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Form 424B3 Xos, Inc.

August 12, 2022 7:16 AM EDT

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PROSPECTUS SUPPLEMENT NO. 4
(TO PROSPECTUS DATED MAY 6, 2022)
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-259509


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This prospectus supplement updates and supplements the prospectus dated May 6, 2022 (the “Prospectus”), which forms a part of our Registration Statement on Form S-1, as amended (Registration No. 333-259509). This prospectus supplement is being filed to update and supplement the information in the Prospectus with the information contained in our Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 11, 2022 (the “Current Report on Form 8-K”). Accordingly, we have attached the Current Report on Form 8-K to this prospectus supplement.
You should read this prospectus supplement in conjunction with the Prospectus, including any amendments or supplements to it. This prospectus supplement is not complete without, and may not be delivered or used except in conjunction with, the Prospectus, including any amendments or supplements to it. This prospectus supplement is qualified by reference to the Prospectus, except to the extent that the information provided by this prospectus supplement supersedes information contained in the Prospectus. You should not assume that the information provided in this prospectus supplement, the Prospectus or any prior prospectus supplement is accurate as of any date other than their respective dates. Neither the delivery of this prospectus supplement, the Prospectus, or any prior prospectus supplement, nor any sale made hereunder or thereunder, shall under any circumstances create any implication that there has been no change in our affairs since the date of this prospectus supplement, or that the information contained in this prospectus supplement, the Prospectus or any prior prospectus supplement is correct as of any time after the date of that information.
Our Common Stock and Public Warrants are listed on The Nasdaq Capital Market (“Nasdaq”) under the symbols “XOS” and “XOSWW,” respectively. On August 10, 2022, the closing price of our Common Stock was $2.08 and the closing price for our Public Warrants was $0.215.
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See the section entitled “Risk Factors” beginning on page 7 of the Prospectus, as updated and supplemented by the section entitled “Risk Factors” in this prospectus supplement and under similar headings in any further amendments or supplements to the prospectus to read about factors you should consider before buying our securities.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if the prospectus or this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus supplement is August 11, 2022.







UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 9, 2022

XOS, INC.
(Exact name of registrant as specified in its charter)

Delaware001-3959898-1550505
(State or Other Jurisdiction
of Incorporation)
(Commission File Number)(I.R.S. Employer
Identification No.)


3550 Tyburn Street
Los Angeles, California
90065
(Address of principal executive offices)(Zip Code)

(818) 316-1890
(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c))

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




Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, $0.0001 par value per shareXOSNasdaq Global Market
Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per shareXOSWWNasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company

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




Item 1.01. Entry into a Material Definitive Agreement.

Convertible Promissory Notes

On August 9, 2022, Xos, Inc. (the “Company”) entered into a note purchase agreement (the “Note Purchase Agreement”) with Aljomaih Automotive Co. (“Aljomaih”) under which the Company agreed to sell and issue to AAC a convertible promissory note (the “Note”) in the principal amount of $20.0 million, which is convertible into shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”), cash or a combination of cash and Common Stock, at the Company’s election, in the manner and subject to the conditions and limitations set forth in the Note Purchase Agreement and Note. Upon the mutual consent of both parties on or before November 30, 2022, the Company has also agreed to issue and sell additional convertible notes up to a principal amount of $20.0 million to Aljomaih, on terms and conditions to be negotiated in good faith.

The maturity date of the Note is August 11, 2025, unless earlier converted or redeemed. The Note bears interest at a rate of 10.0% per annum, payable at maturity in validly issued, fully paid and non-assessable shares of Common Stock, calculated based on the 10-day volume weighted average price ending on the trading day immediately prior to the applicable payment date (the “Interest Shares”), unless earlier converted or paid.

The Note provides a conversion right, in which Aljomaih may, on or after November 9, 2022, elect to convert the outstanding principal amount of the Note by providing written notice to the Company. The conversion price for the Note will initially be equal to $2.3817 per share, subject to adjustment in certain events pursuant to the terms of the Note. Aljomaih may also elect to convert the entire principal amount of the Note upon a transaction resulting in the change of control of the Company, by written notice to the Company within ten business days of receipt of notice of such change of control transaction.

The Company shall not effect the conversion of any portion of the Note and/or deliver Interest Shares, and Aljomaih shall not have the right to convert any portion of this Note or receive Interest Shares, in each case, pursuant to the terms and conditions of this Note and any such conversion or payment of Interest Shares shall be null and void and treated as if never made to the extent that after giving effect to such conversion or payment of Interest Shares, Aljomaih would beneficially own in excess of 19.99% of the shares of Common Stock outstanding immediately after giving effect to such conversion or the aggregate number of shares issued under the Note Purchase Agreement would exceed 19.99% of the Company’s common stock outstanding on the date that the Company enters into the Note Purchase Agreement, except that such limitation shall not apply in the event that the Company obtains the approval of its stockholders as required by the applicable rules of the Nasdaq Stock Market LLC (“Nasdaq”) for issuances of shares of Common Stock in excess of such amount.

On or after August 11, 2024, or as otherwise agreed to between the Company and Aljomaih in writing, the Company shall have the right, exercisable on not less than five trading days prior



written notice to Aljomaih, to prepay the outstanding Note (principal and accrued and unpaid interest), in full or in part, and without penalty, in accordance with the terms of the Note.

The Note includes customary covenants and sets forth certain events of default after which the Note may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company after which the Note becomes automatically due and payable.

The Company has also agreed to grant Aljomaih a right to designate one individual for nomination (the “Designated Director”) to the Company’s board of directors (the “Board”), subject to the approval of the Company and the Board and satisfaction of certain conditions. The Designated Director will be designated for nomination as a Class I director and a member of the Board as soon as reasonably practicable and shall continue as a director of the Board until the earlier of the date that (i) Aljomaih first no longer owns at least 5% of the then outstanding shares of Common Stock, or (ii) is 30 days immediately prior to the next election of Class I directors (the “Director Right Termination Date”). The Designated Director will execute a written consent agreeing to resign no later than the Director Right Termination Date and upon the request of the Board in connection with a change of control. If the Designated Director ceases to serve as a member of the Board at any time prior to the Director Right Termination Date, then Aljomaih shall be permitted to nominate another individual as a Designated Director pursuant to the provisions set forth in Section 6(a) therein, provided that any such right to designate a replacement Designated Director shall terminate on the Director Right Termination Date or the date of resignation of a Designated Director due to a change of control.

In addition, the Company has agreed to give Aljomaih a right of first offer (“Right of First Offer”) with respect to any future distribution of products or services offered by the Company in Cooperation Council for the Arab States of the Gulf (Saudi Arabia, Bahrain, Kuwait, United Arab Emirates, Qatar and Oman), Jordan, Iraq, Syria, Lebanon, Egypt and Yemen. The Right of First Offer will terminate upon the earlier of (i) the first date Aljomaih no longer holds 5% of the Company’s then outstanding shares of Common Stock, or (ii) August 9, 2025.

As soon as practicable after September 1, 2022, but no later than September 16, 2022, the Company is required to file a registration statement registering the resale by Aljomaih of any shares of Common Stock issuable upon conversion of the Note under the Securities Act of 1933, as amended (the “Securities Act”).

The Note Purchase Agreement contains customary representations, warranties, conditions and indemnification obligations by each party. The representations, warranties and covenants contained in the Note Purchase Agreement were made only for purposes of the Note Purchase Agreement and as of specific dates, were solely for the benefit of the parties to such agreement and are subject to certain important limitations.

The foregoing descriptions of the Note Purchase Agreement and the Note are qualified in their entirety by reference to the full text of such agreements, which are attached to this Current



Report on Form 8-K as Exhibits 10.1 and 4.1, respectively, and which are incorporated herein by reference.

Convertible Debentures

On August 9, 2022, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with YA II PN, Ltd. (“Yorkville”) under which the Company agreed to sell and issue to Yorkville convertible debentures (the “Convertible Debentures”) in the principal amount of up to $35.0 million, which are convertible into shares of Common Stock, subject to certain conditions and limitations set forth in the Securities Purchase Agreement. $20.0 million in principal amount of Convertible Debentures was issued on August 11, 2022, and an additional $15.0 million in principal amount will be issued to Yorkville upon the effectiveness of the registration statement registering the resale of Common Stock resulting from the conversion of the Convertible Debentures. Yorkville is a fund managed by Yorkville Advisors Global, LP, headquartered in Mountainside, New Jersey.

The Convertible Debentures bear interest at an annual rate of 6.0%, payable at maturity, which will increase to an annual rate of (i) 10.0% upon the occurrence and during the continuance of an event of default, and (ii) 7.5% for so long as “Registration Event” (as defined in the Convertible Debenture) remains in effect in accordance with the registration rights agreement by and between the Company and Yorkville, dated August 9, 2022 (the “Yorkville RRA”). The maturity date of the Convertible Debentures shall be November 11, 2023, which may be extended by an additional three months in certain instances.

The Convertible Debentures provide a conversion right, in which Yorkville may, at any time after the issuance date, convert any portion of the principal amount of the Convertible Debenture, together with any accrued but unpaid interest, into shares of Common Stock at the lower of (i) $2.4733 per share (the conversion price pursuant to this clause (i), the “Fixed Conversion Price”) or (ii) 97% of the lowest daily volume weighted average price of the Common Stock during the three trading days immediately preceding the date of conversion (but not lower than a floor price of $0.50 per share, subject to adjustment in accordance with the terms of the Convertible Debentures) (the conversion price pursuant to this clause (ii), the “Variable Conversion Price”).

The Company shall not issue any shares of Common Stock upon conversion of any Convertible Debentures, or otherwise, if the issuance of such Common Stock, together with any Common Stock issued in connection with any other related transactions that may be considered part of the same series of transactions, would exceed 33,199,327 shares (the “Exchange Cap”), except that such limitation shall not apply in the event that the Company obtains the approval of its stockholders as required by the applicable rules of Nasdaq for issuances of shares of Common Stock in excess of such amount. In addition, Yorkville has agreed that it (i) will not convert any portion of the Debentures prior to September 9, 2022 (the “Conversion Start Date”), (ii) it will not convert more than an aggregate amount of $4,000,000 in principal at the Variable Conversion Price during (A) the 30-day period commencing on the Conversion Start Date or (B) any successive 30-day period thereafter (each such 30-day period described in (A) and (B), a “30-Day Period”) and (iii) it will use commercially reasonable efforts to convert at least



$2,000,000 of principal amount of Convertible Debentures in each 30-Day Period, provided that the certain conditions set forth in the Convertible Debentures are satisfied as of each such period.

If, at any time after the issue date of the Convertible Debentures, and from time to time thereafter, (i) the daily VWAP (as defined in the Convertible Debenture) of the Common Stock is less than the $0.50 floor price for five consecutive trading days, or (ii) the Company has issued pursuant to the Convertible Debenture in excess of 95% of the Common Stock available under the Exchange Cap (the last such day of each such occurrence, a “Triggering Date”), then the Company shall make monthly prepayments of $3,000,000 principal amount in the aggregate among the Convertible Debentures outstanding (provided that, subject to certain conditions, such amount shall instead be $4,000,000) (or the outstanding principal if less than such amount) (such amount, the “Triggered Principal Amount”) beginning on the 10th calendar day after the Triggering Date and continuing on the same day of each successive calendar month. Each monthly prepayment shall be an amount equal to the sum of (i) the Triggered Principal Amount, plus (ii) a redemption premium equal to 5.0% of such Triggered Principal Amount, plus (iii) accrued and unpaid interest on the outstanding Convertible Debentures. Notwithstanding the foregoing, subject to certain conditions set forth in the Convertible Debentures, each Triggered Principal Amount may be reduced in certain circumstances or the obligation of the Company to make monthly prepayments may cease.

The Convertible Debentures provide the Company, subject to certain conditions, with a redemption right pursuant to which the Company, upon 10 business days’ prior written notice to Yorkville (a “Redemption Notice”), may redeem in cash, in whole or in part, any amounts outstanding under the Convertible Debentures. Each redemption payment will be the principal amount of the Convertible Debentures to be redeemed, plus a redemption premium equal to 5.0% of the principal amount being redeemed, plus accrued and unpaid interest on the outstanding Convertible Debentures. The Company may exercise this redemption right at any time after the issue date of the Convertible Debentures, and from time to time thereafter, but only if the daily VWAP of the Common Stock is less than the Fixed Conversion Price for a period of three consecutive trading days immediately prior to the notice for such redemption. Yorkville shall have 10 business days after receipt of a Redemption Notice to elect to convert all or any portion of the Convertible Debentures.

The Convertible Debentures include customary covenants and set forth certain events of default after which the Convertible Debentures may be declared immediately due and payable and set forth certain types of bankruptcy or insolvency events of default involving the Company after which the Convertible Debentures become automatically due and payable.

In connection with the Securities Purchase Agreement, the Company and Yorkville entered into the Yorkville RRA pursuant to which the Company is required to file a registration statement registering the resale by Yorkville of any shares of Common Stock issuable upon conversion of the Convertible Debentures under the Securities Act. The Company is required to file such registration statement no later than 30 days following the execution date of the Yorkville RRA.




Under the Securities Purchase Agreement, the Company agreed not to effect an advance under the Standby Equity Purchase Agreement, dated March 23, 2022, by and between Yorkville and the Company (the “SEPA”), without the advance mutual consent of both parties, until the earliest of the date (i) all Convertible Debentures have been repaid or converted into Common Stock or (ii) Yorkville no longer has any right or ability to convert any portion of the Convertible Debentures into Common Stock (collectively, the “Consent Termination Date”). Yorkville agreed to extend the term set forth in the SEPA for a number of days equal to the number of days between the date of the Securities Purchase Agreement and the Consent Termination Date. For the avoidance of doubt and subject to the foregoing, the SEPA shall remain in full force and effect from the date hereof until the termination of the SEPA pursuant to the terms thereof.

The Securities Purchase Agreement contains customary representations, warranties, conditions and indemnification obligations by each party. The representations, warranties and covenants contained in the Securities Purchase Agreement were made only for purposes of the Securities Purchase Agreement and as of specific dates, were solely for the benefit of the parties to such agreement and are subject to certain important limitations.

The foregoing descriptions of the Securities Purchase Agreement, Yorkville RRA and Convertible Debentures are qualified in their entirety by reference to the full text of the Securities Purchase Agreement, Yorkville RRA and form of Convertible Debenture, which are attached to this Current Report on Form 8-K as Exhibit 10.2, 10.3, and 4.2, respectively, and which are incorporated herein by reference.

This Current Report on Form 8-K shall not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information contained above in Item 1.01 is hereby incorporated by reference into this Item 2.03.

Item 3.02. Unregistered Sale of Equity Securities.

The information contained above in Item 1.01 is hereby incorporated by reference into this Item 3.02.

The Note was issued to Aljomaih in reliance upon Section 4(a)(2) of the Securities Act in a transaction not involving any public offering. The Company relied on this exemption from registration based in part on representations made by Aljomaih in the Note Purchase Agreement. The Note and the shares of Common Stock issuable upon conversion of the Note, if any, have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.




The Convertible Debenture was issued to Yorkville in reliance upon Section 4(a)(2) of the Securities Act in a transaction not involving any public offering. The Company relied on this exemption from registration based in part on representations made by Yorkville in the Securities Purchase Agreement. The Convertible Debentures and the shares of Common Stock issuable upon conversion of the Convertible Debentures, if any, have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

To the extent that any shares of Common Stock are issued upon conversion of the Notes or the Convertible Debentures, they will be issued in transactions anticipated to be exempt from registration under the Securities Act by virtue of Section 3(a)(9) thereof because no commission or other remuneration is expected to be paid in connection with conversion of the Notes or Convertible Debentures and any respective resulting issuance of shares of Common Stock.

Item 9.01.Financial Statements and Exhibits.





SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: August 11, 2022
XOS, INC.
By:/s/ Kingsley Afemikhe
Kingsley Afemikhe
Chief Financial Officer



Exhibit 4.1
NEITHER THIS SECURITY NOR THE COMMON STOCK INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH REGULATION S, PURSUANT TO A REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. IN ADDITION, NO HEDGING TRANSACTION MAY BE CONDUCTED WITH RESPECT TO THESE SECURITIES UNLESS SUCH TRANSACTION IS IN COMPLIANCE WITH THE ACT. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “IRC”), THIS NOTE IS BEING ISSUED WITH AN ORIGINAL ISSUE DISCOUNT. THE COMPANY AGREES TO PROVIDE PROMPTLY TO THE INVESTOR, UPON WRITTEN REQUEST, THE ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY. ANY SUCH WRITTEN REQUEST SHOULD BE MADE PURSUANT TO SECTION 5(G) OF THIS NOTE.
XOS, INC.
CONVERTIBLE PROMISSORY NOTE
$20,000,000    August 11, 2022
FOR VALUE RECEIVED, Xos, Inc., a Delaware corporation (the “Company”), promises to pay to Aljomaih Automotive Co. or its registered assigns (“Investor”), in lawful money of the United States of America the principal sum of $20,000,000 together with such amount that has accrued as principal pursuant to Section 1(a) hereof or such lesser amount as shall equal the outstanding principal amount hereof, together with interest from the date of this Convertible Promissory Note (this “Note”), which shall accrue as set forth in Section 1(a) hereof. All unpaid principal, together with any then unpaid and accrued interest and other amounts payable hereunder, shall be due and payable on August 11, 2025 (the “Maturity Date”). This Note is one of the “Notes” issued pursuant to the Purchase Agreement.
The following is a statement of the rights of Investor and the conditions to which this Note is subject, and to which Investor, by the acceptance of this Note, agrees:
1.Payments.
(a)Interest in Shares. The principal amount of this Note outstanding shall accrue interest from the date of this Note at a rate of 10.0% per annum (computed on the basis of a year of 365 days for the actual number of days elapsed). Subject to the Authorized Share Cap, the Company shall pay interest in validly issued, fully paid and non-assessable shares of Common Stock, calculated based on the 10-day VWAP ending on the Trading Day immediately prior to the applicable payment date (the “Interest Shares”). Accrued interest on this Note shall be due and payable upon the Maturity Date unless earlier converted or paid.
(b)Optional Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time on or after August 11, 2024, or as otherwise agreed to between the Company and the Investor in writing, the Company shall have the right, exercisable on not less than five Trading Days prior written notice to the Investor, to prepay the outstanding Note (principal and accrued and unpaid interest), in full or in part, and without penalty, in accordance with this Section 1(b) (the “Optional Prepayment”). Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered in writing to the Investor and state: (i) that the Company is exercising its right to prepay the Note, and (ii) the date of prepayment, which shall be not less than five Trading Days from the date of the Optional Prepayment Notice. On the date fixed for



prepayment (the “Optional Prepayment Date”), the Company shall make payment of the Optional Prepayment Amount to the Investor, or upon the direction of the Investor as specified by the Investor in a writing to the Company (which direction shall be sent to the Company by the Investor at least two Business Days prior to the Optional Prepayment Date). If the Company exercises its right to prepay the Note, the Company shall make payment to the Investor of (x) an amount in cash equal to the then outstanding principal amount of this Note plus (y) subject to the Authorized Share Cap, the number of Interest Shares corresponding to the accrued and unpaid interest on the unpaid principal amount of this Note to, but excluding, the Optional Prepayment Date (the “Optional Prepayment Amount”).
(c)Elective Conversion Upon a Change of Control. In the event of a Change of Control that occurs prior to any repayment pursuant to Section 1 or Section 2 or conversion pursuant to Section 3 hereof, Investor may elect by written notice to the Company within ten Business Days of the receipt of notice of such Change of Control to convert the entire outstanding principal amount of this Note and, subject to the Authorized Share Cap, pay accrued and unpaid interest on this Note in Interest Shares pursuant to Section 3(b). On or before the later to occur of (i) the thirtieth calendar day prior to the anticipated effective date of a Change of Control and (ii) the date the Company first learns of the anticipated effective date of a Change of Control, the Company shall send to the Investor a written notice of such Change of Control.
2.Events of Default. During the continuance of an Event of Default, and in addition to any other rights or remedies that the Investor may have under applicable law or the provisions of this Note, the Majority Investors may elect by written notice to the Company and holders of the Notes, to either: (i) convert this Note into shares of Common Stock or (ii) declare this Note to be, and upon such declaration this Note shall be and become, immediately due and payable in (x) an amount in cash equal to the then outstanding principal amount of this Note plus (y) subject to the Authorized Share Cap, the number of Interest Shares corresponding to the accrued and unpaid interest on the unpaid principal amount of this Note. Notwithstanding the foregoing, upon the occurrence of any Event of Default described in Section 2(f) or Section 2(g), immediately and without notice, 100% of the principal of, and accrued and unpaid interest, if any, on, this Note shall automatically be immediately due and payable, without presentment, demand, protest or any other notice of any kind or any other action required on the part of the Investor, all of which are hereby expressly waived, anything contained herein or in the other Note Documents to the contrary notwithstanding, in addition to any other rights or remedies that the Investor may have under applicable law or the provisions of this Note. The occurrence of any of the following shall constitute an “Event of Default” under this Note and the other Note Documents:
(a)Failure to Pay. The Company shall fail to pay (i) any principal of this Note when due and payable on the Maturity Date, upon Optional Prepayment, upon any required repurchase, upon declaration of acceleration or otherwise; or (ii) interest on any Note or any other amounts when due and payable, and the default continues for a period of ten Business Days after receipt by the Company of written notice from Investor;
(b)Breach of Covenants. The Company shall fail to observe or perform any other covenant or obligation contained in this Note or the Purchase Agreement (other than those specified in Section 2(a)), in each case that has not been cured or that is incurable within 30 calendar days of receipt by the Company of written notice by the Investor;
(c)Representations and Warranties. Any representation or warranty made by the Company in the Purchase Agreement shall not have been true and correct in all material respects when made, or with respect to any representation and warranty that contains a materiality qualifier, shall not have been true and correct in all such respects when made, where the same would have a Material Adverse Effect (as defined in the Purchase Agreement);
(d)Conversion. The Company shall fail to comply with its obligation to convert this Note and deliver the applicable Conversion Consideration in accordance with the provisions herein upon exercise of the Investor’s conversion right and such failure continues for five Business Days;
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(e)Other Payment Obligations. A default shall exist under any mortgages, agreements or other instruments under which there is outstanding, or by which there is secured or evidenced, any Indebtedness (as defined in the Purchase Agreement) for money borrowed of at least $15,000,000 (or its foreign currency equivalent on the date of such default) in the aggregate of the Company and any of its Signifiant Subsidiaries, where such default results in such indebtedness becoming or being declared due and payable before its stated maturity and such acceleration shall not have been rescinded or annulled or such default shall not have been cured or waived, or such indebtedness is not paid or discharged, as the case may be, within 30 calendar days after written notice to the Company by at least 25% in aggregate principal amount of Notes issued pursuant to the Purchase Agreement then outstanding;
(f)Voluntary Bankruptcy or Insolvency Proceedings. The Company shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) admit in writing its inability to pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved, liquidated or wound up, or adopt any plan of liquidation to the effect the foregoing, (v) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it, or (vi) take any action for the purpose of effecting any of the foregoing; or
(g)Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the Company, or of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to the Company or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within 45 days of commencement.
3.Conversion.
(a)Optional Conversion. On or after November 9, 2022, the Investor may elect at any time while any principal amount of this Note is outstanding, to convert the outstanding principal amount of this Note by providing written notice of such election to the Company.
(b)Conversion upon a Change of Control. If a Change of Control occurs prior to any repayment pursuant to Section 1 or Section 2 or conversion pursuant to Section 3(a), then, upon the Investor’s election in accordance with Section 1(c), (i) any portion of the outstanding principal amount of this Note shall convert, immediately prior to such Change of Control, into that number of shares of Common Stock equal to the quotient obtained by dividing (x) such outstanding principal amount as of immediately prior to such Change of Control by (y) the Conversion Price and (ii) subject to the Authorized Share Cap, the number of Interest Shares corresponding to the accrued and unpaid interest on the unpaid principal amount of this Note to, but excluding, the date of such Change of Control.
(c)Settlement upon Conversion. Upon any conversion of this Note, the Company will settle such conversion by paying or delivering, as applicable and as provided in this Section 3(c), either (x) shares of Common Stock, rounded down to the nearest whole share (a “Physical Settlement”); (y) solely cash as provided in Section 3(d)(i)(2) (a “Cash Settlement”); or (z) a combination of cash and shares of Common Stock, rounded down to the nearest whole share (a “Combination Settlement”). The Company will have the right to elect the Settlement Method applicable to any conversion of this Note; provided, however, that: (i) subject to clause (ii) below, the Company will send notice of such Settlement Method to the Investor no later than the fifth Business Day immediately after such Conversion Date; (ii) if all or any portion of this Note is called for Optional Prepayment, then the Company will specify, in the related Optional Prepayment Notice sent pursuant to Section 1(b), the Settlement Method that will apply to all conversions of this Note with a Conversion Date that occurs on or after the related date of
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Optional Prepayment Notice and before the related Optional Prepayment Date; (iii) the Company will use the same Settlement Method for all conversions of Notes with the same Conversion Date; and (iv) if the Company does not timely elect a Settlement Method with respect to the conversion of this Note, then the Company will be deemed to have elected the Default Settlement Method (and, for the avoidance of doubt, the failure to timely make such election will not constitute an Event of Default).
The Company will have the right, in its sole discretion and exercisable at its election by sending notice of such exercise to the Investors, to irrevocably fix the Settlement Method that will apply to all conversions of Notes with a Conversion Date that occurs on or after the date such notice is sent to Investors; provided that (x) the Settlement Method so elected must be a Settlement Method that the Company is then permitted to elect; (y) no such irrevocable election will affect any Settlement Method theretofore elected (or deemed to be elected); and (z) the Default Settlement Method will automatically be deemed to be set to the Settlement Method so fixed. Such notice, if sent, must set forth the applicable Settlement Method and expressly state that the election is irrevocable and applicable to all conversions of Notes with a Conversion Date that occurs on or after the date such notice is sent to Investors. For the avoidance of doubt, such an irrevocable election, if made, will be effective without the need to amend this Note.
(d)Conversion Consideration.
(i)Generally. Subject to Section 3(d)(ii), the type and amount of consideration (the “Conversion Consideration”) due in respect of this Note upon conversion will be as follows:
(1)if Physical Settlement applies to such conversion, a number of shares of Common Stock equal to: (x) the outstanding principal amount being converted divided by (y) the Conversion Price;
(2)if Cash Settlement applies to such conversion, cash in an amount equal to: (I) (x) the outstanding principal amount being converted multiplied by (y) the 10-day VWAP ending on the Trading Day immediately prior to the applicable Conversion Date, divided by (II) the Conversion Price; or
(3)if Combination Settlement applies to such conversion, consideration consisting of: (a) a number of shares of Common Stock equal to: (I) the outstanding principal amount being converted into shares of Common Stock divided by (II) the Conversion Price; and (b) cash in an amount equal to: (I) (x) the remaining outstanding principal amount being converted multiplied by (y) the 10-day VWAP ending on the Trading Day immediately prior to the applicable Conversion Date, divided by (II) the Conversion Price; and
in the case of each of the foregoing clauses (1) through (3), subject to the Authorized Share Cap, the number of Interest Shares corresponding to the accrued and unpaid interest on the unpaid principal amount of this Note to, but excluding, the Conversion Date.
(ii)Fractional Shares. If Physical Settlement or Combination Settlement applies to the conversion of this Note and the number of shares of Common Stock deliverable pursuant to Section 3(d)(i) upon such conversion is not a whole number, then such number will be rounded down to the nearest whole number.
(e)Delivery of the Conversion Consideration. Except as set forth in this Section 3, the Company will pay or deliver, as applicable, the Conversion Consideration due upon the conversion of any Note to the Investor on or before the tenth Business Day immediately after the Conversion Date; providedhowever, that, with respect to any Conversion Date occurring during a Change of Control Period, the Company will settle any such conversion concurrent with the closing of the Change of Control and the Conversion Date will instead be deemed to be the
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effective date of the closing of such Change of Control immediately prior to the effectiveness thereof.
(f)Deemed Payment of Principal and Interest; Settlement of Accrued Interest Notwithstanding Conversion. If the Investor converts this Note, the Company’s delivery of the Conversion Consideration due in respect of such conversion will be deemed to fully satisfy and discharge the Company’s obligation to pay the principal of, and accrued and unpaid interest, if any, on, such Note to, but excluding the Conversion Date.
(g)Effect of Converting a Note. At the Close of Business on the Conversion Date for any conversion of this Note, this Note (or such portion thereof) will (unless there occurs a Default in the delivery of the Conversion Consideration or interest due upon such conversion) be deemed to cease to be outstanding (and, for the avoidance of doubt, no Person will be deemed to be a holder of such Note (or such portion thereof) as of the Close of Business on such Conversion Date).
(h)Holder of Record of Conversion Shares. The Person in whose name any share of Common Stock is issuable upon conversion of any Note will be deemed to become the holder of record of such share as of the Close of Business on the Conversion Date for such conversion.
(i)Delivery of Original Note. If this Note is to be converted pursuant to this Section 3, Investor agrees to deliver the original of this Note (or a notice to the effect that the original Note has been lost, stolen or destroyed and an agreement acceptable to the Company whereby the Investor agrees to indemnify the Company from any loss incurred by it in connection with this Note) immediately following the applicable Conversion Date for cancellation.
(j)Limitations on Conversion and Interest Shares.
(i)Notwithstanding anything herein or any other Note Document to the contrary, the Company shall not effect the conversion of any portion of this Note and/or deliver Interest Shares, and the Investor shall not have the right to convert any portion of this Note or receive Interest Shares, in each case, pursuant to the terms and conditions of this Note and any such conversion or payment of Interest Shares shall be null and void and treated as if never made to the extent that after giving effect to such conversion or payment of Interest Shares, the Investor together with the other Attribution Parties collectively would beneficially own in excess of 19.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately after giving effect to such conversion.
(ii)Notwithstanding anything herein or any other Note Document to the contrary, prior to Nasdaq Stockholder Approval, the number of Interest Shares deliverable upon any interest payments hereunder will be subject to, and shall not exceed, the Authorized Share Cap.
4.Definitions. As used in this Note, the following capitalized terms have the following meanings:
10-day VWAP” means the average of the Daily VWAP for the 10 Trading Days ending on the Trading Day immediately prior to the applicable date.
Affiliate” has the meaning set forth in Rule 144 under the Securities Act as in effect on the Initial Closing Date.
Attribution Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time to time after the Initial Closing Date, directly or indirectly managed or advised by the Investor’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Investor or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a group (as that term is used
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in Section 13(d) of the Exchange Act and as defined in Rule 13d-5 thereunder) together with the Investor or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated with the Investor’s and the other Attribution Parties for purposes of Section 13(d) of the Exchange Act. For clarity, the purpose of the foregoing is to subject collectively the Investor and all other Attribution Parties to the Maximum Percentage.
Authorized Share Cap” means, as of any time prior to the receipt of Nasdaq Stockholder Approval, 33,199,327 shares of Common Stock, which amount shall be subject to the same adjustments as the Conversion Price. For the avoidance of doubt, after the receipt of Nasdaq Stockholder Approval the Authorized Share Cap shall no longer be applicable.
Business Day” means any day other than a day on which federal or state banking institutions in the Borough of Manhattan, the City of New York are authorized or obligated by law, executive order or regulation to close.
Change of Control” means (a) a sale, directly or indirectly, to a third party, in a transaction or series of transaction, of all or substantially all of the consolidated assets of the Company, whether effected by merger, consolidation or other business combination transaction, (b) a merger, sale of the equity securities of the Company, consolidation or other business combination transaction of the Company with or into another corporation, limited liability company or other entity pursuant to which stockholders of the Company prior to such sale, merger, consolidation or other capital reorganization or business combination transaction own less than 50% of the voting interests or beneficial interests in the Company or surviving or resulting entity, or (c) the consummation of any transaction, including any merger or consolidation, the result of which is that any “person” or group becomes the owner of directly or indirectly, of more than 50% of the voting interests or beneficial interests in the Company.
Change of Control Period” means the period from, and including, the date the Company delivers written notice pursuant to Section 1(c) to the Investor of a Change of Control to, but excluding, the effective date of such Change of Control.
Close of Business” means 5:00 p.m., New York City time.
Common Stock” means the Company’s common stock, par value $0.0001 per share.
Conversion Date” means any date the Investor has sent a notice to the Company, electing to convert all or any portion of this Note, pursuant to Section 1(c), Section 2, Section 3(a) or Section 3(b).
Conversion Price” means $2.3817 (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock).
Daily VWAP” means the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page “XMTR <equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such Trading Day (or if such volume-weighted average price is unavailable, the market value of one share of the Common Stock on such Trading Day determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained for this purpose by the Company). The “Daily VWAP” shall be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.
Default” means any event that is (or, after notice, passage of time or both, would be) an Event of Default.
Default Settlement Method” means Physical Settlement; provided, however, that the Company may, from time to time, change the Default Settlement Method, to any Settlement Method that
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the Company is then permitted to elect, by sending notice of the new Default Settlement Method to the Investor.
Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
Initial Closing Date” means the Initial Closing Date as defined in the Purchase Agreement.
Investor” means the Person specified in the introductory paragraph of this Note or any Person who shall at the time be the registered holder of this Note.
Investors” means the investors that have purchased Notes.
Majority Investors” means the Majority Investors as defined in the Purchase Agreement.
Nasdaq Stockholder Approval” means the receipt by the Company of requisite approval from its stockholders to issue more than 19.99% of its outstanding shares of Common Stock at an issue price below the “minimum price” in payment of interest and settlement of conversions of the Notes in accordance with Nasdaq Stock Market Rule 5635.
Note Documents” means the Note Documents as defined in the Purchase Agreement.
Notes” means the convertible promissory notes issued by the Company pursuant to the Purchase Agreement.
Person” means and include an individual, a partnership, a corporation (including a business trust), a joint stock company, a limited liability company, an unincorporated association, a joint venture or other entity or a governmental authority.
Purchase Agreement” means the Note Purchase Agreement dated August 9, 2022 (as amended, modified or supplemented), by and among the Company and the Investors (as defined in the Purchase Agreement) party thereto.
Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, among the Company and the Investors listed therein, as may be amended and/or restated from time to time.
Securities Act” means the Securities Act of 1933, as amended.
Settlement Method” means Cash Settlement, Physical Settlement or Combination Settlement.
Significant Subsidiary” of any Person means any Subsidiary of that Person that constitutes a “significant subsidiary” (as defined in Rule 1-02(w) of Regulation S-X under the Exchange Act) of that Person.
Subsidiary” means, with respect to any Person, (A) any corporation, association or other business entity (other than a partnership or limited liability company) of which more than 50% of the total voting power of the capital stock entitled (without regard to the occurrence of any contingency, but after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees, as applicable, of such corporation, association or other business entity is owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person; and (B) any partnership or limited liability company where (i) more than 50% of the capital accounts, distribution rights, equity and voting interests, or of the general and limited partnership interests, as applicable, of such partnership or limited liability company are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person,
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whether in the form of membership, general, special or limited partnership or limited liability company interests or otherwise; and (ii) such Person or any one or more of the other Subsidiaries of such Person is a controlling general partner of, or otherwise controls, such partnership or limited liability company.
Trading Day” means a day on which the Nasdaq Stock Market is open for trading; provided that if the Common Stock (or such other security) is not so listed or traded, “Trading Day” means a Business Day.
5.Miscellaneous.
(a)Successors and Assigns; Transfer of this Note or Securities Issuable on Conversion Hereof.
(i)Subject to the restrictions on transfer described in this Section 5(a), Section 5(m)(v) and Section 3(j) of the Purchase Agreement, the rights and obligations of the Company and Investor shall be binding upon and benefit the registered successors, assigns, heirs, administrators and transferees of the parties.
(ii)Neither this Note nor any of the rights, interests or obligations hereunder may be assigned, by operation of law or otherwise, in whole or in part, by either (A) Investor without the prior written consent of the Company, or (B) the Company without the prior written consent of the Majority Investors.
(iii)The Company may not, directly or indirectly, (1) consolidate or merge with or into another entity or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to another person, unless the entity formed by or surviving any such consolidation or merger (if other than the Company) or the entity to which such sale, assignment, transfer, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Note and related documents pursuant to agreements reasonably satisfactory to the Majority Investors provided that such entity shall not have any obligations under the Note after the Investor elects to convert the entire outstanding principal amount of this Note pursuant to Section 1(c) and the Company satisfies its obligations thereunder.
(b)Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon the written consent of the Company and the Majority Investors; provided, however, that no such amendment, waiver or consent shall: (i) reduce the principal amount of this Note; (ii) reduce the rate of interest of this Note; or (iii) relate to that treatment of this Note in a Change of Control, without the written consent of Investor; and provided further that that any such amendment, waiver or modification shall apply equally to all Notes, and no waiver or modification that applies to one or more (but not all) Notes or one or more (but not all) holders of Notes different than to all Notes or holders of Notes shall become effective until approved by such differently affected holder or holders of Notes.
(c)Notices. All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be provided in accordance with Section 8(g) of the Purchase Agreement.
(d)Pari Passu Notes. Investor acknowledges and agrees that the payment of all or any portion of the outstanding principal amount of this Note and all interest hereon shall be pari passu in right of payment and in all other respects to the other Notes. In the event Investor receives payments in excess of its pro rata share of the Company’s payments to the Investors of all of the Notes, then Investor shall hold in trust all such excess payments for the benefit of the holders of the other Notes and shall pay such amounts held in trust to such other holders upon demand by such holders.
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(e)Payment. Unless converted into the Company’s equity securities pursuant to the terms hereof, payment shall be made in lawful tender of the United States.
(f)Usury. In the event any interest is paid on this Note which is deemed to be in excess of the then legal maximum rate, then that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal of this Note.
(g)Notices. All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and mailed, electronically mailed or delivered to each party as follows: (i) if to an Investor, at the Investor’s address or electronic address set forth on the signature page hereto, or at such other address or electronic address as the Investor shall have furnished the Company in writing or (ii) if to the Company, at 3550 Tyburn Street, Los Angeles, California 90065, Attention: General Counsel, Email: [*] with a copy to 3550 Tyburn Street, Los Angeles, California 90065, Attention: Chief Financial Officer, Email: [*], or at such other address or electronic address as the Company shall have furnished to the Investors in writing, with a copy (which shall not constitute notice) to Cooley LLP, Cooley LLP, 3 Embarcadero Center, 20th Floor, San Francisco, California 94111, Attention: David Peinsipp and Rachel Proffitt, Email: [*] and [*]. All such notices and communications will be deemed effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) when sent via electronic mail, upon confirmation of delivery when directed to the relevant electronic mail address, (iv) one Business Day after being deposited with an overnight courier service of recognized standing or (v) four Business Days after being deposited in the U.S. mail, first class with postage prepaid.
(h)Waivers. The Company hereby waives notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to this instrument.
(i)Governing Law; Venue. Notwithstanding the place where this Note may be executed by any of the parties hereto, the parties expressly agree that (1) this Note shall be governed by and construed under the laws of the State of New York and (2) the venue for any action taken with respect to this Note shall be any state or federal court in New York County in the State of New York.
(j)Waiver of Jury Trial; Judicial Reference. By acceptance of this Note, Investor hereby agrees and the Company hereby agrees to waive their respective rights to a jury trial of any claim or cause of action based upon or arising out of this Note or any of the Note Documents. If the jury waiver set forth in this paragraph is not enforceable, then any claim or cause of action arising out of or relating to this Note, the Note Documents or any of the transactions contemplated therein shall be settled by judicial reference pursuant to Code of Civil Procedure Section 638 et seq. before a referee sitting without a jury, such referee to be mutually acceptable to the parties or, if no agreement is reached, by a referee appointed by a District Judge of the United States District Court for the Southern District of New York. This paragraph shall not restrict a party from exercising remedies under the Uniform Commercial Code or from exercising pre-judgment remedies under applicable law. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.
(k)Counterparts. This Note may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Note may also be executed and delivered by facsimile signature, PDF or any electronic signature complying with the U.S. federal ESIGN Act of 2000 (e.g., www.docusign.com).
(l)Currency. All currency amounts set forth in this Note are in U.S. Dollars.
(m)Taxes.
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(i)The Company shall deduct and withhold from payments due pursuant to this Note the amounts required to be deducted and withheld under applicable law; provided that, so long as Investor has provided a valid IRS Form W-9 or appropriate version of IRS Form W-8 in accordance with Section 5(m)(ii), the Company shall use its commercially reasonable efforts to (i) provide to the Investor, prior to the date the applicable payment is scheduled to be made, with written notice of its intent to deduct and withhold together with a calculation of the amount to be deducted and withheld and (ii) cooperate with the Investor to minimize or obtain an exemption from such deduction or withholding. Any amounts withheld shall be timely paid over the appropriate governmental authority in accordance with applicable law. To the extent that amounts are deducted and withheld from payments otherwise payable pursuant to this Note, such deducted and withheld amounts shall be treated for all purposes of this Note as having been paid to the person in respect of whom such deduction and withholding was made. If a payment is payable (in whole or in part) in consideration other than cash and if the cash portion of any such payment is insufficient to satisfy all required tax withholding obligations (or the payment consists entirely of non-cash consideration), the Company shall retain an amount of the non-cash consideration otherwise payable equal in value to the amount required to satisfy any applicable withholding taxes (as reasonably determined jointly by the Company and Investor).
(ii)Any Investor (including for purposes of this Section 5(m)(ii) any successor, assign, participant or other transferee) that is entitled to an exemption from or reduction of withholding tax (including, without limitation, any withholding tax imposed under any of IRC Sections 1441 – 1446, IRC Sections 1471 – 1474, and/or IRC Sections 3401 – 3406) under the law of the United States, or an applicable treaty to which such jurisdiction is a party, with respect to payments under the Note or any other Note Document shall deliver to the Company, at the time or times prescribed by applicable law and at any times reasonably requested by the Company, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Company as will permit such payments to be made without withholding or at a reduced rate. In addition, any Investor, if reasonably requested by the Company, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Company as will enable the Company to determine whether or not such Investor is subject to backup withholding or information reporting requirements. Without limiting the generality of the foregoing, on or prior to the date of this Note and upon any future transfer or assignment in accordance with Section 5(a),
(1)if Investor is a “United States Person” as defined in IRC Section 7701(a)(30), it shall deliver to the Company a duly executed United States Internal Revenue Service Form W-9; and
(2)if Investor is not such a United States Person (a “Foreign Investor”), such Foreign Investor shall deliver to the Company (i) a duly executed United States Internal Revenue Service Form W-8BEN or Form W-8BEN-E, as applicable, and (ii) if the Foreign Investor is eligible to claim exemption from United States federal withholding tax under IRC Section 871(h) or 881(c) with respect to payments of “portfolio interest,” a certificate in form and substance reasonably satisfactory to the Company representing that such Investor is not a bank for purposes of IRC Section 881(c), is not a 10-percent shareholder (within the meaning of IRC Section 871(h)(3)(B)) of the Company and is not a controlled foreign corporation related to the Company (within the meaning of IRC Section 864(d)(4))). To the extent a Foreign Investor is treated as a partnership for U.S. federal income tax purposes or is not the beneficial owner of interest or other amounts paid with respect to the Note, such Investor shall deliver to the Company a duly executed United States Internal Revenue Service Form W-8IMY, accompanied by applicable United States Internal Revenue Service Forms W-9, W-8BEN, W-8BEN-E and/or other certification documents from each beneficial owner (provided that if Investor is treated as a
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partnership for U.S. federal income tax purposes, Investor shall provide a certificate on behalf of each direct and indirect partner representing that such direct and indirect partner is not a bank for purposes of IRC Section 881(c), is not a 10-percent shareholder (within the meaning of IRC Section 871(h)(3)(B)) of the Company and is not a controlled foreign corporation related to the Company (within the meaning of IRC Section 864(d)(4))). To the extent the forms and other documentation described in this Section 5(m)(ii)(2) (including, for the avoidance of doubt, the portfolio interest certificate specified in Section 5(m)(ii)(2)(ii)) are provided by Investor to the reasonable satisfaction of the Company, the Company agrees to treat all interest paid or payable pursuant to this Note as “portfolio interest” exempt from United States federal withholding tax under IRC Section 871(h) or 881(c) unless otherwise required due to a change in applicable law or by a tax authority in connection with an audit or other similar proceeding.
(iii)If a payment made to Investor in connection with this Note would be subject to U.S. federal withholding tax imposed by FATCA if Investor were to fail to comply with the applicable reporting requirements of FATCA (including those contained in IRC Section 1471(b) or 1472(b), as applicable), Investor shall deliver to Company at the time or times prescribed by law and at such time or times reasonably requested by the Company such documentation prescribed by applicable law (including as prescribed by IRC Section 1471(b)(3)(C)(i)) and such additional documentation reasonably requested by the Company as may be necessary for the Company to comply with its obligations under FATCA and to determine that Investor has complied with Investor’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from payments to such Investor. FATCA” means (a) IRC Sections 1471 through 1474, as of the date of this Note (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreement entered into pursuant to IRC Section 1471(b)(1), (b) any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the United States and any other jurisdiction with the purpose (in either case) of facilitating the implementation of (a) above, and (c) any agreement pursuant to the implementation of paragraphs (a) or (b) above with the United States Internal Revenue Service, the United States government or any governmental or taxation authority in the United States.
(iv)Investor agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall deliver promptly to the Company updated or other appropriate documentation (including any new documentation reasonably requested by the Company).
(v)The Company shall establish and maintain a record of ownership (the “Register”) in which it agrees to register by book entry Investor’s and each subsequent assignee’s name and address and the principal amounts (and stated interest) of Investor’s and each subsequent assignee’s interest in the Note. Any Investor that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Company, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the participated Notes (the “Participant Register”); provided such Investor shall have no obligation to disclose all or any portion of the Participant Register (including the identity of any participant) to the Company except to the extent that such disclosure is necessary to establish that the Note is in registered form under Treasury Regulations Section 5f.103-1(c). The entries in the Register and the Participant Register shall be conclusive absent manifest error. This Section 5(m)(v) shall be construed so that the Note is at all times maintained in “registered form” within the meaning of IRC Sections 163(f), 871(h)(2) and 881(c)(2) and any related regulations (or any successor provisions of the IRC or such regulations).
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(vi)The Company and Investor agree to treat all amounts borrowed pursuant to this Note as debt for all U.S. federal and state income tax purposes, and, in accordance with Section 385(c) of the IRC, such characterization shall be binding upon Investor and the Company (along with their successors and assigns) and they shall prepare and file their U.S. federal and state tax returns and reports consistent with such treatment unless otherwise required due to a change in applicable law or by a tax authority in connection with an audit or other similar proceeding.
(n)Right of Setoff. The Company hereby grants to Investor a right of setoff for all the obligations of the Company under this Note and related documents to Investor, whether now existing or hereafter arising upon and against all deposits, credits and property, now or hereafter in the possession, custody, safekeeping or control of Investor or any entity under the control of Investor (including a subsidiary of Investor) or in transit to any of them, and other obligations owing to Investor or any such entity. At any time after the occurrence and during the continuance of an Event of Default, without demand or notice, Investor may setoff the same or any part thereof and apply the same to any liability or obligations of the Company under this Note and related documents even though unmatured and regardless of the adequacy of any other collateral securing the obligations of the Company under this Note and related documents.
[remainder of page intentionally left blank]

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The parties have executed this Note as of the date first noted above.
COMPANY

XOS, INC.



By:     /s/ Kingsley Afemikhe
Name:    Kingsley Afemikhe
Title:    Chief Financial Officer

[Signature Page to Convertible Promissory Note]


The parties have executed this Note as of the date first noted above.
INVESTOR:

ALJOMAIH AUTOMOTIVE CO.



By:    /s/ Ibrahim M. Aljomaih    
Name:    Ibrahim M. Aljomaih
Title:    Vice Chairman & Managing Director

Email:    [*]
cc:    [*]

Address for Notice:

Ibrahim M. Aljomaih
Aljomaih Automotive Company
P.O. Box 224
King Khalid Street
31471 Dammam
Kingdom of Saudi Arabia

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

Duane Morris LLP
201 S. Biscayne Boulevard, Suite 3400
Miami, Florida 33131
Attention: Robert Zinn and Jennifer Migliori
Email: [*]
[Signature Page to Convertible Promissory Note]
Exhibit 4.2
NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
Xos, Inc.
Convertible Debenture
Principal Amount: $[ ]
Debenture Issuance Date: [ ], 2022
Debenture Number: XOS-[ ]
FOR VALUE RECEIVED, Xos, Inc., a Delaware corporation (the “Company”), hereby promises to pay to YA II PN, Ltd., or its registered assigns (the “Holder”), the amount set out above as the principal amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest”) on any outstanding Principal at the applicable Interest Rate from the date set out above as the Debenture Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether upon the Maturity Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Convertible Debenture (including all debentures issued in exchange, transfer or replacement hereof, this “Debenture”) was originally issued pursuant to the Securities Purchase Agreement dated August 9, 2022, as amended (the “Securities Purchase Agreement”), between the Company and the Buyers listed on the Schedule of Buyers attached thereto. Certain capitalized terms used herein are defined in Section (15).
(1)GENERAL TERMS
(a)Maturity Date. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal, accrued and unpaid Interest, and any other amounts outstanding pursuant to the terms of this Debenture. The “Maturity Date” shall be November 11, 2023; provided, however, that the Company at its election may extend the Maturity Date by three months by providing written notice to the Holder at least three months, but no more than four months, prior to the original maturity date; provided that at the time of such written notice the outstanding Principal balance on this Debenture and all Other Debentures equal or exceed $8 million. Other than as specifically permitted by this Debenture, the Company may not prepay or redeem any portion of the outstanding Principal and accrued and unpaid Interest.
(b)Interest Rate and Payment of Interest. Interest shall accrue on the outstanding Principal balance hereof at an annual rate equal to 6% (“Interest Rate”), which Interest Rate shall increase to an annual rate of: (i) 10.0% upon the occurrence and during the continuance of any Event of Default; and (ii) 7.5% for so long as any Registration Event remains



in effect. Interest shall be calculated on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.
(2)PAYMENTS.
(a)Triggering Date. If, at any time after the Issuance Date set forth above, and from time to time thereafter, (i) the daily VWAP of the Common Stock is less than the Floor Price for five consecutive Trading Days, or (ii) the Company has issued pursuant to this Debenture in excess of 95% of the Common Shares available under the Exchange Cap (the last such day of each such occurrence, a “Triggering Date”), then the Company shall make monthly prepayments of $3,000,000 in the aggregate among this Debenture and all Other Debentures (provided that, if the Triggering Date is on or after the publication of the Company’s quarterly report for the quarter ended September 30, 2022 and the Cash Runway Ratio as of the applicable Triggering Date is less than 1.00, such amount shall instead be $4,000,000) of Principal (or the outstanding Principal if less than such amount) (the “Triggered Principal Amount”) beginning on the 10th calendar day after the Triggering Date and continuing on the same day of each successive calendar month. The prepayment price for each monthly prepayment shall be an amount equal to the sum of (i) an amount of Principal equal to the Triggered Principal Amount, plus (ii) the Redemption Premium (as defined below) in respect of such Triggered Principal Amount, plus (iii) accrued and unpaid interest hereunder as of each payment date. Notwithstanding the foregoing, each Triggered Principal Amount shall be reduced by any Principal and/or accrued and unpaid interest converted by the Holder in the 30 days prior to such monthly prepayment date. The obligation of the Company to make monthly prepayments hereunder shall cease and the Triggered Principal Amount, if otherwise increased pursuant to the proviso of the first sentence of this clause (a), shall reduce to $3,000,000 (with respect to any payment that has not yet come due) if any time after the Triggering Date (A) either (i) the Company provides the Holder a reset notice (each, a “Floor Reset Notice”) setting forth a reduced Floor Price which shall be equal to no more than 85% of the Closing Price as of the Trading Day immediately prior to the Floor Reset Notice, provided that such Floor Price shall not be less than $0.50, or (ii) the daily VWAP is greater than the Floor Price a period of 3 consecutive Trading Days, (B) in the event that the Triggering Date was caused by the issuance pursuant to this Debenture in excess of 95% of the Common Shares available under the Exchange Cap as set forth above, the date the Company has obtained stockholder approval to increase the number of Common Shares under the Exchange Cap and/ or the Exchange Cap no longer applies, unless a subsequent Triggering Date occurs, and (C) the payment in full of all obligations under this Note. In addition, the Triggered Principal Amount, if otherwise increased pursuant to the proviso of the first sentence of this clause (a), shall reduce to $3,000,000 (with respect to any payment that has not yet come due) if any time after the Triggering Date the Cash Runway Ratio is equal to or greater than 1.00. Following the cessation of the payment obligation in respect of a given Triggering Date, the determination of a subsequent Triggering Date shall not include any Trading Days included in the time period ending with the prior Triggering Date. If this Debenture or any Other Debentures are held by more than one holder, then the Triggered Principal Amount, Redemption Premium and accrued and unpaid interest shall be allocated to each holder based on each holder’s pro-rata portion of the total outstanding Principal amount outstanding on all such debentures.
(b)Early Redemption. The Company at its option shall have the right, but not the obligation, to redeem (“Optional Redemption”) early a portion or all amounts outstanding under this Debenture in cash at the Redemption Amount (as defined below) as described in this Section; provided that (i) at the time of the Redemption Notice (as defined below), the daily VWAP of the Common Stock is less than the Fixed Conversion Price during a period of three consecutive Trading Days immediately prior to such Redemption Notice and (ii) the Company provides the Holder with at least 10 Business Days’ prior written notice (each, a “Redemption Notice”) of its desire to exercise an Optional Redemption. Each Redemption Notice shall be
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irrevocable and shall specify the outstanding balance of the Convertible Debentures to be redeemed and the applicable Redemption Premium. The “Redemption Amount” shall be an amount equal to the outstanding Principal balance being redeemed by the Company, plus the applicable Redemption Premium, plus all accrued and unpaid interest hereunder as of such redemption date. After receipt of the Redemption Notice, the Holder shall have 10 Business Days to elect to convert all or any portion of Convertible Debentures. On the 11th Business Day after the Redemption Notice, the Company shall deliver to the Holder the Redemption Amount with respect to the Principal amount redeemed after giving effect to conversions effected during the applicable notice period.
(c)Payment Dates. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
(3)EVENTS OF DEFAULT.
(a)An “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
(i)the Company’s failure to pay to the Holder (A) any amount of Principal after such payment is due, or (B) any amount of Interest, or other amounts when and as due under this Debenture or any other Transaction Document, within 7 calendar days after receipt by the Company of written notice from Holder;
(ii)The Company shall commence, or there shall be commenced against the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 61 days; or the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Company suffers any appointment of any custodian, private or court appointed receiver or the like for it or all or substantially all of its property which continues undischarged or unstayed for a period of 91 days; or the Company makes a general assignment of all or substantially all of its assets for the benefit of creditors; or the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Company shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company for the purpose of effecting any of the foregoing;
(iii)The Company or any Significant Subsidiary of the Company shall default in any of its obligations under any other debenture or any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the Company or any Significant Subsidiary of the Company in an amount exceeding $5,000,000, whether such indebtedness now exists or shall hereafter be created where such default results in such indebtedness becoming or being declared due and payable before its stated maturity and such acceleration shall not have been rescinded or annulled or such default shall not have been cured or waived, or such indebtedness is not paid or discharged, as the case may be, within 20 calendar
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days after written notice to the Company by Holders of at least 25% in aggregate principal amount of Notes issued pursuant to the Purchase Agreement then outstanding;
(iv)The Common Stock shall cease to be quoted or listed for trading, as applicable, on any Primary Market for a period of 10 consecutive Trading Days;
(v)[Reserved];
(vi)the Company’s (A) failure to instruct its Transfer Agent and use its reasonable efforts to cause its Transfer Agent to deliver the required number of shares of Common Stock to the Holder within 2 Business Days after the applicable Share Delivery Date or (B) notice, written or oral, to any holder of the Debentures, including by way of public announcement, at any time, of its intention not to comply with a request for conversion of any Debentures into shares of Common Stock that is tendered in accordance with the provisions of the Debentures, other than pursuant to Section (5)(c);
(vii)The Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined herein) within five Business Days after such payment is due;
(viii)The Company shall fail to observe or perform any other material covenant, agreement or warranty contained in, or otherwise commit any material breach or default of any provision of this Debenture (except as may be covered by Section (3)(a)(i) through (3)(a)(ix) hereof) or any Transaction Document (as defined in Section(15)) which is not cured or remedied within 30 calendar days of receipt by the Company of written notice by the Holder.
(ix)any Event of Default (as defined in the Other Debentures) occurs with respect to any Other Debentures.
(b)During the time that any portion of this Debenture is outstanding, if any Event of Default has occurred and is continuing, the full unpaid Principal amount of this Debenture, together with accrued and unpaid interest and other amounts owing in respect thereof, to the date of acceleration shall become at the Holder’s election, immediately due and payable in cash. The Holder need not provide and the Company hereby waives any presentment, demand, protest or other notice of any kind, (other than required notice of conversion) and the Holder may immediately enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.
(4)CONVERSION OF DEBENTURE.    This Debenture shall be convertible into shares of the Company’s Common Stock, on the terms and conditions set forth in this Section (4).
(a)Conversion Right. Subject to the limitations of Section (4)(c), at any time or times on or after the Issuance Date, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of Common Stock in accordance with Section (4)(b), at the Conversion Rate (as defined below). The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to this Section (4)(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”). If more than one Debenture shall be surrendered for conversion at one time by the same Holder, the conversion obligation with respect to such Debentures shall be computed on the basis of the aggregate principal amount of the Debentures (or specified portions thereof to the extent permitted thereby) so surrendered. The
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Company shall not issue any fraction of a share of Common Stock upon any conversion. All calculations under this Section (4) shall be rounded to the nearest $0.0001. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share (if such fractional share is greater than one-half) and down to the nearest whole share (if such fractional share is equal to or less than one-half). The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount, unless such taxes are due because the Holder requests such Common Stock to be issued in a name other than the Holder’s name, in which case the Holder shall pay such taxes.
(i)Conversion Amount” means the portion of the Principal and accrued Interest to be converted, redeemed or otherwise with respect to which this determination is being made.
(ii)Conversion Price” means, as of any Conversion Date (as defined below) or other date of determination the lower of (i) $2.4733 (the “Fixed Conversion Price”), or (ii) 97% of the lowest daily VWAP of the Common Stock during the 3 consecutive Trading Days immediately preceding the Conversion Date or other date of determination (the “Variable Conversion Price”), but not lower than the Floor Price. The Conversion Price shall be adjusted from time to time pursuant to the other terms and conditions of this Debenture.
(b)Mechanics of Conversion.
(i)Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”), the Holder shall (A) transmit by email (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”) to the Company and (B) if required by Section (4)(b)(iii), surrender this Debenture to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking reasonably satisfactory to the Company with respect to this Debenture in the case of its loss, theft or destruction). On or before the 3rd Trading Day following the date of receipt of a Conversion Notice (the “Share Delivery Date”), the Company shall (X) if legends are not required to be placed on certificates or book entry of Common Stock and provided that the Transfer Agent is participating in the Depository Trust Company’s (“DTC”) Fast Automated Securities Transfer Program, instruct the Transfer Agent to credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, or if restrictive legends are required to be placed on certificates or book-entry positions of Common Stock, issue and deliver to the address as specified in the Conversion Notice, a certificate or book-entry position, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled. If this Debenture is physically surrendered for conversion and the outstanding Principal of this Debenture is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three Business Days after receipt of this Debenture and at its own expense, issue and deliver to the holder a new Debenture representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Debenture shall be treated for all purposes as the record holder or holders of such shares of Common Stock upon the transmission of a Conversion Notice.
(ii)Company’s Failure to Timely Convert. If within 4 Trading Days after the Company’s receipt of an email copy of a Conversion Notice the Company shall fail to
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instruct the Transfer Agent to issue and deliver to the Holder or credit the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such holder’s conversion of any Conversion Amount (a “Conversion Failure”), and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within five Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out of pocket expenses, if any) for the shares of Common Stock so purchased (the Buy-In Price), at which point the Company’s obligation to deliver such certificate (and to issue such Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder such shares of Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Price on the Conversion Date.
(iii)Book-Entry. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Debenture in accordance with the terms hereof, the Holder shall not be required to physically surrender this Debenture to the Company unless (A) the full Conversion Amount represented by this Debenture is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Debenture upon physical surrender of this Debenture. The Holder and the Company shall maintain records showing the Principal and Interest converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Debenture upon conversion.
(c)Limitations on Conversions.
(i)Beneficial Ownership. The Holder shall not have the right to convert any portion of this Debenture or receive shares of Common Stock hereunder to the extent that after giving effect to such conversion or receipt of such Shares, the Holder, together with any affiliate thereof, would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion or receipt of shares as payment of interest. Since the Holder will not be obligated to report to the Company the number of shares of Common Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares of Common Stock in excess of 9.99% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the Principal amount of this Debenture is convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice for a Principal amount of this Debenture that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the conversion for the maximum Principal amount permitted to be converted on such Conversion Date in accordance with Section (4)(a) and, any Principal amount tendered for conversion in excess of the permitted amount hereunder shall remain outstanding under this Debenture. The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 65 days prior notice to the Company. Other Holders shall be unaffected by any such waiver.
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(ii)Principal Market Limitation. Notwithstanding anything in this Debenture to the contrary, the Company shall not issue any shares of Common Stock upon conversion of this Debenture, or otherwise, if the issuance of such Common Stock, together with any Common Stock issued in connection with any other related transactions that may be considered part of the same series of transactions, would exceed 33,199,327, which is the aggregate number of shares of Common Stock that the Company may issue in a transaction in compliance with the Company’s obligations under the rules or regulations of Nasdaq Stock Market LLC (the “Nasdaq”) (and such aggregate number of shares of Common Stock shall be referred to as the “Exchange Cap”) except that such limitation shall not apply if the Company’s stockholders have approved issuances in excess of the Exchange Cap in accordance with the rules of the Nasdaq.
(iii)Other Conversion Limitations and Agreements. The Holder agrees that (A) it shall not convert any portion of this Debenture prior to September 9, 2022 (the “Conversion Start Date”), (B) it shall not convert more than an aggregate amount of Principal equal to $4,000,000 of this Debenture and any Other Debenture held by the Holder utilizing the Variable Conversion Price (y) during the period beginning at 12:01 a.m. on the Conversion Start Date and ending at 11:59 p.m. on the date that is 30 days following the Conversion Start Date, and (z) during each successive 30 day period immediately following the conclusion of the prior period (each such period described in (y) and (z) above shall be referred to herein as a “30-Day Period”), and (C) it shall use commercially reasonable efforts, taking into account relevant market conditions, to convert at least $2,000,000 of Principal amount in the aggregate of this Debenture and any Other Debenture held by the Holder in each 30-Day Period; provided that the Equity Conditions are satisfied as of each day of such 30-Day Period. The foregoing limitations in this subsection shall not apply (A) at any time upon the occurrence and during the continuance of an Event of Default, and (B) with respect to any conversions utilizing the Fixed Conversion Price, and may be waived with written consent of the Company. For as long as any Holder holds any Debentures (or shares of Common Stock issuable upon conversion under a Debenture), each Holder will be prohibited from directly or indirectly engaging in any Short Sales involving the Company’s Common Stock.
(d)Other Provisions.
(i)[Reserved].
(ii)All calculations under this Section (4) shall be rounded to the nearest $0.0001 or whole share.
(iii)The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock solely for the purpose of issuance upon conversion of this Debenture and payment of interest on this Debenture, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, not less than such number of shares of the Common Stock as shall be issuable (taking into account the adjustments and restrictions set forth herein) upon the conversion of the outstanding Principal amount of this Debenture and payment of interest hereunder. Within seven Business Days following the receipt by the Company of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Company shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized, issued and fully paid, nonassessable and, if the Underlying Shares Registration Statement has been declared effective under the Securities Act, registered for public sale in accordance with such Underlying Shares Registration Statement.
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(iv)Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section (3) herein for the Company’s failure to deliver certificates representing shares of Common Stock upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
(5)Adjustments to Conversion Price
(a)Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If the Company, at any time while this Debenture is outstanding, shall (a) pay a stock dividend or otherwise make a distribution or distributions on all or substantially all shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (excluding any interest payments or equivalents thereto that are paid in shares of Common Stock and, for the avoidance of doubt, excluding conversions of warrants and other securities into shares of Common Stock), (b) subdivide outstanding shares of its Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then each of the Fixed Conversion Price and the Floor Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
(b)Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to ensure that the Holder will thereafter have the right to receive upon a conversion of this Debenture, at the Holder’s option, (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Debenture) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Debenture initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Required Holders. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Debenture.
(c)Whenever the Conversion Price is adjusted pursuant to Section (5) hereof, the Company shall promptly provide the Holder with a written notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
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(d)In case of any (1) merger or consolidation of the Company with or into another Person, or (2) sale by the Company or any Subsidiary of the Company of more than one-half of the assets of the Company on a consolidated basis in one or a series of related transactions, a Holder shall have the right to (A) exercise any rights under Section (3)(b), (B) convert the aggregate amount of this Debenture then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate Principal amount of this Debenture could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (C) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible Debenture with a Principal amount equal to the aggregate Principal amount of this Debenture then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible debenture shall have terms identical (including with respect to conversion) to the terms of this Debenture, and shall be entitled to all of the rights and privileges of the Holder of this Debenture set forth herein and the agreements pursuant to which this Debentures were issued. In the case of clause (C), the conversion price applicable for the newly issued convertible debentures shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.
(6)REISSUANCE OF THIS DEBENTURE.
(a)Transfer. If this Debenture is to be transferred, the Holder shall surrender this Debenture to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Debenture (in accordance with Section (6)(d)), registered in the name of the registered transferee or assignee, representing the outstanding Principal being transferred by the Holder (along with any accrued and unpaid interest thereof) and, if less than the entire outstanding Principal is being transferred, a new Debenture (in accordance with Section (6)(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of Section (4)(b)(iii) following conversion or redemption of any portion of this Debenture, the outstanding Principal represented by this Debenture may be less than the Principal stated on the face of this Debenture.
(b)Lost, Stolen or Mutilated Debenture. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Debenture, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Debenture, the Company shall execute and deliver to the Holder a new Debenture (in accordance with Section (6)(d)) representing the outstanding Principal.
(c)Debenture Exchangeable for Different Denominations. This Debenture is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Debenture or Debentures (in accordance with Section (6)(d)) representing in the aggregate the outstanding Principal of this Debenture, and each such new Debenture will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.
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(d)Issuance of New Debentures. Whenever the Company is required to issue a new Debenture pursuant to the terms of this Debenture, such new Debenture (i) shall be of like tenor with this Debenture, (ii) shall represent, as indicated on the face of such new Debenture, the Principal remaining outstanding (or in the case of a new Debenture being issued pursuant to Section 5(6)(a) or Section 5(6)(c), the Principal designated by the Holder which, when added to the Principal represented by the other new Debentures issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Debenture immediately prior to such issuance of new Debentures), (iii) shall have an issuance date, as indicated on the face of such new Debenture, which is the same as the Issuance Date of this Debenture, (iv) shall have the same rights and conditions as this Debenture, and (v) shall represent accrued and unpaid Interest from the Issuance Date.
(7)NOTICES.    Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing by letter and email and will be deemed to have been delivered: upon the later of (A) either (i) receipt, when delivered personally or (ii) one Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same and (B) receipt, when sent by electronic mail. The addresses and email addresses for such communications shall be:
If to the Company, to:Xos, Inc.
3550 Tyburn Street
Los Angeles, CA 90065
Telephone: [*]
Attention: Kingsley Afemikhe; Christen Romero; Michael Jung
E-Mail: [*]; [*]; [*]
with a copy (which shall not constitute notice) to:
Cooley LLP
3 Embarcadero Center, 20th Floor
San Francisco, CA 94111
Telephone: [*]
Attention: David Peinsipp and Rachel Proffitt
Email: [*] and [*]
If to the Holder:YA II PN, Ltd
c/o Yorkville Advisors Global, LLC
1012 Springfield Avenue
Mountainside, NJ 07092
Attention: Mark Angelo
Telephone: [*]
Email: [*]

or at such other address and/or email and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) electronically generated by the sender’s email service provider containing the time, date, recipient email address or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service,
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receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.
(8)Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligations of the Company, which are absolute and unconditional, to pay the Principal of, interest and other charges (if any) on, this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct obligation of the Company. As long as this Debenture is outstanding, the Company shall not and shall cause its subsidiaries not to, without the consent of the Holder, (i) amend its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of the Holder; (ii) repay, repurchase or offer to repay, repurchase or otherwise acquire shares of its Common Stock, except (A) pursuant to and in accordance with stock option plans or other benefit plans or agreements for directors, officers or employees of the Company and its Subsidiaries, (B) the repurchase of equity interests in the ordinary course of business in connection with the exercise of stock options, warrants or other convertible or exchangeable securities if such equity interests represent a portion of the exercise, conversion or exchange price, (C) the repurchase of equity interests in connection with the withholding of a portion of the equity interests granted or awarded to a current or former officer, director, employee or consultant to pay for the taxes payable by such person upon such grant or award (or upon vesting thereof), (D) the repurchase of its equity interests in an amount not to exceed $1,000,000 in any fiscal year, and (E) the Company may (x) purchase or pay cash in lieu of fractional shares of its equity interests arising out of stock dividends, splits, or business combinations or in connection with issuance of equity interests of the Company pursuant to mergers, consolidations or other acquisitions, and (y) pay cash in lieu of fractional shares upon the exercise of warrants, options or other securities convertible into or exercisable for equity interests of the Company; or (iii) enter into any agreement with respect to any of the foregoing.
(9)This Debenture shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Company, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
(10)This Debenture shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to conflicts of laws thereof. Each of the parties consents to the jurisdiction of the Supreme Court of the State of New York located in the City of New York, Borough of Manhattan, and the U.S. District Court for the Southern District of New York in connection with any dispute arising under this Debenture and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
(11)If the Company fails to strictly comply with the terms of this Debenture, then the Company shall reimburse the Holder promptly for all reasonable and documented fees, costs and expenses, including, without limitation, reasonable and documented attorneys’ fees and expenses incurred by the Holder in any action in connection with this Debenture, including, without limitation, those incurred: (i) during any workout, attempted workout, and/or in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations, (ii) collecting
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any sums which become due to the Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (iv) the protection, preservation or enforcement of any rights or remedies of the Holder.
(12)Any waiver by the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture. Any waiver must be in writing.
(13)If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the Principal of or interest on this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.
(14)On or prior to the Debenture Issuance Date or the date a Debenture is transferred, each Holder shall provide the Company with a duly completed and executed Internal Revenue Service Form W-9 or appropriate W-8, as applicable. The Company shall be entitled to deduct or withhold from any payments under this Debenture any taxes it is required to deduct or withhold as required by applicable law. Each Holder agrees, and each beneficial owner of an interest in a Debenture, by its acquisition of such interest, is deemed to agree, that if the Company or other applicable withholding agent pays withholding taxes or backup withholding on behalf of such Holder or beneficial owner, then the Company or such withholding agent, as applicable, may, at its option, withhold from or set off such payments against payments of cash to the Holder of the Debenture.
(15)CERTAIN DEFINITIONS. For purposes of this Debenture, the following terms shall have the following meanings:
(a)Burn Rate” means, as of any date of determination, the average monthly net decrease in cash used in operating activities for the most recently reported quarter, as reported by the most recently published Annual Report on Form 10-K or Quarterly Report on Form 10-Q by the Company.
(b)Bloomberg” means Bloomberg Financial Markets.
(c)Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
(d)Cash Runway” means, as of any date of determination, the quotient determined by dividing the sum of cash and cash equivalents (including, but not limited to, (i)
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cash and cash equivalents, (ii) restricted cash, (iii) accounts receivable and (iv) marketable debt securities, available for sale — short term), as reported by the most recently published Annual Report on Form 10-K or Quarterly Report on Form 10-Q, by the Company, by the Burn Rate.
(e)Cash Runway Ratio” means, as of any date of determination, the quotient determined by dividing the Cash Runway, by the number of full 30-Day Periods remaining until the Maturity Date.
(f)Closing Price” means the price per share in the last reported trade of the Common Stock on a Primary Market or on the exchange which the Common Stock is then listed as quoted by Bloomberg.
(g)Commission” means the Securities and Exchange Commission.
(h)Common Stock” means the common stock, par value $0.0001, of the Company and stock of any other class into which such shares may hereafter be changed or reclassified.
(i)Equity Conditions” means that each of the following conditions is satisfied: (i) on each day during the period beginning two weeks prior to the applicable date of determination and ending on and including the applicable date of determination (the “Equity Conditions Measuring Period”), either (x) the Underlying Shares Registration Statement filed pursuant to the Registration Rights Agreement shall be effective and available for the resale of all applicable shares of Common Stock to be issued in connection with the event requiring determination or (y) all applicable shares of Common Stock to be issued in connection with the event requiring determination shall be eligible for resale without restriction and without the need for registration under any applicable federal or state securities laws; (ii) on each day during the Equity Conditions Measuring Period, the Common Stock is designated for quotation on the Principal Market and shall not have been suspended from trading on such exchange or market nor shall delisting or suspension by such exchange or market been threatened or pending either (A) in writing by such exchange or market or (B) by falling below the then effective minimum listing maintenance requirements of such exchange or market; (iii) during the Equity Conditions Measuring Period, the Company shall have delivered Conversion Shares upon conversion of the Debentures to the Holder on a timely basis as set forth in Section (4)(b) hereof; (iv) any applicable shares of Common Stock to be issued in connection with the event requiring determination may be issued in full without violating Section (4)(c) hereof and the rules or regulations of the Primary Market; (v) during the Equity Conditions Measuring Period, there shall not have occurred either (A) an Event of Default or (B) an event that with the passage of time or giving of notice would constitute an Event of Default; and (vii) the Company shall have no knowledge of any fact that would cause (x) the Registration Statements required pursuant to the Registration Rights Agreement not to be effective and available for the resale of all applicable shares of Common Stock to be issued in connection with the event requiring determination or (y) any applicable shares of Common Stock to be issued in connection with the event requiring determination not to be eligible for sale without restriction and without the need for registration under any applicable federal or state securities laws.
(j)Exchange Act” means the Securities Exchange Act of 1934, as amended.
(k)Floor Price” means $1.313 per share, or any reset Floor Price as determined in accordance with Section 2 or this definition, but no less than $0.50 per share. By means of a Floor Reset Notice, the Company may elect to increase the Floor Price to a previously effective Floor Price if the daily VWAP for each of the 10 most recent consecutive Trading Days was at least 25% above such previously effective Floor Price.
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(l)Fundamental Transactionmeans any of the following: (1) the Company effects any merger or consolidation of the Company with or into another Person and the Company is the non-surviving company (other than a merger or consolidation with a wholly owned Subsidiary of the Company for the purpose of redomiciling the Company), (2) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (3) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (4) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property.
(m)Other Debentures” means any other outstanding debentures issued pursuant to the Securities Purchase Agreement and any other debentures, notes, or other instruments issued in exchange, replacement, or modification of the foregoing.
(n)Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
(o)Primary Market” means any of New York Stock Exchange, the NYSE MKT, the Nasdaq Global Market, the Nasdaq Global Select Market, or the OTC QB, and any successor to any of the foregoing markets or exchanges.
(p)Redemption Premium” means 5% of the Principal amount being prepaid pursuant to Section 2(a) or redeemed pursuant to Section 2(b), as applicable.
(q)Registration Event” shall mean an Event under Section 2(e) of the Registration Rights Agreement (as defined in the Securities Purchase Agreement).
(r)Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(s)“Short Sales” means all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Securities Exchange Act of 1934, as amended.
(t)Significant Subsidiary” of any Person means any Subsidiary of that Person that constitutes a “significant subsidiary” (as defined in Rule 1-02(w) of Regulation S-X under the Exchange Act) of that Person.
(u)Subsidiary” means, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of capital stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries of such Person; or (iii) one or more Subsidiaries of such Person.
(v)Trading Day” means a day on which the shares of Common Stock are quoted or traded on a Primary Market on which the shares of Common Stock are then quoted or listed; provided, that in the event that the shares of Common Stock are not listed or quoted, then Trading Day shall mean a Business Day.
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(w)Transaction Document(s)” shall mean this Debenture, along with the Securities Purchase Agreement, and any other documents or agreements entered into in connection with the foregoing.
(x)Underlying Shares” means the shares of Common Stock issuable upon conversion of this Debenture or as payment of interest in accordance with the terms hereof.
(y)Underlying Shares Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement, covering among other things the resale of the Underlying Shares and naming the Holder as a “selling stockholder” thereunder.
(z)VWAP” means, for any security as of any date, the daily dollar volume-weighted average price for such security on the Primary Market as reported by Bloomberg through its “Historical Prices – Px Table with Average Daily Volume” functions.
[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Convertible Debenture to be duly executed by a duly authorized officer as of the date set forth above.
COMPANY:

XOS, INC.



By:                    
Name:    
Title:    

[Signature Page to Convertible Debentures]


EXHIBIT I
CONVERSION NOTICE
(To be executed by the Holder in order to Convert the Debenture)
To: Xos, Inc.
Via Email:
The undersigned hereby irrevocably elects to convert a portion of the outstanding and unpaid Conversion Amount of Debenture No. XOS-1 into Shares of Common Stock of Xos, Inc., according to the conditions stated therein, as of the Conversion Date written below.
Conversion Date:
Principal Amount to be Converted:
Accrued Interest to be Converted:
Total Conversion Amount to be converted:
Fixed Conversion Price:
Variable Conversion Price:
Applicable Conversion Price:
Number of shares of Common Stock to be issued:
Please issue the shares of Common Stock in the following name and deliver them to the following account:
Issue to:
Broker DTC Participant Code:
Account Number:
Authorized Signature:
Name:
Title:


Exhibit 10.1
NOTE PURCHASE AGREEMENT
This Note Purchase Agreement, dated as of August 9, 2022, (this “Agreement”) is entered into by and among Xos, Inc., a Delaware corporation (the “Company”), and the persons and entities listed on Schedule I hereto, as amended from time to time with the issuance of each Note (as defined below) (each an “Investor” and, collectively, the “Investors”).
RECITALS
WHEREAS, the Company has authorized the sale and issuance of one or more convertible promissory notes as part of a series of convertible notes issued pursuant to this Agreement in substantially the form attached hereto as Exhibit A (each, a “Note” and, collectively, the “Notes”) with an aggregate principal amount of up to $40,000,000 (the “Authorized Amount”).
WHEREAS, on the terms and subject to the conditions set forth herein, each Investor is willing to purchase from the Company, and the Company is willing to sell and issue to such Investor, a Note in the principal amount set forth opposite such Investor’s name on Schedule I hereto.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing, and the representations, warranties, and conditions set forth below, the parties hereto, intending to be legally bound, hereby agree as follows:
1.The Notes.
(a)Issuance of Notes. The sale, purchase and issuance of the Notes shall take place at one or more closings via the electronic exchange of documents on the date hereof, or at such other time and place as the Company and the Investor purchasing the applicable Note at such time and place mutually agree upon, orally or in writing (each a “Closing”). In the event there is more than one closing, the term “Closing” shall apply to each such closing unless otherwise specified. At each Closing, subject to the terms and conditions of this Agreement, the Company hereby agrees to issue and sell to each Investor, and each Investor severally agrees to purchase a Note in the principal amount set forth opposite the respective Investor’s name on Schedule I hereto (each such principal amount, a “Purchase Price”), convertible into shares (together with any interest on the Notes paid in the form of shares of Common Stock, provided that such shares issued as payment for interest shall not exceed the Authorized Share Cap (as defined in the Notes), the “Conversion Shares”) of the Company’s common stock, par value $0.0001 per share (“Common Stock”). The obligations of each Investor to purchase a Note is several and not joint.
(b)Closing.
(i)Initial Closing. The initial Closing of the sale, purchase and issuance of a Note with an aggregate principal amount of $20,000,000 under this Agreement shall take place on the date hereof, or at such other time and place as the Company and Investor purchasing the Note at such time and place mutually agree upon, orally or in writing.
(ii)Optional Closing. Upon the mutual written agreement of the Company and Aljomaih Automotive Company (“Aljomaih”) on or before November 30, 2022, the Company shall sell and issue one or more Notes, and the applicable participating Investor shall purchase one or more Notes, at a subsequent closing (the “Optional Closing”) with an aggregate principal amount of up to an additional $20,000,000. Any such sale and issuance of Notes in the Optional Closing shall be on the terms and conditions to be discussed in good faith between the Company and Aljomaih.
(iii)Delivery. At each Closing, subject to the terms and conditions of this Agreement, the Company will deliver to each Investor participating in such Closing, an executed Note in the name of the Investor in the principal amount purchased at such



Closing by such Investor, against payment of the Purchase Price therefor by wire transfer pursuant to the instructions provided in writing by the Company.
2.Representations and Warranties of the Company. The Company severally represents and warrants to each Investor, as set forth below in this Section 2:
(a)Each of the Company and any of its Significant Subsidiaries (as defined in Rule 1-02(w) of Regulation S-X under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (i) has been duly organized and is validly existing as a corporation or other business entity, as applicable, in good standing under the laws of the jurisdiction in which it is organized with full corporate or other power and authority to own or lease, as the case may be, and to operate its properties and conduct its business as described in the reports, schedules, forms, statements and other documents (the “SEC Documents”) required to be filed by it with the Securities and Exchange Commission (the “SEC”) and (ii) is duly qualified to do business as a foreign corporation or other business entity, as applicable, and is in good standing under the laws of each jurisdiction which requires such qualification, except in each case, where the failure to be so qualified or in good standing in any such jurisdiction would not, individually or in the aggregate, have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business (a “Material Adverse Effect”).
(b)The SEC Documents, at the time they were filed with the SEC, conformed in all material respects to the requirements of the Exchange Act, and none of such documents contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(c)The Company’s authorized equity capitalization is as set forth in the SEC Documents. The capital stock of the Company conforms to the descriptions thereof contained in the SEC Documents. The outstanding shares of Common Stock have been duly and validly authorized and issued and are fully paid and non-assessable.
(d)This Agreement and each Note (together, the “Note Documents”), when executed and delivered, will have been duly authorized by the Company and will be valid and binding agreements of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles. The Conversion Shares, when issued and paid for in accordance with the terms of the Note Documents, will have been duly authorized and will be duly and validly issued, fully paid and nonassessable, other than restrictions on transfer provided for in the Note Documents or imposed by applicable securities laws, and shall not be subject to preemptive rights, rights of first refusal or other similar rights. The Company has reserved from its duly authorized capital stock the maximum number of Conversion Shares issuable pursuant to this Agreement and the Notes.
(e)No consent, approval, authorization, filing with or order of any court or governmental agency or body is required in connection with the transactions contemplated herein, except such as may be required under the Securities Act of 1933, as amended (the “Securities Act”) or the blue sky laws of any jurisdiction in connection with the purchase of a Note by the applicable Investor in the manner contemplated herein.
(f)Neither the issue and sale of the Notes nor the consummation of any other of the transactions herein contemplated nor the fulfillment of the terms hereof will conflict with, result in a breach or violation of, or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to, (i) the organization documents of the Company, (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which the Company is a party or bound or to which its or their property is subject, or (iii) any statute, law, rule, regulation, judgment, order or decree applicable to the Company of any court, regulatory body,
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administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or any of its properties.
(g)The consolidated historical financial statements and schedules of the Company and its consolidated subsidiaries included in SEC Documents present fairly, in all material respects, the financial condition, results of operations and cash flows of the Company as of the dates and for the periods indicated, comply as to form with the applicable accounting requirements of the Securities Act and have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as otherwise noted therein).
(h)No action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its Significant Subsidiaries or its or their property is pending or, to the knowledge of the Company, threatened that (i) could reasonably be expected to have a material adverse effect on the performance of this Agreement or the consummation of any of the transactions contemplated hereby or (ii) could reasonably be expected to have a Material Adverse Effect.
(i)Each of the Company and each of its Significant Subsidiaries owns or leases all such properties as are necessary to the conduct of its operations as presently conducted.
(j)The Company is not in violation or default of (i) any provision of its charter, bylaws or other organizational document, (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which it is a party or bound or to which its property is subject, or (iii) any statute, law, rule, regulation, judgment, order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or any of its properties, as applicable, except, in the case of the foregoing clauses (ii) and (iii), for such defaults as would not, individually or in the aggregate, have a Material Adverse Effect.
(k)WithumSmith+Brown, PC, who have certified certain financial statements of the Company and its consolidated subsidiaries and delivered their report with respect to the audited consolidated financial statements and schedules included in the SEC Documents, are independent public accountants with respect to the Company within the meaning of the Securities Act and the applicable published rules and regulations thereunder.
(l)The Company and its Significant Subsidiaries have filed all tax returns that are required to be filed or have requested extensions thereof (except in any case in which the failure so to file would not reasonably be expected to have a Material Adverse Effect) and has paid all taxes required to be paid by it and any other assessment, fine or penalty levied against it, to the extent that any of the foregoing is due and payable, except for any such assessment, fine or penalty that is currently being contested in good faith or as would not have a Material Adverse Effect.
(m)The Company and its Significant Subsidiaries possess all licenses, certificates, permits and other authorizations issued by all applicable authorities necessary to conduct their respective businesses, and neither the Company nor any such subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would reasonably be expected to have a Material Adverse Effect.
(n)The Company and its Significant Subsidiaries are (i) in compliance with applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), except where such non-compliance with Environmental Laws would not, individually or in the aggregate, could be reasonably be expected to have a Material Adverse Effect.
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(o)Neither the Company nor any of its Significant Subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee, affiliate or other person acting on behalf of the Company or any of its Significant Subsidiaries is aware of or has taken any action, directly or indirectly, that could result in a violation or a sanction for violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), or similar law of any other relevant jurisdiction, or the rules or regulations thereunder; and the Company and its Significant Subsidiaries have instituted and maintain policies and procedures to ensure compliance therewith. No part of the proceeds of the offering will be used, directly or indirectly, in violation of the FCPA or similar law of any other relevant jurisdiction, or the rules or regulations thereunder.
(p)The operations of the Company and its Significant Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements and the anti-money laundering statutes and the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its Significant Subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.
(q)No “Bad Actor” disqualifying event described in Rule 506(d)(1)(i) to (viii) of the Securities Act, (a “Disqualification Event”) is applicable to the Company, except for a Disqualification Event to which Rule 506(d)(2)(ii-iv) or (d)(3) of the Securities Act, is applicable.
3.Representations and Warranties of the Investors. Each Investor, individually and not jointly with any other Investor, represents and warrants to the Company as set forth in this Section 3:
(a)Each Investor has full legal capacity, power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement and each Note purchased by the applicable Investor, when executed and delivered, will have been duly authorized by the applicable Investor and will be valid and binding agreements of the applicable Investor, enforceable against such Investor in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.
(b)Neither the issue and sale of the Notes, the issuance of the Conversion Shares nor the consummation of any other of the transactions herein contemplated nor the fulfillment of the terms hereof will conflict with, result in a breach or violation of, or imposition of any lien, charge or encumbrance upon any property or assets of the applicable Investor pursuant to, (i) the organizational documents of the applicable Investor, (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which the applicable Investor is a party or bound or to which its property is subject, or (iii) any statute, law, rule, regulation, judgment, order or decree applicable to the applicable Investor of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the applicable Investor or any of its properties.
(c)Each Investor has not been formed solely for the purpose of making this investment and is purchasing the Note, and subsequent issuance of the Conversion Shares, for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, any immediate distribution thereof. Each Investor has been advised that the Notes and the Conversion Shares have not been registered under the Securities Act, or any state securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable state securities laws or unless an exemption from such registration requirements is available. Except as set forth in that certain Registration Rights Agreement by and between the Company and certain Investors listed therein, each Investor is aware that the Company is under no obligation to effect any such registration with respect to the Note or the Conversion Shares to
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file for or comply with any exemption from registration. Each Investor has such knowledge and experience in financial and business matters that the applicable Investor is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment and is able to bear the economic risk of such investment for an indefinite period of time. Each Investor is an accredited investor as such term is defined in Rule 501 of Regulation D under the Securities Act.
(d)Each Investor has had an opportunity to receive all information related to the Company requested by it and to ask questions of and receive answers from the Company regarding the Company, its business and the terms and conditions of the offering of the Notes and Conversion Shares. Each Investor acknowledges receipt of copies of the SEC Documents (or access thereto via EDGAR). Neither such inquiries nor any other due diligence investigation conducted by the applicable Investor shall modify, limit or otherwise affect such Investor’s right to rely on the Company’s representations and warranties contained in this Agreement.
(e)Each Investor acknowledges that it is not relying upon any person, firm or corporation in making its investment or decision to invest in the Company. Each Investor agrees that neither such Investor nor the respective controlling persons, officers, directors, partners, agents, or employees of such Investor shall be liable to any other Investor for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Notes or the issuance of the Conversion Shares.
(f)Each Investor understands that the Notes and the Conversion Shares are characterized as “restricted securities” under the Securities Act in as much as they are being acquired from the Company in a transaction not involving a public offering and that under the Securities Act and applicable regulations thereunder such securities may be resold without registration under the Securities Act only in certain limited circumstances. Each Investor represents that such Investor is familiar with the provisions of Rule 144 promulgated under the Securities Act (“Rule 144”), as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act. Each Investor understands that no public market now exists for any of the Notes and that it is uncertain whether a public market will ever exist for the Notes.
(g)The residency of each Investor (or, in the case of a partnership or corporation, such entity’s principal place of business) is correctly set forth on Schedule I hereto.
(h)No Investor has engaged any brokers, finders or agents, and neither the Company nor any other Investor has, nor will, incur, directly or indirectly, as a result of any action taken by any other Investor, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with the Note Documents or any of the transactions contemplated thereby.
(i)Each Investor has reviewed with its own tax advisors the U.S. federal, state, local and foreign tax consequences of this investment and the transactions contemplated by the Note Documents. With respect to such matters, each Investor has relied, and will have relied, at each applicable Closing, solely on such advisors and not on the statements or representations of the Company or any of its agents, written or oral. Each Investor understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment or the transactions contemplated by the Note Documents.
(j)Regulation S Exemption.
(i)Each Investor who is not a U.S. person (as defined in Rule 902(k) of Regulation S) (“Non-U.S. Investor”) acknowledges that the Company will rely on such Non-U.S. Investor’s representations, warranties and certifications set forth below for purposes of determining such Non-U.S. Investor’s suitability as an investor in the Notes, and subsequent holder of the Conversion Shares, and for purposes of confirming the availability of the Regulation S exemption from the registration requirements of the Securities Act.
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(ii)Non-U.S. Investor understands that the Notes, and the subsequent issuance of the Conversion Shares, at the time of issuance may not be registered under the Securities Act or any other applicable securities laws, and that the Notes, and the subsequent issuance of the Conversion Shares, are being issued pursuant to the exemption from the registration requirements under the Securities Act provided by Regulation S under the Securities Act. Non-U.S. Investor also understands that the Notes, and the subsequent issuance of the Conversion Shares, may not be offered, sold or otherwise transferred except in compliance with the registration requirements of the Securities Act and any other applicable securities laws or pursuant to an exemption therefrom, and in each case in compliance with the conditions set forth in this Section 3(j).
(iii)At the time of the decision to purchase the Notes, Non-U.S. Investor was, and Non-U.S. Investor currently is, outside of the United States (as defined in Rule 902(l) of Regulation S), and Non-U.S. Investor is not a U.S. person (as defined in Rule 902(k) of Regulation S). In particular, Non-U.S. Investor affirms that such Non-U.S. Investor is not organized or incorporated under the laws of the United States and such Non-U.S. Investor was not formed by U.S. persons principally for the purpose of investing in securities not registered under the Securities Act. Such Non-U.S. Each Investor has satisfied itself as to the full observance of the laws of such Non-U.S. Investor’s jurisdiction in connection with any invitation to subscribe for the Notes, and the subsequent issuance of the Conversion Shares, or any use of the Notes, and the subsequent issuance of the Conversion Shares, including (A) the legal requirements within such Non-U.S. Investor’s jurisdiction for the purchase of the Securities, (B) any foreign exchange restrictions applicable to such purchase, (C) any governmental or other consents that may need to be obtained, and (D) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Securities. Non-U.S. Investor’s subscription, payment for and continued beneficial ownership of the Notes and/or the subsequent issuance of the Conversion Shares will not violate any applicable securities or other laws of such Non-U.S. Investor’s jurisdiction.
(iv)Non-U.S. Investor confirms that the Notes, and the subsequent issuance of the Conversion Shares, will be acquired for investment by such Non-U.S. Investor and not for the account or benefit of a U.S. person, and not with a view to the resale or “distribution” (within the meaning of the Act) of any part of the Notes, and the subsequent issuance of the Conversion Shares, in the United States or to a U. S. person.
(k)Each Investor has not taken any of the actions set forth in, and is not subject to, the disqualification provisions of Rule 506(d)(1) of the Securities Act.
(l)Without in any way limiting the representations set forth above:
(i)Each Investor acknowledges and agrees that it will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Notes purchased, and the subsequent issuance of the Conversion Shares, hereunder except in compliance with the Securities Act, applicable blue sky laws, and the rules and regulations promulgated thereunder.
(ii)Each Investor acknowledges and agrees that it will not offer, sell or otherwise transfer the Notes, and the subsequent issuance of the Conversion Shares, prior to the date which is one year after the original issue date of the respective Notes, other than (A) to the Company, (B) pursuant to a registration statement that has been declared effective under the Securities Act, (C) in the case of a Non-U.S. Investor, pursuant to offers and sales that occur outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S under the Securities Act, or (D) pursuant to another available exemption from the registration requirements of the Securities Act,
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subject to the Company’s right prior to any such offer, sale or transfer pursuant to clause (C) or (D) to require (1) advance written notification to the Company of the proposed disposition with a detailed statement of the circumstances surrounding the proposed disposition and (2) the delivery of an opinion of counsel, certificates, and/or other information reasonably satisfactory to the Company (including, without limitation, the execution by the transferee of Notes or the Conversion Shares of a letter with representations, warranties and certifications substantially similar to those provided in this Section 3). Notwithstanding the foregoing, no such registration statement or opinion of counsel shall be required: (a) for any transfer of any Notes in compliance with SEC Rule 144 or Rule 144A, or (b) for any transfer of any Notes or Conversion Shares by an Investor that is a partnership or a corporation without payment of consideration to (1) a partner of such partnership or stockholder of such corporation or (2) a controlled Affiliate, successor or partner of such partnership or corporation; provided, that in each of the foregoing cases the transferee agrees in writing to be subject to the terms of this Section 3 to the same extent as if the transferee were an original Investor hereunder.
(iii)Each Investor acknowledges and agrees that it will not engage in hedging transactions involving any of the Notes or the Conversion Shares unless such transactions are in compliance with the Securities Act.
(iv)Each Investor is aware that the Notes, and the subsequent issuance of the Conversion Shares, may not be sold pursuant to Rule 144 adopted under the Securities Act unless certain conditions are met and until the undersigned has held the Securities for the applicable holding period under Rule 144.
(v)Each Investor further agrees that any offer, sale or other disposition of the Notes or Conversion Shares shall be subject to the restrictions on transfer set forth in the Note.
(m)It is understood that the certificates evidencing the Notes or Conversion Shares will bear the legends set forth below, as applicable:
(i)[NEITHER] THIS SECURITY [NOR THE COMMON STOCK INTO WHICH THIS SECURITY IS CONVERTIBLE] [HAVE][HAS] BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH REGULATION S, PURSUANT TO A REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. IN ADDITION, NO HEDGING TRANSACTION MAY BE CONDUCTED WITH RESPECT TO THESE SECURITIES UNLESS SUCH TRANSACTION IS IN COMPLIANCE WITH THE ACT. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
(ii)Any legend required by the securities laws of any state to the extent such laws are applicable to the shares represented by the certificate so legended;
(iii)A legend required under Treasury Regulation Section 1.1275-3.
(n)Each Investor acknowledges that it had the opportunity to review this Agreement and the transactions contemplated by this Agreement with its own legal counsel and investment and tax advisors. Each Investor is relying solely on such counsel and advisors and not on any statements or representations of the Company or any of the Company’s representatives or agents
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for legal, tax, investment or other advice with respect to the Investor acquisition of securities hereunder, the transactions contemplated by this Agreement or the laws of any jurisdiction.
4.Conditions to Closing of the Investor. Each Investor’s obligation to purchase the Note at a Closing is subject to the satisfaction, at or prior to such Closing, of the following conditions:
(a)The representations and warranties made by the Company in Section 2 hereof shall have been true and correct when made, and shall be true and correct in all respects, or with respect to those representations and warranties that do not contain any materiality qualifier in all material respects, on the date of the applicable Closing.
(b)Except for any notices required or permitted to be filed after such Closing with certain federal and state securities commissions, the Company shall have obtained all governmental approvals required in connection with the lawful sale and issuance of the Notes.
(c)At such Closing, the sale and issuance by the Company, and the purchase by the Investor, of the Notes shall be legally permitted by all laws and regulations to which the Investor or the Company are subject.
(d)The Company shall have duly executed and delivered to the Investor: this Agreement and each Note issued hereunder at such Closing;
5.Conditions to Obligations of the Company. The Company’s obligation to issue and sell the Notes to the Investors at a Closing is subject to the satisfaction, on or prior to such Closing, of the following conditions:
(a)The representations and warranties made by the Investors in Section 3 hereof shall be true and correct on the Closing Date, with the same force and effect as if they had been made on and as of said date.
(b)At such Closing, the sale and issuance by the Company, and the purchase by the Investors, of the Notes shall be legally permitted by all laws and regulations to which the Investors or the Company are subject.
(c)The Investors shall have each delivered to the Company the Purchase Price in respect of the Note being purchased by the Investor referenced in Schedule I.
(d)The Investors shall have each delivered to the Company the applicable tax forms described in Section 5(m)(ii) of the Note.
6.Additional Agreements.
(a)Notwithstanding any such right currently in existence, Aljomaih shall have the right to designate one individual (the “Designated Director”) for nomination to the Company’s Board of Directors (the “Board”), subject to the approval of the Company and the Board (such determination to be made in the reasonable discretion of the Company and the Board acting in good faith and consistent with the Company’s nominating and governance practices in effect from time to time). The Designated Director shall provide any information reasonably requested by the Company or the Board. The Designated Director shall execute a written consent agreeing to resign (i) no later than the Director Right Termination Date (defined in Section 6(c)) and (ii) upon the request of the Board in connection with a Change of Control. “Change of Control” shall mean (a) a sale, directly or indirectly, to a third party, in a transaction or series of transaction, of all or substantially all of the consolidated assets of the Company, whether effected by merger, consolidation or other business combination transaction, (b) a merger, sale of the equity securities of the Company, consolidation or other business combination transaction of the Company with or into another corporation, limited liability company or other entity pursuant to which stockholders of the Company prior to such sale, merger, consolidation or other capital reorganization or
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business combination transaction own less than 50% of the voting interests or beneficial interests in the Company or surviving or resulting entity, or (c) the consummation of any transaction, including any merger or consolidation, the result of which is that any “person” or group becomes the owner of directly or indirectly, of more than 50% of the voting interests or beneficial interests in the Company.
(b)If the proposed Designated Director is not approved by the Company or the Board, Aljomaih shall have the right to submit another proposed Designated Director for approval on the same basis as set forth in Section 6(a). Aljomaih shall have the right to continue such submissions until it receives the reasonable approval of the Company and the Board.
(c)Subject to Section 6(a), the Designated Director will be designated for nomination as a Class I director and a member of the Board as soon as reasonably practicable and shall continue as a director of the Board until the Director Right Termination Date (defined below), subject to applicable law, SEC regulations, Nasdaq listing standards and Company policy with respect to the Board. The “Director Right Termination Date” shall mean the earlier of the date that (i) Aljomaih first no longer owns at least 5% of the then outstanding shares of Common Stock, with equitable adjustments in the event of any share split, stock dividend or consolidation, or any recapitalization, amalgamation, arrangement, reorganization, exchange or similar reclassification (the “Minimum Ownership Threshold”), or (ii) is 30 days immediately prior to the next election of Class I directors (which is expected to be in the year 2025). If a Designated Director ceases to serve as a member of the Board at any time prior to the Director Termination Date, then Aljomaih shall be permitted to nominate another individual as a Designated Director pursuant to the provisions set forth in Section 6(a) herein, provided that any such right to designate a replacement Designated Director shall terminate on (i) the Director Right Termination Date or (ii) the date of resignation of a Designated Director due to a Change of Control pursuant to Section 6(a).
(d)During the Restricted Period (defined below) Aljomaih will have a right of first offer (“Right of First Offer”) with respect to any product future distribution of products or services offered by Xos in the Middle East Region (a “Restricted Transaction”). The “Middle East Region” shall consist of the following countries: Cooperation Council for the Arab States of the Gulf (Saudi Arabia, Bahrain, Kuwait, United Arab Emirates, Qatar and Oman), Jordan, Iraq, Syria, Lebanon, Egypt and Yemen. The Right of First Offer will have an exercise period of 20 business days following Aljomaih’s receipt of an offer notice (satisfying Section 8(h) herein) made by the Company. “Restricted Period” shall mean the period that commences on the date of this Agreement and terminates upon the earlier of (i) the first date Aljomaih no longer satisfies the Minimum Ownership Threshold, or (ii) the three-year anniversary from the date hereof.
(e)Registration Rights.
(i)Reference is made to that Amended and Restated Registration Rights Agreement, dated as of August 26, 2021, by and among the Company and the parties thereto (the “Registration Rights Agreement”). For purposes of this Section 6(e), capitalized terms not defined herein have the meaning ascribed to them in the Amended and Restated Registration Rights Agreement, dated as of August 26, 2021, by and among the Company and the parties thereto.
(ii)As soon as practicable after September 1, 2022 but no later than September 16, 2022, the Company shall submit to or file with the SEC a Registration Statement for a Shelf Registration on Form S-3 (the “Form S-3 Shelf”) or a Registration Statement for a Shelf Registration on Form S-1 (the “Form S-1 Shelf”), if the Company is not then eligible to use a Form S-3 Shelf, for a Shelf Registration covering the resale of all the Registrable Securities (determined as of two business days prior to such submission or filing) on a delayed or continuous basis and shall use its commercially reasonable efforts to have such Shelf declared effective as soon as practicable after the filing thereof, but no later than the earlier of (a) the 60th calendar day following the filing date thereof if the SEC notifies the Company that it will “review” the Registration
9


Statement and (b) the fifth business day after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that the Registration Statement will not be “reviewed” or will not be subject to further review. Such Shelf shall provide for the resale of the Conversion Shares pursuant to any method or combination of methods legally available to, and requested in writing by Aljomaih. The Company will use its commercially reasonable efforts to provide a draft of such Registration Statement to Aljomaih for review at least two business days in advance of the date of filing of such Registration Statement with the SEC; provided that for the avoidance of doubt, in no event shall the Company be required to delay or postpone the filing of such Registration Statement as a result of or in connection with Aljomaih’s review. The Company shall maintain a Shelf in accordance with the terms hereof, and shall prepare and file with the Commission such amendments, including post-effective amendments, and supplements as may be necessary to keep a Shelf continuously effective, available for use to permit Aljomaih to sell the Conversion Shares included therein and in compliance with the provisions of the Securities Act until such time as there are no longer any Conversion Shares that are Registrable Securities. In the event the Company files a Form S-1 Shelf, the Company shall use its commercially reasonable efforts to convert the Form S-1 Shelf (and any Subsequent Shelf Registration Statement) to a Form S-3 Shelf as soon as practicable after the Company is eligible to use Form S-3. The Company’s obligation under this Section 6(e), shall, for the avoidance of doubt, be subject to Section 3.5 of the Registration Rights Agreement.
(iii)The Company acknowledges that the Conversion Shares are Registrable Securities under the Registration Rights Agreement, and that Aljomaih’s registration rights under the Registration Rights Agreement shall apply to the Conversion Shares for a period of 10 years from the date hereof so long as they continue to be Registrable Securities.
7.Confidentiality of Records. Each Investor agrees to use the same degree of care as such Investor uses to protect its own confidential information to keep confidential any information furnished to such Investor pursuant to any Note Document (so long as such information is not in the public domain), except that such Investor may disclose such proprietary or confidential information (i) to any Affiliate, partner, member, stockholder, subsidiary or parent of such Investor as long as such partner, subsidiary or parent is advised of and agrees or has agreed to be bound by the confidentiality provisions of this Section 7 or comparable restrictions; (ii) at such time as it enters the public domain through no fault of such Investor or its Affiliate; (iii) that is communicated to it free of any obligation of confidentiality; (iv) that is developed by Investor or its agents independently of and without reference to any confidential information communicated by the Company; (v) as required by applicable law; (vi) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company; or (vii) to any prospective purchaser of any Notes from such Investor, if such prospective purchaser agrees to be bound by the provisions of this Section 7.
8.Miscellaneous.
(a)Any provision of this Agreement may be amended, waived or terminated only upon the written consent of the Company and Investors holding a majority of the outstanding principal amount of the Notes (the “Majority Investors”). Each Investor acknowledges that by the operation of this paragraph, the Majority Investors will have the right and power to diminish or eliminate all rights of any Investor under this Agreement; provided, however, that in no event shall any amendment, waiver or modification of this Agreement affect any Investor or subset of the Investors in a manner different from the other Investors, and no waiver or modification that applies to one or more (but not all) Investors differently than to all Investors shall become effective until approved by such differently affected Investor.
(b)NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT (1) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER
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THE LAWS OF THE STATE OF NEW YORK AND (2) THE VENUE FOR ANY ACTION TAKEN WITH RESPECT TO THIS AGREEMENT SHALL BE ANY STATE OR FEDERAL COURT IN NEW YORK COUNTY IN THE STATE OF NEW YORK
(c)EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
(d)The representations and warranties made herein shall survive the execution and delivery of this Agreement.
(e)Subject to the restrictions on transfer described in Section 8(f) below and Section 5(m)(v) of the Note, the rights and obligations of the Company and each Investor shall be binding upon and benefit the registered successors, assigns, heirs, administrators and transferees of the parties.
(f)The Notes issuable under this Agreement shall be registered in the books of the Company. The Company will keep, at its principal executive office, books for the registration and registration of transfer of the Notes. Prior to presentation of a Note for registration of transfer, the Company shall treat the Person in whose name such Note is registered as the owner and holder of such Note for all purposes whatsoever, whether or not such Note shall be overdue, and the Company shall not be affected by notice to the contrary. Subject to any restrictions on or conditions to transfer set forth in any Note, the holder of any Note, at its option, may in person or by duly authorized attorney surrender the same for exchange at the Company’s chief executive office, and promptly thereafter and at the Company’s expense, except as provided below, receive in exchange therefor one or more new Note(s), each in the principal requested by such holder, dated the date to which interest shall have been paid on the Note so surrendered or, if no interest shall have yet been so paid, dated the date of the Note so surrendered and registered in the name of such Person or Persons as shall have been designated in writing by such holder or its attorney for the same principal amount as the then unpaid principal amount of the Note so surrendered. Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note and (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it; or (b) in the case of mutilation, upon surrender thereof, the Company, at its expense, will execute and deliver in lieu thereof a new Note executed in the same manner as the Note being replaced, in the same principal amount as the unpaid principal amount of such Note and dated the date to which interest shall have been paid on such Note or, if no interest shall have yet been so paid, dated the date of such Note.
(g)This Agreement together with the Notes constitute and contain the entire agreement among the Company and the Investors and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof.
(h)All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and mailed, electronically mailed or delivered to each party as follows: (i) if to an Investor, at the Investor’s address or electronic address set forth on Schedule I hereto, or at such other address or electronic address as the Investor shall have furnished the Company in writing or (ii) if to the Company, at 3550 Tyburn Street, Los Angeles, California 90065, Attention: General Counsel, Email: [*] with a copy to 3550 Tyburn Street, Los Angeles, California 90065, Attention: Chief Financial Officer, Email: [*], or at such other address or electronic address as the Company shall have furnished to the Investors in writing, with a copy (which shall not constitute notice) to Cooley LLP, Cooley LLP, 3 Embarcadero Center, 20th
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Floor, San Francisco, California 94111, Attention: David Peinsipp and Rachel Proffitt, Email: [*] and [*]. All such notices and communications will be deemed effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) when sent via electronic mail, upon confirmation of delivery when directed to the relevant electronic mail address, (iv) one business day after being deposited with an overnight courier service of recognized standing or (v) four business days after being deposited in the U.S. mail, first class with postage prepaid.
(i)If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
(j)This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may also be executed and delivered by facsimile signature, PDF or any electronic signature complying with the U.S. federal ESIGN Act of 2000 (e.g., www.docusign.com).
(k)Each party shall be responsible for their own expenses (including fees of outside counsel and all other third-party consultants) incurred in connection with the transactions contemplated hereby.
(l)All currency amounts set forth in this Agreement are in U.S. Dollars.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above.
XOS, INC.



By:    /s/ Kingsley Afemikhe
Name:    Kingsley Afemikhe
Title:    Chief Financial Officer

[Signature Page to Note Purchase Agreement]


ALJOMAIH AUTOMOTIVE CO.



By:    /s/ Ibrahim M. Aljomaih    
Name:    Ibrahim M. Aljomaih
Title: Vice Chairman & Managing Director    
[Signature Page to Note Purchase Agreement]


SCHEDULE I
Schedule of Investors
InvestorPrincipal Amount/ Purchase Price

Aljomaih Automotive Co.

Aljomaih Automotive Company
P.O. Box 224
King Khalid Street
31471 Dammam
Kingdom of Saudi Arabia

Attention: Ibrahim M. Aljomaih
Email: [*]

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

Duane Morris LLP
201 S. Biscayne Boulevard, Suite 3400
Miami, Florida 33131
Attention: Robert Zinn and Jennifer Migliori
Email: [*] and [*]
$20,000,000.00
Total$20,000,000.00




EXHIBIT A
Form of Convertible Promissory Note
[attached]

Exhibit 10.2
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of August 9, 2022, is between XOS, INC., a company incorporated under the laws of the State of Delaware, with principal executive offices located at 3550 Tyburn Street, Los Angeles, California 90065 (the “Company”), and each of the investors listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively the “Buyers”).
WITNESSETH
WHEREAS, the Company and each Buyer desire to enter into this transaction for the Company to sell and the Buyers to purchase the Convertible Debentures (as defined below) pursuant to an exemption from registration pursuant to Section 4(2) and/or Rule 506 of Regulation D (“Regulation D”) as promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities Act”);
WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the Buyer, as provided herein, and the Buyer shall purchase convertible debentures in the form attached hereto as “Exhibit A” (the “Convertible Debentures”) in the principal amount of up to $35,000,000 (the “Subscription Amount”), which shall be convertible into shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) (as converted, the “Conversion Shares”) of which $20,000,000 of Convertible Debentures shall be purchased upon the signing of this Agreement (the “First Closing”), and $15,000,000 of Convertible Debentures shall be purchased on or about the date the registration statement registering the resale of the Conversion Shares (the “Registration Statement”) has first been declared effective by the SEC (the “Second Closing”) (individually referred to as a “Closing” collectively referred to as the “Closings”), at a purchase price equal to 98% of the Subscription Amount (the “Purchase Price”) in the respective amounts set forth opposite each Buyer(s) name on Schedule I;
WHEREAS, contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which the Company has agreed to provide certain registration rights under the Securities Act and the rules and regulations promulgated there under, and applicable state securities laws;
WHEREAS, contemporaneously with the execution and delivery of this Agreement, the Company is delivering Irrevocable Transfer Agent Instructions (the “Irrevocable Transfer Agent Instructions”) to its transfer agent; and
WHEREAS, the Convertible Debentures and the Conversion Shares are collectively referred to herein as the “Securities.”
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:
1.PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.
(a)Purchase of Convertible Debentures. Subject to the satisfaction of the conditions set forth in Sections 6 and 7 below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company at each Closing a
1


Convertible Debenture with principal amount corresponding to the Subscription Amount set forth opposite each Buyer’s name on Schedule of Buyers attached as Schedule I hereto.
(b)Closing Date. Each Closing shall occur electronically at the offices of Yorkville Advisors Global, LP, 1012 Springfield Avenue, Mountainside, New Jersey 07092. The date and time of each Closing shall be as follows: (i) the First Closing shall take place on the date hereof provided that the conditions to the First Closing set forth in Sections 6 and 7 below are satisfied or waived (or such other date as is mutually agreed to by the Company and each Buyer) (the “First Closing Date”), and (ii) the Second Closing shall be on the second Business Day after the date the Registration Statement is first declared effective by the SEC, provided the conditions to the Closing set forth in Sections 6 and 7 below are satisfied or waived (or such other date as is mutually agreed to by the Company and each Buyer) (the “Second Closing Date” and collectively referred to as the “Closing Dates”). As used herein “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to remain closed.
(c)Form of Payment; Deliveries. Subject to the satisfaction of the terms and conditions of this Agreement, on the Closing Date, (i) the Buyers shall deliver to the Company, in immediately available funds to a bank account designated by the Company, the Purchase Price for the Convertible Debentures to be issued and sold to such Buyer at such Closing, and (ii) the Company shall deliver to each Buyer, Convertible Debentures which such Buyer is purchasing at the Closing with a principal amount corresponding with the Subscription Amount set forth opposite each Buyer’s name on Schedule of Buyers attached as Schedule I hereto, duly executed on behalf of the Company.
(d)Maximum Shares. Notwithstanding anything in this Agreement to the contrary, the Company shall not issue any shares of Common Stock pursuant to the transactions contemplated hereby or any other Transaction Documents if the issuance of such shares of Common Stock, together with any shares of Common Stock issued in connection with any other related transactions that may be considered part of the same series of transactions, would exceed 33,199,327, which is the aggregate number of shares of Common Stock that the Company may issue in a transaction in compliance with the Company’s obligations under the rules or regulations of the Nasdaq Stock Market (“Nasdaq”) (such aggregate number of shares of Common Stock, the “Exchange Cap”), except that such limitation shall not apply in the event that the Company obtains the approval of its stockholders as required by the applicable rules of the Nasdaq for issuances of shares of Common Stock in excess of such amount. The Exchange Cap shall be appropriately adjusted for any stock dividend, stock split, reverse stock split or similar transaction in the same manner as the Conversion Price (as defined in the Convertible Debenture) as set forth in Section 5 in the Convertible Debenture. The Company shall have made all required submissions to Nasdaq regarding the Conversion Shares and shall have not received any notice objecting to the listing of the Conversion Shares from Nasdaq.
(e)Fees. The Company shall pay to YA Global II SPV, LLC, an affiliate of the lead Buyer (the “Subsidiary Fund”), a one-time due diligence and structuring fee of $10,000, which the parties acknowledged has been paid.
2.BUYER’S REPRESENTATIONS AND WARRANTIES.
Each Buyer, severally and not jointly, represents and warrants to the Company with respect to only itself that, as of the date hereof and as of the Closing Date:
(a)Investment Purpose. The Buyer is acquiring the Securities for its own account for investment purposes and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered under or exempt from the
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registration requirements of the Securities Act; provided, however, that by making the representations herein, such Buyer does not agree, or make any representation or warranty, to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with, or pursuant to, a registration statement covering such Securities or an available exemption under the Securities Act. Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities. The Buyer acknowledges that it will be disclosed as a “selling stockholder” in each Registration Statement and in any prospectus contained therein.
(b)Accredited Investor Status. The Buyer is an “Accredited Investor” as that term is defined in Rule 501(a)(3) of Regulation D.
(c)Reliance on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the Securities.
(d)Information. The Buyer and its advisors (and its counsel), if any, have been furnished with all materials relating to the business, finances and operations of the Company and information the Buyer deemed material to making an informed investment decision regarding its purchase of the Securities, which have been requested by such Buyer. The Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company and its management and have received answers to such questions. Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below. The Buyer understands that its investment in the Securities involves a high degree of risk. The Buyer has sought such accounting, legal and tax advice, as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.
(e)Transfer or Resale. The Buyer understands that: (i) the Securities have not been registered under the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration requirements, or (C) such Buyer provides the Company with reasonable assurances (in the form of seller and broker representation letters reasonably acceptable to the Company) that such Securities can be sold, assigned or transferred pursuant to Rule 144 promulgated under the Securities Act, as amended (or a successor rule thereto) (collectively, “Rule 144”), in each case following the applicable holding period set forth therein; and (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC thereunder.
(f)Legends. The Buyer agrees to the imprinting, so long as its required by this Section 2(f), of a restrictive legend on the Securities in substantially the following form:
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[NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE][THESE SECURITIES HAVE NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
Subject to the provision of representation letters from the Buyer and its representatives as the Company may require, certificates or book-entry positions evidencing the Conversion Shares shall not contain any legend (including the legend set forth above), (i) while a registration statement covering the resale of such security is effective under the Securities Act, or (ii) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the SEC). The Buyer agrees that the removal of restrictive legend from certificates representing Securities as set forth in this Section 3(f) is predicated upon the Company’s reliance that the Buyer will sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a registration statement, they will be sold in compliance with the plan of distribution set forth therein. On or prior to the conversion of the Convertible Debentures or the sale or transfer of any Conversion Shares, the Buyer shall deliver to the Company and/or any transfer agent or depositary all documents, instruments and writings expressly required to be delivered by the Buyer in order to implement and effect such conversion, sale or transfer of Conversion Shares.
(g)Organization; Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations hereunder and thereunder.
(h)Authorization, Enforcement. The Transaction Documents to which each such Buyer is a party have been duly and validly authorized, executed and delivered on behalf of such Buyer and constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with its terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
(i)No Conflicts. The execution, delivery and performance by such Buyer of the Transaction Documents to which each such Buyer is a party and the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except, in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations
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which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder and thereunder.
(j)Certain Trading Activities. The Buyer has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with the Buyer, engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales (as defined below) involving the Company’s securities) during the period commencing as of the time that the Buyer first contacted the Company or the Company’s agents regarding the specific investment in the Company contemplated by this Agreement and ending immediately prior to the execution of this Agreement by such Buyer, except for the sale of securities issued in connection with that certain Standby Equity Purchase Agreement, dated March 23, 2022, by and between YA II PN, Ltd. (“YA II”) and Xos, Inc. (the “SEPA”)
(k)General Solicitation. Neither the Buyer, nor any of its affiliates, nor any person acting on its or their behalf, has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Securities by the Buyer.
(l)Evaluation of Risks. The Buyer has such knowledge and experience in financial, tax and business matters as to be capable of evaluating the merits and risks of, and bearing the economic risks entailed by, an investment in the Common Stock of the Company and of protecting its interests in connection with the transactions contemplated hereby. The Buyer acknowledges and agrees that its investment in the Company involves a high degree of risk, and that the Buyer may lose all or a part of its investment.
(m)Not an Affiliate. The Buyer is not (i) an officer or director of the Company or any of its Subsidiaries, (ii) or an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”)) of the Company or any of its Subsidiaries or (iii) a “beneficial owner” of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d3 of the 1934 Act).
3.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth under the corresponding section of the Disclosure Schedules which Disclosure Schedules shall be deemed a part hereof and to qualify any representation or warranty otherwise made herein to the extent of such disclosure, the Company hereby makes the representations and warranties set forth below to each Buyer:
(a)Organization and Qualification. The Company and each of its Subsidiaries are entities duly formed, validly existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their properties and to carry on their business as now being conducted and as presently proposed to be conducted. The Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect (as defined below). As used in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company and its Subsidiaries, taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or any other agreements or instruments to be entered into by the Company in connection herewith or therewith or (iii) the authority or ability of the Company to perform any of its obligations under any of the Transaction Documents (as defined below). “Subsidiaries” means any Person in which the Company, directly or indirectly, owns a majority
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of the outstanding capital stock having voting power or holds a majority of the equity or similar interest of such Person, and each of the foregoing, is individually referred to herein as a “Subsidiary.”
(b)Authorization; Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of this Agreement and the other Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Convertible Debentures, the reservation for issuance and issuance of the Conversion Shares issuable upon conversion of the Convertible Debentures), have been duly authorized by the Company’s board of directors and no further filing, consent or authorization is required by the Company, its board of directors or its stockholders or other governmental body. This Agreement has been, and the other Transaction Documents to which the Company is a party will be prior to the Closing, duly executed and delivered by the Company, and each constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law. “Transaction Documents” means, collectively, this Agreement, the Registration Rights Agreement, the Convertible Debentures, the Irrevocable Transfer Agent Instructions, and each of the other agreements and instruments entered into by the Company or delivered by the Company in connection with the transactions contemplated hereby and thereby, as may be amended from time to time.
(c)Issuance of Securities. The issuance of the Securities are duly authorized and, upon issuance and payment in accordance with the terms of the Transaction Documents the Securities, shall be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances (collectively “Liens”) with respect to the issuance thereof. As of the Closing Date, the Company shall have reserved from its duly authorized capital stock and shall have instructed its transfer agent to irrevocably reserve not less than 33,199,327 shares of Common Stock issuable upon conversion of all Convertible Debentures. Upon issuance or conversion in accordance with the Convertible Debentures, the Conversion Shares, when issued, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock.
(d)No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Convertible Debentures, the Conversion Shares, and the reservation for issuance of the Conversion Shares) will not (i) result in a violation of the Certificate of Incorporation (as defined below), Bylaws (as defined below), certificate of formation, memorandum of association, articles of association, bylaws or other organizational documents of the Company or any of its Subsidiaries, or any capital stock or other securities of the Company or any of its Subsidiaries, (ii) conflict with, or constitute a default under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, U.S. federal and state securities laws and regulations, the securities laws of the jurisdictions of the Company’s incorporation or in which it or its subsidiaries operate and the rules and regulations of Nasdaq and including all applicable laws,
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rules and regulations of the State of incorporation of the Company) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, except in the case of (ii) and (iii) for any conflict, default, right or violation that would not reasonably be expected to result in a Material Adverse Effect.
(e)Consents. No consent, approval, authorization, filing with or order of any court or governmental agency or body is required in connection with the transactions contemplated herein, except such as may be required under the 1933 Act or the blue sky laws of any jurisdiction in connection with the purchase of the Convertible Debentures by the applicable Buyer in the manner contemplated herein.
(f)Nasdaq. At the First Closing Date, the Company has made all required submissions to Nasdaq regarding the Conversion Shares and shall have not received any notice objecting to the listing of the Conversion Shares from Nasdaq.
(g)Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby. The Company further acknowledges that no Buyer (nor any affiliate of any Buyer) is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s purchase of the Securities. The Company further represents to each Buyer that the Company’s decision to enter into the Transaction Documents to which it is a party has been based solely on the independent evaluation by the Company and its representatives.
(h)No Integrated Offering. None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to require approval of stockholders of the Company under any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated for quotation. None of the Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps that would cause the offering of any of the Securities to be integrated with other offerings of securities of the Company.
(i)Dilutive Effect. The Company understands and acknowledges that the number of Conversion Shares will increase in certain circumstances. The Company further acknowledges its obligation to issue the Conversion Shares upon conversion of the Convertible Debentures in accordance with the terms thereof is, absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company.
(j)Application of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, interested stockholder, business combination, poison pill (including, without limitation, any distribution under a rights agreement), stockholder rights plan or other similar antitakeover provision under the Certificate of Incorporation, Bylaws or other organizational documents or the laws of the jurisdiction of its incorporation or otherwise which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the Securities and any Buyer’s ownership of the Securities.
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(k)SEC Documents; Financial Statements. Since August 20, 2021, the Company has timely filed all reports, schedules, forms, proxy statements, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits and appendices included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). The Company has delivered or has made available to the Buyers or their respective representatives true, correct and complete copies of each of the SEC Documents not available on the EDGAR system. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”), consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal yearend audit adjustments which will not be material, either individually or in the aggregate). The reserves, if any, established by the Company or the lack of reserves, if applicable, are reasonable based upon facts and circumstances known by the Company on the date hereof and there are no loss contingencies that are required to be accrued by the Statement of Financial Accounting Standard No. 5 of the Financial Accounting Standards Board which are not provided for by the Company in its financial statements or otherwise. No other information provided by or on behalf of the Company to any of the Buyers which is not included in the SEC Documents (including, without limitation, information in the disclosure schedules to this Agreement) contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein not misleading, in the light of the circumstance under which they are or were made. The Company is not currently contemplating to amend or restate any of the financial statements (including, without limitation, any notes or any letter of the independent accountants of the Company with respect thereto) included in the SEC Documents (the “Financial Statements”), nor is the Company currently aware of facts or circumstances which would require the Company to amend or restate any of the Financial Statements, in each case, in order for any of the Financials Statements to be in compliance with GAAP and the rules and regulations of the SEC. The Company has not been informed by its independent accountants that they recommend that the Company amend or restate any of the Financial Statements or that there is any need for the Company to amend or restate any of the Financial Statements.
(l)Absence of Certain Changes. Since the date of the Company’s most recent audited financial statements contained in a Form 10-K, there has been no Material Adverse Effect, nor any event or occurrence specifically affecting the Company or its Subsidiaries that would be reasonably expected to result in a Material Adverse Effect. Since the date of the Company’s most recent audited financial statements contained in a Form 10-K, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any material assets, individually or in the aggregate, outside of the ordinary course of business or (iii) made any material capital expenditures, individually or in the aggregate, outside of the ordinary course of business. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or
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winding up, nor does the Company or any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so.
(m)No Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or circumstance has occurred or exists, or is reasonably expected to exist or occur specific to the Company, any of its Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition (financial or otherwise), that has not been publicly disclosed and would reasonably be expected to have a Material Adverse Effect.
(n)Conduct of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term under its Certificate of Incorporation, any certificate of designation, preferences or rights of any other outstanding series of preferred stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of formation, memorandum of association, articles of association, certificate of incorporation or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except in all cases for violations which would not reasonably be expected to have a Material Adverse Effect. Without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements of Nasdaq and has no knowledge of any facts or circumstances that could reasonably lead to delisting or suspension of the Common Stock by Nasdaq in the foreseeable future. Since August 20, 2021, (i) the Common Stock has been listed or designated for quotation on Nasdaq, (ii) trading in the Common Stock has not been suspended by the SEC or Nasdaq and (iii) the Company has received no communication, written or oral, from the SEC or Nasdaq regarding the suspension or delisting of the Common Stock from Nasdaq, which has not been publicly disclosed. The Company and each of its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any of its Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. There is no agreement, commitment, judgment, injunction, order or decree binding upon the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is a party which has or would reasonably be expected to have the effect of prohibiting or materially impairing any business practice of the Company or any of its Subsidiaries, any acquisition of property by the Company or any of its Subsidiaries or the conduct of business by the Company or any of its Subsidiaries as currently conducted other than such effects, individually or in the aggregate, which have not had and would not reasonably be expected to have a Material Adverse Effect on the Company or any of its Subsidiaries.
(o)Foreign Corrupt Practices. Neither the Company nor any of its Subsidiaries nor any director, officer, agent, employee, nor any other person acting for or on behalf of the Company or any of its Subsidiaries (individually and collectively, a “Company Affiliate”) have violated the U.S. Foreign Corrupt Practices Act (the “FCPA) or any other applicable antibribery or anticorruption laws, nor has any Company Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given, promised to give, or authorized the giving of anything of value, to any officer, employee or any other person acting in an official capacity for any Governmental Entity to any political party or official thereof or to any candidate for political office (individually and collectively, a “Government Official”) or to any person under circumstances where such Company Affiliate knew or was aware of a high probability that all or a portion of such money or thing of value would be offered, given or promised, directly or
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indirectly, to any Government Official, for the purpose, in violation of applicable law, of: (i) (A) influencing any act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official to do or omit to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing such Government Official to influence or affect any act or decision of any Governmental Entity, or (ii) assisting the Company or its Subsidiaries in obtaining or retaining business for or with, or directing business to, the Company or its Subsidiaries.
(p)Equity Capitalization.
(i)Definitions:
(A)Common Stock” means (x) the Company’s shares of common stock, par value $0.0001 per share, and (y) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(B)Preferred Stock” means (x) the Company’s blank preferred stock, par value $0.0001 per share, the terms of which may be designated by the board of directors of the Company in a statement of designations and (y) any capital stock into which such preferred stock shall have been changed or any share capital resulting from a reclassification of such preferred stock (other than a conversion of such preferred stock into Common Stock in accordance with the terms of such Certificate of Designations).
(ii)Authorized and Outstanding Capital Stock. As of the date hereof, the authorized capital stock of the Company consists of (A) 1,000,000,000 shares of Common Stock, of which, 166,079,676 are issued and outstanding and (B) 10,000,000 shares of Preferred Stock, none of which are issued and outstanding.
(iii)Valid Issuance; Available Shares. All of such outstanding shares are duly authorized and have been validly issued and are fully paid and nonassessable.
(iv)Existing Securities; Obligations. Except as disclosed in the SEC Documents or as disclosed by the Company to the Buyers: (A) none of the Company’s or any Subsidiary’s shares, interests or capital stock is subject to preemptive rights or any other similar rights or Liens suffered or permitted by the Company or any Subsidiary; (B) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares, interests or capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries; (C) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except pursuant to this Agreement); (D) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (E) there are no securities or instruments containing antidilution or similar provisions that
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will be triggered by the issuance of the Securities; and (F) neither the Company nor any Subsidiary has any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.
(v)Organizational Documents. The Company has furnished to the Buyers or filed on EDGAR true, correct and complete copies of the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate of Incorporation”), and the Company’s bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all convertible securities and the material rights of the holders thereof in respect thereto.
(q)Litigation. Except as disclosed in the SEC Documents, there is no action, suit, arbitration, proceeding, inquiry or investigation before or by Nasdaq, any court, public board, other Governmental Entity, selfregulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company’s or its Subsidiaries’ officers or directors, whether of a civil or criminal nature or otherwise, in their capacities as such, which would reasonably be expected to result in a Material Adverse Effect. After reasonable inquiry of its employees, the Company is not aware of any event which might result in or form the basis for any such action, suit, arbitration, investigation, inquiry or other proceeding. Without limitation of the foregoing, there has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company, any of its Subsidiaries or any current or former director or officer of the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is the subject of any order, writ, judgment, injunction, decree, determination or award of any Governmental Entity that would reasonably be expected to result in a Material Adverse Effect.
(r)Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will be unable to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.
(s)Manipulation of Price. Neither the Company nor any of its Subsidiaries has, and, to the knowledge of the Company, no Person acting on their behalf has, directly or indirectly, (i) taken any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company or any of its Subsidiaries to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company or any of its Subsidiaries.
(t)Shell Company Status. The Company will cease to be an issuer described in Rule 144(i)(1)(i) on August 26, 2022.
(u)Money Laundering. The Company and its Subsidiaries are in material compliance with, and have not previously committed any material violation of, the USA Patriot Act of 2001 and all other applicable U.S. and nonU.S. antimoney laundering laws and regulations, including, but not limited to, the laws, regulations and Executive Orders and sanctions programs (“Sanctions Programs”) administered by the U.S. Office of Foreign Assets Control (“OFAC”), including, without limitation, (i) Executive Order 13224 of September 23, 2001 entitled,
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“Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and any regulations contained in 31 CFR, Subtitle B, Chapter V.
(v)Disclosure. The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, nonpublic information concerning the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other Transaction Documents. The Company understands and confirms that each of the Buyers will rely on the foregoing representations in effecting transactions in securities of the Company. None of the disclosures provided to the Buyers regarding the Company and its Subsidiaries, their businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the Company or any of its Subsidiaries, taken as a whole, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. None of the written information furnished after the date hereof by or on behalf of the Company or any of its Subsidiaries to each Buyer pursuant to or in connection with this Agreement and the other Transaction Documents, taken as a whole, will contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, liabilities, prospects, operations (including results thereof) or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure at or before the date hereof or announcement by the Company but which has not been so publicly disclosed. All financial projections and forecasts that have been prepared by or on behalf of the Company or any of its Subsidiaries and made available to the Buyers have been prepared in good faith based upon reasonable assumptions and represented, at the time each such financial projection or forecast was delivered to each Buyer, the Company’s best estimate of future financial performance (it being recognized that such financial projections or forecasts are not to be viewed as facts and that the actual results during the period or periods covered by any such financial projections or forecasts may differ from the projected or forecasted results). The Company acknowledges and agrees that no Buyer makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 2.
(w)No General Solicitation. Neither the Company, nor any of its affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of the Securities.
(x)Private Placement. Assuming the accuracy of the Buyers’ representations and warranties set forth in Section 2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Buyers as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Primary Market.
4.COVENANTS.
(a)Reporting Status. For the period beginning on the date hereof, and ending 6 months after the date on which all the Convertible Debentures are no longer outstanding (the “Reporting Period”), the Company shall file on a timely basis all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer
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required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require or otherwise permit such termination.
(b)Use of Proceeds. Neither the Company nor any Subsidiary will, directly or indirectly, use the proceeds of the transactions contemplated herein to repay any loans to any executives or employees of the Company or to make any payments in respect of any related party debt. Neither the Company nor any Subsidiary will, directly or indirectly, use the proceeds of the transactions contemplated herein, or lend, contribute, facilitate or otherwise make available such proceeds to any Person (i) to fund, either directly or indirectly, any activities or business of or with any Person that is identified on the list of Specially Designated Nationals and Blocker Persons maintained by OFAC, or in any country or territory, that, at the time of such funding, is, or whose government is, the subject of Sanctions Programs, or (ii) in any other manner that will result in a violation of Sanctions Programs.
(c)Listing. The Company shall promptly secure the listing or designation for quotation (as the case may be) of all of the Underlying Securities (as defined below) upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed or designated for quotation (as the case may be, each an “Eligible Market”), subject to official notice of issuance, and shall use reasonable efforts to maintain such listing or designation for quotation (as the case may be) of all Underlying Securities from time to time issuable under the terms of the Transaction Documents on such Eligible Market for the Reporting Period. Neither the Company nor any of its Subsidiaries shall take any action which could be reasonably expected to result in the delisting or suspension of the Common Stock on an Eligible Market during the Reporting Period, other than in connection with the listing of the Underlying Securities on another national securities exchange or automated quotation system. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(c). “Underlying Securities” means the (i) the Conversion Shares and (ii) any common stock of the Company issued or issuable with respect to the Conversion Shares, including, without limitation, (1) as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise and (2) shares of capital stock of the Company into which the shares of Common Stock are converted or exchanged without regard to any limitations on conversion of the Convertible Debentures.
(d)Pledge of Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees that, subject to compliance with applicable federal and state securities laws, the Securities may be pledged by an investor in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by a Buyer.
(e)Disclosure of Transactions and Other Material Information. On or before 5:30 p.m., New York time, on the fourth Business Day after the date of this Agreement, the Company shall file a current report on Form 8K describing all the material terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and attaching all the material Transaction Documents (including, without limitation, this Agreement (including all attachments, the “Current Report”). From and after the filing of the Current Report, the Company shall have disclosed all material, nonpublic information (if any) provided to any of the Buyers by the Company or any of its Subsidiaries or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the filing of the Current Report, the Company acknowledges and agrees that any and all confidentiality or similar obligations with respect to the transactions contemplated by the Transaction Documents under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers,
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directors, affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate. The Company shall not, and the Company shall cause each of its Subsidiaries and each of its and their respective officers, directors, employees and agents not to, provide any Buyer with any material, nonpublic information regarding the Company or any of its Subsidiaries from and after the date hereof without first obtaining the express prior written consent of such Buyer (which may be granted or withheld in such Buyer’s sole discretion).
(f)Reservation of Shares. So long as any of the Convertible Debentures remain outstanding, the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than the maximum number of shares of Common Stock issuable upon conversion of all the Convertible Debentures then outstanding (assuming for purposes hereof that (x) the Convertible Debentures are convertible at the Floor Price (as defined in the Convertible Debenture) then in effect, and (y) any such conversion shall not take into account any limitations on the conversion of the Convertible Debentures) (the “Required Reserve Amount”); provided that at no time shall the number of shares of Common Stock reserved pursuant to this Section 4(g) be reduced other than proportionally in connection with any conversion and/or redemption, or reverse stock split. If at any time the number of shares of Common Stock authorized and reserved for issuance is not sufficient to meet the Required Reserved Amount, the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares up to the Exchange Cap.
(g)Conduct of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or regulation of any Governmental Entity, except where such violations would not reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.
(h)Short Selling. The Buyer hereby agrees that it shall not directly or indirectly, engage in any Short Sales involving the Company’s securities during the period commencing on the date hereof and ending when no Convertible Debentures remain outstanding. “Short Sales” means all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the 1934 Act.
(i)From the date hereof until all the Convertible Debentures have been repaid or converted into shares of Common Stock, unless the holders of at least 75% in principal amount of the then outstanding Convertible Debentures shall have given prior written consent, the Company shall not, and shall not permit any of its subsidiaries (whether or not a subsidiary on the date hereof) to, directly or indirectly (A) amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially and adversely affects any rights of the holders of the Convertible Debentures or (B) enter into or agree to enter into a transaction in which the Company enters into an “equity line of credit” or conducts an “at the market offering”.
(j)The Company shall not effect an Advance under the SEPA without the advance mutual consent of the parties hereto from the date hereof until the earliest of the date (i) all Convertible Debentures have been repaid or converted into Common Stock or (ii) YA II no longer has any right or ability to convert any portion of the Convertible Debentures into Common Stock (collectively, the “Consent Termination Date”). YA II agrees to extend the term set forth in the SEPA for a number of days equal to the number of days between the date hereof and the Consent Termination Date. For the avoidance of doubt and subject to the foregoing, it is the intention of the parties hereto that the SEPA shall remain in full force and effect from the date hereof until the termination of the SEPA pursuant to the terms thereof.
5.REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.
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(a)Register. The Company shall maintain at its principal executive offices or with the Transfer Agent (or at such other office or agency of the Company as it may designate by notice to each holder of Securities), a register for the Convertible Debentures in which the Company shall record the name and address of the Person in whose name the Convertible Debentures have been issued (including the name and address of each transferee), the amount of Convertible Debentures held by such Person. The Company shall keep the register open and available at all times during business hours for inspection by any Buyer or its legal representatives at any reasonable time and from time to time upon reasonable prior notice.
(b)Transfer Restrictions. The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Buyer or in connection with a pledge as contemplated herein, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of a Buyer under this Agreement.
6.CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.
    The obligation of the Company hereunder to issue and sell the Convertible Debentures to each Buyer at each Closing is subject to the satisfaction, at or before such Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof:
(a)Such Buyer shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.
(b)Such Buyer and each other Buyer shall have delivered to the Company the Purchase Price (less, in the case of any Buyer, the amounts withheld pursuant to Section 4(d)) for the Convertible Debentures being purchased by such Buyer at the Closing by wire transfer of immediately available funds in accordance with the Closing Statement.
(c)The representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date), and such Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the Closing Date.
7.CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase its Convertible Debentures at each Closing is subject to the satisfaction, at or before such Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
(a)The Company shall have duly executed and delivered to such Buyer each of the Transaction Documents to which it is a party and the Company shall have duly executed and
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delivered to such Buyer a Convertible Debenture with a principal amount corresponding to the Subscription Amount set forth opposite such Buyer’s name on Schedule of Buyers attached as Schedule I for the Closing.
(b)Such Buyer shall have received the opinion of counsel to the Company, dated as of the Closing Date, in the form reasonably acceptable to such Buyer.
(c)The Company shall make available to Buyer upon written request copies of its and each Subsidiaries’ charter.
(d)The Company shall have delivered to such Buyer a certificate evidencing the incorporation and good standing of the Company as of a date within 10 days of the Closing Date.
(e)Each and every representation and warranty of the Company shall be true and correct in all material respects (other than representations and warranties qualified by materiality, which shall be true and correct in all respects) as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date) and as of such Closing Date no Event of Default (as defined in the Convertible Debentures) shall have occurred and be continuing and no event or condition that upon notice, lapse of time or both would, unless cured or waived, become an Event of Default (as defined in the Convertible Debentures) shall have occurred and be continuing.
(f)The Common Stock (A) shall be designated for quotation or listed (as applicable) on Nasdaq and (B) shall not have been suspended, as of each Closing Date, by the SEC or Nasdaq from trading on Nasdaq nor shall suspension by the SEC or Nasdaq have been threatened, as of each Closing Date, either (I) in writing by the SEC or Nasdaq or (II) by falling below the minimum maintenance requirements of Nasdaq.
(g)The Company shall have obtained all governmental, regulatory or third-party consents and approvals, if any, necessary for the sale of the Securities, including without limitation, those required by Nasdaq.
(h)No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.
(i)Since the date of execution of this Agreement, no event or series of events shall have occurred that has resulted in or would reasonably be expected to result in a Material Adverse Effect, or an Event of Default (as defined in the Convertible Debentures).
(j)The Company shall have filed a listing of additional shares notification form with the Nasdaq for the listing of the maximum number of Conversion Shares issuable pursuant to the Convertible Debentures to be issued at the Closing.
(k)Such Buyer shall have received a letter, duly executed by an officer of the Company, setting forth the wire amounts of each Buyer and the wire transfer instructions of the Company (the “Closing Statement”).
(l)(i) From the date hereof to the applicable Closing Date, trading in the Common Stock shall not have been suspended by the SEC or Nasdaq (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the Closing), and (ii) at any time from the date hereof to the applicable Closing Date, trading in
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securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on Nasdaq, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of each Buyer, makes it impracticable or inadvisable to purchase the Securities at the Closing.
(m)The Company and its Subsidiaries shall have delivered to such Buyer such other documents, instruments or certificates relating to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.
(n)Solely with respect to the Second Closing, the Registration Statement shall be effective in accordance with the provisions set forth in the Registration Rights Agreement, including the effectiveness deadline set forth therein.
8.TERMINATION.
In the event that the First Closing shall not have occurred with respect to a Buyer within 10 days of the date hereof, then such Buyer shall have the right to terminate its obligations under this Agreement with respect to itself at any time on or after the close of business on such date without liability of such Buyer to any other party; provided, however, (i) the right to terminate this Agreement under this Section 8 shall not be available to such Buyer if the failure of the transactions contemplated by this Agreement to have been consummated by such date is the result of such Buyer’s breach of this Agreement and (ii) the abandonment of the sale and purchase of the Convertible Debentures shall be applicable only to such Buyer providing such written notice, provided further that no such termination shall affect any obligation of the Company under this Agreement to reimburse such Buyer for the expenses described herein. Nothing contained in this Section 8 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction Documents.
9.NON-EXCLUSIVE AGREEMENT.
Except as described in Section 4(i)(B), this Agreement and the rights awarded to the Buyers hereunder are non-exclusive, and the Company may, at any time throughout the terms of this Agreement and thereafter, issue and allot, or undertake to issue and allot, any shares and/or securities and/or convertible notes, bonds, debentures, options to acquire shares or other securities and/or other facilities that may be converted into or replaced by Common Stock or other securities of the Company, and to extend, renew and/or recycle any bonds and/or debentures, and/or grant any rights with respect to its existing and/or future share capital.
10.MISCELLANEOUS.
(a)Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or under any of the other Transaction Documents or with
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any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude any Buyer from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to such Buyer or to enforce a judgment or other court ruling in favor of such Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
(b)Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an email which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
(c)Headings; Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.
(d)Entire Agreement, Amendments. This Agreement supersedes all other prior oral or written agreements between the Buyer, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement.
(e)Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing by letter and email and will be deemed to have been delivered: upon the later of (A) either (i) receipt, when delivered personally or (ii) one Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same and (B) receipt, when sent by electronic mail. The addresses and email addresses for such communications shall be:
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If to the Company, to:Xos, Inc.
3550 Tyburn Street
Los Angeles, CA 90065
Telephone: [*]
Attention: Chief Financial Officer
E-Mail: [*]
With Copy to:Cooley LLP
3 Embarcadero Center, 20th Floor
San Francisco, CA 94111
Telephone: [*]
Attention: Dave Peinsipp
                  Rachel Proffitt
Email: [*]
           [*]
If to a Buyer, to its address and email address set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers,
With copy to:
David Fine, Esq.
c/o Yorkville Advisors Global, LP
1012 Springfield Avenue
Mountainside, NJ 07092
Email: [*]
or to such other address, email address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) electronically generated by the sender’s e-mail service provider containing the time, date, recipient e-mail address or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively
(f)Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of any of the Convertible Debentures (but excluding any purchasers of Underlying Securities, unless pursuant to a written assignment by such Buyer). The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Buyers. In connection with any transfer of any or all of its Securities, a Buyer may assign all, or a portion, of its rights and obligations hereunder in connection with such Securities without the consent of the Company, but with written notice to the Company in which event such assignee shall be deemed to be a Buyer hereunder with respect to such transferred Securities and be required to comply with any obligations the Buyer may have under this Agreement.
(g)Indemnification.
(i)In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall
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defend, protect, indemnify and hold harmless each Buyer and each holder of any Securities and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Buyer Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Buyer Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Buyer Indemnitee as a result of, or arising out of, or relating to (i) any material misrepresentation or material breach of any representation or warranty made by the Company in any of the Transaction Documents, (ii) any material breach of any material covenant, material agreement or material obligation of the Company or any Subsidiary contained in any of the Transaction Documents or (iii) any cause of action, suit, proceeding or claim brought or made against such Buyer Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company or any Subsidiary) or which otherwise involves such Buyer Indemnitee that arises out of or results from the execution, delivery, performance or enforcement of any of the Transaction Documents. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.
(ii)In consideration of the Company’s execution and delivery of the Transaction Documents and in addition to each Buyer’s obligations under the Transaction Documents, each Buyer, severally and not jointly, shall defend, protect, indemnify and hold harmless the Company and its stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Company Indemnitees”) from and against any and all Indemnified Liabilities, incurred by any Company Indemnitees as a result of, or arising out of, or relating to (i) any misrepresentation or breach of any representation or warranty made by such Buyer in any of the Transaction Documents, (ii) any material breach of any material covenant, material agreement or material obligation of such Buyer contained in any of the Transaction Documents or (iii) any cause of action, suit, proceeding or claim brought or made against such Company Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company or any Subsidiary) or which otherwise involves such Company Indemnitee that arises out of or results from the execution, delivery, performance or enforcement of any of the Transaction Documents. To the extent that the foregoing undertaking by the Buyers may be unenforceable for any reason, each Buyer shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.
(iii)Promptly after receipt by a Buyer Indemnitee or Company Indemnitee under this Section 9(g) of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving an Indemnified Liability, such Buyer Indemnitee or Company Indemnitee shall, if a claim in respect thereof is to be made against the Company or a Buyer under this Section 9(g), deliver to the Company or Buyer, as applicable, a written notice of the commencement thereof, and the Company or Buyer shall have the right to participate in, and, to the extent the Company or Buyer, as applicable so desires, to assume control of the defense thereof with counsel mutually reasonably satisfactory to the Company or Buyer and the Buyer Indemnitee or Company Indemnitee, as applicable; provided, however, that a Buyer Indemnitee or Company
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Indemnitee shall have the right to retain its own counsel with the fees and expenses of such counsel to be paid by the Company or Buyer, if applicable, if: (A) the Company or Buyer has agreed in writing to pay such fees and expenses; (B) the Company or Buyer shall have failed promptly to assume the defense of such Indemnified Liability and to employ counsel reasonably satisfactory to such Buyer Indemnitee or Company Indemnitee in any such Indemnified Liability; or (C) the named parties to any such Indemnified Liability (including any impleaded parties) include both such Buyer Indemnitee or Company Indemnitee and the Company or Buyer, as applicable, and such Buyer Indemnitee or Company Indemnitee shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnitee and the Company (in which case, if such Buyer Indemnitee or Company Indemnitee notifies the Company or Buyer, as applicable, in writing that it elects to employ separate counsel at the expense of the Company or Buyer, as applicable, then the Company or Buyer, as applicable, shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Company or Buyer, as applicable), provided further, that in the case of clause (C) above the Company or Buyer shall not be responsible for the reasonable fees and expenses of more than one separate legal counsel for the Indemnitees. The Buyer Indemnitee or Company Indemnitee shall reasonably cooperate with the Company or Buyer, as applicable, in connection with any negotiation or defense of any such action or Indemnified Liability by the Company or Buyer and shall furnish to the Company or Buyer all information reasonably available to the Indemnitee which relates to such action or Indemnified Liability. The Company or Buyer shall keep the Buyer Indemnitee or Company Indemnitee reasonably apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. The Company or Buyer shall not be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that the Company or Buyer shall not unreasonably withhold, delay or condition its consent. The Company or Buyer, as applicable, shall not, without the prior written consent of the Buyer Indemnitee or Company Indemnitee, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Buyer Indemnitee or Company Indemnitee of a release from all liability in respect to such Indemnified Liability or litigation, and such settlement shall not include any admission as to fault on the part of the Buyer Indemnitee or Company Indemnitee. Following indemnification as provided for hereunder, the Company or Buyer, as applicable, shall be subrogated to all rights of the Indemnitee with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the Company or Buyer, as applicable, within a reasonable time of the commencement of any such action shall not relieve the Company or Buyer, as applicable, of any liability to the Buyer Indemnitee or Company Indemnitee under this Section 9(g), except to the extent that the Company or Buyer, as applicable, is materially and adversely prejudiced in its ability to defend such action.
(iv)The indemnification required by this Section 9(g) shall be made by periodic payments of the amount thereof during the course of the investigation or defense, within 10 days after bills supporting the Indemnified Liabilities are received by the Company.
(v)The indemnity agreement contained herein shall be in addition to (A) any cause of action or similar right of the Buyer Indemnitee or Company Indemnitee against the Company or Buyer, as applicable, or others, and (B) any liabilities the Company or Buyer may be subject to pursuant to the law.
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(h)No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.
COMPANY:

XOS, INC.



By:    /s/ Kingsley Afemikhe
Name:    Kingsley Afemikhe
Title:    Chief Financial Officer

[Signature Page to Securities Purchase Agreement]


IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.
BUYER:

YA II PN, LTD.

By:    Yorkville Advisors Global, LP
Its:    Investment Manager

By:    Yorkville Advisors Global II, LLC
Its:    General Partner



By:    /s/ Matt Beckman
Name:    Matt Beckman
Title:    Member
[Signature Page to Securities Purchase Agreement]


EXHIBIT A
FORM OF CONVERTIBLE DEBENTURES




SCHEDULE OF BUYERS
(a)(b)(c)
Buyer Subscription Amount of Convertible DebenturesPurchase Price (98% of Subscription Amount)
    
YA II PN, Ltd. 
1012 Springfield AvenueFirst Closing:$20,000,000.00$19,600,000.00
Mountainside, NJ 07092Second Closing$15,000,000.00$14,700,000.00
Email: [*]
  
 Aggregate:$35,000,000.00$34,300,000.00
  
  
Legal Representative’s Address and E-Mail Address 
David Fine, Esq. 
1012 Springfield Avenue 
Mountainside, NJ 07092 
Email: [*]
  


Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of August 9, 2022 by and among XOS, INC., a Delaware corporation (the “Company”), and YA II PN, LTD., a Cayman Islands exempt limited partnership (the “Investor”).
WITNESSETH
WHEREAS, in connection with the Securities Purchase Agreement by and among the parties hereto of even date herewith (the Securities Purchase Agreement”), the Company has agreed, upon the terms and subject to the conditions of the Securities Purchase Agreement, to issue and sell to the Investor up to $35,000,000 in principal amount of convertible debentures (the “Convertible Debentures”), which shall be convertible into shares of the Company’s common stock, par value $0.0001 (the “Common Stock”) (as converted, the “Conversion Shares”). Capitalized terms not defined herein shall have the meaning ascribed to them in the Securities Purchase Agreement.
WHEREAS, to induce the Investor to execute and deliver the Securities Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “Securities Act”), and applicable state securities laws and other rights as provided for herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows:
1.DEFINITIONS.
As used in this Agreement, the following terms shall have the following meanings:
(a)Effectiveness Deadline” means, with respect to a Registration Statement filed hereunder, the 45th calendar day following the date hereof, provided, however, in the event the Company is notified by the U.S. Securities and Exchange Commission (“SEC”) that one of the Registration Statements, as defined below, will not be reviewed or is no longer subject to further review and comments, the Effectiveness Deadline as to such Registration Statement shall be the fifth business day following the date on which the Company is so notified if such date precedes the date required above.
(b)Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(c)Filing Deadline” means, with respect to a Registration Statement required hereunder, the 30th calendar day following the date hereof.
(d)Person” means a corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency.
(e)Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance
1


upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
(f)Registrable Securities” means all of (i) the shares of Common Stock issuable upon conversion of the Convertible Debentures, (ii) any additional shares issuable in connection with any anti-dilution provisions of the Convertible Debentures (without giving effect to any limitations on exercise set forth in the Convertible Debentures, as applicable) and (iii) any shares of Common Stock issued or issuable with respect to any shares described in subsections (i) and (ii) above by way of any stock split, stock dividend or other distribution, recapitalization or similar event or otherwise.
(g)Registration Statement” means any registration statement of the Company, including the Prospectus, amendments and supplements to such registration statement or Prospectus, including post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.
(h)Required Registration Amount” means (i) with respect to the initial Registration Statement at least 33,199,327 shares of Common Stock issued or to be issued upon conversion of the Convertible Debentures, and (ii) with respect to subsequent Registration Statements such number of shares of Common Stock as requested by the Investor not to exceed 300% of the maximum number of shares of Common Stock issuable upon conversion of all Convertible Debentures then outstanding (assuming for purposes hereof that (x) such Convertible Debentures are convertible at the Conversion Price (as defined therein) in effect as of the date of determination, and (y) any such conversion shall not take into account any limitations on the conversion of the Convertible Debentures set forth therein), in each case subject to any cutback set forth in Section 2(d).
(i)Rule 144” means Rule 144 under the Securities Act or any successor rule thereto.
(j)Rule 415” means Rule 415 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such Rule.
(k)SEC” means the Securities and Exchange Commission or any other federal agency administering the Securities Act and the Exchange Act at the time.
(l)Securities Act” shall have the meaning set forth in the Recitals above.
2.REGISTRATION.
(a)The Company’s registration obligations set forth in this Section 2 including its obligations to file Registration Statements, obtain effectiveness of Registration Statements, and maintain the continuous effectiveness of any Registration Statement that has been declared effective shall begin on the date hereof and continue until all the Registrable Securities have been sold or may permanently be sold without any restrictions pursuant to Rule 144, as determined by the counsel to the Company
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pursuant to a written opinion letter to such effect, addressed and acceptable to the Company’s transfer agent(the “Registration Period”).
(b)Subject to the terms and conditions of this Agreement, the Company shall (i) on or prior to the Filing Deadline, prepare and file with the SEC an initial Registration Statement on Form S-3 (or, if the Company is not then eligible, on Form S-1) or any successor form thereto covering the resale by the Investor of Registrable Securities, and (ii) on or prior to the 30th calendar day following receipt of each written notice by the Investor (a “Demand Notice”) delivered pursuant to the terms hereof, prepare and file an additional Registration Statement covering the resale by the Investor of Registrable Securities. Each Registration Statement prepared pursuant hereto shall register for resale at least the number of shares of Common Stock equal to the Required Registration Amount as of date the Registration Statement is initially filed with the SEC. Each Registration Statement shall contain the “Selling Stockholders” and “Plan of Distribution” sections. The Company shall use commercially reasonable efforts to have each Registration Statement declared effective by the SEC as soon as practicable, but in no event later than the Effectiveness Deadline. By 9:30 am on the business day following the date of effectiveness, the Company shall file with the SEC in accordance with Rule 424 under the 1933 Act the final Prospectus to be used in connection with sales pursuant to such Registration Statement. Prior to the filing of the Registration Statement with the SEC, the Company shall furnish a draft of the Registration Statement to the Investor for their review and comment. The Investor shall furnish comments on the Registration Statement to the Company within 24 hours of the receipt thereof from the Company.
For the purposes hereof, the Investor shall be entitled to deliver a Demand Notice to the Company at any time during the Registration Period if at such time (i) no Registration Statement is then in effect which the Investor may use to resell Registrable Securities, or (ii) a Registration Statement is effective, but the Holder has resold substantially all of the shares of Common Stock registered on such Registration Statement. In addition, the Investor may deliver a Demand Notice to the Company at any time during the Registration Period during which (i) the Company does not have a class of securities listed, or approved for listing, on a national securities exchange registered pursuant to Section 6 of the Exchange Act, or (ii) Rule 144, as amended, would not allow the “tacking” of the holding period of the Convertible Debenture onto the holding period of the Conversion Shares issuable upon conversion thereof.
(c)During the Registration Period, the Company shall (i) promptly prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the Prospectus used in connection with a Registration Statement, which Prospectus is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may be necessary to keep such Registration Statement effective at all times during the Registration Period, (ii) prepare and file with the SEC additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (iii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and as so supplemented or amended to be filed pursuant to Rule 424; (iv) respond as promptly as reasonably possible to any comments received from the SEC with respect to a Registration Statement or any amendment thereto and as promptly as reasonably possible provide the Investor true and complete copies of all correspondence from and to the SEC relating to a Registration Statement (provided that the Company may excise any information contained therein which would constitute material non-public information as to any Investor which has not executed a confidentiality agreement with the Company); and (v) comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration
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Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 2(c)) by reason of the Company’s filing a report on Form 10-K, Form 10-Q, or Form 8-K or any analogous report under the Securities Exchange Act, the Company shall incorporate such report by reference into the Registration Statement, if applicable, or shall file such amendments or supplements with the SEC on the same day on which the Exchange Act report is filed which created the requirement for the Company to amend or supplement the Registration Statement.
(d)Reduction of Registrable Securities Included in a Registration Statement. Notwithstanding anything contained herein, in the event that the SEC requires the Company to reduce the number of Registrable Securities to be included in a Registration Statement in order to allow the Company to rely on Rule 415 with respect to a Registration Statement, then the Company shall be obligated to include in such Registration Statement (which may be a subsequent Registration Statement if the Company needs to withdraw a Registration Statement and refile a new Registration Statement in order to rely on Rule 415) only such limited portion of the Registrable Securities as the SEC shall permit. Any Registrable Securities that are excluded in accordance with the foregoing terms are hereinafter referred to as “Cut Back Securities.” To the extent Cut Back Securities exist, promptly following such time as may be permitted by the SEC, the Company shall be required to file a Registration Statement covering the resale of the Cut Back Securities (subject also to the terms of this Section) and shall use commercially reasonable efforts to cause such Registration Statement to be declared effective as promptly as practicable thereafter.
(e)Failure to File or Obtain Effectiveness of the Registration Statement or Remain Current. If: (i) a Registration Statement is not filed on or prior to its Filing Date, or (ii) the Company fails to use commercially reasonable efforts to have the Registration Statement declared effective on or prior to Effectiveness Deadline or the Company fails to file with the SEC a request for acceleration in accordance with Rule 461 promulgated under the Securities Act, within five business days of the date that the Company is notified (orally or in writing, whichever is earlier) by the SEC that a Registration Statement will not be “reviewed,” or not subject to further review, or (iii) after the effectiveness, a Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities, except for Cut Back Securities, for which it is required to be effective, or (iv) the Investor is not permitted to utilize the Prospectus therein to resell such Registrable Securities for more than 45 consecutive calendar days or more than an aggregate of 60 calendar days during any 12-month period (which need not be consecutive calendar days), or (v) if after the date that is six months from the date hereof, the Company does not have available adequate current public information as set forth in Rule 144(c) (any such failure or breach being referred to as an “Event”), then in addition to any other rights the holders of the Convertible Debentures may have hereunder or under applicable law, the Company shall be in breach of the term and conditions of this Agreement and such Event shall be deemed an event of default under the Convertible Debentures for so long as such Event remains uncured.
(f)Piggy-Back Registrations. If at any time there is not an effective Registration Statement covering all of the Registrable Securities and the Company proposes to register the offer and sale of any shares of its Common Stock under the Securities Act (other than a registration (i) pursuant to a Registration Statement on Form S-8 ((or other registration solely relating to an offering or sale to employees or directors of the Company pursuant to any employee stock plan or other employee benefit
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arrangement), (ii) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), or (iii) in connection with any dividend or distribution reinvestment or similar plan), whether for its own account or for the account of one or more stockholders of the Company and the form of Registration Statement to be used may be used for any registration of Registrable Securities, the Company shall give prompt written notice (in any event no later than five days prior to the filing of such Registration Statement) to the holders of Registrable Securities of its intention to effect such a registration and, shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion from the holders of Registrable Securities; provided, however, that, the Company shall not be required to register any Registrable Securities pursuant to this Section 10(c) that have been sold or may permanently be sold without any restrictions pursuant to Rule 144, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company’s transfer agent.
3.RELATED OBLIGATIONS.
(a)The Company shall, not less than three business days prior to the filing of each Registration Statement and not less than one Trading Day prior to the filing of any related amendments and supplements to all Registration Statements (except for supplements and amendments to update the Registration Statement solely for information reflected in the Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q or current reports on Form 8-K) furnish to each Investor copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the reasonable and prompt review of such Investor. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Investor shall reasonably object in good faith; provided that, the Company is notified of such objection in writing no later than two business days after the Investor have been so furnished copies of a Registration Statement, provided further that the Company shall not be in breach of this Agreement or in default under the Convertible Debentures, each pursuant to Section 2(e) hereof due to such objection by the Investor.
(b)The Company shall furnish to each Investor whose Registrable Securities are included in any Registration Statement, without charge, (i) at least one copy of such Registration Statement as declared effective by the SEC and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, all exhibits and each preliminary prospectus, (ii) 10 copies of the final prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as such Investor may reasonably request) and (iii) such other documents, which are not publicly available through EDGAR, as such Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by such Investor.
(c)The Company shall use commercially reasonable efforts to (i) register and qualify the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws of such jurisdictions in the United States as any Investor reasonably requests, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable
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Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (w) make any change to its articles of incorporation or by-laws, (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(c), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify each Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.
(d)As promptly as practicable after becoming aware of such event or development, the Company shall notify each Investor in writing of the happening of any event as a result of which the Prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, nonpublic information), and promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission, and deliver 10 copies of such supplement or amendment to each Investor. The Company shall also promptly notify each Investor in writing (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to each Investor by facsimile on the same day of such effectiveness), (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate.
(e)The Company shall use commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction within the United States of America and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify each Investor who holds Registrable Securities being sold of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.
(f)The Company shall hold in confidence and not make any disclosure of information concerning the Investor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at the Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.
(g)The Company shall use commercially reasonable efforts to cause all the Registrable Securities to be listed on each securities exchange on which the Common
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Stock is then listed. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3(i).
(h)The Company shall cooperate with the holders of the Registrable Securities to facilitate the timely preparation and delivery of certificates representing the Registrable Securities to be sold pursuant to such Registration Statement or Rule 144 free of any restrictive legends and representing such number of shares of Common Stock and registered in such names as the holders of the Registrable Securities may reasonably request a reasonable period of time prior to sales of Registrable Securities pursuant to such Registration Statement or Rule; provided, that the Company may satisfy its obligations hereunder without issuing physical stock certificates through the use of The Depository Trust Company's Direct Registration System.
(i)The Company shall use commercially reasonable efforts to cause the Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.
(j)The Company shall otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.
(k)Within two business days after a Registration Statement which covers Registrable Securities is declared effective by the SEC, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Investor whose Registrable Securities are included in such Registration Statement) confirmation that such Registration Statement has been declared effective by the SEC.
(l)The Company shall take all other reasonable actions necessary to expedite and facilitate disposition by each Investor of Registrable Securities pursuant to a Registration Statement.
4.OBLIGATIONS OF THE INVESTOR.
(a)The Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(d) such Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement covering such Registrable Securities until the Investor’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(d) or receipt of notice that no supplement or amendment is required. Notwithstanding anything to the contrary, subject to compliance with the securities laws, the Company shall cause its transfer agent to deliver unlegended certificates for shares of Common Stock to a transferee of an Investor in accordance with the terms of the Securities Purchase Agreement in connection with any sale of Registrable Securities with respect to which an Investor has entered into a contract for sale prior to the Investor’s receipt of a notice from the Company of the happening of any event of the kind described in Section 3(d) and for which the Investor has not yet settled.
(b)The Investor covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it or an exemption therefrom in connection with sales of Registrable Securities pursuant to the Registration Statement.
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5.EXPENSES OF REGISTRATION.
All expenses incurred by the Company in complying with its obligations pursuant to this Agreement and in connection with the registration and disposition of Registrable Securities shall be paid by the Company, including, without limitation, all registration, listing and qualifications fees, printers, fees and expenses of the Company's counsel and accountants (except legal fees of Investor’s counsel associated with the review of the Registration Statement).
6.INDEMNIFICATION.
With respect to Registrable Securities which are included in a Registration Statement under this Agreement:
(a)To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend the Investor, the directors, officers, partners, employees, agents, representatives of, and each Person, if any, who controls any Investor within the meaning of the Securities Act or the Exchange Act (each, an “Indemnified Person”), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or several (collectively, “Claims”) incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified Damages”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto, or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (ii) any untrue statement or alleged untrue statement of a material fact contained in any final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading (the matters in the foregoing clauses (i) and (ii) being, together, “Violations”). Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (x) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation contained in (or not contained in, in the case of an omission) information furnished in writing to the Company by such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto; (y) shall not be available to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to Section 3(c); and (z) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person.
(b)In connection with a Registration Statement, the Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers, employees, representatives, or agents and each Person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (each an
8


Indemnified Party”), against any Claim or Indemnified Damages to which any of them may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or is based upon any Violation contained in (or not contained in, in the case of an omission) written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and, subject to Section 6(d), such Investor will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld; provided, further, however, that the Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party.
(c)Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses of not more than one counsel for such Indemnified Person or Indemnified Party to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent; provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any
9


liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.
(d)The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.
(e)The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.
7.CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.
8.REPORTS UNDER THE EXCHANGE ACT.
With a view to making available to the Investor the benefits of Rule 144 promulgated under the Securities Act or any similar rule or regulation of the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration, and as a material inducement to the Investor’s purchase of the Convertible Debentures, the Company represents, warrants, and covenants to the following:
(a)The Company is subject to the reporting requirements of section 13 or 15(d) of the Exchange Act and has filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months prior to the date hereof (or for such shorter period that the issuer was required to file such reports), other than Form 8-K reports.
(b)During the Registration Period, the Company shall file with the SEC in a timely manner all required reports under Section 13 or 15(d) of the Exchange Act (it being understood that nothing herein shall limit the Company’s obligations under the Securities Purchase Agreement) and such reports shall conform to the requirement of the Exchange Act and the SEC for filing thereunder.
(c)The Company shall furnish to the Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration.
9.AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with
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the written consent of the Company and Investor who then hold at least two-thirds (2/3) of the Registrable Securities. Any amendment or waiver effected in accordance with this Section 9 shall be binding upon each Investor and the Company. No such amendment shall be effective to the extent that it applies to fewer than all of the holders of the Registrable Securities. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of this Agreement unless the same consideration also is offered to all of the parties to this Agreement.
10.MISCELLANEOUS.
(a)A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities or owns the right to receive the Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.
(b)No Piggyback on Registrations. Except as otherwise disclosed to Investor on or before the date hereof, the Company shall not file any other registration statements on Form S-3, Form S-1, or otherwise until the initial Registration Statement required hereunder is declared effective by the SEC, provided that this Section 10(b) shall not prohibit the Company from filing amendments to registration statements already filed. The Company shall not include any other securities on a Registration Statement unless otherwise agreed by the Investor.
(c)Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered pursuant to the notice provisions of the Securities Purchase Agreement or to such other address and/or electronic mail address and/or to the attention of such other person as the recipient party has specified by written notice given to each other party five days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) electronically generated by the sender’s email service provider containing the time, date, and recipient email or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with this section.
(d)Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.
(e)All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby
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irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude any Buyer from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company's obligations to such Buyer or to enforce a judgment or other court ruling in favor of such Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
(f)Assignment.
(i)Subject to Section 10(k), this Agreement and the rights, duties and obligations of the Investor hereunder may only be assigned upon the transfer of a Convertible Debenture or the Conversion Shares issued pursuant to a Convertible Debenture pursuant to the terms and restrictions on transfer set forth in the Securities Purchase Agreement and the applicable Convertible Debenture.
(ii)This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors and the permitted assigns of the parties.
(iii)No assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company unless and until the Company shall have received (A) written notice of such assignment as provided in Section 10(f) hereof and (B) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement). Any transfer or assignment made other than as provided in this Section 10(f) shall be null and void.
(g)The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
(h)This Agreement may be executed in identical counterparts, both which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. Facsimile or other electronically scanned and delivered signatures (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com), including by e-mail attachment, shall be deemed to have been duly and validly delivered and be valid and effective for all purposes of this Agreement.
(i)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.
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(j)The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.
(k)This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
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IN WITNESS WHEREOF, the Investor and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first above written.
COMPANY:

XOS, INC.



By:    /s/ Kingsley Afemikhe
Name:    Kingsley Afemikhe
Title:    Chief Financial Officer

[Signature Page to Registration Rights Agreement]


INVESTOR:

YA II PN, LTD.

By:    Yorkville Advisors Global, LP
Its:    Investment Manager

By:    Yorkville Advisors Global II, LLC
Its:    General Partner



By:    /s/ Matt Beckman
Name:    Matt Beckman
Title:    Member
[Signature Page to Registration Rights Agreement]


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