Document:

Exhibit 10.8

 

FORWARD PURCHASE
AGREEMENT

 

This Forward Purchase
Agreement (this “Agreement”) is entered into as of __________, 2021, by and between Galliot Acquisition Corp., a Delaware
corporation (the “Company”), and the purchaser named on the signature page hereto (the “Purchaser”).

 

Recitals

 

WHEREAS, the Company
was incorporated for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or
similar business combination with one or more businesses (a “Business Combination”);

 

WHEREAS, the Company
has filed with the U.S. Securities and Exchange Commission (the “SEC”) a registration statement on Form S-1 (the “Registration
Statement”) for its initial public offering (“IPO”) of 25,000,000 units (or 28,750,000 units if the underwriters’
over-allotment option (the “IPO Option”) is exercised in full) (the “Public Units”) at a price
of $10.00 per Public Unit, each Public Unit comprised of one share of Class A common stock, par value $0.0001 per share, of the Company
(the “Class A Shares,” and the Class A Shares included in the Public Units, the “Public Shares”),
and one-sixth of one redeemable warrant, where each whole redeemable warrant is exercisable to purchase one Class A Share at an exercise
price of $11.50 per share (the “Warrants,” and the Warrants included in the Public Units, the “Public Warrants”);

 

WHEREAS, the Company’s
sponsor, Galliot Holdings, LLC, has agreed or will agree to purchase an aggregate of 5,000,000 Warrants (or 5,500,000 Warrants if the
IPO Option is exercised in full) at a price of $1.50 per warrant in a private placement that will close simultaneously with the closing
of the IPO (the “Private Placement Warrants”);

 

WHEREAS, following
the closing of the IPO (the “IPO Closing”), the Company will seek to identify and consummate a Business Combination;

 

WHEREAS, the parties
wish to enter into this Agreement, pursuant to which concurrently with the closing of the Company’s initial Business Combination
(the “Business Combination Closing”), the Company may issue and sell to the Purchaser, and the Purchaser may purchase
from the Company, on a private placement basis, 2,500,000 Class A Shares at $10.00 per share (the “Forward Purchase Shares”)
for an aggregate purchase price of $25,000,000;

 

WHEREAS, proceeds
from the IPO and the sale of the Private Placement Warrants in an aggregate amount equal to the gross proceeds from the IPO will be deposited
into a trust account for the benefit of the holders of the Public Shares (the “Trust Account”), as described in the
Registration Statement.

 

NOW, THEREFORE,
in consideration of the premises, representations, warranties and the mutual covenants contained in this Agreement, and for other good
and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

Agreement

 

1.  
Sale and Purchase.

 

(a)  
Forward Purchase Units.

 

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(i)  
Subject to the terms and conditions set forth herein, the Company shall issue and sell to the Purchaser, and the Purchaser shall
purchase from the Company, 2,500,000 Forward Purchase Shares for a purchase price of $10.00 per Forward Purchase Share (the “Forward
Purchase Price”), or $25,000,000 in the aggregate.

 

(ii)  
As soon as reasonably practicable, but in no event less than twenty (20) Business Days after the Company has identified a target
for the Business Combination and that target has indicated a willingness to enter into definitive negotiations for the Business Combination,
the Company shall provide the Purchaser with notice (the “Initial Company Notice”). Along with delivery of the Initial
Company Notice, the Company shall provide the Purchaser with all pertinent information related to the Business Combination, including:
(1) the identity of the counterparty or parties to the Business Combination (the “Target”); (2) audited financial
documents (at a minimum, income statements, balance sheets, statements of cash flow, and general ledgers) of the Target for each fiscal
for each of the previous three (3) fiscal years (if such audited financial documents are commercially reasonably obtainable by the Company;
if audited financial documents are not commercially reasonably obtainable, then unaudited financial documents); (3) the complete terms
of the Business Combination (including identification of other Forward Purchase Agreements and the amounts thereof, any debt being utilized
by the Company in furtherance of the Business Combination, and capitalization tables for the Company immediately prior to and following
the Business Combination); (4) the proposed timeline for the Business Combination; and (5) such other information as the Purchaser (or
any applicable Transferee pursuant to Section 4(b) hereof) may reasonably request. The Company shall keep the Purchaser informed of the
progress of the negotiations with the target of the Business Combination, and shall update the information provided to the Purchaser
as reasonably necessary to keep the Purchaser informed of the status of the target and the Business Combination.

 

(B)  
The Company shall inform the Purchaser of the entry into definitive agreements with the Target for the Business Combination. Prior
to the later of twenty (20) Business Days after this notification to the Purchaser or twenty (20) business days before the Business Combination
Closing, the Purchaser shall provide the Company with notice of the decision of its investment committee as to the approval or non-approval
of the purchase of Forward Purchase Shares. If approved, this notice shall constitute the binding obligation of the Purchaser to purchase
the Forward Purchase Shares, subject to the terms and conditions of this Agreement. The determination of the Purchaser’s investment
committee as to whether the Forward Purchase Shares offered to the Purchaser are to be purchased by the Purchaser shall be made in the
committee’s reasonable business judgement.

 

(iii)  
At least ten (10) Business Days before the Business Combination Closing, the Company shall provide the Purchaser with an updated
notice (the “Final Company Notice”) including:

 

(A)  
the anticipated date of the Business Combination Closing; and

 

(B)  
instructions for wiring the Forward Purchase Price.

 

(iv)  
The closing of the sale of Forward Purchase Shares (the “Forward Closing”) shall be held on the same date and
concurrently with the Business Combination Closing (such date being referred to as the “Forward Closing Date”). At
least three (3) Business Days prior to the Forward Closing Date, the Purchaser shall deliver the Forward Purchase Price for the Forward
Purchase Shares by wire transfer of U.S. dollars in immediately available funds to the account specified by the Company in such notice
(which shall be an escrow account maintained by American Stock Transfer & Trust Company LLC, acting as escrow agent) to be held in
escrow until the Forward Closing. Immediately prior to the Forward Closing on the Forward Closing Date, (i)

 

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the Forward Purchase
Price shall be released from escrow automatically and without further action by the Company or the Purchaser, and (ii) upon such release,
the Company shall issue the Forward Purchase Shares to the Purchaser in book-entry form, free and clear of any liens or other restrictions
whatsoever (other than those arising under state or federal securities laws), registered in the name of the Purchaser (or its nominee
in accordance with its delivery instructions), or to a custodian designated by the Purchaser, as applicable. In the event the Business
Combination Closing does not occur within five (5) Business Days of the date scheduled for closing, the Forward Closing shall not occur
and the Company shall promptly (but not later than one (1) Business Day thereafter) return the Forward Purchase Price to the Purchaser.
For purposes of this Agreement, “Business Day” means any day, other than a Saturday or a Sunday, that is neither a
legal holiday nor a day on which banking institutions are generally authorized or required by law or regulation to close in the City
of New York, New York.

 

(b)  
Legends. Each register and book entry for the Forward Purchase Shares shall contain a notation, and each certificate (if
any) evidencing the Forward Purchase Shares shall be stamped or otherwise imprinted with a legend, in substantially the following form:

 

“THE SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION,
AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT AND LAWS. THE SALE, PLEDGE, HYPOTHECATION, OR TRANSFER OF THE SECURITIES REPRESENTED
HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN FORWARD PURCHASE AGREEMENT BY AND BETWEEN THE HOLDER AND THE COMPANY. COPIES
OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.”

 

2.  
Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Company as follows, as of
the date hereof:

 

(a)  
Organization and Power. The Purchaser is duly organized, validly existing, and in good standing under the laws of the jurisdiction
of its formation and has all requisite power and authority to carry on its business as presently conducted and as proposed to be conducted.

 

(b)  
Authorization. The Purchaser has full power and authority to enter into this Agreement. This Agreement, when executed and
delivered by the Purchaser, will constitute the valid and legally binding obligation of the Purchaser, enforceable against the Purchaser
in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
and any other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies, or (iii) to the extent the indemnification
provisions contained in the Registration Rights (as defined below) may be limited by applicable federal or state securities laws.

 

(c)  
Governmental Consents and Filings. No consent, approval, order or authorization of, or registration, qualification, designation,
declaration or filing with, any federal, state or local governmental authority is required on the part of the Purchaser in connection
with the consummation of the transactions contemplated by this Agreement.

 

(d)  
Compliance with Other Instruments. The execution, delivery and performance by the Purchaser of this Agreement and the consummation
by the Purchaser of the transactions contemplated by this

 

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Agreement will not
result in any violation or default (i) of any provisions of its organizational documents, (ii) of any instrument, judgment, order, writ
or decree to which it is a party or by which it is bound, (iii) under any note, indenture or mortgage to which it is a party or by which
it is bound, (iv) under any lease, agreement, contract or purchase order to which it is a party or by which it is bound or (v) of any
provision of federal or state statute, rule or regulation applicable to the Purchaser, in each case (other than clause (i)), which would
have a material adverse effect on the Purchaser or its ability to consummate the transactions contemplated by this Agreement.

 

(e)  
Purchase Entirely for Own Account. This Agreement is made with the Purchaser in reliance upon the Purchaser’s representation
to the Company, which by the Purchaser’s execution of this Agreement, the Purchaser hereby confirms, that the Forward Purchase
Shares to be acquired by the Purchaser will be acquired for investment for the Purchaser’s own account, not as a nominee or agent,
and not with a view to the resale or distribution of any part thereof in violation of any state or federal securities laws, and that
the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same in violation of
law. By executing this Agreement, the Purchaser further represents that the Purchaser does not presently have any contract, undertaking,
agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person, with respect
to any of the Forward Purchase Shares. For purposes of this Agreement, “Person” means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or any government or
any department or agency thereof. Person does not include any affiliated entity of Purchaser.

 

(f)  
Disclosure of Information. The Purchaser has had an opportunity to discuss the Company’s business, management, financial
affairs and the terms and conditions of the offering of the Forward Purchase Shares, as well as the terms of the Company’s proposed
IPO, with the Company’s management.

 

(g)  
Restricted Securities. The Purchaser understands that the offer and sale of the Forward Purchase Shares to the Purchaser
has not been, and will not be, registered under the Securities Act of 1933, as amended (the “Securities Act”), by
reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona
fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser understands
that the Forward Purchase Shares are “restricted securities” under applicable U.S. federal and state securities laws and
that, pursuant to these laws, the Purchaser must hold the Forward Purchase Shares indefinitely unless they are registered with the SEC
and qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser
acknowledges that the Company has no obligation to register or qualify the Forward Purchase Shares for resale, except for the Registration
Rights. The Purchaser further acknowledges that if an exemption from registration or qualification is available, it may be conditioned
on various requirements including, but not limited to, the time and manner of sale, the holding period for the Forward Purchase Shares,
and on requirements relating to the Company which are outside of the Purchaser’s control, and which the Company is under no obligation
and may not be able to satisfy. The Purchaser acknowledges that the Company will file the Registration Statement for its proposed IPO.
The Purchaser understands that the offering of the Forward Purchase Shares is not, and is not intended to be, part of the IPO, and that
the Purchaser will not be able to rely on the protection of Section 11 of the Securities Act with respect to the Forward Purchase Shares.

 

(h)  
No Public Market; IPO and Related Transactions. The Purchaser understands that no public market now exists for the Forward
Purchase Shares, and that the Company has made no assurances that a public market will ever exist for the Forward Purchase Shares. The
Purchaser further understands that the terms of the proposed IPO and each of the transactions related thereto described herein, including
but not limited to the

 

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number and price of
securities sold as well as their structure and terms, are subject to adjustment and change in the discretion of the Company and its affiliates.

 

(i)  
High Degree of Risk. The Purchaser understands that its agreement to purchase the Forward Purchase Shares involves a high
degree of risk which could cause the Purchaser to lose all or part of its investment.

 

(j)  
Accredited Investor. The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under
the Securities Act.

 

(k)  
No General Solicitation. Neither the Purchaser, nor any of its officers, directors, employees, agents, stockholders or
partners has either directly or indirectly, including, through a broker or finder (i) engaged in any general solicitation, or (ii) published
any advertisement in connection with the offer and sale of the Forward Purchase Shares.

 

(l)  
Residence. The Purchaser’s principal place of business is the office or offices located at the address of the Purchaser
set forth on the signature page hereof.

 

(m)  
Non-Public Information. The Purchaser acknowledges its obligations under applicable securities laws with respect to the
treatment of non-public information relating to the Company.

 

(n)  
Adequacy of Financing. At the time of the Forward Closing, the Purchaser will have available to it sufficient funds to
satisfy its obligations under this Agreement.

 

(o)  
No Other Representations and Warranties; Non-Reliance. Except for the specific representations and warranties contained
in this Section 2 and in any certificate or agreement delivered pursuant hereto, none of the Purchaser nor any person acting on behalf
of the Purchaser nor any of the Purchaser’s affiliates (the “Purchaser Parties”) has made, makes or shall be
deemed to make any other express or implied representation or warranty with respect to the Purchaser and this offering, and the Purchaser
Parties disclaim any such representation or warranty. Except for the specific representations and warranties expressly made by the Company
in Section 3 of this Agreement and in any certificate or agreement delivered pursuant hereto, the Purchaser Parties specifically disclaim
that they are relying upon any other representations or warranties that may have been made by the Company, any person on behalf of the
Company or any of the Company’s affiliates (collectively, the “Company Parties”).

 

3.  
Representations and Warranties of the Company. The Company represents and warrants to the Purchaser as follows:

 

(a)  
Incorporation and Corporate Power. The Company is duly incorporated and validly existing and in good standing as a corporation
under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as presently conducted
and as proposed to be conducted. The Company has no subsidiaries.

 

(b)  
Capitalization. On the date hereof, the authorized share capital of the Company consists of:

 

(i)  
200,000,000 Class A Shares, none of which are issued and outstanding.

 

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(ii)  
20,000,000 shares of Class B common stock, par value $0.0001 per share, of the Company (the “Class B Shares”),
7,187,500 of which are issued and outstanding. All of the outstanding Class B Shares have been duly authorized, are fully paid and nonassessable
and were issued in compliance with all applicable federal and state securities laws.

 

(iii)  
1,000,000 shares of undesignated preferred stock, none of which are issued and outstanding.

 

(c)  
Authorization. All corporate action required to be taken by the Company’s Board of Directors and stockholders in
order to authorize the Company to enter into this Agreement and to issue the Forward Purchase Shares at the Forward Closing has been
taken or will be taken prior to the Forward Closing. All action on the part of the stockholders, directors and officers of the Company
necessary for the execution and delivery of this Agreement, the performance of all obligations of the Company under this Agreement to
be performed as of the Forward Closing, and the issuance and delivery of the Forward Purchase has been taken or will be taken prior to
the Forward Closing. This Agreement, when executed and delivered by the Company, shall constitute the valid and legally binding obligation
of the Company, enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’
rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable
remedies, or (iii) to the extent the indemnification provisions contained in the Registration Rights may be limited by applicable federal
or state securities laws.

 

(d)  
Valid Issuance of Securities. The Forward Purchase Shares, when issued, sold and delivered in accordance with the terms
and for the consideration set forth in this Agreement, will be validly issued, fully paid and nonassessable, as applicable, and free
of all preemptive or similar rights, taxes, liens, encumbrances and charges with respect to the issue thereof and restrictions on transfer
other than restrictions on transfer specified under this Agreement, applicable state and federal securities laws and liens or encumbrances
created by or imposed by the Purchaser. Assuming the accuracy of the representations of the Purchaser in this Agreement and subject to
the filings described in Section 3(e) below, the Forward Purchase Shares will be issued in compliance with all applicable federal
and state securities laws.

 

(e)  
Governmental Consents and Filings. Assuming the accuracy of the representations and warranties made by the Purchaser in
this Agreement, no consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with,
any federal, state or local governmental authority is required on the part of the Company in connection with the consummation of the
transactions contemplated by this Agreement, except for filings pursuant to Regulation D of the Securities Act, and applicable state
securities laws, if any, and pursuant to the Registration Rights.

 

(f)  
Compliance with Other Instruments. The execution, delivery and performance of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in any violation or default (i) of any provisions of the Company’s
certificate of incorporation, as it may be amended from time to time (the “Charter”), or other governing documents
of the Company, (ii) of any instrument, judgment, order, writ or decree to which the Company is a party or by which it is bound, (iii)
under any note, indenture or mortgage to which the Company is a party or by which it is bound, (iv) under any lease, agreement, contract
or purchase order to which the Company is a party or by which it is bound or (v) of any provision of federal or state statute, rule or
regulation applicable to the Company, in each case (other than clause (i)) which would have a material adverse effect on the Company
or its ability to consummate the transactions contemplated by this Agreement.

 

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(g)  
Operations. As of the date hereof, the Company has not conducted, and prior to the IPO Closing the Company will not conduct,
any operations other than organizational activities and activities in connection with offerings of its securities.

 

(h)  
No General Solicitation. Neither the Company, nor any of its officers, directors, employees, agents or stockholders has
either directly or indirectly, including, through a broker or finder (i) engaged in any general solicitation, or (ii) published any advertisement
in connection with the offer and sale of the Forward Purchase Shares.

 

(i)  
No Other Representations and Warranties; Non-Reliance. Except for the specific representations and warranties contained
in this Section 3 and in any certificate or agreement delivered pursuant hereto, none of the Company Parties has made, makes or shall
be deemed to make any other express or implied representation or warranty with respect to the Company, this offering, the proposed IPO
or a potential Business Combination, and the Company Parties disclaim any such representation or warranty. Except for the specific representations
and warranties expressly made by the Purchaser in Section 2 of this Agreement and in any certificate or agreement delivered pursuant
hereto, the Company Parties specifically disclaim that they are relying upon any other representations or warranties that may have been
made by the Purchaser Parties.

 

4.  
Registration Rights; Transfer 

 

(a)  
Registration Rights. The Purchaser has been or will be granted customary registration rights by the Company with respect
to the Forward Purchase Shares pursuant to a registration rights agreement to be entered into with the Company, a form of which has been
or will be filed with the registration statement relating to the Company’s IPO (the “Registration Rights”).

 

(b)  
Transfer. This Agreement and all of the Purchaser’s rights and obligations hereunder (including the Purchaser’s
obligation to purchase the Forward Purchase Shares) may be transferred or assigned, at any time and from time to time, in whole or in
part, to one or more affiliates of the Purchaser (each such transferee, a “Transferee”). Upon any such assignment:

 

(i)  
the applicable Transferee shall execute a signature page to this Agreement, substantially in the form of the Purchaser’s
signature page hereto (the “Joinder Agreement”), which shall reflect the number of Forward Purchase Shares to be purchased
by such Transferee (the “Transferee Securities”), and, upon such execution, such Transferee shall have all the same
rights and obligations of the Purchaser hereunder with respect to the Transferee Securities, and references herein to the “Purchaser”
shall be deemed to refer to and include any such Transferee with respect to such Transferee and to its Transferee Securities; provided,
that any representations, warranties, covenants and agreements of the Purchaser and any such Transferee shall be several and not joint
and shall be made as to the Purchaser or any such Transferee, as applicable, as to itself only; and

 

(ii)  
upon a Transferee’s execution and delivery of a Joinder Agreement, the number of Forward Purchase Shares to be purchased
by the Purchaser hereunder shall be reduced by the total number of Forward Purchase Shares to be purchased by the applicable Transferee
pursuant to the applicable Joinder Agreement, which reduction shall be evidenced by the Purchaser and the Company amending Schedule
A to this Agreement to reflect each transfer and updating the “Number of Forward Purchase Shares” and “Aggregate
Purchase Price for Forward Purchase Shares” on the Purchaser’s signature page hereto to reflect such reduced number of Forward
Purchase Shares, and the Purchaser shall be fully and unconditionally released from its obligation to purchase such Transferee Securities
hereunder. For the avoidance of doubt, this Agreement need

 

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not be amended and
restated in its entirety, but only Schedule A and the Purchaser’s signature page hereto need be so amended and updated and
executed by each of the Purchaser and the Company upon the occurrence of any such transfer of Transferee Securities.

 

5.  
Additional Agreements, Acknowledgements and Waivers of the Purchaser.

 

(a)  
Lock-up; Transfer Restrictions. The Purchaser agrees that it shall not Transfer any Forward Purchase Shares until 30 days
after the completion of the initial Business Combination. Notwithstanding the foregoing, Transfers of the Forward Purchase Shares are
permitted (any such transferees, the “Permitted Transferees”): (A) to the Company’s officers or directors, any
affiliates or family members of any of the Company’s officers or directors, any members of the Purchaser, or any affiliates of
the Purchaser; (B) in the case of an individual, by gift to a member of the individual’s immediate family, to a trust, the beneficiary
of which is a member of individual’s immediate family or an affiliate of such person, or to a charitable organization; (C) in the
case of an individual, by virtue of laws of descent and distribution upon death of the individual; (D) in the case of an individual,
pursuant to a qualified domestic relations order; (E) in the event of the Company’s liquidation, merger, share exchange, reorganization
or other similar transaction which results in all of the Company’s stockholders having the right to exchange their Class A Shares
for cash, securities or other property subsequent to the completion of a Business Combination; (F) as a distribution to limited partners,
members or stockholders of the Purchaser; (G) to a nominee or custodian of a person or entity to whom a disposition or transfer would
be permissible under clauses (A) through (F) above; provided, however, that in each case, these Permitted Transferees must
enter into a written agreement agreeing to be bound by these transfer restrictions. “Transfer” shall mean the (x)
sale or assignment of, offer to sell, contract or agreement to sell, hypothecation, pledge, grant of any option to purchase or otherwise
dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation
with respect to or decrease of a call equivalent position (within the meaning of Section 16 of the Exchange Act, and the rules and regulations
of the SEC promulgated thereunder) with respect to, any of the Forward Purchase Shares (excluding any pledges in the ordinary course
of business for bona fide financing purposes or as part of prime brokerage arrangements), (y) entry into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences of ownership of any of the Forward Purchase Shares,
whether any such transaction is to be settled by delivery of such Forward Purchase Shares, in cash or otherwise, or (z) public announcement
of any intention to effect any transaction specified in clause (x) or (y).

 

(b)  
Trust Account.

 

(i)  
The Purchaser hereby acknowledges that it is aware that the Company will establish the Trust Account for the benefit of its public
stockholders upon the IPO Closing. The Purchaser, for itself and its affiliates, hereby agrees that it has no right, title, interest
or claim of any kind in or to any monies held in the Trust Account, or any other asset of the Company as a result of any liquidation
of the Company, except for redemption and liquidation rights, if any, the Purchaser may have in respect of any Public Shares held by
it.

 

(ii)  
The Purchaser hereby agrees that it shall have no right of set-off or any right, title, interest or claim of any kind (“Claim”)
to, or to any monies in, the Trust Account, and hereby irrevocably waives any Claim to, or to any monies in, the Trust Account that it
may have now or in the future, except for redemption and liquidation rights, if any, the Purchaser may have in respect of any Public
Shares held by it. In the event the Purchaser has any Claim against the Company under this Agreement, the Purchaser shall pursue such
Claim solely against the Company and its assets outside the Trust Account and not against the property or any monies in the Trust Account,
except for redemption and liquidation rights, if any, the Purchaser may have in respect of any Public Shares held by it.

 

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6.  
NASDAQ Listing. The Company will use commercially reasonable efforts to effect the listing of the Class A Shares and Public
Warrants on the Nasdaq Capital Market (or another national securities exchange) at the time of the Business Combination Closing.

 

7.  
Forward Closing Conditions.

 

(a)  
The obligation of the Purchaser to purchase the Forward Purchase Shares at the Forward Closing under this Agreement shall be subject
to the fulfillment, at or prior to the Forward Closing of each of the following conditions, any of which, to the extent permitted by
applicable laws, may be waived by the Purchaser:

 

(i)  
The Business Combination shall be consummated substantially concurrently with the purchase of the Forward Purchase Shares, on
terms materially identical to those set forth in the Initial Company Notice;

 

(ii)  
The Purchaser and any applicable Transferee shall have obtained the approval of its respective investment committee to consummate
the purchase of the Forward Purchase Shares hereunder;

 

(iii)  
The Company shall have delivered to the Purchaser a certificate evidencing the Company’s good standing as a Delaware corporation;

 

(iv)  
The representations and warranties of the Company set forth in Section 3 of this Agreement shall have been true and correct as
of the date hereof and shall be true and correct as of the Forward Closing Date, as applicable, with the same effect as though such representations
and warranties had been made on and as of such date (other than any such representation or warranty that is made by its terms as of a
specified date, which shall be true and correct as of such specified date), except where the failure to be so true and correct would
not have a material adverse effect on the Company or its ability to consummate the transactions contemplated by this Agreement;

 

(v)  
The Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Forward Closing; and

 

(vi)  
No order, writ, judgment, injunction, decree, determination, or award shall have been entered by or with any governmental, regulatory,
or administrative authority or any court, tribunal, or judicial, or arbitral body, and no other legal restraint or prohibition shall
be in effect, preventing the purchase by the Purchaser of the Forward Purchase Shares.

 

(b)  
The obligation of the Company to sell the Forward Purchase Shares at the Forward Closing under this Agreement shall be subject
to the fulfillment, at or prior to the Forward Closing of each of the following conditions, any of which, to the extent permitted by
applicable laws, may be waived by the Company:

 

(i)  
The Business Combination shall be consummated substantially concurrently with the purchase of Forward Purchase Shares;

 

(ii)  
The representations and warranties of the Purchaser set forth in Section 2 of this Agreement shall have been true and correct
as of the date hereof and shall be true and correct as of the Forward Closing Date, as applicable, with the same effect as though such
representations and warranties had been made

 

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on and as of such
date (other than any such representation or warranty that is made by its terms as of a specified date, which shall be true and correct
as of such specified date), except where the failure to be so true and correct would not have a material adverse effect on the Purchaser
or its ability to consummate the transactions contemplated by this Agreement;

 

(iii)  
The Purchaser shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the Purchaser at or prior to the Forward Closing; and

 

(iv)  
No order, writ, judgment, injunction, decree, determination, or award shall have been entered by or with any governmental, regulatory,
or administrative authority or any court, tribunal, or judicial, or arbitral body, and no other legal restraint or prohibition shall
be in effect, preventing the purchase by the Purchaser of the Forward Purchase Shares.

 

8.  
Termination. This Agreement may be terminated at any time prior to the Forward Closing:

 

(a)  
by mutual written consent of the Company and the Purchaser;

 

(b)  
automatically

 

(i)  
if the IPO is not consummated on or prior to twelve months from the date of this Agreement; or

 

(ii)  
if the Business Combination is not consummated within 30 months from the closing of the IPO, or such later date as may be approved
by the Company’s stockholders.

 

In the event of
any termination of this Agreement pursuant to this Section 8, the Forward Purchase Price (and interest thereon, if any), if previously
paid, and all Purchaser’s funds paid in connection herewith shall be promptly returned to the Purchaser, and thereafter this Agreement
shall forthwith become null and void and have no effect, without any liability on the part of the Purchaser or the Company and their
respective directors, officers, employees, partners, managers, members, or stockholders and all rights and obligations of each party
shall cease; provided, however, that nothing contained in this Section 8 shall relieve either party from liabilities
or damages arising out of any fraud or willful breach by such party of any of its representations, warranties, covenants or agreements
contained in this Agreement.

 

9.  
General Provisions.

 

(a)  
Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be
deemed effectively given upon the earlier of actual receipt, or (i) personal delivery to the party to be notified, (ii) when sent, if
sent by electronic mail or facsimile (if any) during normal business hours of the recipient, and if not sent during normal business hours,
then on the recipient’s next Business Day, (iii) five (5) Business Days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (iv) one (1) Business Day after deposit with a nationally recognized overnight courier,
freight prepaid, specifying next Business Day delivery, with written verification of receipt. All communications sent to the Company
shall be sent to: Galliot Acquisition Corp., Four Embarcadero Center, Suite 2100, San Francisco, CA 94111, Attn: Rufina Adams, Chief
Financial Officer, email: rufina@truewindcapital.com, with a copy to the Company’s counsel at: Davis Polk & Wardwell
LLP, 450 Lexington Avenue, New York, NY 10017, Attn: Yan Zhang, Esq.., email: yan.zhang@davispolk.com.

 

    10 

     

    

All communications
to the Purchaser shall be sent to the Purchaser’s address as set forth on the signature page hereof, or to such e-mail address,
facsimile number (if any) or address as subsequently modified by written notice given in accordance with this Section 9(a).

 

(b)  
No Finder’s Fees. Each party represents that it neither is nor will be obligated for any finder’s fee or commission
in connection with this transaction. The Purchaser agrees to indemnify and to hold harmless the Company from any liability for any commission
or compensation in the nature of a finder’s or broker’s fee arising out of this transaction (and the costs and expenses of
defending against such liability or asserted liability) for which the Purchaser or any of its officers, employees or representatives
is responsible. The Company agrees to indemnify and hold harmless the Purchaser from any liability for any commission or compensation
in the nature of a finder’s or broker’s fee arising out of this transaction (and the costs and expenses of defending against
such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

 

(c)  
Survival of Representations and Warranties. All of the representations and warranties contained herein shall survive the
Forward Closing.

 

(d)  
Entire Agreement. This Agreement, together with any documents, instruments and writings that are delivered pursuant hereto
or referenced herein, constitutes the entire agreement and understanding of the parties hereto in respect of its subject matter and supersedes
all prior understandings, agreements, or representations by or among the parties hereto, written or oral, to the extent they relate in
any way to the subject matter hereof or the transactions contemplated hereby.

 

(e)  
Successors. All of the terms, agreements, covenants, representations, warranties, and conditions of this Agreement are
binding upon, and inure to the benefit of and are enforceable by, the parties hereto and their respective successors. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

(f)  
Assignments. Except as otherwise specifically provided herein, no party hereto may assign either this Agreement or any
of its rights, interests, or obligations hereunder without the prior written approval of the other party.

 

(g)  
Counterparts. This Agreement may be executed (including via e-signature) in two or more counterparts, each of which will
be deemed an original but all of which together will constitute one and the same instrument.

 

(h)  
Headings. The section headings contained in this Agreement are inserted for convenience only and will not affect in any
way the meaning or interpretation of this Agreement.

 

(i)  
Governing Law. This Agreement, the entire relationship of the parties hereto, and any dispute between the parties (whether
grounded in contract, tort, statute, law or equity) shall be governed by, construed in accordance with, and interpreted pursuant to the
laws of the State of New York, without giving effect to its choice of laws principles.

 

(j)  
Jurisdiction. The parties (i) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of
New York and to the jurisdiction of the United States District Court for the Southern District of New York for the purpose of any suit,
action or other proceeding arising out of or based

 

    11 

     

    

upon this Agreement,
(ii) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in state courts of
New York or the United States District Court for the Southern District of New York, and (iii) hereby waive, and agree not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to
the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action
or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement
or the subject matter hereof may not be enforced in or by such court.

 

(k)  
Waiver of Jury Trial. The parties hereto hereby waive any right to a jury trial in connection with any litigation pursuant
to this Agreement and the transactions contemplated hereby.

 

(l)  
Amendments. This Agreement may not be amended, modified or waived as to any particular provision except with the prior
written consent of the Company and the Purchaser.

 

(m)  
Severability. The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision
will not affect the validity or enforceability of the other provisions hereof; provided, that if any provision of this Agreement,
as applied to any party hereto or to any circumstance, is adjudged by a governmental authority, arbitrator, or mediator not to be enforceable
in accordance with its terms, the parties hereto agree that the governmental authority, arbitrator, or mediator making such determination
will have the power to modify the provision in a manner consistent with its objectives such that it is enforceable, and/or to delete
specific words or phrases, and in its reduced form, such provision will then be enforceable and will be enforced.

 

(n)  
Expenses. Each of the Company and the Purchaser will bear its own costs and expenses incurred in connection with the preparation,
execution and performance of this Agreement and the consummation of the transactions contemplated hereby, including all fees and expenses
of agents, representatives, financial advisors, legal counsel and accountants. The Company shall be responsible for the fees of its transfer
agent; stamp taxes and all of The Depository Trust Company’s fees associated with the issuance of the Forward Purchase Shares.

 

(o)  
Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity
or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties hereto and no presumption
or burden of proof will arise favoring or disfavoring any party hereto because of the authorship of any provision of this Agreement.
Any reference to any federal, state, local, or foreign law will be deemed also to refer to law as amended and all rules and regulations
promulgated thereunder, unless the context requires otherwise. The words “include,” “includes,”
and “including” will be deemed to be followed by “without limitation.” Pronouns in masculine, feminine,
and neuter genders will be construed to include any other gender, and words in the singular form will be construed to include the plural
and vice versa, unless the context otherwise requires. The words “this Agreement,” “herein,” “hereof,”
“hereby,” “hereunder,” and words of similar import refer to this Agreement as a whole and not to
any particular subdivision unless expressly so limited. The parties hereto intend that each representation, warranty, and covenant contained
herein will have independent significance. If any party hereto has breached any representation, warranty, or covenant contained herein
in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless
of the relative levels of specificity) which such party hereto has not breached will not detract from or mitigate the fact that such
party hereto is in breach of the first representation, warranty, or covenant.

 

    12 

     

    

(p)  
Waiver. No waiver by any party hereto of any default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising because of any prior or subsequent occurrence.

 

(q)  
Specific Performance. The Purchaser agrees that irreparable damage may occur in the event any provision of this Agreement
was not performed by the Purchaser in accordance with the terms hereof and that the Company shall be entitled to specific performance
of the terms hereof, in addition to any other remedy at law or equity.

 

[Signature Page
Follows]

 

    13 

     

    

IN WITNESS WHEREOF,
the undersigned have executed this Agreement to be effective as of the date first set forth above.

 

	PURCHASER: [          ]	 
	 	 
	 	 
	By:	 	 
	Name:	 	 
	Title:	Chief Executive Officer	 

 

Address for Notices :

 

[          ]

 

With a copy to

 

[           ]

 

	COMPANY:

     

    GALLIOT ACQUISITION CORP.

    
	 
	 	 
	 	 
	By:	 	 
	Name:	James H. Greene, Jr. 	 
	Title:	Chief Executive Officer	 

 

[Signature Page
to Forward Purchase Agreement]

 

    14 

     

    

TO BE EXECUTED UPON ANY ASSIGNMENT
IN ACCORDANCE WITH THIS AGREEMENT TO “NUMBER OF FORWARD PURCHASE SHARES” AND “AGGREGATE PURCHASE PRICE FOR FORWARD
PURCHASE SHARES” SET FORTH BELOW

 

	Number of Forward Purchase Shares:	 
	 	 
	Aggregate Purchase Price for Forward Purchase Shares:	$                  

 

Number of Forward Purchase Shares and
Aggregate Purchase Price for Forward Purchase Shares as of, 202

[        ], accepted and agreed to as of this     day of       , 202[        ].

 

	 	[                 ]

	 	 
	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	 	 

	 	GALLIOT ACQUISITION CORP.

	 	 
	 	 
	 	By:	      
	 	Name:	 
	 	Title:	 

    15 

     

    

SCHEDULE A

SCHEDULE OF TRANSFERS OF FORWARD PURCHASE SHARES

 

The following transfers
of a portion of the original number of Forward Purchase Shares have been made:

 

	Date of Transfer	 	Transferee	 	Number of Forward Purchase Shares Transferred	 	Purchaser Revised Forward Purchase Shares Amount

    A-1

     

    

TO BE EXECUTED UPON ANY ASSIGNMENT
OF FORWARD PURCHASE SHARES:

 

Schedule A as of , 202[ ], accepted
and agreed to as of this day of , 202[ ] by:

 

	[                    ]	 	GALLIOT ACQUISITION CORP.
	 	 	 
	 	 	 
	By:	 	 	By:	 
	Name:	 	 	Name:	 
	Title:	 	 	Title:	 

    A-2ex_237059.htm

Exhibit 10.1

 

Note Purchase Agreement

 

This Note Purchase Agreement (this “Agreement”), dated as of March 23, 2021, is entered into by and between Orbital Energy Group, Inc., a Colorado corporation (“Company”), and Streeterville Capital, LLC, a Utah limited liability company, its successors and/or assigns (“Investor”).

 

A.         Company and Investor are executing and delivering this Agreement in reliance upon an exemption from securities registration afforded by the Securities Act of 1933, as amended (the “1933 Act”), and the rules and regulations promulgated thereunder by the United States Securities and Exchange Commission (the “SEC”).

 

B.         Investor desires to purchase and Company desires to issue and sell, upon the terms and conditions set forth in this Agreement a Promissory Note, in the form attached hereto as Exhibit A, in the original principal amount of $10,715,000.00 (the “Note”).

 

C.         This Agreement, the Note, and all other certificates, documents, agreements, resolutions and instruments delivered to any party under or in connection with this Agreement, as the same may be amended from time to time, are collectively referred to herein as the “Transaction Documents”.

 

NOW, THEREFORE, in consideration of the above recitals and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Company and Investor hereby agree as follows:

 

1.    Purchase and Sale of Note.

 

1.1.    Purchase of Note. Company shall issue and sell to Investor and Investor shall purchase from Company the Note. In consideration thereof, Investor shall pay the Purchase Price (as defined below) to Company.

 

1.2.    Form of Payment. On the Closing Date (as defined below), Investor shall pay the Purchase Price to Company via wire transfer of immediately available funds against delivery of the Note.

 

1.3.    Closing Date. Subject to the satisfaction (or written waiver) of the conditions set forth in Section 5 and Section 6 below, the date of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be March 23, 2021, or another mutually agreed upon date. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date by means of the exchange by email of signed .pdf documents, but shall be deemed for all purposes to have occurred at the offices of Hansen Black Anderson Ashcraft PLLC in Lehi, Utah.

 

1.4.    Collateral for the Note. The Note shall be unsecured.

 

1.5.    Original Issue Discount; Transaction Expense Amount. The Note carries an original issue discount of $700,000.00 (the “OID”). In addition, Company agrees to pay $15,000.00 to Investor to cover Investor’s legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the purchase and sale of the Note (the “Transaction Expense Amount”), all of which amount is included in the initial principal balance of the Note. The “Purchase Price”, therefore, shall be $10,000,000.00, computed as follows: $10,715,000.00 initial principal balance, less the OID, less the Transaction Expense Amount.

 

1

 

 

2.    Investor’s Representations and Warranties. Investor represents and warrants to Company that as of the Closing Date: (i) this Agreement has been duly and validly authorized; (ii) this Agreement constitutes a valid and binding agreement of Investor enforceable in accordance with its terms; and (iii) Investor is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D of the 1933 Act.

 

3.    Company’s Representations and Warranties. Company represents and warrants to Investor that as of the Closing Date: Company is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation and has the requisite corporate power to own its properties and to carry on its business as now being conducted; Company is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary; Company has registered its Common Stock under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), and is obligated to file reports pursuant to Section 13 or Section 15(d) of the 1934 Act; each of the Transaction Documents and the transactions contemplated hereby and thereby, have been duly and validly authorized by Company and all necessary actions have been taken; this Agreement, the Note, and the other Transaction Documents have been duly executed and delivered by Company and constitute the valid and binding obligations of Company enforceable in accordance with their terms; the execution and delivery of the Transaction Documents by Company, the issuance of the Note in accordance with the terms hereof, and the consummation by Company of the other transactions contemplated by the Transaction Documents do not and will not conflict with or result in a breach by Company of any of the terms or provisions of, or constitute a default under (a) Company’s formation documents or bylaws, each as currently in effect, (b) any indenture, mortgage, deed of trust, or other material agreement or instrument to which Company is a party or by which it or any of its properties or assets are bound, including, without limitation, any listing agreement for the Common Stock, or (c) any existing applicable law, rule, or regulation or any applicable decree, judgment, or order of any court, United States federal, state or foreign regulatory body, administrative agency, or other governmental body having jurisdiction over Company or any of Company’s properties or assets; no further authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, or stock exchange or market or the stockholders or any lender of Company is required to be obtained by Company for the issuance of the Note to Investor or the entering into of the Transaction Documents; none of Company’s filings with the SEC contained, at the time they were filed, any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; Company has filed all reports, schedules, forms, statements and other documents required to be filed by Company with the SEC under the 1934 Act on a timely basis or has received a valid extension of such time of filing and has filed any such report, schedule, form, statement or other document prior to the expiration of any such extension; there is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending or, to the knowledge of Company, threatened against or affecting Company before or by any governmental authority or non-governmental department, commission, board, bureau, agency or instrumentality or any other person, wherein an unfavorable decision, ruling or finding would have a material adverse effect on Company or which would adversely affect the validity or enforceability of, or the authority or ability of Company to perform its obligations under, any of the Transaction Documents; Company has not consummated any financing transaction that has not been disclosed in a periodic filing or current report with the SEC under the 1934 Act; Company is not, nor has it been at any time in the previous twelve (12) months, a “Shell Company,” as such type of “issuer” is described in Rule 144(i)(1) under the 1933 Act; with respect to any commissions, placement agent or finder’s fees or similar payments that will or would become due and owing by Company to any person or entity as a result of this Agreement or the transactions contemplated hereby (“Broker Fees”), any such Broker Fees will be made in full compliance with all applicable laws and regulations and only to a person or entity that is a registered investment adviser or registered broker-dealer;

 

2

 

 

(xiv) Investor shall have no obligation with respect to any Broker Fees or with respect to any claims made by or on behalf of other persons for fees of a type contemplated in this subsection that may be due in connection with the transactions contemplated hereby and Company shall indemnify and hold harmless each of Investor, Investor’s employees, officers, directors, stockholders, members, managers, agents, and partners, and their respective affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and attorneys’ fees) and expenses suffered in respect of any such claimed Broker Fees; neither Investor nor any of its officers, directors, stockholders, members, managers, employees, agents or representatives has made any representations or warranties to Company or any of its officers, directors, employees, agents or representatives except as expressly set forth in the Transaction Documents and, in making its decision to enter into the transactions contemplated by the Transaction Documents, Company is not relying on any representation, warranty, covenant or promise of Investor or its officers, directors, members, managers, employees, agents or representatives other than as set forth in the Transaction Documents; Company acknowledges that the State of Utah has a reasonable relationship and sufficient contacts to the transactions contemplated by the Transaction Documents and any dispute that may arise related thereto such that the laws and venue of the State of Utah, as set forth more specifically in Section 8.2 below, shall be applicable to the Transaction Documents and the transactions contemplated therein; and Company has performed due diligence and background research on Investor and its affiliates including, without limitation, John M. Fife, and, to its satisfaction, has made inquiries with respect to all matters Company may consider relevant to the undertakings and relationships contemplated by the Transaction Documents including, among other things, the following: http://investing.businessweek.com/research/stocks/people/person.asp?personId=7505107&ticker=UAHC; SEC Civil Case No. 07-C-0347 (N.D. Ill.); SEC Civil Action No. 07-CV-347 (N.D. Ill.); and FINRA Case #2011029203701. In addition, various affiliates of Investor are involved in ongoing litigation with the SEC regarding broker-dealer registration (see SEC Civil Case No. 1:20-cv-05227 (N.D. Ill.)). Company, being aware of the matters described in subsection (xvii) above, acknowledges and agrees that such matters, or any similar matters, have no bearing on the transactions contemplated by the Transaction Documents and covenants and agrees it will not use any such information as a defense to performance of its obligations under the Transaction Documents or in any attempt to avoid, modify or reduce such obligations.

 

4.    Company Covenants. Until all of Company’s obligations under all of the Transaction Documents are paid and performed in full, or within the timeframes otherwise specifically set forth below, Company will at all times comply with the following covenants: so long as Investor beneficially owns the Note and for at least twenty (20) Trading Days (as defined in the Note) thereafter, Company will timely file on the applicable deadline all reports required to be filed with the SEC pursuant to Sections 13 or 15(d) of the 1934 Act, and will take all reasonable action under its control to ensure that adequate current public information with respect to Company, as required in accordance with Rule 144 of the 1933 Act, is publicly available, and will not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination; the Common Stock shall be listed or quoted for trading on either NYSE or Nasdaq; trading in Company’s Common Stock will not be suspended, halted, chilled, frozen, reach zero bid or otherwise cease trading on Company’s principal trading market; Company will not make any Restricted Issuance (as defined below) where Company receives net proceeds in an amount less $10,000,000.00 without Investor’s prior written consent, which consent may be granted or withheld in Investor’s sole and absolute discretion; and (vi) Company will not enter into any financing transaction with John Kirkland or any entity owned by or affiliated with John Kirkland. For purposes hereof, the term “Restricted Issuance” means any issuance of any Company securities that (A) have or may have conversion rights of any kind, contingent, conditional or otherwise, in which the number of shares that may be issued pursuant to such conversion right varies with the market price of the Common Stock, or (B) are or may become convertible into Common Stock (including without limitation convertible debt, warrants or convertible preferred stock), with a conversion price that varies with the market price of the Common Stock, even if such security only becomes convertible following an event of default, the passage of time, or another trigger event or condition.

 

3

 

 

For avoidance of doubt, the issuance of shares of Common Stock under, pursuant to, in exchange for or in connection with any contract or instrument, whether convertible or not, is deemed a Restricted Issuance for purposes hereof if the number of shares of Common Stock to be issued is based upon or related in any way to the market price of the Common Stock, including, but not limited to, Common Stock issued in connection with a Section 3(a)(9) exchange, a Section 3(a)(10) settlement, or any other similar settlement or exchange.

 

5.    Conditions to Company’s Obligation to Sell. The obligation of Company hereunder to issue and sell the Note to Investor at the Closing is subject to the satisfaction, on or before the Closing Date, of each of the following conditions:

 

5.1.    Investor shall have executed this Agreement and delivered the same to Company.

 

5.2.    Investor shall have delivered the Purchase Price to Company in accordance with Section 1.2 above.

 

6.    Conditions to Investor’s Obligation to Purchase. The obligation of Investor hereunder to purchase the Note at the Closing is subject to the satisfaction, on or before the Closing Date, of each of the following conditions, provided that these conditions are for Investor’s sole benefit and may be waived by Investor at any time in its sole discretion:

 

6.1.    Company shall have executed this Agreement and the Note and delivered the same to Investor.

 

6.2.    Company shall have delivered to Investor a fully executed Secretary’s Certificate substantially in the form attached hereto as Exhibit B evidencing Company’s approval of the Transaction Documents.

 

6.3.    Company shall have delivered to Investor fully executed copies of all other Transaction Documents required to be executed by Company herein or therein.

 

7.    Terms of Future Financings. So long as the Note is outstanding, upon any issuance by Company of any security with any term or condition more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to Investor in the Transaction Documents, then Company shall notify Investor of such additional or more favorable term and such term, at Investor’s option, shall become a part of the Transaction Documents for the benefit of Investor. Additionally, if Company fails to notify Investor of any such additional or more favorable term, but Investor becomes aware that Company has granted such a term to any third party, Investor may notify Company of such additional or more favorable term and such term shall become a part of the Transaction Documents retroactive to the date on which such term was granted to the applicable third party. The types of terms contained in another security that may be more favorable to the holder of such security include, but are not limited to, terms addressing conversion rights, interest rates, original issue discounts, stock sale price, conversion price per share, warrant coverage, warrant exercise price, and anti-dilution/conversion and exercise price resets.

 

8.    Miscellaneous. The provisions set forth in this Section 8 shall apply to this Agreement, as well as all other Transaction Documents as if these terms were fully set forth therein; provided, however, that in the event there is a conflict between any provision set forth in this Section 8 and any provision in any other Transaction Document, the provision in such other Transaction Document shall govern.

 

 

4

 

 

8.1.    Arbitration of Claims. The parties shall submit all Claims (as defined in Exhibit C) arising under this Agreement or any other Transaction Document or any other agreement between the parties and their affiliates or any Claim relating to the relationship of the parties to binding arbitration pursuant to the arbitration provisions set forth in Exhibit C attached hereto (the “Arbitration Provisions”). For the avoidance of doubt, the parties agree that the injunction described in Section 8.3 below may be pursued in an arbitration that is separate and apart from any other arbitration regarding all other Claims arising under the Transaction Documents. The parties hereby acknowledge and agree that the Arbitration Provisions are unconditionally binding on the parties hereto and are severable from all other provisions of this Agreement. By executing this Agreement, Company represents, warrants and covenants that Company has reviewed the Arbitration Provisions carefully, consulted with legal counsel about such provisions (or waived its right to do so), understands that the Arbitration Provisions are intended to allow for the expeditious and efficient resolution of any dispute hereunder, agrees to the terms and limitations set forth in the Arbitration Provisions, and that Company will not take a position contrary to the foregoing representations. Company acknowledges and agrees that Investor may rely upon the foregoing representations and covenants of Company regarding the Arbitration Provisions.

 

8.2.    Governing Law; Venue. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed by, the internal laws of the State of Utah, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Utah. Each party consents to and expressly agrees that the exclusive venue for arbitration of any dispute arising out of or relating to any Transaction Document or the relationship of the parties or their affiliates shall be in Salt Lake County, Utah. Without modifying the parties’ obligations to resolve disputes hereunder pursuant to the Arbitration Provisions, for any litigation arising in connection with any of the Transaction Documents, each party hereto hereby (i) consents to and expressly submits to the exclusive personal jurisdiction of any state or federal court sitting in Salt Lake County, Utah, (ii) expressly submits to the exclusive venue of any such court for the purposes hereof, (iii) agrees to not bring any such action outside of any state or federal court sitting in Salt Lake County, Utah, and (iv) waives any claim of improper venue and any claim or objection that such courts are an inconvenient forum or any other claim, defense or objection to the bringing of any such proceeding in such jurisdiction or to any claim that such venue of the suit, action or proceeding is improper. Finally, Company covenants and agrees to name Investor as a party in interest in, and provide written notice to Investor in accordance with Section 8.9 below prior to bringing or filing, any action that is related in any way to the Transaction Documents or any transaction contemplated herein or therein, and further agrees to timely name Investor as a party to any such action. Company acknowledges that the governing law and venue provisions set forth in this Section 8.2 are material terms to induce Investor to enter into the Transaction Documents and that but for Company’s agreements set forth in this Section 8.2 Investor would not have entered into the Transaction Documents.

 

8.3.    Specific Performance. Company acknowledges and agrees that Investor may suffer irreparable harm in the event that Company fails to perform any material provision of this Agreement or any of the other Transaction Documents in accordance with its specific terms. It is accordingly agreed that Investor shall be entitled to one or more injunctions to prevent or cure breaches of the provisions of this Agreement or such other Transaction Document and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other remedy to which the Investor may be entitled under the Transaction Documents, at law or in equity. Company specifically agrees that following an Event of Default (as defined in the Note) under the Note, Investor shall have the right to seek and receive injunctive relief from a court or an arbitrator prohibiting Company from issuing any of its common or preferred stock to any party unless the Note is being paid in full simultaneously with such issuance. Company specifically acknowledges that Investor’s right to obtain specific performance constitutes bargained for leverage and that the loss of such leverage would result in irreparable harm to Investor.

 

5

 

 

For the avoidance of doubt, in the event Investor seeks to obtain an injunction from a court or an arbitrator against Company or specific performance of any provision of any Transaction Document, such action shall not be a waiver of any right of Investor under any Transaction Document, at law, or in equity, including without limitation its rights to arbitrate any Claim pursuant to the terms of the Transaction Documents, nor shall Investor’s pursuit of an injunction prevent Investor, under the doctrines of claim preclusion, issues preclusion, res judicata or other similar legal doctrines, from pursuing other Claims in the future in a separate arbitration.

 

8.4.    Counterparts. Each Transaction Document may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. The parties acknowledge and agree that this Agreement and all other Transaction Documents may be executed by electronic signature, which shall be considered as an original signature for all purposes and shall have the same force and effect as an original signature. The parties hereto confirm that any electronic copy of another party’s executed counterpart of a Transaction Document (or such party’s signature page thereof) will be deemed to be an executed original thereof.

 

8.5.    Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.

 

8.6.    Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform to such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.

 

8.7.    Entire Agreement. This Agreement, together with the other Transaction Documents, contains the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Company nor Investor makes any representation, warranty, covenant or undertaking with respect to such matters. For the avoidance of doubt, all prior term sheets or other documents between Company and Investor, or any affiliate thereof, related to the transactions contemplated by the Transaction Documents (collectively, “Prior Agreements”), that may have been entered into between Company and Investor, or any affiliate thereof, are hereby null and void and deemed to be replaced in their entirety by the Transaction Documents. To the extent there is a conflict between any term set forth in any Prior Agreement and the term(s) of the Transaction Documents, the Transaction Documents shall govern.

 

8.8.    Amendments. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by both parties hereto.

 

8.9.    Notices. Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given on the earliest of: (i) the date delivered, if delivered by personal delivery as against written receipt therefor or by email to an executive officer named below or such officer’s successor, or by facsimile (with successful transmission confirmation which is kept by sending party), (ii) the earlier of the date delivered or the third Trading Day after deposit, postage prepaid, in the United States Postal Service by certified mail, or (iii) the earlier of the date delivered or the third Trading Day after mailing by express courier, with delivery costs and fees prepaid, in each case, addressed to each of the other parties thereunto entitled at the following addresses (or at such other addresses as such party may designate by five (5) calendar days’ advance written notice similarly given to each of the other parties hereto):

 

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If to Company:

 

Orbital Energy Group, Inc.

Attn: James O’Neil

1924 Aldine Western

Houston, Texas 77038

If to Investor:

 

Streeterville Capital, LLC

Attn: John Fife

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

 

With a copy to (which copy shall not constitute notice):

 

Hansen Black Anderson Ashcraft PLLC

Attn: Jonathan Hansen

3051 West Maple Loop Drive, Suite 325

Lehi, Utah 84043

 

8.10.    Successors and Assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Investor hereunder may be assigned by Investor to a third party, including its affiliates, in whole or in part, without the need to obtain Company’s consent thereto. Company may not assign its rights or obligations under this Agreement or delegate its duties hereunder, whether directly or indirectly, without the prior written consent of Investor, and any such attempted assignment or delegation shall be null and void.

 

8.11.    Survival. The representations and warranties of Company and the agreements and covenants set forth in this Agreement shall survive the Closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of Investor. Company agrees to indemnify and hold harmless Investor and all its officers, directors, employees, attorneys, and agents for loss or damage arising as a result of or related to any breach or alleged breach by Company of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.

 

8.12.    Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

8.13.    Investor’s Rights and Remedies Cumulative. All rights, remedies, and powers conferred in this Agreement and the Transaction Documents are cumulative and not exclusive of any other rights or remedies, and shall be in addition to every other right, power, and remedy that Investor may have, whether specifically granted in this Agreement or any other Transaction Document, or existing at law, in equity, or by statute, and any and all such rights and remedies may be exercised from time to time and as often and in such order as Investor may deem expedient.

 

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8.14.    Attorneys’ Fees and Cost of Collection. In the event any suit, action or arbitration is filed by either party against the other to interpret or enforce any of the Transaction Documents, the unsuccessful party to such action agrees to pay to the prevailing party all costs and expenses, including attorneys’ fees incurred therein, including the same with respect to an appeal. The “prevailing party” shall be the party in whose favor a judgment is entered, regardless of whether judgment is entered on all claims asserted by such party and regardless of the amount of the judgment; or where, due to the assertion of counterclaims, judgments are entered in favor of and against both parties, then the arbitrator shall determine the “prevailing party” by taking into account the relative dollar amounts of the judgments or, if the judgments involve nonmonetary relief, the relative importance and value of such relief. Nothing herein shall restrict or impair an arbitrator’s or a court’s power to award fees and expenses for frivolous or bad faith pleading. If (i) the Note is placed in the hands of an attorney for collection or enforcement prior to commencing arbitration or legal proceedings, or is collected or enforced through any arbitration or legal proceeding, or Investor otherwise takes action to collect amounts due under the Note or to enforce the provisions of the Note, or (ii) there occurs any bankruptcy, reorganization, receivership of Borrower or other proceedings affecting Borrower’s creditors’ rights and involving a claim under the Note; then Borrower shall pay the costs incurred by Investor for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees, expenses, deposition costs, and disbursements.

 

8.15.    Waiver. No waiver of any provision of this Agreement shall be effective unless it is in the form of a writing signed by the party granting the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or consent to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit a party to provide a waiver or consent in the future except to the extent specifically set forth in writing.

 

8.16.    Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING SUCH PARTY’S RIGHT TO DEMAND TRIAL BY JURY.

 

8.17.    Time is of the Essence. Time is expressly made of the essence with respect to each and every provision of this Agreement and the other Transaction Documents.

 

8.18.    Voluntary Agreement. Company has carefully read this Agreement and each of the other Transaction Documents and has asked any questions needed for Company to understand the terms, consequences and binding effect of this Agreement and each of the other Transaction Documents and fully understand them. Company has had the opportunity to seek the advice of an attorney of Company’s choosing, or has waived the right to do so, and is executing this Agreement and each of the other Transaction Documents voluntarily and without any duress or undue influence by Investor or anyone else.

 

8.19.    Document Imaging. Investor shall be entitled, in its sole discretion, to image or make copies of all or any selection of the agreements, instruments, documents, and items and records governing, arising from or relating to any of Borrower’s loans, including, without limitation, this Agreement and the other Transaction Documents, and Investor may destroy or archive the paper originals. The parties hereto (i) waive any right to insist or require that Investor produce paper originals, (ii) agree that such images shall be accorded the same force and effect as the paper originals, (iii) agree that Investor is entitled to use such images in lieu of destroyed or archived originals for any purpose, including as admissible evidence in any demand, presentment or other proceedings, and (iv) further agree that any executed facsimile (faxed), scanned, emailed, or other imaged copy of this Agreement or any other Transaction Document shall be deemed to be of the same force and effect as the original manually executed document.

 

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IN WITNESS WHEREOF, the undersigned Investor and Company have caused this Agreement to be duly executed as of the date first above written.

SUBSCRIPTION AMOUNT:

 

Principal Amount of Note:         $10,715,000.00

 

Purchase Price:         $10,000,000.00

 

 

INVESTOR:

 

Streeterville Capital, LLC

 

 

By: /s/ John M. Fife, President                  

John M. Fife, President         

 

 

 

COMPANY:

 

Orbital Energy Group, Inc.

 

 

By:   /s/ William Clough                        

 

Printed Name:   William Clough     

 

Title:  Executive Chairman                 

 

 

 

 

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PROMISSORY NOTE 

 

Effective Date: March 23, 2021         U.S. $10,715,000.00

 

FOR VALUE RECEIVED, Orbital Energy Group, Inc., a Colorado corporation (“Borrower”), promises to pay to Streeterville Capital, LLC, a Utah limited liability company, or its successors or assigns (“Lender”), $10,715,000.00 and any interest, fees, charges, and late fees accrued hereunder on the date that is eighteen (18) months after the Purchase Price Date (the “Maturity Date”) in accordance with the terms set forth herein and to pay interest on the Outstanding Balance at the rate of nine percent (9%) per annum from the Purchase Price Date (as defined below) until the same is paid in full. All interest calculations hereunder shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months, shall compound daily and shall be payable in accordance with the terms of this Note. This Promissory Note (this “Note”) is issued and made effective as of March 23, 2021 (the “Effective Date”). This Note is issued pursuant to that certain Note Purchase Agreement dated March 23, 2021, as the same may be amended from time to time, by and between Borrower and Lender (the “Purchase Agreement”). Certain capitalized terms used herein are defined in Attachment 1 attached hereto and incorporated herein by this reference.

 

This Note carries an OID of $700,000.00. In addition, Borrower agrees to pay $15,000.00 to Lender to cover Lender’s legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the purchase and sale of this Note (the “Transaction Expense Amount”), all of which amount is included in the initial principal balance of this Note. The purchase price for this Note shall be $10,000,000.00 (the “Purchase Price”), computed as follows: $10,715,000.00 original principal balance, less the OID, less the Transaction Expense Amount.

 

9.    Payment; Prepayment; Credit Risk Premium.

 

9.1.    Payment. All payments owing hereunder shall be in lawful money of the United States of America and delivered to Lender at the address or bank account furnished by Lender to Borrower for that purpose. All payments shall be applied first to (a) Lender’s reasonable costs of collection, if any, then to (b) fees and charges hereunder, if any, then to (c) accrued and unpaid interest hereunder, and thereafter, to (d) principal hereunder.

 

9.2.    Prepayment. Borrower may pay all or any portion of the Outstanding Balance earlier than it is due; provided that in the event Borrower elects to prepay all or any portion of the Outstanding Balance, it shall pay to Lender 115% of the portion of the Outstanding Balance Borrower elects to prepay. Early payments of less than all principal, fees and interest outstanding will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s remaining obligations hereunder.

 

9.3.    Credit Risk Premium. If Borrower’s Market Capitalization on the date that is twelve (12) months from the Effective Date is less than twenty (20%) of the Market Capitalization on the Effective Date, then the Outstanding Balance will automatically and without further action increase by twenty percent (20%). For the avoidance of doubt, such decrease in the Market Capitalization shall not be considered an Event of Default (as defined below) hereunder.

 

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10.    Security. This Note is unsecured.

 

11.    Redemption. Beginning on the date that is six (6) months after the Purchase Price Date, Lender shall have the right, exercisable at any time in its sole and absolute discretion, to redeem any amount of this Note up to $1,000,000.00 (such amount, the “Redemption Amount”) per calendar month by providing written notice to Borrower (each, a “Redemption Notice”). For the avoidance of doubt, Lender may submit to Borrower one (1) or more Redemption Notices in any given calendar month so long as the aggregate amount being redeemed in such month does not exceed $1,000,000.00. Upon receipt of any Redemption Notice, Borrower shall pay the applicable Redemption Amount in cash to Lender within three (3) Trading Day of Borrower’s receipt of such Redemption Notice.

 

12.    Trigger Events; Defaults; Remedies.

 

12.1.    Trigger Events. The following are trigger events under this Note (each, a “Trigger Event”): Borrower fails to pay any principal, interest, fees, charges, or any other amount when due and payable hereunder; a receiver, trustee or other similar official shall be appointed over Borrower or a material part of its assets and such appointment shall remain uncontested for twenty (20) days or shall not be dismissed or discharged within sixty (60) days; Borrower becomes insolvent or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any; Borrower makes a general assignment for the benefit of creditors; Borrower files a petition for relief under any bankruptcy, insolvency or similar law (domestic or foreign); an involuntary bankruptcy proceeding is commenced or filed against Borrower; Borrower or any pledgor, trustor, or guarantor of this Note defaults or otherwise fails to observe or perform any covenant, obligation, condition or agreement of Borrower or such pledgor, trustor, or guarantor contained herein or in any other Transaction Document (as defined in the Purchase Agreement), other than those specifically set forth in this Section 4.1 and Section 4 of the Purchase Agreement; any representation, warranty or other statement made or furnished by or on behalf of Borrower or any pledgor, trustor, or guarantor of this Note to Lender herein, in any Transaction Document, or otherwise in connection with the issuance of this Note is false, incorrect, incomplete or misleading in any material respect when made or furnished; the occurrence of a Fundamental Transaction without Lender’s prior written consent; Borrower effectuates a reverse split of its Common Stock without twenty (20) Trading Days prior written notice to Lender; any money judgment, writ or similar process is entered or filed against Borrower or any subsidiary of Borrower or any of its property or other assets for more than $500,000.00, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) calendar days unless otherwise consented to by Lender; Borrower fails to observe or perform any covenant set forth in Section 4 of the Purchase Agreement; or Borrower, any affiliate of Borrower, or any pledgor, trustor, or guarantor of this Note breaches any covenant or other term or condition contained in any Other Agreements.

 

12.2.    Trigger Event Remedies. At any time following the occurrence of any Trigger Event, Lender may, at its option, increase the Outstanding Balance by applying the Trigger Effect (subject to the limitation set forth below).

 

12.3.    Defaults. At any time following the occurrence of a Trigger Event, Lender may, at its option, send written notice to Borrower demanding that Borrower cure the Trigger Event within five (5) Trading Days. If Borrower fails to cure the Trigger Event within the required five (5) Trading Day cure period, the Trigger Event will automatically become an event of default hereunder (each, an “Event of Default”).

 

 

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12.4.    Default Remedies. At any time and from time to time following the occurrence of any Event of Default, Lender may accelerate this Note by written notice to Borrower, with the Outstanding Balance becoming immediately due and payable in cash at the Mandatory Default Amount. Notwithstanding the foregoing, upon the occurrence of any Trigger Event described in clauses (b), (c), (d), (e) or (f) of Section 4.1, an Event of Default will be deemed to have occurred and the Outstanding Balance as of the date of the occurrence of such Trigger Event shall become immediately and automatically due and payable in cash at the Mandatory Default Amount, without any written notice required by Lender for the Trigger Event to become an Event of Default. At any time following the occurrence of any Event of Default, upon written notice given by Lender to Borrower, interest shall accrue on the Outstanding Balance beginning on the date the applicable Event of Default occurred at an interest rate equal to the lesser of twenty-two percent (22%) per annum or the maximum rate permitted under applicable law (“Default Interest”). In connection with acceleration described herein, Lender need not provide, and Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and Lender may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Lender at any time prior to payment hereunder and Lender shall have all rights as a holder of the Note until such time, if any, as Lender receives full payment pursuant to this Section 4.4. No such rescission or annulment shall affect any subsequent Trigger Event or Event of Default or impair any right consequent thereon.

 

13.    Unconditional Obligation; No Offset. Borrower acknowledges that this Note is an unconditional, valid, binding and enforceable obligation of Borrower not subject to offset, deduction or counterclaim of any kind. Borrower hereby waives any rights of offset it now has or may have hereafter against Lender, its successors and assigns, and agrees to make the payments called for herein in accordance with the terms of this Note.

 

14.    Waiver. No waiver of any provision of this Note shall be effective unless it is in the form of a writing signed by the party granting the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or consent to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit a party to provide a waiver or consent in the future except to the extent specifically set forth in writing.

 

15.    Governing Law; Venue. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Utah, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Utah. The provisions set forth in the Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this reference.

 

16.    Arbitration of Disputes. By its issuance or acceptance of this Note, each party agrees to be bound by the Arbitration Provisions (as defined in the Purchase Agreement) set forth as an exhibit to the Purchase Agreement.

 

17.    Cancellation. After repayment of the entire Outstanding Balance, this Note shall be deemed paid in full, shall automatically be deemed canceled, and shall not be reissued.

 

18.    Amendments. The prior written consent of both parties hereto shall be required for any change or amendment to this Note.

 

19.    Assignments. Borrower may not assign this Note without the prior written consent of Lender. This Note may be offered, sold, assigned or transferred by Lender to any of its affiliates without the consent of Borrower, so long as such transfer is in accordance with applicable federal and state securities laws.

 

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20.    Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with the subsection of the Purchase Agreement titled “Notices.”

 

21.    Liquidated Damages. Lender and Borrower agree that in the event Borrower fails to comply with any of the terms or provisions of this Note, Lender’s damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties’ inability to predict future interest rates, future share prices, future trading volumes and other relevant factors. Accordingly, Lender and Borrower agree that any fees, balance adjustments, Default Interest or other charges assessed under this Note are not penalties but instead are intended by the parties to be, and shall be deemed, liquidated damages.

 

22.    Severability. If any part of this Note is construed to be in violation of any law, such part shall be modified to achieve the objective of Borrower and Lender to the fullest extent permitted by law and the balance of this Note shall remain in full force and effect.

 

[Remainder of page intentionally left blank; signature page follows]IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the Restatement Date.

 

BORROWER:

 

Orbital Energy Group, Inc.

 

 

By:  /s/  William Clough                                            

Name: William Clough                                             

Title:   Executive Chairman                                          

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

 

LENDER:

 

Streeterville Capital, LLC

 

 

By:  /s/ John M. Fife                              

John M. Fife, President          

 

 

 

 

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ATTACHMENT 1

DEFINITIONS

 

For purposes of this Note, the following terms shall have the following meanings:

 

A1.“    Fundamental Transaction” means that (a) (i) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, consolidate or merge with or into (whether or not Borrower or any of its subsidiaries is the surviving corporation) any other person or entity, or (ii) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective properties or assets to any other person or entity, or (iii) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, allow any other person or entity to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of voting stock of Borrower (not including any shares of voting stock of Borrower held by the person or persons making or party to, or associated or affiliated with the persons or entities making or party to, such purchase, tender or exchange offer), or (iv) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other person or entity whereby such other person or entity acquires more than 50% of the outstanding shares of voting stock of Borrower (not including any shares of voting stock of Borrower held by the other persons or entities making or party to, or associated or affiliated with the other persons or entities making or party to, such stock or share purchase agreement or other business combination), or (v) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, reorganize, recapitalize or reclassify the Common Stock, other than an increase in the number of authorized shares of Borrower’s Common Stock, or reverse splits of its outstanding and authorized shares of Common Stock to meet Nasdaq listing requirements or (b) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding voting stock of Borrower.

 

A2.“    Major Trigger Event” means any Trigger Event occurring under Sections 4.1(a) or 4.1(l).

 

A3.“    Mandatory Default Amount” means the Outstanding Balance following the application of the Trigger Effect.

 

A4.“    Market Capitalization” means a number equal to (a) the average VWAP of the Common Stock for the immediately preceding fifteen (15) Trading Days, multiplied by (b) the aggregate number of outstanding Common Stock as reported on Borrower’s most recently filed Form 10-Q or Form 10-K.

 

A5.“    Minor Trigger Event” means any Trigger Event that is not a Major Trigger Event.

 

A6.“    OID” means an original issue discount.

 

A7.“    Other Agreements” means, collectively, (a) all existing and future agreements and instruments between, among or by Borrower (or an affiliate), on the one hand, and Lender (or an affiliate), on the other hand, and (b) any financing agreement or a material agreement that affects Borrower’s ongoing business operations.

 

A8.“    Outstanding Balance” means as of any date of determination, the Purchase Price, as reduced or increased, as the case may be, pursuant to the terms hereof for payment, offset, or otherwise, plus the OID, the Transaction Expense Amount, accrued but unpaid interest, collection and enforcements costs (including attorneys’ fees) incurred by Lender, transfer, stamp, issuance and similar taxes and fees incurred under this Note.

 

A9.“    Purchase Price Date” means the date the Purchase Price is delivered by Lender to Borrower.

 

A10.“    Trigger Effect” means multiplying the Outstanding Balance as of the date the applicable Trigger Event occurred by (a) fifteen percent (15%) for each occurrence of any Major Trigger Event, or (b) five percent (5%) for each occurrence of any Minor Trigger Event, and then adding the resulting product to the Outstanding Balance as of the date the applicable Trigger Event occurred, with the sum of the foregoing then becoming the Outstanding Balance under this Note as of the date the applicable Trigger Event occurred; provided that the Trigger Effect may only be applied three (3) times hereunder with respect to Major Trigger Events and three (3) times hereunder with respect to Minor Trigger Events.

 

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A11.“    Trading Day” means any day on which Nasdaq (or such other principal market for the Common Stock) is open for trading.

 

 

[Remainder of page intentionally left blank]

 

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EXHIBIT C

 

ARBITRATION PROVISIONS

 

1.         Dispute Resolution. For purposes of this Exhibit C, the term “Claims” means any disputes, claims, demands, causes of action, requests for injunctive relief, requests for specific performance, liabilities, damages, losses, or controversies whatsoever arising from, related to, or connected with the transactions contemplated in the Transaction Documents and any communications between the parties related thereto, including without limitation any claims of mutual mistake, mistake, fraud, misrepresentation, failure of formation, failure of consideration, promissory estoppel, unconscionability, failure of condition precedent, rescission, and any statutory claims, tort claims, contract claims, or claims to void, invalidate or terminate the Agreement (or these Arbitration Provisions (defined below)) or any of the other Transaction Documents. For the avoidance of doubt, Investor’s pursuit of an injunction or other Claim pursuant to these Arbitration Provisions or with a court will not later prevent Investor under the doctrines of claim preclusion, issue preclusion, res judicata or other similar legal doctrines from pursuing other Claims in a separate arbitration in the future. The parties to this Agreement (the “parties”) hereby agree that the Claims may be arbitrated in one or more Arbitrations pursuant to these Arbitration Provisions (one for an injunction or injunctions and a separate one for all other Claims). The term “Claims” specifically excludes a dispute over Calculations. The parties to the Agreement hereby agree that the arbitration provisions set forth in this Exhibit C (“Arbitration Provisions”) are binding on each of them. As a result, any attempt to rescind the Agreement (or these Arbitration Provisions) or declare the Agreement (or these Arbitration Provisions) or any other Transaction Document invalid or unenforceable for any reason is subject to these Arbitration Provisions. These Arbitration Provisions shall also survive any termination or expiration of the Agreement. Any capitalized term not defined in these Arbitration Provisions shall have the meaning set forth in the Agreement.

 

2.         Arbitration. Except as otherwise provided herein, all Claims must be submitted to arbitration (“Arbitration”) to be conducted exclusively in Salt Lake County, Utah and pursuant to the terms set forth in these Arbitration Provisions. Subject to the arbitration appeal right provided for in Paragraph 5 below (the “Appeal Right”), the parties agree that the award of the arbitrator rendered pursuant to Paragraph 4 below (the “Arbitration Award”) shall be (a) final and binding upon the parties, (b) the sole and exclusive remedy between them regarding any Claims, counterclaims, issues, or accountings presented or pleaded to the arbitrator, and (c) promptly payable in United States dollars free of any tax, deduction or offset (with respect to monetary awards). Subject to the Appeal Right, any costs or fees, including without limitation attorneys’ fees, incurred in connection with or incident to enforcing the Arbitration Award shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement. The Arbitration Award shall include default interest (as defined or otherwise provided for in the Note, “Default Interest”) (with respect to monetary awards) at the rate specified in the Note for Default Interest both before and after the Arbitration Award. Judgment upon the Arbitration Award will be entered and enforced by any state or federal court sitting in Salt Lake County, Utah.

 

3.         The Arbitration Act. The parties hereby incorporate herein the provisions and procedures set forth in the Utah Uniform Arbitration Act, U.C.A. § 78B-11-101 et seq. (as amended or superseded from time to time, the “Arbitration Act”). Notwithstanding the foregoing, pursuant to, and to the maximum extent permitted by, Section 105 of the Arbitration Act, in the event of conflict or variation between the terms of these Arbitration Provisions and the provisions of the Arbitration Act, the terms of these Arbitration Provisions shall control and the parties hereby waive or otherwise agree to vary the effect of all requirements of the Arbitration Act that may conflict with or vary from these Arbitration Provisions.

 

4.         Arbitration Proceedings. Arbitration between the parties will be subject to the following:

 

4.1         Initiation of Arbitration. Pursuant to Section 110 of the Arbitration Act, the parties agree that a party may initiate Arbitration by giving written notice to the other party (“Arbitration Notice”) in the same manner that notice is permitted under Section 8.9 of the Agreement; provided, however, that the Arbitration Notice may not be given by email or fax. Arbitration will be deemed initiated as of the date that the Arbitration Notice is deemed delivered to such other party under Section 8.9 of the Agreement (the “Service Date”). After the Service Date, information may be delivered, and notices may be given, by email or fax pursuant to Section 8.9 of the Agreement or any other method permitted thereunder. The Arbitration Notice must describe the nature of the controversy, the remedies sought, and the election to commence Arbitration proceedings. All Claims in the Arbitration Notice must be pleaded consistent with the Utah Rules of Civil Procedure.

 

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4.2         Selection and Payment of Arbitrator.

 

(a) Within ten (10) calendar days after the Service Date, Investor shall select and submit to Company the names of three (3) arbitrators that are designated as “neutrals” or qualified arbitrators by Utah ADR Services (http://www.utahadrservices.com) (such three (3) designated persons hereunder are referred to herein as the “Proposed Arbitrators”). For the avoidance of doubt, each Proposed Arbitrator must be qualified as a “neutral” with Utah ADR Services. Within five (5) calendar days after Investor has submitted to Company the names of the Proposed Arbitrators, Company must select, by written notice to Investor, one (1) of the Proposed Arbitrators to act as the arbitrator for the parties under these Arbitration Provisions. If Company fails to select one of the Proposed Arbitrators in writing within such 5-day period, then Investor may select the arbitrator from the Proposed Arbitrators by providing written notice of such selection to Company.

 

(b) If Investor fails to submit to Company the Proposed Arbitrators within ten (10) calendar days after the Service Date pursuant to subparagraph (a) above, then Company may at any time prior to Investor so designating the Proposed Arbitrators, identify the names of three (3) arbitrators that are designated as “neutrals” or qualified arbitrators by Utah ADR Service by written notice to Investor. Investor may then, within five (5) calendar days after Company has submitted notice of its Proposed Arbitrators to Investor, select, by written notice to Company, one (1) of the Proposed Arbitrators to act as the arbitrator for the parties under these Arbitration Provisions. If Investor fails to select in writing and within such 5-day period one (1) of the three (3) Proposed Arbitrators selected by Company, then Company may select the arbitrator from its three (3) previously selected Proposed Arbitrators by providing written notice of such selection to Investor.

 

(c) If a Proposed Arbitrator chosen to serve as arbitrator declines or is otherwise unable to serve as arbitrator, then the party that selected such Proposed Arbitrator may select one (1) of the other three (3) Proposed Arbitrators within three (3) calendar days of the date the chosen Proposed Arbitrator declines or notifies the parties he or she is unable to serve as arbitrator. If all three (3) Proposed Arbitrators decline or are otherwise unable to serve as arbitrator, then the arbitrator selection process shall begin again in accordance with this Paragraph 4.2.

 

(d) The date that the Proposed Arbitrator selected pursuant to this Paragraph 4.2 agrees in writing (including via email) delivered to both parties to serve as the arbitrator hereunder is referred to herein as the “Arbitration Commencement Date”. If an arbitrator resigns or is unable to act during the Arbitration, a replacement arbitrator shall be chosen in accordance with this Paragraph 4.2 to continue the Arbitration. If Utah ADR Services ceases to exist or to provide a list of neutrals and there is no successor thereto, then the arbitrator shall be selected under the then prevailing rules of the American Arbitration Association.

 

(e) Subject to Paragraph 4.10 below, the cost of the arbitrator must be paid equally by both parties. Subject to Paragraph 4.10 below, if one party refuses or fails to pay its portion of the arbitrator fee, then the other party can advance such unpaid amount (subject to the accrual of Default Interest thereupon), with such amount being added to or subtracted from, as applicable, the Arbitration Award.

 

4.3         Applicability of Certain Utah Rules. The parties agree that the Arbitration shall be conducted generally in accordance with the Utah Rules of Civil Procedure and the Utah Rules of Evidence. More specifically, the Utah Rules of Civil Procedure shall apply, without limitation, to the filing of any pleadings, motions or memoranda, the conducting of discovery, and the taking of any depositions. The Utah Rules of Evidence shall apply to any hearings, whether telephonic or in person, held by the arbitrator. Notwithstanding the foregoing, it is the parties’ intent that the incorporation of such rules will in no event supersede these Arbitration Provisions. In the event of any conflict between the Utah Rules of Civil Procedure or the Utah Rules of Evidence and these Arbitration Provisions, these Arbitration Provisions shall control.

 

4.4         Answer and Default. An answer and any counterclaims to the Arbitration Notice shall be required to be delivered to the party initiating the Arbitration within twenty (20) calendar days after the Arbitration Commencement Date. If an answer is not delivered by the required deadline, the arbitrator must provide written notice to the defaulting party stating that the arbitrator will enter a default award against such party if such party does not file an answer within five (5) calendar days of receipt of such notice. If an answer is not filed within the five (5) day extension period, the arbitrator must render a default award, consistent with the relief requested in the Arbitration Notice, against a party that fails to submit an answer within such time period.

 

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4.5         Related Litigation. The party that delivers the Arbitration Notice to the other party shall have the option to also commence concurrent legal proceedings with any state or federal court sitting in Salt Lake County, Utah (“Litigation Proceedings”), subject to the following: (a) the complaint in the Litigation Proceedings is to be substantially similar to the claims set forth in the Arbitration Notice, provided that an additional cause of action to compel arbitration will also be included therein, (b) so long as the other party files an answer to the complaint in the Litigation Proceedings and an answer to the Arbitration Notice, the Litigation Proceedings will be stayed pending an Arbitration Award (or Appeal Panel Award (defined below), as applicable) hereunder, (c) if the other party fails to file an answer in the Litigation Proceedings or an answer in the Arbitration proceedings, then the party initiating Arbitration shall be entitled to a default judgment consistent with the relief requested, to be entered in the Litigation Proceedings, and (d) any legal or procedural issue arising under the Arbitration Act that requires a decision of a court of competent jurisdiction may be determined in the Litigation Proceedings. Any award of the arbitrator (or of the Appeal Panel (defined below)) may be entered in such Litigation Proceedings pursuant to the Arbitration Act.

 

4.6         Discovery. Pursuant to Section 118(8) of the Arbitration Act, the parties agree that discovery shall be conducted as follows:

 

(a) Written discovery will only be allowed if the likely benefits of the proposed written discovery outweigh the burden or expense thereof, and the written discovery sought is likely to reveal information that will satisfy a specific element of a claim or defense already pleaded in the Arbitration. The party seeking written discovery shall always have the burden of showing that all of the standards and limitations set forth in these Arbitration Provisions are satisfied. The scope of discovery in the Arbitration proceedings shall also be limited as follows:

 

(i)         To facts directly connected with the transactions contemplated by the Agreement.

 

(ii)         To facts and information that cannot be obtained from another source or in another manner that is more convenient, less burdensome or less expensive than in the manner requested.

 

(b) No party shall be allowed (i) more than fifteen (15) interrogatories (including discrete subparts), (ii) more than fifteen (15) requests for admission (including discrete subparts), (iii) more than ten (10) document requests (including discrete subparts), or (iv) more than three (3) depositions (excluding expert depositions) for a maximum of seven (7) hours per deposition. The costs associated with depositions will be borne by the party taking the deposition. The party defending the deposition will submit a notice to the party taking the deposition of the estimated attorneys’ fees that such party expects to incur in connection with defending the deposition. If the party defending the deposition fails to submit an estimate of attorneys’ fees within five (5) calendar days of its receipt of a deposition notice, then such party shall be deemed to have waived its right to the estimated attorneys’ fees. The party taking the deposition must pay the party defending the deposition the estimated attorneys’ fees prior to taking the deposition, unless such obligation is deemed to be waived as set forth in the immediately preceding sentence. If the party taking the deposition believes that the estimated attorneys’ fees are unreasonable, such party may submit the issue to the arbitrator for a decision. All depositions will be taken in Utah.

 

(c) All discovery requests (including document production requests included in deposition notices) must be submitted in writing to the arbitrator and the other party. The party submitting the written discovery requests must include with such discovery requests a detailed explanation of how the proposed discovery requests satisfy the requirements of these Arbitration Provisions and the Utah Rules of Civil Procedure. The receiving party will then be allowed, within five (5) calendar days of receiving the proposed discovery requests, to submit to the arbitrator an estimate of the attorneys’ fees and costs associated with responding to such written discovery requests and a written challenge to each applicable discovery request. After receipt of an estimate of attorneys’ fees and costs and/or challenge(s) to one or more discovery requests, consistent with subparagraph (c) above, the arbitrator will within three (3) calendar days make a finding as to the likely attorneys’ fees and costs associated with responding to the discovery requests and issue an order that (i) requires the requesting party to prepay the attorneys’ fees and costs associated with responding to the discovery requests, and (ii) requires the responding party to respond to the discovery requests as limited by the arbitrator within twenty-five (25) calendar days of the arbitrator’s finding with respect to such discovery requests. If a party entitled to submit an estimate of attorneys’ fees and costs and/or a challenge to discovery requests fails to do so within such 5-day period, the arbitrator will make a finding that (A) there are no attorneys’ fees or costs associated with responding to such discovery requests, and

 

 

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(B) the responding party must respond to such discovery requests (as may be limited by the arbitrator) within twenty-five (25) calendar days of the arbitrator’s finding with respect to such discovery requests. Any party submitting any written discovery requests, including without limitation interrogatories, requests for production subpoenas to a party or a third party, or requests for admissions, must prepay the estimated attorneys’ fees and costs, before the responding party has any obligation to produce or respond to the same, unless such obligation is deemed waived as set forth above.

 

(d) In order to allow a written discovery request, the arbitrator must find that the discovery request satisfies the standards set forth in these Arbitration Provisions and the Utah Rules of Civil Procedure. The arbitrator must strictly enforce these standards. If a discovery request does not satisfy any of the standards set forth in these Arbitration Provisions or the Utah Rules of Civil Procedure, the arbitrator may modify such discovery request to satisfy the applicable standards, or strike such discovery request in whole or in part.

 

(e) Each party may submit expert reports (and rebuttals thereto), provided that such reports must be submitted within sixty (60) days of the Arbitration Commencement Date. Each party will be allowed a maximum of two (2) experts. Expert reports must contain the following: (i) a complete statement of all opinions the expert will offer at trial and the basis and reasons for them; (ii) the expert’s name and qualifications, including a list of all the expert’s publications within the preceding ten (10) years, and a list of any other cases in which the expert has testified at trial or in a deposition or prepared a report within the preceding ten (10) years; and (iii) the compensation to be paid for the expert’s report and testimony. The parties are entitled to depose any other party’s expert witness one (1) time for no more than four (4) hours. An expert may not testify in a party’s case-in-chief concerning any matter not fairly disclosed in the expert report.

 

4.6         Dispositive Motions. Each party shall have the right to submit dispositive motions pursuant Rule 12 or Rule 56 of the Utah Rules of Civil Procedure (a “Dispositive Motion”). The party submitting the Dispositive Motion may, but is not required to, deliver to the arbitrator and to the other party a memorandum in support (the “Memorandum in Support”) of the Dispositive Motion. Within seven (7) calendar days of delivery of the Memorandum in Support, the other party shall deliver to the arbitrator and to the other party a memorandum in opposition to the Memorandum in Support (the “Memorandum in Opposition”). Within seven (7) calendar days of delivery of the Memorandum in Opposition, as applicable, the party that submitted the Memorandum in Support shall deliver to the arbitrator and to the other party a reply memorandum to the Memorandum in Opposition (“Reply Memorandum”). If the applicable party shall fail to deliver the Memorandum in Opposition as required above, or if the other party fails to deliver the Reply Memorandum as required above, then the applicable party shall lose its right to so deliver the same, and the Dispositive Motion shall proceed regardless.

 

4.7         Confidentiality. All information disclosed by either party (or such party’s agents) during the Arbitration process (including without limitation information disclosed during the discovery process or any Appeal (defined below)) shall be considered confidential in nature. Each party agrees not to disclose any confidential information received from the other party (or its agents) during the Arbitration process (including without limitation during the discovery process or any Appeal) unless (a) prior to or after the time of disclosure such information becomes public knowledge or part of the public domain, not as a result of any inaction or action of the receiving party or its agents, (b) such information is required by a court order, subpoena or similar legal duress to be disclosed if such receiving party has notified the other party thereof in writing and given it a reasonable opportunity to obtain a protective order from a court of competent jurisdiction prior to disclosure, or (c) such information is disclosed to the receiving party’s agents, representatives and legal counsel on a need to know basis who each agree in writing not to disclose such information to any third party. Pursuant to Section 118(5) of the Arbitration Act, the arbitrator is hereby authorized and directed to issue a protective order to prevent the disclosure of privileged information and confidential information upon the written request of either party.

 

4.8         Authorization; Timing; Scheduling Order. Subject to all other portions of these Arbitration Provisions, the parties hereby authorize and direct the arbitrator to take such actions and make such rulings as may be necessary to carry out the parties’ intent for the Arbitration proceedings to be efficient and expeditious. Pursuant to Section 120 of the Arbitration Act, the parties hereby agree that an Arbitration Award must be made within one hundred twenty (120) calendar days after the Arbitration Commencement Date. The arbitrator is hereby authorized and directed to hold a scheduling conference within ten (10) calendar days after the Arbitration Commencement Date in order to establish a scheduling order with various binding deadlines for discovery, expert testimony, and the submission of documents by the parties to enable the arbitrator to render a decision prior to the end of such 120-day period.

 

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4.9         Relief. The arbitrator shall have the right to award or include in the Arbitration Award (or in a preliminary ruling) any relief which the arbitrator deems proper under the circumstances, including, without limitation, specific performance and injunctive relief, provided that the arbitrator may not award exemplary or punitive damages.

 

4.10         Fees and Costs. As part of the Arbitration Award, the arbitrator is hereby directed to require the losing party (the party being awarded the least amount of money by the arbitrator, which, for the avoidance of doubt, shall be determined without regard to any statutory fines, penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid costs and fees of the Arbitration, and (b) reimburse the prevailing party for all reasonable attorneys’ fees, arbitrator costs and fees, deposition costs, other discovery costs, and other expenses, costs or fees paid or otherwise incurred by the prevailing party in connection with the Arbitration.

 

5.         Arbitration Appeal.

 

5.1         Initiation of Appeal. Following the entry of the Arbitration Award, either party (the “Appellant”) shall have a period of thirty (30) calendar days in which to notify the other party (the “Appellee”), in writing, that the Appellant elects to appeal (the “Appeal”) the Arbitration Award (such notice, an “Appeal Notice”) to a panel of arbitrators as provided in Paragraph 5.2 below. The date the Appellant delivers an Appeal Notice to the Appellee is referred to herein as the “Appeal Date”. The Appeal Notice must be delivered to the Appellee in accordance with the provisions of Paragraph 4.1 above with respect to delivery of an Arbitration Notice. In addition, together with delivery of the Appeal Notice to the Appellee, the Appellant must also pay for (and provide proof of such payment to the Appellee together with delivery of the Appeal Notice) a bond in the amount of 110% of the sum the Appellant owes to the Appellee as a result of the Arbitration Award the Appellant is appealing. In the event an Appellant delivers an Appeal Notice to the Appellee (together with proof of payment of the applicable bond) in compliance with the provisions of this Paragraph 5.1, the Appeal will occur as a matter of right and, except as specifically set forth herein, will not be further conditioned. In the event a party does not deliver an Appeal Notice (along with proof of payment of the applicable bond) to the other party within the deadline prescribed in this Paragraph 5.1, such party shall lose its right to appeal the Arbitration Award. If no party delivers an Appeal Notice (along with proof of payment of the applicable bond) to the other party within the deadline described in this Paragraph 5.1, the Arbitration Award shall be final. The parties acknowledge and agree that any Appeal shall be deemed part of the parties’ agreement to arbitrate for purposes of these Arbitration Provisions and the Arbitration Act.

 

5.2         Selection and Payment of Appeal Panel. In the event an Appellant delivers an Appeal Notice to the Appellee (together with proof of payment of the applicable bond) in compliance with the provisions of Paragraph 5.1 above, the Appeal will be heard by a three (3) person arbitration panel (the “Appeal Panel”).

 

(a)          Within ten (10) calendar days after the Appeal Date, the Appellee shall select and submit to the Appellant the names of five (5) arbitrators that are designated as “neutrals” or qualified arbitrators by Utah ADR Services (http://www.utahadrservices.com) (such five (5) designated persons hereunder are referred to herein as the “Proposed Appeal Arbitrators”). For the avoidance of doubt, each Proposed Appeal Arbitrator must be qualified as a “neutral” with Utah ADR Services, and shall not be the arbitrator who rendered the Arbitration Award being appealed (the “Original Arbitrator”). Within five (5) calendar days after the Appellee has submitted to the Appellant the names of the Proposed Appeal Arbitrators, the Appellant must select, by written notice to the Appellee, three (3) of the Proposed Appeal Arbitrators to act as the members of the Appeal Panel. If the Appellant fails to select three (3) of the Proposed Appeal Arbitrators in writing within such 5-day period, then the Appellee may select such three (3) arbitrators from the Proposed Appeal Arbitrators by providing written notice of such selection to the Appellant.

 

(b)          If the Appellee fails to submit to the Appellant the names of the Proposed Appeal Arbitrators within ten (10) calendar days after the Appeal Date pursuant to subparagraph (a) above, then the Appellant may at any time prior to the Appellee so designating the Proposed Appeal Arbitrators, identify the names of five (5) arbitrators that are designated as “neutrals” or qualified arbitrators by Utah ADR Service (none of whom may be the Original Arbitrator) by written notice to the Appellee. The Appellee may then, within five (5) calendar days after the Appellant has submitted notice of its selected arbitrators to the Appellee, select, by written notice to the Appellant, three (3) of such selected arbitrators to serve on the Appeal Panel. If the Appellee fails to select in writing within such 5-day period three (3) of the arbitrators selected by the Appellant to serve as the members of the Appeal Panel, then the Appellant may select the three (3) members of the Appeal Panel from the Appellant’s list of five (5) arbitrators by providing written notice of such selection to the Appellee.

 

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(c)          If a selected Proposed Appeal Arbitrator declines or is otherwise unable to serve, then the party that selected such Proposed Appeal Arbitrator may select one (1) of the other five (5) designated Proposed Appeal Arbitrators within three (3) calendar days of the date a chosen Proposed Appeal Arbitrator declines or notifies the parties he or she is unable to serve as an arbitrator. If at least three (3) of the five (5) designated Proposed Appeal Arbitrators decline or are otherwise unable to serve, then the Proposed Appeal Arbitrator selection process shall begin again in accordance with this Paragraph 5.2; provided, however, that any Proposed Appeal Arbitrators who have already agreed to serve shall remain on the Appeal Panel.

 

(d)         The date that all three (3) Proposed Appeal Arbitrators selected pursuant to this Paragraph 5.2 agree in writing (including via email) delivered to both the Appellant and the Appellee to serve as members of the Appeal Panel hereunder is referred to herein as the “Appeal Commencement Date”. No later than five (5) calendar days after the Appeal Commencement Date, the Appellee shall designate in writing (including via email) to the Appellant and the Appeal Panel the name of one (1) of the three (3) members of the Appeal Panel to serve as the lead arbitrator in the Appeal proceedings. Each member of the Appeal Panel shall be deemed an arbitrator for purposes of these Arbitration Provisions and the Arbitration Act, provided that, in conducting the Appeal, the Appeal Panel may only act or make determinations upon the approval or vote of no less than the majority vote of its members, as announced or communicated by the lead arbitrator on the Appeal Panel. If an arbitrator on the Appeal Panel ceases or is unable to act during the Appeal proceedings, a replacement arbitrator shall be chosen in accordance with Paragraph 5.2 above to continue the Appeal as a member of the Appeal Panel. If Utah ADR Services ceases to exist or to provide a list of neutrals, then the arbitrators for the Appeal Panel shall be selected under the then prevailing rules of the American Arbitration Association.

 

(d)          Subject to Paragraph 5.7 below, the cost of the Appeal Panel must be paid entirely by the Appellant.

 

5.3         Appeal Procedure. The Appeal will be deemed an appeal of the entire Arbitration Award. In conducting the Appeal, the Appeal Panel shall conduct a de novo review of all Claims described or otherwise set forth in the Arbitration Notice. Subject to the foregoing and all other provisions of this Paragraph 5, the Appeal Panel shall conduct the Appeal in a manner the Appeal Panel considers appropriate for a fair and expeditious disposition of the Appeal, may hold one or more hearings and permit oral argument, and may review all previous evidence and discovery, together with all briefs, pleadings and other documents filed with the Original Arbitrator (as well as any documents filed with the Appeal Panel pursuant to Paragraph 5.4(a) below). Notwithstanding the foregoing, in connection with the Appeal, the Appeal Panel shall not permit the parties to conduct any additional discovery or raise any new Claims to be arbitrated, shall not permit new witnesses or affidavits, and shall not base any of its findings or determinations on the Original Arbitrator’s findings or the Arbitration Award.

 

5.4         Timing. 

 

(a)         Within seven (7) calendar days of the Appeal Commencement Date, the Appellant (i) shall deliver or cause to be delivered to the Appeal Panel copies of the Appeal Notice, all discovery conducted in connection with the Arbitration, and all briefs, pleadings and other documents filed with the Original Arbitrator (which material Appellee shall have the right to review and supplement if necessary), and (ii) may, but is not required to, deliver to the Appeal Panel and to the Appellee a Memorandum in Support of the Appellant’s arguments concerning or position with respect to all Claims, counterclaims, issues, or accountings presented or pleaded in the Arbitration. Within seven (7) calendar days of the Appellant’s delivery of the Memorandum in Support, as applicable, the Appellee shall deliver to the Appeal Panel and to the Appellant a Memorandum in Opposition to the Memorandum in Support. Within seven (7) calendar days of the Appellee’s delivery of the Memorandum in Opposition, as applicable, the Appellant shall deliver to the Appeal Panel and to the Appellee a Reply Memorandum to the Memorandum in Opposition. If the Appellant shall fail to substantially comply with the requirements of clause (i) of this subparagraph (a), the Appellant shall lose its right to appeal the Arbitration Award, and the Arbitration Award shall be final. If the Appellee shall fail to deliver the Memorandum in Opposition as required above, or if the Appellant shall fail to deliver the Reply Memorandum as required above, then the Appellee or the Appellant, as the case may be, shall lose its right to so deliver the same, and the Appeal shall proceed regardless.

 

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(b)          Subject to subparagraph (a) above, the parties hereby agree that the Appeal must be heard by the Appeal Panel within thirty (30) calendar days of the Appeal Commencement Date, and that the Appeal Panel must render its decision within thirty (30) calendar days after the Appeal is heard (and in no event later than sixty (60) calendar days after the Appeal Commencement Date).

 

5.5         Appeal Panel Award. The Appeal Panel shall issue its decision (the “Appeal Panel Award”) through the lead arbitrator on the Appeal Panel. Notwithstanding any other provision contained herein, the Appeal Panel Award shall (a) supersede in its entirety and make of no further force or effect the Arbitration Award (provided that any protective orders issued by the Original Arbitrator shall remain in full force and effect), (b) be final and binding upon the parties, with no further rights of appeal, (c) be the sole and exclusive remedy between the parties regarding any Claims, counterclaims, issues, or accountings presented or pleaded in the Arbitration, and (d) be promptly payable in United States dollars free of any tax, deduction or offset (with respect to monetary awards). Any costs or fees, including without limitation attorneys’ fees, incurred in connection with or incident to enforcing the Appeal Panel Award shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement. The Appeal Panel Award shall include Default Interest (with respect to monetary awards) at the rate specified in the Note for Default Interest both before and after the Arbitration Award. Judgment upon the Appeal Panel Award will be entered and enforced by a state or federal court sitting in Salt Lake County, Utah.

 

5.6         Relief. The Appeal Panel shall have the right to award or include in the Appeal Panel Award any relief which the Appeal Panel deems proper under the circumstances, including, without limitation, specific performance and injunctive relief, provided that the Appeal Panel may not award exemplary or punitive damages.

 

5.7         Fees and Costs. As part of the Appeal Panel Award, the Appeal Panel is hereby directed to require the losing party (the party being awarded the least amount of money by the arbitrator, which, for the avoidance of doubt, shall be determined without regard to any statutory fines, penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid costs and fees of the Arbitration and the Appeal Panel, and (b) reimburse the prevailing party (the party being awarded the most amount of money by the Appeal Panel, which, for the avoidance of doubt, shall be determined without regard to any statutory fines, penalties, fees, or other charges awarded to any part) the reasonable attorneys’ fees, arbitrator and Appeal Panel costs and fees, deposition costs, other discovery costs, and other expenses, costs or fees paid or otherwise incurred by the prevailing party in connection with the Arbitration (including without limitation in connection with the Appeal).

 

6.          Miscellaneous.

 

6.1         Severability. If any part of these Arbitration Provisions is found to violate or be illegal under applicable law, then such provision shall be modified to the minimum extent necessary to make such provision enforceable under applicable law, and the remainder of the Arbitration Provisions shall remain unaffected and in full force and effect.

 

6.2         Governing Law. These Arbitration Provisions shall be governed by the laws of the State of Utah without regard to the conflict of laws principles therein.

 

6.3         Interpretation. The headings of these Arbitration Provisions are for convenience of reference only and shall not form part of, or affect the interpretation of, these Arbitration Provisions.

 

6.4         Waiver. No waiver of any provision of these Arbitration Provisions shall be effective unless it is in the form of a writing signed by the party granting the waiver.

 

6.5         Time is of the Essence. Time is expressly made of the essence with respect to each and every provision of these Arbitration Provisions.

 

 

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