impairment analysis and determined that approximately $2.4 million of equipment and leasehold approvements associated with Project Marie that were not attached with the repossession of NYDIG collateralized assets were impaired as of year-end.

**<u>Promissory Notes</u>**

The Company has issued six promissory notes to certain holders totaling an aggregate principal balance of $900 thousand in which were issued in $300 thousand increments on January 13, 2023, February 3, 2023, and February 10, 2023. Each of the promissory notes accrue at an interest rate of 15% per annum, and each note matures within nine months subsequent its issuance. On March 24, 2023, the Company issued to the holders of the promissory notes on January 13, 2023, 1,337,916 shares of common stock in satisfaction of the repayment of $300 thousand in principal plus accrued and unpaid interest and other charges thereon, at the same price per share as the agreed upon share price conversion rate noted in relation to the December 5, 2022 SPA amendment on February 9, 2023, and approved during the Special Shareholders Meeting on March 10, 2023.

**<u>Project Dorothy Definitive Agreements</u>**

On March 2, 2023, Soluna DV Services, LLC, a Nevada limited liability company ("<u>ServeCo</u>") and an indirect wholly-owned subsidiary of Soluna Holdings, Inc., a Nevada corporation (the "<u>Company</u>"), entered into a series of agreements with (a) Briscoe Wind Farm, LLC, a Delaware limited liability company ("<u>Briscoe</u>"), (b) Golden Spread Electric Cooperative, Inc., a Texas cooperative corporation ("<u>GSEC</u>"), and (c) Lighthouse Electric Cooperative, Inc., a Texas cooperative corporation ("<u>LHEC</u>"). All the agreements were effective as of February 24, 2023 (the "<u>Effective Date</u>"). The Company has been developing a modular data center in phases (the "<u>Dorothy Facility</u>"). The two phases of the Dorothy Facility will have a peak demand of 50 megawatts, and if, upon mutual agreement, all four phases are completed, the data center will have an estimated peak demand of 150 megawatts. The Dorothy Facility will be located next to, and supplied energy from, Briscoe's 150-megawatt wind farm located at or near Briscoe and Floyd Counties, Texas (the "<u>Briscoe Wind Farm</u>"). Under the agreements, LHEC and GSEC will supply the Dorothy Facility with energy from the Briscoe Wind Farm and the Electric Reliability Council of Texas ("<u>ERCOT</u>") market.

ServeCo and LHEC entered into an Agreement for Electric Service to Soluna DV Services, LLC (the "<u>Retail Agreement</u>") for resale of energy supplied from the Briscoe Wind Farm and the ERCOT market delivered by GSEC for service to the energy load of the Dorothy Facility. As noted above, GSEC has by separate agreement arranged to purchase power at wholesale from Briscoe or to deliver and purchase power from the ERCOT market to serve LHEC with electric power and energy for resale to ServeCo for service to the Dorothy Facility. The initial term of the Retail Agreement is five years, with up to five extension terms of one year each unless terminated by LHEC or ServeCo.

ServeCo and Briscoe also entered into a Cooperation Agreement (the "<u>Cooperation Agreement</u>"), pursuant to which Briscoe and ServeCo agreed to certain rights, obligations, and restrictions with respect to the real property of the Dorothy Facility and the construction, interconnection, permitting, operation, maintenance, removal, and decommissioning of the Dorothy Facility and applicable credit support. Soluna DV ComputeCo, LLC, a Delaware limited liability company and an indirect wholly-owned subsidiary of the Company and Soluna DVSL ComputeCo, LLC, a Delaware limited liability company and an indirect wholly-owned subsidiary of the Company became parties to the Cooperation Agreement by each entering into a Joinder Agreement on the Effective Date. Unless terminated sooner in accordance with its terms, the term of the Cooperation Agreement is from the Effective Date until the expiration or termination of the Power Purchase Agreement, by and between Briscoe and GSEC, dated as of the Effective Date (the "<u>PPA</u>").

ServeCo, Briscoe, LHEC, and GSEC also entered into a Performance and Net Energy Security Agreement (the "<u>PSA</u>"), pursuant to which ServeCo will provide certain credit support to LHEC in connection with its obligations under the Retail Agreement and the other transaction agreements. The PSA is effective on the Effective Date and will remain in effect for 18 months following the later of the termination of the Retail Agreement or the termination of the PPA.

On the Effective Date, ServeCo and Alice Fay Grabbe ("<u>Owner</u>") entered into a Lease Agreement (the "<u>Lease</u>") to lease certain real property located in Briscoe County, Texas for the Dorothy Facility. Unless terminated sooner in accordance with its terms, the initial term of the Lease is five years. The initial term of the Lease will automatically extend for five additional one-year periods, unless terminated by ServeCo or Owner.

**<u>Spring Lane Contribution and Change in Ownership in Soluna DVSL ComputeCo.</u>**

On March 10, 2023, the Company along with Soluna DV Devco, LLC, a Nevada limited liability company ("<u>Devco</u>"), and Soluna DVSL ComputeCo, LLC, a Delaware limited liability company (the "<u>Project Company</u>") entered into a Purchase and Sale Agreement (the "<u>Purchase and Sale Agreement</u>") with Soluna SLC Fund I Projects Holdco, LLC, a Delaware limited liability company ("<u>Spring Lane</u>") that is wholly owned indirectly by Spring Lane Management LLC. The Project Company is constructing a modular data center with a peak demand of 25 megawatts (the "<u>Dorothy Phase 1A Facility</u>").

Under a series of transactions in February 2023 and March 2023, culminating in the March 10, 2023 Purchase and Sale Agreement, the Company sold to Spring Lane certain Class B Membership Interests for a purchase price of $7,500,000 (the "<u>Sale</u>"). After giving effect to the Sale, the Company owned 6,790,537 Class B Membership Interests (constituting 14.6% of the Class B Membership Interests) and Spring Lane owns 39,791,988 Class B Membership Interests (constituting 85.4% of the Class B Membership Interests). The cash portion of the purchase price paid by Spring Lane to the Company was $5,770,065, which represented the purchase price of $7,500,000 less the Company's pro rata share of certain contributions funded entirely by Spring Lane in the earlier portion of this series of transactions occurring during February 2023 and March 2023. As a further part of these transactions, the parties agreed that from Jan. 1, 2023 onwards, Soluna would bear only 14.6% of the costs relating to the construction and operation of the Dorothy Phase 1A Facility, compared to its 67.8% share until that time, including during the calendar year 2022. After Spring Lane Capital realizes an 18% Internal Rate of Return hurdle on its investments, the Company retains the right to 50% of the profits on Soluna DVSL ComputeCo. In connection with the Spring Lane transactions and agreements, Soluna DV Services, LLC. will be providing the operations and maintenance services to Soluna DVSL ComputeCo, LLC. Soluna DV Services, LLC expects to receive a margin of 20% for services rendered.

Concurrently with the Sale, the Company, Spring Lane, Devco and the Project Company entered into (a) the Fourth Amended and Restated Limited Liability Company Agreement of the Project Company, dated as of March 10, 2023 (the "<u>Fourth A&R LLCA</u>"), an amendment and restatement of the Third Amended and Restated Limited Liability Company Agreement of the Project Company dated as of March 3, 2023, and (b) the Amended and Restated Contribution Agreement, dated as of March 10, 2023 (the "<u>A&R Contribution Agreement</u>"), an amendment and restatement of the Contribution Agreement dated as of August 5, 2022. The Fourth A&R LLCA provides for certain updates in respect of Spring Lane's majority ownership. The A&R Contribution Agreement reflects updated pro rata member funding percentages as a result of the Sale as well as updated contribution caps for each of the Company and Spring Lane.

## Exhibit 10.64

**Exhibit 10.64**

**PURCHASE AND SALE AGREEMENT**

**dated as of March 10, 2023**

**among**

**SOLUNA HOLDINGS, INC.<br> as Seller**

**and**

**SOLUNA SLC FUND I PROJECTS HOLDCO, LLC<br> as Purchaser**

**and**

**for purposes of Section 3.3 only**

**SOLUNA DV DEVCO, LLC**

and

**SOLUNA DVSL COMPUTECO, LLC**

Purchase of Membership Interests<br> of Soluna DVSL ComputeCo, LLC

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
| ARTICLE I DEFINED TERMS | ARTICLE I DEFINED TERMS | 3.0 |
| &nbsp;&nbsp;&nbsp;**Section 1.1** | **Definitions** | 3.0 |
| &nbsp;&nbsp;&nbsp;**Section 1.2** | **Terms Generally** | 5.0 |
| ARTICLE II PURCHASE AND SALE | ARTICLE II PURCHASE AND SALE | 6.0 |
| &nbsp;&nbsp;&nbsp;**Section 2.1** | **Purchase and Sale** | 6.0 |
| &nbsp;&nbsp;&nbsp;**Section 2.2** | **Purchase Price** | 6.0 |
| &nbsp;&nbsp;&nbsp;**Section 2.3** | **Conditions Precedent** | 6.0 |
| ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER, DEVCO AND DVSL | ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER, DEVCO AND DVSL | 7.0 |
| &nbsp;&nbsp;&nbsp;**Section 3.1** | **LLCA Reps** | 7.0 |
| &nbsp;&nbsp;&nbsp;**Section 3.2** | **Title to Interests** | 7.0 |
| &nbsp;&nbsp;&nbsp;**Section 3.3** | **Contribution Agreement** | 8.0 |
| &nbsp;&nbsp;&nbsp;**Section 3.4** | **Certain Tax Matters** | 8.0 |
| ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER | ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER | 8.0 |
| ARTICLE V INDEMNIFICATION | ARTICLE V INDEMNIFICATION | 8.0 |
| &nbsp;&nbsp;&nbsp;**Section 5.1** | **Indemnification** | 8.0 |
| &nbsp;&nbsp;&nbsp;**Section 5.2** | **Tax Treatment of Indemnification Payments** | 8.0 |
| &nbsp;&nbsp;&nbsp;**Section 5.3** | **Effect of Investigation** | 8.0 |
| ARTICLE VI MISCELLANEOUS | ARTICLE VI MISCELLANEOUS | 9.0 |
| &nbsp;&nbsp;&nbsp;**Section 6.1** | **Notices** | 9.0 |
| &nbsp;&nbsp;&nbsp;**Section 6.2** | **Amendments** | 9.0 |
| &nbsp;&nbsp;&nbsp;**Section 6.3** | **No Waiver by Course of Conduct; Cumulative Remedies** | 9.0 |
| &nbsp;&nbsp;&nbsp;**Section 6.4** | **Successors and Assigns** | 9.0 |
| &nbsp;&nbsp;&nbsp;**Section 6.5** | **Counterparts** | 9.0 |
| &nbsp;&nbsp;&nbsp;**Section 6.6** | **Entire Agreement** | 9.0 |
| &nbsp;&nbsp;&nbsp;**Section 6.7** | **Severability** | 9.0 |
| &nbsp;&nbsp;&nbsp;**Section 6.8** | **Governing Law** | 10.0 |
| &nbsp;&nbsp;&nbsp;**Section 6.9** | **WAIVER OF JURY TRIAL** | 10.0 |
| &nbsp;&nbsp;&nbsp;**Section 6.10** | **Taxes** | 10.0 |
| &nbsp;&nbsp;&nbsp;**Section 6.11** | **Fees and Expenses** | 10.0 |
| &nbsp;&nbsp;&nbsp;**Section 6.12** | **Phase 1b Purchase Option** | 10.0 |

---

i

**PURCHASE AND SALE AGREEMENT**

This **PURCHASE AND SALE AGREEMENT**, dated as of March 10, 2023, is entered into between **SOLUNA HOLDINGS, INC.**, a Nevada corporation (the "**Seller**"), and **SOLUNA SLC FUND I PROJECTS HOLDCO, LLC**, a Delaware limited liability company (the "**Purchaser**"), and for purposes of Section 3.3 only, Soluna DV Devco, LLC ("**Devco**") and Soluna DVSL ComputeCo, LLC ("**DVSL**").

**PRELIMINARY STATEMENTS**

**WHEREAS**, the Seller and the Purchaser, together with Soluna DV Devco, LLC, a Nevada limited liability company, are party to that certain Third Amended and Restated Limited Liability Company Agreement of Soluna DVSL ComputeCo, LLC, a Delaware limited liability company, dated as of March 3, 2023 (as amended, amended and restated, supplemented and otherwise modified from time to time, the "**LLCA**");

**WHEREAS**, as of February 9, 2023, pursuant to the LLCA, the Seller owned 26,330,434 Class B Membership Interests (as defined in the LLCA), constituting 67.8% of the Class B Membership Interests, and the Purchaser owned 12,500,000 Class B Membership Interests, constituting 32.2% of the Class B Membership Interests;

**WHEREAS**, in early 2023, the Parties desired that the Seller sell, and the Purchaser purchase for $7,500,000, membership interests in DVSL such that after giving effect to such transaction, Seller would own 14.6% of the Class B Membership Interests and Purchaser would own 85.4% of the Class B Membership Interests (the "**Proposed SLC Purchase**");

**WHEREAS**, prior to the Parties consummating the Proposed SLC Purchase, certain project costs of DVSL became due and payable;

**WHEREAS**, the Parties have agreed in the Contribution Agreement that despite the Proposed SLC Purchase not having been consummated on January 1, 2023, all expenses of DVSL payable from and after January 1, 2023 that are to be funded by capital contributions of the members of DVSL will be funded by Seller and Purchaser in proportion to their ownership in DVSL as if the Proposed SLC Purchase had been consummated;

**WHEREAS**, Soluna DV ComputeCo, LLC, a Delaware limited liability company ("**Soluna DV**") is required to fund its share of certain costs in respect of shared facilities that Soluna DV co-owns with DVSL;

**WHEREAS**, on February 10, 2023, Purchaser contributed $1,186,676 in exchange for 3,554,068 additional Class B Membership Interests in DVSL (the "**First Advance**"), which amount (a) was used by DVSL to fund certain DVSL project costs that would otherwise have been funded by use of capital contributions from each of Seller and Purchaser in proportion to their ownership had the Proposed SLC Purchase been consummated on January 1, 2023 (the portion of such capital contributions needed to fund such costs that would have been allocated to Seller had the Proposed SLC Purchase been consummated on January 1, 2023, the "**First Advance Seller Obligations**"), and (b) includes (i) an interest-free intercompany loan made by DVSL to Soluna DV to fund certain project costs of Soluna DV (which is wholly owned by Seller), which loan Seller wishes to repay in full on behalf of Soluna DV (the "**First Advance Loan Repayment**"), and (ii) certain shared facilities costs required to be reimbursed by Soluna DV (the "**First Advance Reimbursable Costs**"). The sum of the First Advance Seller Obligations, the First Advance Loan Repayment and First Advance Reimbursable Costs is $859,500 (the "**First Advance Offset**");

**WHEREAS**, on March 3, 2023, Purchaser contributed $1,500,000 in exchange for 4,126,023 additional Class B Membership Interests in DVSL (the "**Second Advance**"), which amount (a) was used by DVSL to fund certain DVSL project costs that would otherwise have been funded by use of capital contributions from each of Seller and Purchaser in proportion to their ownership had the Proposed SLC Purchase been consummated on January 1, 2023 (the portion of such capital contributions needed to fund such costs that would have been allocated to Seller had the Proposed SLC Purchase been consummated on January 1, 2023, the "**Second Advance Seller Obligations**"), and (b) includes an interest-free intercompany loan made by DVSL to Soluna DV to fund certain project costs of Soluna DV, which Seller wishes to repay in full on behalf of Soluna DV (the "**Second Advance Loan Repayment**"). The sum of the Second Advance Seller Obligations and Second Advance Loan Repayment is $870,435 (the "**Second Advance Offset**");

**WHEREAS**, after giving effect to the First Advance and the Second Advance, the Seller owns 26,330,434 Class B Membership Interests, constituting 56.61% of the Class B Membership Interests, and the Purchaser owns 20,180,091 Class B Membership Interests, constituting 43.39% of the Class B Membership Interests;

**WHEREAS**, the Parties desire to consummate the Proposed SLC Purchase;

**WHEREAS**, in respect of the Proposed SLC Purchase, the Parties desire that the First Advance Offset and Second Advance Offset be offset against the $7,500,000 purchase price;

**WHEREAS**, the Seller therefore desires to sell all of its right, title and interest in, to and under 19,539,897 Class B Membership Interests (constituting 42.0% of the total Class B Membership Interests) (the "**Subject Membership Interests**"), and the Purchaser desires to purchase the Subject Membership Interests from the Seller, on the terms and conditions set forth in this Agreement, such that immediately after giving effect to such purchase, Seller shall own 6,790,537 Class B Membership Interests (constituting 14.6% of the Class B Membership Interests) and Purchaser shall own 39,791,988 Class B Membership Interests (constituting 85.4% of the Class B Membership Interests);

**NOW, THEREFORE**, in consideration of the mutual covenants, terms and conditions contained in this Agreement, the parties agree as follows:

**ARTICLE I DEFINED TERMS**

**Section 1.1 Definitions**. The following terms used in this Agreement shall have the meanings set forth below. Terms used but not defined in this Agreement shall have the meanings given in the LLCA.

"**Agreement**" means this Purchase and Sale Agreement.

**"Business Day"** means any day other than a Saturday, a Sunday or any day that commercial banks in New York, New York are not authorized or required to be closed.

"**CarVal**" means AB Carval Investors, LP, and its affiliates, including without limitation, CVI CD Wind Loan Holdings, LLC.

"**Cash Portion of the Purchase Price**" means (a) the Purchase Price of $7,500,000, less (b) the sum of (i) the First Advance Offset of $859,500, and (ii) the Second Advance Offset of $870,435. The Cash Portion of the Purchase Price is equal to $5,770,065.

"**Contribution Agreement**" means that certain Contribution Agreement, dated as of August 5, 2022, by and among the Seller, the Purchaser, Devco and DVSL.

"**Cooperation Agreement**" means the Cooperation Agreement to be entered into by Briscoe Wind Farm, LLC, a Delaware limited liability company, Soluna DVSL ComputeCo, LLC, a Delaware limited liability company, Soluna DV ComputeCo, LLC, a Delaware limited liability company and Soluna DV Services, LLC, a Nevada limited liability company.

"**DVSL**" has the meaning given in the Preamble.

"**Financing Deadline**" has the meaning given in <u>Section 6.12</u>.

"**First Advance**" has the meaning given in the Recitals.

"**First Advance Loan Repayment**" has the meaning given in the Recitals.

"**First Advance Offset**" has the meaning given in the Recitals.

"**First Advance Reimbursable Costs**" has the meaning given in the Recitals.

"**First Advance Seller Obligations**" has the meaning given in the Recitals.

"**Lien**" means any lien (statutory or otherwise), pledge, mortgage, deed of trust, security interest, charge, option, right of first refusal, right of first offer, easement, covenant, condition, restriction, declaration, servitude, transfer restriction, encumbrance, claims or other rights or interests of any kind whatsoever.

"**Noteholders**" means each purchaser identified on the signature pages to the Note Purchase Agreement, as amended, supplemented or otherwise modified from time to time, and the secured convertible note issued thereunder.

"**Note Purchase Agreement**" means the Securities Purchase Agreement dated as of October 20, 2021 between Seller and the Noteholders.

"**Permitted Equity Encumbrances**" means (a) those restrictions on transfer imposed by applicable securities laws, and (b) restrictions imposed on transfers set forth in the LLCA.

"**Person**" means an individual, partnership, corporation, limited liability company, joint stock company, trust (including a business or statutory trust), unincorporated association, sole proprietorship, joint venture, government (or any agency or political subdivision thereof) or other entity.

"**Phase 1b Project**" has the meaning given in <u>Section 6.12</u>.

"**Phase 1b Purchase Option**" has the meaning given in <u>Section 6.12</u>.

"**Project**" has the meaning given in the LLCA.

"**Project Pro Forma**" has the meaning set forth in the Contribution Agreement.

"**Project Marie**" means the 25 MW data center in Kentucky owned by Seller.

"**Proposed SLC Purchase**" has the meaning given in the Recitals.

"**Purchase Price**" has the meaning specified in <u>Section 2.2</u>.

"**Purchaser**" has the meaning specified in the preamble to this Agreement.

"**Second Advance**" has the meaning given in the Recitals.

"**Second Advance Loan Repayment**" has the meaning given in the Recitals.

"**Second Advance Offset**" has the meaning given in the Recitals.

"**Second Advance Seller Obligations**" has the meaning given in the Recitals.

"**Seller**" has the meaning specified in the preamble to this Agreement.

"**Soluna DV**" has the meaning given in the Recitals.

"**Subject Membership Interests**" has the meaning given in the Recitals.

"**Taxes**" means all forms of taxation or duties in the nature of a tax imposed by a taxing authority or other governmental authority, including taxes collected through withholding, together with any related interest, penalties or other additional amounts<u>.</u>

"**Transfer Taxes**" has the meaning specified in Section 6.10(b).

**Section 1.2 Terms Generally**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The definitions of terms in this Agreement shall apply equally to the singular and plural forms of the terms defined.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The words "include", "includes" and "including", when following any general statement, term or matter, shall be deemed to be followed by the phrase "without limitation".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The word "will" shall be construed to have the same meaning and effect as the word "shall".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (ii) any reference herein to any Person shall be construed to include such Person's successors and assigns (subject to any restrictions on such assignments set forth herein), (iii) the words "herein", "hereof", "hereto", "hereunder" and "this Agreement", and words of similar import shall be construed to refer to this Agreement in its entirety, including the exhibits and schedules hereto, and not to any particular provision hereof, (iv) all references herein to Articles, Sections, Schedules, Annexes and Exhibits shall be construed to refer to Articles and Sections of, and Schedules, Annexes and Exhibits to, this Agreement, and (v) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented and in effect from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) In computing periods of time from a specified date to a later specified date, the word "from" means "from and including", the words "to" and "until" each mean "to but excluding", and the word "through" means "to and including".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Each covenant in this Agreement shall be given independent effect, and the fact that any act or omission may be permitted by one covenant and prohibited or restricted by any other covenant (whether or not dealing with the same or similar events) shall not be construed as creating any ambiguity, conflict or other basis to consider any matter other than the express terms hereof in determining the meaning or construction of such covenants and the enforcement thereof in accordance with their respective terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) This Agreement is being entered into by and between competent and sophisticated parties who are experienced in business matters and represented by legal counsel and other advisors, and has been reviewed by the parties and their legal counsel and other advisors. Therefore, any ambiguous language in this Agreement will not be construed against any particular party as the drafter of the language.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Article and Section headings contained in this Agreement are included for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect.

**ARTICLE II PURCHASE AND SALE**

**Section 2.1 Purchase and Sale**. Upon the terms and subject to the conditions set forth in this Agreement (including, without limitation, the payment in full of the Purchase Price pursuant to and in accordance with <u>Section 2.2</u>), the Seller hereby irrevocably sells and assigns to the Purchaser, and the Purchaser hereby purchases and assumes from the Seller, as of the date hereof, all of Seller's right, title and interest in, to and under the Subject Membership Interests.

**Section 2.2 Purchase Price**. The purchase price for the Subject Membership Interests shall equal $7,500,000 (the "**Purchase Price**"). The Purchaser shall pay the Purchase Price to the Seller (except as otherwise set forth on <u>Exhibit A</u>) on the date hereof in cash, by wire transfer of immediately available funds to the accounts specified by the Seller in, and in accordance with, the wire instructions set forth on <u>Exhibit A</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The purchase price for the Subject Membership Interests shall equal $7,500,000 (the "**Purchase Price**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Purchaser shall pay the Cash Portion of the Purchase Price, which accounts for the First Advance Offset and Second Advance Offset, to the Seller (except as otherwise set forth on <u>Exhibit A</u>) on the date hereof in cash, by wire transfer of immediately available funds to the accounts specified by the Seller in, and in accordance with, the wire instructions set forth on <u>Exhibit A</u>.

**Section 2.3 Conditions Precedent**. The Purchaser shall pay the Purchase Price in full pursuant to and in accordance with <u>Section 2.2</u>; *provided, that,* the Purchaser shall have received the following, each of which shall be in form and substance satisfactory to the Purchaser, in its sole discretion, on or prior to the date hereof:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Effective as of the date hereof, the LLCA shall have been amended and restated in the form of the Fourth Amended and Restated Limited Liability Company Agreement, attached hereto as <u>Exhibit B</u> (the "**Restated LLCA**"), reflecting, among other things, the change in ownership percentages as a result of the sale of the Subject Membership Interests contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) An executed Second Addendum Amendment, in a form acceptable to Purchaser, by and among the Seller and the purchasers under the Note Purchase Agreement, a copy of which (including all exhibits and ancillary agreements) has been provided to Purchaser.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Executed letters of intent or term sheets between the Seller and hosting counterparties for 20 MW of the Project in accordance with the Project Pro Forma, copies of which (including all exhibits and ancillary agreements) have been provided to Purchaser.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) A fully executed Cooperation Agreement or written acknowledgement from CarVal that no material open issues remain with respect to the Cooperation Agreement, copies of which (including all exhibits and ancillary agreements) have been provided to Purchaser.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) A legal opinion from Nixon Peabody LLP in respect of the release of the Subject Membership Interests from collateral under the Note Purchase Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Reasonably satisfactory confirmation that all debt and other obligations incurred by a subsidiary of Seller with respect to Project Marie is non-recourse debt, which is solely the obligation of the sole project company that owns such project and neither Seller nor any of its Affiliates (other than such project company) is liable for, or has any other obligation related to, such debt or other obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) John Belizaire has been formally appointed as Chief Executive Officer of the Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) A fully executed amendment and/or restatement of the Contribution Agreement, in substantially the form attached hereto as <u>Exhibit C</u>.

**ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER, DEVCO AND DVSL**

To induce the Purchaser to enter into this Agreement and to purchase the Subject Membership Interests, the Seller hereby represents and warrants to the Purchaser the following:

**Section 3.1 LLCA Reps**. Each of the representations made by Seller pursuant to Section 3.9(c) of the LLCA is true and correct as of the date hereof, except to the extent that any such representations specifically refer to an earlier date, in which case such representations are true and correct as of such earlier date.

**Section 3.2 Title to Interests**. The Seller is the record and beneficial owner of the outstanding Subject Membership Interests, and has good and marketable title to the Subject Membership Interests, free and clear of all Liens other than Permitted Equity Encumbrances. The Seller has full right, power and authority to transfer and deliver to the Purchaser valid title to the Subject Membership Interests, free and clear of all Liens. Immediately following the Closing (as defined below), the Purchaser will be the record and beneficial owner of the Subject Membership Interests, and have good and marketable title to such Subject Membership Interests, free and clear of all Liens other than Permitted Equity Encumbrances. Except pursuant to this Agreement, there is no contractual obligation pursuant to which the Seller has, directly or indirectly, granted any option, warrant or other right to any person or entity to acquire any Subject Membership Interests or other equity interests in DVSL.

**Section 3.3 Contribution Agreement**. Each of the Seller, Devco and DVSL hereby represents and warrants to Purchaser that the representations and warranties set forth in Sections 6.1 through 6.11 of Article VI and Sections 7.1 through 7.21 of Article VII of the Contribution Agreement are true, complete and correct as of the date hereof. Seller hereby represents and warrants to Purchaser that the representations and warranties set forth in paragraphs (a) through (i) of Section 8.2 of the Contribution Agreement are true, complete and correct as of the date hereof.

**Section 3.4 Certain Tax Matters**. Seller agrees to request that DVSL make a valid election under Section 754 of the Code (and under applicable provisions of state and local law) in accordance with section 7.5(b)(iii) of the LLCA, and such election shall be effective for the taxable year of DVSL that includes the date of the closing of the transactions contemplated herein (the "**Closing**").

**ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER**

To induce the Seller to enter into this Agreement and sell the Subject Membership Interests, the Purchaser hereby represents and warrants that each of the representations made by the Purchaser pursuant to Section 3.9(c) of the LLCA is true and correct as of the date hereof, except to the extent that any such representations specifically refer to an earlier date, in which case such representations are true and correct as of such earlier date.

**ARTICLE V INDEMNIFICATION**

**Section 5.1 Indemnification**. Each party shall defend, indemnify and hold harmless the other party, its affiliates, directors, officers and employees from and against all reasonable and documented claims, judgments, damages, liabilities, settlements, losses, costs and expenses, including attorneys' fees and disbursements, arising from or relating to (a) any inaccuracy in or breach of any of the representations or warranties made by it under this Agreement, or (b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by it pursuant to this Agreement.

**Section 5.2 Tax Treatment of Indemnification Payments**. All indemnification payments made by Seller or Purchaser under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for tax purposes, unless otherwise required by law.

**Section 5.3 Effect of Investigation**. Each party's right to indemnification or other remedy based on the representations, warranties, covenants and agreements contained herein will not be affected by any investigation conducted by the same party with respect to, or any knowledge acquired by such party at any time, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant or agreement.

**ARTICLE VI MISCELLANEOUS**

**Section 6.1 Notices**. Section 11.1 of the LLCA is incorporated by reference.

**Section 6.2 Amendments**. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto.

**Section 6.3 No Waiver by Course of Conduct; Cumulative Remedies**. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof, and no single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

**Section 6.4 Successors and Assigns**. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.

**Section 6.5 Counterparts**. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Agreement by fax or other electronic transmission (i.e. a "pdf" or "tif" document) shall be effective as delivery of a manually executed counterpart of this Agreement.

**Section 6.6 Entire Agreement**. This Agreement together with the LLCA and Contribution Agreement represent the entire agreement of the parties and supersedes all prior agreements and understandings, oral or written, relating to the subject matter hereof.

**Section 6.7 Severability**. If any provision hereof is found by a court to be invalid or unenforceable, to the fullest extent permitted by applicable law, the parties agree that such invalidity or unenforceability will not impair the validity or enforceability of any other provision hereof.

**Section 6.8 Governing Law**. This Agreement and all matters arising out of or in connection herewith shall be governed by and construed in accordance with the laws of the State of Delaware, excluding any conflict of laws rule or principle that might refer the governance or construction of this Agreement to the law of another jurisdiction. Each party irrevocably submit to the non-exclusive jurisdiction of any state or federal court in the State of Delaware with respect to any action or proceeding arising out of or relating to any such Dispute. Each party irrevocably and unconditionally waives trial by jury in any action, suit or proceeding hereunder.

**Section 6.9 WAIVER OF JURY TRIAL**. EACH PARTY HERETO IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

**Section 6.10 Taxes**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Any and all payments by or on behalf of the Purchaser to the Seller hereunder will be made free and clear of and without deduction for any and all present or future Taxes, unless otherwise required by applicable law. Purchaser shall provide, to the extent feasible, Seller with written notice of any deduction and withholding requirement to which Seller is subject no fewer than fifteen (15) Business Days prior to the date of such payment. To the extent that amounts are so withheld by Purchaser, Purchaser shall remit such withheld amounts to the applicable governmental authority, provide proof of timely payment to the Seller and such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) All sales Taxes, use Taxes, transfer Taxes, filing fees and similar Taxes (excluding, for the avoidance of doubt, Taxes measured in whole or in part by income or gain and withholding Taxes subject to Section 6.10(a)), fees, charges and expenses ("**Transfer Taxes**") required to be paid in connection with the Transactions contemplated by this Agreement shall be borne and paid equally by the Purchaser and Seller. Each Party shall use reasonable best efforts to avail itself of any available exemptions from Transfer Taxes, and to cooperate with the other Party in providing any information and documentation that may be necessary to obtain such exemptions. The obligation to prepare and file any tax return relating to Transfer Taxes shall be borne by the Party who has that responsibility under applicable law, provided the other Parties shall provide reasonable assistance with respect thereto.

**Section 6.11 Fees and Expenses**. At the Closing, Seller shall reimburse Purchaser or pay directly the reasonable and documented third party and out-of-pocket fees and costs incurred by Purchaser and its Affiliates.

**Section 6.12 Phase 1b Purchase Option**. In the event that Seller has not executed, on or prior to the date that is 45 days after the date hereof (the "**Financing Deadline**"), an agreement between the Seller or its affiliate and a third-party for a credit facility, loan, or other financing transaction with a total commitment of $2,000,000 or more to be applied to project costs of the Project or the adjacent project owned by Soluna DV (the "**Phase 1b Project**"), and delivered copies of such financing documents (including all exhibits and ancillary agreements) to Purchaser, then Purchaser shall have the right (but not the obligation) to require Seller to sell 30% of its interests in Soluna DV to Purchaser in exchange for a $2,000,000 payment from Purchaser to Seller (the "**Phase 1b Purchase Option**") on substantially the same terms as Purchaser received in connection with their initial investment in DVSL. In the event that Purchaser elects to exercise the Phase 1b Purchase Option, Purchaser shall deliver, within 30 days after the Financing Deadline, written notice to Seller of its intent to exercise the Phase 1b Purchase Option, and the parties shall consummate the sale within 30 days after delivery of such written notice. Seller has provided a true and complete copy of the certificate of formation, operating agreement and any other governing documents of Soluna DV (collectively, the "**Soluna DV Documents**") to Purchaser prior to the date hereof, and hereby represents, warrants and certifies that such Soluna DV Documents are in full force and effect and have not been rescinded as of the date hereof, and agrees that such Soluna DV Documents will not be modified or amended without prior written notice to Purchaser.

*[Remainder of Page Intentionally Left Blank; Signature Pages Follow]*

IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly executed and delivered as of the date first above written.

---

| |
|:---|
| SOLUNA HOLDINGS, INC. |
| as Seller |
| By: |
| Name: |
| Title: |

---

*[signatures continued on following page]*

---

| |
|:---|
| **SOLUNA SLC FUND I PROJECTS HOLDCO, LLC**<br> as Purchaser |
| By: |
| Name: |
| Title: |

---

*[signatures continued on following page]*

---

| |
|:---|
| **SOLUNA DVSL COMPUTECO, LLC** |
| By: |
| Name: |
| Title: |
| **SOLUNA DV DEVCO, LLC** |
| By: |
| Name: |
| Title: |

---

**<u>EXHIBIT A</u>**

Funds Flow and Use of Proceeds

---

| | |
|:---|:---|
| **Transactions to Close** | |
| Purchase Price: | $7500000 |
| <u><u>Less</u> the following amounts deemed to have been paid by Purchaser:</u> |  |
| (i) Amount deemed to have been paid by Purchaser on March 3, 2023 on behalf of Seller for capital contribution into DVSL to pay for portion of the Dorothy 1A security deposit: | $(859500)<sup>1</sup> |
| (ii) Amount deemed to have been paid by Purchaser on February 10, 2023 on behalf of Seller for capital contribution into DVSL and expenses of Soluna DV: | $(870435)<sup>2</sup> |
| **Cash Portion of the Purchase Price, which shall be sent to Seller in accordance with the attached wire instructions (see attached):** | $**5770065** |

---

<sup>[1]</sup> This amount is calculated as Seller's 14.6% share of the capital contribution to DVSL needed for the Dorothy 1A security deposit in favor of the Briscoe Wind Farm, which amount is $750,000 multiplied times 14.6%, plus Seller's 100.0% share of its direct obligations for the Dorothy 1B security deposit, which amount is $750,000. The sum of these two amounts is $859,500.

<sup>[2]</sup> This amount is calculated as Seller's 67.8% share of the capital contribution to DVSL needed to fund certain 2022 Dorothy 1A project costs, plus Seller's 14.6% share of the capital contribution to DVSL needed to fund certain 2023 Dorothy 1A project costs, plus Seller's 100.0% share of its direct obligations for certain Dorothy 1B project costs. The sum of these three amounts is $870,435. Documentation regarding the determination of these amounts, including a summary of applicable invoices, has been provided by Seller to Purchaser.

## Exhibit 10.65

**Exhibit 10.65**

**FOURTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT**

**OF**

**Soluna DVSL ComputeCo, LLC**

**Dated as of March 10, 2023**

**<u>**TABLE OF CONTENTS**</u>**

---

| | | |
|:---|:---|:---|
| |  | Page |
| ARTICLE I | AGREEMENT | 1 |
| Section 1.1 | Definitions | 1 |
| Section 1.2 | Other Definitional Provisions | 13 |
| ARTICLE II | CONTINUATION; OFFICES; TERM | 13 |
| Section 2.1 | Formation of the Company | 13 |
| Section 2.2 | Name, Office and Registered Agent | 14 |
| Section 2.3 | Purpose; No Partnership Intended | 14 |
| Section 2.4 | Term | 14 |
| Section 2.5 | Organizational and Fictitious Name Filings; Preservation of Limited Liability | 14 |
| Section 2.6 | Separateness | 15 |
| ARTICLE III | RIGHTS AND OBLIGATIONS OF THE MEMBERS | 16 |
| Section 3.1 | Members; Membership Interests | 16 |
| Section 3.2 | Actions by the Members | 17 |
| Section 3.3 | Management Rights | 17 |
| Section 3.4 | Other Activities | 18 |
| Section 3.5 | Limitation of Liability of Members | 18 |
| Section 3.6 | Company Property | 19 |
| Section 3.7 | Retirement, Resignation, Expulsion, Incompetency, Bankruptcy or Dissolution of a Member | 19 |
| Section 3.8 | Withdrawal of Capital | 19 |
| Section 3.9 | Representations and Warranties | 19 |
| Section 3.10 | Affiliate Contracts | 22 |
| Section 3.11 | Fees and Expenses | 22 |
| ARTICLE IV | CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS | 22 |
| Section 4.1 | Capital Contributions | 22 |
| Section 4.2 | Capital Accounts | 22 |
| ARTICLE V | ALLOCATIONS | 24 |
| Section 5.1 | Allocations | 24 |
| Section 5.2 | Adjustments to Comply with Code | 24 |
| Section 5.3 | Special Allocations | 25 |
| Section 5.4 | Transfer or Change in Membership Interest | 25 |
| Section 5.5 | Tax Allocations | 25 |
| ARTICLE VI | DISTRIBUTIONS; PAYMENTS | 26 |
| Section 6.1 | Distributions | 26 |
| Section 6.2 | Tax Distributions | 27 |
| Section 6.3 | Withholding Taxes | 27 |
| Section 6.4 | Limitation on Distributions | 28 |

---

i

---

| | | |
|:---|:---|:---|
| Section 6.5 | No Return of Distributions | 28 |
| Section 6.6 | Calculation of Target Return | 28 |
| Section 6.7 | Use of Proceeds | 28 |
| ARTICLE VII | ACCOUNTING AND RECORDS | 29 |
| Section 7.1 | Reports; Budget | 29 |
| Section 7.2 | Books and Records and Inspection; Right to Audit and Contest | 30 |
| Section 7.3 | Bank Accounts, Notes and Drafts | 32 |
| Section 7.4 | Financial Statements and Other Reports | 32 |
| Section 7.5 | Partnership Status and Tax Elections | 33 |
| Section 7.6 | Company Tax Returns | 33 |
| Section 7.7 | Tax Matters | 34 |
| Section 7.8 | Cooperation | 35 |
| Section 7.9 | Fiscal Year | 35 |
| Section 7.10 | Member Tax Consistency | 35 |
| ARTICLE VIII | MANAGEMENT | 35 |
| Section 8.1 | Management of the Company | 35 |
| Section 8.2 | Removal of Manager/Changes in Voting | 37 |
| Section 8.3 | Debt | 37 |
| Section 8.4 | Major Decisions | 37 |
| Section 8.5 | Special Class B Members' Powers | 39 |
| Section 8.6 | Costs and Expenses; Compensation | 40 |
| Section 8.7 | Indemnification and Exculpation | 40 |
| Section 8.8 | Power of Attorney | 41 |
| ARTICLE IX | TRANSFERS | 41 |
| Section 9.1 | Prohibited Transfers | 41 |
| Section 9.2 | Conditions Applicable to All Transfers | 41 |
| Section 9.3 | Additional Requirements of Transfer | 42 |
| Section 9.4 | Transfer Expenses | 43 |
| Section 9.5 | Non-Compliant Transfer | 43 |
| Section 9.6 | Transferee Members | 43 |
| Section 9.7 | Tag-Along | 44 |
| Section 9.8 | Sale of Projects | 45 |
| Section 9.9 | Special Provisions Relating to Sales of the Company | 45 |
| ARTICLE X | DISSOLUTION AND WINDING-UP | 49 |
| Section 10.1 | Events of Dissolution | 49 |
| Section 10.2 | Distribution of Assets | 50 |
| Section 10.3 | In-Kind Distributions | 50 |
| Section 10.4 | Certificate of Cancellation | 51 |
| ARTICLE XI | MISCELLANEOUS | 51 |
| Section 11.1 | Notices | 51 |
| Section 11.2 | Amendment | 51 |
| Section 11.3 | Partition | 52 |

---

ii

---

| | | |
|:---|:---|:---|
| Section 11.4 | Waivers and Modifications | 52 |
| Section 11.5 | Severability | 52 |
| Section 11.6 | Successors; No Third-Party Beneficiaries | 52 |
| Section 11.7 | Entire Agreement | 52 |
| Section 11.8 | Governing Law | 52 |
| Section 11.9 | Further Assurances | 53 |
| Section 11.10 | Counterparts | 53 |
| Section 11.11 | Dispute Resolution | 53 |
| Section 11.12 | Confidentiality and Publicity | 54 |
| Section 11.13 | Joint Efforts | 54 |
| Section 11.14 | Recourse Only to Party | 54 |
| Section 11.15 | Rule of Interpretation Regarding Manager Deliveries | 54 |
| Section 11.16 | Effectiveness | 54 |
| Annex 1 | Members and Membership Interests | 1 |
| Schedule 4.2(d) | Initial Capital Accounts | 1 |
| Exhibit A | Form of Class A Membership Interest Certificate | 1 |
| Exhibit B | Form of Assignment and Assumption Agreement | 1 |

---

iii

 **FOURTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT**

**OF**

**SOLUNA DVSL COMPUTECO, LLC**

This Fourth Amended and Restated Limited Liability Company Agreement of Soluna DVSL ComputeCo, LLC, a Delaware limited liability company (the "<u>Company</u>"), is dated as of March 10, 2023, by and among the Company, Soluna DV Devco, LLC, a Nevada limited liability company ("<u>Developer</u>"), Soluna Holdings, Inc., a Nevada corporation ("<u>Soluna</u>" or "<u>Parent</u>"), and Soluna SLC Fund I Projects Holdco, LLC, a Delaware limited liability company ("<u>Spring Lane</u>"). Each of the Company, Developer, Spring Lane and Soluna shall be referred to herein as a "<u>Party</u>" and collectively as the "<u>Parties</u>".

**RECITALS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Company was formed by the filing of a Certificate of Formation with the Secretary of State of the State of Delaware on January 26, 2022 (the "<u>Certificate of Formation</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The Company has been formed to construct, own, operate and maintain one or more variable data centers or crypto-mining centers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Soluna Computing, Inc. ("<u>SCI</u>") entered into a Limited Liability Company Agreement of the Company on July 8, 2022, which was amended and restated by that certain Amended and Restated Limited Liability Company Agreement, dated as of August 5, 2022, by and among the Parties, and that certain Second Amended and Restated Limited Liability Company Agreement, dated as of February 10, 2023, by and among the Parties and that certain Third Amended and Restated Limited Liability Company Agreement, dated as of March 3, 2023, by and among the Parties (the "<u>Existing LLCA</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The Company, Developer, Soluna and Spring Lane desire to enter into this Agreement to amend and restate the Existing LLCA, and to describe the respective rights and obligations of Members, and to describe the management of the Company and of the respective project companies.

**NOW, THEREFORE**, 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 hereto agree as follows:

**ARTICLE I**

**AGREEMENT**

Section 1.1 <u>Definitions</u>. As used in this Agreement, the following terms have the respective meanings set forth below:

"<u>Act</u>" means the Delaware Limited Liability Company Act, Delaware Code Ann. 6, Sections 18-101, et seq. and any successor statute, as the same may be amended from time to time.

"<u>Adjusted Capital Account</u>" shall mean the balance in a Capital Account maintained for a Member as of the end of each fiscal year as adjusted under <u>Section 5.2</u>, and further (i) increased by any amounts which such Member is obligated to restore pursuant to any provision of this Agreement or is treated as being obligated to restore pursuant to Treasury Regulations Section 1.704-1(b)(2)(ii)(c), or is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and (ii) decreased by the items described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6). The foregoing definition of Adjusted Capital Account is intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

"<u>Adjusted Capital Account Deficit</u>" shall mean, with respect to any Member, the deficit balance, if any, in such Member's Adjusted Capital Account as of the end of the relevant fiscal year.

"<u>Administrative Services Agreement</u>" has the meaning established in the Contribution Agreement.

"<u>Affiliate</u>" of a specified Person means any Person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, such specified Person. As used in this definition of Affiliate, the term "<u>control</u>" of a specified Person including, with correlative meanings, the terms, "<u>controlled by</u>" and "<u>under common control with</u>," means (a) the ownership, directly or indirectly, of 50% or more of the equity interest in a Person; or (b) the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise; with respect to a Class B Member, a "Class B Affiliate" shall constitute an "Affiliate."

"<u>Agreement</u>" means this Fourth Amended and Restated Limited Liability Company Agreement (including all annexes, schedules and exhibits hereto), as the same may be amended, supplemented or replaced from time to time.

"<u>Annual Budget</u>" means, with respect to the Company, a budget in respect of each Fiscal Year, setting forth good faith estimations of income and expenses, and, if reasonably requested, specifying reasonable reserves, in each case in accordance with Prudent Industry Practice to the extent applicable or relevant.

"<u>Applicable Laws</u>" means all applicable laws of any Governmental Authority, and any applicable ordinances, judgments, decrees, injunctions, guidance, writs and orders of like actions of any Governmental Authority and rules and regulations of any federal, regional, state, county, municipal or other Governmental Authority.

"<u>Applicable Tax Rate</u>" means the combined effective federal, state and local income tax rate applicable to the Members as determined by the Manager (assuming that all of the Members are individuals paying taxes at the maximum applicable federal income tax rates and a 5% combined state and local income tax rate).

"<u>Approved Sale</u>" has the meaning established in <u>Section 9.9(c)</u>.

"<u>Asset Administrator</u>" has the meaning in the Contribution Agreement.

"<u>Business Day</u>" has the meaning established in the Contribution Agreement.

"<u>Calculation Dispute</u>" has the meaning established in <u>Section 11.1(b)</u>.

"<u>Capital Account</u>" has the meaning established in <u>Section 4.2(a)</u>.

"<u>Capital Commitment</u>" means, for any Member, the commitment to contribute capital to the Company as provided herein to the extent, if any, that the conditions for such contributions have been satisfied or waived, as required.

"<u>Capital Contribution</u>" means, with respect to any Member, the amount of cash and the initial Gross Asset Value of any property contributed to the Company with respect to the Membership Interests in the Company held by such Member.

"<u>Certificate of Formation</u>" has the meaning established in the preamble to this Agreement.

"<u>Class A Member</u>" means a Member holding one or more Class A Membership Interests.

"<u>Class A Member Contribution Cap</u>" means, with respect to the Class A Member, the Capital Commitment up to an aggregate of US$100, as provided in the Contribution Agreement.

"<u>Class A Membership Interests</u>" has the meaning established in <u>Section 3.1(b)</u>.

"<u>Class B Affiliate</u>" means a Person that is (i) an investment vehicle managed by a Class B Member or an Affiliate of such Class B Member, or (ii) an Affiliate of a Class B Member, or (iii) a general partner of a Class B Member, a limited partner of a Class B Member, or an owner of a Class B Member.

"<u>Class B Member</u>" means a Member holding one or more Class B Membership Interests.

"<u>Class B Member Contribution Cap</u>" means, (i) with respect to Spring Lane, the Capital Commitment of up to such amount equal to (a) the total aggregate amount of Capital Contributions funded by Spring Lane as of March 10, 2023 <u>plus</u> (b) US$3,000,000, and (ii) with respect to Soluna, the Capital Commitment of up to such amount equal to (a) the total aggregate amount of Capital Contributions funded by Soluna as of March 10, 2023 <u>plus</u> (b) US$1,500,000, each as provided in the Contribution Agreement.

"<u>Class B Member Corporate Investment Vehicle</u>" means any Class B Member that is a corporation or entity that has "checked the box" to be treated as a corporation for U.S. federal income tax purposes and any corporation or entity that has "checked the box" to be treated as a corporation for U.S. federal income tax purposes formed by any Class B Member or any Affiliate thereof that holds, directly or indirectly (including through the Class B Member), Membership Interests of the Company and each of their respective transferees or Affiliates designated by such Class B Member Corporate Investment Vehicle to be included as a the Class B Member Corporate Investment Vehicle.

"<u>Class B Membership Interests</u>" has the meaning established in <u>Section 3.1(b)</u>.

"<u>Code</u>" means the Internal Revenue Code of 1986, as amended, or any successor federal tax statute.

"<u>Company</u>" has the meaning established in the introductory paragraph.

"<u>Confidential Information</u>" has the meaning established in <u>Section 11.12(a)</u>.

"<u>Consent of the Members</u>" means an affirmative vote of the Requisite Class B Members.

"<u>Contribution Agreement</u>" means that certain Contribution Agreement by and between the Company, Spring Lane, Parent and Developer, dated as of the Effective Date and as amended from time to time.

"<u>Contribution Cap</u>" means, for each Member, its Class A Member Contribution Cap or Class B Member Contribution Cap as applicable.

"<u>Depreciation</u>" means for each Fiscal Year or part thereof, an amount equal to the depreciation, amortization or other cost recovery deduction allowable for federal income tax purposes with respect to an asset, except that if the Gross Asset Value of an asset differs from its adjusted basis at the beginning of such Fiscal Year, then the depreciation, amortization or other cost recovery deduction shall be an amount that bears the same ratio to such Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for the period bears to the adjusted tax basis. If the asset has a zero adjusted tax basis, then the depreciation, amortization or other cost recovery deduction shall be determined under a method reasonably selected by the Manager and the Requisite Class B Members.

"<u>Designated Individual</u>" has the meaning established in <u>Section 7.7(a)</u>.

"<u>Developer</u>" has the meaning established in the preamble to this Agreement.

"<u>Dispute</u>" has the meaning established in <u>Section 11.11 (a)</u>.

"<u>Disputing Member</u>" has the meaning established in <u>Section 11.11(a)</u>.

"<u>Disqualified Transferee</u>" means any entity that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) has,
 directly or indirectly, its principal/controlling office in a country that is subject to
 economic/political sanctions imposed by the United States for terrorism, terrorist activity
 financing, arms proliferation (nuclear, chemical, biological or otherwise), export control
 violations, narcotics trafficking, money laundering, and other similar reasons, such that
 the transfer would be unlawful;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the
 business (or any portion thereof) of which is involved in illegal narcotics, arms or terrorism
 or the export of technology in violation of export control laws; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) has
 been convicted of a money laundering offense or terrorist activity financing offense.

"<u>Dissolution Event</u>" has the meaning established in <u>Section 10.1</u>.

"<u>Distributable Cash</u>" means, as of any Distribution Date, all Available Cash Flow (as defined in <u>Section 6.7</u>) <u>less</u> reserves in respect of expenses of the Company expected to be incurred in the following Quarter not to exceed amounts for such Quarter shown in the applicable Annual Budget then in effect.

"<u>Distribution Date</u>" means March 31, June 30, September 30 and December 31 of each year (or if such day is not a Business Day, the next Business Day).

"<u>Effective Date</u>" means August 5, 2022.

"<u>EPC Agreement</u>" has the meaning established in the Contribution Agreement.

"<u>Equity Interests</u>" means any shares, membership interests, participations, or other equivalent ownership interest in a Person, including any and all options, warrants, rights or convertible securities to purchase or other rights to acquire any of the foregoing.

"<u>Estimated Tax Amount</u>" means, for a Fiscal Year (or fiscal period), a Member's Tax Amount for such Fiscal Year (or fiscal period) as estimated from time to time by the Manager acting in good faith.

"<u>Fair Market Value</u>" with respect to any asset means the price at which the asset would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of the relevant facts and taking into account the full useful life of the asset and if installed and operating at the time of determination, as installed and operating. When used in connection with the value of the Company, Fair Market Value shall mean the value of the entire Company as a going concern, and not the liquidation value of its assets.

"<u>Financing Documents</u>" has the meaning established in the Contribution Agreement.

"<u>Fiscal Year</u>" has the meaning established in <u>Section 7.9</u>.

"<u>For Reason</u>" shall mean (i) fraud, deceit, gross negligence or willful misconduct by the Manager in the conduct of its duties the Company or any Affiliate of the Company, (ii) breach by Manager of any material term of this Agreement, as determined by the Requisite Class B Members, or (iii) a proceeding is commenced in respect of the Manager or the Parent relating to bankruptcy, insolvency, reorganization or relief of debtors, or the Manager seeks appointment of a receiver, trustee, custodian or other similar official for all or any part of Manager's or Parent's property, and any such action that is not dismissed or terminated within sixty (60) days of commencement; provided, however, that in the case of clause (ii), Manager shall have the opportunity to cure such breach within 30 days of the earlier of (a) receiving written notice from any Member of such breach, and (b) the date on which the Manager was obligated to notify any Member of the circumstances regarding such breach if the Manager has not delivered such notice on or prior to such date as required under the Transaction Documents; provided, further, that if such breach cannot be cured within such period, and the Managing Member is proceeding with diligence to cure such breach, the 30-day cure period shall be extended by an additional 60 days, for a total cure period of 90 days.

"<u>Force Majeure Event</u>" means, solely as to the performance by a Party hereto of its obligations hereunder, any event or circumstance which wholly or partly prevents or delays such Party in the performance of any material obligation arising under this Agreement, but only if and to the extent: (a) such event is not within the reasonable control, directly or indirectly, of the Party claiming such Force Majeure Event; (b) the Party claiming such Force Majeure Event has taken all reasonable precautions and measures in order to prevent or avoid such event or mitigate the effect of such event on its ability to perform its obligations under this Agreement, and which by the exercise of due diligence the Party claiming such Force Majeure Event could not reasonably have been expected to avoid and which by the exercise of due diligence it has been unable to overcome; and (c) such event is not the direct or indirect result of the negligence or the failure of, or caused by, the Party claiming such Force Majeure Event.

"<u>GAAP</u>" means (i) generally accepted accounting principles in the United States of America as in effect from time to time, consistently applied; or (ii) upon agreement of the Parties, internationally recognized generally accepted accounting principles, consistently applied.

"<u>Governmental Authority</u>" has the meaning established in the Contribution Agreement.

"<u>Gross Asset Value</u>" means, with respect to any asset, the asset's adjusted tax basis for federal income tax purposes, except as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the initial Gross Asset Value of any asset contributed by a Member to the Company shall be the Fair Market Value of such asset as of the date of contribution; provided that the initial Gross Asset Values of the assets contributed to the Company pursuant to <u>Section 4.2(d)</u> shall be as shown in <u>Schedule 4.2(d)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the Gross Asset Values of all Company assets shall be adjusted to equal their respective Fair Market Values at the times described in <u>Section 4.2(c)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the Gross Asset Value of any item of Company assets distributed to any Member shall be adjusted to equal the Fair Market Value of such asset on the date of distribution;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the Gross Asset Values of all Company assets shall be adjusted to reflect any adjustments to the adjusted basis of such assets pursuant to Sections 734(b) or 743(b) of the Code, but only to the extent that such adjustments are required to be taken into account in determining Capital Accounts pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this subsection (d) to the extent that an adjustment pursuant to subsection (b) is made in connection with a transaction that would otherwise result in an adjustment pursuant to this subsection (d); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) if the Gross Asset Value of an asset has been determined or adjusted pursuant to subsection (a), (b) or (d) above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Income and Net Losses.

"<u>Indebtedness</u>" shall have the meaning established in the Contribution Agreement.

"<u>Initial Reimbursement Amount</u>" means Spring Lane's and its Affiliates' reasonable and documented third-party out of pocket legal and professional expenses in connection with the due diligence investigation and evaluation of entering into (i) this Agreement, including the negotiation, authorization, execution and delivery of this Agreement, up to a maximum amount of $50,000; and (ii) the other Transaction Documents and the Project Documents.

"<u>Internal Rate of Return</u>" or "<u>IRR</u>" means, with respect to a Member as of the date of determination, the discount rate which makes (i) the sum of the separate present values of each distribution made to the Member, when discounted to their present values as of the date of the each Capital Contribution made by such Member at such discount rate equal to (ii) the sum of the separate present values of each Capital Contribution made to the Company by the applicable Member, when discounted to their present values as of the date of each applicable Capital Contribution made by such Member to the Company, using the same discount rate. The XIRR function in Microsoft Excel, U.S. English Version or any other program agreed by the Members shall be used to calculate whether a specified Internal Rate of Return has been achieved. The Internal Rate of Return with respect to a Member shall be deemed to include any amount paid or received by any predecessor in interest of a Member.

"<u>IRS</u>" means the Internal Revenue Service or any successor agency.

"<u>Lien</u>" has the meaning established in the Contribution Agreement.

"<u>Major Decisions</u>" has the meaning established in <u>Section 8.4</u>.

"<u>Manager</u>" means any Person appointed by the Requisite Class B Members, who shall initially be the Class A Member. The Manager is a manager of the Company within the meaning of the Act.

"<u>Material Adverse Effect</u>" means, (a) with respect to the Company or Devco, a material adverse change in, or material adverse effect on the business, operations, Properties, Liabilities or financial condition of such Person; (b) a material adverse change in, or material adverse effect on (i) with respect to the Company, Devco or the Class A Member, the ability of such Person to perform any of its material obligations under any Transaction Document, Financing Document or Project Document to which it is a party; or (ii) the validity or enforceability of any Transaction Document against the Company, Devco or the Class A Member, as applicable, or any Financing Document or Project Document; except to the extent in <u>subclauses (a)</u> or <u>(b)</u> above, that such change or effect results from an event or condition affecting the economy generally (provided that such conditions do not affect such Person and its subsidiaries, taken as a whole, in a disproportionate manner relative to similarly situated participants in the market or markets in which such Person operates, if any similarly situated participants then exist).

"<u>Member</u>" means the Class A Member and the Class B Members or any Person admitted to the Company as a member as provided in this Agreement (each in the capacity as a member of the Company), but does not include any Person who has ceased to be a member of the Company.

"<u>Membership Interest</u>" means the entire interest of a Member in the Company, including rights to distributions (liquidating or otherwise), allocations of profits and losses, and to vote, consent or approve or receive information, if any.

"<u>Net Income</u>" or "<u>Net Losses</u>" shall mean with respect to each fiscal year or other period, an amount equal to the Company's income or loss for such fiscal year or period determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be separately stated pursuant to Code Section 703(a)(i) shall be included in such taxable income or loss), together with the following adjustments (without duplication):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net Income or Net Losses pursuant to this definition shall be added to such taxable income or loss;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury Regulations 1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing Net Income or Net Losses pursuant to this definition shall be subtracted from such taxable income or loss in the year paid, and shall not be taken into account in any other year; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) in the event the Gross Asset Value of any Company property is adjusted pursuant to paragraphs (b) or (d) of the definition of "Gross Asset Value" above, the amount of such adjustment shall be taken into account as a gain or loss on the disposition of such property for purposes of computing Net Income and Net Loss;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) in lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or taxable loss, there shall be taken into account Depreciation for such fiscal year or other period, computed in accordance with the definition of Depreciation herein;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) gain or loss resulting from any disposition of Company property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the property's Gross Asset Value, notwithstanding that the adjusted tax basis of such property may differ from its Gross Asset Value; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) notwithstanding any other provision of this definition of Net Income and Net Losses, any items comprising the Company's Net Income or Net Losses that are allocated pursuant to <u>Section 5.1</u> shall not be taken into account in computing Net Income or Net Losses.

The amount of the items of Company income, gain, loss or deduction available to be specially allocated pursuant to Section 5.3 shall be determined by applying rules analogous to those set forth in subparagraphs (a) through (f) above.

"<u>Notice</u>" has the meaning established in <u>Section 11.1</u>.

"<u>O&M Agreement</u>" has the meaning established in the Contribution Agreement.

"<u>Partnership Representative</u>" has the meaning established in <u>Section 7.7(a)</u>.

"<u>Percentage Interest</u>" means the percentage interest shown for a Member in <u>Schedule 4.2(d)</u>.

"<u>Permit</u>" has the meaning established in the Contribution Agreement.

"<u>Permitted Lien</u>" has the meaning established in the Contribution Agreement

"<u>Person</u>" has the meaning established in the Contribution Agreement.

"<u>POCo</u>" has the meaning established in the Contribution Agreement.

"<u>Prohibited Class B Entity</u>" means any entity listed on <u>Schedule 9.2(i)</u> and their controlling owners.

"<u>Project</u>" has the meaning established in the Contribution Agreement.

"<u>Project Capital Recovery Date</u>" means the date on which each of the Class B Members have received from the Company, cash distributions equal to the Capital Contributions made by each such Class B Member.

"<u>Project Budget</u>" means the budget for the development and construction of the applicable Project as approved by Spring Lane in accordance with the Contribution Agreement.

"<u>Project Documents</u>" has the meaning established in the Contribution Agreement.

"<u>Project Pro Forma</u>" has the meaning established in the Contribution Agreement.

"<u>Prudent Industry Practices</u>" has the meaning established in the Contribution Agreement.

"<u>Project Opex and Capex Budget</u>" means the periodic operating or capital budgets of the Company.

"<u>Project Schedule</u>" means the schedule for the development and construction of the applicable Project as approved by Spring Lane in accordance with the Contribution Agreement.

"<u>Quarter</u>" means a fiscal quarter.

"<u>Quarterly Estimated Tax Amount</u>" means, with respect to any quarter of a Fiscal Year, the excess of (i) the product of (A) ¼ in the case of the first quarter of the Fiscal Year, ½ in the case of the second quarter of the Fiscal Year, ¾ in the case of the third quarter of the Fiscal Year, and 1 in the case of the fourth quarter of the Fiscal Year and (B) such Member's Estimated Tax Amount for such Fiscal Year <u>over</u> (ii) all prior distributions made to such Member for such Fiscal Year (including Quarterly Estimated Tax Amounts for such Fiscal Year).

"<u>Representatives</u>" means, with respect to any Person, the managing members, the officers, directors, employees, representatives or agents (including investment bankers, financial advisors, attorneys, accountants, brokers and other advisors) of such Person, to the extent that such officer, director, employee, representative or agent of such Person is acting in his or her capacity as an officer, director, employee, representative or agent of such Person.

"<u>Requisite Class B Members</u>" means the holders of a majority of the then outstanding Class B Membership Interests, which majority must include Spring Lane for so long as Spring Lane holds any Membership Interests; <u>provided</u>, <u>however</u>, that

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) for any matter described in <u>Section 8.1(c)(i)</u>, the "Requisite Class B Members" shall mean an affirmative vote of the holders of a majority of the outstanding Class B Membership Interests held by Class B Members other than the Developer, POCo or Soluna, or their respective Affiliates, or any of their respective transferees or successors, or their respective Affiliates, and, for so long as Spring Lane or its Affiliates hold any Membership Interests, which majority must include Spring Lane, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) for any matter described in <u>Section 8.5</u>, the "Requisite Class B Members" shall mean an affirmative vote of the holders of a majority of the outstanding Class B Membership Interests held by Class B Members other than the Developer, POCo or Soluna, or their respective Affiliates, or any of their respective transferees or successors, or their respective Affiliates, and which majority must include Spring Lane for so long as Spring Lane or its Affiliates hold any Membership Interests.

"<u>Sale of the Company</u>" shall mean any of the following events: (a) a merger in which the Company is a constituent party, except any such merger involving the Company in which the Membership Interests outstanding immediately prior to such merger continue to represent, or are converted into or exchanged for shares of equity interests that represent, immediately following such merger, at least a majority, by voting power, of the equity interests of (1) the surviving or resulting company or, (2) if the surviving or resulting company is a wholly owned subsidiary of another company immediately following such merger, the parent company of such surviving or resulting company and (b) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company of all or substantially all the assets of the Company, directly or indirectly, by the Company, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Company.

"<u>Sale Proceeds</u>" has the meaning established in <u>Section 9.10</u>.

"<u>Shared Facilities Agreement</u>" has the meaning set forth in the Contribution Agreement.

"<u>Soluna</u>" has the meaning established in the preamble to this Agreement.

"<u>Spring Lane</u>" has the meaning established in the preamble to this Agreement.

"<u>Subsidiary</u>" means, with respect to any Person, any corporation, partnership, limited liability company, joint venture or other entity of which such Person (either alone or through or together with any other Person pursuant to any agreement, arrangement, contract or other commitment) owns, directly or indirectly, fifty percent (50%) or more of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.

"<u>Tag-Eligible Members</u>" shall mean all Members other than Developer, POCo or Soluna, or their respective Affiliates, or any of their respective transferees or successors or their respective Affiliates.

"<u>Target Achievement Date</u>" means the last day of the Quarter (or if such date is not a Business Day, the next Business Day) in which each Class B Member has achieved its Target Return.

"<u>Target Return</u>" means the amount of cash distributed to the Class B Members that results in the Class B Members achieving a eighteen percent (18%) Internal Rate of Return on the Capital Contributions made by it.

"<u>Tangible Net Worth</u>" means with respect to any entity (i) all shareholders' equity in such entity and its subsidiaries, determined on a consolidated basis in accordance with GAAP (less the value of all assets properly classified as intangible assets under GAAP and minority interests) or (ii) if such entity is a fund or similar entity, (a) partners' capital (including in the form of shareholder loans to such entity) in such entity (determined in accordance with GAAP, it being understood that the calculation of partners' capital in such entity is already net of any liabilities of such entity) plus (b) the unfunded/uncalled capital commitments (including in the form of shareholder loan commitments to such entity) of the partners in such entity determined in accordance with such entity's limited partnership agreement or equivalent constituent documents, other than the unfunded/uncalled capital commitment (including in the form of shareholder loan commitments to such entity) of any defaulting partner or any partner whose commitment cannot be called in respect of the obligations under the Contribution Agreement or any guaranty of those obligations being provided by such entity, less (c) without duplication, the full amount of unfunded obligations of such entity to or related to investments and other activities of such entity (including amounts committed to be funded on a conditional or contingent basis).

"<u>Tax</u>" (and, with correlative meaning, "<u>Taxes</u>" and "<u>Taxable</u>") means any taxes, customs, duties, charges, fees, levies or other assessments imposed by any federal, state, local or foreign taxing authority, including, but not limited to, income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, net worth, employment, occupation, payroll, withholding, social security, alternative or add-on minimum, ad valorem, transfer, stamp, or environmental tax, or any other tax, custom, duty, levy or other like assessment or charge of any kind whatsoever imposed by any federal, state, local or foreign taxing authority, together with any related interest, penalty, addition to tax, or additional amount attributable thereto.

"<u>Tax Amount</u>" means, for a Fiscal Year, the product of (A) the Applicable Tax Rate multiplied by (B) the net taxable income allocated by the Company to such Member for such Fiscal Year.

"<u>Tax Distribution</u>" means the quarterly distribution to each Member of an amount of cash equal to such Member's Quarterly Estimated Tax Amount for such quarter of the Fiscal Year.

"<u>Tax Proceeding</u>" has the meaning established in <u>Section 7.7(b)</u>.

"<u>Tax Return</u>" means any return, report or similar statement required to be filed with respect to any Taxes (including any attached schedules), including an IRS Form K-1 to be issued to Members, any information return, claim for refund, amended return or declaration of estimated Tax.

"<u>Termination Payment</u>" means, in the event that an EPC Agreement or O&M Agreement is terminated in connection with the Sale of the Company, an amount equal to (a) the aggregate out-of-pockets costs reasonably incurred to implement such termination and conduct an orderly demobilization under the applicable agreement, plus (b) all employee termination costs reasonably incurred by the Asset Administrator directly resulting from such termination, if such Person is an Affiliate of the Class A Member, and, solely with respect to costs incurred in connection with terminating employees of Asset Administrator or an Affiliate thereof, up to (in the case of subclause (b) above only) an aggregate per employee amount of one month of the gross cash salary prior to such termination of such terminated employee who is dismissed from employment by the Asset Administrator as a direct result of such termination and is not reassigned to employment with any Affiliate thereof; <u>provided</u> that such Termination Payment (i) shall be without duplication of any termination payment provided for in the applicable EPC Agreement, O&M Agreement or Administrative Services Agreement and (ii) shall not be payable if at the time of such termination, there is any other basis on which the applicable EPC Agreement, O&M Agreement or Administrative Services Agreement is terminable by the Company in accordance with its terms (other than any provision providing that such agreement may be terminated upon a change in control).

"<u>Third Party</u>" means any Person who is not a Member or an Affiliate of a Member and that is not the Company.

"<u>Tracking Account</u>" means a tracking account for the Company, showing the actual financial results of the Company, on a cash basis, including the Distributable Cash therefrom, all distributions of such Distributable Cash hereunder and, until the Target Achievement Date, the Internal Rate of Return realized as of the date of determination by the Requisite Class B Members.

"<u>Transaction Documents</u>" means collectively and individually, this Agreement, the Contribution Agreement, the Shared Facilities Agreement, the Administrative Services Agreement, and the other documents, instruments, or certificates delivered under this Agreement or the foregoing agreements or documents.

"<u>Transfer</u>" (and any corollary use thereof) means, with respect to any Membership Interests, a direct or indirect sale, assignment, pledge, encumbrance, abandonment, disposition, alienation, hypothecation, gift or other transfer, whether voluntary, involuntary, or by operation of law, of such Membership Interests.

"<u>Treasury Regulations</u>" means regulations issued under the Code.

"<u>UCC</u>" means the Uniform Commercial Code of any applicable jurisdiction.

"<u>Unfunded Commitment</u>" means, as to any Member and as of any date, the excess of such Member's Capital Commitment over such Member's Capital Contribution as of such date.

Section 1.2 <u>Other Definitional Provisions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) As used in this Agreement and in any certificate or other documents made or delivered pursuant hereto or thereto, financial and accounting terms not defined in this Agreement or in any such certificate or other document, and financial and accounting terms partly defined in this Agreement or in any such certificate or other document to the extent not defined, shall have the respective meanings given to them under GAAP. To the extent that the definitions of financial and accounting terms in this Agreement or in any such certificate or other document are inconsistent with the meanings of such terms under GAAP, the definitions contained in this Agreement or in any such certificate or other document shall control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) This Agreement is the result of the joint efforts of the parties hereto, and each provision hereof has been subject to the mutual consultation, negotiation and agreement of the parties and there is to be no construction against either party based on any presumption of that party's involvement in the drafting hereof. Any reference to any Law shall be deemed also to refer to all rules and regulations promulgated thereunder and such laws and regulations as amended from time to time, unless the context requires otherwise. Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders and the terms "include," "includes" and "including" shall be inclusive and not exclusive and shall be deemed to be followed by the following phrase "without limitation." Unless otherwise specified, the terms "hereof," "herein," "hereunder," "herewith" and similar terms refer to this Agreement as a whole (including the schedules and exhibits to this Agreement) and references herein to Sections, Articles, Schedules or Exhibits refer to the applicable sections, articles, schedules or exhibits of this Agreement; the words "or" and "any" are not exclusive and shall be interpreted to mean "and/or" and "any and all", respectively. All references to "dollars" or "$" are to United States dollars.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as amended, restated, supplemented or otherwise modified from time to time, and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Any references to a Person are also to its successors and permitted assigns.

**ARTICLE II**

**CONTINUATION; OFFICES; TERM**

Section 2.1 <u>Formation of the Company</u>. The Members hereby acknowledge the formation of the Company as a limited liability company pursuant to the Act, the Certificate of Formation and this Agreement.

Section 2.2 <u>Name, Office and Registered Agent</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The name of the Company shall be "Soluna DVSL ComputeCo, LLC" or such other name or names as may be agreed to by the Members from time to time. The principal office of the Company shall be 325 Washington Ave. Extension, Albany, NY 12205, 518-218-2550, Attn: CFO, email: DVnotice@soluna.io. The Manager may at any time change the location of such office to another location; <u>provided</u> that the Manager gives prompt written notice of any such change to the registered agent of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The registered office of the Company in the State of Delaware is located at 1209 Orange Street, County of New Castle, Wilmington, Delaware 19801. The registered agent of the Company for service of process at such address is The Corporation Trust Company. The registered office and registered agent may be changed by the Manager at any time in accordance with the Act; <u>provided</u> that the Manager gives prompt written notice of any such change to all Members. The registered agent's primary duty as such is to forward to the Company at its principal office and place of business any notice that is served on it as registered agent.

Section 2.3 <u>Purpose; No Partnership Intended</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The nature of the business or purpose to be conducted or promoted by the Company is: (i) to engage in the transactions contemplated by the Transaction Documents, Project Documents and Financing Documents; and (ii) to engage in any lawful act or activity, enter into any agreement and to exercise any powers permitted to limited liability companies formed under the Act that are incidental to or necessary, suitable or convenient for the accomplishment of the purposes specified above. The Company shall exist for the purposes and business specified in this <u>Section 2.3(a)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) This Agreement shall not be deemed to create a partnership under the Delaware Revised Uniform Partnership Act, company, joint venture or other arrangement among the Members with respect to any actions whatsoever other than the purposes and business specified in <u>Section 2.3(a)</u> and the activities related thereto provided, that the Members intend that the Company shall constitute a partnership for all tax purposes.

Section 2.4 <u>Term</u>. The term of the Company commenced on the date of its formation and shall continue until the Company is dissolved in accordance with <u>Article X</u>. Except as provided in <u>Article X</u>, the Company shall not be dissolved.

Section 2.5 <u>Organizational and Fictitious Name Filings; Preservation of Limited Liability</u>. Prior to the Company conducting business in any jurisdiction other than Delaware, the Manager shall, on behalf of the Company, register the Company as a foreign limited liability company and file such fictitious or trade names, statements or certificates in such jurisdictions and offices as necessary or appropriate for the conduct of the Company's business. The Manager shall take any and all other actions as may be reasonably necessary or appropriate to perfect and maintain the status of the Company as a limited liability company under the laws of Delaware and any other state or jurisdiction other than Delaware in which the Company engages in business and continue the Company as a limited liability company and to protect the limited liability of the Members as contemplated by the Act and as provided herein.

Section 2.6 <u>Separateness</u>. The Company shall maintain its existence separate and distinct from any other Person, including taking the following actions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) maintaining in full effect its existence, rights and franchises as a limited liability company under the laws of the State of Delaware and obtaining and preserving its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement and each other instrument or agreement necessary or appropriate to properly administer this Agreement and permit and effectuate the transactions contemplated hereby and thereby;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) maintaining its own deposit accounts, separate from those of any other Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) conducting all transactions between the Company and any of its Affiliates on an arm's length basis and on a commercially reasonable basis;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) conducting its affairs separately from those of any other Person and maintaining accurate and separate books, records and accounts and financial statements, it being agreed that performance of its obligations under the Transaction Documents, Project Documents and Financing Documents shall not result in the Company contravening this <u>Section 2.6(d)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) acting solely in its own limited liability company name and not that of any other Person, and at all times using its own stationery, invoices and checks separate from those of any other Person, any of its officers or any of their respective Affiliates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) maintaining all of its assets in its own name and not commingling its assets with those of any other Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) paying its own operating expenses and other liabilities out of its own funds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) observing all limited liability company formalities, including maintaining meeting minutes or records of meetings and acting on behalf of itself only pursuant to due authorization, required hereby and by the Certificate of Formation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) maintaining adequate capital for the normal obligations reasonably foreseeable in light of its contemplated business operations; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) holding itself out to the public as a legal entity separate and distinct from any other Person.

**ARTICLE III**

**RIGHTS AND OBLIGATIONS OF THE MEMBERS**

Section 3.1 <u>Members; Membership Interests</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The names of the Members, their addresses, contact information and Membership Interests held are listed on <u>Annex I</u>. <u>Annex I</u> shall be amended from time to time by the Manager without requiring the consent of any Member to reflect the change in a Member's name, address or contact information, the withdrawal of any Member, the admission of any additional Member, Transfers of Membership Interests or the issuance of additional Membership Interests, in each case, pursuant to, and in accordance with, the terms and conditions of this Agreement. The Manager shall upon each amendment to Annex I, provide each Member, on a confidential basis for informational purposes, with a copy of such amended Annex I.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The authorized Membership Interests consist of One Hundred (100) Class A Membership Interests (the "<u>Class A Membership Interests</u>") and 42,384,502 Class B Membership Interests (the "<u>Class B Membership Interests</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Issuances of Membership Interests.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) As of the Effective Date, 100 Class A Membership Interests were issued to the Developer, 12,500,000 Class B Membership Interests were issued to Spring Lane, and 26,330,434 Class B Membership Interests were issued to Soluna.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) On February 10, 2023, 3,554,068 additional Class B Membership Interests were issued to Spring Lane (such additional issuance of Class B Membership Interests, the "<u>February 2023 Subsequent Issuance</u>") in exchange for an additional Capital Contribution made by Spring Lane in the amount of $1,186,676 paid by Spring Lane as specified in the Contribution Request dated February 10, 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) On March 3, 2023, 4,126,023 additional Class B Membership Interests were issued to Soluna SLC Fund I Projects Holdco, LLC (such additional issuance of Class B Membership Interests, the "<u>March 2023 Subsequent Issuance</u>") in exchange for an additional Capital Contribution made by Soluna SLC Fund I Projects Holdco, LLC in the amount of $1,500,000 paid by Soluna SLC Fund I Projects Holdco, LLC as specified in the Contribution Request dated March 3, 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) On March [__], 2023, Soluna sold and transferred to Spring Lane, and Spring Lane purchased and accepted from Soluna, 19,539,897 Class B Membership Interests for an aggregate purchase price of $5,770,065 in accordance with the terms and conditions of that certain Purchase and Sale Agreement dated as of March [__], 2023 (the "<u>2023 Purchase Agreement</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) On the Effective Date, Spring Lane was admitted to the Company as a Class B Member, and Soluna was admitted to the Company as a Class B Member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Membership Interests shall (i) have the rights and obligations ascribed to such Membership Interests in this Agreement and the Act; (ii) be recorded in a register of Membership Interests, which register the Manager shall maintain; and (iii) be transferable only on recordation of such Transfer in the register of Membership Interest, which recordation the Manager shall make, upon compliance with the provisions of <u>Article IX</u>. The Members hereby specify, acknowledge and agree that all Membership Interests are securities governed by <u>Article 8</u> of the UCC, and pursuant to the terms of Section 8-103(c) of the UCC, such interests shall be "securities" for all purposes under such <u>Article 8</u> and under all other provisions of the UCC. All Membership Interests shall be recorded in a register thereof maintained by the Company and shall be represented by certificates substantially in the form attached hereto as <u>Exhibit A</u> duly executed by the Manager.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Company shall treat the registered holder of a Membership Interest, as shown in the register of Membership Interests referred to in <u>Section 3.1</u> of this Agreement as a Member for all purposes of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Upon the Transfer by a Member of all of its Membership Interest to another Person pursuant to and in accordance with the terms set forth in <u>Article IX</u>, the transferor shall automatically cease to be a Member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Subject to <u>Article IX</u>, no Member will have any right to voluntarily resign or otherwise withdraw from the Company without the prior written consent of all remaining Members of the Company which consent may be given or withheld in their sole and absolute discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) SCI forfeited any and all Membership Interests held by it as of the Effective Date, and irrevocably, and unconditionally waived, released and discharged the Company, and all of its Members and Managers, and their respective present and former Affiliates, on its own behalf and on behalf of SCI's present and former Affiliates, agents, heirs, legatees, successors and assigns and any other Person that may assert any Claims (as defined below) by, through or under SCI or any of the forgoing, from any and all past, present and future disputes, claims, counter-claims, controversies, demands, rights, obligations, liabilities, judgments, damages, accountings, losses, actions and causes of action of every kind and nature, whether contingent, unknown, undisclosed or otherwise (collectively, "<u>Claims</u>") by, or incurred by, such party of any kind or nature whatsoever, and in any capacity and under any theory, whether existing or arising at any time prior to and including the date hereof, in each case, whether arising under the forfeited Membership Interests or otherwise at Law or in equity, and any events, matters, causes, things, acts, omissions or conduct, occurring or existing at any time up to and including the date hereof.

Section 3.2 <u>Actions by the Members</u>. To the extent that any act or matter requires the vote of the Members, and except as may be otherwise specifically provided herein, such vote shall be by the Consent of the Members. The Manager is hereby authorized by the Members to take any and all actions on behalf of the Company except for (i) any action that is a Major Decision and (ii) any action which is reserved to or requires the approval of the Requisite Class B Members under any provision of this Agreement.

Section 3.3 <u>Management Rights</u>. No Member, in its capacity as such shall have any right, power or authority to take part in the management or control of the business of, or transact any business for, the Company, to sign for or on behalf of the Company or to bind the Company in any manner whatsoever. Except in the case of an exercise by the Class B Members of its rights under <u>Section 8.1(c)</u>, the Manager shall not hold out or represent to any Third Party that any Member, other than the Manager, in its capacity as such, has any such power or right or that any Member is anything other than a member in the Company. The Parties intend that a Member does not control, is not controlling, and is not participating in the control of the Company or the business of the Company by virtue of its possessing or exercising any rights as a Member set forth in this Agreement or the Act or any other agreement relating to the Company.

Section 3.4 <u>Other Activities</u>. Notwithstanding any duty otherwise existing at law or in equity, and except as provided in this Agreement or the other Transaction Documents, any Member may engage in or possess an interest in other business ventures of every nature and description, independently or with others, even if such activities compete directly with the business of the Company, and neither the Company nor any of the Members will have any rights by virtue of this Agreement in and to such independent ventures or any income, profits or property derived from them. Notwithstanding anything to the contrary in this <u>Section 3.4</u>, the foregoing shall not be deemed to limit any requirement to act reasonably or for any such consent or approval to not be unreasonably withheld, conditioned or delayed, in each case wherever expressly stated in this Agreement.

Section 3.5 <u>Limitation of Liability of Members</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Notwithstanding anything to the contrary and to the fullest extent permitted under Applicable Law, no Member will be liable 'to the Company, any Member, the Manager, any transferee or any other equity holder in or creditor of the Company for any action taken by or on behalf of the Company, except for such actions as constitute gross negligence, fraud or willful misconduct of such Member. Except as otherwise required by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, will be the debts, obligations and liabilities solely of the Company, and the Members of the Company will not be obligated personally for any of such debts, obligations or liabilities solely by reason of being a Member or Manager of the Company. No Member shall have any personal liability for the repayment of the positive balance in the Capital Account of a Member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) This Agreement is not intended to, and does not, create or impose any fiduciary duty on any Member in its capacity as a member of the Company. Furthermore, each of the Members and the Company hereby waives any and all fiduciary duties of a Member in its capacity as a member of the Company that, absent such waiver, may be implied by Applicable Law, and in doing so, acknowledges and agrees that the duties and obligation of each Member to each other and to the Company are only as expressly set forth in this Agreement. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of a Member otherwise existing at law or in equity, are agreed by the Members to replace such other duties and liabilities of such Member. To the extent that, at law or in equity, a Member, in its capacity as a member of the Company, has duties (including fiduciary duties) or liabilities relating thereto to the Company or to any Member or other Person bound by this Agreement more expansive than those set forth in <u>Section 3.5(a)</u>, such duties and liabilities are hereby limited to the extent permitted under the Act, including to the fullest extent permitted Section 18-1101 of the Act, to those set forth in <u>Section 3.5(a)</u>; <u>provided</u>, that this <u>Section 3.5(b)</u> or <u>Section 3.5(a)</u> will not be construed to limit obligations or liabilities expressly provided for in this Agreement (including the obligations with respect to Capital Contributions) or any other Transaction Document. The provisions of this Agreement, including this <u>Section 3.5(b)</u>, to the extent that they limit the duties and liabilities of a Member otherwise existing at law or in equity, in its capacity as a member of the Company, are agreed by the Members to replace such other duties and liabilities of such Member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Whenever in this Agreement a Member, in its capacity as a member of the Company or otherwise (other than in its capacity as a Manager), is permitted or required to make a decision (including a decision that is in such Member's "discretion" or under a grant of similar authority or latitude), the Member shall be entitled to consider only such interests and factors as such Member desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Company or any other Person. Whenever in this Agreement a Member is permitted or required to make a decision in such Member's "good faith," the Member shall act under such express standard and shall not be subject to any other or different standard imposed by this Agreement or any other Applicable Law.

Section 3.6 <u>Company Property</u>. All property owned by the Company, whether real or personal, tangible or intangible and wherever located, will be deemed to be owned by the Company, and no Member, individually, will have any ownership of such property.

Section 3.7 <u>Retirement, Resignation, Expulsion, Incompetency, Bankruptcy or Dissolution of a Member</u>. The retirement, resignation, expulsion, bankruptcy or dissolution of a Member will not, in and of itself, dissolve the Company. The successors in interest to the bankrupt Member shall, for the purpose of settling the estate, have all of the rights of such Member, including the same rights and subject to the same limitations that such Member would have had under the provisions of this Agreement to Transfer its Membership Interest. A successor in interest to a Member will not become a substituted Member except as provided in <u>Article IX</u> of this Agreement. Each of the Parties to this Agreement acknowledges and agrees that it has material ongoing obligations to the other Parties under this Agreement and intends for this Agreement to be an executory contract under 11 U.S.C. § 365.

Section 3.8 <u>Withdrawal of Capital</u>. No Member will have the right to withdraw capital from the Company or to receive or demand distributions (except as to distributions to which it is entitled under <u>Article VI</u>) or return of its Capital Contributions until the Company is dissolved in accordance with this Agreement and applicable provisions of the Act. No Member will be entitled to demand or receive any interest on its Capital Contributions.

Section 3.9 <u>Representations and Warranties</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Class A Member makes the following representations and warranties to the Company and each other Member as of the Effective Date and as of the date hereof:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Organization, Good Standing, Etc</u>. The Class A Member is a limited liability company duly formed, validly existing and in good standing under the law of the jurisdiction of its formation. The Class A Member has the limited liability company power and authority to own, lease and operate its properties and to carry on its business as now being conducted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Authority</u>. The Class A Member has the limited liability company power and authority to enter into the Transaction Documents to which it is a party, to perform its obligations under such Transaction Documents and to consummate the transactions contemplated thereby. Each of the Transaction Documents to which the Class A Member is a party represents a valid and binding obligation of the Class A Member, enforceable against it in accordance with the terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws affecting enforcement of creditors' rights and remedies generally and to general principles of equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>No Conflicts</u>. The execution and delivery by the Class A Member of the Transaction Documents to which it is a party and the performance by the Class A Member of its obligations under such agreements will not (A) violate any constitution or statute, regulation, rule, injunction, order, decree, ruling, charge or other restriction of any Governmental Authority to which the Class A Member is subject, (B) conflict with or cause a breach of any provision in the organizational documents of the Class A Member, (C) conflict with, cause a breach of, constitute a default under, cause the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any authorization, consent, waiver or approval under any contract, license, instrument, decree, judgment or other arrangement to which the Class A Member and/or its Affiliates is a party or under which any of them is bound or to which any of their assets are subject (or result in the imposition of a security interest or encumbrance upon any such assets), or (D) require any consent, approval or authorization from, filing or registration with, or notice to any Governmental Authority or Person, unless such requirement has already been satisfied.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Absence of Litigation</u>. The Class A Member is not subject to any outstanding injunction, judgment, order, decree, ruling or charge and, to the knowledge of the Class A Member, is not threatened in writing with being made a party to any action, suit, proceeding, hearing or investigation of, in, or before any Governmental Authority or before any arbitrator that could affect its ability to complete the transactions contemplated in the Transaction Documents to which it or any Affiliate of the Class A Member is a party or could have a material effect on the operation of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>Acknowledgment</u>. The Class A Member acknowledges that, except with respect to the representations and warranties expressly made by the Class B Members in the Transaction Documents, none of the Class B Members have made any representation or warranty, whether express or implied under the Transaction Documents, to the Class A Member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Manager makes the following additional representations and warranties as to the Company to each other Member as of the Effective Date and as of the date hereof:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Organization, Good Standing, Etc</u>. The Company is a limited liability company duly formed, validly existing and in good standing under the law of the jurisdiction of its formation. The Company has the limited liability company power and authority to own, lease and operate its properties and to carry on its business as now being conducted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Authority</u>. The Company has the limited liability company power and authority to enter into the Transaction Documents to which it is a party, to perform its obligations under such Transaction Documents and to consummate the transactions contemplated thereby. Each of the Transaction Documents to which the Company is a party represents a valid and binding obligation of the Company, enforceable against it in accordance with the terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws affecting enforcement of creditors' rights and remedies generally and to general principles of equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Taxes</u>. The Company is a newly formed entity that has not yet filed and has not been required to file any Tax Returns and the Company has not paid or been required to pay any Taxes. Prior to the Effective Date, the Company was an entity that was disregarded as separate from its owner for federal income Tax purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Tax Character</u>. No election has been filed with the IRS to treat the Company as a corporation for federal income tax purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>Obligations</u>. The Company is not a party to any contracts or agreements other than as contemplated herein. It has no debts or other liabilities other than as contemplated in the Transaction Documents, Project Documents and Financing Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) <u>Employee Matters</u>. The Company does not have and has never had any employees and has not maintained, sponsored, administered or participated in any employee benefit plan or arrangement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Each Class B Member, severally and not jointly, makes the following representations and warranties to the Company and each other Member as of the Effective Date and as of the date hereof:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Organization, Good Standing, Etc</u>. The Class B Member is a limited liability company, duly formed, validly existing and in good standing under the laws of the jurisdiction of its formation, and it has the power and authority to own, lease and operate its properties and to carry on its business as now being conducted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Authority</u>. The Class B Member has the power and authority to enter into the Transaction Documents to which it is a party, to perform its obligations under such Transaction Documents, and to consummate the transactions contemplated thereby. Each of the Transaction Documents to which the Class B Member is a party represents a valid and binding obligation of the Class B Member, enforceable against it in accordance with the terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws affecting enforcement of creditors' rights and remedies generally and to general principles of equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>No Conflicts</u>. The execution and delivery of each of the Transaction Documents to which the Class B Member is a party and the performance by the Class B Member of its obligations thereunder will not (A) violate any constitution, statute, regulation, rule, injunction, order, decree, ruling or other restriction of any Governmental Authority to which the Class B Member is subject, (B) conflict with or cause a breach of any provision in the charter, bylaws or other organizational documents of the Class B Member, (C) cause a breach of, constitute a default under, cause the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any authorization, consent, waiver or approval under any contract, license, instrument, decree, judgment or other arrangement to which the Class B Member is a party or under which it is bound or to which any of its assets are subject (or result in the imposition of a security interest or encumbrance upon any such assets), or (D) require any consent, approval or authorization from, filing or registration with, or notice to any Governmental Authority or Person, unless such requirement has already been satisfied.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Absence of Litigation</u>. The Class B Member is not subject to any outstanding injunction, judgment, order, decree, ruling or charge and, to the knowledge of the Class B Member, is not threatened in writing with being made a party to any action, suit, proceeding, hearing or investigation of, in, or before any Governmental Authority or before any arbitrator that could affect its ability to complete the transactions contemplated in the Transaction Documents to which it is a party or could have a material effect on the operation of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>Acknowledgment</u>. The Class B Member acknowledges that, except with respect to the representations and warranties expressly made by the Class A Member in the Transaction Documents, the Project Documents or the Financing Documents, the Class A Member has made no representation or warranty, whether express or implied under the Transaction Documents, to the Class B Member.

Section 3.10 <u>Affiliate Contracts</u>. The Company shall enter into the Project Documents to which it is anticipated to be a party, in each case in accordance with the terms of the Contribution Agreement.

Section 3.11 <u>Fees and Expenses</u>. For avoidance of doubt, before making any distributions to any party, the Company shall have paid Spring Lane the Initial Reimbursement Amount, to the extent not previously paid in accordance with Section 10.9 of the Contribution Agreement.

**ARTICLE IV**

**CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS**

Section 4.1 <u>Capital Contributions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The initial Capital Contributions of the Members are set forth on <u>Schedule 4.2(d)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Subject to the terms and conditions of the Contribution Agreement, each Member shall make Capital Contributions at such time or times and in such amounts as provided in the Contribution Agreement, up to such Member's aggregate Contribution Cap. The proceeds of such Capital Contribution shall be applied solely as provided in the Contribution Agreement for purposes of funding Project Costs in accordance with the Project Budget and Project Schedule or as otherwise established in the Contribution Agreement. No Member shall have the obligation to make any Capital Contribution hereunder in excess of such Member's Contribution Cap, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Except as may be specifically set forth elsewhere in this Agreement and as provided in <u>Section 2.2</u> of the Contribution Agreement, no Member shall be required to make any further Capital Contributions after the Commitment Expiration Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Except as elsewhere set forth in this Agreement, the Members will have no obligation to make any Capital Contributions other than as described in this <u>Section 4.1</u>.

Section 4.2 <u>Capital Accounts</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) A capital account (a "<u>Capital Account</u>") shall be established and maintained for each Member in the manner required by the Treasury Regulations under Section 704(b) of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) A Member's Capital Account shall be increased by (i) the amount of cash the Member contributes to the Company, (ii) the net value of any property the Member contributes to the Company (i.e., the Fair Market Value of the property net of liabilities secured by the property that the Company is considered to assume or take subject to under Section 752 of the Code), (iii) the Member's distributive share of Net Income or other income and gain allocated in accordance with this Agreement, and (iv) the net amount of any Company liabilities that are assumed by such Member or that are secured by any Company assets distributed to such Member. A Member's Capital Account shall be decreased by (i) the amount of cash distributed to the Member by the Company, (ii) the net value of any property distributed to the Member by the Company (i.e., the Fair Market Value of the property net of liabilities secured by the property that the Member is considered to assume or take subject to under Section 752 of the Code), (iii) the Member's distributive share of Net Loss or other loss and deduction allocated in accordance with this Agreement, (iv) the net amount of any liabilities of such Member that are assumed by the Company or that are secured by any property contributed by such Member to the Company (without duplication of any liabilities taken into account in determining the amount of any increase in a Member's Capital Account), and (v) an amount equal to an allocation of downward basis adjustment to such Member as described in Treasury Regulation Section 1.704-1(b)(2)(iv)(j), if any. The Members' Capital Accounts shall be maintained and adjusted as required by the provisions of Treasury Regulation Sections 1.704-1(b)(2)(iv) and 1.704-1(b)(4), including adjustments to reflect the allocations to the Members of depreciation, depletion, amortization and gain or loss as computed for book purposes rather than the allocation of the corresponding items as computed for tax purposes, as required by Treasury Regulation Section 1.704-1(b)(2)(iv)(g).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Gross Asset Value of the Company's property shall be revalued, and the Capital Accounts of the Members shall be reset to reflect a revaluation as directed by Treasury Regulation Section 1.704-1(b)(2)(iv)(f), immediately prior to the following events: (i) if any new or existing Member makes more than a de minimis Capital Contribution in exchange for a new or additional Membership Interest, (ii) if more than a de minimis amount of property is distributed by the Company to a Member to redeem all or any portion of its Membership Interest, or (iii) if the Company is liquidated within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g); provided, however, that the adjustments pursuant to clauses (i) and (ii) above shall be made only if the Manager reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) For federal income tax purposes, each of the initial Members will be treated as acquiring an interest in a new partnership in exchange for its initial Capital Contribution on the Effective Date, and with respect to the February 2023 Subsequent Issuance and March 2023 Subsequent Issuance, Spring Lane will be treated as acquiring an interest in a partnership in exchange for its additional Capital Contribution on the date hereof. The Company will be an entity disregarded as separate from the Class A Member for federal income tax purposes prior to the admission of the Class B Members as Members of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Following the Members' initial Capital Contributions in accordance with the Contribution Agreement, the Capital Account balance and Percentage Interest of each Member are as shown in <u>Schedule 4.2(d)</u>. The Manager shall update <u>Schedule 4.2(d)</u> from time to time. Any such updating will be consistent with the requirements regarding the maintenance of Capital Accounts set forth in this <u>Article IV</u>. Any reference in this Agreement to <u>Schedule 4.2(d)</u> will be treated as a reference to <u>Schedule 4.2(d)</u> as amended and in effect from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) If all or a portion of a Membership Interest in the Company is Transferred in accordance with the terms of this Agreement, then the transferee shall succeed to the Capital Account of the transferor to the extent of the Membership Interest so Transferred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The Capital Accounts shall be maintained in accordance with Treasury Regulation Sections 1.704-1(b) and the provisions regarding Capital Accounts in this Agreement will be interpreted and applied in a manner consistent with such Treasury Regulation or any successor provision.

**ARTICLE V**

**ALLOCATIONS**

Section 5.1 <u>Allocations</u>. Subject to <u>Section 5.2</u> and <u>Section 5.3</u>, for each Fiscal Year or portion thereof, the Company's Net Income or Net Losses (and, to the extent necessary, items thereof) shall be allocated among the Members in amounts that, as of the end of such Fiscal Year or other period, would result in Capital Account balances for each Member, increased by such Member's share of partnership minimum gain (as determined according to Treasury Regulation Section 1.704-2(g)) and such Member's partner nonrecourse debt minimum gain (as defined in Treasury Regulation Section 1.704-2(i)(2)), equal to all amounts required to be distributed pursuant to <u>Section 10.2(b)(iv)</u> in the priority and manner provided therein on a hypothetical liquidation of the Company. In determining the amounts distributable to the Members under <u>Section 10.2(b)(iv)</u> upon a hypothetical liquidation, it shall be presumed that (i) all of the Company's remaining assets are sold at their respective Gross Asset Values, (ii) all Company liabilities are satisfied (limited with respect to each nonrecourse liability to the Gross Asset Value securing that liability), (iii) all Membership Interests are vested and (iv) the proceeds of such hypothetical sale are applied and distributed in accordance with <u>Section 6.1(a)</u>.

Section 5.2 <u>Adjustments to Comply with Code</u>. The manner in which Capital Accounts are to be maintained and in which the income, gain, loss, deductions and credits of the Company are to be allocated pursuant to this Agreement are intended to comply with the requirements of Section 704(b) of the Code and the Treasury Regulations promulgated thereunder. If, in the opinion of the Company's accountants and subject to the consent of the Manager and the Requisite Class B Members, modifications are required in the manner in which Capital Accounts are to be maintained or the manner in which income, gain, deductions or losses, or items included therein, are to be allocated in order to comply with Section 704(b) of the Code and the Treasury Regulations thereunder, then, notwithstanding anything to the contrary contained in this Agreement, such modifications shall be made, provided, however, that any change in the manner of maintaining Capital Accounts or allocating income, gain, deductions or losses, or items included therein, shall not materially alter the economic agreement between or among the Members as set forth in this Agreement.

Section 5.3 <u>Special Allocations</u>. Notwithstanding any other provision of this Agreement, appropriate adjustments shall be made to the allocations to the extent required to comply with the provisions of the Treasury Regulations under Section 704(b) of the Code relating to qualified income offset, minimum gain chargeback, minimum gain chargeback with respect to partner nonrecourse debt, allocations of nonrecourse deductions, allocations with respect to partner nonrecourse debt, limitations on allocations of losses that might cause or increase an Adjusted Capital Account Deficit, corrective allocations with respect to partnership non-compensatory options, and forfeiture allocations with respect to substantially nonvested partnership interests, and such provisions are hereby incorporated by reference and shall be applied to the allocation of profits and losses in the manner provided in the Treasury Regulations. The Manager may, with the consent of the Requisite Class B Members, adjust the subsequent allocations of Net Income and Net Losses to prevent distortion of the economic arrangement of a Member, as otherwise described in this Agreement, due to allocations resulting from the preceding sentence. Nonrecourse deductions (within the meaning of Treasury Regulations Section 1.704-2(b)(1)), tax credits, and other items the allocation of which cannot have economic effect shall be allocated to the Members in accordance with their Percentage Interest. To the extent permitted by such Treasury Regulations, the allocations pursuant to this <u>Section 5.3</u> in such year and subsequent years shall be further adjusted so that the cumulative effect of all the allocations shall be the same as if all such allocations were made pursuant to the allocation provisions of this Agreement without regard to this <u>Section 5.3</u>.

Section 5.4 <u>Transfer or Change in Membership Interest</u>. If the respective Membership Interests or allocation ratios described in this <u>Article V</u> of the existing Members in the Company change or if a Membership Interest is Transferred in compliance with this Agreement to any other Person, then, for the Fiscal Year or other period in which the change or Transfer occurs, tax items shall be allocated, as between the Members for the Fiscal Year in which the change occurs or between the transferor and transferee, by taking into account their varying interests using any method permitted by Section 706 of the Code and the Treasury Regulations promulgated under Section 706 of the Code (such as an interim closing of the books or a proration method) as determined by the Manager with the consent of the Requisite Class B Members.

Section 5.5 <u>Tax Allocations</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>In General</u>. Except as otherwise provided in this <u>Section 5.5</u>, taxable income and loss and all items thereof shall be allocated to the Members to the greatest extent practicable in a manner consistent with the manner set forth in <u>Section 5.1</u> and Sections 704(b) and (c) of the Code. Allocations pursuant to this <u>Section 5.5</u> are solely for federal income tax purposes and shall not affect, or in any way be taken into account in computing, any Member's Capital Account or share of Net Income, Net Losses, other items or distributions pursuant to any provision of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Section 704(c) of the Code</u>. In accordance with Section 704(c) of the Code, income, gain, loss and deduction with respect to any property contributed to the capital of the Company shall, solely for income tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its initial Gross Asset Value.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Adjustments under Section 704(c) of the Code</u>. In the event the Gross Asset Value of any Company asset is adjusted pursuant to paragraph (b) of the definition of "<u>Gross Asset Value</u>," subsequent allocations of income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted tax basis of such asset and its Gross Asset Value in the same manner as under Section 704(c) of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Decisions Relating to Section 704(c) of the Code</u>. Any elections or other decisions relating to allocations under this <u>Section 5.5</u>, including the selection of any allocation method permitted under Treasury Regulation Section 1.704-3, shall be made by the Manager with the consent of the Requisite Class B Members.

**ARTICLE VI**

**DISTRIBUTIONS; PAYMENTS**

Section 6.1 <u>Distributions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Except as provided otherwise in <u>Section 10.2</u>, and subject to <u>Section 6.2</u>, Distributable Cash shall be distributed to the Members on each Distribution Date as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) first, until the Project Capital Recovery Date, one hundred percent (100%) of the Distributable Cash received by the Company shall be distributed to the Class B Members on a pro rata basis until the Class B Members have received one hundred percent (100%) of such Member's respective aggregate Capital Contributions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) second, from and after the Project Capital Recovery Date and through the Target Achievement Date, the Distributable Cash received by the Company shall be distributed ninety percent (90%) to the Class B Members, and ten percent (10%) to the Class A Member, until each of the Class B Members has received its Target Return;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) after the Target Achievement Date, the portion of Distributable Cash received by the Company shall be distributed fifty percent (50%) to Spring Lane (or its respective assigns), and fifty percent (50%) to the Class A Member and Soluna (or their respective assigns) pro rata based on the amount of Membership Interests held by such Members.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Distributions required to be made by operation of <u>Section 6.1(a)</u> shall be made by the Company on each Distribution Date, unless otherwise agreed with the Consent of the Members.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding the foregoing, if any Member fails to make a Capital Contribution in accordance with <u>Section 4.1(b)</u> or otherwise is in material breach of any provision in this Agreement (such Member, a "<u>Breaching Member</u>"), and such breach is continuing, such Breaching Member (i) shall not be entitled to and shall forfeit any right to any distributions pursuant to this <u>Section 6.1</u>, and (ii) shall not be entitled to vote on any matters as a Member of the Company with respect to any Membership Interests held by such Breaching Member (for avoidance of doubt, the Membership Interests held by such Breaching Member shall not be included in either the numerator or denominator for determining whether the voting threshold for the Requisite Class B Members has been reached). Upon any breach, a non-Breaching Member shall promptly provide written notice to the Breaching Member and each other Member of such breach ("<u>Breach Notice</u>"). The Breaching Member shall have five (5) Business Days after such Breach Notice has been received by the Breaching Member to challenge such Breach Notice by providing written notice to the non-Breaching Members of such challenge (a "<u>Breach Challenge</u>"). Upon receipt of a Breach Challenge by the non-Breaching Member, the Members shall in good faith collaborate to resolve such dispute set forth in the Breach Challenge. If the Members cannot resolve such dispute within thirty (30) calendar days, the Members shall engage a third party mediator, acceptable to the Members, to resolve the dispute in a timely manner thereafter.

Section 6.2 <u>Tax Distributions</u>. Notwithstanding anything to the contrary in <u>Section 6.1</u>, to the extent that the Manager, in its reasonable discretion, determines that the Company has sufficient current and projected cash flow to make Tax Distributions, the Company may make Tax Distributions quarterly to each Member. Tax Distributions pursuant to this <u>Section 6.2</u> shall be treated as advances of distributions to be made pursuant to <u>Section 6.1</u> (including <u>Section 10.2(b)</u>) and credited against future distributions pursuant to <u>Section 6.1</u> (including <u>Section 10.2(b)</u>). No Member shall be entitled to any Tax Distributions (or further Tax Distributions, as the case may be) during a Fiscal Year if such Member has already received cumulative distributions during such Fiscal Year pursuant to <u>Section 6.1</u> or this <u>Section 6.2</u> equal to or in excess of such Member's Tax Amount for such Fiscal Year. Notwithstanding the foregoing, no Member shall be liable to return any Tax Distribution, even if the Tax Distributions made to such Member exceed the amount such Member could be entitled to receive under <u>Section 6.1</u> (including <u>Section 10.2(b)</u>); provided such excess Tax Distribution shall be treated as an advance to such Member with respect to the next distributions in the distribution waterfall pursuant to Section 6.1. If the cumulative distributions made to any Member pursuant to <u>Section 6.1</u> or this <u>Section 6.2</u> with respect to a Fiscal Year is less than the Tax Amount of such Member for such Fiscal Year, the Company shall distribute the excess of the Tax Amount over such cumulative distributions to such Member within sixty (60) days following the filing of Internal Revenue Service Form 1065 by the Company for the Fiscal Year; provided, however, such Tax Distributions shall only be made to the extent the Company has sufficient cash and any shortfall in the Tax Distributions for any Fiscal Year shall be included in the Tax Amount used for calculating the Tax Distributions for each subsequent Fiscal Year until all Tax Distributions are paid in full. In determining the amount of any Tax Distribution, the amount of taxable income allocated to each Member for any Fiscal Year shall be reduced by any Net Losses previously allocated to such Member in any prior Fiscal Year <u>provided</u> that no such Net Loss (or partial Net Loss) shall be counted more than once for this purpose. No Tax Distributions shall be made pursuant to this <u>Section 6.2</u> in connection with a Sale of the Company.

Section 6.3 <u>Withholding Taxes</u>. If the Company is required to withhold Taxes with respect to any allocation or distribution to any Member pursuant to any applicable federal, state or local Tax laws, the Company may, after first notifying the Member and permitting the Member, if legally permitted, to contest the applicability of such Taxes, withhold such amounts and make such payments to Taxing authorities as are necessary to ensure compliance with such Tax laws. Any funds withheld by reason of this <u>Section 6.3</u> will nonetheless be deemed distributed to the Member in question for all purposes under this Agreement. If the Company did not withhold from actual distributions any amounts it was required to withhold, the Company may, at its option, (a) require the Member to which the withholding was credited to reimburse the Company for such withholding, or (b) reduce any subsequent distributions by the amount of such withholding. This obligation of a Member to reimburse the Company for Taxes that were required to be withheld shall continue after such Member Transfers its Membership Interests in the Company. Each Member agrees to furnish the Company with any representations and forms as will reasonably be requested by the Company to assist it in determining the extent of, and in fulfilling, any withholding obligations it may have.

Section 6.4 <u>Limitation on Distributions</u>. No distribution shall be made if such distribution would violate any contract or agreement to which the Company is then a party that was approved by the Requisite Class B Members or any Applicable Law then applicable to the Company.

Section 6.5 <u>No Return of Distributions</u>. Any distribution of cash or property pursuant to this Agreement shall be treated as a compromise within the meaning of Section 18-502(b) of the Act and, to the full extent permitted by law, no Member receiving the payment of any such money or distribution of any such property will be required to return any such money or property to any Person, the Company or any creditor of the Company. However, if any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Member is obligated to return such money or property, then such obligation will be the obligation of such Member and not of the other Members. Without limiting the generality of the foregoing, a deficit Capital Account of a Member will not be deemed to be a liability of such Member nor an asset or property of the Company.

Section 6.6 <u>Calculation of Target Return</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Tracking Accounts</u>. The Manager shall maintain the Tracking Account and shall deliver updated Tracking Accounts to the Members in accordance with <u>Article VII</u>. Distributions of Distributable Cash pursuant to <u>Section 6.1(a)</u> shall be made to the Members in the allocated percentages specified in such Section, which shall vary as provided in such Section, and which shall be determined by reference to data in the Tracking Accounts, subject to any corrections or adjustments by Manager that may be necessary from time to time to reflect the transactions herein specified (including, for the avoidance of doubt, such corrections and adjustments requested by any Member).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Notice of Date</u>. The Manager shall notify the Members in writing on or before the earlier of (i) fifteen (15) calendar days before the Distribution Date on which the Manager expects the Class B Members to achieve the Project Capital Recovery Date and Target Return and (ii) thirty (30) calendar days before making any liquidating distributions after a liquidation of the Company under <u>Section 10.1</u> (or on such later date as the liquidation is ordered). The notice shall include the Tracking Accounts showing the Manager's calculations of the Class B Members' Internal Rate of Return (which calculations shall apply the methodology used in the applicable Project Pro Forma) and the allocations and distributions that the Manager proposes to make to the Class B Members on the Distribution Date in accordance with <u>Section 6.1(a)</u> or <u>Section 10.2</u>, as applicable, based on such calculations.

Section 6.7 <u>Use of Proceeds</u>. The Company shall apply revenues (inclusive of any net refinancing proceeds) from its operations in accordance with this <u>Section 6.7</u>, unless otherwise agreed in writing by the Members or required in any Financing Documents:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) first, Tax Distributions pursuant to <u>Section 6.2</u>, if any;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) second, to pay its operating costs and expenses and capital expenses then due, after taking appropriate reserves and making provision for losses in accordance with Prudent Industry Practice and as may otherwise be required by the Financing Documents (including, without limitation, costs of goods sold, operational and maintenance expenses, insurance payments, asset management fees, reserve build up, professional expenses and other expenses related to the relevant Project);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) third, to reimburse to the Class B Members any amounts contributed to the Company to pay costs incurred by the Company pursuant to <u>Section 8.6</u> and to reimburse to the Manager any amounts paid by Manager pursuant to <u>Section 8.6</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) fourth, to pay any indebtedness as and when due under Financing Documents (if any);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) fifth, decommissioning costs, as agreed by the Requisite Class B Members, or if and to the extent required by the Financing Documents; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) last, to use one hundred (100%) percent of all remaining cash (including, without limitation, net cash flows from asset sales and refinancing proceeds) (such remaining cash, the "<u>Available Cash Flow</u>"), to make distributions to the Members in accordance with <u>Section 6.1</u>.

**ARTICLE VII**

**ACCOUNTING AND RECORDS**

Section 7.1 <u>Reports; Budget</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Thirty days after the last Business Day of each Quarter, Manager shall update the Tracking Accounts and deliver to the Class B Members a report showing the calculation of (i) each Class B Member's aggregate Internal Rate of Return, and (ii) the Internal Rate of Return achieved by the Class B Members, in each case as of the end of the immediately preceding Quarter (the "<u>Target Return Report</u>"). In the event that distributions made to the Class B Members prior to and as of the Target Achievement Date exceeded the Target Return, for the next following Distribution Date or Distribution Dates, the Company shall adjust distributions to the Members until Distributable Cash shall have been distributed in accordance with <u>Section 6.1(a)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Manager will promptly notify each Member of upon having actual knowledge of (a) any breach, default or event of default by the Company under any Project Documents, Financing Documents or Transaction Document, including any default by a counterparty under any Contracts or Transaction Document or any other material contract, and shall provide each Member with copies of any notices received by the Manager in connection with such breach, default or event of default and (b) any event or circumstance that is reasonably likely to have a Material Adverse Effect on the Company, the Class A Member, Parent or, in the reasonable estimation of the Manager based on facts known to it without inquiry, any Class B Members.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Manager will promptly make available copies of each report delivered to the Company pursuant to the O&M Agreement, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Manager shall prepare and deliver to each Member a monthly operations report in a form that is reasonable acceptable to the Requisite Class B Members and such other information relating to the financial condition, business, prospects, or corporate affairs of the Company as any Member may from time to time reasonably request. Notwithstanding the foregoing, delivery by the Manager to the Members of a copy of a monthly operations and maintenance report from the O&M provider under the O&M Agreement (in the form agreed on or prior to execution of the Contribution Agreement) shall be deemed to satisfy the obligations under this <u>Section 7.1(d)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Manager shall prepare a proposed Annual Budget no later than November 15 of each Fiscal Year starting with 2023 with respect to the upcoming year. Each Annual Budget will contain a line-item specification of projected revenues and expenses (including reserves), and such other line items required by any O&M Agreement, the Administrative Services Agreement or any other agreement that the Company and the Members (or any of their Affiliates) are party to. The Members will review promptly each proposed Annual Budget, as presented, and will approve, deny, or request modifications within fifteen (15) days of receipt of such draft. If a proposed Annual Budget is not approved by the Members, the Manager shall prepare and submit a revised budget or portion thereof until the Annual Budget is approved as provided in this <u>Section 7.1(e)</u>; <u>provided</u>, that in the event that an Annual Budget for a Fiscal Year is not approved by the first day thereof, the Annual Budget for the immediately preceding Fiscal Year shall automatically and without further action continue to be the "Annual Budget" until an Annual Budget is approved.

Section 7.2 <u>Books and Records and Inspection; Right to Audit and Contest</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Manager will, on behalf of the Company, maintain full and accurate books of account, financial records and supporting documents, which will in all material respects reflect, completely, accurately and in reasonable detail each transaction of the Company, and such other matters as are customarily entered into the records or maintained by Persons engaged in a business of like character or as are required by law. The books of account, financial records, and supporting documents and the other documents and writings of the Company will be kept and maintained by the Manager at the principal office of the Company. The financial records and reports of the Company (which, for the avoidance of doubt, do not for purposes of this sentence include Tracking Accounts) will be kept in accordance with GAAP and kept on an accrual basis. The Manager shall not delegate its responsibilities in this <u>Section 7.2</u> to any Person without the Consent of the Members; provided that such Consent of the Members shall be deemed to be given with respect to the delegation to the initial administrator under the Administrative Services Agreement to the extent set forth in such agreement as in effect on the Effective Date; and provided further that such delegation shall not in any way reduce or eliminate the obligations of the Manager under this Agreement, including this <u>Section 7.2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In addition to and without limiting the generality of <u>Section 7.2(a)</u>, the Manager will, on behalf of the Company, maintain at the Company's principal office:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) true and full information regarding the status of the financial condition of the Company, including any financial statements for the three most recent Fiscal Years;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) promptly after filing, a copy of the Company's federal, state, and local income Tax Returns for each year;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) consents and resolutions of the Members and the Manager with respect to the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) a current list of the name and last known business, residence or mailing address of each Member;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) a copy of this Agreement, the Company's Certificate of Formation, and all amendments thereto, together with executed copies of any written powers of attorney pursuant to which such agreements and Certificate of Formation and all amendments thereto have been executed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) true and full information regarding the amount of cash and a description and statement of the agreed value of any other property and services contributed by each Member, and the date upon which each became a Member; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) copies of records that would enable a Member to determine the Member's relative shares of the Company's distributions and the Member's relative voting rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Upon at least five (5) Business Days prior notice to the Manager, all books and records of the Company and its subsidiaries will be open to inspection and copying by any of the Members or their Representatives during business hours and at such Member's expense, for any purpose reasonably related to such Member's interest in the Company; provided that any such inspection or copying is conducted in a manner which does not unreasonably interfere with the Company's business, and each Member shall be entitled to visit and inspect the Company's properties of the Company and its subsidiaries (if any) and discuss the affairs, finances, and accounts of the Company and its subsidiaries (if any) with the Manager, during normal business hours of the Company as may be reasonably requested by the Member; provided that such Member shall follow all applicable safety, security and site rules and comply with all Applicable Laws, applicable permits and Prudent Industry Practices when on the Project site.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Upon at least five (5) Business Days prior written notice to the Manager, each Class B Member shall have the right, at its sole cost and expense, to audit all of the books and records of the Manager relating to the Tracking Account and the Target Return. Such audit may be conducted by such Class B Member or its designated Representatives. Each Class B Member shall have the right, upon notice to the Manager, to contest any calculation of the Target Return or any element of the Tracking Accounts. The Members shall thereupon, together, expeditiously and in good faith, attempt to resolve any such dispute. If such dispute shall not be resolved within twenty (20) Business Days after such notice from such Class B Member, any Member may submit the dispute for resolution pursuant to <u>Section 11.11</u>. If such resolution determines that any such calculation was incorrect, the Tracking Account shall be adjusted accordingly, the Class B Member with respect to which such calculation was incorrect shall be reimbursed by the Company for all of its costs and expenses incurred in connection with such audit, and, if affected thereby, the Target Achievement Date shall be adjusted and (x) the Class A Member shall promptly reimburse the Class B Members for any distribution received by the Class A Member which should have been made to the Class B Members, or (y) the Class B Members shall promptly reimburse the Class A Member for any distribution received by the Class B Members which should have been made to the Class A Member

Section 7.3 <u>Bank Accounts, Notes and Drafts</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Members acknowledge that the Company may maintain funds in cash, money market funds, certificates of deposit, or other permitted investments as approved by the Members in excess of the insurance provided by the Federal Deposit Insurance Corporation, or other depository insurance institutions, and that the Manager shall not be accountable or liable for any loss of such funds resulting from failure or insolvency of the institution, so long as any such maintenance of funds is at a federally or state chartered banking institution consented to by the Requisite Class B Members. As an initial matter, Requisite Class B Members consent to KeyBank. Each Class B Member shall have access to view the account balance at any time at such bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Checks, notes, drafts and other orders for the payment of money shall be signed by such Persons employed by the Manager or its Affiliate as the Manager from time to time may authorize in writing. When the Manager so authorizes, and subject to Applicable Law, the signature of any such Person may be given electronically.

Section 7.4 <u>Financial Statements and Other Reports</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company shall maintain true and proper books, records, reports, and accounts in which shall be entered all transactions of the Company. The Company shall also maintain all schedules to this Agreement and shall update such schedules promptly upon receipt of new information relating thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) As soon as available, but in any event not later than May 31 of each Fiscal Year, the Company shall furnish each Member a copy of the audited consolidated balance sheet of the Company and its subsidiaries (if any) as at the end of such year and the related audited statements of income, retained earnings and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year and a comparison between the audited balance sheet of the Company and its subsidiaries (if any) and the related statements of operations, shareholders' equity and cash flows referred to above, all such financial statements audited and certified by independent public accountants acceptable to the Requisite Class B Members. Such financial statement shall be prepared on a consolidated basis if the Company has any subsidiaries during any relevant period of time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) As soon as practicable, but in any event within sixty (60) days after the end of each of the first three (3) quarters of each Fiscal Year, Company shall furnish to each Member unaudited statements of income and cash flows of the Company and its subsidiaries (if any) for such fiscal quarter, and an unaudited balance sheet and a statement of members' equity of the Company and its subsidiaries (if any) as of the end of such fiscal quarter, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments; and (ii) not contain all or any notes thereto that may be otherwise required by GAAP). Such financial statement shall be prepared on a consolidated basis if the Company has any subsidiaries during any relevant period of time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Company shall deliver draft Schedule K-1s to the Members prior to March 1 of each Fiscal Year and final Schedule K-1s to the Members prior to March 15 of each Fiscal Year.

Section 7.5 <u>Partnership Status and Tax Elections</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Members intend that the Company will be taxed as a partnership for United States federal, state and local income tax purposes. No Member shall elect to be excluded from the application of Subchapter K of Chapter 1 of Subtitle A of the Code or any similar state statute nor elect for the Company to be treated as a corporation, or an association taxable as a corporation, under the Code or any similar state statute.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company shall make the following elections or applications on the appropriate Tax Returns or other documentation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) to the extent permitted under Section 706 of the Code, to adopt as the Company's fiscal year a year that ends on December 31 as long as such fiscal year remains the Company's "majority interest taxable year," as defined in Treasury Regulations Section 1.706-1(b)(2);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) to adopt the accrual method of accounting;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) if a distribution of the Company's property as described in Section 734 of the Code occurs or a transfer of Membership Interest as described in Section 743 of the Code occurs, on request in writing from any Member, to elect, at such Member's cost, pursuant to Section 754 of the Code to adjust the basis of the Company's properties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) to elect to amortize the organizational expenses of the Company ratably over a period of 180 months as permitted by Section 709(b) of the Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) to make an election with respect to bonus depreciation, if such election is agreed to by the Manager and the Class B Members; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) any other election the Manager and the Class B Members agree to be appropriate.

Section 7.6 <u>Company Tax Returns</u>. The Manager shall prepare all Tax Returns of the Company in accordance with the Code, provided that the income Tax Returns of the Company shall be subject to the review and approval of the Requisite Class B Members, as provided in this <u>Section 7.6</u>, and the Manager shall retain a nationally recognized accounting firm to advise on such preparation and review. The Manager shall deliver a draft of all income Tax Returns of the Company to the Members not less than thirty (30) calendar days prior to the deadline for filing (taking into account any extensions). The Members may propose revisions to such Tax Returns not more than five (5) Business Days after the date of delivery, and the Manager shall consider and shall incorporate any such revisions so long the revisions are in compliance with Applicable Laws and this Agreement, and no Member is disadvantaged by any such revisions without its written consent. To the extent that any Tax Returns are not prepared in a timely manner as a result of the breach by the Manager of its obligations under this Agreement, the Requisite Class B Members may elect to assume the preparation of any such Tax Return on behalf of and at the expense of the Company, and the Company and Manager shall provide access to all information necessary or useful in such preparation. The Manager may extend the time for filing any Tax Returns as provided for under Applicable Laws, provided that prior notice thereof is given to the Class B Members. Each Member shall provide such information, if any, as may be reasonably needed by the Company for purposes of preparing such Tax Returns; <u>provided</u> that such information is readily available or reasonably can be obtained from regularly maintained accounting records.

Section 7.7 <u>Tax Matters</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) (i) the Manager shall be designated as the "Partnership Representative" within the meaning of Section 6223(a) of the Code (the "<u>Partnership Representative</u>") and the Manager shall be authorized to take any actions necessary under Treasury Regulations or other guidance to be designated as the Partnership Representative; (ii) subject to <u>Section 7.7(b)</u>, the Company and each Member agree that they shall be bound by the actions taken by the Partnership Representative, as described in Section 6223(b) of the Code; (iii) the election set forth in Section 6226(a) of the Code shall be made as provided in Section 7.7(b), and the Members agree to take any action, and furnish the Company, the Manager, and the Partnership Representative with any information necessary, to give effect to such election if made in accordance with such section; and (iv) any imputed underpayment imposed on the Company pursuant to Section 6232 of the Code (and any related interest, penalties or other additions to tax) that the Partnership Representative reasonably determines is attributable to one or more Members (including any former Members), shall be promptly paid by such Members (including any former Members) to the Company (pro rata in proportion to their respective shares of such underpayment) within fifteen (15) days following the Company's request for payment (and any failure to pay such amount shall result in a subsequent reduction in distributions otherwise payable to such Member); provided, that the Company shall provide the Members with its calculation of the portion of any imputed underpayment applicable to each of the Members and an opportunity to review and comment, which comments shall be considered in good faith by the Company. If the Partnership Representative is not an individual, the Partnership Representative shall appoint a "designated individual" in accordance with Treasury Regulations Section 301.6223-1(b)(3) (the "<u>Designated Individual</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Partnership Representative shall (i) keep all Members reasonably and contemporaneously apprised regarding all tax audits, examinations, proceedings and other material tax matters related to the Company or any of its direct or indirect subsidiaries (a "<u>Tax Proceeding</u>") and (ii) promptly furnish to all Members copies of any and all material documents and correspondence sent or received in connection with any such Tax Proceeding. All Members shall be entitled to be present at, and participate in, any and all meetings and conference calls with respect to any Tax Proceeding. The Partnership Representative shall not settle or otherwise agree to, or cause or permit the Company or any of its direct or indirect subsidiaries to settle or agree to, any matter, determination or outcome without the prior written consent of the Requisite Class B Members, if such resolution would have an adverse effect on any Class B Member or the Company. Notwithstanding the foregoing, unless otherwise agreed to by the Partnership Representative and the Requisite Class B Members, the Partnership Representative shall cause the Company to make an election pursuant to Section 6226 of the Code with respect to any "imputed underpayment" (within the meaning of Section 6225 of the Code) to make the provisions of Section 6225 of the Code inapplicable to such imputed underpayment (a "Section 6226 Election") to the extent the Company is eligible to make such election; provided, however, that if any Member objects in writing to such Section 6226 Election, and provides an alternative to such Section 6226 Election that is materially more favorable to such Member and no less favorable to the other Members or the Company (as determined by the written Consent of the Members, such consent not to be unreasonably withheld), then the Company shall in good faith pursue such alternative so long as it can be implemented without jeopardizing the Members' rights to the Section 6226 Election.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company shall indemnify and reimburse the Partnership Representative for all reasonable out-of-pocket expenses, including legal and accounting fees (including tax preparation fees), claims, liabilities, losses and damages, incurred in connection with the exercise of its duties as Partnership Representative.

Section 7.8 <u>Cooperation</u>. Subject to the provisions of this <u>Article VII</u>, each Member shall, at the requesting Member's expense, provide the other Members with such assistance as may reasonably be requested by such other Members in connection with the preparation of any Tax Return, any audit or other examination by any taxing authority, or any judicial or administrative proceedings relating to the liability for any Taxes with respect to the operations of the Company.

Section 7.9 <u>Fiscal Year</u>. The fiscal year of the Company (the "<u>Fiscal Year</u>") shall be a year that ends on December 31. The taxable year of the Company will be a year that ends on December 31 as long as such taxable year remains the Company's "majority interest taxable year," as defined in Treasury Regulations Section 1.706-1(b)(2), or such other date as required by federal income tax law.

Section 7.10 <u>Member Tax Consistency</u>. Each Member agrees that on such Member's federal, state, local, foreign, and other income tax returns, such Member shall not take any position with regard to any Company item that is inconsistent with the treatment of such item on the Company's return, unless otherwise required by applicable law, in which case such Member shall provide prior written notice to the Company of such inconsistency.

**ARTICLE VIII**

**MANAGEMENT**

Section 8.1 <u>Management of the Company</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Manager and Spring Lane shall meet to review the business, operations, finances and prospects of the Company at least bi-weekly or more frequently as requested by Spring Lane, in each case at a mutually agreeable time after reasonable prior notice. Such meetings may include other Members. For the avoidance of doubt, any meeting between Manager and any Member may be via telephone or videoconference, at the request of any such Party. Notwithstanding the foregoing, if Spring Lane has access and meeting rights in connection with the O&M Agreement that are substantially similar to the foregoing, compliance with such rights by the O&M provider under the O&M Agreement shall be deemed to satisfy the requirements under this <u>Section 8.1(a)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Subject to <u>Section 8.2</u> and this <u>Section 8.1</u>, the Manager will have responsibility, control and supervision over the day-to-day operation of the Company and all actions with respect to the management and operation of the Company that are those necessary, convenient or incidental for the accomplishment of the purposes of the Company set out in Section 2.3(a) that are not (i) Major Decisions pursuant to <u>Section 8.4</u> or (ii) decisions reserved to, or subject to the consent of, the Requisite Class B Members, including pursuant to this <u>Section 8.1</u> and <u>Section 8.5</u>. The Manager shall devote such time to the business and affairs of the Company as is necessary to carry out the Manager's duties set forth in this Agreement. The Manager shall perform their managerial duties (i) in good faith, (ii) in a manner it believes in good faith to be in the best interests of the Company, (iii) in a manner it believes in good faith to represent the care as an ordinarily prudent person in a like position would exercise under similar circumstances, (iv) without intentional misconduct or a knowing violation of law; and (v) without engaging in any transaction for which it receives a personal benefit in violation or breach of any provision of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding any other provision of this Agreement, (i) in connection with (A) any payment being made by or on behalf of the Company to POCo that is not contemplated in the Shared Facilities Agreement or any other Project Document, (B) any default by POCo under the Shared Facilities Agreement (including the enforcement of any remedies thereunder or the waiver of any such default) or any other Project Document, (C) any consent, approval, waiver, or other material decision pertaining to POCo (including with regard to termination for cause) under the Shared Facilities Agreement or any other Project Document, (D) any matter subject to Section 8.2.2 of the Shared Facilities Agreement or similar provisions in any other Project Document, or (E) matters arising under or affecting any Transaction Documents between the Company on the one hand and Developer or its Affiliates on the other hand, or under any Project Document (each, an "<u>Affiliate Contract</u>") (for purposes of this clause (c)(i)(E), other than those addressed in clauses (A), (B), (C) and (D) of this Section 8.1(c)) between the Company and POCo, including in its capacity as a Member or Manager hereunder, and including the enforcement, prosecution, waiver, or conduct of any claims, disputes or material rights thereunder or with respect thereto, then, in each case, the Requisite Class B Members shall have the sole right and power to exercise decisions on behalf of the Company, each Class B Member acknowledges, solely for the avoidance of doubt and not in derogation of any right of indemnity or otherwise of the Class B Members hereunder, that neither the Manager nor Class A Member shall have any responsibility or liability of any kind whatsoever for actions taken by the Requisite Class B Members in the exercise of its rights under this Section 8.1(c); provided that, for the avoidance of doubt, in no event shall this Section 8(c) be deemed to limit the Class A Member's voting rights with respect to any matter falling under the Shared Facilities Agreement or any other Project Document to the extent pertaining to the need for or the nature and substance of any services that happen to be provided by POCo (such as upgrades to the Shared Facilities), as opposed to pertaining directly to POCo (and POCo's performance) itself; provided that the Class A Member shall be recused from any decision regarding the price paid to POCo with respect to any such services, and (ii) other than in the event of an emergency that requires the Company to take an action within twenty four hours (in which event, the Class B Members shall be promptly notified), the Requisite Class B Members shall have the sole right and power to approve or consent or to refrain from approving or consenting to any amendment, supplement, extension, waiver or other modification to or deviation from any Project Document, excepting from the foregoing requirements under clause (ii) the following: immaterial waivers or modifications, and waivers or modifications to the extent solely affecting the administration, operations or logistics of the Company such that the Company is in a substantially equivalent position consistent with the terms of the applicable Project Document without materially expanding the liabilities of the Company and without materially affecting the Project Budget, the Project Schedule or the assumptions in the Project Pro Forma.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Notwithstanding anything herein (x) the Manager shall have no obligation to expend any of its own funds in carrying out its duties and obligations under this Agreement if it is not reasonably satisfied, to the extent any amounts are reimbursable hereunder, that such amounts will be timely reimbursed in accordance with the terms hereof, and (y) the Manager shall not be liable for any failure to perform any of its duties or obligations hereunder to the extent that such failure was due to (i) failure of the Class B Members (or the Company, to the extent caused by the Class B Members) to make funds available for such performance as required hereunder, (ii) a Force Majeure Event, or (iii) the breach by any other Person of a Contract where such compliance was inherently a predicate for the performance by Manager of its obligations hereunder; provided, for the avoidance of doubt, that the foregoing exception to Manager's obligation to perform shall not relieve the other Person of any liability for any such breach.

Section 8.2 <u>Removal of Manager/Changes in Voting</u>. The Requisite Class B Members shall have the right to remove the Manager as Manager at any time upon notice to the Manager and the other Members and replace the Manager with a designee of the Requisite Class B Members selected in a commercially reasonable manner, which may be a Class B Member, if (a) the Manager, Soluna, Developer or POCo, or their respective successors or assigns, or any of their respective Affiliates, is terminated as a service provider under any of the Project Documents or (b) the Requisite Class B Members have concluded in their reasonable judgement that any of the events described in clause (iii) of the definition of "For Reason" are imminently likely to occur with respect to the Manager or Parent. Parent shall notify Spring Lane (i) ten (10) days prior to filing a bankruptcy petition, apply for a receivership, or otherwise institute insolvency proceedings or consenting to the institution of bankruptcy, receivership or insolvency proceedings, or (ii) immediately if it reasonably believes that the events described in clause (iii) of the definition of "For Reason" are imminently likely to occur. In addition, the Requisite Class B Members shall have the right to remove the Manager For Reason, and upon such removal For Reason, any Membership Interest of the removed Manager shall convert automatically into a non-voting membership interest (including that the consent of such Member shall not be required pursuant to Section 8.4); provided that, for the avoidance of doubt, notwithstanding such conversion the Member shall continue to be entitled to the economic rights provided in <u>Articles V</u> and <u>VI</u>.

Section 8.3 <u>Debt</u>. Except as otherwise provided in the Act or by Applicable Law, no Member will be obligated personally for any debt, obligation or liability of the Company or other Members, whether arising in contract, tort or otherwise, solely by reason of being a Member.

Section 8.4 <u>Major Decisions</u>. In addition to any other approval required by Applicable Laws or this Agreement, and subject to <u>Section 8.5(f)</u>, the Company shall not, without the consent of the Requisite Class B Members, directly or indirectly take any of the following actions ("<u>Major Decisions</u>"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) amend its limited liability company operating agreement or its certificate of formation, or, subject to <u>Section 8.1(c)</u>, any Project Document or Project Schedule;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) except as provided in <u>Article IX</u>, issue, sell or exchange, agree to issue, sell or exchange, or reserve or set aside for issuance, sale or exchange, any Membership Interests or interests, or other equity or debt securities (or any securities or instruments convertible or exchangeable into the foregoing) of the Company or any of its subsidiaries (if any);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) repurchase any equity or debt securities (or any securities or instruments convertible into the foregoing) of the Company or any of its subsidiaries (if any);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) perform any act that could subject the Members to liability in their capacity as Members;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) change the general nature of the business activity of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) execute, modify or terminate, or waive or enforce any material right or claim under, (i) any contract between the Company (or any of its subsidiaries, if any), on the one hand, and the Manager, any Affiliate of the Manager, or employee of the Manager or Affiliate of the Manager, on the other hand, in each case, in which any such Person has a direct or indirect economic interest, or (ii) any Affiliate Contract, unless, in each case, expressly permitted under <u>Section 8.1(c)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) create a new subsidiary or invest in any other Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) delegate any power or authority of the Manager to one or more Persons except as otherwise set forth herein;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) make any distribution, other than as set forth in <u>Article VI</u> or <u>Article X</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) change the tax classification of the Company or make any material tax election (including as regards tax credits) not specifically provided for in this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) elect the alternative depreciation system or make any change to any material tax depreciation or accounting methods of the Company that would have a disproportionate, material and adverse impact on any Member;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) to confess a judgment against the Company, pursue a claim of the Company against a third party (excluding, for the avoidance of doubt, the Class A Member and its Affiliates), or bring, dismiss, or settle litigation or claims involving the Company (excluding, for the avoidance of doubt, in respect of the Class A Member and its Affiliates);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) engage or terminate an auditing firm;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) hire or allow for any employees of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) approve, amend, modify, or incur costs in excess of, an Annual Budget or any Project Pro Forma, Project Schedule, and the Project Opex and Capex Budget;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) enter into any merger, consolidation, reorganization or other business combination;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) sell, lease, exchange or other disposal of any material assets of the Company; provided that (A) the Company may sell products and services in the ordinary course of business as part of its revenue generation pursuant to business operations that are part of the Annual Budget, and (B) the Company may sell, lease, otherwise transfer or dispose of property or assets that (1) are obsolete, damaged or no longer useful for the business of the Company, (2) are not in excess of $1,000,000 per annum, (3) are cash or cash equivalent investments in a manner consistent with the Project Budget, or (4) are condemned as a result of the exercise of "eminent domain" or other similar policies to the respective governmental authority or agency that has condemned the same (whether by deed in lieu of condemnation or otherwise);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) create, issue, or guarantee, or incur or agree to incur, or enter into any agreement, any Indebtedness for borrowed money, other than pursuant to any Financing Documents pursuant to any "Qualifying Debt" (as defined in the Contribution Agreement); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) refinance the Indebtedness and other obligations under the Financing Documents or place Liens on the assets of the Company in connection with such refinancing.

Section 8.5 <u>Special Class B Members' Powers</u>. The Requisite Class B Members shall have the right, in their sole discretion without the consent of the Class A Member, acting by a vote of the Requisite Class B Members, to cause the Company to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) except as expressly provided elsewhere in this Agreement and for so long as Spring Lane or any of its Affiliates holds any Membership Interests, dissolve the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) file a bankruptcy petition, apply for a receivership, or otherwise institute insolvency proceedings or consent to the institution of bankruptcy, receivership or insolvency proceedings, in each case related to the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) enter into, modify, or terminate, waive or enforce any right or claim under any agreement or transaction in which the Manager, any Affiliate of the Manager, any employee of Manager or its Affiliates may have a direct or indirect economic interest other than in its capacity as a Member;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) except in the case of any such transaction between the Company and a Class B Member or a Class B Affiliate, sell, lease or otherwise dispose of all or substantially all of the Company's assets, on terms acceptable to the Requisite Class B Members, and in connection with such sale or other disposal, at the election of the Requisite Class B Members, terminate the rights and obligations of the Company under any Shared Facilities Agreement, EPC Agreement, O&M Agreement or Administrative Services Agreement with such termination effective upon payment of the Termination Payment therefor (if applicable); provided that Class B Members shall provide a right of first offer to the Developer in accordance with <u>Section 9.10</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) except in the case of any such transaction between the Company and a Class B Member or a Class B Affiliate, enter into or allow the Company to enter into any merger, consolidation, reorganization or other business combination or transaction under <u>Section 9.7</u>, <u>Section 9.8</u> or <u>Section 9.9</u>, and in connection with such transaction terminate the rights and obligations of the Company under any EPC Agreement, O&M Agreement or Administrative Services Agreement, with such termination effective upon payment of the Termination Payment therefor (if applicable); provided that Class B Members shall provide a right of first offer to the Developer in accordance with <u>Section 9.10</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) if the Class A Member is removed as the Manager, take or refrain from taking any of the actions in <u>Section 8.4(h)</u>, <u>Section 8.4(l)</u>, <u>Section 8.4(m)</u>, and <u>Section 8.4(n)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) to confess a judgment against the Company, pursue a claim against the Class A Member or any of its Affiliates, or bring or settle litigation or claims involving the Company or in respect of the Class A Member or its Affiliates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) prepare and send Contribution Requests (as defined in the Contribution Agreement) in accordance with the terms of the Contribution Agreement, and to require the Class B Members to make subsequent Capital Contributions in accordance with the Contribution Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) take the actions and cause the Company to take the actions specified in Section 8.1(c).

Section 8.6 <u>Costs and Expenses; Compensation</u>. All out-of-pocket costs and expenses reasonably incurred by the Manager in performing its duties as Manager hereunder, including travel and the fees, costs and expenses of accountants and other third party service providers shall be the costs and expenses of the Company and Company shall promptly reimburse the Manager for all such out-of-pocket costs and expenses; provided, that Manager shall not be permitted to pass through any out-of-pocket expense hereunder that (a) Manager has expressly agreed in this Agreement or any other Transaction Document or any Corporate Document to pay on its own account, or (b) that are customary items of overhead (including, without limitation, office supplies, office expenses, office space, employee salaries and benefits, utilities, internet access, cellular phone service, computers, software and tools of the trade used by Manager to perform its management duties) or (c) that are paid pursuant to any Administrative Services Agreement. All out-of-pocket costs and expenses reasonably incurred by the Class B Members in connection with the exercise of their rights and duties pursuant to Section 8.4 or Section 8.5 shall be costs and expenses of the Company, and the Company shall promptly reimburse the Class B Members for all such costs and expenses to the same extent they would be reimbursable to the Manager pursuant to the foregoing sentence.

Section 8.7 <u>Indemnification and Exculpation</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) To the fullest extent permitted by Applicable Law, the Company shall exculpate, hold harmless, and indemnify the Manager (only in its capacity as Manager), each Member (only in its capacity as a Member) and their respective members, officers, directors, employees and agents from and against, all claims, suits, demands, injunctions, actions, causes of action, assessments, costs, expenses judgments, awards, liabilities, losses ("Losses") any of them incur by reason of any act or omission performed or omitted by such Person in good faith, in a manner reasonably believed to be consistent with its rights and obligations under Applicable Law and this Agreement; <u>provided</u>, that this indemnity does not apply to such matters that are attributable to the gross negligence, willful misconduct or fraud, or the breach by such Person in any capacity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) To the fullest extent permitted by Applicable Law, expenses to be incurred by an indemnified Person under this <u>Section 8.7</u> shall, from time to time, be advanced by or on behalf of the Company prior to the final disposition of any matter upon receipt by the Company of an undertaking from a Person with sufficient credit capacity to repay such amount if it shall be determined that the indemnified Person is not entitled to be indemnified under this Agreement.

Section 8.8 <u>Power of Attorney</u>. In the event that the Requisite Class B Members approve the issuance of any debt securities, term loan or any Financing Documents, or modifications, amendments or changes to the same, each Party to this Agreement hereby grants a power of attorney to the Manager, and a designee of Spring Lane, and each of them, with full power of substitution, to sign such Financing Documents or related documents on behalf of such Party, including, without limitation, any pledge of membership interests in the Company required by the lender. The power of attorney granted hereunder shall authorize the Manager and a designee of Spring Lane to execute and deliver such documentation referred to in the previous sentence on behalf of any Party failing to do so within five (5) business days of a request by the Company. The power of attorney granted pursuant to this <u>Section 8.8</u> is given in consideration of the agreements and covenants of the Company and the parties in connection with the transactions contemplated by this Agreement and, as such, each is coupled with an interest and shall be irrevocable unless and until this Agreement terminates or expires. Each party hereto hereby revokes any and all previous proxies or powers of attorney with respect to the matters addressed in the first sentence of this <u>Section 8.8</u> and shall not hereafter, unless and until this Agreement terminates or expires pursuant to the terms hereof, purport to grant any other proxy or power of attorney with respect to any of the Membership Interests, deposit any of the Membership Interests into a voting trust or enter into any agreement (other than this Agreement), arrangement or understanding with any person, directly or indirectly, to vote, grant any proxy or give instructions with respect to the voting of any of the Membership Interests, in each case, with respect to the matters addressed in the first sentence of this <u>Section 8.8</u>, other than as set forth in <u>Section 9.9(d)</u>.

**ARTICLE IX**

**TRANSFERS**

Section 9.1 <u>Prohibited Transfers</u>. Each Member may Transfer only in compliance with this <u>Article IX</u>. Any attempted Transfer that does not comply with this <u>Article IX</u> shall be null and void and of no force or effect whatsoever. Notwithstanding the foregoing, the Transfer contemplated by the 2023 Purchase Agreement shall be exempt from the requirements of <u>Sections 9.2(a)</u>, <u>(b)</u> and <u>(h)</u>, <u>Section 9.9</u> and <u>Section 9.10</u>.

Section 9.2 <u>Conditions Applicable to All Transfers</u>. Except as otherwise provided in this <u>Article IX</u>, all Transfers of Membership Interests must satisfy the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The transferring Member must give notice of the proposed Transfer to the Manager and the other Members not less than 10 Business Days prior to the proposed date for the consummation of the proposed Transfer; provided that, with respect to any Transfer by a Class B Member, such Class B Member must also give notice to the Manager and the other Members promptly upon commencing a marketing process for the sale of Class B Membership Interests and promptly upon entering into advanced negotiations with a third party with respect to the Transfer of Class B Membership Interests;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The transferring Member and the prospective transferee must each execute, acknowledge and deliver to the Company an assignment and assumption agreement substantially in the form set forth in <u>Exhibit B</u> hereto with respect to such Transfer and such other instruments as are reasonably satisfactory in form and substance to the other Members to effect such Transfer and confirm the transferor's intention that the transferee become a Member in its place with respect to the Membership Interests so transferred, and the prospective transferee makes the representations, warranties and covenants set forth in <u>Section 3.9</u> as of the date of such Transfer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Transfer will not violate any Applicable Law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The transferee is not a Disqualified Transferee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Transfer will not cause the Company to be classified as a corporation or publicly traded partnership for federal income tax purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Transfer will not cause the assets of the Company to be treated as tax-exempt use property within the meaning of Section 168(h) of the Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) For Transfers by the Class A Member of the Class A Member's interests, the Transfer shall have been approved in writing by the Requisite Class B Members in their sole discretion, unless such Transfer is made in compliance with <u>Section 9.9</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) For Transfers by any Class B Member, the Class B Member has made all of the contributions contemplated to be made by such Class B Member under the Contribution Agreement; <u>provided that</u>, this restriction shall not apply if the transferee has reasonably demonstrated that they have the ability to make all remaining Capital Contributions required of the transferring Class B Member (an "<u>Eligible Transferee</u>"); provided further that any transferee that has (i) a long-term credit rating of at least BBB- by Standard & Poor's and Baa3 by Moody's, (ii) a Tangible Net Worth of at least $25,000,000, or (iii) has provided a parent guaranty from an entity that meets the requirements set forth in clause (i) or (ii), which guaranty is in form and substance reasonably acceptable to the Class A Member, shall be deemed to be an Eligible Transferee; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) For Transfers by any Class B Member, such Transfer is not to a Prohibited Class B Entity.

Section 9.3 <u>Additional Requirements of Transfer</u>. As additional conditions to the validity of any transfer of a Membership Interest, such transfer shall not: (a) violate the Act, (b) violate the registration provisions of the Securities Act of 1933, as amended from time to time, or the securities laws of any jurisdiction, (c) cause the Company to register as an "investment company" under the Investment Company Act of 1940, as amended from time to time, and the rules and regulations of the Securities and Exchange Commission thereunder, (d) result in the Company being classified as a "publicly traded partnership" under the Code or treated as an entity other than a partnership for federal income tax purposes or (e) be to a "benefit plan investor" (as defined in the Plan Assets Regulation), unless such transfer would not result in all or any portion of the assets of the Company constituting "plan assets" for purposes of ERISA. The Company may require reasonable evidence as to the satisfaction of any of the foregoing conditions, including a favorable opinion of tax counsel on behalf of the transferor Member.

Section 9.4 <u>Transfer Expenses</u>. All reasonable documented, out of pocket costs and expenses incurred by the Class B Members, its Affiliates or the Company for the benefit of all holders of Membership Interests in connection with a Sale of the Company in accordance with the applicable terms hereof (whether or not consummated), including all attorneys' fees and expenses, all accounting fees and charges and all finders, brokerage or investment banking fees, charges or commissions, will be paid by the Company, and, if not paid by the Company, borne by the Members based upon the pro rata share of the proceeds to which each Member is entitled to receive under <u>Section 6.1(a)</u> such that proceeds from any Sale of the Company will be distributed pursuant to <u>Section 6.1(a)</u> as if they had been distributed after giving effect to such costs and expenses.

Section 9.5 <u>Non-Compliant Transfer</u>. Any proposed Transfer of a Membership Interest that does not satisfy the conditions for such Transfer set forth in this Agreement shall be null and void ab initio and shall not be recognized by the Company for any purpose. Unless and until all of the requirements of this Agreement have been satisfied with respect to a proposed Transfer of a Membership Interest, the Company shall (a) continue to treat the transferor of such Membership Interest as the sole owner of the Membership Interest for all purposes hereunder and incur no liability for allocations or distributions made to such transferor with respect to such Membership Interest, (b) make no allocations or distributions to the proposed transferee with respect to such Membership Interest, (c) not furnish to such transferee any tax, financial or other information regarding the Company with respect to such Membership Interest and (d) not otherwise treat such proposed transferee as the legal or equitable owner of such Membership Interest, except and only to the extent as required by Applicable Law.

Section 9.6 <u>Transferee Members</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) A transferee of a Membership Interest that is admitted as a substitute Member in accordance with this Agreement shall succeed to the rights and obligations of the transferor of such Membership Interest under this Agreement and Applicable Law with respect to such Membership Interest as of immediately prior to the effective time of such admission and, as of such effective time, any Unfunded Commitment and the Capital Account of such transferor. The Capital Contributions and the Capital Account balance of the transferee with respect to such Membership Interest shall equal the Capital Contribution and the Capital Account balance of the transferor with respect to such Membership Interest as of immediately prior to such time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any transferee of all or part of any Membership Interests pursuant to a Transfer made in accordance with this Agreement shall be admitted to the Company as a Member only upon its execution of a joinder agreement in form and substance reasonably satisfactory to the other Members.

Section 9.7 <u>Tag-Along</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In the event that a Member (a "<u>Selling Member</u>") seeks or otherwise receives and wishes to accept an offer by a third party to purchase forty percent (40%) or more of its Membership Interest (other than a Class B Affiliate), and without limitation of the consent right in <u>Section 9.2(g)</u>, or if the Class A Member is the Selling Member and the transferee is not an Affiliate of the Selling Member, then such Selling Member shall give written notice, specifying the cash purchase price and the other material terms of such offer (and providing a copy of the proposed agreement for such purchase and sale if then available) ("<u>Tag-Along Notice</u>"), to all Tag-Eligible Members, and such Tag-Eligible Members and the Selling Member shall have the right to participate in the proposed sale on a pro rata basis calculated as set forth in <u>Section 9.7(c)</u> on terms and conditions no less favorable to the Tag-Eligible Members than those applicable to the Selling Member, exercisable by delivery of written notice delivered to the Selling Member (the "<u>Tag Along Election</u>"), within ten (10) Business Days following receipt of the Tag Along Notice (the "<u>Election Period</u>"), which Tag Along Election shall be irrevocable, and shall be for the sale of all of the Membership Interest of the electing Tag-Eligible Member set forth in the Tag Along Election (a "<u>Tag Along Sale</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If a Tag-Eligible Member delivers the Tag Along Election (any such Member, a "<u>Tag Along Member</u>"), then such Tag Along Member shall be irrevocably bound (subject to the terms and conditions set forth set forth in the definitive documentation for such purchase and sale) to sell its Membership Interests on terms and conditions no less favorable to the Tag Along Member than those applicable to the Selling Member (taking into account the differences in rights, obligations and values between Class B Membership Interests and Class A Membership Interests), unless otherwise agreed to in writing by such Tag Along Member in its sole discretion. The proceeds of such Tag Along Sale shall be allocated to the Selling Member and the Tag Along Member in the amounts as would have been distributed had the proceeds been distributions pursuant to <u>Section 6.1(a)</u> and further provided that any proceeds held in escrow pursuant to such sale shall not constitute sale proceeds until released from such escrow for payment to the Selling Member and the Tag Along Member (which proceeds shall be so applied at the time of release from such escrow).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In order to be entitled to participate pursuant to a Tag Along Election, each Tag Along Member shall agree to make and shall make to the proposed transferee substantially the same representations, warranties, covenants, indemnities and agreements as the Selling Member agrees to make to the purchaser of the Selling Member's Membership Interests and agree to the same conditions as the Selling Member agrees (except that, in the case of representations, warranties, covenants, indemnities, agreements and conditions pertaining specifically to the Selling Member, each Tag Along Member shall make comparable representations, warranties, covenants, indemnities and agreements and shall agree to comparable conditions, in each case to the extent applicable and pertaining specifically to itself and only to itself); <u>provided</u>, that all representations, warranties, covenants, indemnities and agreements shall be made by Members severally and not jointly; and <u>provided further</u>, that the liability for indemnification, in addition to being several and not joint, shall be allocated pro rata based on the decrease in the amount of the aggregate consideration each such Member would receive in such Tag Along Sale if the amount of the aggregate consideration to be distributed was reduced by the aggregate amount of such obligations (i.e., reverse waterfall), other than as to such liability in respect of the representations and warranties made to the transferee as to itself and its properties and liability in respect of its performance of its obligations to the transferee, as to which its liability shall not be limited by such allocation, and as to which no other Member shall have liability unless otherwise agreed in writing. Members' liability in respect of such transfer will not exceed such Member's Proceeds, except that in the case of potential liability for fraud or willful misconduct by such Member, such Member shall bear the full liability therefor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The closing of the purchase of the Membership Interests with respect to which a Tag Along Election has been made will take place concurrently with the closing of the sale of the Selling Member's Interests. The closing of such sale shall take place at a time and place to be designated by mutual agreement between the Selling Member and the applicable purchaser; provided, that the date designated for such closing shall be within ninety (90) days following the end of the Election Period unless otherwise agreed by the Selling Member and the Tag Along Member. The net proceeds of the sale of the Membership Interests in such Tag Along Sale shall be distributed to the applicable Members as if such sale were a liquidation of the Company in the amounts and order of priority in accordance with <u>Section 6.1</u>.

Section 9.8 <u>Sale of Projects</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If the Requisite Class B Members seek or otherwise receive and wish to accept an offer for the sale, lease or other disposal of all or substantially all of the Company's assets, then the Requisite Class B Members shall have the right to require the Company to sell, lease or otherwise dispose of all of the Company's assets, on terms acceptable to the Requisite Class B Members in accordance with <u>Section 8.5(d)</u>, and the proceeds of such sale, lease or disposal shall be promptly first applied to then outstanding obligations of the Company in accordance with <u>Section 6.7</u>, and thereafter distributed to the Class B Members and the Class A Member as distributions pursuant to <u>Section 6.1(a)</u> and further provided that any proceeds held in escrow pursuant to such sale, lease or disposal shall not constitute sale proceeds until released from such escrow for distribution first to any outstanding obligations of the Company in accordance with <u>Section 6.7</u>, and thereafter in accordance with <u>Section 6.1(a)</u> (and which proceeds shall be so applied at the time of release from such escrow). In connection with any such sale, lease or other disposal of all or substantially all of the Company's assets, the Requisite Class B Members shall have the right to cause the Company to terminate the O&M Agreement or Administrative Services Agreement of the Company, subject to the payment of the applicable Termination Payment, if any. Notwithstanding the foregoing, the Class B Members shall provide a right of first offer to the Developer in accordance with <u>Section 9.10</u> and will ensure that proceeds from such transaction are distributed to the Class A Member in accordance with <u>Article VI</u>.

Section 9.9 <u>Special Provisions Relating to Sales of the Company</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In the event of a sale or exchange by the Members of all or substantially all of the Membership Interests held by the Members (whether by sale, merger, recapitalization, reorganization, consolidation, combination or otherwise), each Member shall receive in exchange for the Membership Interests transferred by such Member (<u>provided</u> that, as provided in <u>Section 9.9(b)</u>, owners of the Class B Member Corporate Investment Vehicles may deliver the capital stock, other equity interests and all outstanding indebtedness of such Class B Member Corporate Investment Vehicles in lieu of such Membership Interests), the same portion of the aggregate consideration from such sale or exchange that such Member would have received if such aggregate consideration had been distributed by the Company in complete liquidation pursuant to the rights and preferences set forth in <u>Section 6.1(a)</u> as in effect immediately prior to such sale or exchange; provided that any proceeds held in escrow pursuant to such sale or exchange shall not constitute sale proceeds until released from such escrow for payment to the Class B Members and the Class A Member (which proceeds shall be so applied at the time of release from such escrow). Each Member shall take all necessary or desirable actions in connection with such distribution of the aggregate consideration from such sale or exchange as requested by the Requisite Class B Members. Notwithstanding anything to the contrary in this Agreement, proceeds of the sale of the Membership Interests of the Class B Members shall not be distributed pursuant to <u>Section 6.1</u> hereof in the event that substantially all of the Membership Interests are being sold pursuant to a Tag Along Sale if the Class A Member is not participating in a Tag Along Sale pursuant to <u>Section 9.7</u>, and such proceeds shall be paid to the Class B Members with no obligation to distribute any such proceeds to the Class A Member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Without limiting the generality of the foregoing or any other provision of this Agreement (including the requirements of the conditions specified in <u>Section 9.7</u> and this <u>Section 9.9</u>), it is understood and agreed that the following structure for a Sale of the Company with respect to the Class B Members shall be implemented by the Company and approved by the Manager and each Member if so requested by the Requisite Class B Members: a Sale of the Company in which the purchaser or purchasers acquire(s) separately each of the following: (i) all Membership Interests of the Company other than the Membership Interests held by the Class B Member Corporate Investment Vehicles; and (ii) all outstanding capital stock, other equity interests and all outstanding indebtedness of the Class B Member Corporate Investment Vehicles and/or all of their options, warrants and/or other rights to acquire equity interests in the Company (which options, warrants or rights the purchaser or purchasers will then exercise). The price to be paid to the owners of the debt and equity securities of the Class B Member Corporate Investment Vehicles will be the aggregate value of all Membership Interests held, directly or indirectly, by such Class B Member Corporate Investment Vehicle (as if all options, warrants and/or other rights to acquire equity interests in the Company had been exercised) as if all such Membership Interests were directly sold in such transaction plus the amount of any cash held by the Class B Member Corporate Investment Vehicle. If such structure is implemented, then the relevant Class B Member(s) shall be deemed to include the stockholders and other securities holders of such Class B Member Corporate Investment Vehicle and the Membership Interests held by such Class B Member Corporate Investment Vehicle shall be determined based on the indirect sale of such Membership Interests by such holders. For the sake of clarity, the value of each Membership Interest sold or exchanged pursuant to <u>Section 9.7</u> or <u>Section 9.9</u> shall be determined by (i) calculating the aggregate equity value of the Company after taking into account the benefit of any step-up in basis attributable to the purchase of all of the Membership Interests and all of the debt and equity securities of the Class B Member Corporate Investment Vehicles and (ii) allocating to each such Membership Interests, whether sold directly or pursuant to the sale of all of the debt and equity securities of the Class B Member Corporate Investment Vehicles, the same portion of the aggregate consideration from such sale or exchange that would have been allocated to such Membership Interest if such aggregate consideration had been distributed by the Company in complete liquidation pursuant to the rights and preferences set forth in <u>Section 6.1(a)</u> as in effect immediately prior to such sale or exchange. Notwithstanding anything in this Agreement to the contrary, the Class B Members may Transfer to any Class B Member Corporate Investment Vehicle, in connection with an Approved Sale, Class B Membership Interests representing such Class B Member Corporate Investment Vehicle's indirect interest in the Company and the holders of such Class B Member Corporate Investment Vehicle shall be entitled to sell their outstanding capital stock, other equity interests and outstanding indebtedness of the Class B Member Corporate Investment Vehicles as set forth in <u>Section 9.9(a)</u> and this <u>Section 9.9(b)</u>. Such Transfer may be made through a series of Transfers between any Persons who hold an interest in any Class B Member, directly or indirectly, between such Class B Member and such Class B Member Corporate Investment Vehicle, as the case may be. Notwithstanding anything in this Agreement to the contrary, in connection with any Transfer of equity securities of any Person held by the Company, a Class B Member may direct the Company to distribute such applicable portion of such equity securities indirectly held by a Class B Member Corporate Investment Vehicle to such Class B Member in accordance with <u>Section 6.1(a)</u>, a Class B Member may Transfer such equity securities to such Class B Member Corporate Investment Vehicle, or through a series of Transfers between any Persons who hold an interest in such Class B Member, directly or indirectly, between such Class B Member and such Class B Member Corporate Investment Vehicle, as the case may be, and the holders of such Class B Member Corporate Investment Vehicle shall be entitled to sell their outstanding capital stock, other equity interests and outstanding indebtedness of such Class B Member Corporate Investment Vehicles at the same price per equity security as the equity securities being sold by the Company (such price to be paid to the holders of the debt and equity securities of such Class B Member Corporate Investment Vehicle).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If the Requisite Class B Members approve, or notify the Company of the Requisite Class B Members' desire to pursue (or initiate a process to effect), a Sale of the Company in accordance with <u>Sections 8.5(d)</u> or <u>(e)</u> (an "<u>Approved Sale</u>") to an unaffiliated Person (and in any event, not including an entity that is an investment vehicle managed by any Class B Member or an Affiliate of such Class B Member or the general partners of such Class B Member), each Member (including, for these purposes, the owners of debt or equity securities of Class B Member Corporate Investment Vehicles): (i) shall vote for (if such Member is entitled to vote thereon), consent to (to the extent required or requested) and raise no objections against such Approved Sale; (ii) waive any dissenters or appraisal rights with respect to such Approved Sale; (iii) shall not make any claim with respect to or take any action that is reasonably likely to hinder or cause an adverse effect on such Approved Sale, (iv) to the extent requested by such Class B Member, shall become a party to, and cause the Company to become party to, any applicable purchase agreement, agreement of merger, consolidation or reorganization, or other agreement to effect the Sale of the Company, (v) shall take all actions necessary or required to consummate the Sale of Company, and (vi) the Company and each Member shall consummate such Approved Sale on the terms and conditions so approved. Notwithstanding any provision of this Agreement to the contrary, no authorization or approval of the Manager or any Member other than the Requisite Class B Members shall be required to approve and authorize an Approved Sale. In connection with any Approved Sale, the Company, the Manager, each Subsidiary of the Company, each Representative and each Member (solely in such Person's capacity as such), to the extent within such Member's control, shall take all necessary or reasonably desirable actions in connection with the consummation of the Approved Sale and any related transactions (including any auction or competitive bid process in connection with or preceding such Sale of the Company) as requested by the Requisite Class B Members (at the Company's expense, including: (i) causing the Company to retain investment bankers and other advisors selected by the Requisite Class B Members; (ii) participating in management meetings and preparing pitchbooks and confidential information memorandums; (iii) furnishing information and copies of documents; (iv) filing, on behalf of the Company or the Class B Members, reasonably necessary applications, reports, returns, filings and other documents or instruments with Governmental Authorities relating to the Company; (v) providing assistance with legal, accounting, tax, financial, benefits and other forms of due diligence; and (vi) otherwise reasonably cooperating with the Requisite Class B Members (who shall control all decisions in connection with such Approved Sale by the Requisite Class B Members (including the hiring or terminating of any investment bank or other professional advisor(s), if any)), the prospective buyer(s), any investment bankers, consultants or other professional advisors who have been retained in connection with such Approved Sale and their respective representatives. Without limiting the foregoing, the obligations of each Member with respect to an Approved Sale shall not in any way be limited or otherwise affected by the amount, nature, form or terms of the consideration to be paid in any Approved Sale, even if such Approved Sale results in no consideration being paid or payable to such Member. Each Member must agree to make to the proposed transferee substantially the same representations, warranties, covenants, indemnities and agreements as approved by the Requisite Class B Members and agree to the same conditions as approved by the Requisite Class B Members (except that, in the case of representations, warranties, covenants, indemnities, agreements and conditions pertaining specifically to the Class B Members, the other Members shall make comparable representations, warranties, covenants, indemnities and agreements and shall agree to comparable conditions, in each case to the extent applicable and pertaining specifically to itself and only to itself); <u>provided</u>, that all representations, warranties, covenants, indemnities and agreements shall be made by the Members severally and not jointly and provided further, that the liability for indemnification, in addition to being several and not joint, shall be allocated pro rata based on the decrease in the amount of the aggregate consideration each such Member would receive in such Sale of the Company if the amount of the aggregate consideration to be distributed was reduced by the aggregate amount of such obligations (i.e., reverse waterfall), other than as to such liability in respect of the representations and warranties made to the transferee as to itself and its properties and liability in respect of its performance of its obligations to the transferee, as to which its liability shall not be limited by such allocation, and as to which no other Member shall have liability unless otherwise agreed in writing. Members' liability in respect of such transfer will not exceed such Member's Proceeds, except that in the case of potential liability for fraud or willful misconduct by such Member, such Member shall bear the full liability therefor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Each Member shall promptly take all necessary or reasonably desirable actions requested by the Requisite Class B Members in connection with, and in order to expeditiously consummate, such Approved Sale and any related transactions, including executing, acknowledging and delivering transfer agreements, sale agreements, escrow agreements, consents, assignments, customary releases (including general releases (with customary exclusions), whether relating to the Company or its Affiliates or otherwise), waivers and other documents or instruments. Solely with respect to any Approved Sale, each Member hereby: (i) appoints Spring Lane or its designee as its representative in connection with any sale agreement with customary provisions (including the right to resolve any potential indemnification claims or other disputes on behalf of all (but not less than all) Members, execute and deliver all amendments, waivers, releases, and other documents, necessary, proper, required, contemplated or deemed advisable by Spring Lane, receive and distribute funds (including in making payments of expenses) and receiving notices) and (ii) irrevocably grants to, and appoints, Spring Lane or its designee, such Member's proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of such Member, to (A) vote the Membership Interests held by such Member, (B) to grant a consent or approval in respect of such Membership Interests, in connection with any meeting of the Members or any action by written consent in lieu of a meeting of the Members with respect to an Approved Sale or (C) to transfer such Member's Membership Interests in the Approved Sale and to execute any purchase (or similar) agreement or other documentation required to consummate such transfer in the Approved Sale or otherwise required or contemplated by this <u>Section 9.9</u>. Each Member hereby affirms that the irrevocable proxy set forth in this <u>Section 9.9(d)</u> is given to secure the performance of the duties of such Member under this Agreement in connection with an Approved Sale. Each Member hereby further affirms that the irrevocable proxy set forth in this <u>Section 9.9(d)</u> is coupled with an interest and irrevocable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding anything to the contrary contained herein, at the Requisite Class B Members may determine, in good faith, that the proceeds with respect to a Sale of the Company may be withheld from any Member pending the execution of the deliveries set forth in <u>Section 9.7</u> and <u>Section 9.9</u>, as applicable, or that the posting of such Member's pro rata share of any security as the Requisite Class B Members deem reasonably necessary to cover any purchase price adjustments, indemnification or such other obligations of the Company or a Member as set forth in this <u>Section 9.9</u> in connection with such Sale of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Requisite Class B Members shall, in their sole discretion, decide whether or not to pursue, consummate, postpone or abandon any Approved Sale and the terms and conditions thereof. None of the Members, the Representatives of any Member nor any of their Affiliates shall have any liability to any other Members arising from, relating to or in connection with the pursuit, consummation, postponement, abandonment or terms and conditions of any such Approved Sale except to the extent any such Person shall have failed to comply with the provisions of this <u>Section 9.9</u>. To the maximum extent permitted by law, in connection with any Sale of the Company, each Member hereby waives all claims (including any claims for breach of fiduciary duty (which has been eliminated pursuant to <u>Section 3.5(b)</u>), but excluding claims based on fraud, bad faith or willful misconduct) arising out of or related to any Sale of the Company, including claims relating to the fairness of the Sale of the Company, the price paid for the Membership Interests in such Sale of the Company, the process or timing of such Sale of the Company, or any similar claims arising from or relating to a Sale of the Company and, without limiting the foregoing, acknowledges and agrees such Member is not entitled to any dissenter's rights, appraisal rights or similar rights under Section 18-210 of the Act or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) In no manner shall this <u>Section 9.9</u> be construed to grant to any Member any dissenters rights or appraisal rights or give any Member any right to vote in any Approved Sale, including any Approved Sale structured as a merger or consolidation and each Member grants to the Class B Members the sole right to approve or consent to an Approved Sale, including an Approved Sale structured as a merger or consolidation of the Company, without approval or consent of the Members (other than the Class B Members).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) If any Member fails to deliver any certificates representing its Membership Interests as required by this <u>Section 9.9</u>, or in lieu thereof to deliver, a customary affidavit attesting to the loss or destruction of such certificate(s), upon consummation of the Approved Sale, such Member will not be entitled to the consideration they would otherwise receive in the Approved Sale until such failure is cured (provided that, after curing such failure, such Member will be so entitled to such consideration).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) This Agreement shall terminate as to the Class A Member, Class B Members and Manager as of the consummation of any Sale of the Company, but shall survive until any payments due to the Class A Member and the Class A Member from the proceeds of such transaction shall have been irrevocably paid in full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) For the avoidance of doubt, neither the Class A Member nor the Class B Members shall be required to enter into any non-compete in connection with any sale pursuant to this <u>Section 9.9</u>.

Section 9.10 <u>Class A Member Right of First Offer</u>. If at any time during the term of this Agreement the Company or any Class B Member receives a bona fide offer from a third party to purchase all or substantially all of the assets or outstanding equity interests in the Company or the Project (collectively, the "<u>Covered Transactions</u>"), the Company or the Class B Member(s), as the case may be, will promptly and in any event within five (5) Business Days deliver to the Developer written notice describing such offer (including with such notice all material, non-confidential information and material terms thereof) (the "<u>ROFO Notice</u>"). Developer will have the right ("<u>Right of First Offer</u>"), by written notice to the Company and/or the Class B Members, as the case may be, within ten (10) Business Days following receipt of the ROFO Notice ("<u>Exercise Notice</u>") to elect to enter into a transaction with the Company and/or the Class B Members, as the case may be, in lieu of such third party. Developer and the Company and/or the Class B Members, as the case may be, will close the Transactions not later than forty-five (45) days after the date of the Exercise Notice or at such other time as the parties may agree in writing. If Developer does not send a timely Exercise Notice to the Company and/or the Class B Members, as the case may be, then the Company and/or the Class B Members, as the case may be, will have the right to enter into the original Covered Transaction with the third party that prompted the ROFO Notice; provided that if no transaction is entered into by the Company and/or the Class B Members, as the case may be, and such third party within one hundred twenty (120) days after the date of the ROFO Notice, then Developer's Right of First Offer will remain in effect with respect to any offer subsequently made by or to a third party and the process above will be repeated. Upon the consummation of a Covered Transaction as permitted herein, the Company and/or the Class B Members, as the case may be, shall provide written notice to the Developer and the Developer's Right of First Offer shall be terminated.

**ARTICLE X**

**DISSOLUTION AND WINDING-UP**

Section 10.1 <u>Events of Dissolution</u>. The Company shall be dissolved upon the first to occur of the following (each a "<u>Dissolution Event</u>"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the written consent of (i) each of the Members or (ii) the Requisite Class B Members pursuant to Section 8.5(a), to dissolve the Company, but only on the effective date of dissolution specified by the Members or the Requisite Class B Members, as the case may be, in such writing at the time of such consent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) entry of a decree of judicial dissolution under Section 18-802 of the Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the issuance of a final, nonappealable court order which makes it unlawful for the business of the Company to be carried on; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the termination of the legal existence of the last remaining Member of the Company or the occurrence of any other event which terminates the continued membership of the last remaining Member of the Company unless the Company is continued in a manner permitted by this Agreement or the Act.

Section 10.2 <u>Distribution of Assets</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Members hereby appoint the Manager to act as the liquidator upon the occurrence of one of the events in <u>Section 10.1</u>, <u>provided</u> that the Requisite Class B Members shall have the right to appoint at any time after such event a replacement liquidator, which may not be any Class B Member, and such replacement shall serve as the liquidator. Upon the occurrence of such an event, the liquidator will proceed diligently to wind up the affairs of the Company and make final distributions as provided herein and in the Act. The liquidator may sell, and will use commercially reasonable efforts to obtain the best possible price for, any or all Company property, including to Members.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Promptly after the termination of the Company, the liquidator shall cause to be prepared and furnished to the Members a statement setting forth the assets and liabilities of the Company as of the date of termination. The liquidator shall liquidate the properties of the Company in an orderly and businesslike manner as promptly as possible and shall update the Tracking Accounts to allocate the proceeds thereof (and related liabilities) to the Company in a reasonable manner, and apply and distribute the proceeds thereof in the following order of priority:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) to the payment of the expenses of liquidation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) to payment of the debts and liabilities of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) to the establishment of such reserves as the liquidator shall deem reasonably necessary for the contingent or unforeseen obligations of the Company, said retained funds to be held by said Company for the purpose of distributing such reserves in payment of the contingent and unforeseen liabilities should they become due and payable, the balance remaining from said retained funds to be distributed to the Members at such time as the liquidator shall deem advisable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) to the Members as distributions in accordance with <u>Section 6.1(a)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The distribution of cash to a Member in accordance with the provisions of this <u>Section 10.2</u> constitutes a complete return to the Member of its Capital Contributions and a complete distribution to the Member on its Membership Interests in the Company of all the Company's property and constitutes a compromise to which all Members have consented within the meaning of Section 18-502(b) of the Act. If the assets of the Company remaining after the payment or discharge of the debts and liabilities of the Company are insufficient to return Capital Contributions of each Member, such Member shall have no recourse against the Company or any other Member.

Section 10.3 <u>In-Kind Distributions</u>. There shall be no distribution of assets of the Company in-kind without the written affirmative consent of each Member.

Section 10.4 <u>Certificate of Cancellation</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) When all debts, liabilities and obligations have been paid and discharged or adequate provisions have been made therefor and all of the remaining property and assets have been distributed to the Members, a certificate of cancellation shall be executed and filed by the liquidator with the Secretary of State of the State of Delaware, which certificate shall set forth the information required by Section 18-203 of the Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Upon the filing of the certificate of cancellation, the existence of the Company shall cease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) All costs and expenses in fulfilling the obligations under this <u>Article X</u> shall be borne by the Company.

**ARTICLE XI**

**MISCELLANEOUS**

Section 11.1 <u>Notices</u>. Unless otherwise provided herein, any offer, acceptance, election, approval, consent, certification, request, waiver, notice or other communication required or permitted to be given hereunder (collectively referred to as a "<u>Notice</u>"), shall be in writing and delivered (a) in person, (b) by registered or certified mail with postage prepaid and return receipt requested, (c) by recognized overnight courier service with charges prepaid or (d) by facsimile or electronic mail transmission, directed to the intended recipient at the address of such Member set forth on <u>Schedule 4.2(d)</u> attached hereto (as applicable) or at such other address as any Member hereafter may designate to the others in accordance with a Notice under this <u>Section 11.1</u>. Copies of such Notices, which shall not constitute notice for purposes of this Agreement, shall be provided by the means noted above to the persons designated for such copies on such <u>Schedule 4.2(d)</u>. A Notice or other communication will be deemed delivered on the earliest to occur of (i) its actual receipt when delivered in person, (ii) the fifth (5<sup>th</sup>) Business Day following its deposit in registered or certified mail, with postage prepaid, and return receipt requested, (iii) the second (2<sup>nd</sup>) Business Day following its deposit with a recognized overnight courier service or (iv) the date of receipt of a facsimile or electronic mail or, if such date of receipt is not a Business Day, the next Business Day following such date of receipt, provided the sender can and does provide evidence of successful transmission. Any Notice or other communication received on a day that is not a Business Day or later than 5:00 p.m. on a Business Day shall be deemed to be received on the next Business Day.

Section 11.2 <u>Amendment</u>. Except for an amendment of <u>Schedule 4.2(d)</u> hereto in accordance with the terms of this Agreement, an amendment of Annex I in accordance with <u>Section 3.1(a)</u>, and a Transfer of Membership Interests and the admission of a new Member in accordance with the terms of this Agreement, this Agreement may only be amended, restated, supplemented or otherwise modified by an instrument in writing duly executed by each of the Manager and the Requisite Class B Members. Notwithstanding the foregoing, this Agreement may not be amended, modified or terminated and the observance of any term hereof may not be waived with respect to any Class B Member without the written consent of such Class B Member, unless such amendment, modification, termination, or waiver applies to all Class B Members in the same fashion. No amendment hereto may reduce the rights of, increase the liabilities of or otherwise adversely and disproportionately affect any Member without the consent of such Member.

Section 11.3 <u>Partition</u>. Each of the Members hereby irrevocably waives, to the extent it may lawfully do so, any right that such Member may have to maintain any action for partition with respect to the Company property.

Section 11.4 <u>Waivers and Modifications</u>. Any waiver or consent, express, implied or deemed, to or of any breach or default by any Person in the performance by that Person of its obligations with respect to the Company or any action inconsistent with this Agreement is not a consent or waiver to or of any other breach or default in the performance by that Person of the same or any other obligations of that Person with respect to the Company or any other such action. Failure on the part of a Person to insist in any one or more instances upon strict performance of any provisions of this Agreement, to take advantage of any of its rights hereunder, or to declare any Person in default with respect to the Company, irrespective of how long that failure continues, does not constitute a waiver by that Person of its rights with respect to that Person or its rights with respect to that default until the applicable statute of limitations period has lapsed. All waivers and consents hereunder shall be in writing duly executed by the mutual consent of the Members and shall be delivered to the other Members in the manner set forth in <u>Section 11.1</u>.

Section 11.5 <u>Severability</u>. Except as otherwise provided in the next succeeding sentence, every term and provision of this Agreement is intended to be severable, and if any term or provision of this Agreement is found by a court of competent jurisdiction to illegal or invalid, such illegality or invalidity shall not affect the legality or validity of the remainder of this Agreement.

Section 11.6 <u>Successors; No Third-Party Beneficiaries</u>. This Agreement is binding on and inures to the benefit of the Members and their respective heirs, legal representatives, successors and permitted assigns. Nothing in this Agreement shall provide any benefit to any third party (other than the Company) or entitle any third party (other than the Company) to any claim, cause of action, remedy or right of any kind, it being the intent of the Members that this Agreement shall not be construed as a third-party beneficiary contract. To the full extent permitted by law, no creditor or other third party having dealings with the Company shall have the right to pursue any other right or remedy hereunder or at law or in equity, it being understood and agreed that the provisions of this Agreement shall be solely for the benefit of, and may be enforced solely by, the parties hereto and their respective successors and permitted assigns. None of the rights or obligations of the Members herein set forth to make Capital Contributions or loans to the Company shall be deemed an asset of the Company for any purpose by any creditor or other third party.

Section 11.7 <u>Entire Agreement</u>. This Agreement, including the schedules attached hereto or incorporated herein by reference, constitutes the entire agreement of the Members with respect to the matters covered herein. This Agreement supersedes all prior agreements and oral understandings among the parties hereto with respect to such matters. Upon the effectiveness of this Agreement, the Existing LLCA shall be deemed amended and restated and superseded and replaced in its entirety by this Agreement, and shall be of no further force or effect.

Section 11.8 <u>Governing Law</u>. This Agreement and all matters arising out of or in connection herewith shall be governed by and construed in accordance with the laws of the State of Delaware, excluding any conflict of laws rule or principle that might refer the governance or construction of this Agreement to the law of another jurisdiction. The Members irrevocably submit to the non-exclusive jurisdiction of any state or federal court in the State of Delaware with respect to any action or proceeding arising out of or relating to any such Dispute. Each Member irrevocably and unconditionally waives trial by jury in any action, suit or proceeding hereunder.

Section 11.9 <u>Further Assurances</u>. In connection with this Agreement and the transactions contemplated hereby, each Member shall execute and deliver any additional documents and instruments and perform any additional acts that may be reasonably required or useful to carry out the intent and purpose of this Agreement and as are not inconsistent with the terms hereof.

Section 11.10 <u>Counterparts</u>. This Agreement may be executed in any number of counterparts, each of which may be delivered by facsimile transmission or electronically in .PDF format and each of which shall be an original but all of which together will constitute one instrument, binding upon all parties hereto, notwithstanding that all of such parties may not have executed the same counterpart. Delivery of an electronic counterpart shall be effective as manual delivery thereof.

Section 11.11 <u>Dispute Resolution</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) This <u>Section 11.11</u> shall apply to any dispute arising under or related to this Agreement (whether arising in contract, tort or otherwise, and whether arising at law or in equity), including (a) any dispute regarding the construction, interpretation, performance, validity or enforceability of any provision of this Agreement or whether any Person is in compliance with, or breach of, any provisions of this Agreement, and (b) the applicability of this <u>Section 11.11</u> to a particular dispute. Any dispute to which this <u>Section 11.11</u> applies is referred to herein as a "<u>Dispute</u>." With respect to a particular Dispute, each Member that is a party to such Dispute is referred to herein as a "<u>Disputing Member</u>".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If a Dispute arises, the Disputing Members shall attempt to resolve such Dispute through the following procedure: (i) first, the representatives of each of the Disputing Members shall promptly meet (whether by phone or in person) in a good faith attempt to resolve the Dispute; (ii) second, if the Dispute is still unresolved after twenty (20) calendar days following the commencement of the negotiations described in <u>Section 11.11(b)(i)</u>, then the designated executive officer of each Disputing Member shall meet (whether by phone or in person) in a good faith attempt to resolve the Dispute; and (iii) third, if the Dispute is still unresolved after ten (10) calendar days following the commencement of the negotiations described in clause (ii), then any Disputing Member may seek any and all remedies available to it at law or in equity; provided, however, that if the subject matter of a Dispute is primarily of an accounting or financial nature, or is related to the calculation of any amounts or the determination of the amount or proportionate allocation of any distribution, any such Dispute (a "<u>Calculation Dispute</u>") shall be referred for adjudication to a firm of certified public accountants of national or regional repute mutually acceptable to the Members (the "Independent Calculation Agent"), and the determination of the Independent Calculation Agent shall be binding. The fees and expenses of the Independent Calculation Agent shall be borne 50% by the Company and 50% by the Member that is the substantially non-prevailing Party.

Section 11.12 Confidentiality and Publicity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Confidential Information</u>. Subject to the remaining provisions of this <u>Section 11.12</u>, the Members shall, and shall cause their Affiliates and their respective stockholders, members, Subsidiaries and Representatives to, hold confidential all information they may receive from or on behalf of the other Members concerning the Class A Member, Developer, the Class B Members, the Company, the other parties to the Project Documents, and their respective assets, business, operations or prospects or this Agreement (the "<u>Confidential Information</u>"); provided, that Confidential Information shall not include information that (i) becomes generally available to the public other than as a result of a disclosure by a recipient Member or any of its Representatives, or (ii) becomes available to a recipient Member or any of its Representatives on a non-confidential basis prior to its disclosure by the Company or its Representatives. In addition, each Member acknowledges its obligations under the United States federal securities laws. If a party becomes compelled by legal or administrative process to disclose any Confidential Information, such party shall, to the extent permitted by Applicable Laws, provide the other Members with prompt Notice so that the other Members may seek a protective order or other appropriate remedy or waive compliance with the non-disclosure provisions of this <u>Section 11.12</u> with respect to the information required to be disclosed. If such protective order or other remedy is not obtained, or such other Members waive compliance with the non-disclosure provisions of this <u>Section 11.12</u> with respect to the information required to be disclosed, the first party shall furnish only that portion of such information that it is advised, by opinion of counsel, is legally required to be furnished and shall exercise reasonable efforts, at the disclosing Member's expense, to obtain reasonable assurance that confidential treatment will be accorded such information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Disclosure to Representatives</u>. Notwithstanding <u>Section 11.12(a)</u>, a Member may disclose Confidential Information received by it to its employees, consultants, legal counsel, lenders or other agents who have a need to know such information in connection with the Transaction Documents; provided that such Member informs each such Person who has access to the Confidential Information of the confidential nature of such Confidential Information, the terms of this Agreement, and that such terms apply to them, and the Member shall be responsible for the disclosure by any such Person in violation of this <u>Section 11.12</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Disclosure by Member</u>. Notwithstanding the other provisions of this <u>Section 11.12</u> but subject to <u>Section 11.12(d)</u>, Members may disclose Confidential Information to any of its Affiliates, its current or prospective direct or indirect investors and equity owners, prospective lenders and, provided such Persons are party to a reasonable non-disclosure agreement, to prospective parties to a Sale of the Company or prospective parties to one or more transactions pursuant to <u>Section 9.7, Section 9.8</u> or <u>Section 9.9</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Publicity</u>. No Member shall may make any public announcement or issue any press release respecting the Company, the transaction contemplated by the Transaction Documents, or any Project, that references the other Member or any of its Affiliates without the consent of such other Member.

Section 11.13 <u>Joint Efforts</u>. To the fullest extent permitted by law, neither this Agreement nor any ambiguity or uncertainty herein will be construed against or in favor of any of the parties hereto, whether under any rule of construction or otherwise, by virtue of the fact that such party had primary drafting responsibility for such Agreement. On the contrary, this Agreement has been prepared by the joint efforts of the respective attorneys for, and has been reviewed by, each of the parties hereto.

Section 11.14 <u>Recourse Only to Party</u>. The sole recourse of the Company for performance of the obligations of any party hereto shall be against such party and its assets and not against any assets or property of any present or future stockholder, partner, member, officer, employee, servant, executive, director, agent, authorized representative or Affiliate thereof.

Section 11.15 <u>Rule of Interpretation Regarding Manager Deliveries</u>. Whenever in this Agreement the Manager is required to deliver or "make available" to the Members any draft, report, document, instrument, or copy of any of the foregoing (including any revisions to any of the foregoing, and to Tracking Accounts) (collectively "deliverables") the posting of any such deliverable to a secure electronic dataroom maintained by or at the behest of Manager and to which the Members have access, shall in all respects constitute such document having been delivered or made available.

Section 11.16 <u>Effectiveness.</u> Upon execution of this Agreement by the Parties, the Existing LLCA shall be deemed amended and restated and superseded and replaced in its entirety by this Agreement.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties, each a Member, have caused this Limited Liability Company Agreement to be signed by their respective duly authorized officers as of the date first above written.

---

| |
|:---|
| **<u>COMPANY</u>**<u>:</u> |
| **Soluna DVSL ComputeCo, LLC** |
| **By:** |
| By: |
| Name: |
| Title: |

---

SIGNATURE PAGE TO SOLUNA DVSL COMPUTECO, LLC

LIMITED LIABILITY COMPANY AGREEMENT

IN WITNESS WHEREOF, the parties, each a Member, have caused this Limited Liability Company Agreement to be signed by their respective duly authorized officers as of the date first above written.

---

| |
|:---|
| **DEVELOPER:** |
| **Soluna DV Devco, LLC** |
| By: |
| Name: |
| Title: |

---

SIGNATURE PAGE TO SOLUNA DVSL COMPUTECO, LLC

LIMITED LIABILITY COMPANY AGREEMENT

IN WITNESS WHEREOF, the parties, each a Member, have caused this Limited Liability Company Agreement to be signed by their respective duly authorized officers as of the date first above written.

---

| |
|:---|
| **<u>SPRING LANE:</u>** |
| **Soluna SLC Fund I Projects Holdco, LLC** |
| By: |
| Name: |
| Title: |

---

SIGNATURE PAGE TO SOLUNA DVSL COMPUTECO, LLC

LIMITED LIABILITY COMPANY AGREEMENT

IN WITNESS WHEREOF, the parties, each a Member, have caused this Limited Liability Company Agreement to be signed by their respective duly authorized officers as of the date first above written.

---

| |
|:---|
| **<u>PARENT:</u>** |
| **SOLUNA HOLDINGS, INC.** |
| By: |
| Name: |
| Title: |

---

SIGNATURE PAGE TO SOLUNA DVSL COMPUTECO, LLC

LIMITED LIABILITY COMPANY AGREEMENT

<u>Annex I</u>

<u>Members and Membership Interests</u>

---

| | | |
|:---|:---|:---|
| Class A Member | Number of Class A<br> Membership Interests<br> Owned<br>| Percentage of Class A<br> Membership Interests<br> Owned<br>|
| Name: Soluna DV Devco, LLC<br>Address:<br> 325 Washington Ave. Extension<br> Albany, NY 12205<br> 518-218-2550<br>Attention: CFO<br>Email: DVnotice@soluna.io<br>| 100 | 100% |

---

---

| | | |
|:---|:---|:---|
| Class B Members | Number of Class B<br> Membership Interests<br> Owned<br>| Percentage of Class B<br> Membership Interests<br> Owned<br>|
| Name: Soluna SLC Fund I Projects Holdco, LLC<br>Address:<br> 100 Cambridge Street<br> Suite 1802<br> Boston, MA 02114<br> Attention: Rob Day<br> Email: rob@springlanecapital.com<br>| 39719988 | 85.4% |
| Name: Soluna Holdings, Inc.<br>Address:<br> 325 Washington Ave. Extension<br> Albany, NY 12205<br> 518-218-2550<br>Attention: CFO<br>Email: DVnotice@soluna.io<br>| 6790537 | 14.6% |
| TOTAL: | 46510525 | 100.00% |

---

Copies of Notices to the Class A Member (which shall not constitute notice) to:

Norton Rose Fulbright US LLP

1301 Avenue of the Americas

New York, New York 10019-6022

Attention: Christine Brozynski

Copies of Notices to the Class B Members (which shall not constitute notice) to:

Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C.

One Financial Center

Boston, MA 02111

Attention: Sahir Surmeli and Ayaz Shaikh

Annex I-1

**<u>Schedule 4.2(d</u>**)

<u>Initial Capital Accounts</u>

---

| | | | | |
|:---|:---|:---|:---|:---|
| Member Name | Initial Capital<br> Contribution |  | Capital Account<br> Balance | Percentage Interest |
| Soluna DV Devco, LLC  | $100 |  | $100 | 100% of the Class A Membership Interests |
| Soluna SLC Fund I Projects Holdco, LLC  | $3851317.42 |  | $3851317.42 | 32.2% of the Class B Membership Interests |
| Soluna Holdings, Inc. | $8112548.64 | (1) | $8112548.64 | 67.8% of the Class B Membership Interests |

---

(1) $8,112,548.64
 of which has been deemed to be contributed to the Company by Parent through payment of capital expenditures and development costs
 made on behalf of the Company by Parent prior to the date hereof.

<u>Current Capital Accounts</u>

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Member Name | Capital Contribution |  | Capital Account<br> Balance |  | Percentage Interest |
| Soluna DV Devco, LLC  | $100 |  | $100 |  | 100% of the Class A Membership Interests |
| Soluna SLC Fund I Projects Holdco, LLC  |  | (1) |  | (1) | 85.4% of the Class B Membership Interests |
| Soluna Holdings, Inc. |  | (1)(2) |  | (1)(3) | 14.6% of the Class B Membership Interests |

---

(1) To be determined
 by Spring Lane and the Parent and agreed upon in writing no later than March 31, 2023.

(2) $8,112,548.64 of which
 has been deemed to be contributed to the Company by Parent through payment of capital expenditures and development costs made on
 behalf of the Company by Parent prior to the date hereof.

(3) Parent's Capital
 Account Balance shall not exceed 14.6% of the total Capital Account Balance attributable to the Class B Members.

Schedule 4.2(d)-1

**<u>Schedule 9.2(i</u>**)

<u>Prohibited Class B Entities</u>

&nbsp;&nbsp;&nbsp;&nbsp;1. Compute
 North LLC and its Affiliates

2. Lancium
 Technologies Corporation and its Affiliates

3. Priority
 Power Management, LLC and its Affiliates

4. Rhodium
 Enterprises, Inc. and its Affiliates

5. Marathon
 Digital Holdings, Inc. and its Affiliates

Schedule 4.2(d)-2

**<u>Exhibit A</u>**

**FORM OF CLASS A MEMBERSHIP INTEREST CERTIFICATE**

**Soluna DVSL ComputeCo, LLC, a Delaware limited liability company**

THIS CERTIFICATE EVIDENCES A CLASS A MEMBERSHIP INTEREST IN Soluna DVSL ComputeCo, LLC AND SHALL BE A SECURITY FOR THE PURPOSES OF ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN THE STATE OF DELAWARE. THIS SECURITY HAS NOT BEEN REGISTERED OR QUALIFIED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED AND QUALIFIED OR IF AN EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION EXISTS.

No. [__]

**THIS CERTIFIES THAT** [________] is the owner of [_______ (___)] fully paid and non-assessable Class A Membership Interests (as defined in the LLC Agreement referred to herein) in Soluna DVSL ComputeCo, LLC, a Delaware limited liability company (the "<u>Company</u>") and certain other rights in connection therewith in the Company, as set forth in the Amended and Restated Limited Liability Company Agreement of the Company, dated as of August 5, 2022, as amended, restated, modified and supplemented from time to time (the "<u>LLC Agreement</u>"). Such Class A Membership Interests are not transferable except as provided in the LLC Agreement and are otherwise subject to the terms and conditions of the LLC Agreement.

**THIS CERTIFICATE** is not negotiable or transferable except in connection with the transfer of the Class A Membership Interests evidenced hereby as provided in and in accordance with the LLC Agreement; <u>provided</u>, <u>however</u>, that this Certificate, when coupled with an assignment in the form set forth on the reverse hereof or attached hereto or otherwise sufficient to convey an interest in the Company, duly executed in blank or assigned to the named assignee, may be deposited with the Secretary of the Company and shall constitute direction by the registered owner of this Certificate to the Secretary to register the change of ownership of the Class A Membership Interests evidenced hereby to such assignee and to issue a new Certificate reflecting such change of ownership to such assignee subject to any restrictions on Transfer in the LLC Agreement. The Class A Membership Interests in the Company shall constitute "securities" within the meaning of (i) Article 8 of the Uniform Commercial Code as in effect from time to time in the State of Delaware and (ii) the law of any other applicable jurisdiction that presently or hereafter is substantially similar to such Article 8.

This Certificate has been executed by a duly authorized officer of the Company and the issuance recorded in its limited liability company books as of the [__] day of [___________], 20[_].

---

| |
|:---|
| **Soluna DVSL ComputeCo, LLC,** |
| a Delaware limited liability company |
| By: |
| Name: |
| Title: |

---

**[(REVERSE OF CERTIFICATE)]**

**ASSIGNMENT OF MEMBERSHIP INTEREST**

FOR VALUE RECEIVED, the undersigned (the "<u>Assignor</u>") hereby assigns, conveys, sells and transfer unto

---

| | |
|:---|:---|
| (Please insert taxpayer identification<br> number of Assignee) | (Please print name and address) |

---

all rights and interest of the Assignor in Soluna DVSL ComputeCo, LLC represented by Certificate No. [__] and irrevocably constitutes and appoints __________________ as its attorney-in-fact with full power of substitution in the premises to transfer the same on the books of Soluna DVSL ComputeCo, LLC.

---

| | |
|:---|:---|
| **Dated:** | [________________], |
|  | a [_________________] |
|  | By: |
|  | Name: |
|  | Title: |

---

THIS SECURITY HAS NOT BEEN REGISTERED OR QUALIFIED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED AND QUALIFIED OR IF AN EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION EXISTS.

**FORM OF CLASS B MEMBERSHIP INTEREST CERTIFICATE**

**Soluna DVSL ComputeCo, LLC, a Delaware limited liability company**

THIS CERTIFICATE EVIDENCES A CLASS B MEMBERSHIP INTEREST IN Soluna DVSL ComputeCo, LLC AND SHALL BE A SECURITY FOR THE PURPOSES OF ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN THE STATE OF DELAWARE. THIS SECURITY HAS NOT BEEN REGISTERED OR QUALIFIED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED AND QUALIFIED OR IF AN EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION EXISTS.

No. [__]

**THIS CERTIFIES THAT** [________] is the owner of [_______ (___)] fully paid and non-assessable Class B Membership Interests (as defined in the LLC Agreement referred to herein) in Soluna DVSL ComputeCo, LLC, a Delaware limited liability company (the "<u>Company</u>") and certain other rights in connection therewith in the Company, as set forth in the Amended and Restated Limited Liability Company Agreement of the Company, dated as of August 5, 2022, as amended, restated, modified and supplemented from time to time (the "<u>LLC Agreement</u>"). Such Class B Membership Interests are not transferable except as provided in the LLC Agreement and are otherwise subject to the terms and conditions of the LLC Agreement.

**THIS CERTIFICATE** is not negotiable or transferable except in connection with the transfer of the Class B Membership Interests evidenced hereby as provided in and in accordance with the LLC Agreement; <u>provided</u>, <u>however</u>, that this Certificate, when coupled with an assignment in the form set forth on the reverse hereof or attached hereto or otherwise sufficient to convey an interest in the Company, duly executed in blank or assigned to the named assignee, may be deposited with the Secretary of the Company and shall constitute direction by the registered owner of this Certificate to the Secretary to register the change of ownership of the Class B Membership Interests evidenced hereby to such assignee and to issue a new Certificate reflecting such change of ownership to such assignee subject to any restrictions on Transfer in the LLC Agreement. The Class B Membership Interests in the Company shall constitute "securities" within the meaning of (i) Article 8 of the Uniform Commercial Code as in effect from time to time in the State of Delaware and (ii) the law of any other applicable jurisdiction that presently or hereafter is substantially similar to such Article 8.

This Certificate has been executed by a duly authorized officer of the Company and the issuance recorded in its limited liability company books as of the [__] day of [___________], 20[_].

---

| |
|:---|
| **Soluna DVSL ComputeCo, LLC,** |
| a Delaware limited liability company |
| By: |
| Name: |
| Title: |

---

**[(REVERSE OF CERTIFICATE)]**

**ASSIGNMENT OF MEMBERSHIP INTEREST**

FOR VALUE RECEIVED, the undersigned (the "<u>Assignor</u>") hereby assigns, conveys, sells and transfer unto

---

| | |
|:---|:---|
| (Please insert taxpayer identification | (Please print name and address) |
| number of Assignee) |  |

---

all rights and interest of the Assignor in Soluna DVSL ComputeCo, LLC represented by Certificate No. [__] and irrevocably constitutes and appoints __________________ as its attorney-in-fact with full power of substitution in the premises to transfer the same on the books of Soluna DVSL ComputeCo, LLC.

---

| | |
|:---|:---|
| **Dated:** | [________________], |
|  | a [_________________] |
|  | By: |
|  | Name: |
|  | Title: |

---

THIS SECURITY HAS NOT BEEN REGISTERED OR QUALIFIED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED AND QUALIFIED OR IF AN EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION EXISTS.

**Exhibit B**

**<u>FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT</u>**

ASSIGNMENT AND ASSUMPTION AGREEMENT

This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "<u>Agreement</u>") is made as of this [__] day of [_________], by and among [____________________], a [_____________] (the "<u>Assignor</u>") and [____________________], a [_____________] (the "Assignee"). Capitalized terms used in this Agreement but not defined in this Agreement shall have the meanings ascribed to such terms in the LLC Agreement (defined below).

RECITALS:

**WHEREAS**, the Assignor is a Class [_] Member of Soluna DVSL ComputeCo, LLC, a Delaware limited liability company (the "<u>Company</u>");

**WHEREAS**, <u>Article IX</u> of the Fourth Amended and Restated Limited Liability Company Agreement of Soluna DVSL ComputeCo, LLC, dated as of March 8, 2023 (the "<u>LLC Agreement</u>") by and among the Members party thereto, permits, under certain circumstances, the Transfer of the Assignor's Membership Interest in the Company;

**WHEREAS**, the Assignor has agreed to sell, grant, convey, transfer, assign and deliver to the Assignee (or its designee), and the Assignee has agreed to purchase, accept and assume (or will cause its designee to purchase, accept and assume), all [or a portion thereof] of the rights, duties and obligations of the Assignor with respect to its Membership Interest in the Company.

**NOW, THEREFORE**, for value received, in consideration of the agreements herein contained and other good and valuable consideration, receipt and sufficiency thereof being hereby acknowledged, the parties hereto hereby agree as follows:

<u>Assignment</u>. The Assignor hereby irrevocably sells, grants, conveys, transfers, assigns, and delivers unto Assignee (or its designee), without recourse to the Assignor, all **[or a portion thereof]** of the Assignor's rights, title and interest in and to Assignor's Membership Interest in the Company (the "<u>Assigned Interest</u>"). The Assignor hereby irrevocably delegates, without recourse by Assignee to the Assignor, any and all duties, obligations, responsibilities, claims, demands and other commitments in connection with the Assigned Interest, as applicable, unto Assignee.

<u>Acceptance of Assignment</u>. Assignee hereby irrevocably purchases, accepts and assumes the Assigned Interest and from the date hereof agrees to be admitted to the Company as a Member of the Company, to perform and be bound by all the terms, conditions and covenants of and assumes the duties and obligations of the Assignor with respect to the Assigned Interest.

<u>Representations and Warranties of Assignor</u>. The Assignor hereby represents and warrants to the Assignee as follows:

The Assignor (i) is duly organized and validly existing under the laws of its jurisdiction of organization or incorporation; (ii) is in good standing under such laws; and (iii) has full power and authority to execute, deliver and perform its obligations under this Agreement.

Exhibit B-1

The rights and duties assigned by the Assignor pursuant to this Agreement are not subject to any prior sale, transfer, assignment or participation by the Assignor or any agreement to assign, convey, transfer or participate, in whole or in part.

<u>Representations and Warranties of Assignee</u>. The Assignee hereby represents and warrants to the Assignor as follows:

The Assignee (i) is duly organized and validly existing under the laws of its jurisdiction of organization or incorporation; (ii) is in good standing under such laws; (iii) has full power and authority to execute, deliver and perform its obligations under this Agreement.

<u>LLC Agreement Requirements</u>.

Assignee's notice address for purposes of the LLC Agreement is: [___________________].

Assignee hereby ratifies the LLC Agreement and confirms that the representations, warranties and covenants in <u>Section 3.9[(a)][c]<sup>1</sup></u> of the LLC Agreement are and will be true and correct with respect to Assignee as of the Effective Date and the date hereof.

Assignee hereby assumes and agrees to perform each of the covenants of the Assignor from and after the date of this Agreement.

Each of Assignor and Assignee hereby represents and warrants that the Transfer contemplated by this Agreement is in accordance with all Applicable Laws and does not violate any provision of applicable securities laws.

Each of Assignor and Assignee hereby represents and warrants that the Transfer contemplated by this Agreement will not (i) violate any securities laws or any other applicable federal or state laws or the order of any court having jurisdiction over the Company or any of its assets or any Project; or (ii) cause the Company to be classified as a corporation or publicly traded partnership for federal income tax purposes.

<u>Admission</u>. The admission of Assignor shall be effective upon (a) the execution by Assignor and Assignee of this Agreement, the delivery of the respective counterpart signature pages to the other party; and (b) the execution and delivery by Assignee of a Joinder Agreement, to the Company, in the form attached hereto as <u>Exhibit A</u>.

<u>Further Assurances</u>. The Assignor agrees to execute and deliver to the Assignee such further instruments as the Assignee may deem necessary to make effective this Agreement and the covenants contained herein.

<u>Severability</u>. The invalidity of unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision hereof, each of which shall remain in full force and effect.

<u>Conflicts</u>. In the event of any conflict or inconsistency between the terms of the LLC Agreement and the terms hereof, the terms of the LLC Agreement shall govern.

<u>Third Party Beneficiaries</u>. For purposes of <u>Sections 3</u>, <u>4</u> and <u>5</u> of this Agreement, the Company and each of its Members are express third-party beneficiaries. Such rights are in addition to the Company's and Members' rights under the LLC Agreement, none of which are waived.

<u>Governing Law</u>. THIS AGREEMENT, AND MATTERS ARISING IN CONNECTION HEREWITH, INCLUDING THE INTERPRETATION, CONSTRUCTION, VALIDITY AND ENFORCEABILITY HEREOF, WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, EXCLUDING ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION.

<u>Counterparts</u>. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall constitute an original, but all of which counterparts together shall constitute one and the same instrument.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

<sup>1</sup> Contingent on whether Transferor is a Class A or Class B Member.

Exhibit B-2

IN WITNESS WHEREOF, the parties hereto have each caused this Assignment and Assumption Agreement to be duly executed by their respective officers thereunto duly authorized as of the date set forth above.

---

| | | |
|:---|:---|:---|
|  | **ASSIGNOR** |  |
| [ | | ], |
| a[ | | ] |

---

---

| |
|:---|
| By: |
| Name: |
| Title: |
| **ASSIGNEE:** |
| [ ], |
| a [ ] |
| By: |
| Name: |
| Title: |

---

Exhibit B-3

**EXHIBIT A**

**TO ASSIGNMENT AND ASSUMPTION AGREEMENT**

**<u>FORM OF JOINDER AGREEMENT</u>**

Reference is hereby made to that certain Fourth Amended and Restated Limited Liability Company Agreement of Soluna DVSL ComputeCo, LLC (the "<u>Company</u>"), dated as of March 8, 2023, as may be amended, restated, supplemented, or otherwise modified from time to time (the "<u>LLC Agreement</u>"). The undersigned hereby agrees to be joined as a member of the Company and agrees to be bound by each of the terms and conditions of the LLC Agreement pursuant to and in accordance with <u>Article IX</u> thereof.

This Joinder to Fourth Amended and Restated Limited Liability Company Agreement of Soluna DVSL ComputeCo, LLC (this "<u>Joinder</u>") is made by the undersigned as of the [__] day of [________] (the "<u>Effective Date</u>"), and shall be made a part of the LLC Agreement and attached thereto as of the Effective Date.

IN WITNESS WHEREOF, the undersigned has executed this Joinder as of the Effective Date.

[<u> </u>_________________________________],

a [<u> </u>________________________________]

By:   <br> Name:   <br> Title:  

Exhibit B-4

## Exhibit 10.66

**Exhibit 10.66**

***Execution Version***

**<u>LEASE AGREEMENT</u>**

**(Briscoe County, Texas)**

THIS LEASE AGREEMENT (this "**Lease**") is made and executed as of February 24, 2023 (the "**Execution Date**") by **Alice Faye Grabbe** ("**Owner**"), and **Soluna DV Services, LLC**, a Nevada limited liability company ("**Tenant**"), and in connection herewith Owner and Tenant agree, covenant and contract as follows:

**RECITALS:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Owner is the owner of that certain 33.19 acres of real property located in Briscoe County, Texas more particularly described on <u>Exhibit A-2</u> (the "**Leased Property**"), which is a portion of that certain real property more particularly described in <u>Exhibit A-1</u> attached to and made a part of this Lease (the "**Overall Property**"), and all other rights, title, interests, privileges and appurtenances pertaining to the Leased Property, including any and all right, title and interest in and to adjacent public roads, necessary for ingress, egress and maintenance of the Data Facilities (as defined below).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Tenant desires to lease from Owner and Owner desires to lease to Tenant the Leased Property, in accordance with the terms and conditions of this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Owner is the current party in interest to that certain Lease and Easement Agreement, effective as of October 20, 2014 with Owner, as owner, and Briscoe Wind Farm, LLC, as tenant ("**Wind Tenant**"), such lease being further evidenced by that certain Memorandum of Lease Agreement executed October 20, 2014 between Owner and Wind Tenant, recorded in the Official Public Records of Briscoe County, Texas, as Volume 39 and Page No. 327 (the "**Existing Lease**"), pursuant to which Owner leases to Wind Tenant the Overall Property; provided however, as a condition precedent to the effectiveness of this Lease, Owner shall amend the Existing Lease as described in <u>Section 5.3(a)</u> below.

NOW, THEREFORE, for and in consideration of the mutual covenants and benefits herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Section 1. <u>Lease</u>. Owner hereby leases to Tenant the Leased Property, Tenant hereby leases the Leased Property from Owner, upon and subject to the terms and conditions hereof. This Lease contemplates that one or more Data Facilities may be developed, constructed and operated on the Leased Property.

Section 2. <u>Purpose and Scope of Lease</u>. Beginning on the Commencement Date and continuing until the early termination or expiration of the Term, the Tenant shall have the right to use the Leased Property in accordance with and subject to the terms of this Lease for the construction, installation, development, improvement, maintenance, operation, repair, replacement, relocation and removal of one or more Data Facilities and to operate any and all Tenant installed or leased buildings, improvements, fixtures, facilities, infrastructure, machinery or equipment that Tenant deems necessary for the benefit of the Data Facilities (collectively, "**Tenant's Improvements**"). "**Data Facilities**" shall mean one or more modular data centers on a modular data center farm and all ancillary buildings, facilities and improvements related thereto. Without limiting the generality of the foregoing, Tenant shall have the following rights and privileges under this Lease:

(a) the right to undertake any such purposes or other activities on the Leased Property, whether accomplished by Tenant or a third party authorized by Tenant, that Tenant reasonably determines are necessary, useful or appropriate to accomplish any of the purposes or uses of the Lease or that are compatible with such purposes or uses; and

(b) the right to install Tenant's Improvements on the Leased Property without Owner's consent.

Section 3. <u>Delivery of Premises</u>. Owner shall deliver the Leased Property to Tenant in its "as- is" condition as of the Execution Date.

Section 4. <u>Exclusiveness; Existing Lease</u>. Except for the rights granted to the Wind Tenant under the Existing Lease, as amended by the Existing Lease Amendment, this Lease and Tenant's rights, privileges and obligations hereunder shall be exclusive with respect to the Leased Property. With respect to the Leased Property, Owner shall not amend, supplement or otherwise modify the Existing Lease, as amended by the Existing Lease Amendment, without Tenant's prior written consent, not to be unreasonably withheld, if such amendment, supplement or modification would reasonably be expected to adversely affect Tenant's rights under this Lease. For the avoidance of doubt, no Tenant consent shall be required for an amendment to the Existing Lease that does not apply to the Leased Property.

Section 5. <u>Term</u>.

5.1 <u>Early Access Agreement</u>. Owner and Tenant have entered into that certain Early Access Agreement, dated as of February 7, 2022, as amended by that certain First Amendment to Early Access Agreement, dated as of March 27, 2022,that certain Second Amendment to Early Access Agreement, dated as of August 5, 2022, and that certain Third Amendment to Early Access Agreement, dated as of October 6, 2022, pursuant to which Tenant can access and improve the Leased Property pursuant to the terms thereof (as amended, the "**Access Agreement**").

5.2 <u>Operative Documents</u>. In the event the parties fail to execute the Operative Documents (as defined below) within six (6) months of the Execution Date or any of the other conditions precedent set forth in <u>Section 5.3</u> are not achieved at such time and Tenant has not waived the satisfaction of such condition precedent in accordance with <u>Section 5.3</u>, Tenant shall have the right to terminate this Lease upon written notice to Owner at any time following the expiration of such six (6)-month period. "**Operative Documents**" shall mean that certain Wind Power Purchase Agreement by and between Wind Tenant and Golden Spread Electric Cooperative, Inc. (the "**PPA**"), that certain Cooperation Agreement, by and between Tenant, certain affiliates of Tenant identified therein, and Wind Tenant (the "**Cooperation Agreement**"), and that certain Agreement For Electric Service To Soluna DV Services, LLC, between Tenant and Lighthouse Electric Cooperative, Inc., each of which are under negotiation among the parties thereto, and any other documents, agreements and certificates related thereto.

5.3 <u>Conditions Precedent</u>. This Lease and the rights and obligations of Tenant and Owner hereunder are expressly conditioned on the following conditions being met.

(a) <u>Existing Lease</u>. Owner shall have entered into an amendment to the Existing Lease in substantially the form attached hereto as Exhibit E (the "**Existing Lease Amendment**"), which confirms that: (i) Wind Tenant will not construct any new improvements on the Leased Property other than any improvements required to replace or operate and maintain Wind Tenant's existing improvements located on the Leased Property, (ii) Wind Tenant shall not interfere with the development, construction, installation, maintenance or operation by Tenant of the Data Facilities or any of Tenant's Improvements on the Leased Property, and (iii) Wind Tenant shall have no rights under the Existing Lease as to the Leased Property other the rights expressly reserved by Wind Tenant to the Leased Property in the Existing Lease, as amended by the Existing Lease Amendment. Owner shall deliver a fully-executed copy of the Existing Lease Amendment to Tenant.

(b) <u>Operative Documents</u>. The Operative Documents shall have been executed by the parties thereto. Tenant may not waive the condition precedent set forth in <u>Section 5.3(b)</u> without Wind Tenant's prior written consent. This provision is for the express benefit of and shall be enforceable by Wind Tenant.

(c) <u>Substation Easement</u>. Tenant and Owner shall have entered into that certain Grant of Easement substantially in the form attached hereto as <u>Exhibit D</u> (the "**Easement**"), and such Grant of Easement shall have been recorded in the official records of Briscoe County, Texas.

5.4 <u>Initial Term & Extended Term</u>. The initial term of this Lease shall commence on the date (the "**Commencement Date**") on which all conditions set forth in <u>Section 5.3</u> have been met. Following the Commencement Date and following the Service Date (as defined below), at the request of either party, the parties shall enter into a memorandum of lease, in form and substance reasonably satisfactory to the parties, confirming the Commencement Date, the Service Date and the expiration date of the Initial Term, as applicable, provided, however, the failure of Owner or Tenant, or both, to execute and deliver such memorandum shall not affect the Commencement Date or expiration date. The initial term shall commence on the Commencement Date and shall continue until the date that is the fifth (5<sup>th</sup>) anniversary of the Service Date (the "**Initial Term**"), unless terminated sooner in accordance with the terms of this Lease. Promptly following the Service Date, Tenant shall notify Owner in writing that the Service Date has occurred. The Initial Term shall automatically extend for five (5) additional one (1) year periods (each, an "**Extended Term**"), unless terminated sooner in accordance with the terms of this Lease or unless terminated by Lessee by written notice delivered to Owner at least sixty (60) days prior to the end of the Initial Term or then-applicable Extended Term, as the case may be. The Extended Terms, if any should occur, shall commence on the day following the expiration of the Initial Term, or Extended Term, as applicable, and continue until the date that is one (1) year after the first day of such Extended Term. The terms and conditions set forth in this Lease shall remain in effect during each Extended Term. The Initial Term and each Extended Term (if applicable) shall be collectively referred to as the "**Term**". "**Service Date**" shall mean the earlier of (i) the date that is one (1) year after the Effective Date under and as defined in the PPA and (ii) the Service Date under and as defined in the PPA.

Section 6. <u>Lease Payments</u>. In consideration of the rights granted under this Lease, Tenant shall pay to Owner the amounts (the "**Rent Payment**") set forth in <u>Schedule 1</u> ("**Payment Schedule**") attached hereto and incorporated herein by reference for all purposes. Notwithstanding anything to the contrary in this Lease, Tenant shall have no further liability to make any payments that accrue under this Lease, following termination or expiration of this Lease in accordance with its terms.

Section 7. <u>Reserved</u>

Section 8. <u>Tenant's Representations, Warranties and Covenants</u>. Tenant hereby represents, warrants and covenants to Owner as follows:

8.1 <u>Tenant's Authority</u>. Tenant has full power, authority, capacity and legal right to enter into, execute and deliver this Lease. Each person signing this Lease on behalf of Tenant is authorized to do so. This Lease constitutes a legal, valid and binding agreement enforceable against Tenant in accordance with its terms.

8.2 <u>Legal Status/Approvals</u>. Tenant (a) is duly organized or formed, validly existing and in good standing under the laws of its state of organization or formation; (b) is duly qualified to transact business and is in good standing in the state of Texas; and (c) has full power and authority to lease the Leased Property and carry on its business as now conducted. Tenant has all necessary approvals, governmental and otherwise, to execute and deliver this Lease and the execution and delivery of this Lease by Tenant will not place Tenant in default of any agreements to which Tenant is a party or bound.

8.3 <u>Requirements of Governmental Agencies</u>. Tenant shall have the right in its sole discretion, to contest by appropriate legal proceedings, brought in the name of Tenant or in the names of both Tenant and Owner where appropriate or required, the validity or applicability to the Leased Property or any Data Facility of any law, ordinance, statute, order, regulation, tax or the like now or hereafter made or issued by any governmental agency or entity. Owner shall cooperate in every reasonable way in such contest, at no out-of-pocket expense to Owner. Any such contest or proceeding, including any maintained in the name of Owner, shall be controlled and directed by Tenant.

8.4 <u>Liens</u>. Tenant shall keep the Leased Property free and clear of all liens and claims of liens for labor and services performed on, and materials, supplies or equipment furnished to the Leased Property for Tenant's use or benefit; provided, however, that if such a lien does arise, Tenant has a right to contest such lien and Tenant, within thirty (30) days after it receives notice of the filing of such lien, either bonds around such lien or establishes appropriate reserves therefore, or, otherwise, removes such lien from the Leased Property pursuant to applicable law, in which case Tenant shall not be deemed to have breached this <u>Section 8.4</u>. Nothing in this <u>Section 8.4</u> or this Lease shall be construed to prohibit Tenant from granting one or more liens on all or any portion of Tenant's right, title or interest under this Lease as security for the repayment of any indebtedness and/or the performance of any obligation relating in whole or in part to any of the Data Facilities.

8.5 <u>Hazardous Materials</u>. Tenant will comply with any federal, state and local laws, ordinances and regulations relating, to the generation, manufacture, production, use, storage, release or threatened release, discharge, disposal, transportation or presence of any substance, material or waste which is now or hereafter classified as hazardous or toxic, or which is regulated under current or future federal, state or local laws or regulations (each such substance, material and waste, "**Hazardous Materials**") in each case by Tenant or any Tenant Parties in, on, under or about the Leased Property. In conformance with the requirements of applicable law and to the extent required to comply with applicable law, Tenant shall clean up, remove, remedy and repair any soil or ground water contamination and damage caused by the release or disposal of any Hazardous Materials by Tenant or any Tenant Parties in, on, under, or about the Leased Property. Tenant shall immediately give Owner written notice of any breach of this Section or upon learning of the presence of any release or suspected release of any Hazardous Materials which may affect the Leased Property. Notwithstanding anything to the contrary in this Lease, in no event shall Tenant have any obligation or liability under this Lease in respect of any Hazardous Materials brought upon, stored, used, generated, released or disposed of on, under, from or about the Leased Property or the Overall Property (i) prior to the date of delivery of the Leased Property to Tenant, or (ii) by Owner, or its agents, employees, contractors, licensees, subtenants, representatives or invitees, or (iii) by any other tenant of the Overall Property, or such other tenant's agents, employees, contractors, licensees, subtenants, representatives or invitees. Notwithstanding anything to the contrary in this Lease, in no event shall Tenant, its agents, employees, contractors, licensees, subtenants, representatives or invitees be deemed to have permitted Hazardous Materials to be brought upon, stored, used, generated, released, disposed of or otherwise be present on, under, from or about the Leased Property (including without limitation the soil and groundwater thereunder) for any Hazardous Materials that have migrated to the Leased Property from any location off the Leased Property.

8.6 <u>Estoppel Certificate by Tenant</u>. Tenant shall at any time, up to twice per year, within fifteen (15) days after a written request by Owner, execute and deliver to Owner a commercially reasonable written statement certifying that this Lease is in full force and effect (or modified and stating the modification). Such statement shall also state that, to Tenant's knowledge, there are no defaults existing at the time of execution of the statement, or (to the extent applicable) if existing, the nature of such defaults.

8.7 <u>Gates and Fences</u>.

(a) [Intentionally omitted.]

(b) Tenant acknowledges that Owner has a right to maintain locks on all exterior gates, provided that Owner shall provide Tenant with a key or with the combination to such locks and provided further that Tenant shall at all times have access to the Leased Property. Tenant shall have the right to install gates within the Leased Property where necessary or useful in connection with Tenant's use of the Leased Property. When installing a gate within Owner's existing fence on the Leased Property, Tenant agrees to make or cause to be made such fence cuts, braces, and repairs that will be permanent and remain functional for the remaining life of the fences of which they are part and become incorporated within. Should such cuts, braces, repairs or cattle guards as made by Tenant or Tenant's personnel become weakened or prove to be insecure or inadequate by reason of improper installation or fabrication and occur over and above normal wear, tear and use, Owner shall notify Tenant in writing. Tenant shall make or cause to be made adequate repairs or replacements of any such insecure or inadequate fencing, bracing, cattle guards or gates made by Tenant or Tenant's personnel within ten (10) days of receiving notice thereof from Owner, weather permitting; *provided, however*, that in the event Owner deems it necessary to effect any such repairs or replacements without notice to Tenant because of the imminent escape or loss of livestock, Owner shall be authorized to effect any such repairs or replacements, and to be reimbursed by Tenant for the reasonable, actual, out-of-pocket costs incurred by Owner in this regard for reasonable and necessary materials and labor. Tenant shall, and shall cause its authorized representatives to, promptly close and lock all gates opened by Tenant or its authorized representatives on the Leased Property in connection with their activities under this Lease.

8.8 <u>Roads and Soil Surfaces</u>. Should Tenant exercise its right under this Lease to construct or improve any road, lane, or route on the Leased Property (each a "**Road**"), Tenant shall consider any locations suggested by Owner when evaluating the potential locations to construct a new Road, but such suggestions shall not be binding on Tenant. Tenant shall use reasonable efforts to use or improve the existing roads, if any, on the Leased Property in order to minimize new road construction. Tenant agrees that at the places where it trenches across any existing road or roads on the Leased Property, if any, it will fully repair the road bed and surface of the road after any of its operations hereunder in such a way as that any road affected hereby will be kept in its normal condition except at those times when Tenant is actually trenching. Promptly after completion of construction, maintenance or removal operations in connection with the Lease, Tenant shall fill all ruts, holes and other depressions caused by such operations and restore all surfaces utilized to as near normal grade and level as is commercially reasonable. On areas not occupied by such a road, Tenant shall replant native grass seed, but not crops or any other type of vegetation, on any portion of the Leased Property that was in native grassland prior to construction of a Data Facility. Notwithstanding anything contained in this <u>Section 8.8</u>, (a) Tenant shall be responsible for (i) repairing damage to Owner's or third party-constructed or Tenant-constructed roads caused by Tenant's operations on the Leased Property and (ii) routine maintenance of Roads on the Leased Property, (b) Tenant shall not have responsibility or obligation for repairing damage to Roads caused by parties other than the Tenant Parties or for routine maintenance of Owner or third party- constructed roads (it being understood and agreed that Owner shall have the obligation to promptly cause the same to be repaired and/or replaced at no cost or expense to Tenant), and (c) if Tenant so elects, Tenant shall have the right to repair damage to Roads caused by parties other than the Tenant Parties or for routine maintenance of Owner or third party-constructed roads and shall be permitted to offset the actual, reasonable, out of pocket costs or expenses incurred by Tenant for such repairs and maintenance against any Rent Payments or other amounts owed by Tenant under this Lease. Subject to the foregoing, the Owner Parties may use, without charge, any roads existing as of the Execution Date or constructed on the Leased Property by Tenant; provided that such use does not inhibit or impair Tenant's use of the Leased Property as contemplated herein.

8.9 <u>No Broker</u>. Neither Tenant nor any of its affiliates nor any of their respective officers, directors or employees has employed any broker or finder or incurred any liability for any brokers' fees, commissions or finders' fees as a result of the execution of this Lease.

8.10 <u>Tenant's Insurance</u>. Tenant shall procure and maintain during the Term of this Lease, at its sole cost and expense, a policy or policies of insurance in amounts not less than a combined single limit of $1,000,000 per occurrence and $2,000,000 in the aggregate, insuring against any and all liability to the extent obtainable for injury or death of a person or persons or damage to property occasioned by or arising out of or in connection with the occupation and use of the Leased Property.

8.11 <u>Intentionally Omitted</u>.

8.12 <u>Intentionally Omitted</u>.

8.13 <u>Interest on Past Due Payments</u>. All Rent Payments and other payments not paid or tendered when due under this Lease shall bear interest at a rate equal to the lesser of (i) eight percent (8%) per annum, or (ii) the maximum rate allowed by applicable law (the "**Contract Rate**").

8.14 <u>Payment of Taxes</u>. Tenant shall pay all real and personal property taxes, assessments and charges, general and specific, that may be levied or assessed by reason of Tenant's use of the Leased Property, or Tenant's leasehold interest hereunder. Further, Tenant shall be responsible for paying any increases, including any rollback taxes or other tax penalties, in real property taxes resulting from a reclassification of the Leased Property or a loss of a property tax exemption, in each case only if the same is directly caused by Tenant's use of the Leased Property or by Owner's change in use of the Leased Property that is directly necessitated by Tenant's use of the Leased Property. In the event increased ad valorem taxes are assessed against the Leased Property as a result of any other payments made hereunder, Tenant shall pay the increase. Taxes that are the responsibility of Tenant shall be collectively referred to as "**Tenant Taxes**". Owner shall pay or cause to be paid, and Tenant shall not be liable for, taxes attributable to facilities installed by Owner or others on the Leased Property or to the underlying value of the Leased Property itself. Owner shall pay or cause to be paid, and Tenant shall not be liable for, taxes attributable to the Overall Property that does not consist of the Leased Property. Taxes that are the responsibility of Owner shall be collectively referred to as "**Owner Taxes**". It is a condition to Owner's right to payment or reimbursement hereunder that Owner submit the real property tax bill to Tenant within thirty (30) days after Owner receives the bill from the taxing authority. Owner shall pay all Owner Taxes prior to delinquency. In the event Owner does not pay any Owner Taxes prior to delinquency, Tenant may, but shall not be obligated to, pay the taxing authorities the entire amount (including, but not limited to, any interest and penalties set forth thereon) due on the tax bill and Owner shall reimburse Tenant such amount plus interest (computed from the date of Tenant's payment) at a rate equal to the Contract Rate, or Tenant may offset such amount, together with such interest, against any Rent Payments or other payments due to Owner under this Lease. To the extent that any Tenant Taxes are jointly assessed with Owner Taxes, the parties shall cooperate in a good faith effort to cause such Tenant Taxes to be separately assessed. With respect to any Tenant Taxes, Tenant shall have the right to contest the validity and/or amount of such Tenant Taxes. Owner agrees to render to Tenant all reasonable assistance in contesting the validity or amount of any such contested Tenant Taxes, including joining in the signing of any protests or pleading which Tenant may deem advisable to file; provided, however, that Tenant will reimburse Owner for its reasonable out-of-pocket expenses, including reasonable attorneys' fees incurred in connection with providing such assistance.

8.15 <u>Utilities</u>. Tenant shall pay when due all charges for electricity, water, gas, telecommunications and other utility services used by Tenant on the Leased Property. In the event that Tenant requires well water and Owner has sufficient water from existing wells to meet Owner's requirements and Tenant's requirements, then Owner will supply the well water to Tenant and Tenant will pay to Owner the fair market value for such water, as mutually agreed to by the parties and shall provide Owner reasonable access to any well drilled on the Property. Upon expiration or earlier termination of this Lease, any water well drilled by Tenant on the Property shall become property of the Owner. Otherwise, Tenant may construct its own water wells upon the Leased Property provided that Tenant obtains Owner's prior approval of the location, which may be withheld by Owner at its sole discretion.

8.17 <u>Intentionally Omitted</u>.

8.18 <u>Site Rules</u>. Tenant shall abide by the site rules, attached hereto as <u>Exhibit C</u> and incorporated herein (the "**Site Rules**"), while on and accessing the Leased Property, to the extent such Site Rules are applicable to the uses permitted hereunder.

8.19 <u>Facility Setback</u>. Tenant agrees it shall not construct any (i) modules, buildings or other above-ground structures within 337.68 feet of any existing Wind Turbine Generator ("**Facility Setback**"), or (ii) permanent structure greater than seventeen (17) feet above ground level in height outside of the Facility Setback on the Leased Property, without Wind Tenant's prior written approval, which approval shall not be unreasonably withheld.

Section 9. <u>Owner's Representations, Warranties and Covenants</u>. Owner hereby represents, warrants and covenants to Tenant as follows:

9.1 <u>Owner's Authority</u>. Owner is the sole owner and holder of fee simple title to the surface estate of the Leased Property and all appurtenant rights thereto. Owner has full power, authority, capacity and legal right to enter into, execute and deliver this Lease, and to assign, warrant, set- over, transfer and convey the Leased Property to Tenant pursuant to the terms of this Lease. Owner has the authority to grant the Easement or use thereof to Tenant. Each person signing this Lease on behalf of Owner is authorized to do so. This Lease constitutes a legal, valid and binding agreement enforceable against Owner and the Leased Property in accordance with its terms.

9.2 <u>Legal Status; Approvals</u>. Owner, if other than an individual, (a) is duly organized or formed, validly existing and in good standing under the laws of its state of organization or formation; and (b) is duly qualified to transact business and is in good standing in the state of Texas. Owner has full power and authority to own the Leased Property and carry on its business as now conducted and proposed to be conducted. Owner has all necessary approvals, governmental and otherwise, to own the Leased Property and to execute and deliver this Lease and the execution and delivery of this Lease by Owner will not place Owner in default of any agreements to which Owner is a party or bound.

9.3 <u>No Interference; No Third Party Rights; Recognition</u>. Owner covenants and agrees that Tenant shall have the quiet use and enjoyment of the Leased Property in accordance with the terms of this Lease without hindrance or interruption from Owner or any of the Owner Parties (defined in <u>Section 10.1</u>). Tenant shall have access to the Leased Property at all times (twenty-four hours a day, seven days a week, three hundred sixty five days a year).

So long as no default by Tenant hereunder or pursuant to the Easement, beyond any applicable notice or cure periods, has occurred and is continuing, if Wind Tenant defaults under the Existing Lease, as amended, or the Existing Lease terminates (other than a termination or a default caused in whole or in part by Tenant or arising from Tenant's failure to perform Tenant's obligations hereunder or under the Easement), Owner agrees that:

(a) Tenant shall have no liability or obligation to Owner under this Lease arising from or related to such default.

(b) Tenant's right to occupy the Leased Property in accordance with this Lease shall not be disturbed by Owner.

(c) Owner shall not (unless required by law) name or join Tenant as a party defendant in any action, suit or proceeding which may be instituted or taken by Owner to enforce the performance or observance by Wind Tenant of the provisions of the Existing Lease, as amended and/or to recover damages for breach or default thereof by reason of the occurrence of any breach or default by Wind Tenant, unless such breach or default was caused in whole or in part by Tenant or otherwise constitutes a default by Tenant beyond any applicable notice and cure periods under the terms of this Lease or the Easement.

(d) Tenant shall not be evicted from the Leased Property by Owner, nor shall Tenant's possession be disturbed by Owner in or as a result of any such action, suit or proceeding.

9.4 <u>Liens and Third Party Rights</u>.

(a) <u>Liens</u>. Except as disclosed in writing by Owner to Tenant, there are no liens, encumbrances, leases, mortgages, deeds of trust, security interests, licenses or other exceptions (collectively, "**Liens**") encumbering or affecting all or any portion of the Leased Property.

(b) <u>No Third Party Rights</u>. Except as disclosed in writing by Owner to Tenant, there are no currently existing options, rights of refusal, sales contracts, leases, easements, mineral reservations or conveyances, mineral leases, or severed mineral interests requiring use of the surface estate or other rights in favor of any third parties relating to the Leased Property or any interest therein ("**Third Party Rights**"), that could interfere with the development, construction, installation, maintenance or operation by Tenant of a Data Facility or any Tenant's Improvements or that could adversely affect Tenant's use of the Leased Property, or prevent Tenant from obtaining the benefits intended under this Lease.

(d) Concurrently herewith, Owner has cooperated with Tenant to obtain a Surface Waiver (as defined below) from each party that holds a mineral interest in, to or under the Leased Property that might interfere with Tenant's rights under this Lease. A "**Surface Waiver**" shall mean an agreement between Tenant and the holder of a mineral interest in, to or under the Leased Property that provides that the holder of such mineral interest shall waive any right to explore and/or develop minerals on, in or under the Leased Property from the surface of the Leased Property; provided that Tenant may agree in its sole and absolute discretion to designate drill sites on the surface of the Property to the extent such drill sites will not interfere with Tenant's use of the Leased Property.

(e) To the extent that Owner owns any minerals or mineral interests in, on or under the Leased Property, Owner shall not itself develop such minerals or lease or sell such rights to third parties without first waiving, on behalf of itself, its successors, and assigns, for the Term of this Lease, its rights to access and use the surface of the Leased Property, and the subsurface thereof to a depth of five hundred feet (500'), for the purposes of mining, drilling, exploring, producing, storing, processing, removing, transporting, marketing, extracting, or developing the oil, gas, and other minerals or the hydrocarbons produced therefrom located underneath the Property and agreeing with any third-party developer that any such mineral developer shall not in any way adversely affect Tenant's rights under this Lease.

9.5 <u>Requirements of Governmental Agencies</u>. Owner shall fully cooperate with Tenant, at no out-of-pocket expense to Owner, in connection with (i) obtaining and complying with any land use or environmental permits and approvals, building permits, environmental impact reviews, including without limitation groundwater conservation district requirements and permits, permits related to the installation of above-ground storage tanks or any other approvals required for the financing, construction, installation, relocation, replacement, maintenance, operation or removal of any Data Facility or other Tenant's Improvements, including without limitation execution of applications for such approvals and (ii) providing affidavits or documents from Owner customarily required by title companies. In connection with any application by Tenant for a governmental use permit, approval, authorization or other consent, or any governmental review of any previously issued permit, including, without limitation, for the installation, continued operation, modification or replacement of any Data Facility or other Tenant's Improvements, Owner agrees to support and not oppose, in any way, whether directly or indirectly, any such application or approval, at any administrative, judicial or legislative level.

9.6 <u>Hazardous Materials</u>. Owner represents that there are no Hazardous Materials located on the Leased Property in any amount which would require reporting under applicable environmental laws, and the Leased Property has not been used for the generation, treatment, storage or disposal of Hazardous Materials and there are no underground storage tanks located on the Leased Property. Owner shall not violate any federal, state or local law, ordinance or regulation relating to the generation, manufacture, production, use, storage, release or threatened release, discharge, disposal, transportation or presence of any Hazardous Materials on or under the Leased Property.

9.7 <u>No Litigation</u>. Owner is not a party to any, and there are no pending or, to Owner's best knowledge, threatened, legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any kind or nature whatsoever against Owner or involving the Leased Property (a) challenging the validity or propriety of this Lease, the documents executed in connection herewith, and/or transactions contemplated in this Lease and/or such documents or (b) which could reasonably be expected to have a material adverse effect on the ownership or operation of the Leased Property or any part thereof or interest therein. Owner shall

(i) promptly inform Tenant of any disagreements, disputes, threatened litigation or pending litigation between any Owner and any other party that may materially impact Tenant's use of the Leased Property, (ii) promptly give Tenant copies of any notices, correspondence or other written or digital communication received by Owner in connection with any such disagreement, dispute, threatened litigation or pending litigation and (iii) vigorously defend against any such disagreement, dispute, threatened litigation or pending litigation, if the same will have, or could reasonably be expected to have, a material adverse effect on Tenant's use of the Leased Property.

9.8 <u>Intentionally Omitted</u>.

9.9 <u>Estoppel Certificates from Owner</u>. Owner shall at any time and from time to time, within fifteen (15) days after a written request by Tenant, execute and deliver to Tenant a written statement certifying that this Lease is in full force and effect (or modified and stating the modification). Such statement shall also (a) state that, to Owner's knowledge, there are no defaults on the part of Owner or Tenant existing at the time of execution of the statement, or (to the extent applicable) if existing, the nature of such defaults, (b) state that Owner has not entered into any agreements that might materially and adversely affect Tenant's use of the Leased Property, and (c) attest to such other factual matters relating to this Lease as Tenant or its Mortgagee may reasonably request.

9.10 <u>Noise/Interference</u>. Owner acknowledges and agrees that incident to the uses permitted by the Lease shall be the continuous creation of audible and electromagnetic noise and possible electrical interference, radio frequency interference or cell tower interference related to the maintenance, operation and use of the Data Facility and as further set forth in <u>Section 10.2</u>, Owner waives, on behalf of Owner and the Owner Parties, the right to make any claims for Losses (as defined in <u>Section 10.1</u>) as a result thereof.

9.11 <u>No Liability for Failure to Develop or Operate</u>. Owner acknowledges and agrees that Tenant may or may not elect to construct, install or develop a Data Facility in its sole discretion, and Tenant shall have no responsibility or liability to Owner or any other party in the event Tenant does not construct, install or develop any Data Facility on the Leased Property. Furthermore, nothing in this Lease may be interpreted as imposing on Tenant, or any other party, any obligation to continuously operate any Data Facility constructed, developed or installed on the Leased Property.

9.12 <u>Confidentiality</u>. Owner shall maintain in confidence, for the sole benefit of Tenant, all information pertaining to the financial terms of or payments under this Lease, Tenant's site or methods of operation, methods of construction, whether disclosed by Tenant or discovered by Owner. Owner shall not publish or otherwise disclose such information to others, except as necessary to Owner's financial advisors, lenders, consultants, retained experts, constituent entities of any Owner, and lawyers or other professionals, who receive such information under an obligation of confidentiality.

9.13 <u>Non Foreign Owner</u>. Owner is not a "foreign person" within the meaning of Section 1445(1)(3) of the Internal Revenue Code of 1986, as amended, and the related Treasury Department regulations, including temporary regulations.

9.14 <u>No Broker</u>. Neither Owner nor any of its affiliates nor any of their respective officers, directors or employees has employed any broker or finder or incurred any liability for any brokers' fees, commissions or finders' fees as a result of the execution of this Lease.

9.15 <u>Lone Star Infrastructure Protection Act</u>. Pursuant to the Lone Star Infrastructure Protection Act (Chapter 113 of the Texas Business and Commerce Code) (the "**Lone Star Act**"), Owner represents and warrants that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) Owner
 is not owned by, and the majority of stock or other ownership interest of the Owner is not
 held or controlled by,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Individuals
 who are citizens of China, Iran, North Korea, Russia, or a Designated Country (as defined
 below); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. A
 company or other entity, including a governmental entity, that is owned or controlled by
 citizens of or is directly controlled by the government of China, Iran, North Korea, Russia,
 or a Designated Country; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Owner is not headquartered in China, Iran, North Korea, Russia,
or a Designated Country.

"Designated Country," for purposes of this Section 9.15 means a country designated by the Governor of the State of Texas as a threat to critical infrastructure under Section 113.003 of the Texas Business and Commerce Code.

9.16 <u>Life Estate/ Remainderman</u>. If an Owner holds a life estate ("Life Estate Holder") in the Leased Property and is alive, Owner shall only consist of the Life Estate Holder, and all payments, notices and other dealings under this Lease (including the signing of estoppels) by Tenant with Owner shall be conducted solely with the Life Estate Holder as Owner. Upon the death of Life Estate Holder and after Tenant receives written notice of the last Life Estate Holder's death, any holders of a remainder interest (the "Remainderman") shall become the Owner for all purposes under this Lease. The Remainderman shall notify Tenant of their address(es) for notice purposes and other purposes under this Lease, and all subsequent payments, notices and other dealings under this Lease by Tenant with Owner shall be conducted solely with the Remainderman as Owner.

9.17 <u>Form W-9</u>. Notwithstanding anything in this Lease to the contrary, Tenant shall have no obligation to make any payment to Owner otherwise required under this Lease until Owner has returned to Tenant a completed Internal Revenue Service Form W-9 and payments retained by Tenant pending the return of such W-9 shall not constitute an event of default.

Section 10. <u>Indemnity and Release</u>.

10.1 <u>Indemnity by Tenant</u>. **SUBJECT TO THE LIMITATIONS OF LIABILITY SET FORTH IN <u>SECTION 10.3</u>, TENANT HEREBY DEFENDS, INDEMNIFIES AND HOLDS HARMLESS OWNER AND OWNER'S AFFILIATES, SUCCESSORS AND ASSIGNS AND ALL SUCH PARTIES' STOCKHOLDERS, MEMBERS, PARTNERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, REPRESENTATIVES, CONTRACTORS, AND INVITEES (COLLECTIVELY, THE "OWNER PARTIES") FROM AND AGAINST LOSSES, LIABILITIES, DAMAGES, COSTS, CLAIMS, SUITS AND CAUSES OF ACTION (INCLUDING LOSSES OR CLAIMS FOR PERSONAL INJURIES, DEATH AND PROPERTY DAMAGE (INCLUDING, WITHOUT LIMITATION, DAMAGE TO OWNER'S CROPS) OR CLAIMS FOR INTERFERENCE WITH THE EXISTING LEASE AND INCLUDING REASONABLE ATTORNEYS' FEES AND COSTS OF LITIGATION) (COLLECTIVELY, "LOSSES"), IN EACH CASE, TO THE EXTENT DIRECTLY ARISING OUT OF ANY TENANT PARTY'S (AS DEFINED IN <u>SECTION 10.2</u>) ACTIONS ON, OR USE OR OPERATION OF, THE LEASED PROPERTY DURING THE TERM OF THIS LEASE (ALL SUCH LOSSES FOR WHICH TENANT IS OBLIGATED TO INDEMNIFY THE OWNER PARTIES ARE COLLECTIVELY REFERRED TO AS THE "OWNER LOSSES"), BUT EXCLUDING ANY LOSSES TO THE EXTENT CAUSED BY ANY OWNER PARTY'S ACTIONS OR INACTIONS AND ANY LOSSES CAUSED BY, OR ALLEGEDLY CAUSED BY OWNER'S NEGLIGENCE OR WILLFUL NEGLECT. NOTWITHSTANDING THE FOREGOING, ANY OWNER LOSSES FOR WHICH TENANT IS OBLIGATED TO INDEMNIFY ANY OWNER PARTY HEREUNDER SHALL BE REDUCED BY ANY INSURANCE PROCEEDS ACTUALLY RECOVERED BY SUCH OWNER PARTY FOR SUCH OWNER LOSSES.**

10.2 <u>Indemnity by Owner</u>. **SUBJECT TO THE LIMITATIONS OF LIABILITY SET FORTH IN <u>SECTION 10.3</u>, OWNER HEREBY DEFENDS, INDEMNIFIES AND HOLDS HARMLESS TENANT AND TENANT'S AFFILIATES, SUCCESSORS AND ASSIGNS AND ALL SUCH PARTIES' STOCKHOLDERS, MEMBERS, PARTNERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, REPRESENTATIVES, CONTRACTORS AND INVITEES (COLLECTIVELY, THE "TENANT PARTIES") FROM AND AGAINST LOSSES TO THE EXTENT DIRECTLY ARISING OUT OF ANY OWNER PARTY'S ACTIONS ON, OR USE, OWNERSHIP OR OPERATION OF, THE LEASED PROPERTY OR OVERALL PROPERTY OR BREACH OF THIS LEASE, BUT EXCLUDING ANY OWNER LOSSES AND ANY LOSSES TO THE EXTENT CAUSED BY ANY TENANT PARTY'S ACTIONS OR INACTIONS. NOTWITHSTANDING THE FOREGOING, ANY LOSSES FOR WHICH OWNER IS OBLIGATED TO INDEMNIFY ANY TENANT PARTY HEREUNDER SHALL BE REDUCED BY ANY INSURANCE PROCEEDS ACTUALLY RECOVERED BY SUCH TENANT PARTY FOR SUCH LOSSES.**

10.3 <u>Limitation of Liability</u>. **NEITHER OWNER NOR TENANT SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES OF ANY KIND OR NATURE, REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT OR OTHERWISE (INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS OR REVENUE AND LOSSES OF RENT, BUSINESS OPPORTUNITIES AND THE LIKE THAT MAY RESULT FROM A LOSS OF USE OF THE LEASED PROPERTY OR ANY PORTION THEREOF OR OTHERWISE), EXCEPT TO THE EXTENT ANY SUCH PARTY SUFFERS SUCH DAMAGES TO AN UNAFFILIATED THIRD PARTY IN CONNECTION WITH A LOSS FOR WHICH SUCH PARTY IS INDEMNIFIED UNDER THIS LEASE, IN WHICH EVENT SUCH DAMAGES SHALL BE RECOVERABLE.**

Section 11. <u>Assignments</u>

11.1 <u>Assignments by Tenant</u>. So long as Tenant is not in default of its obligations under this Lease, beyond any applicable notice or cure periods, Owner hereby consents and grants to Tenant the right, on an exclusive or non-exclusive basis, to grant, sell, lease, convey or assign all or a portion of Tenant's interest in this Lease or to grant co-leases (including, without limitation, co-tenancy or tenancy in common interests), separate leases, easements, sub-easements, licenses or similar rights to Tenant's interest in this Lease (each of the foregoing, individually and collectively, an "**Assignment**") to one or more persons or entities who are "**Qualified Assignees**" (defined below), and no further consent of Owner shall be required for any such Assignment. So long as Tenant is not in default of its obligations under this Lease, beyond any applicable notice or cure periods, Owner further hereby consents and grants to Tenant the right to sublease or sub- sublease all or any portion of the Leased Property to one or more sublessees (each of the foregoing, individually and collectively, a "**Sublease**"), and no further consent of Owner shall be required for any such Sublease(s). No Owner consent shall be required for any change in ownership of Tenant and any such change in ownership shall not constitute an "Assignment" for purposes of this Lease. Owner further hereby consents and grants to Tenant the right, on an exclusive or non-exclusive basis, to encumber, hypothecate, mortgage, grant or pledge (including by mortgage, deed of trust or personal property security instrument) all or any portion of Tenant's right, title or interest under this Lease, to any Mortgagee (defined below) as security for the repayment of any indebtedness and/or the performance of any obligation, so long as any such mortgage or pledge does not encumber the fee estate of the Leased Property. Upon Tenant's assignment of its interest, or a portion thereof, in this Lease, Owner shall recognize the Assignee as Tenant's proper successor, the Assignee shall have all of the assigned rights, benefits and obligations of Tenant under and pursuant to this Lease, and Tenant shall be relieved of all of its obligations relating to the assigned interests under this Lease that relate to acts or omissions which occur or accrue following the effective date of such grant, sale, lease, conveyance or assignment. "**Qualified Assignee**" shall be an affiliate of Tenant, an assignee with a net worth equal to or greater than the assigning Tenant or any subtenant. Owner consent shall be required for an Assignment to an entity or person who is not a Qualified Assignee, which consent shall not be unreasonably withheld, conditioned or delayed. For the avoidance of doubt, Owner consent shall not be required to any Sublease. Notwithstanding anything to the contrary herein, Tenant shall be permitted to grant an Access Easement and Right of Way to Lighthouse Electric Cooperative, Inc. covering all or a portion of the Leased Property in connection with that certain Agreement for Electric Service to Soluna DV Services, LLC, and Owner's consent shall not be required with respect to such easement.

Notwithstanding anything to the contrary herein, Tenant may pledge its interest in any personal property situated on the Leased Property in connection with a personal property and equipment financing. Upon the making of any such pledge, Owner will, upon request of Tenant, enter into a commercially reasonable agreement with the lender under such financing to ensure the lender's rights to the collateral pledged to it.

11.2 <u>Notice to Owner</u>. Following an Assignment, Sublease or the granting of a Mortgage, Tenant or the Mortgagee will give notice of the same (including the address of the Mortgagee for notice purposes) to Owner; provided, however, that the failure to give such notice shall not constitute a default but rather shall only have the effect of not binding Owner hereunder with respect to such Mortgagee until such notice is given.

11.3 <u>Cure</u>. Each Assignee that holds a partial interest in, or a sublease under this Lease, shall have the same amount of time following delivery of written notice of such default, to cure said default as is given to Tenant pursuant to this Lease. If Tenant or an Assignee holds an interest in less than all of this Lease any default under this Lease shall be deemed remedied, as to Tenant's or such Assignee's partial interest only (and Owner shall not disturb such partial interest), if Tenant or Assignee, as the case may be, shall have cured its pro rata portion of the default by paying the fees attributable to the Lease in which Tenant or the Assignee, as the case may be, holds an interest.

11.4 <u>Division into Separate Leases</u>. Tenant may divide the Leased Property into two (2) or more separate, stand-alone Leases if such division becomes necessary to further the development of any Data Facility. If Tenant elects to divide the Leased Property into two (2) or more Leases, then Tenant shall provide Owner with a written proposal of how to bifurcate this Lease and any related documents, along with all documentation necessary to divide the Leased Property including new lease and if applicable, easement agreements. Following receipt of any such documentation, Owner shall, within twenty (20) business days after written request from Tenant, and without demanding any additional consideration other than as specifically set forth herein, bifurcate this Lease by entering into and delivering to Tenant two (2) (or the requested number of) stand-alone new Leases (which shall supersede and replace this Lease) that provide Tenant with separate leasehold estates in different portions of the Leased Property, as designated by Tenant and with the necessary easement, sub-easement or co-easement rights in the Leased Property. Tenant will reimburse Owner for any and all expenses incurred by Owner in review and preparation of such proposed division, including, but not limited to, any attorneys' fees in creating additional lease agreements. Any new Leases shall: (i) specify the portion(s) of the Leased Property and any easement areas to be covered thereby (and the term "Leased Property" as used therein, shall refer only to such portion(s)), (ii) contain the same terms and conditions as this Lease (except for any requirements that have been fulfilled by Tenant, any Assignee, or any other person or entity prior to the execution of such new Leases, and except for any modifications that may be required to ensure that Tenant's and Owner's respective combined obligations under such new leases do not exceed their respective obligations under this Lease) and be in a form reasonably acceptable to Tenant and Owner; (iii) be for a term equal to the then-remaining term of this Lease; (iv) contain a grant of access, transmission, communications, utility and other easements for the benefit of the bifurcated leasehold estates; and (v) to the extent permitted by law, enjoy the same priority as this Lease over any lien, encumbrance or other interest against the Leased Property.

11.5 <u>Assignments and Transfers by Owner</u>. The burdens of this Lease and other rights contained in this Lease shall run with and against the Leased Property and shall be a charge and burden thereon for the duration of this Lease and shall be binding upon and against Owner and its successors and assigns. Owner shall notify Tenant in writing within thirty (30) days of any sale, assignment or transfer of any of Owner's interest in the Leased Property and/or this Lease, or any part thereof, and any such sale, assignment or transfer shall be made subject to the terms and conditions of this Lease. Tenant shall not be under any obligation to make payments to new owners until it receives notice and proof of new ownership. Owner shall notify Tenant in writing of any sale of the Leased Property and/or a conveyance of the right to payments under this Lease and Owner shall notify any prospective owner, transferee or assignee of the following (1) Tenant shall not be under any obligation to make payments to new owners until it receives notice and proof of new ownership; and (2) new owners are bound by prior payments made before notice is received.

Section 12. <u>Mortgagee Protection</u>. Any Mortgagee (defined below) shall, for so long as its Mortgage is in existence and until the Lien thereof has been extinguished, be entitled to the following protections, upon delivery to Owner of notice of its name and address:

12.1 <u>Mortgagee's Right to Possession, Right to Acquire and Right to Assign</u>. A Mortgagee shall have the absolute right: (a) to assign its security interest; (b) to enforce its Lien and acquire title to the leasehold estate by any lawful means; (c) to take possession of and operate the Leased Property, or any portion thereof and to perform all obligations to be performed by Tenant or Assignee under this Lease, or to cause a receiver to be appointed to do so; (d) to acquire the leasehold estate by foreclosure or by an assignment in lieu of foreclosure and thereafter to assign or transfer the leasehold estate to a third party; and (e) prior to any enforcement action, to cure any breach or default of Tenant under this Lease. Owner's consent shall not be required for (x) the pledge, mortgage or hypothecation of Tenant's rights in the Lease; or (b) the acquisition of Tenant's or Assignee's leasehold estate by a third party who acquires the same by foreclosure or assignment in lieu of foreclosure. As used in this Lease, (i) the term "**Mortgagee**" means any financial institution or other person or entity that from time to time provides secured financing or interest rate hedging directly to Tenant or indirectly to an affiliate or otherwise encumbers some or all of Tenant's or an Assignee's interest in the Lease and any agent, security agent, collateral agent, indenture trustee, loan trustee, loan participant or participating syndicated lenders involved in whole or in part in such financing, and their respective successors and assigns, (ii) the term "**Mortgage**" refers to the mortgage, deed of trust or other security interest in this Lease given to a Mortgagee in connection with such financing and (iii) the term "**Mortgaged Interest**" refers to the interest in this Lease, that is held by the Mortgagee. Under no circumstances may a Mortgage be allowed to attach to the fee simple estate owned by Owner or the leasehold estate and other real property interests held by the Wind Tenant in the Leased Property.

12.2 <u>Notice of Default: Opportunity to Cure</u>. As a precondition to exercising any rights or remedies as a result of any alleged default by Tenant or Assignee, Owner shall give written notice of a default under this Lease to each Mortgagee concurrently with delivery of such notice to Tenant or Assignee, as applicable, specifying in detail the alleged event of default, provided that such Mortgagee shall have provided Owner with its current address. In the event the Owner gives such a written notice of default, the following provisions shall apply:

(a) A "**Monetary Default**" means failure to pay when due any monetary obligation of Tenant or Assignee to Owner under this Lease; any other event of default is a "**Non-Monetary Default**."

(b) Notwithstanding any provision herein to the contrary, the Mortgagee shall have the same period after receipt of notice of default to remedy the default, or cause the same to be remedied, as is given to Tenant or Assignee, plus, in each instance, the following additional time periods: (i) thirty (30) days after receipt of the notice of default in the event of any Monetary Default; and (ii) ninety (90) days after receipt of the notice of default in the event of any Non-Monetary Default, provided that such period shall be extended for the time reasonably required to complete such cure, including the time required for the Mortgagee to perfect its right to cure such non-monetary default by obtaining possession of the Leased Property (including possession by a receiver) or by instituting foreclosure proceedings, provided the Mortgagee acts with reasonable and continuous diligence. The Mortgagee shall have the absolute right to substitute itself for Tenant or any Assignee and perform the duties of Tenant or any Assignee under this Lease for purposes of curing such defaults. Owner expressly consents to such substitution, agrees to accept such performance, and authorizes the Mortgagee (or its employees, agents, representatives or contractors) to enter upon the Leased Property to complete such performance with all the rights, privileges and obligations of the Tenant or any Assignee. Owner shall not terminate this Lease prior to expiration of the cure periods available to a Mortgagee as set forth above.

(c) During any period of possession of the Mortgaged Interest by a Mortgagee (or a receiver requested by such Mortgagee) and/or during the pendency of any foreclosure proceedings instituted by a Mortgagee, the Mortgagee shall pay or cause to be paid all monetary charges payable by Tenant or any Assignee under this Lease which have accrued and are unpaid at the commencement of said period and those which accrue thereafter during said period. Following acquisition of Tenant's or any Assignee's Mortgaged Interest by the Mortgagee or its assignee or designee as a result of either foreclosure or acceptance of an assignment in lieu of foreclosure, or by a purchaser at a foreclosure sale, this Lease shall continue in full force and effect and the Mortgagee or party acquiring title to the Mortgaged Interest shall, as promptly as reasonably possible, commence the cure of all defaults under this Lease and thereafter diligently process such cure to completion, whereupon Owner's right to terminate this Lease based upon such defaults shall be deemed waived; provided, however, the Mortgagee or party acquiring title to the Mortgaged Interest shall not be required to cure those non-monetary defaults which are not capable of being cured or performed by such party ("**non-curable defaults**"). Non-curable defaults shall be deemed waived by Owner upon completion of foreclosure proceedings or acquisition of interest in this Lease by such party.

(d) Any Mortgagee or other party who acquires the Mortgaged Interest pursuant to foreclosure or assignment in lieu of foreclosure shall not be liable to perform the obligations imposed on Tenant or an Assignee by this Lease incurred or accruing after such party no longer has ownership of the leasehold estate or possession of the Leased Property.

(e) Neither the bankruptcy nor the insolvency of Owner, Tenant or any Assignee shall be grounds for terminating this Lease as long as all other monetary charges payable by Tenant or Assignee under this Lease are paid by the Mortgagee in accordance with the terms of this Lease.

(f) Nothing in this Lease shall be construed to extend this Lease beyond the Term or to require a Mortgagee to continue foreclosure proceedings after the default has been cured. If the default is cured and the Mortgagee discontinues foreclosure proceedings, this Lease shall continue in full force and effect.

12.3 <u>New Lease to Mortgagee</u>. If this Lease terminates because of Tenant's or Assignee's default or if the Mortgaged Interest is foreclosed, or if this Lease is rejected or disaffirmed pursuant to bankruptcy law or other law affecting creditors' rights, then Owner shall, upon written request from any Mortgagee, enter into a new agreement for the Leased Property, on the following terms and conditions:

(a) The terms of the new agreement shall commence on the date of termination, foreclosure, or rejection and shall continue for the remainder of the term of this Lease, subject to the same terms and conditions set forth in this Lease. Such new agreement shall be subject to all existing subleases, provided the subtenants are not then in default.

(c) At the option of the Mortgagee, the new agreement may be executed by a designee of such Mortgagee without the Mortgagee assuming the burdens and obligations of the Assignee thereunder.

(d) If more than one Mortgagee makes a written request for a new agreement pursuant hereto, the new agreement shall be delivered to the Mortgagee requesting such new agreements whose Mortgage is prior in lien, and the written request of any other Mortgagee whose lien is subordinate shall be void and of no further force or effect. Owner shall be reimbursed all reasonable expenses incurred in determining whose Mortgage is prior in lien and otherwise expended in conjunction with this <u>Section 12.3</u>.

12.4 <u>Consent to Amendment, Termination or Surrender, Assignment</u>. Notwithstanding any provision of this Lease to the contrary, (a) the Parties agree that so long as there exists an unpaid Mortgage, this Lease shall not be modified or amended and Owner shall not accept a surrender of the Leased Property or any part thereof or a cancellation or release of this Lease from Tenant or Assignee prior to expiration of the term without the prior written consent of the Mortgagee and (b) the Parties agree that so long as the Existing Lease is in effect (i) the boundaries of the Leased Property shall not be materially changed and (ii) this Section 12.4, Sections 2 (Purpose and Scope of Lease), 5.2 (Operative Documents), 5.3 (Conditions Precedent), 8.19 (Facility Setback), 13.5 (Removal of Improvements), and 13.1 (Termination following Termination of the Operative Documents) of this Lease shall not be modified or amended, in each case of clauses (i) and (ii) without the prior written consent of Wind Tenant. Clause (a) of this Section 12.4 is for the express benefit of and shall be enforceable by such Mortgagee. Clause (b) of this Section 12.4 is for the express benefit of and shall be enforceable by the Wind Tenant.

12.5 <u>No Waiver</u>. No payment made to Owner by a Mortgagee shall constitute an agreement that such payment was, in fact, due under the terms of this Lease; and a Mortgagee having made any payment to Owner pursuant to Owner's wrongful, improper or mistaken notice or demand shall be entitled to the return of any such payment.

12.7 <u>Third Party Beneficiary</u>. Each Mortgagee is and shall be an express third party beneficiary of the provisions of this <u>Section 12</u>, and shall be entitled to compel the performance of the obligations of Owner under this Lease to the extent that Tenant is entitled to compel performance.

12.8 <u>Further Amendments</u>. Provided that no material default in the performance of Tenant's obligations under this Lease shall have occurred and remain uncured after the expiration of all applicable notice and cure periods, at Tenant's request, but subject to <u>Section 12.4</u>, Owner shall (a) amend this Lease to include any provision that may reasonably be requested by an existing or proposed Mortgagee, or by any entity that is proposing to directly or indirectly acquire this Lease or any portion thereof, and (b) shall execute such additional documents as may reasonably be required to evidence such Mortgagee's or other entity's rights hereunder; provided, however, that such amendment shall not materially impair the rights of Owner under this Lease, change the terms of any amounts to paid by Tenant, or extend the term of this Lease beyond the period of time stated in <u>Section 5</u>. Further, Owner shall, within ten (10) business days after written notice from Tenant or any existing or proposed Mortgagee, execute and deliver thereto a certificate to the effect that Owner (a) recognizes a particular entity as a Mortgagee under this Lease and (b) will accord to such entity all the rights and privileges of a Mortgagee hereunder. Owner will be reimbursed any expense incurred by Owner under this provision, including any reasonable attorneys' fees.

12.9 <u>Further Amendments to Property Description</u>. In the event that it is determined that there are any inaccuracies in or changes required to the legal description of the Leased Property contained in <u>Exhibit A</u> the validity of this Lease shall not be affected, and, upon the request of Tenant, Owner shall amend the legal description of the Leased Property contained in <u>Exhibit A</u> of this Lease and any memorandum to the Lease to reflect the legal description of the Leased Property contained in a title commitment, other title report or survey obtained by Tenant for the Leased Property. Subject to Section 12.4, Tenant may, at its sole option, unilaterally execute and record an amendment to <u>Exhibit A</u> to set forth the final legal description of the Leased Property and no consent or authorization from Owner shall be required for such amendment to be effective.

Section 13. <u>Termination; Dispute Resolution</u>.

13.1 <u>Termination following Termination of the Operative Documents</u>. This Lease shall terminate as to all of the Leased Property within thirty (30) days' of the termination of an Operative Document.

13.2 <u>Owner's Right to Terminate</u>. Except as qualified by <u>Section 11</u> and <u>Section 12</u> Owner shall have the right to terminate Tenant's interest in this Lease if (a) a Monetary Default shall have occurred and remains uncured after five (5) business days following written notice from Owner to Tenant; and provided Owner simultaneously notifies Tenant and all Mortgagees and Assignees in writing of such default, which notice sets forth in detail the facts pertaining to such default, or (b) a Non-Monetary Default shall exist and shall not have been remedied within sixty (60) days after Tenant receives the written notice (and provided Owner simultaneously notifies Tenant and all Mortgagees and Assignees in writing of such default, which notice sets forth in detail the facts pertaining to such default), or, if such cure cannot, with the exercise of commercially reasonable diligence, be completed within such period of time, Tenant, has not begun to diligently undertake the cure within the relevant time period or to thereafter prosecute the cure to completion. Owner shall have all rights and remedies available to Owner at law and in equity; provided, however, that notwithstanding any other provision of this Lease or any rights or remedies which Owner might otherwise have at law or in equity, with respect to any default under this Lease that is not remedied within the time provided in this Lease, Owner shall be limited to seeking damages and Owner shall not (and Owner waives the right to) commence any action or proceeding in which termination, cancellation, rescission or reformation of this Lease is sought as a remedy.

13.3 <u>Effect of Termination</u>. Upon termination of the Lease, whether as to the entire Leased Property or a portion thereof, Tenant shall, upon written request by Owner, prepare and place of record in the county in which the Leased Property is located, a release of all of Tenant's right, title and interest in and to the Leased Property, or to that part thereof as to which the Lease has been terminated. Subject to <u>Section 13.5</u>, following termination of the Lease as to all or any part of the Leased Property, Tenant shall peaceably and quietly leave, surrender and return the Leased Property (or applicable portion thereof) to Owner. All further rights and obligations of Owner and Tenant under this Lease will cease and terminate as of the date of any termination with respect or in regard to the Leased Property, or to that part as to which the Lease has been terminated; except for the provisions of <u>Section 13.5</u> and those obligations that expressly survive the termination of this Lease as set forth in <u>Section 13.4</u>.

13.4 <u>Survival</u>. Any provision of this Lease that expressly or by implication comes into or remains in force following the termination of this Lease shall survive the termination or expiration of this Lease for the period set forth in such provision, or if no period is set forth in such provision, for the period that is coextensive with the applicable statute of limitations. Notwithstanding anything to the contrary in this Lease, any indemnification obligations provided for under this Lease and the provisions of <u>Section 16</u> shall survive the termination of this Lease.

13.5 <u>Removal of Improvements</u>. Within twenty-four (24) months after termination, surrender, or expiration of this Lease, Tenant will (a) remove all above-ground improvements and, to the extent any above-ground Tenant Improvements also extend below ground, Tenant will remove such Tenant Improvements extending up to thirty six inches (36") below ground; and (b) grade and restore the surface of the Leased Property to its approximate original condition that existed before Tenant occupied the Leased Property, normal wear and tear excepted, all at Tenant's sole cost and expense (collectively the "**Removal Requirements**"). If Tenant is required to obtain any permits prior to commencing the removal process, the twenty-four month (24) removal period shall not begin to run until after Tenant receives all such required permits or approvals. Completion of such Removal Requirements shall be undertaken by Tenant subject to and in compliance with the existing applicable law in effect at the time such removal takes place, including but not limited to the proper transportation and disposal of any Hazardous Materials. Failure to remove any improvement within said period and restore the surface of the Leased Property as provided above shall be deemed an abandonment of the improvement and Owner shall cooperate with Wind Tenant regarding removal, at Tenant's sole cost and expense, of any such improvement and restoration of the Lease Property to the standard set forth herein. Notwithstanding the foregoing, Owner may upon written notice to Tenant elect to maintain fences in place and not require removal. If Wind Tenant elects not to remove any such improvement, Owner shall have the right to keep such improvement or to remove any property deemed to be abandoned by Tenant and to receive reimbursement from Tenant for the actual and reasonable cost of such removal of such improvement and the restoration of the surface of the Leased Property to the standard set forth above. In such event, Owner shall also be entitled to the salvage value of any such improvements removed.

Section 14. <u>Commercially Reasonable Efforts to Settle All Disputes</u>. The Parties shall negotiate in good faith in an effort to resolve any disputes by and between Owner and Tenant arising out of or incident to this Lease, the covenants contained herein, the use or occupancy of the Leased Property, or any other aspect of the relationship between Owner and Tenant regarding the Leased Property. Any such disputes shall be submitted to mediation before resorting to litigation. Notwithstanding anything herein to the contrary, either party shall have the right to pursue equitable relief against the other in any court of competent jurisdiction without being required first to negotiate in good faith to resolve the dispute in mediation; provided that all non- equitable relief sought in connection with such dispute shall first be submitted to mediation and a good faith effort shall be made by both Parties to resolve the matter. The prevailing party shall be entitled to reasonable attorneys' fees and court and other costs from the non-prevailing party, including costs and fees on appeal and in any bankruptcy or insolvency proceeding. The Parties agree that venue for any proceedings under this Lease shall be proper in Dallas County, Texas. The rights and obligations under this section shall survive the expiration or any early termination of this Agreement

Section 15. <u>Condemnation</u>. If all of the Leased Property is taken by condemnation, or is purchased by any government agency or governmental body exercising the power of eminent domain, or should a partial taking render the remaining portion of the Leased Property substantially unusable for Tenant's permitted uses then this Lease shall terminate upon the vesting of title or taking of possession. If the taking is partial, then Tenant shall have the option of terminating this Lease or continuing this Lease with the payments to Owner being commensurately reduced to reflect the taking. All payments made on account of any taking by eminent domain shall be made to Owner, except that Tenant shall be entitled to any award made for the reasonable removal and relocation costs of any removable portion of any Data Facility or other Tenant's Improvements that Tenant has the right to remove, and for the loss and damage to any improvements on the Leased Property that Tenant elects or is required not to remove, and for the loss of use of the Leased Property by Tenant. It is agreed that Tenant shall have the right to participate in any settlement or court proceedings. If the parties do not agree upon a division of such award or purchase price, the resolution of such dispute shall be in accordance with <u>Section 14</u> above.

Section 16. <u>Miscellaneous</u>.

16.1 <u>Force Majeure</u>. If performance of this Lease or of any obligation hereunder (other than an obligation to pay any amounts described herein including <u>Schedule 1</u>) is prevented or substantially restricted or interfered with by reason of an event of Force Majeure (defined below), the affected party shall be excused from such performance to the extent of and for the duration of such prevention, restriction or interference. The affected party shall promptly notify the other party in writing of the event of Force Majeure and shall use its reasonable efforts to avoid or remove such causes of nonperformance, and shall continue performance hereunder whenever such causes are removed. The term "**Force Majeure**" means causes beyond the reasonable control of and without the fault or negligence of the party claiming Force Majeure, including, but not limited to, acts of God, labor unrest (including, but not limited to, slowdowns, picketing, boycotts or strikes), floods, earthquakes, storms, fires, lightning, explosions, power failures or power surges, vandalism, theft, terrorism, delays in transportation; inability to secure labor or materials at commercially reasonable prices in the open market; epidemics, wars, revolutions, riots, civil disturbances, sabotage, changes in law or applicable regulations subsequent to the date hereof and actions or inactions by any federal, state or local legislative, executive, administrative judicial agency or body which in any of the foregoing cases, by exercise of due foresight such party could not reasonably have expected to avoid, and which, by the exercise of due diligence, it is unable to overcome.

16.2 <u>Successors and Assigns</u>. This Lease shall run with and burden the Leased Property and be binding on Owner and all subsequent owners of the Leased Property. This Lease shall inure to the benefit of and be binding upon Owner and Tenant and their respective heirs, transferees, successors and assigns, and all persons claiming under them.

16.3 <u>Notices</u>. All notices, requests and communications required or permitted by this Lease shall be given in writing by (a) personal delivery (confirmed by courier delivery service), (b) expedited delivery with proof of delivery, (c) facsimile and confirmed with a copy of such notice sent by mail, (d) first class mail, postage prepaid, return receipt requested, certified, addressed as follows or (e) electronic mail, so long as such notice is also sent simultaneously by a means described in (a)-(d) above:

**If to Owner:**

\*\*\*\*\*\*

**If to Tenant:**

Soluna DV Services, LLC

325 Washington Ave. Extension Albany, NY 12205

Phone: \*\*\*\*\*\*\*\*\*

Attention: CFO

Email: DorothyProject@soluna.io

Except as expressly provided herein, any notice provided for herein shall become effective only upon and at the time of first receipt by the party to whom it is given, unless such notice is mailed by certified mail, return receipt requested, in which case it shall be deemed to be received two (2) business days after the date that it is mailed. Any party may, by proper written notice hereunder to the other party, change the individual address to which such notice shall thereafter be sent; provided, however, such new notice address will not be effective until ten (10) business days after delivery of notice of the new notice address.

16.4 <u>Entire Agreement; Amendments</u>. This Lease, and any Schedules or Exhibits attached hereto and any addenda to this Lease executed contemporaneously herewith by the parties hereto constitute the entire agreement between Owner and Tenant respecting the subject matter hereof and supersede all prior agreements, understandings, negotiations and discussions, whether or oral or written, of the parties pertaining to the subject matter hereof. Any agreement, understanding or representation respecting the Leased Property, or the Lease, or any other matter referenced herein that is not expressly set forth in this Lease or in a subsequent writing signed by both parties shall be null and void and of no force or effect. This Lease shall not be modified or amended, except in writing signed by both parties and no purported modifications or amendments, including, without limitation, any oral agreement, course of conduct or absence of a response to a unilateral communication, shall be binding on either party.

16.5 <u>Further Assurances</u>. Owner will, whenever reasonably requested by Tenant, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, all conveyances, assignments and all other instruments and documents as may be reasonably necessary in order to complete the transactions herein provided and to carry out the terms and provisions of this Lease.

16.6 <u>Governing Law</u>. This Lease shall be governed by and construed, interpreted and enforced in accordance with the laws of the State of Texas, without reference to conflicts of laws principals requiring the application of the laws of another jurisdiction.

16.7 <u>Severability</u>. If, at any time, any provision of this Lease is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions hereof nor the legality, validity or enforceability of such provision under the law of any other jurisdiction shall in any way be affected or impaired thereby and the parties shall promptly negotiate to restore this Lease as near as possible to its original intent and economic effect. If the Lease or its terms are found to be in excess of the longest duration permitted by applicable law, then the provisions of <u>Section 5</u> which specify the term of duration hereof shall be severed from this Lease, and the term instead shall expire on the latest date permitted by applicable law.

16.8 <u>Intentionally Omitted.</u>

16.9 <u>Recording of Agreement</u>. No party hereto shall record a copy of this Lease.

16.10 <u>Captions</u>. The captions in this Lease are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this Lease or the scope or content of any of its provisions.

16.11 <u>No Partnership</u>. Nothing contained in this Lease shall be construed to create a partnership or joint venture between the Parties or their successors in interest.

16.12 <u>Gender and Number</u>. Within this Lease, words of any gender shall be held and construed to include any other gender, and words in the singular number shall be held and construed to include the plural, unless the context otherwise requires.

16.13 <u>Construction</u>. The parties acknowledge that their attorneys have reviewed and revised this Lease and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Lease, Exhibits or Schedules hereto.

16.14 <u>Counterparts</u>. This Lease may be executed by facsimile and in multiple counterparts, no one of which need be executed by all parties hereto, each of which shall constitute an original. Counterparts thus executed shall together constitute one and the same instrument.

16.15 <u>Waiver of Owner's Lien</u>. Owner hereby waives any contractual or statutory Lien on any of Tenant's or any subtenant's or assignee's furniture, fixtures, equipment, machinery, parts, facilities, infrastructure, improvements and any other personal property placed by such party in or at the Leased Property.

**[Signatures Pages Follow]**

IN WITNESS WHEREOF, Owner and Tenant have caused this Lease to be executed and delivered by their duly authorized representatives as of the Execution Date.

---

| |
|:---|
| **OWNER:** |
| Alice Faye Grabbe |

---

---

| | |
|:---|:---|
| **TENANT:** | **TENANT:** |
| **Soluna DV Services, LLC**, | **Soluna DV Services, LLC**, |
| a Nevada limited liability company | a Nevada limited liability company |
| By: |  |
| Name: | John Belizaire |
| Title: | President |

---

<u>List of Attachments</u>

---

| | |
|:---|:---|
| Schedule 1 | Payment Schedule |
| Exhibit A-1 | Overall Property |
| Exhibit A-2 | Leased Property |
| Exhibit B | Intentionally Omitted |
| Exhibit C | Site Rules |
| Exhibit D | Form of Grant of Easement |
| Exhibit E | Amendment to Existing Lease |

---

**Schedule 1**

**Payment Schedule**

All capitalized terms used in this Schedule 1 shall have the meanings given in the Lease to which this Schedule is attached or those meanings provided in this Schedule.

Tenant shall pay as rent under the Lease, the amount of $28,526.00 per calendar year of the Term (the "**Rent Payment**"). The Rent Payment shall not be subject to adjustment during the Term.

The Rent Payment with respect to any period which is less than a calendar year, shall be prorated in accordance with the length of such period.

**Exhibit A-1**

**Legal Description of the Overall Property**

All of Section No. 6, in Block B-2, Certificate No. 1/775, Abstract No. 1099, Patented to Louis Grabbe on June 28, 1922, Patent No. 203, Vol. 14A, Briscoe county, Texas, SAVE AND EXCEPT a 100 foot strip containing 6.89 acres, more or less, conveyed by deed dated May 10, 1927, from Louis Grabbe, Individually and as Survivor in Community of the Estate of Birdie Grabbe and himself, to the Fort Worth and Denver South Plains Railway Company, recorded in <u>Vol. 24, Page 5</u>, Deed Records, Briscoe County, Texas, to which deed reference is hereby made for a more particular description of the property therein conveyed; and further SAVE AND EXCEPT a tract out of said Section No. 6, Block B-2, Briscoe County, Texas, conveyed by Warner Grabbe to Briscoe County, Texas, by deed dated August 15, 1936, recorded in Vol. 31, Page 443, Deed Records, Briscoe County, Texas, to which deed reference is hereby made for a more particular description of the property therein described.

**Exhibit A-2**

**Legal Description of the Leased Property**

![](ex10-66_001.jpg)

**Exhibit B**

**Intentionally Omitted**

**Exhibit C**

**Site Rules**

During the Term of the Lease, Tenant and all Tenant Parties shall follow the following rules while on the Property, to the extent such rules are applicable to Tenant's use of the Leased Property as set forth in the Lease:

1. *Housing on the Property.* In no event shall Tenant construct or otherwise locate any improvements designed for purposes of housing individuals on the Leased Property; however, Tenant may (i) work on the Leased Property twenty-four (24) hours per day as necessary; (ii) install temporary portable structure(s) onto the Leased Property for use as construction office(s) throughout the duration of construction activities.

2. *Animals on the Property.* All Tenant personnel shall be respectful towards grazing animals on the Leased Property, shall not chase any animal and shall avoid any contact with any animals or wildlife on the Leased Property. Tenant shall have the right to permanently remove Owner's fences, gates and cattle guards, but only as reasonably necessary to accommodate Tenant's use of the Leased Property pursuant to the Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Weeds*. If unwanted or noxious weeds or grasses grow on or along the roads built or used by Tenant or Tenant's facilities, if any, Tenant agrees to pay for the application of an approved herbicide to the affected areas, including, without limitation, necessary costs incurred in the control and eradication of bitterweed, broom snake weed, buffalo bur, African rue, and other noxious weeds, which may appear within the confines of any roads installed or improved by Tenant, if any, and in the areas, immediately adjacent to any roads installed or improved by Tenant, if any, so long as this Lease continues in force.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Brush.* Tenant agrees to rake all brush cleared from the Leased Property during Tenant's construction of the Tenant's Improvements, which shall be hauled to a place on Owner's property reasonably designated by Owner without interruption of the topsoil. The mesquite cleared from the Leased Property by or on behalf of Tenant shall be grubbed. No grub or other material shall be piled or buried on the Property.

4. *Topsoil.* Tenant shall use standard construction practices to preserve existing topsoil layers to the extent practical. Owner agrees that Tenant may deposit such topsoil on the Leased Property or adjacent property owned by Owner at a location mutually agreed upon.

5. *Erosion.* Tenant shall use commercially reasonable efforts to minimize erosion caused by Tenant's construction of the Tenant's Improvements, including erecting silt fences. The constructing of roads and the burying of lines shall be done in accordance with good engineering and standard construction practices.

6. *Location of Laydown.* Tenant shall avoid unnecessary disturbance of areas adjacent to its lay-down and construction areas.

7. *Construction of Roads.* Subject to the below requirements, Tenant shall be entitled to construct roads, culverts, bridges and related improvements on the Leased Property, and to improve and upgrade any roads, culverts, bridges and related improvements from time to time existing on the Leased Property.

8. *Fire Prevention.* Tenant will employ prudent precautions to prevent fires, including avoiding the build-up of plant material under vehicles. Tenant shall likewise take necessary precautions and act as a reasonably prudent person in the event of any county-wide burn ban or during a period of Red Flag Warning. In the event a grass fire is started, Owner shall be notified promptly upon Tenant becoming aware of such fire. Tenant agrees to pay to Owner for all damages resulting from fires (whether located on the Leased Property or adjacent lands owed by Owner) that are caused by Tenant, its employees, contractors, agents or any guest or invitee of Tenant. Such payment shall be due and payable within one hundred and twenty days from the date the cost of the damages are agreed to by the Parties. Such payment shall in no way limit or waive Lessor's right to obtain payment for fire damage to animals, structures, equipment or other things located on the Property, or lands adjacent to the Property.

9. *Drainage Tiles.* With respect to drainage tiles located on the Leased Property as of the Execution Date, if any, Owner agrees that Tenant may reroute, at Tenant's sole expense, any drainage tiles which may conflict with the locations of the Tenant's Improvements. Tenant shall bear the cost of having a responsible, insured and experienced field tile contractor repair or rebuild the tiles damaged by Tenant's construction of the Tenant's Improvements.

10. *Prohibited Activities.* Tenant is prohibited from engaging in any of the following activities on the Leased Property: (a) hunting and/or fishing, or bringing poisons, traps, weapons or other firearms, (b) transportation onto the Leased Property of any domestic animals, regardless of whether such domestic animals are kept in Tenant's vehicles, (c) possession or consumption of alcohol or illegal drugs, (d) smoking of any sort (cigarettes, cigars, etc.), with the exception that smoking shall be permitted at specially designated smoking locations, (e) possession of fishing equipment and/or firearms of any kind or nature, and (f) motorcycles. Tenant shall notify all contractors that such activities are prohibited and use commercially reasonable efforts to require contractors to avoid such activities.

11. *Improvement Specifications.* Tenant shall abide by the following minimum specifications, to the extent applicable to the Tenant's Improvements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Roadways</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The
 parties agree that Tenant will employ a professional dirt contracting company, agreeable
 to both parties, to build any new roads and maintain existing roads utilized by Tenant. If
 the parties cannot agree on a dirt contractor then Tenant shall solicit offers from three
 contractors and Tenant shall have the right to choose which of these companies to employ.
 Owner may request that Tenant utilize a different professional dirt contracting company;
 provided, however, Owner shall be responsible for any additional costs above the costs of
 the company chosen by Tenant. At Owner's option, any such additional costs may be deducted
 from payments due to Owner from Tenant under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The
 causeway of any road installed or improved by Tenant shall not be wider than is reasonably
 necessary to facilitate Tenant's operations upon the Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) On
 any roads installed or improved by Tenant, a 6" compacted caliche base shall be added
 to the dirt crown of the road and the compacted caliche base shall be maintained at 6"
 by Tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Any
 roads installed or improved by Tenant shall be caliched up to the cattle guard.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) All
 roads utilized or installed by Tenant shall be kept in a good, level, compacted condition,
 with a good crown to prevent water from running down the road, reasonably free of potholes
 and damage resulting from wind, water, and traffic erosion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Tenant
 shall create diversions or terraces in all roads it installs or utilizes, reasonably requested
 by Tenant where needed to prevent erosion of the road and where water drains off of the road
 and where Tenant's equipment may cause ruts or tracks either in laying or removal operations,
 Tenant shall construct terraces and turnouts sufficient to prevent erosion to Owner's
 reasonable satisfaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) All
 brush shall be grubbed and kept clear of such roadway for 10 feet on either side of the road.
 All mesquite, cedar, grease wood, or other brush shall be grubbed and raked into piles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) In
 the event Tenant uses existing roads on the Property, Tenant shall maintain such roads as
 follows: (i) during construction, if any, Tenant shall, at its sole cost and expense, maintain
 such roads to the extent commercially practicable to keep them in the same condition as present
 prior to construction; and (ii) after the completion of construction, if any, Tenant shall,
 at its sole cost and expense, leave such roads in substantially the same condition that they
 were in prior to the use of such roads by Tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Fence Corner, Line Brace, Cattle Guard and Gate</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The
 parties agree that Tenant will employ a professional fencing company, agreeable to both parties,
 to install all such braces, stretch all such fences, and install all cattle guards, but only
 to the extent Tenant installs any such braces, fences or cattle guards on the Property. If
 the parties cannot agree on a fencing or cattle guard contractor then Tenant shall solicit
 offers from three contractors and Tenant shall have the right to choose which of these companies
 to employ. Owner may request that Tenant utilize a different fencing company; provided, however,
 Owner shall be responsible for any additional costs above the cost of the company chosen
 by Tenant. At Owner's option, any such additional costs may be deducted from payments
 due to Owner from Tenant under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) To
 the extent applicable to the Tenant's Improvements, Tenant shall not cut nor create
 any opening in any present or future fence or fences without first adequately bracing by
 installing a permanent brace during construction and as appropriate a fence corner, line
 brace, cattle guard, and/or gate thereafter which meets the standards herein. All openings
 in fences shall be H braced with dead-man bracing as follows: All metal pipe shall be not
 less than 4" in diameter, 1/4" thick walls, 10' in length, 5' being
 in the ground, cemented and tamped top to bottom, 5' above the ground, cross-braced
 with two 10' long 2 7/8" pipes for the H brace and one 2 7/8" pipe from
 the H diagonally to kicker brace, all pipe welded solidly with complete welds to posts. All
 pipe to be wire brushed, coated with OSPHO rust inhibitor, and one coat of aluminum paint.
 All concrete will be allowed to set for a minimum of 36 hours before attaching wire to the
 posts. All pipe openings shall be capped with metal caps. Cattle guards shall be attached
 to the H brace with five feet high, 4 gauge, galvanized welded wire with 4" x 4"
 openings. At each point where Tenant installs a cattle guard, the same shall be constructed
 by Tenant as a raised cattle guard not less than 9' x 16' as follows: The top
 of the cattle guard shall be 3 feet above the ground level after caliche is placed under
 the cattle guard. Each cattle guard shall rest on concrete supports which are adequate for
 heavy truck traffic. All such cattle guards shall meet Owner specifications. Tenant shall
 maintain all cattle guards it installs in good condition with fences properly attached so
 as to prevent livestock from passing between the cattle guard and fence. Tenant shall keep
 the area beneath the cattle guard cleaned out to maintain the 3-foot space between the ground
 level and cattle guard and it shall be maintained free of vegetation. In the event, any cattle
 guard installed by Tenant is damaged by Tenant, falls into disrepair, or for any other reason
 does not meet the Owner's standards and specifications, Tenant will either repair the
 same or replace the same in such a manner as to meet Owner's standards and specifications
 within thirty (30) days of Owner's notification to Tenant of the need for the same.
 All cattle guards shall be equipped with gates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Tenant
 shall keep all gates on the Leased Property closed at all times when such gates are not in
 use.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) If
 requested by Owner, Tenant agrees to install cattle guards and gates at any fence crossing
 over any new road constructed by Tenant, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) All
 cattle guards on the Leased Property shall be properly attached to prevent livestock from
 passing between the cattle guard and the adjacent fence.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) All
 access gates installed and/or utilized by Tenant shall remain padlocked always, with keys
 to each lock provided to Owner for each gate; In the event the Tenant opens a gate and needs
 to keep such gate open for an extended period to enable construction activities to proceed
 in a given area, Tenant shall station personnel at the open gate for the duration of the
 work day and close the gate at the end of the day. In the event the location of any improvements
 require that any Owner corral, fence, cattle guard, water trough or other Owner improvement
 on the Property be moved from its original location, Tenant shall move such Owner improvement
 (or a replacement thereof, as necessary), to a location as near as practicable to the existing
 location on the Leased Property and as designated by Owner (if such location is consistent
 with all applicable rules, regulations and restrictions).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) Where
 Tenant has determined removal is necessary to avoid interference with its activities, Tenant
 shall rebuild or replace any gate, fence, or cattle guard at Tenant's expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) All
 gates, fences, and cattle guards installed by Tenant, if any, shall be, at a minimum, sufficient
 to withstand both Owner and Tenant's uses of the Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) In
 no event, shall Tenant be responsible for any acts or omissions, any removal of fences, roads
 and other improvements, any damage to the Property, any improvements or other property placed
 thereon, or any nuisance caused by, any third person who is not a Tenant Party (defined as
 an agent, employee, or contractor of Tenant) or is not otherwise acting on behalf of Tenant,
 including without limitation any Owner Party (defined as an agent, employee, or contractor
 of Owner).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) Temporary
 openings in all fences made by Tenant shall be kept closed by Tenant with temporary fencing
 adequately installed and maintained by Tenant to prevent entry or escape by all livestock
 and shall be coyote proof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) Upon
 termination of this agreement, all cattle guards and gates shall become the property of Owner.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) The
 entrance to Owner's property shall be kept locked at all times except when traffic
 is passing through the same.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Trees.</u> Trees removed in clearing for the installation
of underground or overhead cable lines shall be grubbed with the surface graded upon the completion of installation; however,
Tenant may not remove trees larger than ten (10) inches in diameter without Owner's consent.

(d) <u>Cabling.</u> Tenant shall provide As-Built drawings indicating
the location of buried cables on the Leased Property to Owner following the completion of construction. Tenant shall install markers
at all road crossings for any buried cables on the Leased Property. Tenant will make commercially reasonable efforts, to the extent practical,
to lay all underground connection lines and cables to a depth of three (3) feet below grade, but in any case, will bury project underground
connection lines and cables at not less than thirty (30) inches below grade.

12. Tenant or its contractors shall provide its employees with portable toilet facilities during construction of the Tenant's Improvements.

13. *[Intentionally omitted].*

 

14. *Owner's Fences.* Owner has all rights to install fencing, gates and cattle guards on the Property during the term of the Agreement; provided, however, such fencing shall not interfere with Tenant's rights under the Agreement.

15. *Water/Caliche Locations.* Any caliche and/or water purchased from Owner shall be obtained from the locations designated by Owner within a reasonable distance from the place of use. Tenant shall have and hereby assumes liability for damage to water wells, water tables, natural springs and running water courses, tanks and waterings on Owner's property caused by Tenant in the exercise of any rights herein granted; provided however, that Tenant shall not assume any liability for damage resulting from Owner's negligence or willful misconduct. In this connection, no blasting shall be done in order to prevent damage to surrounding area. Provided further it is understood and agreed that no water well shall be drilled upon the Property without the consent of Owner.

16. *Speed Limit.* All employees, contractors and agents of Tenant shall not exceed 15 miles per hour on any roads.

**Exhibit D**

**Form of Grant of Easement**

[See attached.]

**Exhibit E**

**Amendment to Existing Lease**

[See attached.]

## Exhibit 10.67

**Exhibit 10.67**

**Execution Version**

<br>**AMENDED AND RESTATED**<br>**CONTRIBUTION AGREEMENT**<br>By and Among<br>**Soluna SLC Fund I Projects Holdco, LLC,**<br>**Soluna Holdings, Inc.,**<br>**Soluna DV Devco, LLC**<br>and<br>**Soluna DVSL ComputeCo, LLC**<br>**Dated as of March 10, 2023**<br>

**<u>**TABLE OF CONTENTS**</u>**

---

| | | |
|:---|:---|:---|
| |  | Page |
| ARTICLE I | DEFINITIONS | 1 |
| Section 1.1 | Definitions | 1 |
| Section 1.2 | Interpretation | 10 |
| ARTICLE II | CLOSING; INVESTMENT IN DVSL | 11 |
| Section 2.1 | Agreement to Invest; Capital Commitment | 11 |
| Section 2.2 | Capital Contributions | 11 |
| Section 2.3 | Tax Characterization | 12 |
| Section 2.4 | Closing; Fundings | 13 |
| ARTICLE III | THE PROJECT; PROJECT DEVELOPMENT AND FINANCING | 13 |
| Section 3.1 | DVSL | 13 |
| Section 3.2 | Project Financing | 13 |
| Section 3.3 | Project Development | 14 |
| Section 3.4 | Cost Overruns | 14 |
| ARTICLE IV | CONDITIONS TO CLOSING AND FUNDINGS | 14 |
| Section 4.1 | Closing Conditions | 14 |
| Section 4.2 | Conditions to Each Subsequent Contribution | 17 |
| Section 4.3 | Cost Overruns Funding | 19 |
| ARTICLE V | COVENANTS | 20 |
| Section 5.1 | Conduct of Operations | 20 |
| Section 5.2 | Financial Statements | 21 |
| ARTICLE VI | REPRESENTATIONS AND WARRANTIES OF DEVCO | 21 |
| Section 6.1 | Formation; Powers |  |
| Section 6.2 | Authority, Enforceability | 21 |
| Section 6.3 | No Conflict | 22 |
| Section 6.4 | No Indebtedness or Liens | 22 |
| Section 6.5 | Ownership in DVSL and Devco | 22 |
| Section 6.6 | Capitalization of Devco and DVSL | 22 |
| Section 6.7 | Litigation and other Governmental Proceedings | 22 |
| Section 6.8 | No Other Rights | 22 |
| Section 6.9 | Foreign Assets Control Regulations and Anti-Money Laundering | 23 |
| Section 6.10 | Patriot Act | 23 |
| Section 6.11 | Disclosure; No Material Misstatements | 23 |
| ARTICLE VIII | REPRESENTATIONS AND WARRANTIES AS TO DVSL | 24 |
| Section 7.1 | Organization; Powers | 24 |
| Section 7.2 | Authority/Ownership | 24 |
| Section 7.3 | Approvals; No Conflicts | 24 |
| Section 7.4 | Financial Condition; No Material Adverse Effect | 24 |
| Section 7.5 | Environmental Matters | 24 |

---

i

---

| | | |
|:---|:---|:---|
| Section 7.6 | Project Documents | 25.0 |
| Section 7.7 | Compliance with Laws; Permits; Project Document; Financing Documents; Liabilities | 25.0 |
| Section 7.8 | Tax Matters | 26.0 |
| Section 7.9 | Employees | 27.0 |
| Section 7.10 | Properties; Title | 27.0 |
| Section 7.11 | Insurance | 27.0 |
| Section 7.12 | Intellectual Property | 27.0 |
| Section 7.13 | Real Property; Access | 27.0 |
| Section 7.14 | Condemnation | 28.0 |
| Section 7.15 | Notice to Proceed | 28.0 |
| Section 7.16 | Utilities | 28.0 |
| Section 7.17 | Subsidiaries | 28.0 |
| Section 7.18 | Third Party Reports | 28.0 |
| Section 7.19 | Disclosure; No Material Misstatements | 29.0 |
| Section 7.20 | Litigation and other Governmental Proceedings | 29.0 |
| Section 7.21 | No Other Rights | 29.0 |
| ARTICLE VIII | REPRESENTATIONS AND WARRANTIES AS TO INVESTORS | 29.0 |
| Section 8.1 | Spring Lane | 29.0 |
| Section 8.2 | Parent | 30.0 |
| ARTICLE IX | INDEMNIFICATION | 33.0 |
| Section 9.1 | Indemnification | 33.0 |
| Section 9.2 | Third Party Claims | 34.0 |
| Section 9.3 | Indemnification Payments | 35.0 |
| Section 9.4 | Tax Treatment | 35.0 |
| Section 9.5 | Indemnified Party Negligence or Misconduct; Breach | 35.0 |
| Section 9.6 | No Consequential Damages | 35.0 |
| ARTICLE X | MISCELLANEOUS | 35.0 |
| Section 10.1 | Amendments | 35.0 |
| Section 10.2 | Notices | 37.0 |
| Section 10.3 | Binding Effect; Assignment | 37.0 |
| Section 10.4 | No Finder's Fees | 37.0 |
| Section 10.5 | Entire Agreement | 37.0 |
| Section 10.6 | Delay and Waiver | 37.0 |
| Section 10.7 | Severability | 37.0 |
| Section 10.8 | Governing Law; Jurisdiction and Service of Process | 37.0 |
| Section 10.9 | Payment of Fees and Costs | 38.0 |
| Section 10.10 | Patriot Act | 38.0 |
| Section 10.11 | Further Assurances | 38.0 |
| Section 10.12 | Counterpart; Electronic Signatures | 38.0 |

---

**<u>EXHIBITS</u>**

Exhibit A – Form of Contribution Request

Exhibit B – Form of Administrative Services Agreement<br> Exhibit C – Form of Shared Facilities Agreement

**<u>SCHEDULES</u>**

Schedule 1 – Closing Consents

Schedule 2 – Insurance

Schedule 7.8 – Tax Matters

ii

**AMENDED AND RESTATED CONTRIBUTION AGREEMENT**

This AMENDED AND RESTATED CONTRIBUTION AGREEMENT (this "<u>Agreement</u>") is made and entered into as of March ___, 2023, by and among Soluna Holdings, Inc., a Nevada corporation ("<u>Parent</u>"), Soluna DV Devco, LLC, a Delaware limited liability company (the "<u>Devco</u>"), Soluna DVSL ComputeCo, LLC, a Delaware limited liability company ("<u>DVSL</u>"), and Soluna SLC Fund I Projects Holdco, LLC, a Delaware limited partnership ("<u>Spring Lane</u>", and together with the Parent, the Devco and DVSL, the "<u>Parties</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. The
 Parties entered into that certain Contribution Agreement, dated as of the Effective Date
 (as defined below) (the " <u>Existing Contribution Agreement</u> ").

B. On
 the date hereof, the Parties have entered into the DVSL Operating Agreement (as defined below)
 and the 2023 Purchase Agreement (as defined below), and related ancillary agreements and
 documents, and the Parties desire to amend and restate the Existing Contribution Agreement
 in connection with the transactions contemplated by the foregoing agreements and documents.

**NOW THEREFORE**, in consideration of the agreements contained herein, the sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

**ARTICLE I<br> DEFINITIONS**

Section 1.1 <u>Definitions</u>. Terms capitalized herein other than for grammatical reasons and not otherwise defined shall have the meaning established in this <u>Article I</u>. Such terms not defined herein shall have the meanings established in the DVSL Operating Agreement.

"<u>Administrative Services Agreement</u>" means the Administrative Services Contract between the Asset Administrator and DVSL, substantially in the form attached hereto as <u>Exhibit B</u> or as may otherwise be reasonably acceptable to Spring Lane and Asset Administrator, and as the same may be amended or supplemented from time to time, pursuant to a written agreement specifying the terms of such amendment or supplement that are reasonably acceptable to Spring Lane.

"<u>Affiliate</u>" means with respect to any Person, any Person that directly or indirectly controls, is controlled by or is under common control with such Person.

"<u>Aggregate Commitment Amount</u>" means, collectively, the Parent Commitment and Spring Lane Commitment.

"<u>Agreement</u>" means this Agreement, as it may be amended from time to time.

"<u>Approved Expenses</u>" means the documented Project Costs incurred by Devco, DVSL, or their respective Affiliates in respect of the Project prior to the Closing, in accordance with the Project Budget and Project Pro Forma in an amount not to exceed, in the aggregate, the Development Reimbursement, as set forth in the Contribution Request.

"<u>Asset Administrator</u>" means POCo in its capacity as the asset administrator, its successors or permitted assigns, in each case, pursuant to the Administrative Services Agreement.

"<u>Authorized Officer</u>" means, as to any Person, a duly appointed officer of such Person to whom authority has been duly delegated to act on behalf of and bind such Person in connection with the Transaction Documents.

"<u>Business Day</u>" means any day other than a Saturday, a Sunday or any day that commercial banks in New York, New York are not authorized or required to be closed.

"<u>Capital Commitment Expiration Date</u>" means the earlier of (i) the date that is forty-eight (48) months from the Effective Date and (ii) such earlier date as the Aggregate Commitment Amount is fully allocated to the Project or this Agreement is terminated in accordance with its terms.

"<u>Class B Membership Interests</u>" has the meaning established in the DVSL Operating Agreement.

"<u>Closing</u>" means the parties hereto and thereto have duly executed and delivered this Agreement and the other Transaction Documents and the conditions to the First Contribution have been satisfied or waived and the First Contribution has been made.

"<u>Closing Consents</u>" means the third party consents and approvals required to be obtained by any Transaction Party as of the Effective Date in order to enter into the Transaction Documents being executed and delivered on or prior to the Effective Date and perform its obligations thereunder, which consents are listed in <u>Schedule 1</u>.

"<u>Commercial Operation</u>" means, with respect to a Project, that the Project has commenced operating commercially in the manner intended and in accordance with the EPC Agreement.

"<u>Completion</u>" means, as to the Project, that (i) both Substantial Completion and Commercial Operation have occurred, (ii) all Project Documents are in full force and effect other than those that have expired in accordance with their terms, there are no outstanding defaults thereunder (or notices of default that remain uncured), and no events have occurred that, with notice and the passage of time, would constitute, defaults thereunder, and (iii) all Permits and Consents required to operate and maintain the Project have been procured and are in full force and effect.

"<u>Contract</u>" means any agreement, instrument, mortgage, other evidence of indebtedness, license, lease or arrangement of any kind, written or oral, by which a Person is bound under which it has rights.

"<u>Contractor</u>" or "<u>EPC Contractor</u>" means, with respect to the EPC Agreement, the Person identified as such therein, who shall initially be POCo.

"<u>Contribution Date</u>" has the meaning established in <u>Section 2.4(b)</u>.

"<u>Contribution Request</u>" means a written request delivered by DVSL to Parent and Spring Lane to make a Subsequent Contribution, in the form attached hereto as <u>Exhibit A</u> with appropriate insertions.

"<u>Cost Overrun Contingency</u>" means, with respect to a Project, $1,611,299.

"<u>Defense Election</u>" has the meaning established in <u>Section 9.2(b)</u>.

"<u>Development Reimbursement</u>" means an amount not to exceed $183,135, to be paid to Devco in respect of certain Project Costs incurred by Devco prior to the Effective Date, such amount and the timing of and source of funds for any payments in respect thereof as mutually agreed upon by Spring Lane and Devco.

"<u>DVSL</u>" has the meaning established in the preamble.

"<u>DVSL Interests</u>" has the meaning established in <u>Section 3.1(a)</u>.

"<u>DVSL Operating Agreement</u>" means the Third Amended and Restated Limited Liability Company Operating Agreement of DVSL, among Devco, Parent and Spring Lane, dated as of the date hereof.

"<u>Effective Date</u>" shall mean August 5, 2022.

"<u>Environmental Laws</u>" means all Laws applicable or pertaining to the regulation or protection of the environment, the health and safety of persons with respect to exposure to Hazardous Materials and all other environmental matters and shall include all orders, decrees, judgments and rulings imposed through any public or private enforcement proceedings, relating to Hazardous Materials or the existence, use, discharge, release, containment, transportation, generation, storage, management or disposal thereof, or otherwise regulating or providing for the protection of the environment.

"<u>EPC Agreement</u>" means, for the Project, an engineering, procurement and construction contract between the Contractor and DVSL for the construction and installation of the Project, in a form reasonably acceptable to Spring Lane, as the same may be amended or supplemented from time to time, pursuant to a written agreement specifying the terms of such amendment or supplement that are acceptable to Spring Lane.

"<u>EPC NTP</u>" means, with respect to the EPC Agreement, the issuance of a notice to proceed by DVSL to the EPC Contractor triggering commencement of the full scope of work under the EPC Agreement.

"<u>Equipment</u>" means computers, electrical infrastructure, racks, air movers, data infrastructure and other equipment required for the Completion of the Project.

"<u>Final Completion</u>" means, in respect of the Project, that the Contractor has satisfied all obligations under the EPC Agreement in accordance with the EPC Agreement.

"<u>Financing Documents</u>" means any or all of the agreements, instruments, certificates or other documents evidencing or related to Qualifying Debt.

"<u>First Contribution</u>" means (i) Parent's initial Contribution to DVSL in the aggregate amount of US$8,112,548.64, of which US$8,112,548.64 shall be deemed to be contributed to DVSL by Parent through payment of capital expenditures and development costs made on behalf of DVSL by Parent prior to the date hereof, and (ii) Spring Lane's initial Contribution to DVSL in the aggregate amount of US$3,851,317.42.

"<u>FPA</u>" means the Federal Power Act, as amended, and all rules and regulations adopted thereunder.

"<u>GAAP</u>" means the generally accepted accounting principles in the United States of America, as then in effect.

"<u>Governmental Authority</u>" means, with respect to any matter, any federal, state, provincial or local government or any political subdivision thereof, taxing authority, instrumentality, regulatory body, ministry, agency, authority, department, commission, board or bureau thereof or any federal, state or local court, tribunal or arbitrator, in each case, having jurisdiction over or with respect to the applicable Person or Project, or the transactions contemplated by the Transaction Documents or the Project Documents, as applicable, or the performance thereunder of the parties thereto.

"<u>Hazardous Materials</u>" means any substance (i) the presence, use, handling, transport, release or disposal of which requires notification, investigation or remediation under any Environmental Laws; (ii) which is or becomes defined as a "hazardous waste", "hazardous material", "hazardous substance", "toxic substance", "pollutant", or "contaminant", or any similar term or designation under any Environmental Law; or (iii) consisting of gasoline, diesel fuel, motor oil, crude oil or other petroleum hydrocarbons or products or volatile organic compounds.

"<u>Indebtedness</u>" of any Person at any date means, without duplication, (i) all obligations of such Person for borrowed money; (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business; (iv) all obligations of such Person under leases that are or should be, in accordance with GAAP, recorded as capital leases in respect of which such Person is liable; (v) all obligations of such Person to purchase securities (or other property) that arise out of or in connection with the sale of the same or substantially similar securities (or property); (vi) all deferred obligations of such Person to reimburse any bank or other Person in respect of amounts paid or advanced under a letter of credit or other instrument; (vii) all indebtedness of others secured by a Lien on any asset of such Person, whether or not such indebtedness is assumed by such Person; (viii) all indebtedness of others guaranteed by such Person; and (ix) the net obligations as of the day of determination of such Person in respect of interest rate hedge agreements, commodity hedges, currency agreements or other derivative transactions.

"<u>Indemnification Notice</u>" has the meaning established in <u>Section 9.2(a)</u>.

"<u>Indemnified Claims</u>" has the meaning established in <u>Section 9.1(b)</u>.

"<u>Indemnified Costs</u>" has the meaning established in <u>Section 9.1(b)</u>.

"<u>Indemnified Parties</u>" has the meaning established in <u>Section 9.1(b)</u>.

"<u>Indemnifying Party</u>" means either a Parent Indemnifying Party or an Investor Indemnifying Party.

"<u>Independent Engineer</u>" has the meaning established in <u>Section 4.1(j)</u>.

"<u>Insurance Policies</u>" means insurance policies satisfying the requirements of <u>Schedule 2</u>.

"<u>Intellectual Property</u>" shall mean any or all of the following and all rights therein, whether arising under the laws of the United States or any other jurisdiction (i) all patents and patent applications (and all reissues, divisions, re-examinations, renewals, extensions, provisionals, continuations and continuations-in-part thereof), patent disclosures and inventions (whether patentable or not); (ii) all trade secrets, know-how and confidential and proprietary information; (iii) all copyrights and copyrightable works (including computer programs) and registrations and applications therefor and any renewals, modifications and extensions thereof; (iv) all moral and economic rights of authors and inventors, however denominated, throughout the world; (v) unregistered and registered design rights and any registrations and applications for registration thereof; (vi) trademarks, service marks, trade names, service names, brand names, trade dress, logos, slogans, corporate names, trade styles, URLs, domain names and other source or business identifiers, whether registered or not, together with all applications therefor and all extensions and renewals thereof and all goodwill associated therewith; (vii) semiconductor chip "mask" works, and registrations and applications for registration thereof, (viii) database rights; (ix) all other forms of intellectual property, including waivable or assignable rights of publicity or moral rights; (x) processes, methodologies, know how, engineering, drawings, plans and product specifications, and all other information and data relating to the Equipment, and any licenses, license agreements and applications related to any of the foregoing (xii) and any similar, corresponding or equivalent rights to any of the foregoing anywhere in the world.

"<u>Internal Rate of Return</u>" means the discount rate which makes (i) the sum of the present values of each distribution made to a Party, when discounted to their present values as of the date of each Capital Contribution made by such Party at such discount rate equal to (ii) the sum of the separate present values of each Capital Contribution made to DVSL by the applicable Party, when discounted to their present values as of the date of each applicable Capital Contribution made by such Party, using the same discount rate. The XIRR function in Microsoft Excel, U.S. English Version or any other program approved by Spring Lane shall be used to calculate IRR. The Internal Rate of Return with respect to a Party shall be deemed to include any amount paid or received by any predecessor in interest of such Party.

"<u>Investment Package</u>" means the material to be delivered to Spring Lane at the Closing, including the Project Budget, the Project Pro Forma, Permits, Project Documents as then in effect, the Financing Documents (if any at such time) as executed or in the forms to be executed.

"<u>Investor Indemnified Claims</u>" has the meaning established in <u>Section 9.1(a)</u>.

"<u>Investor Indemnified Costs</u>" has the meaning established in <u>Section 9.1(a)</u>.

"<u>Investor Indemnified Parties</u>" has the meaning established in <u>Section 9.1(a)</u>.

"<u>Investor Indemnifying Party</u>" has the meaning established in <u>Section 9.1(b)</u>.

"<u>Laws</u>" means all laws, statutes, directives, codes, resolutions, enactments, treaties, ordinances, judgments, decrees, injunctions, writs and orders of any Governmental Authority and rules, regulations, orders, interpretations and approvals in respect thereof.

"<u>Lessor</u>" means POCo.

"<u>Liability</u>" means any liability, obligation, indebtedness, cost, expense, or penalty (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.

"<u>Lien</u>" means any lien (statutory or otherwise), pledge, mortgage, deed of trust, security interest, charge, option, right of first refusal, right of first offer, easement, covenant, condition, restriction, declaration, servitude, transfer restriction, encumbrance, claims or other rights or interests of any kind whatsoever.

"<u>Manager</u>" has the meaning established in the DVSL Operating Agreement.

"<u>Material Adverse Effect</u>" means, (a) with respect to DVSL or Devco, a material adverse change in, or material adverse effect on the business, operations, Properties, Liabilities or financial condition of such Person; (b) a material adverse change in, or material adverse effect on (i) with respect to Devco, Parent or DVSL, the ability of such Person to perform any of its material obligations under any Transaction Document, Financing Document or Project Document to which it is a party, as the case may be; or (ii) the validity or enforceability of any Transaction Document or any Project Document; except, in each case, to the extent that such change or effect results from events or conditions affecting the economy generally (provided that such events or conditions do not affect such Person and its subsidiaries, taken as a whole, in a disproportionate manner relative to similarly situated participants in the market or markets in which such Person operates, if any similarly situated participants then exist).

"<u>O&M Agreement</u>" means the operations and maintenance agreement between DVSL and O&M Provider for the operation and maintenance of the Project, in a form reasonably acceptable to Spring Lane, as the same may be amended or supplemented from time to time, pursuant to a written agreement specifying the terms of such amendment or supplement that are acceptable to Spring Lane.

"<u>O&M Provider</u>" means POCo in its capacity as operator, or its successors or permitted assigns, in each case, pursuant to the O&M Agreement.

"<u>Parent</u>" means Soluna Holdings, Inc., a Nevada corporation.

"<u>Parent Commitment</u>" means the amount equal to (a) the total aggregate amount of Capital Contributions funded by Parent as of March 10, 2023 <u>plus</u> (b) US$1,500,000.

"<u>Parent Indemnified Claims</u>" has the meaning established in <u>Section 9.1(b)</u>.

"<u>Parent Indemnified Costs</u>" has the meaning established in <u>Section 9.1(b)</u>.

"<u>Parent Indemnified Parties</u>" has the meaning established in <u>Section 9.1(b)</u>.

"<u>Parent Indemnifying Party</u>" has the meaning established in <u>Section 9.1(a)</u>.

"<u>Parent Parties</u>" means, individually and collectively, Parent and its wholly owned direct or indirect subsidiaries, or any of its Affiliates.

"<u>Patriot Act</u>" means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, P.L. 107-56.

"<u>Permit</u>" means, with respect to DVSL, the Project or the Shared Facilities, any license, consent, permit, authorization, requirement, environmental plan, certificate, waiver, franchise, variance, order, decision, registration, ruling and other approval or permission necessary or appropriate, including as to zoning, environmental protection, sanitation, energy regulation, safety, siting or building, required to be obtained from any Governmental Authority to permit the development, construction, operation and ownership of the relevant Project.

"<u>Permitted Indebtedness</u>" means (i) trade or other similar Indebtedness incurred in the ordinary course of business (but not for borrowed money) that is not past due; (ii) contingent liabilities of DVSL at any time outstanding (A) for the endorsement of negotiable instruments received in the ordinary course of business; (B) required under any Permit or Project Document; (iii) under or in respect of performance bonds, letters of credit, bid bonds, appeal bonds, surety bonds, financial assurances and completion guarantees, indemnification obligations, obligations to pay insurance premiums, take or pay obligations and similar obligations, obligations arising in the ordinary course under leases, subleases and other Project Documents in each case contemplated in the Investment Package or as otherwise approved by Spring Lane; (iv) obligations arising under the Transaction Documents, and (vi) subject to the terms of this Agreement, Qualifying Debt.

"<u>Permitted Lien</u>" means (i) liens securing Qualifying Debt approved as provided herein or pursuant to the DVSL Operating Agreement; (ii) any liens or encumbrances provided for in the Project Documents (other than as a result of a breach thereof); (iii) liens for Taxes, impositions, assessments, fees, or other governmental charges levied, assessed or imposed that are not yet due and payable or liens for Taxes that are being contested in good faith and by appropriate proceedings and for which adequate reserves are maintained in accordance with GAAP; (iv) statutory liens (including for mechanic's or materialmen and other similar liens) for amounts that either are not yet due or such liens as are being contested in good faith for which adequate reserves have been established; (v) judgment liens during such time as the underlying judgment is being duly contested by appropriate measures for which adequate reserves or other security reasonably satisfactory to Spring Lane have been established; (vi) other encumbrances disclosed in the Investment Package; and (vii) minor defects, utility easements and rights-of-way, restrictive covenants and other similar encumbrances incurred in the ordinary course of business and encumbrances consisting of zoning restrictions or minor imperfections in title that are not material to DVSL or the Project or the operation of its respective businesses.

"<u>Person</u>" means any individual, corporation, partnership, limited liability company, association, joint stock company, trust, unincorporated organization, joint venture, government or political subdivision or agency thereof.

"<u>POCo</u>" means Soluna DV Services Co LLC, a Nevada limited liability company.

"<u>Project</u>" means the variable data center engaged in cryptocurrency, batch processing or other non crypto related activities, to be owned by DVSL that will be located in Briscoe County, Texas at the location more specifically described in the Sublease including, without limitation, the development, design, engineering, permitting, procurement, construction, civil works, installation, integration, commissioning, start-up, testing, completion, financing, operation and maintenance of the same, and any activities similar to any of the foregoing. For the avoidance of doubt, the Project shall not include the Shared Facilities.

"<u>Project Budget</u>" means, for the Project and the Shared Facilities, a budget delivered with the Investment Package that shows all Project Costs on a line item basis anticipated to be incurred through Final Completion of the Project, together with a balanced statement of uses and anticipated sources of funds, consistent with the Project Pro Forma.

"<u>Project Costs</u>" means, for the Project and the Shared Facilities, as applicable and without duplication, all (i) amounts payable by DVSL under the EPC Agreement; (ii) the amounts payable by DVSL under the EPC Agreement (Shared Facilities); (iii) amounts payable by DVSL pursuant to the Sublease and Sublease (Shared Facilities) during construction of the Project and any other real estate rights necessary for the development, construction, installation, commissioning, start up and testing of the Project or the Shared Facilities; (iv) insurance costs (without duplication) incurred by DVSL related to the design, development, construction, commissioning, start-up, testing and ownership of the Project; (v) all taxes, assessments or charges payable under applicable Law by DVSL with respect to the construction, installation, and commissioning of the Project; (vi) out-of-pocket costs incurred and payable by DVSL in respect of professional advisors (including legal counsel), consultants and other experts or otherwise in connection with the design, development, financing, construction, installation and commissioning of the Project; (vii) all amounts payable by DVSL pursuant to the Shared Facilities Agreement and any Project Document (Shared Facilities); and (viii) all other out-of-pocket costs directly relating to the development, engineering, financing, procurement, construction, permitting, installation, start-up, testing and commissioning of the Project. For the avoidance of doubt, Project Costs include Approved Expenses and any Cost Overrun Contingency Contributions, except as otherwise specified herein, but do not include Spring Lane's due diligence costs.

"<u>Project Documents</u>" means, collectively, the Project Documents (Shared Facilities) and the Project Documents (DVSL).

"<u>Project Documents (Shared Facilities)</u>" means the Shared Facilities Agreement, the Administrative Services Contract (Shared Facilities) (or defined in the Shared Facilities Agreement), the EPC Agreement (Shared Facilities) (as defined in the Shared Facilities Agreement), the O&M Contract (Shared Facilities) (as defined in the Shared Facilities Agreement), the Sublease (Shared Facilities), and each other agreement (if any) required for the ownership, development, engineering, procurement, financing, construction, operation and maintenance of the Shared Facilities.

"<u>Project Documents (DVSL)</u>" means the EPC Agreement, the Sublease, the O&M Agreement and, as specified herein or in the Investment Package, each other agreement required for the ownership, development, engineering, procurement, financing, construction, operation and maintenance of the Project (excluding, for the avoidance of doubt, the Shared Facilities), including agreements or other documents covering or otherwise evidencing arrangements with third party developers, engineering, procurement, construction, installation, operation and maintenance, real property rights, and related third party consents and acknowledgements, Permitted Indebtedness, and Permitted Liens. Each Project Document as referred to herein shall mean the Project Document as in effect as of the applicable time.

"<u>Project Pro Forma</u>" means a financial model agreed to by Parent and Spring Lane showing the economic results that Parent expects from ownership of DVSL over a period of seven (7) years, which shall include the costs of the Shared Facilities.

"<u>Project Schedule</u>" means a reasonably detailed development, construction, and commissioning schedule for the Project and the Shared Facilities (which shall include a critical path schedule and all key project milestones), and related milestone payment dates under the applicable Project Document.

"<u>Project Site</u>" means the site on which the Project will be constructed and operated, the Shared Facilities and the premises under the Sublease.

"<u>Property</u>" means any interest in any kind of property or asset, whether real property, personal property, tangible or intangible, including Permits, Intellectual Property and Contracts.

"<u>Property Rights</u>" means, as to DVSL, its rights in and to Property.

"<u>Prudent Industry Practices</u>" means those practices, methods, equipment, specifications and standards of safety and performance as are (i) used to own, manage, operate and maintain variable data centers and/or crypto-mining centers of the type that are similar to the Project, safely, reliably and efficiently and in compliance with applicable Laws, manufacturers' warranties and manufacturers' recommendations; and (ii) are consistent with the exercise of the reasonable judgment, skill, diligence, foresight and care in order to efficiently accomplish the desired result consistent with manufacturers' warranties, manufacturers' recommendations and the Project Documents, in each case, taking into account the location of the Project, including climatic, environmental and general conditions. "Prudent Industry Practices" are not intended to be limited to a single practice or method to the exclusion of others, but may encompass a range of practices or methods generally accepted or approved by a significant portion of the power generation industry as reasonably applied to the Project during the relevant time period as good, safe and prudent practices in connection with the design, engineering, construction, operation, maintenance, repair and use of such facility, with commensurate standards of safety, performance, dependability, efficiency and economy.

"<u>PUHCA</u>" means the Public Utility Holding Company Act of 2005, and all rules and regulations adopted thereunder.

"<u>Qualifying Debt</u>" means one or more secured or unsecured loan or credit facilities pursuant to which DVSL incurs debt to finance the development and construction of the Project having terms reasonably acceptable to Spring Lane.

"<u>Real Property Interests</u>" means all real property interests held by DVSL in connection with the Project, whether such Person owns a fee interest or holds a leasehold interest as a tenant, an easement right as an easement holder, an option, or a license right as a licensee or otherwise occupies or has interests in real property.

"<u>Shared Facilities</u>" has the meaning established in the Shared Facilities Agreement.

"<u>Shared Facilities Agreement</u>" means the Co-Tenancy and Shared Facilities Agreement by and among DVSL, POCo and the other computing companies having projects adjacent to the Project and sharing the Shared Facilities with DVSL, in substantially the form attached hereto as <u>Exhibit C</u>, as the same may be amended or supplemented from time to time, pursuant to a written agreement specifying the terms of such amendment or supplement that are acceptable to Spring Lane.

"<u>Shared Premises</u>" has the meaning established in the Shared Facilities Agreement.

"<u>Spring Lane</u>" has the meaning established in the preamble.

"<u>Spring Lane Commitment</u>" means the amount equal to (a) the total aggregate amount of Capital Contributions funded by Spring Lane as of March 10, 2023 <u>plus</u> (b) US$3,000,000.

"<u>Sublease</u>" means the Sublease Agreement pursuant to which Lessor has granted to DVSL an undivided sub-leasehold interest in the Project Site, as the same may be amended or supplemented from time to time, pursuant to a written agreement specifying the terms of such amendment or supplement that are acceptable to Spring Lane.

"<u>Sublease (Shared Facilities)</u>" means those provisions in the Shared Facilities Agreement pursuant to which Lessor has granted to DVSL and other computing companies an Undivided Interest in the Shared Premises, as the same may be amended or supplemented from time to time, pursuant to a written agreement specifying the terms of such amendment or supplement that are acceptable to Spring Lane.

"<u>Subsequent Contribution</u>" means a capital contribution other than the First Contribution made by Spring Lane or Parent to DVSL in accordance with this Agreement.

"<u>Substantial Completion</u>" means substantial completion or similar term under the EPC Agreement.

"<u>Target Return</u>" means an amount where the cash distributed to a Class B Member (including any Tax Distributions) equals a eighteen percent (18%) Internal Rate of Return on the Capital Contributions made such Class B Member as of the date of determination, as calculated consistent with the Project Pro Forma.

"<u>Tax</u>" means all taxes, charges, fees and levies imposed under applicable Law by any Governmental Authority, including any gross or net income, gross receipts, capital gains, franchise, premium, profits, sales, use, value-added, transfer, employment or payroll, ad valorem, environmental, excise, license, occupation, real or personal property, intangible property, minimum, alternative minimum, severance, stamp, withholding, or windfall profits tax, custom, duty or other charge, fee or tax, together with any interest, charge, penalty, addition to tax or additional amount related thereto.

"<u>Third Party Claim</u>" means any claim, action, cause of action or suit, litigation, controversy, assessment, arbitration, investigation, inquiry, hearing, charge, complaint, demand, notice or proceeding initiated by any Person other than a party to this Agreement or any Affiliate of a party to this Agreement, including by or before any Governmental Authority.

"<u>Transaction Documents</u>" means collectively this Agreement, the DVSL Operating Agreement, the Project Documents, the Financing Documents, and the other documents, instruments, or certificates relating to or delivered under this Agreement at the Closing.

"<u>Transaction Party</u>" means any or all of Devco, DVSL, and each other Affiliate of Devco that is party to a Transaction Document.

Section 1.2 <u>Interpretation</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) As used in this Agreement and in any certificate or other documents made or delivered pursuant hereto or thereto, financial and accounting terms not defined in this Agreement or in any such certificate or other document, and financial and accounting terms partly defined in this Agreement or in any such certificate or other document to the extent not defined, shall have the respective meanings given to them under GAAP. To the extent that the definitions of financial and accounting terms in this Agreement or in any such certificate or other document are inconsistent with the meanings of such terms under GAAP, the definitions contained in this Agreement or in any such certificate or other document shall control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) This Agreement is the result of the joint efforts of the parties hereto, and each provision hereof has been subject to the mutual consultation, negotiation and agreement of the parties and there is to be no construction against either party based on any presumption of that party's involvement in the drafting hereof. Any reference to any Law shall be deemed also to refer to all rules and regulations promulgated thereunder and such laws and regulations as amended from time to time, unless the context requires otherwise. Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders and the terms "include," "includes" and "including" shall be inclusive and not exclusive and shall be deemed to be followed by the following phrase "without limitation." Unless otherwise specified, the terms "hereof," "herein," "hereunder," "herewith" and similar terms refer to this Agreement as a whole (including the schedules and exhibits to this Agreement) and references herein to Sections, Articles, Schedules or Exhibits refer to the applicable sections, articles, schedules or exhibits of this Agreement; the words "or" and "any" are not exclusive and shall be interpreted to mean "and/or" and "any and all", respectively. All references to "dollars" or "$" are to United States dollars.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as amended, restated, supplemented or otherwise modified from time to time, and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Any references to a Person are also to its successors and permitted assigns.

**ARTICLE II<br> CLOSING; INVESTMENT IN DVSL**

Section 2.1 <u>Agreement to Invest; Capital Commitment</u>. Subject to the terms and conditions of this Agreement and the DVSL Operating Agreement, Spring Lane will make Capital Contributions to DVSL in an aggregate amount up to the Spring Lane Commitment, and the Parent will make Capital Contributions to DVSL in an aggregate amount up to the Parent Commitment.

Section 2.2 <u>Capital Contributions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) On the Effective Date, the Parent and Spring Lane made the First Contribution, and DVSL issued (i) to Devco 100% of the Class A Membership Interests, (ii) to Spring Lane 32.2% of the Class B Membership Interests and admit Spring Lane as a Class B Member of DVSL, and (iii) to the Parent 67.8% of the Class B Membership Interests and admit Parent as a Class B Member of DVSL, and subsequently, but prior to February 10, 2023, the Parent and Spring Lane made Subsequent Contributions in accordance with the terms of the Existing Contribution Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) On February 10, 2023, 3,554,068 additional Class B Membership Interests were issued to Spring Lane in exchange for an additional Capital Contribution made by Spring Lane in the amount of $1,186,676 paid by Spring Lane as specified in the Contribution Request dated February 10, 2023, and immediately after the closing of such transaction, Spring Lane held 37.9% of the Class B Membership Interests and Parent held 62.1% of the Class B Membership Interests.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) On March 3, 2023, 4,126,023 additional Class B Membership Interests were issued to Spring Lane in exchange for an additional Capital Contribution made by Spring Lane in the amount of $1,500,000 paid by Spring Lane as specified in the Contribution Request dated March 3, 2023, and immediately after the closing of such transaction, Spring Lane held 43.39% of the Class B Membership Interests and Parent held 56.61% of the Class B Membership Interests.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) On March 10, 2023, Soluna sold and transferred to Spring Lane, and Spring Lane purchased and accepted from Soluna, 19,539,897 Class B Membership Interests for an aggregate purchase price of $7,500,000 in accordance with the terms and conditions of that certain Purchase and Sale Agreement dated as of March 10, 2023 (the "<u>2023 Purchase Agreement</u>"), and immediately after the closing of such transaction, Spring Lane held 85.4% of the Class B Membership Interests and Parent held 14.6% of the Class B Membership Interests.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) For each Subsequent Contribution, DVSL shall, in accordance with the terms of the DVSL Operating Agreement, submit to the Parent and Spring Lane a fully completed Contribution Request not less than five (5) Business Days prior to the proposed date therefor, unless such requirement is waived by Spring Lane. In the event that Parent does not satisfy in full its obligation to make any Capital Contribution, Spring Lane may elect to make an additional Capital Contribution in the amount of such short fall and such contribution shall constitute a Capital Contribution under the DVSL Operating Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) At such time as the conditions thereto have been satisfied or waived as provided in <u>Section 4.2</u>, the Parent and Spring Lane shall make each Subsequent Contribution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The proceeds of each Subsequent Contribution shall be applied to pay Project Costs of the Project in accordance with the Project Budget. Subsequent Contributions shall be made to pay Project Costs then due and payable based on the terms of the EPC Agreement, Project Budget and Project Schedule.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Parent and Spring Lane shall have no obligation to make any Subsequent Contribution if the conditions to such Subsequent Contribution are not satisfied or waived on or prior to the Capital Commitment Expiration Date; <u>provided</u>, that the Parent and Spring Lane shall make Subsequent Contributions at such times following the Capital Commitment Expiration Date if the conditions to such Subsequent Contributions are satisfied and the Contribution Request was received prior to the Capital Commitment Expiration Date, and the Contribution Request provides for Subsequent Contributions to be made after the Capital Commitment Expiration Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Unless otherwise agreed upon in writing by the Parent and Spring Lane, each Capital Contribution (including any Subsequent Contribution) shall be made on a pro rata basis in proportion to the amount of Class B Membership Interests held by Parent and Spring Lane at the time of any such Capital Contribution. Notwithstanding the forgoing, the Parties agree that all Project Costs due and payable from and after January 1, 2023 that are funded by Capital Contributions shall be funded as if Parent owns 14.6% of the Class B Membership Interests and Spring Lane owns 85.4% of the Class B Membership Interests.

Section 2.3 <u>Tax Characterization</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Prior to the Effective Date, DVSL was treated as an entity that is disregarded as separate from Devco for federal income Tax purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) On the Effective Date, (i) Parent and Spring Lane made their share of the First Contribution to DVSL for their Class B Membership Interests as a capital contribution for purposes of Section 721 of the Code, (ii) Devco made its share of the First Contribution to DVSL for the Class A Membership Interests, and was deemed to contribute assets of Devco immediately prior to the contributions described in clause (i), as a capital contribution for purposes of Section 721 of the Code, and (iii) DVSL became a partnership for federal income tax purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) On the date of each Subsequent Contribution, Parent and Spring Lane shall make a Subsequent Contribution to DVSL as a capital contribution for purposes of Section 721 of the Code.

Section 2.4 <u>Closing; Fundings</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Closing and the making of each Subsequent Contribution shall take place by the electronic delivery of the applicable duly executed documents on the date on which all of the applicable conditions in <u>Section 4.1</u> or <u>Section 4.2</u>, as applicable, have been satisfied (or waived as provided therein) or at such other time as the Parties may agree in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each of the documents and other deliverables to be delivered and the actions to be taken pursuant to <u>Section 4.1</u> or <u>Section 4.2</u> in respect of the First Contribution and each Subsequent Contribution shall be deemed to be delivered or to have occurred simultaneously, and no such document or deliverable or action shall be of any force or effect (and to the extent delivered shall be deemed to be held in escrow) until all such documents are delivered and actions are taken and the applicable funds have been delivered by the relevant Party, at which time the respective First Contribution or Subsequent Contribution shall be deemed to occur (each such date, a "<u>Contribution Date</u>").

**ARTICLE III<br> THE PROJECT; PROJECT DEVELOPMENT AND FINANCING**

Section 3.1 <u>The Project Company</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) As of the Closing, DVSL shall be owned by the Parties in accordance with the DVSL Operating Agreement, and the Project shall be wholly owned by DVSL. The Project, the Project Documents, Permits, Financing Agreements (if any), the Shared Facilities and any assets, equipment, parts, interests or other property (tangible or intangible) related to the Project shall be and at all times shall have been the sole assets of DVSL.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The capital necessary for the construction and completion of the Project (or the reimbursement thereof as Approved Expenses) will be, or shall have been, provided by the Parties holding Class B Membership Interests through one or more equity investments (the "<u>Equity Investment(s)</u>"), as determined by Spring Lane and the Parent, in each case, subject to the terms of this Agreement, including <u>Article IV</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the event that DVSL intends to co-own certain facilities with any computing company owning an adjacent Project, then, subject to the approval of Spring Lane, DVSL and each such other computing company shall enter into a Shared Facilities Agreement.

Section 3.2 <u>Project Financing</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If necessary and specified in the Investment Package, DVSL and Devco shall use commercially reasonable efforts to secure Qualifying Debt for the Project, and the Parent and Spring Lane will cooperate with the Devco to assist the Devco and DVSL in obtaining such Qualifying Debt, including by timely providing diligence information reasonably requested by the lenders. For the avoidance of doubt, none of Spring Lane, Parent or any Parent Party shall have any obligation hereunder to make any further investment or contribution, incur any additional cost or liability, or provide any type of credit support in connection with Qualifying Debt (other than to make Subsequent Contributions as provided herein).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) DVSL shall deliver to Parent and Spring Lane copies of all drafts of the Financing Documents for the Project exchanged between DVSL and the lenders, and shall keep Parent and Spring Lane reasonably and timely informed of the progress of the Financing Documents.

Section 3.3 <u>Project Development</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Devco will use commercially reasonable efforts to develop the Project and the Shared Facilities in accordance with the Project Schedule, the Project Budget, this Agreement, applicable Law, all Permits and Consents, and Prudent Industry Practices.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Project or Shared Facilities fails to reach Completion by the Capital Commitment Expiration Date, then any related damages payable by any Person in respect thereof, any proceeds from any insurance settlement, any indemnity payment, or any other amounts received by DVSL, Devco, any Affiliate of Devco or DVSL shall be repaid to Parent and Spring Lane as a return of its capital contributed in respect of the Project until fully repaid, subject only to any prior right to such amounts specified in the Financing Documents. If the failure of the Project to reach Completion results from any event not excused under the applicable EPC Agreement, then Spring Lane shall have no further obligation to make any Subsequent Contributions. In such event, Parent and Spring Lane, each in its sole discretion, may by notice to DVSL (i) suspend or terminate its obligation to make any Subsequent Contributions as to the Project, or (ii) suspend or terminate the Parent Commitment or Spring Lane Commitment, respectively. During the pendency of any suspension, Parent and Spring Lane shall conduct due diligence to determine the cause of such failure and shall notify DVSL as soon as practicable whether it will resume making Subsequent Contributions or terminate the Investment Commitment. No suspension shall exceed ninety (90) days.

Section 3.4 <u>Cost Overruns</u>. Project Costs that exceed the Project Budget and that are not payable by a third party (including the EPC Contractor, or its surety or insurer) or are not the obligation of the Contractor shall be paid first by Qualifying Debt to the extent available and thereafter by Parties holding Class B Membership Interests on a pro rata basis as a Subsequent Contribution of the required amount up to the Cost Overrun Contingency, to which only the conditions in <u>Section 4.3</u> shall apply. The Parties shall not be obligated to fund any Project Costs overruns in excess of the Qualifying Debt available therefor plus the Cost Overrun Contingency unless otherwise agreed upon by the Parties in writing.

**ARTICLE IV<br> CONDITIONS TO CLOSING AND FUNDINGS**

Section 4.1 <u>Closing Conditions</u>. The obligation of Parent and Spring Lane to make the First Contribution is subject to the satisfaction by Devco and/or DVSL, as the case may be, or waiver, with respect to its own funding obligation, by Parent or Spring Lane, as applicable, as of the Effective Date, of each of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Performance by Devco</u>. Devco and DVSL is each in compliance in all material respects with all agreements, obligations and conditions required to be performed or complied with by it on or before the Effective Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Delivery of Transaction Documents</u>. DVSL, Devco or the applicable Affiliate of Devco or DVSL shall have duly executed and delivered each of the Transaction Documents to which it is party, which shall be in full force and effect as of the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Delivery of Financial Statements</u>. Parent shall have delivered to Spring Lane, Parent's annual financial statements (audited if available) for at least the immediately preceding year, accompanied by a certificate from an Authorized Officer of Parent stating that no material adverse change in the assets, liabilities, operations or financial condition of Parent and its subsidiaries (taken as a whole) has occurred since the date of such financial statements, and that such financial statements fairly present in all material respects the consolidated financial condition of Parent, in accordance with GAAP consistently applied, as at the respective dates of such financial statements (subject to normal year-end adjustments and the absence of footnotes).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Consents and Approvals</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Each of Devco and DVSL shall have obtained fully executed Closing Consents, each of which shall be in full force and effect, and copies of which shall have been delivered to Parent and Spring Lane.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Each of the Transaction Parties other than Devco and DVSL shall have obtained all approvals, consents and qualifications necessary to execute, deliver and perform the Transaction Documents to which it is party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Devco Officer's Certificate</u>. An Authorized Officer of Devco shall have delivered to Parent and Spring Lane a certificate dated as of the Effective Date (i) certifying that all of the conditions set forth in this <u>Section 4.1</u> have been satisfied; (ii) attaching the resolutions of the members of Devco approving the execution, delivery and performance of the Transaction Documents to which Devco is a party and certifying that such resolutions are in full force and effect; (iii) certifying as to the incumbency and specimen signatures of the Persons executing the Transaction Documents; and (iv) attaching certificates of formation and good standing of Devco and each other Transaction Party, certified as of a recent date by applicable Governmental Authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>DVSL Certificate</u>. An Authorized Officer of DVSL shall have delivered to Spring Lane a certificate dated as of the Effective Date (i) certifying and attaching the resolutions of DVSL approving the execution, delivery and performance of the Transaction Documents to which DVSL is a party and certifying that such resolutions are in full force and effect; (ii) certifying as to the incumbency and specimen signatures of the Persons executing such Transaction Documents on behalf of DVSL; and (iii) attaching the certificate of formation and certificate of good standing of DVSL, certified as of a recent date by the applicable Governmental Authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Representations and Warranties</u>. As of the Closing, the representations and warranties made herein and in the other Transaction Documents by each of the Transaction Parties party to any Transaction Document are true and complete in all material respects, except that such representations and warranties that are qualified with reference to materiality are true and complete in all respects, any representations made as of a specific date shall be true and correct as of such date and, with respect to any projections, the projections were prepared in good faith and based on estimates which such party believes were reasonable when made and as of the Effective Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>FIRPTA</u>. Soluna Computing, Inc., as sole owner of Devco immediately prior to the First Contributions, has delivered a certificate of non-foreign status satisfying the requirements under Treasury Regulations Section 1.1445-2(b) and reasonably satisfactory to Spring Lane, certifying that Soluna Computing, Inc. is not a foreign person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Permits</u>. The Project or DVSL shall have (i) obtained all Permits applicable to it and required to be in effect as of the Closing, or has reasonably demonstrated that it can acquire such Permits within a reasonable time after the Closing to Spring Lane's reasonable satisfaction; (ii) timely and completely made all filings required as of such date in respect of each such Permit, except to the extent that failure to make such filings could not be reasonably likely to result in a Material Adverse Effect and shall have made available to Spring Lane copies of such filings; (iii) each such Permit shall be in full force and effect as of the Effective Date, except to the extent that failure to be in full force and effect could not be reasonably likely to result in a Material Adverse Effect; in each case except for any Permit that is (x) not then required for the construction of the Project or otherwise and (y) that Devco expects to be timely obtained in the ordinary course consistent with the Project Schedule.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Independent Engineer Review</u>. Spring Lane shall have received a report of an independent engineer selected by Spring Lane (the "<u>Independent Engineer</u>") for the Project that confirms that the construction of the Project is capable of being accomplished in accordance with the EPC Agreement, the Project Budget and the Project Schedule, and that sufficient funds are available from the Aggregate Contribution Amount and the Qualifying Debt to achieve Completion. Spring Lane shall consult with Parent on the selection of the Independent Engineer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>Insurance</u>. Spring Lane shall have received copies of insurance certificates evidencing that the insurance policies in <u>Schedule 2</u> and as otherwise required by the Project Documents and the Financing Documents are in effect and fully paid.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>Site Plans; Design</u>. Devco shall have delivered to Spring Lane true and complete copies of the site plans and project designs for the Project approved as required by Governmental Authorities having jurisdiction over the applicable Project.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <u>Third Party Reports</u>. Spring Lane shall have received a Phase 1 environmental report for such Project prepared by a nationally recognized environmental consultant or another environmental consultant reasonably approved by Spring Lane, which shall be in form and substance reasonably satisfactory to Spring Lane dated within 180 days of the Closing and in accordance with ASTM International Standard E1527-13 or its successor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) <u>Investment Package</u>. As of each Contribution Date, the information contained in the Investment Package shall (i) be true, correct and complete in all material respects and not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and (ii) demonstrate that the Project is reasonably likely to meet the Target Return set out in the Investment Package and approved by Spring Lane.

Section 4.2 <u>Conditions to Each Subsequent Contribution</u>. The obligation of Parent and Spring Lane to make a Subsequent Contribution is subject to the satisfaction or waiver, with respect to its own obligation to make a Subsequent Contribution, by Parent or Spring Lane, as applicable, as of the applicable Contribution Date, of each of the following conditions; <u>provided that</u>, a waiver by Spring Lane of a condition to make a Subsequent Contribution hereunder that was, or is, caused by, or is a direct or indirect result of, any action or inaction by Parent or Devco shall also be deemed to be the waiver of Parent of such condition to making such Subsequent Contribution hereunder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Performance by Devco</u>. Devco and DVSL each are in compliance in all material respects with all agreements, obligations and conditions required to be performed or complied with by it on or before the Contribution Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Contribution Request</u>. DVSL shall have timely delivered to Parent and Spring Lane a duly executed and completed Contribution Request as to the Subsequent Contribution (including copies of all supporting invoices, documentation evidencing amounts due thereunder and lien waivers required to be delivered under the EPC Agreement) in accordance with <u>Section 2.2(e)</u>, which shall have been reasonably approved Spring Lane.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Liquidity</u>. Parent shall have demonstrated to Spring Lane's reasonable satisfaction (which evidence may include the delivery of financial statements) that Parent has, as of the relevant Contribution Date, available cash, cash equivalents, projected distributions from subsidiaries (derived from revenues of such subsidiaries payable under binding and effective contracts), binding contracted cash flow of the Parent, or binding, non-contingent commitments to subscribe for equity in Parent (collectively, "<u>Available Liquidity</u>"), sufficient to meet Parent's operating expenses when and as they come due, including any reasonably foreseeable cost overruns to be borne by Parent in accordance with <u>Section 3.4</u>, and shall have delivered to Spring Lane reasonable evidence of such Available Liquidity, which may include copies of its most recent financial statements accompanied by a reconciliation to the applicable consolidated budget.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Project Documents</u>. All Project Documents (A) shall be in full force and effect, (B) shall have no continuing event of default thereunder (and no event shall have occurred that, with notice or the passage of time, shall constitute an event of default thereunder), and (C) shall not have been amended in any material respect without the prior written approval of Spring Lane, which approval shall not be unreasonably withheld, conditioned or delayed and shall not have been amended in any manner which could reasonably be expected to adversely affect the Project Budget, the Project Pro Forma or the Project Schedule, in each case, without the prior written approval of Spring Lane.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Financing Documents</u>. Devco or DVSL shall have delivered to Spring Lane, true and complete copies of applicable the Financing Documents, if any, in the forms as approved by Spring Lane (such approval not to be unreasonably withheld, conditioned or delayed provided that the terms are consistent with those set out in the Investment Package and that certain Bilateral Master Contribution Agreement, dated as of May 3, 2022), which shall be in full force and effect, all conditions to the initial construction funding thereunder shall have been satisfied (other than the making of the Subsequent Contribution), and no default or event of default thereunder shall have occurred and be continuing (and no event shall have occurred that, with notice or the passage of time, shall constitute an event of default thereunder).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Representations and Warranties</u>. The representations and warranties made by DVSL and Devco herein and in all other Transaction Documents shall be true and complete in all material respects as if made as of the applicable Contribution Date, except that (i) any such representations and warranties that are qualified by reference to materiality shall be true and complete in all respects, (ii) any representations made as of a specific date shall be true and correct as of such date, and (iii) neither Devco nor DVSL makes any representation with respect to any projections, other than that the projections were prepared in good faith and based on estimates which such party believes were reasonable when made and as of the applicable Contribution Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>No Material Change</u>. There shall not have occurred and Devco or DVSL shall have no knowledge of any event, circumstance, condition or information that could be reasonably likely to materially adversely affect the accuracy or completeness of the information included in the Investment Package for the Project in respect of which the requested Subsequent Contribution is to be made, other than any such events, circumstances, conditions or information as are reasonably acceptable to Parent and Spring Lane, provided that they have been previously disclosed in writing to Parent and Spring Lane.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>No Litigation or Proceeding</u>. No action or proceeding shall have been instituted or threatened (with a reasonable basis therefor) in writing by any Governmental Authority or any other Person whatsoever by or against DVSL, the Parent, Devco or the Project, or any counterparty to a Project Document, in each case that seeks to or could reasonably impair, restrain, prohibit or invalidate the transactions contemplated by this Agreement, the other Transaction Documents, the Project Documents or the Financing Documents, or that could otherwise reasonably be expected to result in a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>No Default</u>. No material breach and no material default shall have occurred and be continuing as to DVSL, Devco or Parent under any of the Transaction Documents, Project Documents or Financing Documents, except to the extent resulting from any action or inaction of Spring Lane in violation of the Transaction Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Permits</u>. The Project or DVSL shall have (i) obtained all Permits applicable to it and required to be in effect as of the Contribution Date; (ii) timely and completely made all filings required as of such date in respect of each such Permit, and shall have made available to Spring Lane copies of such filings; (iii) each such Permit shall be in full force and effect as of the Contribution Date; in each case except for any Permit that is (x) not then required for the construction of the Project or otherwise and (y) that Devco expects to be timely obtained in the ordinary course consistent with the Project Schedule.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>MAE</u>. No event or circumstance has occurred and is continuing that has resulted in or would reasonably be expected to result in a Material Adverse Effect as to the Project.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>Certificates</u>. An Authorized Officer of Devco shall have delivered to Parent, Spring Lane a certificate, dated as of the applicable Contribution Date, certifying (in the case of DVSL) that all of the conditions to the applicable Subsequent Contribution specified in this <u>Section 4.2</u> are duly satisfied as of such date, and an Authorized Officer of Devco shall have delivered to Spring Lane a certificate dated as of the applicable Contribution Date, certifying that all representations of Devco made herein are true and complete in all respects except that (i) any such representations and warranties that are qualified by reference to materiality shall be true and complete in all respects, (ii) any representations made as of a specific date shall be true and correct as of such date, and (iii) Devco does not make any representation with respect to any projections, other than that the projections were prepared in good faith and based on estimates which Devco believes were reasonable when made and as of the applicable Contribution Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <u>Investment Package</u>. As of each Contribution Date, the information contained in the Investment Package shall (i) be true, correct and complete in all material respects and not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and (ii) demonstrate that the Project is reasonably likely to meet the Target Return set out in the Investment Package and approved by Spring Lane.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) <u>Parent Contribution</u>. Spring Lane shall not be obligated to make a Subsequent Contribution until Parent has made all required Contributions set forth in all Contribution Requests, including the Contribution Request for which this condition to make a Subsequent Contribution relates, on a pro rata basis calculated based on the amount of Class B Membership Interests held by Parent and Spring Lane.

Section 4.3 <u>Cost Overruns Funding</u>. The obligation of Parent and Spring Lane to make a Subsequent Contribution in respect of any Cost Overrun Contingency amount as provided in <u>Section 3.4</u> shall be subject to the satisfaction by Devco or DVSL, or waiver, with respect to its own funding obligation, by each of Parent or Spring Lane, as applicable, with respect to its own obligations to make a Subsequent Contribution, as of the applicable Contribution Date, of each of the following conditions; <u>provided that</u>, a waiver by Spring Lane of a condition to make a Subsequent Contribution hereunder that was, or is, caused by, or is a direct or indirect result of, any action or inaction by Parent or Devco shall also be deemed to be the waiver of Parent of such condition to making such Subsequent Contribution hereunder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Contribution Request</u>. DVSL shall have timely delivered to Parent and Spring Lane a duly executed and completed Contribution Request as to the Subsequent Contribution (which Contribution Request appends copies of all supporting invoices, documentation evidencing amounts due thereunder and lien waivers as required to be delivered under the EPC Agreement) in accordance with <u>Section 2.2(e)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Updates</u>. Devco or DVSL shall have delivered to Spring Lane an updated Project Schedule, Project Budget and Project Pro Forma reflecting the increased Project Costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Construction Report</u>. Devco shall have delivered to Spring Lane a construction report explaining the reason for the cost overruns, including copies of any change orders made under the EPC Agreement, and evidence reasonably satisfactory to Spring Lane that demonstrates that the Project is capable of achieving Completion in accordance with the Project Schedule, the EPC Agreement, and the Financing Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>No Liens</u>. The Project shall not be subject to any Liens other than Permitted Liens.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Insurance</u>. Devco shall have delivered to Spring Lane copies of insurance certificates evidencing that the insurance policies are in effect and fully paid.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>No Default</u>. No default by Devco or DVSL shall then be continuing under the applicable Financing Documents or by any party under any Project Document (and no event shall have occurred that, with notice or the passage of time, shall constitute an event of default thereunder) except in the case that either (i) if Devco or DVSL is in default under a Financing Document or Project Document, the payment of the Cost Overrun Contingency (or applicable portion thereof) is sufficient to cure such default, or (ii) if a counterparty is in default under any Project Document, in connection with the payment of the Cost Overrun Contingency (or applicable portion thereof), each defaulted Project Document is terminated and replaced with a Project Document in form and substance and with a counterparty reasonably approved by Spring Lane.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Permits</u>. All applicable Permits required to have been obtained for the Project shall have been obtained and shall be in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Representations and Warranties</u>. After giving effect to any payments to be made with the proceeds of the Cost Overrun Contingency, the representations and warranties made by DVSL and Devco herein and in all other Transaction Documents and Financing Documents shall be true and complete in all material respects as if made as of the applicable Contribution Date, except that (i) any such representations and warranties that are qualified by reference to materiality shall be true and complete in all respects, (ii) any representations made as of a specific date shall be true and correct as of such date, and (iii) neither Devco nor DVSL makes any representation with respect to any projections, other than that the projections were prepared in good faith and based on estimates which such party believes were reasonable when made and as of the applicable Contribution Date.

**ARTICLE V<br> COVENANTS**

Section 5.1 <u>Conduct of Operations</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Devco and DVSL shall each conduct its businesses and operations in accordance with Prudent Industry Practices, all applicable Laws, and the Project Documents and Financing Documents and shall use its commercially reasonable efforts to satisfy the conditions to each additional Subsequent Contribution in respect of the Project in accordance with the Project Schedule.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Neither DVSL nor Devco shall conduct any business other than in connection with the Project or own any assets other than the Project.

Section 5.2 <u>Financial Statements</u>. DVSL shall deliver to Spring Lane, in form and detail reasonably satisfactory to Spring Lane, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Without limitation of anything in the other Transaction Documents, within one hundred twenty (120) days after the close of each applicable fiscal year, audited financial statements of DVSL and its subsidiaries, if any, prepared in accordance with GAAP consistently applied. Such financial statements shall include a statement of equity, a balance sheet as of the close of such year, an income and expense statement, reconciliation of capital accounts (where applicable), reported on without qualification arising out of the scope of the audit, and certified by an independent certified public accountant reasonably acceptable to Spring Lane.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Within sixty (60) days after the end of the first, second and third quarterly accounting periods of its fiscal year (commencing with the second fiscal quarter immediately succeeding the Effective Date), unaudited quarterly financial statements of DVSL, and its subsidiaries, if any, as of the last day of such quarterly period and the related statements of income, cash flow, and shareholders' or members' equity (as applicable) for such quarterly period and (in the case of second and third quarterly periods) for the portion of the fiscal year ending with the last day of such quarterly period, setting forth in each case in comparative form (if applicable) corresponding unaudited figures from the preceding fiscal year, all prepared in accordance with GAAP consistently applied (subject to changes resulting from audit and normal year-end adjustments and the absence of footnote disclosures).

Section 5.3 <u>Access to Information; Due Diligence</u>. Devco will (a) provide Spring Lane, its respective counsel, financial advisors, auditors and other authorized representatives reasonable access to the offices, properties, employees and personnel, books and records of DVSL, and (b) deliver to Spring Lane, its respective counsel, financial advisors, auditors, and other authorized representatives such financial and operating data and other information as such Persons may reasonably request in connection with DVSL and Devco. As part of its due diligence, Spring Lane may make such reasonable inquiries of such Persons having business relationships with Devco (including lenders, contractors, suppliers, and customers) upon reasonable prior notice to Devco, and Devco shall cooperate fully with Spring Lane in connection therewith. Conduct of Operations.

**ARTICLE VI<br> REPRESENTATIONS AND WARRANTIES OF DEVCO**

Devco represents and warrants to Spring Lane that the following statements are true, complete and correct as of the Effective Date and each Contribution Date, as follows:

Section 6.1 <u>Formation; Powers</u>. Devco is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware, has all requisite limited liability company power and authority necessary to own its assets and to carry on its business as now conducted, and is qualified to do business in, and is in good standing in, each jurisdiction where such qualification is required.

Section 6.2 <u>Authority, Enforceability</u>. This Agreement and each other Transaction Document to which Devco is a party has been duly authorized, executed and delivered by Devco and constitutes a legal, valid and binding obligation of Devco, as applicable, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity and public policy, regardless of whether considered in a proceeding in equity or at law.

Section 6.3 <u>No Conflict</u>. Neither the execution and delivery by Devco of the Transaction Documents to which it is a party, nor Devco's consummation of the transactions contemplated in the Transaction Documents, nor compliance with the terms thereof (a) conflicts with in any material respect or would constitute a default under or a material violation of the provisions of any agreement binding on Devco or any Law applicable to or binding on Devco or any Properties of Devco; (b) a default or breach under any Project Document or any Contract by which Devco or any of its Properties are bound, except as could not result in a Material Adverse Effect; or (c) other than as explicitly contemplated in a Transaction Document or a Project Document, the creation or imposition of any Lien (including any Permitted Lien) on any Property of any Transaction Party. The execution, delivery and performance by Devco of each Transaction Document to which it is a party do not require the approval or consent of any Person, which approval or consent has not been obtained.

Section 6.4 <u>No Indebtedness or Liens</u>. Neither Devco nor any of its Affiliates that holds any direct or indirect interests in DVSL has outstanding Liabilities affecting DVSL Interest other than as and to the extent specified in (i) an Investment Package or (ii) as separately provided in writing to Spring Lane and in any event reasonably acceptable to Spring Lane, and no DVSL Interest is subject to any Lien other than a Permitted Lien.

Section 6.5 <u>Ownership in DVSL and Devco</u>. Immediately prior to the Effective Date, Devco was the sole owner of all of the issued membership interests of DVSL, and no other Person has or has ever had any other interest in DVSL. Devco holds good title to the membership interests of DVSL free and clear of Liens other than Permitted Liens.

Section 6.6 <u>Capitalization of Devco and DVSL</u>. Other than as set forth in this Agreement, there are no subscriptions, options, warrants, or calls granted by Devco or any Affiliate of either relating to any direct interest in DVSL, including any right of conversion or exchange under any outstanding security or other instrument.

Section 6.7 <u>Litigation and other Governmental Proceedings</u>. There are no actions, suits, investigations or proceedings by or before any mediator, arbitrator or Governmental Authority pending or, to the knowledge of Devco, threatened in writing against (with a reasonable basis therefor) or affecting Devco or DVSL or to which Devco or DVSL is otherwise party, including in connection with any Environmental Laws, that could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect with respect to any such Persons or that affect or could reasonably be expected to materially and adversely affect the transactions contemplated by any Transaction Document.

Section 6.8 <u>No Other Rights</u>. Other than as set forth in this Agreement or in the applicable Investment Package, none of Devco or any Affiliate thereof has any Contract, arrangement or commitment to issue or sell any of its direct or indirect ownership interests or any interest (including any voting rights) in DVSL or the Project or any securities or obligations convertible into or exchangeable for, or giving any Person any right to acquire from it, any of its direct or indirect ownership interests or any interest in DVSL or the Project, and no such securities or obligations are issued or outstanding other than as contemplated by this Agreement or DVSL Operating Agreement.

Section 6.9 <u>Foreign Assets Control Regulations and Anti-Money Laundering</u>. Each Transaction Party and each Affiliate of Devco is in compliance in all material respects with all U.S. economic sanctions laws, Executive Orders and implementing regulations as promulgated by the U.S. Treasury Department's Office of Foreign Assets Control ("<u>OFAC</u>"), and all applicable anti-money laundering and counter-terrorism financing provisions of the Bank Secrecy Act and all regulations issued pursuant to it. No Transaction Party nor any Affiliate of Devco (i) is a Person designated by the U.S. government on the list of the Specially Designated Nationals and Blocked Persons (the "<u>SDN List</u>") with which a U.S. Person cannot deal with or otherwise engage in business transactions, (ii) is a Person who is otherwise the target of U.S. economic sanctions laws such that a U.S. Person cannot deal or otherwise engage in business transactions with such Person or (iii) is controlled by (including without limitation by virtue of such person being a director or owning voting shares or interests), or acts, directly or indirectly, for or on behalf of, any person or entity on the SDN List or a foreign government that is the target of U.S. economic sanctions prohibitions such that the entry into, or performance under, this Agreement or any other Loan Document would be prohibited under U.S. law.

Section 6.10 <u>Patriot Act</u>. Each Transaction Party and each Affiliate of Devco is in compliance with (a) the Trading with the Enemy Act, and each of the foreign assets control regulations of the United States Treasury Department and any other enabling legislation or executive order relating thereto, (b) the Patriot Act and (c) other federal or state laws relating to "*know your customer*" and anti-money laundering rules and regulations. No part of the proceeds of any First Contribution or Subsequent Contribution will be used directly or indirectly for any payments to any government official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977.

Section 6.11 <u>Disclosure; No Material Misstatements</u>. None of the reports, financial statements, certificates or other information furnished by Devco, Parent or their Affiliates to Spring Lane or any of its Affiliates with regard to the Parent, Devco, any Project, or DVSL in connection with the Transaction Documents, individually or taken as a whole, contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; <u>provided</u>, that with respect to any projections of financial performance of the Project delivered to Spring Lane, Devco makes no representation or warranty any kind except that the projections were prepared in good faith and based on estimates which Devco believes were reasonable when made and as of each Contribution Date.

**ARTICLE VII<br> REPRESENTATIONS AND WARRANTIES AS TO DVSL**

DVSL represents and warrants to Parent and Spring Lane on the Effective Date and, except as otherwise specified, on each Contribution Date, and giving effect to such Contribution, as follows, except to the extent otherwise expressly set forth in the Investment Package and specifically designated therein as exceptions to the representations and warranties below:

Section 7.1 <u>Organization; Powers</u>. DVSL is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware, with all requisite limited liability company power and authority necessary to own its assets and to carry on its business as now conducted and as anticipated to be conducted under the Project Documents and the Financing Documents, and is qualified to do business in, and is in good standing in, each jurisdiction where such qualification is required.

Section 7.2 <u>Authority/Ownership</u>. The issuance of the DVSL Interests in DVSL is within DVSL's limited liability company powers and has been duly authorized by all necessary limited liability company action. The Investment Package does not contain any materially untrue statement (it being understood that DVSL does not make any representation with respect to any projections, other than that the projections were prepared in good faith and based on estimates which DVSL believes were reasonable when made and as of each Contribution Date).

Section 7.3 <u>Approvals; No Conflicts</u>. Except as listed on <u>Schedule 1</u> or in any Investment Package, the transactions contemplated under this Agreement (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or any other Person, nor is any such consent, approval, registration, filing or other action necessary for the validity or enforceability of this Agreement, except as have been obtained or made and are in full force and effect, or are not yet required to be obtained; (b) will not violate any Law or regulation, any Permit, the DVSL Organizational Documents or any other order of any Governmental Authority; (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon DVSL, or give rise to a right thereunder to require any payment to be made by DVSL; and (d) will not result in the creation or imposition of any Lien (including any Permitted Lien) on any real, personal, tangible or intangible property of DVSL.

Section 7.4 <u>Financial Condition; No Material Adverse Effect</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The balance sheets and financial statements for DVSL that have been delivered to Spring Lane (i) are consistent with the books and records of DVSL and have been prepared in accordance with GAAP and (ii) fairly present in all material respects the financial condition of DVSL as of the date thereof and for the period covered thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) DVSL has no material obligations or any material current or long-term Liabilities that are not reflected in the financial statements, Financing Documents or Project Documents that have been delivered to Spring Lane, and which would be required by GAAP to be reflected therein.

Section 7.5 <u>Environmental Matters</u>. Except as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect on DVSL,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) DVSL is in compliance with, and at all times since the Closing has complied in all material respects with, all Environmental Laws applicable to its business and to the Shared Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) none of DVSL nor, to the knowledge of DVSL, any other Person has, except in compliance with applicable Environmental Laws, caused or allowed any Hazardous Material to be deposited, released, stored, or disposed onto or underneath the Project Site, nor, to the knowledge of DVSL, does any condition exist at the Project Site in violation of any applicable Environmental Laws or that would reasonably be expected to give rise to any obligation on the part of DVSL or any other Transaction Party to take remedial action pursuant to any applicable Environmental Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) DVSL has provided to Spring Lane all environmental assessment reports or environmental audits that are in its possession or control in respect of the Project Site of DVSL.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) to the knowledge of DVSL, DVSL's Project Site, or owner or lessor thereof, is not subject to any proceeding, action, order, investigation or inquiry of any Governmental Authority under or related to any Environmental Law.

Section 7.6 <u>Project Documents</u>. DVSL has delivered true, correct and complete copies of all Project Documents and Permits to Spring Lane, each as in effect as of each Contribution Date with respect to DVSL.

Section 7.7 <u>Compliance with Laws; Permits; Project Document; Financing Documents; Liabilities</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) DVSL (i) is in compliance in all material respects with all Laws applicable to it or the Project and all Project Documents, Permits and other Contracts binding upon it or its properties; (ii) possesses all Permits necessary at such time for the construction, installation, operation, maintenance and ownership of the Project, as applicable, and to perform under and realize the benefits of all of the Project Documents affecting the Project (other than any Permit as is not then issuable in the ordinary course); and (iii) otherwise to conduct its business, in each case, other than where non-compliance or non-possession could not reasonably be expected to have a Material Adverse Effect as to DVSL. No Permit materially limits or restricts DVSL from conducting its business as currently anticipated or from exercising its rights or enforcing its obligations under any Project Document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) There are no Permits required under any applicable Law that are or will be required for the ownership and operation of the Project other than the Permits listed in the Investment Package delivered to Spring Lane, except where non-compliance or non-possession could not reasonably be expected to have a Material Adverse Effect as to DVSL. DVSL has no reason to believe that each such Permit will not be in full force and effect prior to the outside date, if any, specified in <u>Section 4.2(c)</u> for the Subsequent Funding for the Project as of the applicable Contribution Date. Each Permit required to be in effect as of a Contribution Date for the Project has been obtained and is in full force and effect. As of any Contribution Date, no Permit for the Project or DVSL is subject to any appeals or further proceedings or to any unsatisfied condition that could allow material modification or revocation that has not been disclosed in the Investment Package. All of the applications and other filings submitted to a Governmental Authority in respect of the Permits have been true, complete, and correct in all material respects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) DVSL possesses all of the Property Rights necessary or reasonably required to perform its duties and exercise and enforce its rights under the Project Documents and to conduct its business in accordance with the Project Pro Forma other than where failure to possess such rights would not have a Material Adverse Effect on DVSL.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Project Documents are in full force and effect and constitute the legal, valid and binding obligation of DVSL, and to the knowledge of DVSL, each other party thereto, enforceable in accordance with its terms. DVSL is not in breach of or default under any Project Document to which it is a party. To the knowledge of DVSL, no other Person is in breach of or default under any Project Document to which DVSL is party. DVSL is not a party to any Contract other than the Project Documents, Financing Documents and Transaction Documents to which it is party other than for any such Contracts that have been approved by Spring Lane, and a true, complete and correct copy as in effect of each the Project Documents and other such Contracts has been delivered to Spring Lane. There are no Project Documents with respect to the Project as of the applicable Contribution Date other than the Project Documents listed in the relevant Investment Package or subsequently delivered to Spring Lane in connection with the Subsequent Funding for the Project.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) DVSL has delivered true, correct and complete copies of all Financing Documents to Spring Lane, if any, each as in effect as of each Contribution Date with respect to DVSL.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Each Financing Document applicable to the Project as of the applicable Contribution Date is in full force and effect and constitutes the legal, valid and binding obligation of DVSL and its Affiliates party thereto. No default or event of default has occurred and is continuing under any Financing Document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) DVSL does not have outstanding any Liabilities other than pursuant to the Project Documents, the Financing Documents, Permits or Transaction Documents, and no Property Right of DVSL is subject to any Lien other than Permitted Liens.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) No material deviations from the Project Budget or the Project Schedule have occurred with respect to the Project as of the applicable Subsequent Contribution Date except as approved by Spring Lane in writing.

Section 7.8 <u>Tax Matters</u>. Except as set forth in <u>Schedule 7.8</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Prior to the Effective Date, DVSL was treated since its formation as a disregarded entity from its owner, Parent, for federal income tax purposes, and no elections have been filed with any applicable Governmental Authority to treat DVSL as a corporation for tax purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) All income and other material tax returns or applicable information returns required to be filed by or with respect to DVSL or its assets have been timely filed with the applicable Governmental Authorities (giving regard to valid extensions) and all such returns are complete and accurate in all material respects. All material Taxes due and payable by or with respect to DVSL or its assets have been fully and timely paid (whether or not shown on such Tax Returns). DVSL has withheld and paid all material Taxes required to be withheld and paid by it under applicable law. All such withheld Taxes have been remitted in a timely manner to the applicable Governmental Authority (giving regard to valid extensions). No written notices have been received that any of the foregoing Tax filings have been audited or examined by any taxing authority. There are no ongoing or pending or, to the knowledge of DVSL, proposed or threatened, audits, examinations, claims, or assessments against DVSL or its assets in respect of any Tax.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) None of the assets of DVSL is subject to any Liens or charges in respect of unpaid Taxes (other than Taxes that are Permitted Liens) and, to the knowledge of DVSL, no such Liens or charges have been proposed or threatened by any Governmental Authority. No extension of the statute of limitations with respect to any Taxes of or with respect to DVSL or its assets has been granted, which extension is still in effect. DVSL has not received any written notice from any jurisdiction where it has not filed Tax returns that DVSL may be required to file Tax returns in such jurisdiction. DVSL does not have a power of attorney relating to Taxes that is currently in effect, and DVSL is not a party to any tax sharing, tax indemnity or similar arrangement, other than customary tax indemnification provisions in Contracts entered into in the ordinary course of business the principal purpose of which does not relate to Taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) DVSL does not have any liability for the Taxes of any other Person under Treasury Regulation Section 1.1502-6 (or any corresponding provision of state, local or non-U.S. Tax Law), as a transferee or successor, by contract (other than customary tax indemnification provisions in Contracts entered into in the ordinary course of business the principal purpose of which does not relate to Taxes), or otherwise pursuant to applicable Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) No rollback or similar tax clawback payments are due in connection with the Project or DVSL.

Section 7.9 <u>Employees</u>. DVSL has never had any employees.

Section 7.10 <u>Properties; Title</u>. DVSL has good and marketable title to all of its personal property, in each case, free and clear of all Liens other than Permitted Liens.

Section 7.11 <u>Insurance</u>. DVSL has in effect all insurance policies required under the Project Documents applicable to DVSL or in accordance with Prudent Industry Practice. DVSL is not in default in the payment of any premiums under any of the Insurance Policies or has failed to give any notice or to present any claim under any of the Insurance Policies in a due and timely fashion.

Section 7.12 <u>Intellectual Property</u>. DVSL owns, licenses or otherwise has the right to use, all Intellectual Property material to its business, and the use thereof by DVSL does not infringe upon the rights of any other Person.

Section 7.13 <u>Real Property; Access</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) DVSL does not own, lease, sublease, occupy or otherwise have any Real Property Interest, except for the rights with respect to the proposed Project Site owned or co-owned by DVSL, or held under the Sublease and Sublease (Shared Facilities), or as described in the Investment Package. DVSL has good and marketable leasehold title to all of the Real Property purported to be leased by it, in each case, free and clear of all Liens other than Permitted Liens.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Real Property Interests held by DVSL, including the Sublease and Sublease (Shared Facilities), provides DVSL with sufficient rights to construct, install, own, operate and maintain (including repair and replace equipment and materials) the Project and ancillary services as may be necessary to operate and maintain the Project for a period not less than the full term of each of the Sublease and Sublease (Shared Facilities).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) With respect to the Sublease, DVSL has obtained from the applicable Lessor, and, as applicable, any other owners, operators, or occupants of or holders of any easements or rights of way affecting the Project Site or the Project, unimpeded access to the Project Site necessary for the work contemplated by the EPC Agreement and otherwise for the development, construction, ownership, operation, and maintenance of the Project throughout the useful life of the Project.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) There are no physical conditions affecting the Project Site, nor any other material adverse status or condition relating to the Project Site or any portion thereof, the Sublease, or any other Real Estate Interests, that could reasonably be expected to materially delay, interfere with or impair construction or operation of the Project, or the exercise of any of DVSL's rights under the Real Property Contracts or the performance of any obligations under the Project Documents or the Financing Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The installation, use, operation and maintenance of the Project at the Project Site will not conflict with or be inconsistent with the rights of any other Person, and there are no rights, encumbrances or encroachments affecting the Project Site and superior to the rights of DVSL therein that would adversely affect the use of the Project Site by DVSL for the construction, operation and maintenance of the Project.

Section 7.14 <u>Condemnation</u>. There are no pending or, to the knowledge of DVSL, threatened actions or proceedings to modify the zoning classification of, or to condemn or take by power of eminent domain or to otherwise impose any restraint or restriction on, all or any part of the Project or the Project Site.

Section 7.15 <u>Notice to Proceed</u>. "Notice to Proceed" or similar milestone has been issued by DVSL in respect of the Project.

Section 7.16 <u>Utilities</u>. All utility services necessary for the construction and the operation of the Project for its intended purposes are available at the Project Site or will be so available as and when required upon commercially reasonable terms.

Section 7.17 <u>Subsidiaries</u>. DVSL has no subsidiaries.

Section 7.18 <u>Third Party Reports</u>. No information provided by DVSL or its Affiliates to any Person in connection with the preparation of any report required to be delivered to Spring Lane hereunder, including to the Independent Engineer, contains any material misstatement of fact or omits to state any material fact necessary to make such information not misleading; provided that DVSL makes no representation as to any information consisting of or to the extent based upon projections of future performance, other than that the projections were prepared in good faith and based upon estimates which DVSL believes were reasonable when made and as of each Contribution Date.

Section 7.19 <u>Disclosure; No Material Misstatements</u>. None of the reports, financial statements, certificates or other information prepared by DVSL and furnished to Spring Lane, or any of its Affiliates, in connection with DVSL or the Project, and Spring Lane's due diligence in respect thereof, including the portions of the Investment Package prepared by or on behalf of DVSL (collectively, "<u>Materials</u>"), individually or taken as a whole, contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; <u>provided</u>, that with respect to any element of the Materials consisting of or to the extent relying upon projections, DVSL makes no representation of any kind except that the projections were prepared in good faith and based on estimates which DVSL believes were reasonable when made and as of each Contribution Date.

Section 7.20 <u>Litigation and other Governmental Proceedings</u>. There are no actions, suits, investigations or proceedings by or before any mediator, arbitrator or Governmental Authority pending or, to the knowledge of DVSL, threatened in writing against, or to which DVSL is party or otherwise affecting DVSL, including in connection with any Environmental Laws, which, in each such case, if adversely determined, could be reasonably likely to result in a Material Adverse Effect.

Section 7.21 <u>No Other Rights</u>. Other than as set forth in this Agreement or in the applicable Investment Package, none of Parent, Devco or DVSL has any Contract, arrangement or commitment to issue or sell any of its ownership interests or any interest (including any voting rights) in DVSL or the Project or any securities or obligations convertible into or exchangeable for, or giving any Person any right to acquire from it, any of its ownership interests or any interest in DVSL or the Project.

**ARTICLE VIII<br> REPRESENTATIONS AND WARRANTIES AS TO INVESTORS**

Section 8.1 <u>Spring Lane</u>. Spring Lane represents and warrants to the Parties as of the Effective Date and, except as otherwise provided below, as of each Contribution Date, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Organization; Powers</u>. Spring Lane is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, with all requisite limited liability company power and authority to carry on its business as such business is now conducted, and as proposed to be conducted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Authority; Enforceability</u>. Spring Lane has full power and authority to execute and deliver each Transaction Document to which it is a party and to consummate the transactions contemplated thereby. The execution and delivery by Spring Lane of the Transaction Documents to which it is a party and the consummation by Spring Lane of the transactions contemplated thereby have been duly authorized by all necessary action required on the part of Spring Lane. This Agreement and each other Transaction Document to which Spring Lane is a party have been duly authorized, executed and delivered by Spring Lane. This Agreement and each Transaction Document to which Spring Lane is a party constitutes the valid and binding obligation of Spring Lane, enforceable against Spring Lane in accordance with its terms except as such terms may be limited by (i) bankruptcy, insolvency or similar laws affecting creditors' rights generally; or (ii) general principles of equity, whether considered in a proceeding in equity or at law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>No Violation</u>. The execution, delivery and performance by Spring Lane of this Agreement and each Transaction Document to which it is a party and the consummation of the transactions contemplated thereby do not and will not (a) violate or conflict with any provision of the governance documents of Spring Lane; (b) violate or require any filing or notice under any provision or requirement of any federal, state or local law, statute, judgment, order, writ, injunction, decree, award, rule, or regulation of any Governmental Authority applicable to Spring Lane; (c) violate, result in a breach of, constitute (with due notice or lapse of time or both) a default or cause any obligation, penalty, premium or right of termination to arise or accrue under, any agreement or instruments to which it is a party or by which any of its assets are bound; or (d) result in the creation or imposition of any Lien (including any Permitted Lien), in each case, which violation, breach, default or Lien would materially adversely affect its ability to perform its obligations under the Transaction Documents to which it is a party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Litigation</u>. There are no claims, actions, suits, investigations or proceedings (including any arbitration proceeding) of any nature, at law or in equity, pending or, to the knowledge of Spring Lane, threatened in writing by (with a reasonable basis therefor) or against Spring Lane, or to which Spring Lane is party the directors, officers, employees, agents of Spring Lane, or any of their Affiliates that is reasonably likely to materially adversely affect Spring Lane's ability to execute, deliver and perform each Transaction Document to which it is a party and consummate the transactions contemplated thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>No Consents or Approvals</u>. There is no requirement applicable to Spring Lane to make any filing with, or to obtain the consent or approval of any Person as a condition to the execution, delivery and performance of the Agreement and each Transaction Document to which it is a party or the consummation of the transactions contemplated thereby that has not yet been obtained.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Financial Capacity</u>. Spring Lane as of the Effective Date has, and will have at all times prior to the Capital Commitment Expiration Date, the financial capacity to pay and perform its obligations under this Agreement, and to make all Contributions contemplated hereby and to otherwise fund the Spring Lane Commitment (assuming, for the purposes of this representation, that all conditions to each Contribution are satisfied or waived).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Sophisticated Investor; Diligence</u>. Spring Lane has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in DVSL and its investment in the Project, and is able to bear the economic risk of such investments for an indefinite period of time. Without limitation of Spring Lane's rights and remedies in connection with this Agreement and the other Transaction Document, Spring Lane has had the opportunity conduct due diligence and to ask questions of its own counsel and of the Parent Parties concerning the Parent Parties and terms and conditions of the transactions contemplated hereby and in each Transaction Document and is satisfied with the results of such diligence and the responses received in respect of such questions. Without derogation of any representation of DVSL herein, based on the foregoing diligence and in reliance on DVSL's representations and warranties herein, Spring Lane has adequate knowledge regarding all aspects of the business of DVSL (including its operations, condition (financial or otherwise), cash flows, assets, liabilities, and prospects) as well as information which is sufficient in all respects to make an informed decision to enter into the transactions contemplated by the Transaction Documents and, subject to the terms and conditions applicable thereto, to make Contributions. Spring Lane is aware that the Class B Membership Interests are subject to the restrictions on transfer imposed by the DVSL Operating Agreement and the state and Federal securities laws of the United States.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Securities Laws Compliance</u>. Spring Lane is an "accredited investor" within the meaning of Rule 501(a) of Regulation D promulgated under the United States Securities Act of 1933, as amended from time to time (the "<u>Securities Act</u>"). The Class B Membership Interests to be acquired by it pursuant to this Agreement are being acquired for its own account and not with a view to any distribution thereof or with any present intention of offering or selling any of such Class B Membership Interests or other securities in DVSL acquired by Spring Lane from time to time (the "<u>Spring Lane Securities</u>") in a transaction that would violate the Securities Act or the securities laws of any state of the United States of America or any other applicable jurisdiction. Spring Lane acknowledges and agrees: (A) that the Class B Membership Interests have not been registered under any Securities Act because DVSL is issuing the Class B Membership Interests in reliance upon the exemptions from the registration requirements of the Securities Acts providing for issuance of securities not involving a public offering and, therefore, the Class B Membership Interests cannot be resold unless they are registered under the Securities Acts or unless an exemption from registration is available, (B) that DVSL has relied upon the fact that the Class B Membership Interests are to be held by Spring Lane for investment purposes only and (C) that the exemptions under the Securities Acts which permit DVSL to sell the Class B Membership Interests to Spring Lane will not be available if the Spring Lane Securities are acquired by a person who purchases its interests in DVSL with a view to distribution. Accordingly, Spring Lane hereby represents, warrants and covenants to DVSL that any subsequent transfer of Class B Membership Interests or after acquired interests, regardless of the manner of sale, to any affiliate or any other person, will be made strictly in compliance with DVSL Operating Agreement, the Securities Act and all other applicable securities laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Patriot Act</u>. Spring Lane is in compliance with (a) the Trading with the Enemy Act, and each of the foreign assets control regulations of the United States Treasury Department and any other enabling legislation or executive order relating thereto, (b) the Patriot Act and (c) other federal or state laws relating to "*know your customer*" and anti-money laundering rules and regulations. No part of any Contribution was obtained directly or indirectly by the making of any payments to any government official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977.

Section 8.2 <u>Parent</u>. Parent represents and warrants to the Parties as of the Effective Date and, except as otherwise provided below, as of each Contribution Date, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Organization; Powers</u>. Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, with all requisite limited liability company power and authority to carry on its business as such business is now conducted, and as proposed to be conducted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Authority; Enforceability</u>. Parent has full power and authority to execute and deliver each Transaction Document to which it is a party and to consummate the transactions contemplated thereby. The execution and delivery by Parent of the Transaction Documents to which it is a party and the consummation by Parent of the transactions contemplated thereby have been duly authorized by all necessary action required on the part of Parent. This Agreement and each other Transaction Document to which Parent are a party have been duly authorized, executed and delivered by Parent. This Agreement and each Transaction Document to which Parent is a party constitutes the valid and binding obligation of Parent, enforceable against Parent in accordance with its terms except as such terms may be limited by (i) bankruptcy, insolvency or similar laws affecting creditors' rights generally; or (ii) general principles of equity, whether considered in a proceeding in equity or at law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>No Violation</u>. The execution, delivery and performance by Parent of this Agreement and each Transaction Document to which it is a party and the consummation of the transactions contemplated thereby do not and will not (a) violate or conflict with any provision of the governance documents of Parent; (b) violate or require any filing or notice under any provision or requirement of any federal, state or local law, statute, judgment, order, writ, injunction, decree, award, rule, or regulation of any Governmental Authority applicable to Parent; (c) violate, result in a breach of, constitute (with due notice or lapse of time or both) a default or cause any obligation, penalty, premium or right of termination to arise or accrue under, any agreement or instruments to which it is a party or by which any of its assets are bound; or (d) result in the creation or imposition of any Lien (including any Permitted Lien), in each case, which violation, breach, default or Lien would materially adversely affect its ability to perform its obligations under the Transaction Documents to which it is a party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Litigation</u>. There are no claims, actions, suits, investigations or proceedings (including any arbitration proceeding) of any nature, at law or in equity, pending or, to the knowledge of Parent, threatened in writing by (with a reasonable basis therefor) or against Parent, or to which Parent is party the directors, officers, employees, agents of Parent, or any of their Affiliates that is reasonably likely to materially adversely affect Parent's ability to execute, deliver and perform each Transaction Document to which it is a party and consummate the transactions contemplated thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>No Consents or Approvals</u>. There is no requirement applicable to Parent to make any filing with, or to obtain the consent or approval of any Person as a condition to the execution, delivery and performance of the Agreement and each Transaction Document to which it is a party or the consummation of the transactions contemplated thereby that has not yet been obtained.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Financial Capacity</u>. Parent, as of the Effective Date has, and will have at all times prior to the Capital Commitment Expiration Date, the financial capacity to pay and perform its obligations under this Agreement, and to make all Contributions contemplated hereby and to otherwise fund the Parent Commitment (assuming, for the purposes of this representation, that all conditions to each Contribution are satisfied or waived).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Sophisticated Investor; Diligence</u>. Parent has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in DVSL and its investments in the Project, and is able to bear the economic risk of such investments for an indefinite period of time. Without limitation of Parent's rights and remedies in connection with this Agreement and the other Transaction Documents. Parent has had the opportunity conduct due diligence and to ask questions of its own counsel and of the Parent Parties concerning the Parent Parties and terms and conditions of the transactions contemplated hereby and in each Transaction Document and is satisfied with the results of such diligence and the responses received in respect of such questions. Without derogation of any representation of DVSL herein, based on the foregoing diligence and in reliance on DVSL's representations and warranties herein, Parent has adequate knowledge regarding all aspects of the business of DVSL (including its operations, condition (financial or otherwise), cash flows, assets, liabilities, and prospects) as well as information which is sufficient in all respects to make an informed decision to enter into the transactions contemplated by the Transaction Documents and, subject to the terms and conditions applicable thereto, to make Contributions. Parent is aware that the Class B Membership Interests are subject to the restrictions on transfer imposed by the DVSL Operating Agreement and the state and Federal securities laws of the United States.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Securities Laws Compliance</u>. Parent is an "accredited investor" within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act. The Class B Membership Interests to be acquired by it pursuant to this Agreement are being acquired for its own account and not with a view to any distribution thereof or with any present intention of offering or selling any of such Class B Membership Interests or other securities in DVSL acquired by Parent from time to time (the "<u>Parent Securities</u>") in a transaction that would violate the Securities Act or the securities laws of any state of the United States of America or any other applicable jurisdiction. Parent acknowledges and agrees: (A) that the Class B Membership Interests have not been registered under any Securities Act because DVSL is issuing the Class B Membership Interests in reliance upon the exemptions from the registration requirements of the Securities Acts providing for issuance of securities not involving a public offering and, therefore, the Class B Membership Interests cannot be resold unless they are registered under the Securities Acts or unless an exemption from registration is available, (B) that DVSL has relied upon the fact that the Class B Membership Interests are to be held by Parent for investment purposes only and (C) that the exemptions under the Securities Acts which permit DVSL to sell the Class B Membership Interests to Parent will not be available if the Parent Securities are acquired by a person who purchases its interests in DVSL with a view to distribution. Accordingly, Parent hereby represents, warrants and covenants to DVSL that any subsequent transfer of Class B Membership Interests or after acquired interests, regardless of the manner of sale, to any affiliate or any other person, will be made strictly in compliance with DVSL Operating Agreement, the Securities Act and all other applicable securities laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Patriot Act</u>. Parent is in compliance with (a) the Trading with the Enemy Act, and each of the foreign assets control regulations of the United States Treasury Department and any other enabling legislation or executive order relating thereto, (b) the Patriot Act and (c) other federal or state laws relating to "*know your customer*" and anti-money laundering rules and regulations. No part of any Contribution was obtained directly or indirectly by the making of any payments to any government official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977.

**ARTICLE IX<br> INDEMNIFICATION**

Section 9.1 Indemnification.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Indemnification by Parent</u>. Subject to the terms and conditions of this <u>Article IX</u>, Parent (the "<u>Parent Indemnifying Party</u>") shall indemnify, defend, reimburse and hold harmless Spring Lane, and its Affiliates, and its and their respective officers, directors, managers, direct and indirect owners, employees, attorneys, contractors and agents (collectively, the "<u>Investor Indemnified Parties</u>"), from and against any and all claims, actions, causes of action, demands, assessments, losses, damages, liabilities, judgments, settlements, Taxes, penalties, costs and expenses (including reasonable attorneys' fees and expenses, including such fees and expenses at trial and on any appeal), of any nature whatsoever (collectively, the "<u>Investor Indemnified Costs</u>"), asserted against, resulting from, imposed upon, or incurred by any or all of Investor Indemnified Parties, by reason of or resulting from or in connection with the breach of the representations, warranties, covenants, obligations or other agreements made by Devco, DVSL or Parent in this Agreement (collectively, "<u>Investor Indemnified Claims</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Indemnification by Investors</u>. Subject to the terms and conditions of this <u>Article X</u>, Spring Lane (for purposes of this <u>Article IX</u>, Spring Lane, an "<u>Investor Indemnifying Party</u>", as the case may be, shall indemnify, defend, reimburse and hold harmless Parent, DVSL and Devco and their respective Affiliates, and their respective officers, directors, managers, direct and indirect owners, employees, attorneys, contractors and agents (collectively, the "<u>Parent Indemnified Parties</u>"; and together with Investor Indemnified Parties, the "<u>Indemnified Parties</u>"), from and against any and all claims, actions, causes of action, demands, assessments, losses, damages, liabilities, judgments, settlements, Taxes, penalties, costs and expenses (including reasonable attorneys' fees and expenses, including such fees and expenses at trial and on any appeal), of any nature whatsoever (collectively, the "<u>Parent Indemnified Costs</u>"; and together with Investor Indemnified Costs, the "<u>Indemnified Costs</u>"), asserted against, resulting from, imposed upon, or incurred by any or all of the Parent Indemnified Parties, by reason of or resulting from or in connection with the breach by Spring Lane in any capacity of the representations, warranties, covenants, obligations or other agreements made by Spring Lane in this Agreement, (collectively, "<u>Parent Indemnified Claims</u>"; and together with Investor Indemnified Claims, the "<u>Indemnified Claims</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Cap</u>. Notwithstanding anything to the contrary herein, except in the case of fraud, (i) in no event shall Parent Indemnifying Party pay or be liable for Investor Indemnified Costs in excess of an amount equal to one hundred percent (100%) of the aggregate amount of all Contributions actually made by Spring Lane, and (ii) in no event shall Investor Indemnifying Party pay or be liable for Parent Indemnified Costs in excess of an amount equal to one hundred percent (100%) of the aggregate amount of all Contributions actually made by Parent.

Section 9.2 <u>Third Party Claims</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Notice of Claim</u>. Within fifteen (15) days after obtaining actual knowledge of a Third Party Claim in respect of which an Indemnified Party may seek indemnification under <u>Section 9.1</u>, such Indemnified Party shall give written notice of the claim to the Indemnifying Party ("<u>Indemnification Notice</u>"). The Indemnification Notice shall state, to the extent known, the nature, basis and status of the Third Party Claim and the amount of the Indemnified Costs claimed. Any failure to deliver an Indemnification Notice to the Indemnifying Party with respect to a Third Party Claim shall not relieve the Indemnifying Party from its obligations to the Indemnified Party under this <u>Article IX</u>, other than to the extent the failure to give timely notice results in an increase in the amount of the Indemnified Costs included in the Indemnified Claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Defense by the Indemnifying Party</u>. The Indemnifying Party shall be entitled to participate in and, subject to <u>Section 9.2(c)</u>, to assume the defense of, any Third Party Claim for which an Indemnified Party intends to seek indemnification, with counsel selected by the Indemnifying Party and reasonably satisfactory to the Indemnified Party; provided, that such claim shall be investigated and defended, and such counsel shall be retained, at the Indemnifying Party's sole expense and, provided, further, that the Indemnified Party shall continue to be entitled to participate in such defense with counsel of its choice at its sole cost and expense unless otherwise specified in this <u>Article IX</u>. Prior to assuming the defense of any Third Party Claim, the Indemnifying Party shall give the Indemnified Party written notice of its election to defend or settle a Third Party Claim ("<u>Defense Election</u>") within thirty (30) days of receiving an Indemnification Notice with respect to such claim. The Indemnified Party shall cooperate to the extent commercially reasonable with the Indemnifying Party in connection with any defense or negotiation of any such action or claim by the Indemnifying Party. The Indemnifying Party shall keep the Indemnified Party fully apprised at all times as to the status of the defense or any settlement negotiations with respect to the Third Party Claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Defense by the Indemnified Party</u>. Notwithstanding the foregoing, in the event that (i) the Indemnifying Party advises an Indemnified Party that the Indemnifying Party will not contest a claim for indemnification hereunder; or (ii) the Indemnifying Party fails to notify the Indemnified Party within thirty (30) days of receipt of an Indemnification Notice, in writing, of its election to defend, settle or compromise, at its sole cost and expense, any such Third Party Claim (or discontinues its defense at any time after it commences such defense), then the Indemnified Party may, at its option, defend, settle or otherwise compromise or pay such Third Party Claim in each case, and all reasonable costs and expenses thereof shall constitute Indemnified Claims hereunder, except to the extent the gross negligence or willful misconduct of the Indemnified Party increased the amount of such Third Party Claim. Unless and until the Indemnifying Party delivers a Defense Election to the Indemnified Party, the Indemnifying Party shall be liable for the Indemnified Party's reasonable costs and expenses arising out of the defense, settlement or compromise of any Third Party Claim subject to indemnification hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>No Settlement Without Consent</u>. The Indemnifying Party shall not be liable for any settlement of any action, claim or proceeding in respect of a Third Party Claim effected without its written consent; provided, that the Indemnifying Party shall not unreasonably withhold such consent. Notwithstanding anything in this <u>Section 9.2</u> to the contrary, the Indemnifying Party shall not, without the Indemnified Party's prior written consent, settle or compromise any claim or consent to entry of judgment in respect thereof that does not include, as an unconditional term of such settlement, the full and complete release of the Indemnified Party.

Section 9.3 <u>Indemnification Payments</u>. Payments for Indemnified Claims shall be made within ten (10) Business Days (a) after the Indemnifying Party receives notice of the claim or, if later, after resolution of any dispute in respect of the claim in the case of claims under <u>Section 9.1</u>; and (b) promptly after the amount of the claim is (i) finally determined by a court of competent jurisdiction; (ii) agreed upon in a settlement agreement or other compromise with the claimant; or (iii) agreed upon by the Indemnifying Party and the Indemnified Parties, in the case of Third Party Claims under <u>Section 9.2</u>. All payments made pursuant to this <u>Section 9.3</u> shall be paid by the obligor in immediately available funds.

Section 9.4 <u>Tax Treatment</u>. Any indemnification payment under this <u>Article IX</u> shall be treated as a nontaxable return of capital to the Indemnified Party for federal income tax purposes unless otherwise required by applicable law. To the extent any indemnification payment made by an Indemnifying Party to an Indemnified Party in respect of any claim pursuant to this <u>Article IX</u> is not treated as a nontaxable return of capital for Tax purposes and instead, is includable as income of the Indemnified Party, the amount of such payment shall be increased by the amount of any federal and applicable state income Tax required to be paid by the Indemnified Party or its Affiliates on the receipt or accrual of such indemnification payment, including, for this purpose, the amount of any such federal and applicable state income Tax required to be paid by the Indemnified Party on the receipt or accrual of the additional amount required to be added to such payment pursuant to this <u>Section 9.4</u>, assuming the full deductibility of such state income taxes for federal income tax purposes, and shall be computed net of any federal or applicable state income tax benefit realized by the Indemnified Party (whether by refund, credit against or reduction in federal or state income Taxes otherwise payable) in the year the Indemnified Costs were incurred or paid (or an earlier year) arising from the incurrence or payment of any such Indemnified Costs. For purposes of the preceding sentence, a Tax benefit realized is a Tax benefit to the extent that it actually results in, or with commercially reasonable steps capable of being taken by the Indemnified Party would actually result in, a refund of, or actual reduction in, Tax.

Section 9.5 <u>Indemnified Party Negligence or Misconduct; Breach</u>. No Indemnified Party shall be indemnified for the Indemnified Costs suffered by such Person to the extent that such Indemnified Costs are attributable to the gross negligence or willful misconduct of such Person or the breach by Parent, Devco or DVSL, or Spring Lane, of its obligations under the Transaction Documents.

Section 9.6 <u>No Consequential Damages</u>. Indemnified Costs are limited to direct and actual damages, and shall not include, and no Indemnifying Party shall have any obligation to pay any Indemnified Party for or in respect of any punitive, consequential damages (other than actual or direct damages) or exemplary damages of any nature (inclusive of lost profits), other than for any such damages that are included in a Third Party Claim. The Indemnified Costs shall be the exclusive legal remedy in respect of Indemnified Claims, other than in connection with the fraud or willful misconduct of a Party, which shall not be subject to such limitations.

**ARTICLE X<br> MISCELLANEOUS**

Section 10.1 <u>Amendments</u>. Any amendment, modification, supplement to, or waiver of any provision of this Agreement may be made only by a written agreement of all of the Parties.

Section 10.2 <u>Notices</u>. All notices or other communications required or permitted to be given under this Agreement shall, subject to the provisions of this <u>Section 11.2</u>, be in writing and shall be considered as properly given (a) if delivered in person; (b) if sent by internationally recognized delivery service; or (c) if sent by electronic mail. Notice given by electronic mail will be deemed to have been validly and effectively given on the day (if a Business Day and, if not, on the next following Business Day) on which it is transmitted before 5:00 p.m., recipient's time, and if transmitted after that time, on the next following Business Day. Any party shall have the right to change its address for notice hereunder to any other location by giving ten (10) days prior written notice to the other parties in the manner set forth herein. Notices required to be given hereunder shall be delivered to the following addresses:

If to Devco:

Soluna DV Devco, LLC

325 Washington Ave. Extension

Albany, NY 12205

Attn: CFO

Phone: \*\*\*\*\*\*\*

Email: DVnotice@soluna.io

If to DVSL:

Soluna DVSL ComputeCo, LLC

325 Washington Ave. Extension

Albany, NY 12205

Attn: CFO

Phone: \*\*\*\*\*\*\*\*\*\*\*

Email: <u>DVnotice@soluna.io</u>

If to Parent:

Soluna Holdings, Inc.

325 Washington Ave. Extension

Albany, NY 12205

Attn: CFO

Phone: \*\*\*\*\*\*\*\*\*\*\*

If to Spring Lane:

Soluna SLC Fund I Projects Holdco, LLC

175 Portland Street

3rd Floor

Boston, MA 02114

Attention: \*\*\*\*\*\*\*\*\*

Email: \*\*\*\*\*\*\*\*\*\*\*\*

with a copy to (which shall not constitute notice):

Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C.

One Financial Center

Boston, MA 02111

Attention: \*\*\*\*\*\*\*\*\*\*\*\*\*

Emails: \*\*\*\*\*\*\*\*\*\*\*\*\*\*

Section 10.3 <u>Binding Effect; Assignment</u>. The terms and conditions of this Agreement shall be binding upon and inure to the benefit of DVSL, Devco, Parent and Spring Lane and their respective successors and permitted assigns. In no event shall any party hereto assign this Agreement other than (i) in connection with any permitted assignment under the DVSL Operating Agreement, (ii) as collateral pursuant to the Financing Documents, or (iii) with the prior written consent of the other parties hereto.

Section 10.4 <u>No Finder's Fees</u>. For the avoidance of doubt, Spring Lane shall not have any direct liability for any commission or compensation in the nature of a finder's or broker's fee payable by Devco or any of its Affiliates in respect of the Project, and all such fees shall be included in the Project Budgets.

Section 10.5 <u>Entire Agreement</u>. This Agreement, together with all schedules and exhibits hereto and the other Transaction Documents, constitute the entire agreement and understanding of the parties with respect to the subject matter hereof and supersede any and all prior negotiations, correspondence, agreements, understandings, duties or obligations between the parties, written or oral, with respect to the subject matter hereof.

Section 10.6 <u>Delay and Waiver</u>. Except as provided herein, no delay or omission to exercise any right, power or remedy accruing to Party hereunder or under any other Transaction Document shall impair any such right, power or remedy of the Party, nor shall it be construed to be a waiver of any breach or default, or an acquiescence thereof, nor shall any waiver of any single default or other breach be deemed a waiver of any other default or other breach. Any waiver, indulgence, permit, consent or approval of any kind or character by a Party of any event of default or breach under this Agreement or any other Transaction Document, or any waiver by a Party of any provision or condition of this Agreement or any other Transaction Document, must be in a writing expressly referencing this Agreement and shall be effective only to the extent in such writing specifically set forth.

Section 10.7 <u>Severability</u>. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

Section 10.8 <u>Governing Law; Jurisdiction and Service of Process</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Any dispute or other matter arising out of or in connection with this Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without reference to principles of conflict of laws or choice of laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each of the parties irrevocably consents to the non-exclusive jurisdiction of the courts of the State of New York and of any federal court located in the Southern District of New York, in each case located in Manhattan, in connection with any suit, action or other proceeding arising out of or relating to this Agreement or the transactions contemplated herein, agrees to waive any objection to venue in the State and County of New York. To the extent permitted by law, service of process in connection with any such proceeding may be effected by mailing in the same manner provided in <u>Section 11.2</u> or by any other manner prescribed or permitted by Applicable Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Each party irrevocably waives any and all right to trial by jury in any action or proceeding arising out of or in connection with this Agreement.

Section 10.9 <u>Payment of Fees and Costs</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) DVSL shall reimburse Spring Lane or pay directly the reasonable and documented third party and out-of-pocket fees and costs incurred by Spring Lane and its Affiliates, including the legal fees and expenses of counsel for Spring Lane, related to drafting and negotiating this Agreement, the DVSL Operating Agreement and the Project Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) DVSL shall reimburse Spring Lane the reasonable and documented third party and out-of-pocket fees and costs incurred by Spring Lane and its Affiliates in connection with the due diligence of the Project up to $50,000 or as otherwise agreed upon in writing between Spring Lane and Parent. Such reimbursement shall be paid by the Company to Spring Lane, or an Affiliate designated by Spring Lane, on the date that the First Contribution is made by any Member and shall be deemed a Project Cost and shall be included in the Project Budget.

Section 10.10 <u>Patriot Act</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Spring Lane hereby notifies DVSL and Devco that pursuant to the requirements of the Patriot Act, it may be required to obtain, verify and record information that identifies each Transaction Party, and each affiliate thereof, which information includes the name and address of each such Person, and other information that will allow Spring Lane to identify each Transaction Party in accordance with the Patriot Act, and DVSL and Devco shall cooperate upon Spring Lane's request to promptly provide such information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Company hereby notifies Spring Lane that pursuant to the requirements of the Patriot Act, it may be required to obtain, verify and record information that identifies each of Spring Lane and each affiliate thereof, which information includes the name and address of each such person, and other information that will allow DVSL to identify each such person in accordance with the Patriot Act, and Spring Lane shall cooperate upon DVSL's request to promptly provide such information.

Section 10.11 <u>Further Assurances</u>. Each party shall promptly execute, deliver, file, or record such agreements, instruments, certificates and other documents and to do and perform such other and further acts and things as any other party may reasonably request or as may be otherwise necessary or proper to consummate the transactions contemplated hereby and to carry out the purposes and provisions of this Agreement.

Section 10.12 <u>Counterpart; Electronic Signatures</u>. This Agreement may be executed in any number of counterparts, each of which may be delivered by facsimile transmission or electronically in .PDF format and each of which shall be an original but all of which together will constitute one instrument, binding upon all parties hereto, notwithstanding that all of such parties may not have executed the same counterpart. Delivery of an electronic counterpart shall be effective as manual delivery thereof.

Section 10.13 <u>Termination; Form of Project Documents</u>. This Agreement shall terminate automatically without any action required by any Party, if the Parties do not agree upon the forms of all agreements and documents contemplated hereby (including, without limitation, the form of Shared Facilities Agreement, the form of Administrative Services Agreement, EPC agreement, O&M contract and each other agreement contemplated thereunder, and the project O&M agreement and EPC agreement), within forty-five (45) days after the date hereof. Such forty-five (45) day period may be extended by mutual written agreement between the Parties. The Parties shall use commercial reasonable best efforts to agree upon a form of Administrative Services Agreement and a form of Shared Facilities Agreement, which shall be attached as <u>Exhibit B</u> and <u>Exhibit C</u> hereto, respectively, and all agreements and documents contemplated thereby. This Agreement may also be terminated upon mutual written consent of the Parties at any time prior to the Capital Commitment Expiration Date.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Contribution Agreement as of the date first written above.

---

| |
|:---|
| **Soluna DVSL ComputeCo, LLC** |
| **By:** |
| By: |
| Name: |
| Title: |

---

[Signature Page to Amended and Restated Contribution Agreement]

---

| |
|:---|
| **Soluna DV Devco, LLC** |
| By: |
| Name: |
| Title: |

---

[Signature Page to Amended and Restated Contribution Agreement]

---

| |
|:---|
| **Soluna Holdings, Inc.** |
| By: |
| Name: |
| Title: |

---

[Signature Page to Amended and Restated Contribution Agreement]

---

| |
|:---|
| Soluna SLC Fund I Projects Holdco, LLC |
| By: |
| By: |
| Name: |
| Title: |

---

[Signature Page to Amended and Restated Contribution Agreement]

**<u>EXHIBIT A</u>**

**<u>Form of Contribution Request</u>**

**CONTRIBUTION REQUEST**

(Delivered pursuant to <u>Section 2.2(e)</u> of the Amended and Restated Contribution Agreement)

Date: **[ ]**

Requested Contribution Date: **[ ]**

[__________]

c/o [ ]<br> [ADDRESS]<br> [CITY, STATE ZIP]<br> Attn:<br> Email:

Re: <u>Soluna DVSL ComputeCo, LLC – Contribution Request</u>

This Contribution Request is delivered to you pursuant to that certain Amended and Restated Contribution Agreement dated as of February ___, 2023 (the "<u>Contribution Agreement</u>") by and among Soluna DV Devco, LLC, a Delaware limited liability company ("<u>Devco</u>"), Soluna Holdings, Inc., a Nevada corporation ("<u>Parent</u>"), Soluna DVSL ComputeCo, LLC, a Delaware limited liability company ("<u>DVSL</u>"), and Soluna SLC Fund I Projects Holdco, LLC, a Delaware limited liability company ("<u>Spring Lane</u>", and together with Devco, Parent and DVSL, the "<u>Parties</u>"). Capitalized terms used but not otherwise defined in this Contribution Request shall have the meaning assigned to such terms in the Contribution Agreement, and the terms and provisions of <u>Section 1.2</u> of the Contribution Agreement shall apply as though set forth herein.

[DVSL / The Requisite Class B Members] submit[s] this Contribution Request pursuant to <u>Section 2.2(e)</u> of the Contribution Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The
 date of the requested Subsequent Contribution is [________] <sup>1</sup> .

2. The
 aggregate amount of the Subsequent Contribution is [$________].

3. The
 proceeds of the proposed Subsequent Contribution will be applied to the Project Costs of
 the Project [and if to Project Costs that are Approved Expenses, the amount of such Approved
 Expenses to be paid from the requested Subsequent Contribution is $[______], as set forth
 below in an amount (consistent with the timing and source of funds of such reimbursement
 as previously agreed between Spring Lane and Devco) not to exceed, in the aggregate, the
 Development Reimbursement].

<sup>1</sup> NTD: Date must be at least [10] business days after the date of the Contribution Request.

Exhibit A-1

______________________________________________

______________________________________________

______________________________________________

______________________________________________

______________________________________________

______________________________________________

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. We
 request that [______] disburse the proceeds of the Subsequent Contribution to the following
 payees in the following amounts:

Payee:

Payees' Address:

Credit

Name of Account

Amount:

Bank:

ABA:

Account #:

The undersigned further confirms and certifies to [_____] that, as of the date of the requested Subsequent Contribution:

(a) The conditions precedent to this Subsequent Contribution set forth in <u>Section 4.2</u> of the Contribution Agreement have been satisfied or waived in accordance with the terms thereof.<sup>2</sup>

(b) The proceeds of the proposed Subsequent Contribution will be applied to pay Project Costs in accordance with the Project Budget, and if to Project Costs that are Approved Expenses, shall be applied in a manner consistent with the timing and sources of funds for such reimbursements as previously agreed between Spring Lane and Devco, and shall be in an amount not to exceed, in the aggregate, the Development Reimbursement.

(c) [No portion of the proposed Subsequent Contribution shall be used or applied in respect of any Cost Overrun Contingency. / The proceeds of the proposed Subsequent Contribution shall be used in respect of a Cost Overrun Contingency, and all of the conditions precedent set forth in <u>Section 4.3</u> of the Contribution Agreement have been fully satisfied by or waived in accordance with the terms thereof.]

(d) The amount of the proposed Subsequent Contribution, when aggregated with all other Capital Contributions made under the Contribution Agreement, does not exceed the Parent Commitment and the Spring Lane Commitment. The amount of the proposed Subsequent Contribution, when aggregated with all other Capital Contributions made under the Contribution Agreement, does not exceed the Parent Commitment and the Spring Lane Commitment. The amount of the proposed Subsequent Contribution, when aggregated with all other Capital Contributions made under the Contribution Agreement, does not exceed the Parent Commitment and the Spring Lane Commitment.

**[**Signature page follows*.***]**

<sup>2</sup> NTD: Any subsequent contribution, including with respect to cost overrun contingencies, should require that all conditions precedents are met, unless waived.

Exhibit A-2

IN WITNESS WHEREOF, the undersigned have caused this Contribution Request to be executed and delivered as of the date first above written.

---

| |
|:---|
| **Soluna DVSL ComputeCo, LLC** |
| By: |
| Name: |
| Title: |

---

Exhibit A-3

**<u>EXHIBIT B</u>**

**<u>FORM OF ADMINISTRATIVE SERVICES AGREEMENT</u>**

[See Attached]

Exhibit B -1

**<u>EXHIBIT C</u>**

**<u>FORM OF SHARED FACILITIES AGREEMENT</u>**

Exhibit C -1

<u>SCHEDULE 1</u>

<u>Closing Consents</u>

&nbsp;&nbsp;&nbsp;&nbsp;1. Consent
 of under the Securities Purchase Agreement dated as of October 20, 2021 between Soluna Holdings,
 Inc. (f/k/a Mechanical Technology, Incorporated) and each purchaser identified on the signature
 pages thereto, as amended, supplemented or otherwise modified from time to time, and the
 secured convertible note issued thereunder.

<u>SCHEDULE 2</u>

<u>Insurance</u>

**Parent**, **Devco and SLC Computing Company Insurance – Construction and Operation Period**

Parent, Devco and SLC Computing Company, to the extent applicable, will each obtain insurance for itself and each of its Affiliates coverage with responsible insurance providers (as evidenced by an AM best rating of A- I VIII or better) on terms and in amounts sufficient to comply with all Project Documents and any Project Documents and Financing Documents. All policies that are written on a claims made form must be maintained by for at least five (5) years following the termination of this Agreement. The insurance coverage for each shall include, at a minimum but not be limited to, the following:

(a) **Workers' Compensation**. Workers' compensation insurance in compliance with appropriate federal and state laws, and employers liability insurance with limit of not less than $1,000,000 per accident or disease for each employee;

(b) **Property Insurance** – property insurance in an amount not less than the full replacement cost of all property owned by SLC Computing Company or its Affiliates under commercially reasonable terms and deductibles.

(c) **Commercial General Liability**.

With respect to construction: Commercial general liability insurance, occurrence form, including, but not limited to, contractual coverage for all of the provisions of this Agreement, with limits of not less than $1,000,000 per occurrence with a $2,000,000 aggregate; and

With respect to operations: Commercial general liability insurance, occurrence form, including, but not limited to, contractual coverage for all of the provisions of this Agreement, with limits of not less than $1,000,000 per occurrence with a $2,000,000 aggregate;

(d) **Automobile Liability**. On or prior to the commencement of operations, automobile liability insurance, including vehicles owned, hired and non-owned, with a combined single limit of not less than $1,000,000 per accident;

(e) **Excess Liability**. Excess liability insurance, umbrella form, shall carry coverage in excess of the limits provided for in the above policies except employer's liability, with a limit of not less than (i) during construction, $10,000,000 and (ii) during operations, $5,000,000;

**(f) Builder's Risk.** In an amount at least equal to $57,363,601, which shall cover the Project as well as the project owned by Soluna DV ComputeCo, LLC, with deductible periods and term to be agreed.

**(g) Director's and Officer's.** Coverage in an amount and on terms agreed upon by Spring Lane and Parent in writing.

.

**(h) Errors and Omissions**. To be provided by the EPC Contractor in amounts to be determined by the Soluna's insurance advisors.

**(i) Title Insurance**. Coverage in an amount and on terms agreed upon by Spring Lane and Parent in writing.

**(j) Cybersecurity**. Coverage in an amount and on terms agreed upon by Spring Lane and Parent in writing and to the extent available on commercial reasonable terms.

**<u>Schedule 7.8</u>**

**Tax Matters**

None.

## Exhibit 10.68

**Exhibit 10.68**

<u>Portions of this Document which are competitively sensitive have been redacted.</u>

 **

***<u>Execution Version</u>***

 

**AGREEMENT FOR ELECTRIC SERVICE TO**

**SOLUNA DV SERVICES, LLC**

**BY AND BETWEEN**

**SOLUNA DV SERVICES, LLC**

**AND**

**LIGHTHOUSE ELECTRIC COOPERATIVE, INC.**

**EFFECTIVE DATE: FEBRUARY 24, 2023**

**TABLE OF CONTENTS**

I. DEFINITIONS 2

II. TERM 10

III. MEMBERSHIP. 11

IV. CONDITIONS 11

V. TERMS
 OF SERVICE 13

VI. CUSTOMER
 FACILITIES 15

VII. RIGHT
 OF ACCESS 16

VIII. COMPLIANCE
 WITH APPLICABLE LAW 16

IX. METERING
 AND DISCONNECTING CIRCUIT BREAKER 17

X. PERFORMANCE
 SECURITY 19

XI. MONTHLY
 AND WEEKLY CHARGES 20

XII. INVOICES
 AND PAYMENT 21

XIII. TAXES 23

XIV. RESALE 23

XV. FORCE
 MAJEURE 23

XVI. INDEMNIFICATION,
 LIMITATION OF LIABILITY, AND DISCLAIMER OF WARRANTIES 24

XVII. FINES
 AND PENALTIES 27

XVIII. REPRESENTATIONS
 AND WARRANTIES 27

XIX. BREACH/DISCONTINUANCE
 OF SERVICE 29

XX. TERMINATION 30

XXI. CONFIDENTIALITY. 32

XXII. DISPUTES 33

XXIII. FORWARD
 CONTRACT AND MASTER NETTING AGREEMENT 34

XXIV. ASSIGNMENT 34

XXV. NOTICE 34

XXVI. ENTIRE
 AGREEMENT 35

XXVII. WAIVER. 36

XXVIII. THIRD
 PARTY BENEFICIARIES 36

XXIX. ADDITIONAL
 TERMS 36

XXX. SURVIVAL;
 EFFECT OF TERMINATION OR EXPIRATION 37

XXXI. MULTIPLE
 COUNTERPARTS/FAX OR EMAIL SIGNATURES 37

XXXII. CHOICE
 OF LAW AND VENUE 37

XXXIII. JURY
 WAIVER. 37

XXXIV. NON-WAIVER. 37

XXXV. AMENDMENTS 38

XXXVI. RULES
 OF CONSTRUCTION 38

**AGREEMENT FOR ELECTRIC SERVICE TO SOLUNA DV SERVICES, LLC**

This contract for electric service (this "Agreement") dated as of February 24, 2023 (the "Effective Date"), is by and between Lighthouse Electric Cooperative, Inc., a Texas cooperative corporation (hereinafter referred to as "Cooperative"), and Soluna DV Services, LLC, a Nevada limited liability company, a subsidiary of Soluna Computing, Inc. (hereinafter referred to as "Customer"). Cooperative and Customer are individually referred to as "Party" and collectively referred to as the "Parties."

**WHEREAS**, Briscoe Wind Farm, LLC, a Delaware limited liability company ("Briscoe") owns and operates an approximately one hundred and fifty (150) MW windfarm located at or near Briscoe and Floyd Counties, Texas, together with all materials, systems, structures, features and improvements necessary to produce electricity at such facility (the "Facility") and associated Briscoe Interconnection Facilities (as defined below);

**WHEREAS**, Customer desires to develop, install, and operate several modular datacenters on a single modular data center farm (the "MDC Farm") that will be (a) built in phases, with the first phase having an estimated peak demand of the lesser of approximately twenty-five (25) MW or the peak demand approved by ERCOT (the "First Phase") and the completed MDC Farm having an estimated peak demand of up to approximately one hundred and fifty (150) MW, and (b) electrically interconnected to the Briscoe Interconnection Facilities (defined below) behind the Facility's Point of Interconnection (as defined below) to the ERCOT Transmission System (as defined below);

**WHEREAS**, GSEC (as defined below), Cooperative's full requirements wholesale provider, has by separate agreement arranged to purchase power at wholesale from Briscoe or to deliver and purchase power from the ERCOT (as defined below) market to serve Cooperative with electric power and energy for resale to Customer for service to the MDC Farm;

**WHEREAS**, by this Agreement, the Parties have agreed to contract for the provision of electric power and energy to be provided by Cooperative to Customer at the Delivery Point (as defined below) for service to the MDC Farm;

**WHEREAS**, Briscoe and Customer wish to settle the Customer's Load (defined below) and the Facility's Net Energy, as defined herein, on a net basis with ERCOT in accordance with ERCOT Nodal Protocol § 10.3.2.3 and Applicable Law ("Net Metering");

**WHEREAS**, Customer requires Service (as defined below) from the Cooperative at the Delivery Point commencing on the Service Date (as defined below); and

**WHEREAS**, Customer wishes to become a member of Cooperative, as further provided herein:

**NOW THEREFORE,** in consideration of the monies to be paid by Customer to Cooperative, and the mutual covenants, agreements, recitals, and obligations herein, the Parties do hereby agree as follows:

**I.** **DEFINITIONS** 

"Affiliate" means, in relation to any Party, (i) any other Person that Controls, is under the Control of, or is under common Control with the named Party and (ii) any Person that, directly or indirectly, is the beneficial owner of fifty percent (50%) or more of any class of equity securities of, or a membership, joint venture, partnership or other ownership interest in, the named Party or of which the named Party is directly or indirectly the owner of fifty percent (50%) or more of any class of equity securities or other ownership interest.

"Agreement" has the meaning given in the introductory paragraph.

"Applicable Law(s)" means all laws, statutes, treaties, codes, ordinances, regulations, certificates, orders, licenses and permits of any Governmental Authority, or other executive, legislative, judicial, or administrative action of a Governmental Authority, including a final decree, judgment or order of a court, that are applicable to a Party, the business of a Party, the MDC Farm, or the Facility, or the transactions contemplated by this Agreement now in effect or hereafter enacted, amendments to or interpretations of any of the foregoing by a Governmental Authority having jurisdiction, and all applicable judicial, administrative, arbitration and regulatory decrees, judgments, injunctions, writs, orders, awards or like actions, including, without limitation, environmental laws pertaining to the facilities or the MDC Farm or the Service or operation thereof, which standards or criteria must be met in order for the Service or facilities to be lawfully provided or operated. Applicable Laws includes the ERCOT Protocols and the requirements of NERC and the TRE.

"Associated Equipment" has the meaning given in Section IX(B).

"Aux Energy" means Energy delivered to Briscoe to power auxiliary facilities and station load pursuant to the Aux Energy Retail Service Agreements.

"Aux Energy Retail Service Agreements" has the meaning given to such term in the GSEC Briscoe PPA.

"Bankrupt" means, with respect to a Party, such Party (i) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar law; (ii) makes a general assignment for the benefit of creditors; (iii) is dissolved (other than pursuant to a consolidation, amalgamation, or merger); (iv) has been adjudicated bankrupt; (v) becomes subject to an order, judgment or decree for relief, entered in an involuntary case, without the application, approval or consent of such Party by any court of competent jurisdiction appointing a receiver, trustee, assignee, custodian or liquidator, for a substantial part of any of its assets and such order, judgment or decree shall continue unstayed and in effect for any period of ninety (90) consecutive days; (vi) has failed to remove an involuntary petition in bankruptcy filed against it within ninety (90) days of the filing thereof, or (vii) becomes subject to an order for relief under the provisions of the United States Bankruptcy Code, 11 U.S.C. § 301.

"Bankruptcy Code" means Title 11 of the United States Code. "Briscoe" has the meaning given in the Recitals hereof.

"Briscoe Interconnection Facilities" means the physical equipment utilized by the Facility to interconnect to the Delivery Point, including transmission lines, transformers and associated equipment, substations, relay and switching equipment and safety equipment.

"Business Day" means any day other than Saturday, Sunday or any day on which national banks in Dallas, Texas are authorized or required to close.

"Change in Law" means the adoption, enactment, promulgation or issuance of, a change in, or a new or changed interpretation by a Governmental Authority of, any Applicable Law after the Effective Date.

"Claims" means any and all demands, claims, judgments, obligations, liabilities, liens, causes of action, lawsuits, arbitrations, mediations, investigations or proceedings, whether at law or in equity.

"Conditions Satisfaction Date" has the meaning set forth in the GSEC Briscoe PPA. "Cooperative" has the meaning given in the introductory paragraph.

"Confidential Information" means all oral and written information (i) relating to the business, strategy, policies, prospects, assets or plans of a Party or any members of a Party's or GSEC's Group, in each case pertaining to this Agreement and the transactions contemplated hereby, (ii) relating to load and customer information of GSEC or a Party, and (iii) all other information identified as confidential provided by a Party pursuant to this Agreement. With respect to clauses (i) and (ii), information shall be Confidential Information whether or not it is marked as confidential by a Party. Notwithstanding the foregoing, only the price terms in this Agreement shall be Confidential Information. The following information does not constitute Confidential Information: (a) information that is or becomes generally available to the public other than as a result of a disclosure by the receiving Party in violation of this Agreement or any other obligation of confidentiality; (b) information that was already known by the receiving Party on a non-confidential basis prior to this Agreement; (c) information that becomes available to the receiving Party on a non-confidential basis from a source other than the disclosing Party if such source was not, to the knowledge of the receiving Party, subject to any prohibition against disclosing the information to the receiving Party; (d) information that the receiving Party develops independently without using the Confidential Information; and (e) information that the disclosing Party approves for release in writing.

"Control" (including the terms "controls", "controlled", "under the control of" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Party, whether through ownership interest, by contract or otherwise.

"Cooperative Group" means Cooperative and its directors, officers, managers, members, employees, attorneys-in-fact and agents.

"\*\*\*\*\*\* Interval" has the meaning set forth in the GSEC Briscoe PPA.

"\*\*\*\*\*\*Net Energy" means, for any period during the Term, the Net Energy delivered by the Facility to GSEC for resale to Cooperative to serve Customer's Load during \*\*\*\*\*\*Intervals, as measured at the MDC Meter.

"\*\*\*Net Energy Price" means a price of $\*\*\*\*/MWh. "Customer" has the meaning given in the introductory paragraph. "Customer Facilities" has the meaning given in Section VI(A).

"Customer Ground Lease" means the Lease Agreement by and between Customer and Alice Faye Grabbe dated as of February 24, 2023.

"Customer Group" means Customer and its directors, officers, managers, members, employees, attorneys-in-fact, and agents.

"Customer's Load" means the load of the MDC Farm. "DCB" has the meaning given in Section IX(E).

"DCB Consultant" has the meaning given in Section IX(E).

"DCB Consultant Agreement" has the meaning given in Section IX(E).

"Delivery Point" means the EPS Meter located where Energy is delivered to the MDC Farm, which shall be the location where the Facility is electrically interconnected with the ERCOT Transmission System, as defined in the ERCOT Protocols and the Interconnection Agreement, and as specifically described in Exhibit D.

"Effective Date" has the meaning given in the introductory paragraph. "Energy" means alternating current electric energy measured in MWh.

"Environmental Attributes" means the environmental and other attributes as may exist from time to time that differentiate the Facility or the Energy generated by the Facility from energy generated by fossil fuel or nuclear powered generating units, and any and all credits, benefits, emissions reductions, offsets, and allowances, howsoever entitled, attributable to the generation from the Facility, and its displacement of conventional energy generation, including (i) any avoided emissions of pollutants to the air, soil or water such as sulfur oxides (SOx), nitrogen oxides (NOx), carbon monoxide (CO) and other pollutants designated by the United States Environmental Protection Agency or other Governmental Authorities, (ii) all emissions reduction credits; (iii) any avoided emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride and other greenhouse gases (GHGs) that have been determined by the United Nations Intergovernmental Panel on Climate Change, or otherwise by law, to contribute to the actual or potential threat of altering the earth's climate by trapping heat in the atmosphere, (iv) credits, benefits or allowances resulting from the compliance of the Facility or Energy from the Facility with the laws, rules and standards of the United Nations Framework Convention on Climate Change (the "UNFCCC") or the Kyoto Protocol of the UNFCCC or crediting "early action" with a view thereto, and (v) all RECs.

"EPS Meter" means the ERCOT-Polled Settlement Meter, as such term is defined in the ERCOT Protocols, that is assigned to Briscoe for purposes of settling Export Energy.

"EPS Metering Design" has the meaning assigned to such term in the ERCOT Protocols. "ERCOT" means the Electric Reliability Council of Texas, a non-profit corporation, and

its successor(s) in responsibilities and function.

"ERCOT Protocols" means the ERCOT Nodal Protocols, Operating Guides, Planning Guides, and other binding documents adopted by ERCOT, including any attachments or exhibits referenced in such documents, as amended from time to time, that contain the scheduling, operating, planning, reliability, and settlement policies, rules, guidelines, procedures, standards and criteria of ERCOT.

"ERCOT Settlement Metering Operating Guide" means the ERCOT Settlement Metering Operating Guide dated June 1, 2022, as may be amended from time to time.

"ERCOT Transmission System" means the interconnected Transmission Service Provider- owned facilities that are used for transmission of electricity in ERCOT.

"Event of Default" has the meaning given in Section XIX.

"Export Energy" means, for any period during the Term, the Energy generated by the Facility and exported to the ERCOT Transmission System at the EPS Meter.

"Extension Term" has the meaning assigned to such term in Section II(A). "Facility" has the meaning given in the Recitals.

"Federal Power Act" means the Federal Power Act, as amended, 16 U.S.C. §§ 791a, et seq.

"Finance Entity(ies)" means any and all individuals or entities of any type, including their

authorized agents and representatives, providing any form of direct or indirect debt or equity financing, including debt guaranty or assurance, to a Party or Indemnitee, and including senior or subordinated debt, lease or equity financing (including tax equity financing).

"Firm Load Shed" means ERCOT-directed curtailment of retail customers during Energy Emergency Alert (EEA) Level 3 or a transmission emergency, as further described in the ERCOT Protocols.

"First Phase" has the meaning given in the Recitals.

"Forced Outage" means an unexpected failure of one or more components of the Facility that prevents Briscoe from making power available to serve Customer's Load.

"Force Majeure" means an event or circumstance which (i) prevents a Party from performing its obligations under this Agreement, (ii) which event or circumstance is beyond the reasonable control of such Party, (iii) was not reasonably foreseeable by such Party, or if reasonably foreseeable could not have been overcome with the exercise of due diligence, (iv) is not the result of such Party's negligence or fault, and (v) which by the exercise of due diligence, such Party is unable to overcome or avoid or cause to be avoided. Without limiting the prior sentence, Force Majeure shall include (provided the criteria in the first sentence are met) failure of transmission or distribution facilities or other equipment, partial or complete forced outage, breakage of or damage to machinery or equipment, acts of God, fire, tornado, earthquake, flooding, explosion, severe weather conditions including ice and wind, civil disturbance, acts of the public enemy, strikes or embargoes, action or restraint by court order or Governmental Authority, riot, insurrection, war, labor dispute, natural disaster, pandemic or epidemic, vandalism, terrorism, and sabotage; provided, however, under no circumstances shall the following circumstances or conditions constitute a Force Majeure: any Change in Law addressed in Section XX(B), economic hardship, or change in market conditions affecting the economics of any Party.

"Governmental Authority" means any federal, state, local or municipal governmental, quasi-governmental, regulatory or administrative agency, commission, body or other authority, including a court, exercising or entitled to exercise any administrative, executive, judicial, legislative, policy, regulatory or taxing authority or power, or any court or governmental tribunal or any other entity with legal authority as to the electric system in the geographic area in which the MDC Farm is located, or their respective successor entities. "Governmental Authority" includes any independent system operator, reliability organization, public utility commission, or quasi-governmental or quasi-regulatory authority having jurisdiction over the Parties, the Facility, or the subject matter of this Agreement, including NERC, ERCOT, PUCT and TRE, or their successor entities. For the avoidance of doubt, "Governmental Authority" excludes GSEC, Briscoe, Customer and Cooperative.

"Group" means, collectively, the Customer Group, GSEC Group and the Cooperative Group, or individually, the Customer Group or the GSEC Group or the Cooperative Group, as the case may be.

"GSEC" means Golden Spread Electric Cooperative, Inc., an electric generation and transmission cooperative providing wholesale electric service to Cooperative on the Service Date.

"GSEC Briscoe PPA" means that certain Wind Power Purchase Agreement entered into by GSEC and Briscoe contemporaneously with this Agreement.

"GSEC Group" means GSEC and its directors, officers, managers, members, employees, attorneys-in-fact and agents.

"Import Energy" means, for any period during the Term, Energy and Ancillary Services (Ancillary Services as defined by the ERCOT Protocols) purchased from the ERCOT wholesale market through the Delivery Point by GSEC for resale to Cooperative to serve Customer's Load when the Energy generated by the Facility is insufficient to meet the total combined demand of the Customer's Load and the Facility, as measured at the Delivery Point.

"Import Energy Charges" means all charges, penalties, fees, or other costs assessed by ERCOT or any other entity under Applicable Law based on the Import Energy for the relevant Settlement Interval, including any resettled or restated amounts.

"Import Energy Fee" means $\*\*\*\*\*\*/MWh.

"Import Energy Price" means the SPP plus all charges and fees assessed by ERCOT or any other entity under Applicable Law based on the portion of usage metered at the Delivery Point that is attributable to Import Energy for the relevant Settlement Interval, including any resettled or restated amounts.

"Indemnified Losses" means any and all losses, damages, costs, expenses, liabilities, fines, penalties or judgments of whatever kind or character incurred by a Person or Party with respect to a Claim, including reasonable attorneys' fees, court costs and other reasonable costs and expenses of litigation.

"Indemnitee" has the meaning assigned to such term in Section XVI(A)(i).

"Indemnitor" has the meaning assigned to such term in Section XVI(A)(i). "Interconnection Agreement" means that certain ERCOT Standard Generation

"Interconnection Agreement by and between Briscoe and the Transmission Service Provider (as successor-in-interest to Sharyland Utilities, L.P.) for the Facility, dated as of December 20, 2013, as amended by that certain Amendment No. 1 ERCOT Standard Generation Interconnection Agreement, dated as of October 14, 2014, and as may be amended further from time to time.

"Interest Rate" has the meaning assigned to such term in Section XII(A).

"Market Price Cap" means an SPP of $\*\*\*\*/MWh, which may be adjusted by the mutual written agreement of Cooperative, Customer and GSEC.

"Material Adverse Effect" means, with respect to any Person, a material adverse effect on the ability of such Person to achieve compliance with Applicable Law with respect to transactions made pursuant to this Agreement, or, with respect to Cooperative: (i) a decrease in the net revenue on a per megawatt-hour basis received by Cooperative under this Agreement of $\*\*\*\*\*/MWh or more; or (ii) an increase in unrecovered net cost for GSEC or Cooperative on a per megawatt-hour basis of $\*\*\*\*\*\*/MWh or more arising from its performance under this Agreement or the GSEC Briscoe PPA.

"MDC Farm" has the meaning given in the Recitals hereof.

"MDC Interconnection Facilities" means the electrical delivery facilities to be owned and operated by Customer that are used to deliver power from the Briscoe Interconnection Facilities to the MDC Farm, as further described in Exhibit A.

"MDC Meter" has the meaning set forth in Section IX(B).

"Meter" means the EPS Meter or the MDC Meter, as the case may be.

"MW" means megawatt of alternating current.

"MWh" means megawatt-hour of alternating current.

"NERC" means the North American Electric Reliability Corporation and the applicable regional entities performing functions through delegation agreements with NERC, each an entity charged with developing, monitoring, assessing and enforcing compliance with reliability standards pursuant to Section 215 of the Federal Power Act, and their successors in responsibilities and function.

"NERC Reliability Standard(s)" means a requirement or requirements, approved by the United States Federal Energy Regulatory Commission under Section 215 of the Federal Power Act, or approved or recognized by an applicable Governmental Authority in other jurisdictions, to provide for Reliable Operation of the Bulk-Power System (as such terms are defined by NERC). The term includes requirements for the operation of existing Bulk-Power System facilities, including cybersecurity protection, and the design of planned additions or modifications to such facilities to the extent necessary to provide for Reliable Operation of the Bulk-Power System, but the term does not include any requirement to enlarge such facilities or to construct new transmission capacity or generation capacity.

"Net Energy" means, for any period during the Term, Energy generated by the Facility and delivered to GSEC for resale to Cooperative to serve Customer's Load, measured in the manner set forth in Exhibit B.

"Net Energy Fee" means $\*\*\*\*\*\*/MWh.

"Net Energy Security" has the meaning set forth in the Performance Security Agreement.

"Net Metering" has the meaning provided in the Recitals.

"Netting Agreement" has the meaning set forth in Section XII(E).

"Operating Procedure" has the meaning set forth in Section IX(I).

"Performance Security Agreement" has the meaning set forth in Section X.

"Person" means an individual, partnership, corporation, limited liability company, joint venture, association, trust, unincorporated organization, Governmental Authority or other form of entity or organization.

"Point of Interconnection" means the location where the Facility is electrically interconnected with the ERCOT Transmission System, as defined in the ERCOT Protocols and the Interconnection Agreement and as specifically described in Exhibit B of the GSEC Briscoe PPA.

"Power Generation Company" means a power generation company as defined in TEX. UTIL. CODE § 31.002(10) and 16 Texas Administrative Code § 25.5(82), in each case as may be amended from time to time.

"Primary Term" has the meaning assigned to such term in Section II(A).

"PUCT" means Public Utility Commission of Texas, and its successor(s) in responsibilities and function.

"Related Agreement" means the GSEC Briscoe PPA, the Performance Security Agreement any Netting Agreement, and any Net Energy Security issued in connection with the Performance Security Agreement.

"Service" means the service contracted for by the Parties pursuant to this Agreement. "Service Date" means the date on which all conditions precedent applicable to the First

Phase as set forth in Section IV and Section IX(A) have been met or waived by both Parties and the MDC Farm is capable of accepting deliveries of Net Energy and Import Energy over the MDC Interconnection Facilities. Such Service Date shall be confirmed to Cooperative by Customer and Briscoe delivering a notice in writing to GSEC and Cooperative indicating that the Service Date under this Agreement and the GSEC Briscoe PPA has occurred. The Service Date is expected to occur on or about March 15, 2023.

"Settlement Interval" means the period of time utilized by ERCOT as the basis for settlement calculations in the Real-Time Energy Market (as defined in the ERCOT Protocols), which as of the Effective Date is fifteen (15) minutes.

"\*\*\*" means \*\*\*\*\*Price (as such term is defined in the ERCOT Protocols) for the (as such term is defined in the ERCOT Protocols) where the Service Delivery Point (as such term is defined in the ERCOT Protocols) is located, as published by

ERCOT, for the \*\*\*\*(as defined in the ERCOT Protocols), currently\*\*\*\*.

"\*\*\*\*\*Net Energy" means all Net Energy measured at the MDC Meter that is not \*\*\*\*Net Energy.

"\*\*\*\*\*\*Net Energy Price" has the meaning set forth in the GSEC Briscoe PPA.

"Suspension Period" has the meaning set forth in the Performance Security Agreement.

"Taxes" means use, conservation, energy, transmission, utility, gross receipts, privilege, sales, use, excise and other taxes, governmental charges, fees, and assessments, but excluding taxes based on net income or net worth, in each case that are imposed by a Governmental Authority.

"Term" means the Primary Term and any Extension Term, as the case may be.

"Termination Payment" means that payment required to be paid upon termination or rejection of this Agreement as described in Section XX.

"Transmission Service Provider" has the meaning set forth in the ERCOT Protocols. As of the Effective Date, the Transmission Service Provider is Oncor Electric Delivery Company LLC.

"Transmission Use Charge" has the meaning set forth in Section XI(G).

"TRE" means Texas Reliability Entity, Inc., and its successors in responsibilities and function.

"UFLS" means Under-Frequency Load Shed as defined by NERC.

"UFLS Equipment" means equipment necessary to satisfy UFLS Requirements.

"UFLS Requirements" means under-frequency load shedding obligations imposed upon GSEC or Cooperative, pursuant to NERC Standard PRC-006-3 — "Automatic Underfrequency Load Shedding," PRC-005-6 – "Protection System, Automatic Reclosing, and Sudden Pressure Relaying Maintenance, PRC-008 – "Implementation and Documentation of Underfrequency Load Shedding Equipment Maintenance Program, and Section 2.6.1 of the ERCOT Nodal Operating Guides as those ERCOT requirements and NERC Reliability Standards may be succeeded and/or amended from time to time.

**II.** **TERM** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. The term of this Agreement shall commence on the Effective Date and, unless terminated sooner in accordance with the terms of this Agreement, the primary term shall continue for five (5) years from the earlier of (i) the date that is one (1) year after the Effective Date or (ii) the Service Date (the "Primary Term"). Following the Primary Term, this Agreement shall continue for five (5) extension terms of one (1) year each (each such term, an "Extension Term") unless terminated sooner in accordance with the terms of this Agreement or unless terminated by Cooperative or Customer by written notice delivered to the other Party at least sixty (60) days prior to the end of the Primary Term or then-applicable Extension Term, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Customer acknowledges that, on the Service Date, Customer shall begin to incur payment and other obligations associated with Cooperative providing Service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. The expiration or termination of this Agreement shall not relieve Customer of its obligation to pay Cooperative for all costs and expenses associated with providing Service or arising under this Agreement.

**III.** **MEMBERSHIP** 

During the Term, Customer shall be a member of Cooperative and shall be bound by the provisions of the Articles of Incorporation and Bylaws of Cooperative and by such rules and regulations as may from time to time be adopted by Cooperative; provided that any amendments to such rules and regulations as may from time to time be adopted by Cooperative after the Effective Date may not apply to Customer to the extent they are inconsistent with the terms and conditions of this Agreement during the Term. The Parties shall comply with all rules and regulations of the PUCT, NERC, TRE, and ERCOT pertaining to the Parties hereto.

**IV.** **CONDITIONS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. The rights and obligations of the Parties under this Agreement are expressly conditioned upon the satisfaction, or waiver in writing by each Party, of the following conditions to the extent applicable to the First Phase on or before the Conditions Satisfaction Date:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) obtaining any necessary approvals from ERCOT and the Transmission Service Provider to connect and Net Meter Customer's Load associated with the First Phase and the Facility's Net Energy as contemplated by the GSEC Briscoe PPA and as further set forth in Section IX;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) execution of the GSEC Briscoe PPA concurrently with the execution of this Agreement and the satisfaction of all conditions precedent set forth in Article 3 of the GSEC Briscoe PPA;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Customer installing UFLS Equipment sufficient for the Customer's Load to count toward Cooperative's and GSEC's UFLS Requirements in compliance with ERCOT and NERC requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Customer or its Affiliate providing access and permissions needed to allow Cooperative or its designee to achieve Firm Load Shed of Customer's Load as provided in this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Cooperative or its designee, as applicable, being assured, as a condition precedent and as an ongoing condition throughout the Term, that they can: (i) exclude Customer's Load from their respective Firm Load Shed obligations, (ii) meet any Firm Load Shed obligation that has arisen due to the demand of the Customer's Load by curtailing the Customer's Load, (iii) curtail the Customer's Load as reasonably necessary to ensure that the Facility is the sole source of Energy for the Customer's Load during periods that would cause an incremental Firm Load Shed allocation to GSEC or Cooperative, or (iv) implement other changes to ERCOT's methodology for allocating Firm Load Shed that prevents any allocation caused by the Customer's Load from being borne by other GSEC or Cooperative customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) completion of any additional requirements imposed by ERCOT in connection with Cooperative interconnecting or serving Customer's Load associated with the First Phase, including without limitation any load, reliability, or interconnection study imposed on either Party, or on Briscoe or GSEC, to comply with NERC Reliability Standards FAC-001 and FAC-002, which shall be completed at Customer's expense;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) The MDC Meter being installed and under the Cooperative's ownership and operation pursuant to the terms of the Operating Procedures and Section IX(B);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Customer granting access rights sufficient to allow the Cooperative and GSEC, as necessary, access to the MDC Meter for purposes of installing, reading, testing, maintaining, repairing, or replacing such MDC Meter pursuant to the terms of an access easement in the form of Exhibit C;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) Customer shall have posted the credit support (including without limitation the Import Energy Account, Net Energy Security and the Performance Security as each such term is defined in the Performance Security Agreement) required to be posted by Customer under the Performance Security Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) Execution of the DCB Consultant Agreement by the DCB Consultant and Customer prior to the initiation of Service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The Parties agree that the assurance required by the Firm Load Shed condition in Section IV(A)(5) may be satisfied by Cooperative requiring that the MDC Farm be served exclusively by Energy generated by the Facility during all periods used by ERCOT to set Firm Load Shed obligations; provided, however, unless GSEC and Cooperative are assured that one of the other options in Section IV(A)(5) can be satisfied, any failure by Customer to meet the foregoing requirement shall reinstate the condition and Cooperative shall have the right to terminate this Agreement without penalty or liability to any Party except as provided in Sections XX and XXX if the condition is not met.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. If the Service Date has not occurred on or prior to the Conditions Satisfaction Date, Cooperative or Customer may terminate this Agreement without penalty and without any Party incurring any liability under this Agreement whatsoever. Alternatively, in the event that the Service Date has not occurred on or prior to the Conditions Satisfaction Date, the Parties may mutually agree to amend this Agreement.

**V.** **TERMS OF SERVICE** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. On the Service Date, Customer forecasts that its peak load for the MDC Farm will initially be the lesser of approximately twenty-five (25) MW or the peak demand approved by ERCOT. Customer thereafter shall provide Cooperative with at least thirty (30) days advance written notice of any changed peak load forecast and the projected date for such increase. Customer shall update such notice as required. Customer's Load shall not exceed loads studied and approved by ERCOT and Transmission Service Provider pursuant to FAC-001 and FAC-002 to the extent such studies and approvals are required. Customer shall comply with any requirements imposed by ERCOT in connection with Cooperative interconnecting or serving Customer's Load at the increased levels provided in Customer's notice, including without limitation any load, reliability, or interconnection study imposed on either Party, or on Briscoe or GSEC, to comply with NERC Reliability Standards FAC-001 and FAC-002, which shall be completed at Customer's expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Cooperative agrees to use reasonable diligence to provide Service to Customer at the Delivery Point, pursuant to the terms of this Agreement and any limitations on such Service set forth herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Commencing on the Service Date, Customer shall receive Service from Cooperative at the Delivery Point and shall pay for such Service in accordance with this Agreement. Customer agrees to purchase all Net Energy delivered at the MDC Meter up to Customer's Load. To the extent that the Net Energy delivered at the MDC Meter is insufficient to serve Customer's Load, Customer agrees to purchase Import Energy to serve Customer's Load. For the avoidance of doubt, the Parties understand that Import Energy will not be purchased by Customer when the price of Import Energy exceeds the Market Price Cap. Service will be at a voltage of approximately \*\*\*\* kV, three-phase, and 60 cycles per second. The Parties agree and acknowledge that the production of the Energy from the Facility is intermittent, that Import Energy may be subject to interruption, and that neither GSEC nor Cooperative is providing a warranty or guarantee of the quantity of Energy to be produced by the Facility for any hourly, daily, monthly, annual or other period or that Import Energy will be free from interruption. For the avoidance of doubt, GSEC shall be permitted to reduce or cease deliveries of Energy from the Facility during (i) any "Force Majeure" declared by Briscoe under the GSEC Briscoe PPA, (ii) scheduled maintenance of the Facility, (iii) Forced Outages, (iv) periods when the MDC Farm is not accepting deliveries of Energy from the Facility, (v) when Import Energy exceeds the Market Price Cap and Customer has not limited Customer's Load to Energy served from the Facility and (vi) during any Suspension Period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Customer shall be solely responsible for any forecasting and scheduling coordination with Briscoe required to determine when Import Energy will be used to provide Service to Customer. Neither GSEC nor Cooperative shall be responsible for determining whether and when Customer's Load will be served from the Facility or with Import Energy and whether Energy provided shall be \*\*\*\*\*\*Net Energy or \*\*\*\*\*Net Energy. Customer shall be responsible for paying and satisfying when due any ERCOT costs or charges imposed in connection with the sale, scheduling, and/or delivery of Energy to the Delivery Point, including without limitation any applicable market charges, transmission costs, transmission line losses, registration charges, and any operation and maintenance costs and charges, whether imposed on Customer or Cooperative. If any such charges or costs are imposed on Cooperative or incurred by Cooperative, Customer will promptly pay such charges or costs, or reimburse Cooperative for such costs or charges if paid by Cooperative, upon receipt of an invoice from Cooperative. Each Party also shall provide the other Party with all supporting data for such cost or charge available to the Party. For sake of clarity, the Parties agree that any charges imposed under this Section V(D) shall be net of all costs or charges incurred by GSEC to provide Service to Cooperative for resale to Customer, which Customer agrees will be included in the monthly charge set forth in Section XI.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. The Parties agree that Briscoe and/or Customer, and not Cooperative, are responsible for meeting any registration and modeling requirements imposed by ERCOT for Generation Resources, as defined in the ERCOT Protocols, or loads that are Net Metered with a Generation Resource behind an ERCOT meter. All risks of non-compliance under Applicable Law of the interconnection and delivery of Energy from the Facility or from the Delivery Point into the MDC Farm's private electric distribution system are assumed by Briscoe and Customer. The risk of delivery or non-delivery of Energy from the Facility lies solely with Customer or Briscoe and not Cooperative or GSEC. For the avoidance of doubt, the delivery of Energy from the EPS Meter to the Customer Facilities and any losses between the EPS Meter and the Customer Facilities shall be the responsibility of Customer. Title to, liability for, and risk of loss of Energy delivered hereunder shall be Customer's upon Cooperative's delivery to Customer at the Delivery Point.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. Neither Cooperative nor GSEC shall be responsible for determining whether and when Customer's Load will be served from the Facility, whether and when the Facility will export Energy to the ERCOT market or sell to GSEC for ultimate resale to Customer and whether Energy provided shall be \*\*\*\*\*\*\*Net Energy or \*\*\*\*\*\*Net Energy. Customer further understands and agrees that, subject to the terms of this Agreement, Import Energy shall be purchased when the Facility is not available to serve Customer's Load and that Customer shall be responsible for such charges and associated fees as set forth herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G. After the Service Date, any test energy that is utilized pursuant to this Section V(G) shall be delivered and purchased by the Parties in accordance with the GSEC Briscoe PPA and this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;H. Any amendment to the Interconnection Agreement affecting the Point of Delivery for or provision of Service shall be subject to approval by Cooperative, not to be unreasonably withheld, conditioned, or delayed. For the avoidance of doubt, the Parties agree that it shall be unreasonable for Cooperative to withhold its consent to an amendment to the Interconnection Agreement if such amendment does not adversely affect GSEC's rights or obligations under the GSEC Briscoe PPA or Cooperative's rights and obligations under this Agreement.

**VI.** **CUSTOMER FACILITIES** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Except for the MDC Meter, which shall be paid for by Customer but owned and operated by Cooperative, Customer shall provide and be responsible for all electric distribution and other facilities necessary for Customer to receive Service from Cooperative under this Agreement downstream of the EPS Meter (collectively all such facilities owned by Customer, the "Customer Facilities").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. If Service provided to Customer causes voltage fluctuations, disturbances, interference, distorted wave forms or deterioration of service to other electric customers served by Cooperative, or to telecommunication facilities services, which can be specifically identified and verified by Cooperative, Cooperative shall have the right to require the installation by Customer of suitable apparatus to correct or limit such fluctuation or disturbance at no cost to Cooperative. If such corrective action is not taken promptly upon request, Cooperative shall have the right to cause reasonable corrective measures to be taken on Customer's behalf (provided Cooperative shall do so only in accordance with all Applicable Laws), and Customer hereby agrees to pay all documented reasonable and actual costs incurred by Cooperative in connection with such corrective action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Customer shall install, own and maintain UFLS Equipment and Cooperative or Customer, as applicable, shall complete all necessary registrations or other requirements with NERC and ERCOT to include the Customer Facilities in its compliance program for applicable UFLS Requirements. Upon request, Cooperative shall provide registration documentation relating to the Customer Facilities to Customer prior to registering. Customer shall be responsible for owning any UFLS Equipment and complying with all applicable UFLS Requirements. Customer shall test and maintain UFLS Equipment as necessary to meet the UFLS Requirements, and shall provide Cooperative with documentation to demonstrate compliance, including a copy of all testing records associated with UFLS Equipment promptly after the testing occurs. Cooperative shall instruct Customer as to which relay Frequency Threshold (as defined in the ERCOT Nodal Operating Guide) setting Cooperative requires and Customer shall set its relays to that Frequency Threshold setting. Prior to performing maintenance or testing, Customer shall provide prior notice to Cooperative of such maintenance or testing. During maintenance and testing of the UFLS Equipment, Customer's loads in excess of 100kw must be deenergized, until such time maintenance and testing is concluded and the UFLS Equipment is responding to the required Frequency Threshold setting. In the event Customer repairs, replaces or modifies the UFLS Equipment, Customer shall retest affected UFLS Equipment pursuant to the UFLS Requirements, and shall promptly provide Cooperative with a copy of those testing records. Customer shall provide prior notice to Cooperative of any planned repairs, replacements or modifications of UFLS Equipment. In the event a loss of load occurs due to an under- frequency event, Customer shall not restore load until approved by Cooperative.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Customer shall be solely responsible for ensuring that the Customer Facilities and the MDC Farm are operated and maintained in accordance with industry standards and Applicable Law. In addition, UFLS Equipment and any other Customer equipment or communication that falls under Cooperative's or GSEC's NERC program shall comply with all NERC requirements, including without limitation NERC Standard PRC-006-3 — "Automatic Underfrequency Load Shedding," NERC PRC-005-6 – "Protection System, Automatic Reclosing, and Sudden Pressure Relaying Maintenance, PRC-008 – "Implementation and Documentation of Underfrequency Load Shedding Equipment Maintenance Program", any Protection System maintenance requirements or other requirements imposed pursuant to NERC or ERCOT Nodal Operating Guides as those ERCOT requirements and the NERC Reliability Standards may be succeeded and/or amended from time to time. Customer shall notify Cooperative without delay of any discovered damage, destruction, or physical threats to the Customer Facilities and, within thirty (30) days, any potential Misoperation (as defined by NERC) of the Customer's relays that fall under the Cooperative's NERC program. Additionally, Customer shall comply with all reasonable requests made by the Cooperative to fulfill any NERC, ERCOT, or other reliability requirements. With respect to any relay testing requirements, if Customer uses a third party to perform relay testing, Customer shall obtain Cooperative's approval of the third party used, such approval not to be unreasonably withheld, delayed, or conditioned.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**VII.** **RIGHT OF ACCESS** 

Customer shall provide Cooperative, and GSEC physical access to the MDC Meter, the DCB (as defined in Section IX(E)) and the Customer Facilities for any purpose reasonably related to Cooperative's rights under this Agreement or compliance with its obligations to third parties, including, without limitation, Governmental Authorities. Customer shall also provide Cooperative and GSEC information about the Delivery Point, the MDC Meter, and the Customer Facilities upon request of Cooperative or GSEC for any purpose reasonably related to Cooperative's rights under this Agreement or compliance with its obligations to third parties, including, without limitation, Governmental Authorities. Customer shall make reasonable efforts to assist Cooperative and GSEC to access Cooperative's facilities on Customer's premises, if any, including reasonable ingress and egress. Duly authorized representatives of Cooperative (including GSEC) shall be permitted to enter Customer's premises at all reasonable times in order to carry out the provisions hereof; provided that Customer reserves the right to exclude any such representative who fails to observe Applicable Laws, regulations, permits and the reasonable site control policies established by Customer. Customer shall provide reasonable assistance to Cooperative, as needed. Notwithstanding anything herein to the contrary, Customer hereby grants Cooperative and GSEC, and shall obtain from third parties as needed, any and all permissions and authorizations necessary for Cooperative and GSEC to physically access the MDC Meter and associated breakers at any time to perform any action that Cooperative or GSEC, in their sole discretion, deems appropriate to carry out the provisions of this Agreement.

**VIII.** **COMPLIANCE WITH APPLICABLE LAW** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Each Party shall perform its obligations under or in connection with this Agreement in a manner consistent with all Applicable Laws. Customer shall ensure its performance of its obligations under or in connection with this Agreement is consistent with all Applicable Laws with respect to the operation of the MDC Farm from any Governmental Authority and shall obtain and maintain all permits necessary for such performance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Customer shall reimburse Cooperative or GSEC for all costs assessed to Cooperative or GSEC, respectively, by a Governmental Authority relating to provision of Service to the MDC Farm, including but not limited to actual, documented costs for consulting and legal fees.

**IX.** **METERING AND DISCONNECTING CIRCUIT BREAKER** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Customer shall be responsible for the costs of any metering and telemetry equipment required by ERCOT, Cooperative, GSEC, or the Transmission Service Provider, as applicable, to facilitate the transactions described in this Agreement. Prior to the Service Date, Customer shall, or shall cause Briscoe to, seek approval from ERCOT and the Transmission Service Provider for any additional approvals needed to allow Net Metering of the First Phase, and thereafter shall obtain such additional approvals as may be required in connection with the Service after the First Phase. The Parties shall cooperate in good faith to obtain any necessary approvals of a new or modified EPS Metering Design at the Delivery Point as necessary to facilitate such Net Metering. If such approval is not obtained prior to the Conditions Satisfaction Date, this Agreement may be terminated by Customer or Cooperative as provided in Section IV.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Electric power delivered hereunder shall be measured by (i) the EPS Meter and (ii) a revenue quality meter ("MDC Meter"). The MDC Meter and associated equipment, including current and potential transformers ("Associated Equipment"), shall be located at the MDC Farm at the location shown on Exhibit A. The MDC Meter shall be owned, installed and maintained by Cooperative at Customer's expense and shall meet specifications acceptable to Cooperative and GSEC. The Associated Equipment shall be installed and maintained by Customer at Customer's expense and shall meet specifications reasonably acceptable to Cooperative and GSEC. Both the MDC Meter and Associated Equipment shall be installed, operated and maintained by or on behalf of Customer in accordance with Applicable Laws. The Parties acknowledge that the MDC Meter is located at the MDC Farm and will generate readings of all Energy delivered to the MDC Farm. Customer shall grant access rights sufficient to allow Cooperative and GSEC, as necessary, to access the MDC Meter and Associated Equipment for purposes of reading, testing, maintaining, inspecting, repairing or replacing (if appliable) the same. Such access shall be pursuant to the terms of an access easement in the form attached as Exhibit C and shall be executed concurrently with this Agreement. Cooperative, GSEC, or Customer may request and witness a test of the MDC Meter and Associated Equipment during normal working hours at a time mutually acceptable to Customer and Cooperative or GSEC, as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Cooperative and GSEC shall have remote access to retrieve data from the MDC Meter regarding (i) Energy metered on a real time basis, and (ii) Settlement Interval load profile data remotely retrievable via MV-90 software and shall provide such data to Briscoe and to GSEC as reasonably necessary to achieve the purposes of this Agreement and the GSEC Briscoe PPA. Meter data shall include delivered and received Energy for real and reactive power. Customer also shall cause to be provided to Cooperative and GSEC primary and backup remote access to retrieve data on Import Energy delivered from ERCOT at the Delivery Point and Export Energy as measured at the EPS Meter operated by the Transmission Service Provider. Data from the EPS Meter shall include (a) Energy metered on a real time basis, and (b) Settlement Interval load profile data remotely retrievable via MV-90 software. EPS Meter data shall include delivered and received Energy for real and reactive power.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Customer shall be responsible for the costs of any additional metering, communication and telemetry equipment required by ERCOT, Cooperative, GSEC, or the Transmission Service Provider, as applicable, to facilitate the telemetry and settlements described in this Agreement and the GSEC Briscoe PPA. Customer shall provide a B2B virtual private network tunnel using a protocol determined by GSEC for communications that meets GSEC's security requirements and that will permit GSEC to automate real time telemetry and daily readings of interval data.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. Customer also shall install, operate and maintain, or cause to be installed, operated and maintained, a Disconnecting Circuit Breaker ("DCB") between the Briscoe Interconnection Facilities and the MDC Farm that is capable of disconnecting all Service to the MDC Farm (including delivery of both Net Energy and Import Energy). The DCB shall be installed and owned by Customer and shall be reasonably acceptable to Cooperative, GSEC and Briscoe. The DCB shall be installed, operated and maintained by Customer in accordance with Applicable Law, prudent industry practices and manufacturer requirements. The DCB shall be programmed to automatically disconnect the MDC Farm when the SPP for Import Energy meets or exceeds the Market Price Cap and the Customer's Load exceeds the Net Energy produced by the Facility. Customer shall be responsible for monitoring and operating the DCB so that such disconnect is achieved. Customer, at its sole cost, also shall provide Cooperative, GSEC and Briscoe with a secondary control scheme to disconnect the MDC Farm from the Facility if the foregoing DCB fails to timely disconnect the MDC Farm from the Facility as provided herein. Customer shall provide, or cause to be provided, Cooperative, GSEC with access to the DCB with lockout provisions that can be physically accessed by Cooperative and GSEC at all times and that will permit Cooperative or GSEC to disconnect the Delivery Point from the MDC Farm any time that Import Energy meets or exceeds the Market Price Cap and the Customer's Load exceeds the Net Energy produced by the Facility, or as provided in the Performance Security Agreement, and to continue disconnection for the entirety of such period of time. Customer shall provide, or cause to be provided, Briscoe with access to the DCB with lockout provisions that can be physically and remotely accessed by Briscoe at all times and that will permit Briscoe to disconnect the Delivery Point from the MDC Farm as provided in the Performance Security Agreement, and to continue disconnection for the entirety of such period of time. Soluna shall not close the DCB until the circumstances giving rise to the right of Cooperative, GSEC or Briscoe, as applicable, to suspend Service or disconnect the Delivery Point from the MDC Farm have been cured. The Parties agree that Cooperative, GSEC or Briscoe shall be permitted to disconnect the MDC Farm under the circumstances set forth herein and that such a disconnect initiated by Cooperative, GSEC or Briscoe, or the failure of Cooperative, GSEC or Briscoe to initiate such a disconnection, shall not impose on Cooperative, GSEC or Briscoe, or any member of the Cooperative Group or GSEC Group any liabilities, obligations or responsibilities, or reduce Customer's liabilities or responsibilities, under this Agreement. Customer shall be responsible to provide any back up power needed to maintain the MDC Farm facilities during such a period of disconnection. **CUSTOMER SHALL INDEMNIFY AND HOLD COOPERATIVE GROUP AND GSEC GROUP HARMLESS FOR ANY AND ALL COSTS, PENALTIES, CHARGES OR OTHER CLAIMS OF ANY KIND INCURRED DUE TO A FAILURE OF THE DCB TO DISCONNECT SERVICE AS PROVIDED HEREIN OR FOR ANY OTHER FAILURE OF THE DCB.** Customer shall grant access rights sufficient to allow Cooperative, GSEC and Briscoe, as necessary, to access the DCB for purposes of testing, inspecting and, as necessary, operating the DCB. Access by Cooperative and GSEC shall be pursuant to the terms of an Access Easement in the form attached as Exhibit C, which shall be executed concurrently with this Agreement. Access by Briscoe shall be pursuant to the terms of an Access Easement, which shall be executed concurrently with this Agreement. Cooperative or GSEC shall be permitted to test local control of the DCB when installed and thereafter upon a reasonable request. Tests shall be conducted during normal working hours at a time mutually acceptable to Customer and Cooperative or GSEC, as applicable. At Customer's expense, Customer agrees to hire a third party ("DCB Consultant") to program, test and monitor the DCB and to monitor Import Energy prices, with notification to Cooperative and GSEC if the Import Energy price will exceed the Market Price Cap. Cooperative and GSEC shall be express, intended third party beneficiaries of the agreement with the DCB Consultant ("DCB Consultant Agreement"), the terms of which, and any amendment thereto or assignment thereof, shall be subject to the approval of Cooperative and GSEC, such approval not to be unreasonably withheld, conditioned, or delayed. Customer shall pay all fees due under the DCB Consultant Agreement. Cooperative and GSEC shall be permitted to test operation of monitoring and notification under the DCB Consulting Agreement when initiated and thereafter upon a reasonable request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. If any Meter fails to register or is found upon testing to be outside the accuracy standards set forth in the ERCOT Settlement Metering Operating Guide, adjustments shall be made to prior meter readings within the past twelve (12) months from the time the error is discovered or a shorter period corresponding to the time period during which the meter readings were inaccurate if it can be determined when the inaccuracy first occurred, in each case unless Applicable Law or ERCOT Protocols require a different timeframe, and Cooperative shall credit or charge Customer for amounts previously over or under billed after giving effect to such adjustments in the next monthly billing period.

G. Cooperative, Customer, GSEC and Briscoe shall develop mutually agreeable written operating procedures in accordance with this Section IX.G. ("Operating Procedures"). The Operating Procedures shall not modify the terms or conditions of this Agreement or the GSEC Briscoe PPA. The Operating Procedures may include methods of day-to-day communications; metering, programing of devices including programing and operation of the DCB hereunder, telecommunications, and data acquisition procedures; key personnel list for applicable Cooperative, Customer, GSEC and Briscoe personnel; operations and maintenance scheduling and reporting; unit operations log; issues concerning variations in Service frequency fluctuation; and any such other matters as may be mutually agreed upon by the Parties.

**X.** **PERFORMANCE SECURITY** 

Performance security shall be provided by Customer pursuant to a separate agreement among the Parties, Briscoe, and GSEC ("Performance Security Agreement"). The requirements of the Performance Security Agreement, as it may be amended from time to time, are incorporated herein by reference and shall be deemed to be part of this Agreement as if set forth herein.

**XI.** **MONTHLY AND WEEKLY CHARGES** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. For each monthly, weekly or bi-weekly billing period during the Term, Customer shall promptly make payment to Cooperative the sum of the following for all Service consumed by Customer for the applicable billing period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The Parties agree that appropriate \*\*\*\*\*logic will be applied with respect to the meter readings recorded by the EPS Meter and the meter readings recorded by the MDC Meter. The \*\*\*\*\*\*logic will allow Parties, Briscoe, and GSEC to accurately determine the quantities of Aux Energy supplied to the Facility, \*\*\*\*\*\*\*Net Energy, \*\*\*\*\*\*\*Net Energy and Import Energy supplied to the MDC Farm. An illustration of the \*\*\*\*\*\*\*\*\*\*\*logic is set forth in Exhibit B attached hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. The Parties agree that Briscoe shall determine the quantity of Net Energy in any billing month and which quantities of Net Energy are \*\*\*\*\*\*\*\*Net Energy and \*\*\*\*\*Net Energy during the billing month in accordance with Section 7.1 of the GSEC Briscoe PPA and shall invoice GSEC for Net Energy in accordance with Section 7.2 of the GSEC Briscoe PPA. Subject to the adjustment procedure set forth below and Customer's rights in Sections XII(B) and XII(C), Customer agrees that the quantities of \*\*\*\*\*\*\*\*Net Energy and \*\*\*\*\*\*Net Energy during the billing month set forth in the Briscoe invoice to GSEC are a correct basis for Cooperative's development of the monthly charge under this Agreement. If Briscoe fails to designate \*\*\*\*\*\*\*Net Energy and \*\*\*\*\*Net Energy to facilitate timely billing under the terms of this Agreement, Cooperative shall bill Customer based on the assumption that all Net Energy is \*\*\*\*\*Net Energy and shall provide a true-up to Customer within one month of receiving an accurate accounting of the Net Energy from Briscoe. Cooperative shall also have the right to send subsequent invoices for prior billing periods based upon corrections or other similar adjustments to GSEC's wholesale power costs for Import Energy (including Import Energy Charges) or Net Energy under the GSEC Briscoe PPA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Customer shall be invoiced on a weekly or bi-weekly basis for Import Energy as provided in Section 2.2(B) of the Performance Security Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; E. Customer's monthly bill shall be the sum of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Net
 Energy, as billed to GSEC by Briscoe (comprised of \*\*\*\*\*\*\*Net Energy for the billing month
 times the Net Energy Price and \*\*\*\*\*Net Energy for the billing month times the \*\*\*\*\*Net Energy
 Price);

ii. the
 Net Energy Fee, which shall be applied to all Net Energy;

iii. Any
 true up required for Import Energy for the billing month times the Import Energy Price and
 the Import Energy Fee; and

iv. Any
 true up required for Import Energy Charges for all intervals during the billing month.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. Upon the agreement of all Parties to this Agreement and the parties to the GSEC Briscoe PPA, payments due under this Agreement, the Performance Security Agreement and the GSEC Briscoe PPA may be netted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G. During the months of June, July, August and September, Customer's monthly bill shall also include a "Transmission Use Charge" equal to \*\*\*\*\*\* times the current year's ERCOT monthly wholesale Transmission Cost of Service charge plus \*\*\*\*%, times Customer's Import Energy demand during the ERCOT 4CP interval for the applicable billing month, as defined in 16 Texas Administrative Code § 25.192. Each year following the first calendar year after the Service Date, Customer shall calculate a Transmission Use Charge true-up by no later than June

1. The Transmission Use Charge true-up shall reconcile Customer Transmission Use Charges for the prior year to the actual charges incurred for that year based on the MDC Farm's actual demand during the ERCOT 4CP intervals. The reconciliation amount shall be credited or charged to Customer invoices in equal installments during June, July, August and September.

**XII.** **INVOICES AND PAYMENT** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Invoices for sums due hereunder shall be rendered to Customer via email on a monthly, weekly or bi-weekly basis, as provided in Section XI, and promptly after Cooperative's receipt of an invoice from GSEC for the Service provided hereunder. Invoices shall be rendered within fifteen (15) calendar days of Cooperative's receipt of its informational copy of Briscoe's invoice to GSEC for Net Energy for the billing month. All payments drawn from the Import Energy Account (as defined in the Performance Security Agreement) shall offset Import Energy charges from GSEC to Cooperative and from Cooperative to Customer. Invoices may be paid (i) by United States Postal Service priority mail, with delivery confirmation, or by reputable express courier service (e.g, FedEx or UPS) with delivery confirmation in accordance with Section XXV, (ii) in person at the office of the Cooperative, (iii) by electronic funds transfer in accordance with instructions provided and to the account designated by Cooperative or (iv) by another method approved by Cooperative in writing. All invoices rendered hereunder are due when rendered and payable within ten (10) Business Days after the date of issuance as shown on the invoice, and Cooperative must receive such invoice within such period. Customer shall provide GSEC and Briscoe with notice of the date of payment upon payment of each invoice. Any amount that is not paid when due shall bear interest from (and including) the due date to the date of payment (but excluding the date of payment) at a rate equal to two percent (2%) over the per annum rate of interest published in The Wall Street Journal under "Money Rates" as the prime lending rate; provided, however, that in no event shall the applicable interest rate exceed the maximum lawful rate permitted by Applicable Laws (the applicable rate, the "Interest Rate"). If Customer fails to pay the full amount of Cooperative's invoice for Net Energy within ten (10) Business Days after the date on which Cooperative issued such invoice as shown on the invoice, Cooperative shall draw funds from the Net Energy Security to apply as payment for Net Energy on the next Business Day. Upon failure of Customer to cure the default described in Section XIX(G), Cooperative may discontinue or suspend Service to Customer as further set forth in the Performance Security Agreement or in Section XIX(G). Discontinuance or suspension of Service shall not relieve Customer of any of its obligations under this Agreement. The failure of Customer to pay any remaining amount of Cooperative's invoice before such payment is past due shall, if not remedied, constitute an Event of Default under this Agreement, subject to the terms of Section XIX herein, and Cooperative shall provide written notice to Customer of Cooperative's intention to discontinue Service. For avoidance of doubt, to the extent that Briscoe has suspended service to GSEC under the GSEC Briscoe PPA due to Customer's failure to provide Net Energy Security, Cooperative shall be entitled to suspend Service to Customer under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Any Party may, in good faith, dispute the correctness of any invoice rendered under this Agreement. In the event an invoice or portion thereof, or any other claim or adjustment arising hereunder, is disputed, written notice of the objection must be given to the delivering Party stating the basis for the dispute (including all supporting calculations). The Parties will treat such matter as a dispute in accordance with Section XXII. If Customer disputes an invoiced amount, Customer shall nevertheless pay such disputed amount on or before the due date. Upon resolution of the dispute under this Agreement or a dispute under the GSEC Briscoe PPA, any payment required to be refunded to a Party under this Agreement shall be made within thirty (30) days after such resolution. In the event that the Party making the refund is shown to have acted in bad faith with respect to the invoice under dispute, such payment shall be made with interest at the Interest Rate from (and including) the date on which such payment was made up to (but excluding) the date such payment is refunded.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. If any Party discovers an error in billings or payments under this Agreement due to metering, billing or other errors, or a prior invoice was prepared on an estimated basis, each Party shall be entitled to an adjustment of the amount payable hereunder to reflect such revised price, error discovery, or the availability of actual (as opposed to estimated) invoicing information. If an invoice has been prepared on an estimated basis and the information necessary to prepare such invoice based on an actual basis becomes available or the Parties have agreed to a revised estimate, or an adjustment is required due to a revision, adjustment or re-settlement by ERCOT, the invoicing Party shall make such adjustments and provide a revised invoice with a calculation of the payment necessary to correct the prior invoice and such invoice shall be due and payable in accordance with the terms hereof. A Party that otherwise seeks an adjustment to an invoice as described in this Section XII(C), must provide the other Party with written notice and a description of the desired adjustment. Such notice shall include a calculation of the payment necessary to correct the prior invoice. Such invoice adjustment shall be made in the same manner as provided for other invoice adjustments herein, unless disputed as provided herein. Any invoice that has not been challenged pursuant to this Agreement within thirty-six (36) months of the date it was received by the receiving Party shall be deemed final and not subject to adjustment under this Section XII(C); provided that the Parties shall abide by the deadlines established in the ERCOT Protocols for requesting adjustments to ERCOT invoices. No adjustment shall be made to \*\*\*\*Net Energy and \*\*\*\*\* Net Energy charges based on information provided by Briscoe unless a corresponding change is made in Briscoe's invoice for such Energy to GSEC under the GSEC Briscoe PPA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Each Party shall have the right during normal business hours to examine the relevant books, records and charts of the other Party to the extent reasonably necessary to verify the accuracy of any statement, payment, calculation or determination made pursuant to the provisions of any section hereof. If any such examination shall reveal, or if either Party shall otherwise discover, any error in its own or the other Party's statements, payment, calculation or determinations, then proper adjustment and correction thereof shall be made as promptly as practicable thereafter and in no event more than thirty-six (36) months after an invoice was first delivered to a Party. Invoices and payments will be subject to collection as may be appropriate as the result of reviews or audits made for the purpose of verification, as provided for in Cooperative's tariff.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. Upon the written agreement of the Parties, GSEC, and Briscoe, payments due under this Agreement, the Performance Security Agreement and the GSEC Briscoe PPA may be netted. The terms of such netting if agreed by all such Parties may be governed by a netting agreement among the respective parties ("Netting Agreement").

**XIII.** **TAXES** 

Customer shall be responsible for all existing and any new Taxes imposed or levied by any Governmental Authority on the Energy sold and delivered hereunder before, upon and after delivery to the Delivery Point, regardless of whether they are imposed on Customer or Cooperative. For sake of clarity, the Taxes subject to this Section XIII do not include Taxes imposed on net income (e.g., federal income tax) or on margins (e.g., Texas franchise tax), which shall be the responsibility of the Party earning such income.

**XIV.** **RESALE** 

Customer understands and agrees that the electric Service provided under this Agreement shall only be used to serve the Customer's Load and not be resold by Customer at retail to any third parties. Customer may use power and Energy purchased under this Agreement only to serve the Customer's Load on Customer's side of the Delivery Point.

**XV.** **FORCE MAJEURE** 

If either Party is rendered unable by Force Majeure to carry out, in whole or in part, its obligations under this Agreement, and if such Party gives notice and reasonable description of the event of Force Majeure to the other Party as soon as reasonably practicable after the occurrence of such event, then during the pendency of such event of Force Majeure, but for no longer period, the obligations of the affected Party (other than the obligation to make payments hereunder when due) shall be suspended to the extent performance is prevented. The affected Party shall take all reasonable steps to remedy the cause of the Force Majeure with all reasonable dispatch. In no event will any Force Majeure event extend this Agreement beyond the Term. If an event of Force Majeure continues for more than three hundred and sixty-five (365) consecutive days, then the Party not declaring Force Majeure may terminate this Agreement by notice to the other Party setting out the termination date, provided that the Force Majeure event is continuing at the time such notice is received. Upon such termination, neither Party shall have any further obligation nor liability to the other Party except as provided in Section XXX hereof.

**XVI.** **INDEMNIFICATION, LIMITATION OF LIABILITY, AND DISCLAIMER OF WARRANTIES** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.**  **<u>INDEMNIFICATION</u>.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**i.** **CUSTOMER ("INDEMNITOR") SHALL INDEMNIFY, DEFEND, AND HOLD HARMLESS COOPERATIVE AND GSEC AND ANY MEMBER OF ITS RESPECTIVE GROUP (EACH, AN "INDEMNITEE") FROM AND AGAINST ANY AND ALL CLAIMS AND INDEMNIFIED LOSSES OF ANY NATURE WHATSOEVER, INCLUDING THOSE BASED ON NEGLIGENCE OF THE INDEMNITEE, WHETHER GROUNDLESS, FALSE, FRAUDULENT OR OTHERWISE AND WHETHER SUCH CLAIMS OR ACTIONS ARE FILED PRIOR TO OR AFTER THE TERMINATION OF THIS AGREEMENT, FOR INJURIES TO ONE OR MORE PERSONS INCLUDING DEATH RESULTING THEREFROM, AND DAMAGE TO PROPERTY IN ANY MANNER, ARISING DIRECTLY OR INDIRECTLY, FROM ELECTRICITY OR ELECTRIC FACILITIES, OCCURRING ON INDEMNITOR'S SIDE OF THE DELIVERY POINT, EXCEPT TO THE EXTENT THAT SUCH INJ URIES OR DAMAGES HAVE BEEN CAUSED BY GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF AN INDEMNITEE.** 

**ii.** **CUSTOMER SHALL ALSO INDEMNIFY AND HOLD HARMLESS COOPERATIVE AND GSEC AND THEIR RESPECTIVE GROUPS FROM AND AGAINST ANY AND ALL THIRD PARTY CLAIMS AND THIRD PARTY INDEMNIFIED LOSSES OF ANY NATURE WHATSOEVER, WHETHER GROUNDLESS, FALSE, FRAUDULENT OR OTHERWISE AND WHETHER SUCH CLAIMS OR ACTIONS ARE FILED PRIOR TO OR AFTER THE TERMINATION OF THIS AGREEMENT, INCLUDING CLAIMS BASED ON THE NEGLIGENCE OF THE INDEMNIFIED PARTY, ARISING FROM OR IN CONNECTION WITH: (I) COOPERATIVE'S DELIVERY AND SALE OF ENERGY TO CUSTOMER, (II) CUSTOMER'S RECEIPT OR PURCHASE OF ENERGY FROM COOPERATIVE, (III) CUSTOMER'S OR ITS AFFILIATES' OPERATIONS ON ITS SIDE OF THE DELIVERY POINT** **(IV) COOPERATIVE'S OR GSEC'S OR GSEC'S DESIGNEE'S DISCONNECT OF THE MDC FARM; AND/OR (V) ANY CO- OWNERSHIP OF THE MDC FARM OR THE FACILITY OR FINANCING RELATED TO THE MDC FARM OR THE FACILITY INCLUDING ANY CLAIMS BROUGHT BY AN OWNER OF THE MDC FARM OR THE FACILITY (OTHER THAN CUSTOMER OR BRISCOE) OR A FINANCE ENTITY OF CUSTOMER OR BRISCOE OR ANY SUCH OTHER OWNER OR THEIR RESPECTIVE AFFILIATES (ALL SUCH ENTITIES ARE THIRD PARTIES FOR PURPOSES OF THIS** **INDEMNIFICATION). FOR THE AVOIDANCE OF DOUBT, A GOVERNMENTAL AUTHORITY IS A THIRD PARTY.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**iii.** **THE INDEMNITOR SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS EACH INDEMNITEE FROM THE INDEMNITOR'S FAILURE TO COMPLY WITH ANY APPLICABLE LAWS.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B. <u>LIMITATION OF LIABILITY</u>. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IN NO EVENT SHALL EITHER PARTY OR ITS RESPECTIVE GROUP HERETO BE LIABLE TO THE OTHER PARTY OR ITS RESPECTIVE GROUP FOR ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OF ANY KIND (INCLUDING WITHOUT LIMITATION LOSS OF PROFITS), HOWEVER CAUSED AND BASED ON WHATEVER THEORY OF LIABILITY, WHETHER TORT, CONTRACT, STRICT LIABILITY, NEGLIGENCE OR OTHERWISE ARISING OUT OF OR RELATED TO THIS AGREEMENT, EXCEPT (I) TO THE EXTENT COVERED BY AN INDEMNITY HEREUNDER WITH RESPECT TO ANY CLAIMS OF THIRD PARTIES FOR WHICH IT IS REQUIRED TO INDEMNIFY THE OTHER PARTY AND ITS RESPECTIVE GROUP, WHICH THIRD-PARTY CLAIMS MAY INCLUDE CLAIMS FOR SPECIAL, PUNITIVE, INCIDENTAL, INDIRECT, EXEMPLARY, OR CONSEQUENTIAL DAMAGES (OTHER THAN CLAIMS BETWEEN OR AMONG COOPERATIVE, GSEC OR THEIR RESPECTIVE AFFILIATES OR FINANCE ENTITIES) OR (II) FOR PENALTIES FOR WHICH IT IS REQUIRED TO INDEMNIFY THE OTHER PARTY AND ITS RESPECTIVE GROUP OR FINES IMPOSED BY A GOVERNMENTAL AUTHORITY, EVEN IF SUCH DAMAGES CLAIMED, PENALTIES OR FINES ARE SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C. <u>LIMITATION ON COOPERATIVE AND GSEC LIABILITY</u>. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, COOPERATIVE AND GSEC SHALL HAVE NO LIABILITY, INCLUDING FOR THEIR NEGLIGENCE, RELATED TO (I) THE OPERATION OF OR COMPLIANCE WITH APPLICABLE LAWS, REGULATIONS, AUTHORIZATIONS OR PERMITS OF THE MDC FARM, BRISCOE FACILITY OR THE CUSTOMER FACILITIES; (II) THE DELIVERY POINT'S OR MDC FARM'S INABILITY TO ACCEPT ENERGY; (III) THE DETERMINATION OF WHETHER AND WHEN CUSTOMER'S LOAD WILL BE SERVED FROM THE FACILITY OR WITH IMPORT ENERGY, WHETHER ENERGY PROVIDED SHALL BE \*\*\*\*\*NET ENERGY OR \*\*\*\*NET ENERGY; (IV) THE ACTIVATION OR FAILURE TO ACTIVATE THE DCB OR**

**(V) CLAIMS BROUGHT BY ANY OWNER OF THE MDC FARM OR FACILITY OTHER THAN CUSTOMER OR BRISCOE, CLAIMS BROUGHT BY CUSTOMER'S OR BRISCOE'S FINANCE ENTITIES, AND CLAIMS BROUGHT BY ANY FINANCE ENTITIES OF OTHER OWNERS OF THE MDC FARM OR FACILITY, AND IN EACH CASE THEIR RESPECTIVE AFFILIATES.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**D. <u>DISCLAIMER OF WARRANTIES</u>. COOPERATIVE AND GSEC MAKE NO WARRANTIES WHATSOEVER WITH REGARD TO THE PROVISION OF ELECTRIC SERVICE AND DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, NOTWITHSTANDING ANY COURSE OF PERFORMANCE OR USAGE OR TRADE, OR LACK THEREOF, THAT MAY BE INCONSISTENT WITH THIS DISCLAIMER.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. **<u>Indemnity Procedure</u>.** The Indemnitee (including GSEC and the GSEC Group, as applicable) shall reasonably promptly after the receipt of notice of any Claims against such Indemnitee with respect to which indemnification may be sought pursuant to this Agreement, notify the Indemnitor in writing thereof; provided that the failure of the Indemnitee reasonably promptly to provide any such notice shall only reduce the liability of the Indemnitor by the amount of any damages attributable to the failure of the Indemnitee to give such notice in such manner. The Indemnitor shall control the settlement of all Claims over which it has assumed the defense; provided, however, that Indemnitor shall not conclude any settlement which requires any action or forbearance from action by, concedes any liability by, or compromises future claims of the Indemnitee or any of its Affiliates without the prior approval of the Indemnitee (which shall not be unreasonably withheld). The Indemnitee shall provide reasonable assistance to the Indemnitor when the Indemnitor so requests, at the Indemnitor's expense, in connection with such Claim. In all cases, the Indemnitee shall have the right to participate in and be represented by counsel of its own choice and at its own expense in any such Claim or with respect to any Claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. **<u>Indemnity Payment</u>.** In the event that either Party is required to be indemnified by the Indemnitor, the Indemnitor shall promptly pay the Indemnitee any amounts due and owing by Indemnitor. The amount owing to the Indemnitee shall be the amount of such Indemnitee's actual loss or expense net of any insurance proceeds. If there should be a dispute between Indemnitee and Indemnitor as to the amount or manner of determination of any indemnity obligation, the Indemnitor shall nevertheless pay when due such portion, if any, of the obligation that is not subject to dispute. Upon resolution of the dispute, if additional payment is due, it shall be paid with interest at the Interest Rate, which shall be applied to the unpaid amount for the period following (and including) the original due date to (but excluding) the date such amount is paid. In the event that Indemnitee recovers from a third party all or any portion of an amount of its loss or expense that was paid by the Indemnitor, the Indemnitee shall refund Indemnitor the recovered amount, including any recovered interest.

**XVII.** **FINES AND PENALTIES** 

**IF FINES, ASSESSMENTS, PENALTIES, CHARGES, LEGAL COSTS AND/OR ATTORNEY'S FEES ARE ASSESSED AGAINST COOPERATIVE OR GSEC BY ANY ENTITY DUE TO NONCOMPLIANCE BY CUSTOMER, CUSTOMER'S AFFILIATES, THE CUSTOMER'S FACILITIES, OR OTHERWISE DUE TO THE ARRANGEMENTS CONTEMPLATED HEREIN, WITH ANY LEGAL, REGULATORY, OR TARIFF REQUIREMENTS APPLICABLE TO CUSTOMER, CUSTOMER'S AFFILIATES, THE CUSTOMER'S FACILITIES, OR THIS AGREEMENT OR ANY CONTRACT TO WHICH CUSTOMER IS A PARTY, INCLUDING WITHOUT LIMITATION ANY TRANSMISSION CHARGES, FINES OR PENALTIES IMPOSED BY NERC, ERCOT OR ANY OTHER GOVERNMENTAL AUTHORITY, AND TO THE EXTENT EACH OF THE FOREGOING IS NOT THE FAULT OF COOPERATIVE OR GSEC, CUSTOMER SHALL INDEMNIFY AND HOLD HARMLESS COOPERATIVE AND GSEC AGAINST ANY AND ALL COSTS, LOSSES, LIABILITIES, DAMAGES AND CLAIMS SUFFERED OR INCURRED BY COOPERATIVE OR GSEC AS A RESULT, INCLUDING WITHOUT LIMITATION, COOPERATIVE'S AND GSEC'S REASONABLE AND DOCUMENTED ATTORNEY'S FEES.**

**XVIII.** **REPRESENTATIONS AND WARRANTIES** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Cooperative
 hereby represents and warrants to Customer as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Cooperative is a cooperative corporation duly formed, validly existing and in good standing under the laws of the State of Texas and has all requisite power and authority to conduct its business as it is now being conducted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Cooperative has all requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transaction as contemplated hereby. The execution and delivery by Cooperative of this Agreement, and the performance by Cooperative of its obligations hereunder, have been duly and validly authorized by all necessary corporate action on the part of Cooperative, no other corporate action on the part of Cooperative or its board of directors or members being necessary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) This Agreement has been duly and validly executed and delivered by Cooperative and constitutes the legal, valid and binding obligation of Cooperative enforceable against Cooperative in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or other applicable laws relating to or affecting the rights of creditors generally, or by general equitable principles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) There is not pending or, to its knowledge, threatened against it any legal proceedings that could materially adversely affect its ability to perform its obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) No Event of Default with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) As of the Effective Date, Cooperative does not reasonably expect that its provision of Service to Customer hereunder would require Cooperative to change its current registration in any way which would result in a Material Adverse Effect on Cooperative, including, but not limited to, Cooperative's current ERCOT registration as an LSE or other registration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) As of the Effective Date, Cooperative does not reasonably expect that this Agreement or Cooperative's Service provided hereunder would cause it to lose its tax-exempt status under Section 501(c)(12) of the United States Internal Revenue Code, 26 U.S.C. § 501.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Customer
 hereby represents and warrants to Cooperative as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Customer is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Nevada and has all requisite company power and authority to conduct its business as it is now being conducted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Customer has all requisite company power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by Customer of this Agreement, and the performance by Customer of its obligations hereunder, have been duly and validly authorized by all necessary company action on the part of Customer, no other action on the part of Customer or its members being necessary. Customer specifically warrants that it or its Affiliate(s) control the MDC Farm and it has the authority to cause such Affiliate(s) to abide by the terms of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) This Agreement has been duly and validly executed and delivered by Customer and constitutes the legal, valid and binding obligation of Customer enforceable against Customer in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or other applicable laws relating to or affecting the rights of creditors generally, or by general equitable principles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) There is not pending or, to its knowledge, threatened against it or any of its Affiliates any legal proceedings that could materially adversely affect its ability to perform its obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) No Event of Default with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) For the duration of the Term, Customer shall ensure that the MDC Farm complies with all applicable ERCOT Protocols (including Protocol 10.3.2.3 as amended by Nodal Protocol Revision Request 945) related to the permissible netting of generation and load at ERCOT meters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) For the duration of the Term, Customer, and any entity holding or that will hold an interconnection agreement or land lease in connection with the MDC Farm, are not companies (as defined below): (i) owned by, or where the majority of stock or other ownership interest of the company is held or controlled by: (a) individuals who are citizens of China, Iran, North Korea, Russia, or a designated country; or (b) a company or other entity, including a governmental entity, that is owned or controlled by citizens of or is directly controlled by the government of China, Iran, North Korea, Russia, or a designated country; or (iii) headquartered in China, Iran, North Korea, Russia, or a designated country under the Lone Star Infrastructure Protection Act, TEX. BUS. & COM. CODE § 113.003. For purposes of this representation and warranty, "companies" means a sole proprietorship, organization, association, corporation, partnership, joint venture, limited partnership, limited liability partnership, or limited liability company, including a wholly owned subsidiary, majority-owned subsidiary, parent company, or Affiliate of those entities or business associations, that exists to make a profit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Customer acknowledges that for the duration of the Term Customer is and shall be a retail customer of Cooperative as defined by TEX. UTIL. CODE § 31.002(16) and 16 Texas Administrative Code § 25.5 (113). For the duration of the Term, Customer represents and warrants that (i) it will not provide or receive compensation from Briscoe to produce, generate, transmit, distribute, sell, or furnish electricity from the Facility to any retail customer within the service territory of an electric cooperative that is a member of GSEC and that has not opted-in to retail competition pursuant to Chapter 41 of the Texas Utilities Code and (ii) it shall not be an electric utility as defined by TEX. UTIL. CODE § 31.002(6) as a result of any transaction identified in this Agreement. Nothing in this Section XVIII(B)(8) is intended to preclude Briscoe from providing or receiving compensation from Customer for services other than producing, generating, transmitting, distributing, selling, or furnishing electricity from the Facility to Customer in a manner that would violate Applicable Law or from engaging in sales as a Power Generation Company including sales to GSEC for resale to Cooperative for service to Customer. Without limiting the foregoing, Cooperative acknowledges and agrees that, to the extent permissible by law, Briscoe may receive compensation from Customer for or in connection with any work which may be performed by Briscoe or its personnel at the Facility's substation related to the construction, maintenance and decommissioning of the MDC Interconnection Facilities and MDC Farm for Customer's self-use.

**XIX.** **BREACH/DISCONTINUANCE OF SERVICE** 

Upon the occurrence of, and during the continuation of, an Event of Default, the non- defaulting Party shall have the right, in its sole discretion, to terminate this Agreement by notice to the other Party designating the date of termination in accordance with the provisions of this Section XIX below; provided that, any delay in providing such written notice shall not waive any Event of Default or any right or remedy provided by Applicable Law. In addition to the right of termination and without regard to whether the non-defaulting Party elects to terminate the Agreement, all remedies at law and in equity shall be available to the non-defaulting Party, subject to the limitations on liability set forth in this Agreement.

Each of the following occurrences shall constitute an "Event of Default" hereunder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Failure by a Party to make any payment required hereunder when due if, after notice from the other Party, such failure is not remedied within ten (10) days after receipt of such notice from the other Party;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Failure by a Party to perform any other material obligation hereunder if, after notice from the other Party, such failure is not remedied within thirty (30) days after receipt of such notice from the other Party;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. A
 Party is Bankrupt;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Reserved.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. A Party's material and uncured breach of one of its representations and warranties contained in this Agreement, except those in Sections XVIII(B)(7) or (8), which are specifically addressed in Section XIX(F);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. Customer's representation and warranties contained in Sections XVIII(B)(7) or (8) prove to no longer be correct during the Term with respect to Customer or Customer's assignee as permitted by this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G. Customer's failure to provide a cash deposit or letter of credit required to be provided by Customer pursuant to the Performance Security Agreement or other breach of the Performance Security Agreement referenced in Section X if, after notice from Cooperative or GSEC, such failure is not remedied within five (5) Business Days after receipt of such notice from the other Party, provided that upon the occurrence of, and during the continuation of such failure Cooperative shall have the right in its sole discretion to interrupt and/or suspend Service, including by activation of the DCB; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;H. Termination
 of the Performance Security Agreement.

**XX.** **TERMINATION** 

This Agreement may be terminated in the sole discretion of the non-defaulting Party as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Upon the occurrence of an Event of Default or otherwise consistent with the provisions in Sections XX or XIX of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. If, after the Service Date, (i) GSEC's continued receipt of service from Briscoe, GSEC's continued sale to Cooperative for resale to Customer, or Cooperative's continued service to Customer would have a Material Adverse Effect on Cooperative, (ii) a Change in Law occurs that renders administration of or performance by a Party, Briscoe, or GSEC under this Agreement or the GSEC Briscoe PPA illegal or impossible, (iii) a Change in Law occurs that materially increases Cooperative's, GSEC's, Customer's or Briscoe's costs to perform under this Agreement or the GSEC Briscoe PPA, (iv) a Change in Law occurs that would cause Briscoe, if it continued to perform under the GSEC Briscoe PPA, to be subject to regulation as a "public utility", as such term is defined in the Public Utility Regulatory Act, or to lose its status as an "exempt wholesale generator," as such term is defined in section 1262(6) of the Public Utility Holding Company Act of 2005, and the regulations of the Federal Energy Regulatory Commission thereunder, or (v) a Change in Law occurs that reduces the quantity of RECs associated with Net Energy consumed by the MDC Farm or otherwise adversely affects Briscoe's ability to qualify for RECs associated with any portion of the Net Energy consumed by the MDC Farm, the Parties shall work in good faith for a sixty (60) day period following receipt of notice of such circumstances from the affected Person(s) to resolve the factors that caused such circumstances. If such circumstances may be overcome by reconfiguring or otherwise changing any characteristics of the Facility, the MDC Farm, the EPS Meter, the Briscoe Interconnection Facilities, the MDC Interconnection Facilities, the Delivery Point, and/or the MDC Meter, or by amending this Agreement, the Performance Security Agreement, any Netting Agreement, or the GSEC Briscoe PPA in a manner acceptable to each of GSEC, Briscoe, Customer, and Cooperative, the Parties shall work together in good faith to determine whether it is commercially reasonable to make such changes, and if so, to effect such changes. If, upon the conclusion of such sixty (60) day period, the Parties, GSEC, and Briscoe have been unable to reach a mutually acceptable agreement to address such circumstances, either Party may terminate this Agreement without liability to either Party, except those liabilities that arose prior to termination. During such sixty (60) day period, Cooperative shall not be required to continue performance under this Agreement if (a) performance has been suspended under the GSEC Briscoe PPA, or (b) such performance results in increased liability or unrecovered cost or noncompliance with Applicable Laws. Such suspension may be accomplished by activation of the DCB and shall be a Suspension Period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Notwithstanding the foregoing, if, notwithstanding such suspension of performance under this Agreement, Cooperative will experience increased liability or unrecovered costs or noncompliance with Applicable Laws, Cooperative may terminate this Agreement without liability upon thirty (30) days' notice to Customer if such increased liability or unrecovered costs or noncompliance with Applicable Laws cannot be overcome within such thirty (30) day period by the measures set forth in clause (B) above. Cooperative shall notify Customer at the address provided in Section XXV or otherwise specified in accordance with Section XXV if GSEC or Cooperative intends to suspend performance pursuant to this Section XX(C) or the corresponding provision in the GSEC Briscoe PPA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. By Cooperative immediately with written notice to Customer if: (i) ERCOT, the PUCT or another RTO requests or requires Cooperative to change its current registration which results in a Material Adverse Effect on Cooperative, including but not limited to a change in Cooperative's current ERCOT registration as an LSE or other registration, in order to provide Service hereunder, whether through an interpretation of existing Applicable Law or Change in Law; or (ii) a change in this Agreement or a change to Cooperative's Service provided hereunder would cause it to lose its tax-exempt status under Section 501(c)(12) of the United States Internal Revenue Code, 26 U.S.C. § 501.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. Reserved.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. By either Party with written notice to the other Party, if the Service Date has not commenced on or prior to the Conditions Satisfaction Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G. By either Party with written notice to the other Party, if the conditions precedent set forth in Sections IV or IX(A) have not been met as provided therein on or prior to the Conditions Satisfaction Date; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;H. This Agreement may be terminated in the sole and absolute discretion of Cooperative upon written notice to Customer upon termination of the GSEC Briscoe PPA or the Performance Security Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I. This Agreement shall terminate following written notice to Cooperative upon termination of the Customer Ground Lease. Customer shall provide Cooperative with prompt notice of any termination of the Customer Ground Lease.

At such time as this Agreement terminates or expires, Customer shall pay to Cooperative a "Termination Payment" in an amount equal to any amounts due to Cooperative under this Agreement, including but not limited to outstanding charges for Service provided up to and including the termination date, amounts that accrued based on transactions during the period prior to termination and that are due after termination and any amounts due to Cooperative under the indemnity provisions of this Agreement. Cooperative may draw on the Performance Security (as defined in the Performance Security Agreement) or the cash deposit amount, as described in the Performance Security Agreement, towards the Termination Payment. Cooperative may draw on Net Energy Security for payment of Net Energy, as provided herein and in the Performance Security Agreement. This Termination Payment shall apply in all circumstances, irrespective of the reason the Agreement is terminated, the Party that seeks termination, or whether the termination results from the expiration of the original Term. This Termination Payment shall also apply in the context of any rejection of the Agreement under the Bankruptcy Code.

**XXI.** **CONFIDENTIALITY** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Except as provided in this Section XXI, the Parties shall not publish, disclose, or otherwise divulge Confidential Information to any Person at any time during or after the Term, without the other Party's prior express written consent. Except as may otherwise be required by Applicable Laws (but subject to the remainder of this Section XXI), no press release or other similar public announcement or publication in any media concerning this Agreement or the subject matter of this Agreement may be made by a Party without the consent of the other Party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. A receiving Party may use and disclose Confidential Information where required to do so in litigation, administrative, regulatory or other legal proceedings or otherwise by Applicable Laws, but shall promptly provide notice to the providing Party prior to disclosure, to the extent legally permitted, and afford the providing Party an opportunity to seek a protective order or other relief to prevent or limit disclosure of the Confidential Information. In such event, the receiving Party shall reasonably cooperate in connection with the providing Party's efforts to obtain such protective order or other relief. Further, each Party shall use all reasonable efforts to maintain the confidentiality of the Confidential Information in any litigation or administrative or regulatory proceeding or in any other instance where disclosure is required by Applicable Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Notwithstanding anything to the contrary herein, each Party may provide any Confidential Information: (i) to the Transmission Service Provider, ERCOT, any other Governmental Authority or any other Person (including subcontractors, consultants, accountants, financial advisors, experts, legal counsel and other professional advisors to the Parties) as required for scheduling, settlement and billing or otherwise to perform under or administer this Agreement; (ii) Affiliates and lessors, owners of and potential bidders and bidders for, and potential purchasers and purchasers of, direct or indirect interests in the Facility or the MDC Farm, as the case may be (including direct or indirect interests in the equity interests of Briscoe or Customer, as the case may be); (iii) to any credit rating agency that has issued a credit rating for Cooperative, GSEC or Briscoe or any of its Affiliates or Customer or any of its Affiliates; (iv) in the case of Cooperative, to GSEC; and (v) in the case of both Parties, Briscoe. Each Party shall cause its personnel and all Persons to whom it discloses the Confidential Information to treat it confidentially and to not disclose it to any other Person in any manner whatsoever. The obligation to provide confidential treatment to Confidential Information shall not be affected by the inadvertent disclosure of Confidential Information by any Party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Obligations under this Section XXI shall survive for a period of one (1) year following the termination or expiration of this Agreement, but in no event to exceed any applicable statutes of limitation.

**XXII.** **DISPUTES** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. In the event of any dispute, controversy, or claim arising out of or relating to this Agreement, the Parties shall make good faith efforts to resolve the dispute within ten (10) Business Days following the delivered date of a written notice of the Dispute by a Party. If the Parties are unable to resolve the dispute within this timeframe, it shall be referred to officers for the Parties, who shall negotiate and attempt in good faith to resolve the dispute. If the Parties have not resolved the dispute within thirty (30) days after the dispute was referred to officers of the Parties, or such longer period as the Parties may mutually agree is necessary to achieve resolution of the dispute, such Party may then seek any and all available legal and equitable remedies in a court of competent jurisdiction, but nothing herein shall limit a Party's right to initiate litigation prior to the expiration of the time periods set forth herein, if application of statutes of limitations would prevent a Party from filing a lawsuit within the time permitted by Applicable Law for filing lawsuits, or as necessary to seek injunctive relief.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. If multiple Disputes arise under this Agreement or any Related Agreement and no Party has initiated litigation with respect to any then-active Dispute, the Parties shall work in good faith to consolidate into a single Dispute all then-active Disputes for the purposes of resolving the Disputes together in accordance with the process outlined in Section XXII(A). If multiple suits have been instituted under this Agreement or any Related Agreement, the subject matters of which are related by common questions of law or fact and which could result in conflicting awards or obligations under this Agreement and the Related Agreements, then any Party may request that all such proceedings be consolidated into a single proceeding. Such request to consolidate litigation shall be directed to a court, judge, or other decisionmaker overseeing the litigation. The parties agree that nothing in this Agreement is (i) intended to limit any rights to consolidation that state or federal procedural rules may provide or (ii) intended to foreclose such consolidation. Notwithstanding the foregoing, the Parties reserve the right to oppose consolidation where such consolidation would result in material increased costs or delay in the resolution of particular suits.

**XXIII.** **FORWARD CONTRACT AND MASTER NETTING AGREEMENT** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Each Party acknowledges and agrees that (i) the transaction(s) contemplated herein constitute "forward contracts" within the meaning of the Bankruptcy Code; (ii) this Agreement constitutes a "master netting agreement" within the meaning of the Bankruptcy Code; (iii) each Party is a "financial participant" within the meaning of the Bankruptcy Code; (iv) all payments made or to be made by one party to the other Party pursuant to this Agreement constitute "settlement payments" within the meaning of the Bankruptcy Code; and (v) this Section XXIII entitles each Party the contractual right to "cause the liquidation, termination, or acceleration" of the transactions contemplated herein within the meaning of Bankruptcy Code Sections 556, 560 and 561.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Each Party acknowledges and agrees that, upon a Party becoming Bankrupt, the other Party shall be entitled to exercise its rights and remedies under this Agreement in accordance with the safe harbor provisions of the Bankruptcy Code set forth in, inter alia, Sections 362(b)(6), 362(b)(17), 362(b)(27), 546(e), 548(d)(2), 556, 560 and 561 thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Each Party acknowledges and agrees that, for purposes of this Agreement, the other Party is not a "utility" as such term is used in Section 366 of the Bankruptcy Code, and each Party agrees to waive and not to assert the applicability of the provisions of Section 366 of the Bankruptcy Code in any bankruptcy proceeding wherein such Party is a debtor. In any such proceeding, each Party further agrees to waive the right to assert that the other Party is a provider of last resort.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Each Party covenants that it shall not dispute its status as a "forward contract merchant" for purposes of this Agreement within the meaning of the Bankruptcy Code.

**XXIV.** **ASSIGNMENT** 

This Agreement shall not be assigned by either Party without prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed. Any assignment by Customer shall not be effective until the assignee assumes in writing all obligations of this Agreement, including without limitation Section X of this Agreement and all obligations in the Performance Security Agreement.

**XXV.** **NOTICE** 

Any notice required or authorized to be given hereunder or any other communications between the Parties provided for under the terms of this Agreement shall be in writing (unless otherwise provided) and shall be delivered (i) personally, (ii) by reputable express courier service, or (iii) by email, addressed to the relevant Party at the addressor email (as the case may be) stated below (as such number or address may be changed in accordance with this Section XXV). Any notice so given personally, by express courier service, or by email shall be deemed to have been given when actually received by the recipient. The Parties' addresses for service and other contact information are:

---

| | |
|:---|:---|
| If to Cooperative: | Lighthouse Electric Cooperative, Inc. |
|  | P.O. Box 600 |
|  | Floydada, TX 79235<br> Attn: General Manager |
|  | Email: \*\*\*\*\*\* |

---

---

| | |
|:---|:---|
| With a copy to: | McLaren Law Firm, PLLC |
|  | 2708 82nd Street |
|  | Lubbock, Texas 79423 |
|  | Attn: \*\*\*\*\*\* |
|  | E-mail: \*\*\*\*\*\*\*\*\*\*\* |

---

---

| | |
|:---|:---|
| And an additional copy to: | Golden Spread Electric Cooperative, Inc. |
|  | 905 South Fillmore, Suite 300 |
|  | Amarillo, Texas 79101-3541 |
|  | Attn: President and Chief Executive Officer |
|  | Email: \*\*\*\* |

---

---

| | |
|:---|:---|
| With a copy to: | Golden Spread Electric Cooperative, Inc. |
|  | 905 South Fillmore, Suite 300 |
|  | Amarillo, Texas 79101-3541 |
|  | Attn: Chief Legal Officer and General Counsel |
|  | Email: \*\*\*\* |

---

---

| | |
|:---|:---|
| If to Customer: | Soluna DV Services LLC<br> Soluna Computing, Inc. |
|  | 325 Washington Ave. Extension<br> Albany, NY 12205 |
|  | Attn: Chief Operating Officer |
|  | Email: \*\*\* |

---

Notice to a copy party shall not be required for such notice to be deemed received pursuant to the above. The above-listed names, titles and addresses of either Party may be changed by written notification to the other Party in accordance with this Section XXV.

**XXVI.** **ENTIRE AGREEMENT** 

This Agreement, the Performance Security Agreement and any Netting Agreement entered into pursuant to the terms of this Agreement and that certain DCB Consultant Agreement entered into on or after the Effective Date constitute the entire agreement between the Parties respecting the subject matter hereof and supersede any prior or contemporaneous agreements or representations of Cooperative and Customer regarding the same subject matter. Neither Cooperative nor Customer, nor either of their respective agents and employees, have made any representations, promises, or made any inducements, written and verbal, which are not contained herein. Each of Customer and Cooperative agrees that it is not relying on any statement not herein contained. This Agreement may be modified at any time by mutual written agreement by the Parties hereto. If any provision of this Agreement is determined to be void, unenforceable, or in violation of law, such provision shall be severed from this Agreement and the remaining provisions of this Agreement shall continue to be binding on the Parties and shall be enforced to the fullest extent possible, in a manner consistent with the original intent of the Parties.

**XXVII.** **WAIVER** 

No waiver, expressed or implied, to any breach of any one or more of the covenants or agreements hereof shall be deemed to be a waiver of any subsequent breach.

**XXVIII.** **THIRD PARTY BENEFICIARIES** 

No provisions of this Agreement are intended to, and shall not, create any rights in or confer any benefits upon any person other than the Parties hereto, except for GSEC's rights under Sections IV, V, VI(D), VII, VIII(B), IX, X, XI(C), XII(A), XII(C), XVI, XVII, XIX(G), XX(B) XXI, XXVIII and XXX, the definitions of "Market Price Cap" and "Service Date" incorporated in this Agreement and the rights of the Cooperative Group and GSEC Group to indemnification under Sections IX and XVI. Notwithstanding the foregoing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. The Parties acknowledge that Cooperative is granted the right to enforce, exercise, or act on behalf of GSEC with respect to any of the rights of GSEC and Cooperative set forth in Article 10, Sections 3.2, 3.3, 3.4, 5.1, 6.1, 6.3, 7.2, 7.8, 12.4, 15.1(D), 15.2, 17.3 and 17.10, and the definition of "Service Date" incorporated in the GSEC Briscoe PPA, and Cooperative is therefore an express, intended third-party beneficiary of the GSEC Briscoe PPA for those purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The Parties agree that GSEC shall have the right to enforce, exercise, or act on behalf of Cooperative with respect to any of the rights of GSEC set forth in Sections IV, V, VI(D), VII, VIII(B), IX, X, XI(C), XII(A), XII(C), XVI, XVII, XIX(G), XX(B),XXI, XXVIII and XXX, the definitions of "Market Price Cap" and "Service Date" incorporated into this Agreement and the rights to indemnification under Sections IX, XVI, and XVII of this Agreement, and GSEC is therefore an express, intended third-party beneficiary of this Agreement for those purposes.

**XXIX.** **ADDITIONAL TERMS** 

The Service contracted for herein is to be provided and taken in accordance with the provisions of this Agreement including any and all amendments that may hereafter be approved in accordance with Applicable Law.

Customer assumes all responsibility for electricity and the Customer Facilities on Customer's side of the Delivery Point.

Customer shall reimburse Cooperative for all reasonable and documented costs incurred by Cooperative in arranging for Service to Customer, including but not limited to costs for actual, documented consulting and legal fees.

**XXX.** **SURVIVAL; EFFECT OF TERMINATION OR EXPIRATION** 

Notwithstanding any termination or expiration of this Agreement, this Agreement will remain in effect with respect to, and to the extent necessary to facilitate the settlement of, all liabilities and obligations arising hereunder before the effective date of such termination or expiration. Without limiting the generality of the foregoing, Section XIX (Breach/Discontinuance of Service), Section XXI (Confidentiality), Section XXXII (Choice of Law and Venue), Section XXXIII (Jury Waiver), Section XVI (Indemnification, Limitation of Liability, and Disclaimer of Warranties) and any other indemnity provision, Section XII (Invoices and Payment) to the extent of any payments accrued prior to termination, and any provision which expressly or by implication is to continue in full force and effect after the termination or expiration of this Agreement, shall survive the termination or expiration hereof, and such provisions shall remain in effect and enforceable following such expiration or termination. If any provision of this Agreement provides an express survival period, this Agreement shall survive termination with respect to that provision for the express survival period set forth herein.

**XXXI.** **MULTIPLE COUNTERPARTS/FAX OR EMAIL SIGNATURES** 

This Agreement may be executed in multiple counterparts, and each counterpart shall be considered as if it were an original. Email signatures shall be given the same effect as originals.

**XXXII.** **CHOICE OF LAW AND VENUE** 

This Agreement shall be governed, construed and interpreted in accordance with the laws of the State of Texas, without regard to principles of conflicts of law. Both Parties hereto irrevocably agree to resolve any and all disputes connected with or arising from this Agreement exclusively in a federal district court in Travis County, Texas.

**XXXIII.** **JURY WAIVER** 

Both Parties to this Agreement irrevocably waive any and all rights to a jury trial for any dispute connected with or arising from this Agreement, or the relationship between the Parties thereto, whether the claim, dispute or cause of action is based in contract, tort, statutory or any other legal basis.

**XXXIV.** **NON-WAIVER** 

No waiver by either Party hereto of any one or more defaults by the other Party in the performance of any of the provisions of this Agreement shall be construed as a waiver of any other default or defaults whether of a like kind or different nature.

**XXXV.** **AMENDMENTS** 

Any amendment to this Agreement must be made in writing signed by both Parties.

**XXXVI.** **RULES OF CONSTRUCTION** 

The initially capitalized terms listed in this Article I, or defined elsewhere in this Agreement, shall have the meanings set forth in Section I, or (unless otherwise indicated) as defined elsewhere in this Agreement, whenever the terms appear in this Agreement, whether in the singular or the plural or in the present or past tense. In addition, the following rules of construction shall apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. The
 masculine shall include the feminine and neuter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. References to "Articles," "Sections," or "Exhibits" shall be to articles, sections, or exhibits of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. References to any Applicable Law shall be to such Applicable Law, as it may be amended, restated, supplemented, modified, or interpreted or applied by a relevant Governmental Authority from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. References to any agreement shall be to such agreement, as it may be amended, restated, supplemented, or modified from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. The words "herein," "hereof" and "hereunder" shall refer to this Agreement as a whole and not to any particular article or section of this Agreement; the word "including" shall mean "including, without limitation"; and the word "include" shall mean "include, without limitation."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. The Exhibits are incorporated in and are intended to be a part of this Agreement. In the event of any conflict or inconsistency between this Agreement or the <u>Exhibits</u>, this Agreement shall prevail.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G. This Agreement was negotiated and prepared by all Parties with the advice and participation of counsel. The Parties have agreed to the wording of this Agreement and none of its provisions shall be construed against one Party on the ground that such Party is the author of this Agreement or any part hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;H. Whenever this Agreement refers to a number of days, such number shall be deemed to refer to calendar days unless Business Days are specified. Whenever any action must be taken hereunder on or by a day that is not a Business Day, then such action may be validly taken on or by the next day that is a Business Day.

(SIGNATURE PAGE FOLLOWS)

**IN WITNESS WHEREOF,** the Parties hereto have executed this Agreement as of the Effective Date.

---

| |
|:---|
| **COOPERATIVE** |
| **LIGHTHOUSE ELECTRIC COOPERATIVE, INC.** |
| By: |
| Name: |
| Title: |
| **CUSTOMER** |
| **SOLUNA DV SERVICES, LLC** |
| By: |
| Name: |
| Title: |

---

 ****

## Exhibit 10.69

**Exhibit 10.69**

**<u>SECOND ADDENDUM AMENDMENT</u>**

THIS SECOND ADDENDUM AMENDMENT, dated as of March 10, 2023, (this "***Agreement***"), is by and among and each purchaser identified on Schedule A hereto (each, including its successors and permitted assigns, a "<u>Purchaser</u>" and collectively, the "<u>Purchasers</u>"), Collateral Services LLC, ("Collateral Agent" and together with the Purchasers, the "Secured Parties"), and Soluna Holdings, Inc. (f/k/a Mechanical Technology, Incorporated), a Nevada corporation (the "***Company***" and together with the Purchasers each a **"*Party*"** and collectively the **"*Parties*"**).

W I T N E S S E T H:

WHEREAS, the Company and Purchasers entered into a Securities Purchase Agreement dated October 25, 2021 (the "<u>SPA</u>"). Capitalized Terms not defined herein shall have the meaning set forth in the SPA and other Transaction Documents (as defined in the SPA);

WHEREAS, on July 19, 2022, the Parties entered into an Addendum (the "Addendum") to memorialize certain agreements between the Parties, which was subsequently amended by the Addendum Amendment dated September 13, 2022 ("First Amendment");

NOW THEREFORE, in consideration of the mutual benefits accruing to Parties hereunder and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows:

AGREEMENTS

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Security Interests</u>. The Parties confirm the release of the Secured Parties' security interest in the assets of Soluna DVSL ComputeCo, LLC ("D1A"). The Parties rescind the release the security interest in the assets of Soluna DV Computeco, LLC ("D1B") and D1B will be deemed a debtor under the Security Agreement with all its assets pledged to the Secured Parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Default Waiver</u>. Contemporaneously with the payment by the Company of the amounts set forth on Schedule A, the Purchasers waive any currently existing events of default arising under the Notes, through the date hereof. This Document shall be a Joint Instruction to the Escrow Agent under the September 29, 2022, escrow agreement, to release the funds set forth on Schedule A to the Purchasers pursuant to instructions provided by each Purchaser for its portion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>ROFR</u>. In the event the Secured Parties seek to foreclose on any equity interest in D1A, Soluna SLC Fund I Projects Holdco LLC, a Delaware limited liability company, or an affiliate ("Spring Lane") will be provided one time option to purchase for cash, whatever equity interests are being foreclosed upon at a price and upon terms that are commercially reasonable. If Spring Lane shall fail to accept the offer within 10 days after it being made or close within 30 days after it being made, the Secured Parties shall have no further obligation to Spring Lane.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Cash Proceeds</u>. The $5,770,065.00 cash proceeds of that certain Purchase and Sale Agreement among the Company and Spring Lane related to the purchase of membership interests of D1A annexed hereto as Exhibit 4 (the "P&S Agreement") shall not be deemed to be a portion of the Collateral prior to such proceeds being expended by the Company. Asset purchased with such funds shall be deemed a portion of the Collateral. The assets of D1A shall remain not part of the Collateral.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Third Party Beneficiary</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Spring Lane shall be a third party beneficiary of this Agreement and shall have the right to enforce this Agreement directly to the extent Spring Lane deems such enforcement necessary or advisable to protect its rights hereunder. Any notices or options required to be given or made to Spring Lane hereunder shall be in writing and delivered to Spring Lane at the following address: 100 Cambridge Street, Suite 1802, Boston, MA 02114, \*\*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. The Company representants that the P&S Agreement annexed hereto (with its exhibits) is the complete agreement with Spring Lane and there are no other agreements or understanding, written or oral. The Company undertakes P&S Agreement not to make any amendments, changes or waivers to the P&S Agreement, Contribution Agreement (as defined in the P&S Agreement), Restated LLCA (as defined in the P&S Agreement) without the consent of the Secured Parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Public Disclosure</u>. Within one (1) business day after execution of this Agreement, the Company shall file a form 8-K with the Securities and Exchange Commission, disclosing this Agreement, which shall be an exhibit to such filing. The Company shall also file additional form 8-Ks within one (1) Trading Day after the Second Reset and Third Reset.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Event of Default</u>. A breach of the terms of this Agreement shall be an Event of Default under the Notes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Representations</u>. The Company warrants and represents that all the warranties and representations of the Company set forth in the Transaction Documents are true and accurate in all material respects as of the date of this Agreement and will be as of the Approval Date, First Reconcile Date and Second Reconcile Date. This Agreement shall be included in the definition of "Transaction Documents" in the SPA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Governing Law; Jurisdiction; Waiver of Jury Trial</u>. (a) This Agreement shall be governed by and construed under the laws of the State of New York applicable to contracts made and to be performed entirely within the State of New York. Each Party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State and County of New York for the adjudication of any dispute hereunder or in connection herewith or therewith or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. (b) EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES AND AGREES THAT ANY DISPUTE OR CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS AGREEMENT AND HAS HAD AN OPPORTUNITY TO SEEK SEPARATE COUNSEL OF ITS OWN CHOICE TO REVIEW THIS AGREEMENT, (III) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <u>Injunctive Relief</u>. Each Party acknowledges and agrees that a breach by it of its obligations hereunder will cause irreparable harm to the other and that the remedy or remedies at law for any such breach will be inadequate and agrees, in the event of any such breach, in addition to all other available remedies, the non-breaching party shall be entitled to an injunction restraining any breach and requiring immediate and specific performance of such obligations without the necessity of showing economic loss or the posting of any bond.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. <u>Severability</u>. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; *provided* that in such case the parties shall negotiate in good faith to replace such provision with a new provision which is not illegal, unenforceable or void, as long as such new provision does not materially change the economic benefits of this Agreement to the Parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. <u>Independent Nature of Purchasers' Obligations and Rights</u>. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents. For reasons of administrative convenience only, each Purchaser and its respective counsel have chosen to communicate with the Company through G&M. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and among the Purchasers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. <u>Counterparts</u>. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Delivery of executed counterparts of this Agreement by facsimile or other electronic format (including via .pdf and DocuSign) shall be effective as an original.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. <u>Notices</u>. All notices shall be delivered in accordance with the notice provisions of the SPA and Security Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. <u>Entire Agreement; Amendments</u>. This Agreement constitutes the entire agreement between the parties with regard to the subject matter hereof and thereof, superseding all prior agreements or understandings, whether written or oral, between or among the parties. Except as specifically modified herein, the Transaction Documents including the Addendum remain in full force and effect without any waivers or modifications. No amendment, modification or other change to this Agreement or waiver of any agreement or other obligation of the parties under this Agreement may be made or given unless such amendment, modification or waiver is set forth in writing and is signed by the Parties; provided, however, that Spring Lane's written consent shall be required with respect to any amendment, modification or waiver of this Agreement that impacts Spring Lane's rights hereunder. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. As used in this Agreement, any consent of the Purchasers shall be determined in accordance with the terms of the SPA.

**[Signatures begin on next page]**

IN WITNESS WHEREOF, the parties have caused this Addendum Amendment to be duly executed as of the day and year first above written.

**<u>COMPANY</u>**

---

| | |
|:---|:---|
| Soluna Holdings, Inc. | Soluna DV Computeco, LLC |
| By: | By: |
| Its: | Its: |
| **<u>PURCHASERS</u>** | **<u>PURCHASERS</u>** |
| ALPHA CAPITAL ANSTALT | SUPEREIGHT CAPITAL HOLDINGS LTD. |
| By: | By: |
| Name: | Name: |
| Title: | Title: |
| 3I, LP |  |
| By: | XINIU NIE |
| Name: |  |
| Title: |  |
| AJF Consulting |  |
| By: | YI HUA CHEN |
| Name: |  |
| Title: |  |
| **<u>COLLATERAL AGENT</u>** | **<u>COLLATERAL AGENT</u>** |
| Collateral Services LLC |  |
| By: |  |
| Name: |  |
| Title: |  |

---

SCHEDULE A

---

| | |
|:---|:---|
| **Purchaser** | **Payment Amount** |
| Alpha Capital Anstalt | $391052.07 |
| Supereight Capital Holdings Ltd. | $8175.24 |
| AJF Consulting | $10110.17 |
| 3i LP | $156505.77 |
| Xiniu Nie | $30905.18 |
| Yi Hua Chen | $20603.53 |
| **Total** | $**617351.96** |

---

## Ex-21

**Exhibit 21**

**SUBSIDIARIES OF SOLUNA HOLDINGS, INC.**

---

| | |
|:---|:---|
| **Subsidiary Name** | **Jurisdiction of Incorporation or Organization** |
| Soluna Computing, Inc. | Nevada |
|  | New York |

---

**SUBSIDIARIES OF SOLUNA COMPUTING, INC.**

---

| | |
|:---|:---|
| **Subsidiary Name** | **Jurisdiction of Incorporation or Organization** |
| Soluna MC, LLC | Nevada |
| Soluna SW, LLC | Nevada |
| Soluna Callisto Holdings, Inc.<br> Soluna DV Devco, LLC | Delaware |
| Soluna DV ComputeCo, LLC | Delaware |
| Soluna DV Services, LLC | Nevada |
|  | Delaware |

---

**SUBSIDIARIES OF SOLUNA MC, LLC**

---

| | |
|:---|:---|
| **Subsidiary Name** | **Jurisdiction of Incorporation or Organization** |
| Soluna MC Borrowings, LLC 2021-1 | Delaware |

---

**SUBSIDIARIES OF SOLUNA SW, LLC**

---

| | |
|:---|:---|
| **Subsidiary Name** | **Jurisdiction of Incorporation or Organization** |
| Soluna SW Borrowings, LLC 2022-1 | Delaware |

---

**SUBSIDIARIES OF DV DEVCO, LLC**

---

| | |
|:---|:---|
| **Subsidiary Name** | **Jurisdiction of Incorporation or Organization** |
| Soluna DVSL ComputeCo, LLC | Delaware |

---

## Exhibit 23.1

**Exhibit 23.1**

<u>CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</u>

We hereby consent to the incorporation by reference in the Registration Statement No. 333-262594 on Form S-3, the Registration Statement No. 333-261427 on Form S-3, and the Registration Statement No. 333–260614 on Form S-8 of our report dated March 31, 2023, with respect to our audits of the consolidated financial statements of Soluna Holdings, Inc. and Subsidiaries (the "Company"), formerly known as Mechanical Technology, Incorporated, as of December 31, 2022 and 2021 and for each of the years in the two-year period ended December 31, 2022, which appears in this Annual Report on Form 10-K for the year ended December 31, 2022. Our report contained an explanatory paragraph regarding substantial doubt about the Company's ability to continue as a going concern.

/S/ UHY LLP

Albany, New York

March 31, 2023

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Michael Toporek, certify that:

1. I have reviewed this Annual Report on Form 10-K of Soluna Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| March 31, 2023 | */s/ Michael Toporek* |
|  | Michael Toporek |
|  | Chief Executive Officer |
|  | (Principal Executive Officer) |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Philip Patman, Jr., certify that:

---

| | |
|:---|:---|
| 1. | I have reviewed this Annual Report on Form 10-K of Soluna Holdings, Inc.; |
| 2. | &nbsp;&nbsp;&nbsp;&nbsp;Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant's other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
|  | (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|  | (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |

---

---

| | |
|:---|:---|
| March 31, 2023 | */s/ Philip Patman, Jr.* |
|  | Philip Patman, Jr. |
|  | Chief Financial Officer |
|  | (Principal Financial Officer) |

---

## Exhibit 32.1

**Exhibit 32.1**

**Soluna Holdings, Inc.**

**Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

**(18 U.S.C. Section 1350)**

In connection with the Annual Report on Form 10-K of Soluna Holdings, Inc. (the "Company") for the year ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael Toporek, Chief Executive Officer of the Company, certify, pursuant to the requirements of Section 906 of the Sarbanes-Oxley Act of 2002, (18 U.S.C. Sections 1350(a) and (b)), that, to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;(1) The
 Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The
information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 31, 2023

---

| |
|:---|
| */s/ Michael Toporek* |
| Michael Toporek |
| Chief Executive Officer |
| (Principal Executive Officer) |

---

This certification is made solely for the purpose of 18 U.S.C. Section 1350, and is not being filed as part of the Report or as a separate disclosure document, and may not be disclosed, distributed or used by any person for any reason other than as specifically required by law.

## Exhibit 32.2

**Exhibit 32.2**

**Soluna Holdings, Inc.**

**Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

**(18 U.S.C. Section 1350)**

In connection with the Annual Report on Form 10-K of Soluna Holdings, Inc. (the "Company") for the year ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Philip Patman, Jr., Chief Financial Officer of the Company, certify, pursuant to the requirements of Section 906 of the Sarbanes-Oxley Act of 2002, (18 U.S.C. Sections 1350(a) and (b)), that, to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;(1) The
 Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The
information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 31, 2023

---

| |
|:---|
| */s/ Philip Patman, Jr.* |
| Philip Patman, Jr |
| Chief Financial Officer |
| (Principal Financial Officer) |

---

This certification is made solely for the purpose of 18 U.S.C. Section 1350, and is not being filed as part of the Report or as a separate disclosure document, and may not be disclosed, distributed or used by any person for any reason other than as specifically required by law.