Form 8-K
8-K — Z Squared Inc.
Accession: 0001185185-26-003984
Filed: 2026-09-14
Period: 2026-09-08
CIK: 0001759186
SIC: 6199 (FINANCE SERVICES)
Item: Entry into a Material Definitive Agreement
Item: Completion of Acquisition or Disposition of Assets
Item: Unregistered Sales of Equity Securities
Item: Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
Item: Regulation FD Disclosure
Item: Financial Statements and Exhibits
Documents
8-K — zsqr8k091426.htm (Primary)
EX-3.1 — EXHIBIT 3.1 (zsqrex3-1.htm)
EX-10.1 — EXHIBIT 10.1 (zsqrex10-1.htm)
EX-10.2 — EXHIBIT 10.2 (zsqrex10-2.htm)
EX-10.3 — EXHIBIT 10.3 (zsqrex10-3.htm)
EX-99.1 — EXHIBIT 99.1 (zsqrex99-1.htm)
XML — IDEA: XBRL DOCUMENT (R1.htm)
8-K — FORM 8-K
8-K (Primary)
Filename: zsqr8k091426.htm · Sequence: 1
false
--12-31
0001759186
0001759186
2026-09-08
2026-09-08
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
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): September 8, 2026
Z SQUARED INC.
(Exact name of registrant
as specified in its charter)
Delaware
001-39669
98-1465952
(State or other jurisdiction
of incorporation)
(Commission File Number)
(I.R.S. Employer
Identification No.)
550 South Andrews Ave., Suite #700
Fort Lauderdale, Florida
33301
(Address of principal executive offices)
(Zip Code)
305-697-0792
(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 obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
☐ 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 class
Trading Symbol(s)
Name of each exchange
on which registered
Common Stock, par value $0.0001 per share
ZSQR
The Nasdaq
Global Market
Indicate by check mark
whether the registrant is an emerging growth company 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.
As previously reported, on July 31, 2026, Z Squared
Inc. (the “Company”) entered into a Membership Interest Purchase Agreement, dated as of July 31, 2026 (the “MIPA”),
by and among the Company, Paradox Infrastructure LLC, a Florida limited liability company (“Seller”), Paradox Data,
LLC, a Florida limited liability company (the “Target Company”), and the Owner Parties named therein, providing for
the acquisition by the Company of one hundred percent (100%) of the outstanding membership interests of the Target Company (the “Membership
Interests” and such acquisition, the “Transaction”).
On September 8, 2026 (the “Closing Date”),
the Company completed the Transaction. At the closing of the Transaction (the “Closing”), Seller assigned the Membership
Interests to the Company pursuant to an Assignment of Membership Interests, dated as of September 8, 2026 (the “Assignment”),
and the Company was admitted as the sole member of the Target Company, which continues without dissolution. As consideration for the Membership
Interests, on or about the date of Closing the Company issued to Seller 5,000 shares of the Company’s newly designated Series A
Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), having an aggregate stated
value of $5,000,000 (the “Closing Consideration”).
As part of the Transaction, at the Closing, the
Target Company, Seller and the Company entered into a Triple Net Lease and Relocation Agreement, dated September 8, 2026 (the “Lease”),
pursuant to which the Target Company, as landlord, leases to Seller, as tenant, the existing building and an approximately three-acre
parcel located in El Dorado, Arkansas (the “Premises”), for the continued operation of Seller’s bitcoin mining
facility pending the transition of electric service and operational control of the Premises to the Target Company. Base rent under the
Lease is $1.00 per year. The Company is a party solely with respect to a one-time relocation payment of $500,000 payable to Seller upon
the earliest of specified trigger events, and the Company’s aggregate monetary liability under the Lease is capped at $500,000.
The Lease expires no later than the second anniversary of its effective date.
Also as part of the Transaction, at the Closing,
the Target Company and Seller entered into an Intercompany Power Access and Cost-Sharing Agreement, dated September 8, 2026 (the “Power
Access Agreement”), governing the transition to the Target Company of Seller’s electric service arrangement with Entergy
Arkansas, LLC at the Premises. The Company is not a party to the Power Access Agreement.
The foregoing descriptions of the MIPA, the Transaction,
the Assignment, the Lease and the Power Access Agreement do not purport to be complete and are qualified in their entirety by reference
to the full text of (i) the MIPA, previously filed as Exhibit 2.1 to the Signing 8-K, and (ii) the Assignment, the Lease and the Power
Access Agreement, copies of which are filed as Exhibit 10.3, Exhibit 10.1 and Exhibit 10.2, respectively, to this Current Report on Form
8-K, each of which is incorporated herein by reference.
Item 2.01. Completion of Acquisition or Disposition of Assets.
The information set forth under Item 1.01 of this
Current Report on Form 8-K is incorporated by reference into this Item 2.01.
The Target Company’s principal asset is
the Union County Campus in El Dorado, Arkansas, a data center development site consisting of approximately three acres, the existing building
located thereon and a contract to acquire approximately 10 acres of adjacent land. The site is served by an electric service agreement
with Entergy Arkansas, LLC providing for up to 8,000 kVA (approximately 8.0 MW) on an interruptible basis. That agreement is held by Seller;
the Target Company’s rights to the capacity arise under the Power Access Agreement, and assignment of the agreement to the Target
Company requires Entergy’s consent, which has not been obtained. The Company’s development plan targets up to approximately
150 MW of AI-ready capacity over time through a combination of utility power and on-site generation, which will require additional power
arrangements, customer commitments, financing, permitting and construction.
As previously disclosed, the Company remains obligated
under the MIPA to make up to four additional milestone payments to Seller and to Paradox Energy LLC, a related party, payable in additional
shares of Series A Preferred Stock having an aggregate stated value of up to $20,000,000, upon the achievement of specified development
milestones at the Union County Campus, such that the aggregate potential consideration under the MIPA remains up to $25,000,000 if all
milestones are achieved in full. No milestone has been achieved as of the date of this Report, and there can be no assurance that any
milestone will be achieved.
Related Person Transaction
As previously disclosed in the Signing 8-K, Jeffery
Harris, the Company’s Chief Technology Officer, holds an indirect minority ownership interest in Seller and in Paradox Energy LLC,
an affiliate of Seller that is entitled to receive a portion of the milestone payments described above. The Transaction accordingly constitutes
a related person transaction for purposes of Item 404(a) of Regulation S-K. The MIPA and the Transaction were reviewed and approved as
a related person transaction by the Audit Committee of the Board of Directors, and approved by the Board of Directors, in accordance with
the Company’s related person transaction policy and Item 404 of Regulation S-K.
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth under Items 1.01 and
2.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02. On September 8, 2026, the Company issued 5,000
shares of Series A Preferred Stock to Seller as the Closing Consideration. The shares of Series A Preferred Stock have not been, and any
shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), issuable upon conversion thereof
will not have been, registered under the Securities Act of 1933, as amended (the “Securities Act”), and were issued
in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated
thereunder, based on, among other things, representations by Seller that it is an “accredited investor” as defined in Rule
501(a) of Regulation D, the absence of general solicitation, and delivery of a customary accredited-investor questionnaire and Rule 506(d)
“bad actor” certification. The shares bear restrictive legends and constitute “restricted securities” for purposes
of Rule 144 under the Securities Act.
1
The rights, preferences and limitations of the
Series A Preferred Stock, including a conversion price of $7.45 per share of Common Stock (subject to customary adjustments for stock
splits, stock dividends, combinations, reclassifications and similar events), an 8.0% cumulative dividend payable in cash or in kind at
the Company’s election, a liquidation preference senior to the Common Stock, an exchange cap and cash-settlement mechanism under
Nasdaq Listing Rule 5635, and optional redemption rights of the Company, are set forth in the Certificate of Designation of Preferences,
Rights and Limitations of the Series A Convertible Preferred Stock (the “Certificate of Designation”), which the Company
filed with the Secretary of State of the State of Delaware on September 8, 2026.
The foregoing description of the Series A Preferred
Stock does not purport to be complete and is qualified in its entirety by reference to the full text of the Certificate of Designation,
a copy of which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change
in Fiscal Year.
On September 8, 2026, the Company filed a Certificate
of Designation with the Secretary of State of the State of Delaware. The information set forth under Item 3.02 above is incorporated herein
by reference. A copy of the Certificate of Designation is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated
herein by reference.
Item 7.01. Regulation FD Disclosure.
On September 9, 2026, the Company issued a press
release announcing the completion of the Transaction. A copy of the press release is furnished as Exhibit 99.1 to this Current Report
on Form 8-K.
The information set forth under this Item 7.01,
including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it
be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall
be expressly set forth by specific reference in such a filing.
Forward-Looking Statements
This Current Report on Form 8-K contains “forward-looking
statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, including statements regarding
the development of the Union County Campus, the availability and expansion of power, the acquisition of adjacent land, the achievement
of development milestones and related issuances of Series A Preferred Stock, and any stockholder approval required under Nasdaq Listing
Rule 5635. Actual results could differ materially, including as a result of the Company’s need to raise substantial additional capital
to fund its artificial intelligence and high-density compute infrastructure strategy, the receipt of Entergy Arkansas, LLC’s consent
to assignment of the electric service agreement, and the other risks described in the Company’s filings with the Securities and
Exchange Commission. The Company undertakes no obligation to update these statements except as required by law.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No.
Description
2.1
Membership Interest Purchase Agreement, dated as of July 31, 2026, by and among Z Squared Inc., Paradox Infrastructure LLC, Paradox Data, LLC, and the Owner Parties named therein (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed August 4, 2026).
3.1*
Certificate of Designation of Preferences, Rights and Limitations of the Series A Convertible Preferred Stock, filed with the Secretary of State of the State of Delaware on September 8, 2026.
10.1*
Triple Net Lease and Relocation Agreement, dated September 8, 2026, by and among Paradox Data LLC, Paradox Infrastructure LLC and Z Squared Inc.
10.2*
Intercompany Power Access and Cost-Sharing Agreement, dated September 8, 2026, by and between Paradox Data LLC and Paradox Infrastructure LLC.
10.3*
Assignment of Membership Interests, dated as of September 8, 2026, by and between Paradox Infrastructure LLC and Z Squared Inc.
99.1*
Press Release dated September 9, 2026, titled “Z Squared Acquires Energized Arkansas Campus to Advance AI Infrastructure Strategy.”
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Filed herewith.
Certain schedules and exhibit have been omitted pursuant to Item 601(a)(5)
of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange
Commission upon request.
2
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.
Date: September 14, 2026
Z SQUARED INC.
By:
/s/ David Halabu
Name:
David Halabu
Title:
Chief Executive Officer
3
EX-3.1 — EXHIBIT 3.1
EX-3.1
Filename: zsqrex3-1.htm · Sequence: 2
Exhibit 3.1
Z SQUARED INC.
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES A CONVERTIBLE PREFERRED STOCK
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
Z SQUARED INC., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the “Corporation”), DOES HEREBY CERTIFY that, pursuant
to the authority expressly vested in the Board of Directors of the Corporation (the “Board of Directors”) by the Amended
and Restated Certificate of Incorporation of the Corporation, as amended (the “Certificate of Incorporation”), which
authorizes the issuance of up to 10,000,000 shares of preferred stock, par value $0.0001 per share, in one or more series, and in accordance
with the provisions of Section 151 of the General Corporation Law of the State of Delaware (the “DGCL”), the Board
of Directors, by resolutions duly adopted on September 3, 2026, adopted the following resolution creating a series of preferred stock
of the Corporation designated as “Series A Convertible Preferred Stock”:
RESOLVED, that pursuant to the authority vested
in the Board of Directors by the Certificate of Incorporation and the DGCL, a series of preferred stock of the Corporation is hereby created,
and the designation, number of shares, powers, preferences, rights, qualifications, limitations and restrictions thereof are as follows:
Section 1 Definitions.
For the purposes hereof, the following terms shall have the following meanings:
“Accreted Stated Value”
means, with respect to each share of Series A Preferred Stock as of any date of determination, the Stated Value of such share plus all
dividends that have been added thereto pursuant to Section 3(a) on or prior to such date and that have not been paid in cash.
“Affiliate” means
any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with
a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Alternate Consideration” has the meaning
set forth in Section 7(d). “Beneficial Ownership Limitation” has the meaning set forth in Section 6(f).
“Business Day” means
any day other than a Saturday, a Sunday or a day on which banks located in New York, New York are authorized or required by law to close.
“Buy-In” has the meaning
set forth in Section 6(c)(iii).
“Closing Date”
means the Closing Date as defined in the Purchase Agreement. “Commission” means the U.S. Securities and Exchange Commission.
“Common Stock”
means the common stock of the Corporation, par value $0.0001 per share, and any other class of securities into which such securities may
hereafter be reclassified or changed.
“Common Stock Equivalents”
means any securities of the Corporation or any Subsidiary that would entitle the holder thereof to acquire at any time Common Stock, including
any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable
for, or otherwise entitles the holder thereof to receive, Common Stock.
“Conversion Amount”
means, with respect to each share of Series A Preferred Stock as of any date of determination, the sum of the Accreted Stated Value of
such share as of such date plus all accrued and unpaid dividends on such share that have accrued since the most recent Dividend Payment
Date (or, if none, the Original Issue Date) and have been neither paid in cash nor added to the Accreted Stated Value as of such date.
“Conversion Date”
has the meaning set forth in Section 6(a).
“Conversion Price”
means $7.45 per share of Common Stock, as adjusted from time to time pursuant to Section 7.
“Conversion Shares”
means, collectively, the shares of Common Stock issuable upon conversion of the shares of Series A Preferred Stock in accordance with
the terms hereof.
“Dividend Payment Date” has the meaning
set forth in Section 3(a). “Election Notice” has the meaning set forth in Section 9(d). “Election Period”
has the meaning set forth in Section 9(d).
“Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exchange Cap” has the meaning set forth
in Section 6(g). “Fundamental Transaction” has the meaning set forth in Section 7(d). “Holder” means
a holder of record of shares of Series A Preferred Stock.
“Junior Securities”
means the Common Stock and all other classes or series of equity securities of the Corporation, whether now existing or hereafter created,
other than the Parity Securities and any Senior Securities issued in accordance with Section 4(b).
“Liquidation” has
the meaning set forth in Section 5(b).
“Milestone Preferred
Stock” means the series of preferred stock of the Corporation issuable in satisfaction of the Milestone Payments
contemplated by the Purchase Agreement and the Milestone Payment Agreement referred to therein, which shall
constitute Parity Securities and shall be convertible into Common Stock at a conversion price per share equal to 100% of the
“Minimum Price” (as defined in Nasdaq Listing Rule 5635(d), being the lower of (x) the Nasdaq official closing price of
the Common Stock immediately preceding the applicable measurement date and (y) the average Nasdaq official closing price of the
Common Stock for the five (5) Trading Days immediately preceding the applicable measurement date), determined as of the applicable
Milestone or installment achievement date.
“Nasdaq” means
The Nasdaq Stock Market LLC.
“Notice of Conversion”
has the meaning set forth in Section 6(a).
“Original Issue Date”
means, with respect to any share of Series A Preferred Stock, the date of the first issuance of such share, regardless of the number of
transfers thereof and regardless of the number of certificates or book-entry positions that may be issued to evidence such share.
“Parity Securities”
means the Milestone Preferred Stock and any other class or series of equity securities of the Corporation hereafter created that expressly
ranks on a parity with the Series A Preferred Stock as to dividend rights and rights upon Liquidation, in each case issued in accordance
with Section 4(b).
“Person” means
an individual, corporation, partnership, joint venture, limited liability company, governmental authority, unincorporated organization,
trust, association or other entity.
“Purchase Agreement”
means that certain Membership Interest Purchase Agreement, dated as of July 31, 2026, by and among the Corporation, Paradox Infrastructure
LLC, Paradox Data, LLC and the other parties thereto, as amended from time to time in accordance with its terms.
2
“Redemption Date” has the meaning set
forth in Section 9(b). “Redemption Notice” has the meaning set forth in Section 9(b). “Redemption Price”
has the meaning set forth in Section 9(b).
“Required Holders”
means the Holders of a majority of the then-outstanding shares of Series A Preferred Stock.
“Securities Act”
means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Senior Securities”
means any class or series of equity securities of the Corporation hereafter created that expressly ranks senior to the Series A Preferred
Stock as to dividend rights or rights upon Liquidation.
“Series A Preferred Stock”
has the meaning set forth in Section 2(a). “Share Delivery Date” has the meaning set forth in Section 6(c)(i).
“Standard Settlement Period”
means the standard settlement period, expressed in a number of Trading Days, on the Corporation’s primary Trading Market with respect
to the Common Stock as in effect on the date of delivery of the applicable Notice of Conversion.
“Stated Value”
means $1,000.00 per share of Series A Preferred Stock, as appropriately adjusted for any stock split, stock dividend, combination, reclassification
or similar event affecting the Series A Preferred Stock.
“Stockholder Approval”
means the approval by the stockholders of the Corporation, in accordance with the applicable rules of Nasdaq (including Nasdaq Listing
Rule 5635) and applicable law, of the issuance of all Conversion Shares in excess of the Exchange Cap.
“Subsidiary” means
any subsidiary of the Corporation, including Paradox Data, LLC from and after the Closing Date.
“Trading Day” means
a day on which the principal Trading Market is open for business.
“Trading Market”
means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the
NYSE American, The Nasdaq Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market or the New York Stock Exchange (or
any successors to any of the foregoing).
“Transfer Agent”
means Continental Stock Transfer & Trust Company, the current transfer agent of the Corporation, with a mailing address of 1 State
Street, 30th Floor, New York, New York 10004, and any successor transfer agent of the Corporation.
“Voting Floor Price”
means $5.08, being the “Minimum Price” within the meaning of Nasdaq Listing Rule 5635(d) determined as of the date
of execution of the Purchase Agreement, as appropriately adjusted for any stock dividend, stock split, stock combination, reclassification
or similar transaction of the type described in Section 7(a).
“VWAP” means, for
any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on
a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading
Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York
City time) to 4:02 p.m. (New York City time)); (b) if the Common Stock is then quoted for trading on OTCQB or OTCQX, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX, as applicable; (c) if the Common Stock
is not then listed or quoted for trading on a Trading Market, OTCQB or OTCQX and if prices for the Common Stock are then reported on the
Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent reported bid price
per share of the Common Stock; or
(d) in all other cases, the fair
market value of a share of Common Stock as determined by an independent appraiser selected in
good faith by the Required Holders and reasonably acceptable to the Corporation, the fees and expenses of which shall be paid by the Corporation.
3
Section 2 Designation,
Amount and Par Value; Status.
(a) The
series of preferred stock created hereby shall be designated as the Corporation’s “Series A Convertible Preferred Stock”
(the “Series A Preferred Stock”), and the number of shares so designated shall be 25,000. Each share of Series A Preferred
Stock shall have a par value of $0.0001 per share.
(b) Shares
of Series A Preferred Stock may be issued in certificated form or, at the option of the Corporation, in uncertificated book-entry form
on the books of the Corporation or the Transfer Agent. Any certificate evidencing shares of Series A Preferred Stock, and any book-entry
position, shall bear such restrictive legends or notations as are required by the Purchase Agreement and applicable securities laws.
(c) Any
shares of Series A Preferred Stock that are converted, redeemed, repurchased or otherwise acquired by the Corporation shall be retired
and cancelled and shall not be reissued as shares of Series A Preferred Stock, and upon the taking of any action required by the DGCL,
such shares shall resume the status of authorized but unissued and undesignated shares of preferred stock of the Corporation. Upon the
conversion, redemption, repurchase or other reacquisition of all outstanding shares of Series A Preferred Stock, the Corporation may take
such actions as are permitted by Section 151(g) of the DGCL to eliminate this Certificate of Designation; provided, however, that the
Corporation shall not take any action to eliminate this Certificate of Designation, and this Certificate of Designation shall remain in
full force and effect, at any time while any obligation to issue Milestone Preferred Stock (or any other shares of Series A Preferred
Stock) remains outstanding under the Purchase Agreement, whether or not any shares of Series A Preferred Stock are then outstanding.
Section 3 Dividends.
(a) Preferred
Dividends. Each Holder shall be entitled to receive, and the Corporation shall pay, cumulative dividends on each share of Series
A Preferred Stock, which shall accrue daily on the Accreted Stated Value of such share from the Original Issue Date, whether or not
declared and whether or not the Corporation has funds legally available therefor, and shall be payable quarterly in arrears on each
January 1, April 1, July 1 and October 1, beginning on the first such date after the Original Issue Date (each, a “Dividend
Payment Date”), at the election of the Corporation as to each Dividend Payment Date and as to all (but not less than all)
shares of Series A Preferred Stock, either (i) in cash at the rate of 8.0% per annum, or (ii) in kind at the rate of 8.0% per annum,
by adding the amount of the dividend so accrued for the applicable quarterly period (calculated at such 8.0% per annum rate) to the
Accreted Stated Value of such share effective as of such Dividend Payment Date, whereupon dividends shall thereafter accrue on the
Accreted Stated Value as so increased (such in-kind dividends compounding quarterly). If the
Corporation fails to deliver notice of its election at least five (5) Trading Days prior to a Dividend Payment Date, or fails to pay
a cash dividend in full when due, the Corporation shall be deemed to have elected payment in kind for such Dividend Payment Date.
Dividends shall be calculated on the basis of a 360-day year consisting of twelve 30-day months.
(b) Participating
Dividends. In addition, if the Corporation declares or pays a dividend or distribution on the Common Stock (other than a dividend
or distribution described in Section 7(a) or Section 7(c)), the Holders shall be entitled to receive, at the same time and on the same
terms as the holders of Common Stock, the dividend or distribution that each Holder would have received had all of such Holder’s
shares of Series A Preferred Stock been converted in full into Common Stock (without regard to the Beneficial Ownership Limitation or
the Exchange Cap) immediately prior to the record date therefor.
(c) Priority.
So long as any shares of Series A Preferred Stock remain outstanding, the Corporation shall not declare or pay any dividend or distribution
on, or redeem, repurchase or otherwise acquire for value, any Junior Securities (other than (i) repurchases of Common Stock or Common
Stock Equivalents from departing employees, directors, consultants or other service providers pursuant to equity incentive plans or agreements
approved by the Board of Directors, and (ii) dividends or distributions payable solely in shares of Common Stock) unless all dividends
accrued on the Series A Preferred Stock through the most recent Dividend Payment Date have been paid in cash or added to the Accreted
Stated Value in accordance with Section 3(a).
4
Section 4 Voting
Rights; Protective Provisions.
(a) As-Converted
Voting; Nasdaq Voting Limitation. Except as otherwise provided herein or as required by the DGCL, the Holders shall be entitled to
vote together with the holders of Common Stock as a single class on all matters submitted to a vote of the holders of Common Stock, on
an as-converted basis. Notwithstanding the foregoing, in accordance with Nasdaq Listing Rule 5640, the number of votes per share of Series
A Preferred Stock on any such matter shall equal the number of whole shares of Common Stock obtained by dividing the Accreted Stated Value
of such share by the greater of (i) the then-effective Conversion Price and (ii) the Voting Floor Price, and in no event shall the aggregate
voting power of the Series A Preferred Stock on an as-converted basis exceed the voting power that would be permitted under Nasdaq Listing
Rule 5640.
(b) Protective
Provisions. For so long as any shares of Series A Preferred Stock remain outstanding, the Corporation shall not, and shall not
permit any Subsidiary to, directly or indirectly (whether by amendment, merger, consolidation, reclassification or otherwise),
without the affirmative vote or written consent of the Required Holders, voting or consenting as a separate class: (i) amend, alter,
waive or repeal any provision of the Certificate of Incorporation (including this Certificate of Designation) or the bylaws of the
Corporation in a manner that adversely affects the powers, preferences or rights of the Series A Preferred Stock; (ii) authorize,
create, designate or issue any Senior Securities, or reclassify any existing security into Senior
Securities, or amend the terms of any existing security so as to cause it to become a Senior Security; (iii) increase or decrease
the authorized number of shares of Series A Preferred Stock (except for a decrease resulting from conversion or cancellation of
shares in accordance herewith); or (iv) enter into any agreement to do any of the foregoing. For the avoidance of doubt, the
authorization, creation and issuance of the Milestone Preferred Stock and of other Parity Securities and Junior Securities shall not
require the consent of the Holders under this Section 4(b).
Section 5 Rank;
Liquidation.
(a) Rank.
The Series A Preferred Stock shall rank, as to dividend rights and rights upon Liquidation: (i) senior to the Common Stock and to
all other Junior Securities; (ii) on a parity with the Parity Securities (including the Milestone Preferred Stock); and (iii) junior to
any Senior Securities issued in accordance with Section 4(b) and to all existing and future indebtedness of the Corporation.
(b) Liquidation
Preference. Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary (a “Liquidation”),
before any distribution or payment shall be made to the holders of any Junior Securities, each Holder shall be entitled to receive, out
of the assets of the Corporation legally available for distribution, an amount in cash per share of Series A Preferred Stock equal to
the Conversion Amount of such share as of the date of final distribution (the “Liquidation Preference”), and no more.
The Series A Preferred Stock is non-participating, and after payment in full of the Liquidation Preference the Holders shall not be entitled
to any further distribution of the assets of the Corporation in respect of the Series A Preferred Stock. If, upon any Liquidation, the
assets of the Corporation available for distribution to the Holders and the holders of Parity Securities are insufficient to pay in full
the Liquidation Preference and the corresponding preferential amounts on the Parity Securities, the Holders and the holders of Parity
Securities shall share ratably in any such distribution in proportion to the full respective preferential amounts to which they are entitled.
For the avoidance of doubt, a Fundamental Transaction shall not, in and of itself, constitute a Liquidation, and shall instead be governed
by Section 7(d). The Corporation shall provide each Holder with written notice of any Liquidation not less than twenty (20) days prior
to the applicable payment or distribution date.Section 6 Conversion.
(a) Optional
Conversion. Each share of Series A Preferred Stock shall be convertible, at any time and from time to time after the Original
Issue Date, at the option of the Holder thereof, into that number of shares of Common Stock (subject to the limitations of Section
6(f) and Section 6(g)) determined by dividing the Conversion Amount of such share as of the Conversion Date by the Conversion Price
in effect on the Conversion Date. A Holder shall effect a conversion by delivering to the Corporation a duly completed conversion
notice in the form attached hereto as Exhibit A (a “Notice of Conversion”), which may be delivered by e-mail or
other electronic transmission and shall not require an ink-original signature or a medallion or other signature guarantee. Each
Notice of Conversion shall specify the number of shares of Series A Preferred Stock to be converted, the aggregate Conversion Amount
thereof, and the date on which such conversion is to be effected, which date may not be prior to the date the Holder delivers such
Notice of Conversion (such date, the “Conversion Date”); if no Conversion Date is specified, the Conversion Date
shall be the date the Notice of Conversion is deemed delivered hereunder. No physical surrender of certificates shall be required as
a condition to conversion, provided that upon conversion in full of the shares represented by a certificate, the Holder shall
promptly surrender such certificate (or a customary lost certificate affidavit) to the Corporation.
5
(b) Conversion
Shares. The aggregate number of Conversion Shares issuable upon any conversion hereunder shall be determined on the basis of the aggregate
Conversion Amount of all shares of Series A Preferred Stock being converted pursuant to the applicable Notice of Conversion.
(c)
Mechanics of Conversion.
(i) Delivery
of Conversion Shares. Not later than the earlier of (A) two (2) Trading Days and (B) the number of Trading Days comprising the Standard
Settlement Period, in each case after each Conversion Date (the “Share Delivery Date”), the Corporation shall deliver,
or cause the Transfer Agent to deliver, to the converting Holder the Conversion Shares, which shall be free of restrictive legends and
trading restrictions if and to the extent then permitted under applicable securities laws (including pursuant to an effective registration
statement or Rule 144 under the Securities Act) and otherwise shall bear customary restrictive legends. The Corporation shall deliver
the Conversion Shares electronically through the Depository Trust Company’s Deposit/Withdrawal at Custodian system if the Corporation
is then a participant in such system and the foregoing legend-free condition is satisfied, and otherwise by book-entry credit on the records
of the Transfer Agent.
(ii) Failure
to Deliver; Rescission. If the Corporation fails for any reason to deliver the Conversion Shares to a Holder by the Share Delivery
Date, the applicable Holder shall be entitled to elect, by written notice to the Corporation at any time prior to its receipt of such
Conversion Shares, to rescind such conversion in whole or in part, in which event the Corporation shall promptly return to such Holder
any converted shares of Series A Preferred Stock subject to such rescission, without prejudice to such Holder’s other rights and
remedies hereunder.
(iii) Buy-In. If
the Corporation fails to deliver the Conversion Shares to a Holder by the Share Delivery Date, and if after such Share Delivery Date
such Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or such Holder’s
brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by such Holder of the Conversion
Shares that such Holder was entitled to receive upon such conversion (a “Buy-In”), then the Corporation shall (A)
pay in cash to such Holder (in addition to any other remedies available to or elected by such Holder) the amount, if any, by which
(x) such Holder’s total purchase price (including any brokerage commissions) for the shares of Common Stock so purchased
exceeds (y) the product of (1) the aggregate number of Conversion Shares that such Holder was
entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such
purchase obligation was executed (including any brokerage commissions), and (B) at the option of such Holder, either reinstate the
shares of Series A Preferred Stock and equivalent number of Conversion Shares for which such conversion was not honored (in which
case such conversion shall be deemed rescinded) or deliver to such Holder the number of shares of Common Stock that would have been
issued if the Corporation had timely complied with its delivery requirements. The Holder shall provide the Corporation written
notice, together with reasonable supporting documentation, indicating the amounts payable to such Holder in respect of a
Buy-In.
(d) Reservation
of Shares. The Corporation covenants that it will at all times while any shares of Series A Preferred Stock remain outstanding reserve
and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of issuance upon conversion of the
Series A Preferred Stock, not less than 150% of the aggregate number of shares of Common Stock issuable upon conversion in full of all
then-outstanding shares of Series A Preferred Stock (assuming for this purpose that dividends are paid in kind through the second anniversary
of the Original Issue Date and without regard to the Beneficial Ownership Limitation or the Exchange Cap). The Corporation covenants that
all Conversion Shares will, upon issuance in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable, free
and clear of all liens (other than restrictions arising under applicable securities laws) and not subject to any preemptive or similar
rights. If at any time the number of authorized but unissued shares of Common Stock is insufficient to permit the reservation required
by this Section 6(d), the Corporation shall use its best efforts to take all such corporate action as is necessary to increase its authorized
shares of Common Stock to a number sufficient for such purpose, including using best efforts to obtain the requisite stockholder approval
of any necessary amendment to the Certificate of Incorporation as promptly as practicable.
(e) Fractional
Shares; Transfer Taxes. No fractional shares of Common Stock shall be issued upon conversion of the Series A Preferred Stock; in lieu
of any fractional share to which a Holder would otherwise be entitled, the number of Conversion Shares issuable upon such conversion shall
be rounded up to the nearest whole share. The issuance of Conversion Shares upon conversion shall be made without charge to any Holder
for any documentary stamp or similar taxes, or any other issue or transfer costs or fees, that may be payable in respect of the issuance
or delivery of such shares in the name of the converting Holder; provided that the Corporation shall not be required to pay any tax that
may be payable in respect of any issuance of Conversion Shares to a Person other than the converting Holder.
6
(f) Beneficial
Ownership Limitation. Notwithstanding anything herein to the contrary, the Corporation shall not effect any conversion of the
Series A Preferred Stock, and a Holder shall not have the right to convert any portion of the Series A Preferred Stock, to the
extent that, after giving effect to the conversion set forth on the applicable Notice of Conversion, such Holder (together with such
Holder’s Affiliates, and any Persons acting as a group together with such Holder or any of such Holder’s Affiliates)
would beneficially own in excess of the Beneficial Ownership Limitation. For purposes of this Section 6(f), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, and
the determination of whether the Series A Preferred Stock is convertible and of which shares are convertible shall be in the sole
discretion of the applicable Holder, whose delivery of a Notice of Conversion shall be deemed such Holder’s determination that
such conversion complies with this Section 6(f), and the Corporation shall not be obligated to verify or confirm the same. The “Beneficial
Ownership Limitation” shall be 4.99% of the number of shares of Common Stock outstanding immediately after giving effect
to the issuance of Conversion Shares pursuant to the applicable Notice of Conversion. A Holder, upon notice to the Corporation, may
increase or decrease the Beneficial Ownership Limitation applicable to such Holder to any other percentage not in excess of 9.99%,
provided that any increase shall not be effective until the sixty-first (61st) day after such notice is delivered to the
Corporation. The Beneficial Ownership Limitation shall be applied and construed, and this Section 6(f) shall be interpreted, in a
manner consistent with published interpretive guidance of the staff of the Commission under Section 13(d) of the Exchange Act. The
provisions of this Section 6(f) shall apply to any successor holder of Series A Preferred Stock.
(g) Nasdaq
Exchange Cap; Stockholder Approval; Cash Settlement. Notwithstanding anything herein to the contrary, unless and until
Stockholder Approval has been obtained, the aggregate number of shares of Common Stock issued upon conversion of the Series A
Preferred Stock (including any shares of Common Stock deemed issued in respect of in-kind dividends), when aggregated with (i) all
shares of Common Stock issued or issuable upon conversion of the Milestone Preferred Stock and (ii) all other issuances of Common
Stock or Common Stock Equivalents required to be aggregated therewith under Nasdaq Listing Rule 5635, shall not exceed 10,594,979 shares
of Common Stock, being 19.99% of the number of shares of Common Stock issued and outstanding immediately prior to the execution of
the Binding LOI, dated June 18, 2026, between the Corporation and Paradox Data, LLC (such maximum number, as appropriately adjusted
for any stock dividend, stock split, stock combination, reclassification or similar transaction of the type described in Section
7(a), the “Exchange Cap”). The Exchange Cap is intended to ensure, and shall be applied and construed so, that no
approval of the Corporation’s stockholders under Nasdaq Listing Rule 5635 is required as a condition to the issuance of the
Series A Preferred Stock or the Milestone Preferred Stock, or to the issuance of Conversion Shares up to the Exchange Cap. The
Exchange Cap shall be allocated among the shares of Series A Preferred Stock and the Milestone Preferred Stock pro rata based on the
respective aggregate stated values thereof at issuance (or as otherwise required by Nasdaq). If, on any Conversion Date, all or any
portion of a conversion would exceed the Exchange Cap or otherwise require stockholder approval under Nasdaq Listing Rule 5635
(including Rule 5635(c) with respect to any Holder that is deemed an officer, director, employee or consultant of the Corporation),
then: (i) the Corporation shall issue Conversion Shares up to the Exchange Cap (to the extent available and permitted); (ii) the
Corporation shall promptly, and in any event within the time period required by the Purchase
Agreement, submit the issuance of the remaining Conversion Shares to its stockholders for Stockholder Approval, and the Board of
Directors shall recommend approval thereof; and (iii) if Stockholder Approval is not obtained within ninety (90) days following
submission of the matter to the Corporation’s stockholders, the Corporation shall pay to the applicable Holder, within five
(5) Business Days following the expiration of such ninety (90)-day period, an amount in cash equal to $1,000.00 for each share of
Series A Preferred Stock (or portion thereof, valued at its Accreted Stated Value relative to
$1,000.00) that cannot be converted as a result of this Section 6(g), whereupon such shares (or portions thereof) shall be
cancelled. Nothing in this Section 6(g) shall modify the Conversion Amount, the Conversion Price, any VWAP measurement period or any
other economic term of the Series A Preferred Stock. The Corporation shall not take any action (including entering into any
transaction requiring aggregation under Nasdaq Listing Rule 5635) that would reduce the number of Conversion Shares issuable under
the Exchange Cap without the consent of the Required Holders.
Section 7 Certain
Adjustments.
(a) Stock
Dividends, Stock Splits and Combinations. If the Corporation, at any time while any shares of Series A Preferred Stock are outstanding:
(i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock
or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any Conversion Shares or shares of Common Stock issued
in payment of dividends on the Series A Preferred Stock); (ii) subdivides (including by way of forward stock split) outstanding shares
of Common Stock into a larger number of shares; (iii) combines (including by way of reverse stock split) outstanding shares of Common
Stock into a smaller number of shares; or (iv) issues, in the event of a reclassification of shares of Common Stock, any shares of capital
stock of the Corporation, then in each case the Conversion Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately before such event and of which
the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to
this Section 7(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or
reclassification. For the avoidance of doubt, upon any event described in this Section 7(a), the Voting Floor Price and the Exchange Cap
shall be equitably and proportionately adjusted, and the 250% threshold in Section 8 shall apply to the Conversion Price as so adjusted.
7
(b) Pro
Rata Distributions. If the Corporation, at any time while any shares of Series A Preferred Stock are outstanding, distributes to
all holders of Common Stock (and not to the Holders on an as-converted basis) evidences of its indebtedness, assets (including cash
and cash dividends, but excluding regular dividends in which the Holders participate pursuant to Section 3(b)), rights or warrants
to subscribe for or purchase any security, or any other asset (a “Distribution”), then each Holder shall be
entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had
held the number of shares of Common Stock acquirable upon complete conversion of such Holder’s Series A Preferred Stock
(without regard to the Beneficial Ownership Limitation or the Exchange Cap) immediately before the record date for such
Distribution; provided, however, that, to the extent that such Holder’s right to participate in any such Distribution would
result in such Holder exceeding the Beneficial Ownership Limitation, then such Holder shall not be entitled to participate in such
Distribution to such extent, and the portion of such Distribution attributable to such excess shall be held in abeyance for the
benefit of such Holder until such time, if ever, as its right thereto would not result in such Holder exceeding the Beneficial
Ownership Limitation.
(c) Fundamental
Transaction. If, at any time while any shares of Series A Preferred Stock are outstanding, (i) the Corporation, directly or
indirectly, in one or more related transactions, effects any merger or consolidation of the Corporation with or into another Person
in which the Corporation is not the surviving entity or in which the holders of Common Stock immediately prior thereto own less than
a majority of the voting power of the surviving entity immediately thereafter, (ii) the Corporation, directly or indirectly, effects
any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or
a series of related transactions, (iii) any direct or indirect purchase offer, tender offer or exchange offer (whether by the
Corporation or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common
Stock, (iv) the Corporation, directly or indirectly, effects any reclassification, reorganization or recapitalization of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property, or (v) the Corporation, directly or indirectly, consummates a stock or share purchase agreement or
other business combination with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common
Stock (each, a “Fundamental Transaction”), then, upon any subsequent conversion of the Series A Preferred Stock,
each Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion
immediately prior to the occurrence of such Fundamental Transaction (without regard to the Beneficial Ownership Limitation or the
Exchange Cap), the number of shares of common stock or common equity interests of the successor or acquiring corporation or of the
Corporation, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which one Conversion
Share would have been issuable immediately prior to such Fundamental Transaction. For purposes of any such subsequent conversion,
the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Corporation shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any
choice as to the securities, cash or property to be received in a Fundamental Transaction, then each Holder shall be given the same
choice as to the Alternate Consideration it receives upon any subsequent conversion. The Corporation shall not effect a Fundamental
Transaction unless the Corporation or the successor or acquiring Person, as applicable, assumes in writing (or by operation of law)
all of the obligations of the Corporation under this Certificate of Designation and the other transaction documents referred to in
the Purchase Agreement, and (if other than the Corporation) delivers to each Holder, in exchange for the outstanding shares of
Series A Preferred Stock, a security of the successor or acquiring Person evidenced by a written instrument substantially similar in
form and substance to this Certificate of Designation, including having a stated value and dividend rights identical to those
hereunder and satisfactory to the Required Holders. The provisions of this Section 7(c) shall apply similarly and equally to
successive Fundamental Transactions.
(d) Calculations.
All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For
purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum
of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.
8
(e) Notice
of Adjustment; Notice of Corporate Events. Whenever the Conversion Price is adjusted pursuant to this Section 7, the Corporation shall
promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and a brief statement of the facts requiring
such adjustment. If, while any shares of Series A Preferred Stock are outstanding, (i) the Corporation declares a dividend or any other
distribution of cash, securities or other property in respect of the Common Stock, (ii) the Corporation authorizes and publicly approves,
or enters into any agreement contemplating, a Fundamental Transaction, or (iii) the Corporation authorizes the voluntary dissolution,
liquidation or winding up of its affairs, then the Corporation shall deliver to each Holder a notice of such event at least ten (10) calendar
days prior to the applicable record or effective date, describing the material terms and conditions of such event; provided that the failure
to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice;
and provided, further, that in lieu of delivering such notice directly to Holders, the Corporation may satisfy this requirement by filing
publicly available disclosure of such event with the Commission on a Current Report on Form 8-K or other periodic report at least ten
(10) calendar days prior to the applicable record or effective date, it being understood that no notice under this Section 7(e) shall
include material, non-public information regarding the Corporation unless concurrently publicly disclosed.
Section 8 Forced
Conversion. If, at any time after the Original Issue Date, the closing sale price of the Common Stock on the principal
Trading Market equals or exceeds 250% of the then-effective Conversion Price for a period of
twenty (20) consecutive Trading Days (the last Trading Day of such period, the “Threshold Date”), the Corporation
may, within ten (10) Trading Days after the Threshold Date, deliver a written notice to all Holders (a “Forced Conversion
Notice”) to cause each Holder to convert all or a pro rata portion (determined by reference to the aggregate Conversion
Amount held by each Holder) of such Holder’s shares of Series A Preferred Stock, at the then-applicable Conversion Amount and
Conversion Price, with the conversion effective on the fifth (5th) Trading Day following delivery of the Forced Conversion Notice,
it being agreed that the conversion of each Holder’s shares pursuant to this Section 8 shall be subject to, and limited by,
the Beneficial Ownership Limitation applicable to such Holder and the Exchange Cap, and any shares of Series A Preferred Stock that
cannot be converted as a result of such limitations shall remain outstanding (with any conversion thereof held in abeyance) until
such time as such conversion would not violate such limitations, whereupon such shares shall automatically convert without further
notice. For the avoidance of doubt, all mechanics and remedies set forth in Section 6(c) shall apply to any conversion effected
pursuant to this Section 8 as if such conversion were effected by delivery of a Notice of Conversion on the effective date
thereof.
Section 9 Redemption;
No Preemptive Rights. (a) No Mandatory Redemption; No Preemptive Rights. Except as expressly provided in Section 6(g)
and Section 9(b), the Series A Preferred Stock shall not be subject to mandatory redemption, and neither the Corporation nor any Holder
shall have any right to require the redemption or repurchase of any shares of Series A Preferred Stock, and there shall be no sinking
fund or similar arrangement with respect thereto. No Holder shall have any preemptive, subscription or similar right to acquire any securities
of the Corporation by virtue of such Holder’s ownership of Series A Preferred Stock.
(b) Optional
Redemption by the Corporation. The Corporation shall have the right, at any time and from time to time after the Original Issue
Date, in its sole discretion, to redeem all or any portion of the then-outstanding shares of Series A Preferred Stock for cash at a
redemption price per share equal to one hundred twenty percent (120%) of the Accreted Stated Value of such share as of the
Redemption Date (the “Redemption Price”). The Corporation shall exercise such right by delivering to each Holder
of shares of Series A Preferred Stock to be redeemed a written notice of redemption (a “Redemption Notice”),
which shall be irrevocable and shall specify (i) the date fixed for such redemption, which shall be not less than ten (10) Business
Days after the date on which the Redemption Notice is deemed given pursuant to Section 10(a) (the “Redemption
Date”), (ii) the number of shares of Series A Preferred Stock of such Holder to be redeemed, and (iii) the aggregate
Redemption Price payable to such Holder in respect thereof (subject to adjustment to give effect to any conversion pursuant to
Section 9(c)). If fewer than all of the then-outstanding shares of Series A Preferred Stock are to be redeemed, the shares to be
redeemed shall be selected pro rata among the Holders based on the aggregate Accreted Stated Value of the shares of Series A
Preferred Stock held by each Holder. Notwithstanding any redemption of shares of Series A Preferred Stock pursuant to this Section
9(b) or anything else herein to the contrary: (i) this Certificate of Designation shall not be
eliminated and shall remain in full force and effect until all Milestone Preferred Stock has been issued; (ii) any Milestone
Preferred Stock issued after such redemption shall have the identical powers, preferences, rights, qualifications, limitations and
restrictions set forth in this Certificate of Designation as in effect immediately prior to such redemption; and (iii) the number of
shares of Series A Preferred Stock authorized hereunder shall at all times remain sufficient to permit the issuance of all Milestone
Preferred Stock that may become issuable under the Purchase Agreement.
9
(c) Holder
Conversion Right Prior to Redemption. Notwithstanding the delivery of any Redemption Notice, each Holder shall retain the right to
convert any or all of such Holder’s shares of Series A Preferred Stock called for redemption in accordance with Section 6 at any
time prior to 5:00 p.m. (New York City time) on the Business Day immediately preceding the Redemption Date, and any share of Series A
Preferred Stock so converted shall not be redeemed and no Redemption Price shall be payable in respect thereof.
(d) Holder
Election as to Form of Redemption Price. Each Holder of shares of Series A Preferred Stock called for redemption shall have the right
to elect, in such Holder’s sole discretion, to receive the Redemption Price in (i) cash, (ii) shares of Common Stock, valued at
the VWAP for the ten (10) Trading Days immediately preceding the Redemption Date, or (iii) any combination of cash and shares of Common
Stock, with the Common Stock component valued as provided in clause (ii), in each case by delivering written notice of such election to
the Corporation (an “Election Notice”) at any time prior to the expiration of the period of ten (10) Business Days
following the date on which the applicable Redemption Notice is deemed given pursuant to Section 10(a) (the “Election Period”).
If a Holder does not deliver an Election Notice prior to the expiration of the Election Period, such Holder shall be deemed to have elected
to receive the Redemption Price in cash. Notwithstanding any election pursuant to this Section 9(d), the issuance of shares of Common
Stock in payment of all or any portion of the Redemption Price shall be subject to the Beneficial Ownership Limitation and the Exchange
Cap (applied mutatis mutandis to such issuance), and to the extent that any such issuance would cause the applicable Holder to exceed
the Beneficial Ownership Limitation or would exceed the Exchange Cap, the portion of the Redemption Price attributable to such excess
shall be paid in cash. Any shares of Common Stock issued in payment of the Redemption Price shall, upon issuance in accordance herewith,
be duly authorized, validly issued, fully paid and nonassessable, and shall be delivered in accordance with the mechanics set forth in
Section 6(c)(i) as if such shares were Conversion Shares.
(e) Payment; Effect
of Redemption. On the Redemption Date, the Corporation shall pay the aggregate Redemption Price for the shares of Series A
Preferred Stock redeemed from each Holder in cash by wire transfer of immediately available funds to an account designated in
writing by such Holder, in shares of Common Stock, or in a combination thereof, in each case in accordance with such Holder’s
election (or deemed election) pursuant to Section 9(d). In addition, on the Redemption Date, the Corporation shall pay to each
applicable Holder, in cash, all dividends accrued on the shares of Series A Preferred Stock so
redeemed from the most recent Dividend Payment Date (or, if none, the Original Issue Date) through the next scheduled Dividend
Payment Date immediately following the Redemption Date, in each case regardless of such Holder’s election (or deemed election)
as to the form of the Redemption Price. From and after the Redemption Date, if the aggregate Redemption Price payable to a Holder
has been paid and delivered in full, dividends shall cease to accrue on the shares so redeemed, such shares shall no longer be
deemed outstanding, all rights of such Holder in respect of such shares (other than the right to receive the Redemption Price) shall
terminate, and such shares shall be retired and cancelled as provided in Section 2(c). If the Corporation fails to pay or deliver
the aggregate Redemption Price (including any shares of Common Stock deliverable pursuant to Section 9(d)) and the dividends payable
pursuant to this Section 9(e) in full on the Redemption Date with respect to any share of Series A Preferred Stock, then, unless and
until the Redemption Price for such share is paid in full, such share shall remain outstanding, dividends shall continue to accrue
thereon, and all rights of the Holder in respect thereof (including the right to convert such share pursuant to Section 6) shall
continue in full force and effect.
Section 10 Miscellaneous.
(a) Notices.
Any and all notices or other communications or deliveries to be provided by the Holders hereunder, including any Notice of Conversion,
shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service, addressed to the
Corporation at 550 South Andrews Ave., Suite 700, Fort Lauderdale, FL 33301, Attention: Chief Executive Officer, e-mail: dh@zsquaredinc.com,
or to such other address or e-mail address as the Corporation may specify for such purposes by notice to the Holders. Any and all notices
or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by e-mail,
or sent by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or address of such Holder
appearing on the books of the Corporation. Any notice or other communication or delivery hereunder shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication is delivered via e-mail prior to 5:30 p.m. (New York
City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via e-mail
on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Business Day following
the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.
10
(b) Lost
or Mutilated Certificates. If a Holder’s Series A Preferred Stock certificate is mutilated, lost, stolen or destroyed, the
Corporation shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of
mutilation), or in lieu of and substitution therefor, a new certificate or book-entry position for such shares, but only upon
receipt of evidence of such loss, theft or destruction and of the ownership thereof reasonably satisfactory to the Corporation and
customary indemnity, if requested, without the requirement to post any bond.
(c) Waiver;
Amendment. Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation 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 hereof. This Certificate
of Designation, and any provision hereof, may be amended, modified or waived, and the Corporation may take any action herein prohibited
or omit to perform any act herein required to be performed by it, only if the Corporation has obtained the affirmative vote at a duly
held meeting or the written consent of the Required Holders (voting or consenting as a separate class) and has complied with any other
approval requirements of applicable law and the Certificate of Incorporation; provided, however, that no amendment, modification or waiver
shall, without the prior written consent of each Holder adversely and disproportionately affected thereby (as compared to the other Holders):
(i) reduce the Stated Value, the Accreted Stated Value, the dividend rates set forth in Section 3(a) or the Liquidation Preference; (ii)
increase the Conversion Price (other than pursuant to adjustments expressly provided in Section 7), ; (iii) change any Dividend Payment
Date or the timing of any payment or delivery owed to such Holder hereunder; or (iv) amend this Section 10(c).
(d) Severability.
If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation
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 violates the
applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate
of interest permitted under applicable law.
(e) Next
Business Day. 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.
(f) Headings;
Interpretation. The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation
and shall not be deemed to limit or affect any of the provisions hereof. This Certificate of Designation shall be governed by and construed
in accordance with the DGCL and the other internal laws of the State of Delaware, without giving effect to any conflict-of-laws principles.
(g) Status
of Converted or Reacquired Shares. Shares of Series A Preferred Stock converted into Common Stock, paid in cash pursuant to Section
6(g), or otherwise redeemed, repurchased or reacquired by the Corporation shall be retired and cancelled as provided in Section 2(c).
RESOLVED, FURTHER, that the officers of the
Corporation be, and each of them hereby is, authorized and directed to execute and file this Certificate of Designation with the
Secretary of State of the State of Delaware and to take all such further actions as such
officers deem necessary or advisable to carry out the purposes of the foregoing resolution.
11
IN WITNESS WHEREOF, the undersigned has executed
this Certificate of Designation as of this 8th day of September, 2026.
Z SQUARED INC.
By:
/s/David Halabu
Name:
David Halabu
Title:
Chief Executive Officer
12
EX-10.1 — EXHIBIT 10.1
EX-10.1
Filename: zsqrex10-1.htm · Sequence: 3
Exhibit 10.1
TRIPLE NET LEASE AND RELOCATION AGREEMENT
Effective Date: September
8, 2026
PARADOX DATA LLC —
Landlord
PARADOX INFRASTRUCTURE
LLC — Tenant
Z SQUARED INC. — Relocation
Payment Obligor
This Triple Net Lease and Relocation Agreement
(this “Lease”) is made and entered into as of September 8, 2026 (the “Effective Date”), by and among Paradox Data
LLC, a Florida limited liability company (“Data” or “Landlord”), Paradox Infrastructure LLC, a Florida limited
liability company (“Infrastructure” or “Tenant”), and Z Squared Inc., a Delaware corporation (“Z Squared”).
Z Squared joins this Lease solely with respect to the obligations expressly imposed upon it. As of the Effective Date, Z Squared owns
one hundred percent (100%) of Data.
Data and Infrastructure are parties to that certain
Intercompany Power Access and Cost-Sharing Agreement dated September 8, 2026 (the “Power Access Agreement”). “MIPA”
means that certain Membership Interest Purchase Agreement dated July 31, 2026, by and among Z Squared, Data, Infrastructure and the Owner
Parties named therein, together with its schedules and exhibits. “Excluded Asset” has the meaning set forth in the MIPA. Capitalized
terms not otherwise defined in this Lease have the meanings set forth in the Power Access Agreement. “Business Day” means
any day other than a Saturday, Sunday, or legal holiday in the State of Arkansas.
1. PREMISES AND USE
1.1 Premises.
Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the existing building (the “Existing Building”)
and the approximately three-acre parcel identified in the MIPA and Exhibit A (collectively, the “Premises”), together with
reasonable rights of access thereto.
1.2 Permitted
Use. Tenant may use the Premises to operate, maintain, wind down, and remove its bitcoin mining facility and related equipment (the
“Permitted Use”). This Lease does not grant any right to electric service or Capacity, all of which are governed exclusively
by the Power Access Agreement.
2. TERM AND RENT
2.1 Term.
The term of this Lease (the “Term”) shall commence on the Effective Date and shall expire at 11:59 p.m. on the earliest
to occur of the following (the applicable date, the “Surrender Date”):
(a) the
day immediately preceding the Changeover Date (as defined in the Power Access Agreement) specified in a valid Changeover Notice delivered
pursuant to Section 4.1 of the Power Access Agreement;
(b) the
surrender date specified in a separate written notice delivered by Data or Z Squared pursuant to Section 6.2; or
(c) the second anniversary of the Effective Date (the “Outside Expiration Date”); or
Triple Net Lease and Relocation Agreement — Page 1
(d) the effective
date of any termination of this Lease by Tenant pursuant to Section 7.1(d) or by either party pursuant to Section 8.1.
2.1 A.
Negotiation Extension. If, on the Outside Expiration Date, the Parties are actively and in good faith negotiating a lease extension,
amendment, or alternative arrangement with respect to the Premises (as evidenced by written communications between the Parties within
the thirty (30) days preceding the Outside Expiration Date in which both Parties have confirmed that negotiations remain ongoing), the
Term shall automatically extend for an additional period of thirty (30) calendar days solely to permit the Parties to complete such negotiations.
During any such extension, no Trigger Event shall be deemed to have occurred solely by reason of the original Outside Expiration Date,
and the Relocation Payment shall not become due solely by reason of such original date. If the Parties have not entered into a written
extension or alternative agreement by the end of the thirty (30)-day extension period, the Term shall expire and the Relocation Payment
shall become due on such extended expiration date.
2.2 Base
Rent. Tenant shall pay Landlord base rent of One Dollar ($1.00) on the Effective Date and One Dollar ($1.00) on each anniversary of
the Effective Date occurring during the Term.
2.3 No
Renewal; Holdover. This Lease shall not renew automatically. Any occupancy after the Surrender Date without Landlord’s written
consent shall constitute a tenancy at sufferance, terminable at any time, at a daily use and occupancy charge equal to one hundred twenty-five
percent (125%) of the fair market rental value of the Premises, determined at the time of holdover, together with all other amounts payable
under this Lease. For purposes of this Section 2.3, the fair market rental value of the Premises shall be the fair market rental value
of an industrial warehouse building of comparable size, age, and condition located in El Dorado, Arkansas, determined without regard to
(i) the Data Center or any improvement, development, entitlement, or construction made or initiated by Data, Z Squared, or any of their
affiliates, or (ii) the presence, availability, or value of the Capacity, the AES, or any electric service interconnection at the Premises.
If the parties do not agree in writing upon such fair market rental value within fifteen (15) Business Days after the commencement of
the holdover, such value shall be determined by a single appraiser holding the MAI designation with not less than five (5) years’
experience appraising industrial property in south Arkansas, selected by mutual agreement of Data and Infrastructure or, failing such
agreement within ten (10) Business Days, appointed by the American Arbitration Association. The appraiser’s determination shall
be final and binding on the parties, and the cost of the appraisal shall be borne equally by Data and Infrastructure. Tenant shall indemnify,
defend, and hold harmless Landlord from and against all third-party claims (and expenses arising therefrom, including reasonable attorneys’
fees) incurred by Landlord as a result of Tenant’s holdover after the Surrender Date. The holdover charge and indemnity in this
Section 2.3 shall not apply to any period during which Tenant remains in possession of the Premises solely because of a delay caused by
Data, Z Squared, Entergy, or the Assignment (as defined in the Power Access Agreement) process. Any consented holdover shall be on a day-to-day
basis unless otherwise agreed in writing.
Triple Net Lease and Relocation Agreement — Page 2
3. TRIPLE NET COSTS AND TAX LIMITS
3.1 Operating
Costs; Additional Rent. Except as expressly provided otherwise in this Lease, Tenant shall pay the ordinary costs arising from its
occupancy and Permitted Use, including non-power utilities, routine maintenance, waste removal, permits required for the Permitted Use,
and the insurance required under Section 4. All amounts payable by Tenant under this Section 3 constitute additional rent (“Additional
Rent”). Power costs and Entergy Charges are governed exclusively by the Power Access Agreement and shall not be charged again under
this Lease.
3.2 Property
Taxes. Tenant shall be responsible only for: (a) taxes assessed against Tenant’s equipment, personal property, and trade fixtures;
(b) the portion of real property taxes attributable to the Premises and the buildings, systems, and improvements existing as of the Effective
Date, determined by reference to the baseline assessed values set forth in Exhibit A; and (c) any increase in taxes attributable to improvements
installed by or on behalf of Tenant. All such amounts shall be prorated for the Term.
3.3 Excluded
Tax Increases. Notwithstanding anything to the contrary, Tenant shall have no liability for any tax or increase in tax attributable
to improvements, additions, equipment, construction, development, financing, transfers of ownership, rezoning, reclassification, or changes
in use made, installed, or initiated by Data, Z Squared, or any of their affiliates, including development of the Data Center. Landlord
shall be solely responsible for such amounts.
3.4 Sales
and Use Taxes. Tenant shall pay sales and use taxes arising from property, equipment, materials, or improvements purchased or installed
by or on behalf of Tenant. Tenant shall not be responsible for sales or use taxes arising from purchases, equipment, construction, or
improvements made or installed by or on behalf of Data, Z Squared, or any of their affiliates.
3.5 Documentation
and Disputes. As a condition precedent to Tenant’s obligation to reimburse any tax, Landlord shall furnish the applicable tax
bill, assessment records, and a reasonable written allocation. No markup, surcharge, or administrative fee shall apply. A disputed amount
shall not be deemed delinquent while the parties are attempting in good faith to resolve the allocation.
4. MAINTENANCE, ALTERATIONS, INSURANCE, AND ACCESS
4.1 Maintenance
and Repair. Tenant shall perform routine maintenance of the Premises and shall repair any damage caused by Tenant’s operations,
employees, contractors, equipment, or removal activities. Landlord shall be responsible for all structural maintenance or capital repairs
and improvements not caused or aggravated by Tenant, subject to the MIPA.
4.2 Alterations.
Tenant may make nonstructural alterations reasonably required for the Permitted Use upon prior notice to Landlord. Structural alterations
or material modifications to building systems require Landlord’s prior written consent, which shall not be unreasonably withheld,
conditioned, or delayed.
Triple Net Lease and Relocation Agreement — Page 3
4.3 Insurance. During the Term,
Tenant shall maintain: (a) commercial general liability insurance with limits of $2,000,000 per occurrence; (b) workers’
compensation insurance as required by applicable law; and (c) replacement-cost property insurance covering Tenant’s equipment
and improvements. Data and Z Squared shall be named as additional insureds under Tenant’s liability policy to the extent
commercially available. Tenant shall deliver certificates of insurance evidencing the required coverage to Data and Z Squared within
ten (10) days after the Effective Date and upon each renewal of any required policy. Landlord shall insure the Existing Building.
Tenant shall not be responsible for any premium increase attributable to construction, improvements, or changes in operations by
Data, Z Squared, or their affiliates. Each party hereby waives, and shall cause its property insurers to waive by endorsement, all
rights of subrogation against each other party and its affiliates, officers, employees, and agents with respect to any loss or
damage covered by property insurance carried by the waiving party, whether or not such loss or damage is caused by the fault or
negligence of such other party. Each party shall cause each of its property insurance policies to contain, or to permit by
endorsement, such waiver of subrogation.
4.4 Landlord
Access. Landlord and its representatives may enter the Premises upon not less than twenty-four (24) hours’ prior notice during
normal business hours, or without prior notice in an emergency. Landlord shall use commercially reasonable efforts to minimize interference
with the Permitted Use and shall comply with Tenant’s reasonable site safety and security procedures.
4.5 Compliance
with Laws; Environmental Matters. Each party shall comply with applicable laws arising from its own activities. Tenant shall be responsible
for contamination first caused by Tenant during the Term. The MIPA shall govern all responsibility for pre-existing conditions and transaction-related
environmental matters.
5. POWER ACCESS AGREEMENT
5.1 Power
Matters. As between this Lease and the Power Access Agreement, the Power Access Agreement shall exclusively govern the AES, Capacity,
Entergy Charges, Assignment, mining during the Mining Period and Interim Mining Period, Changeover Notice, Changeover Date, shutdown,
de-energization, and transfer of operational control.
5.2 Assignment
Not a Trigger. For the avoidance of doubt, an Assignment, the Assignment Date, or any transfer of the Entergy account from Infrastructure
to Data shall not terminate this Lease, require Tenant to vacate the Premises, or trigger the Relocation Payment. A power-based trigger
shall occur only upon (a) Data’s delivery of a valid Changeover Notice pursuant to Section 4.1 of the Power Access Agreement based
upon Data’s need for the Capacity, or (b) the occurrence of a Trigger Event under Section 7.1(d).
6. VACATE EVENTS AND SURRENDER
6.1 Power-Based Notice. A valid Changeover
Notice delivered pursuant to Section 4.1 of the Power Access Agreement shall also constitute notice to vacate under this Lease and shall
provide Tenant not less than sixty (60) calendar days before the Changeover Date. Tenant shall surrender the Premises no later than 11:59
p.m. on the day immediately preceding the Changeover Date and shall comply with Section 4.2 of the Power Access Agreement. A notice executed
only by Z Squared shall be effective under this Section 6.1 only if Data joins in or confirms such notice in writing so that it constitutes
a valid Changeover Notice under the Power Access Agreement.
Triple Net Lease and Relocation Agreement — Page 4
6.2 Separate
Vacate Notice. Data or Z Squared may require Tenant to vacate the Existing Building and the approximately three-acre parcel by delivering
not less than sixty (60) calendar days’ prior written notice specifying the Surrender Date. Unless such notice also satisfies the
requirements of the Power Access Agreement, it shall not amend, accelerate, or otherwise affect either party’s rights or obligations
concerning power access.
6.3 Reserved.
6.4 Outside
Expiration. If no notice is delivered pursuant to Section 6.1 or 6.2, the Term shall automatically expire and Tenant shall surrender
the Premises on the Outside Expiration Date without further notice or demand.
6.5 Surrender
Obligations. Through the Surrender Date, Tenant may continue the Permitted Use, subject to an orderly wind-down and the Power Access
Agreement. On or before the Surrender Date, Tenant shall cease operations, remove its equipment and personal property other than any Excluded
Asset, surrender the Premises in broom-clean condition, ordinary wear and tear excepted, and return all access credentials. If Tenant
fails to remove any equipment required to be removed under this Section 6.5 by the Surrender Date, Landlord may remove and store or dispose
of such equipment at Tenant’s sole cost and expense, and Tenant shall reimburse Landlord within ten (10) Business Days after written
demand for all costs and expenses incurred in doing so. Tenant may leave any Excluded Asset at the Premises, provided Tenant de-energizes
and secures such Excluded Asset so that it does not interfere with Data’s energization or use of the Capacity as required by Section
4.2 of the Power Access Agreement. Leaving an Excluded Asset at the Premises shall not constitute a failure to surrender, a holdover,
abandonment, or an Event of Default, and Tenant shall have no obligation after the Surrender Date to remove, store, maintain, insure,
or dispose of such Excluded Asset, except as expressly provided in the MIPA. Ownership, risk of loss, and disposition of each Excluded
Asset shall be governed by the MIPA. Tenant shall not be required to remediate pre-existing conditions except to the extent expressly
required by the MIPA.
7. RELOCATION PAYMENT AND REMEDIATION DEDUCTIONS
7.1 Trigger
Events. Z Squared shall make one relocation payment to Infrastructure upon the earliest to occur of: (a) delivery of a valid Changeover
Notice pursuant to Section 6.1; (b) delivery of a separate vacate notice pursuant to Section 6.2; (c) the Outside Expiration Date; (d)
the date on which Tenant has been unable to conduct the Permitted Use for thirty (30) consecutive days by reason of the loss, reduction,
or unavailability of the Capacity, other than by reason of Tenant’s own uncured breach of the Power Access Agreement, or the date
of any termination of the Power Access Agreement by Infrastructure pursuant to Section 4.7(e) thereof; or (e) the effective date of a
termination of this Lease pursuant to Section 8.1 (each, a “Trigger Event,” and the applicable date, the “Trigger Date”).
If the Lease remains in effect through the Outside Expiration Date, the Relocation Payment shall be due on that date notwithstanding the
absence of a prior notice. Upon the occurrence of a Trigger Event under clause (d), Tenant may terminate this Lease upon written notice
to Data and Z Squared, and such termination shall not reduce, defer, or impair the Relocation Payment. The Relocation Payment shall be
payable only once.
Triple Net Lease and Relocation Agreement — Page 5
7.2 Relocation
Payment. The gross relocation payment shall be Five Hundred Thousand Dollars ($500,000.00) (the “Relocation Payment”).
On the Trigger Date, Z Squared shall pay the Relocation Payment in immediately available funds, less only those deductions permitted and
finally agreed or determined pursuant to this Section 7. The parties intend the Relocation Payment to constitute a relocation or moving
allowance, but make no representation as to its tax treatment.
7.2 A
In-Lieu Conveyance. In lieu of the cash Relocation Payment, Infrastructure may elect, by written notice to Data and Z Squared delivered
no later than five (5) Business Days after the Trigger Date, to accept conveyance of the land and Existing Building comprising the Premises
in full satisfaction of the Relocation Payment. Any such election shall be effective only if Z Squared consents in writing in its sole
discretion. If Z Squared consents:
(a) Data
shall convey (or cause to be conveyed) to Infrastructure fee simple title to the land and Existing Building by special warranty deed,
free and clear of all liens and encumbrances created by Data after the Effective Date;
(b) closing
shall occur within twenty (20) Business Days after Z Squared’s consent (or such longer period as the parties agree);
(c) all
transfer taxes, recording fees, title insurance premiums (owner’s policy), survey costs, and other customary closing costs shall
be paid by Infrastructure;
(d) the
conveyance shall be in full satisfaction of the Relocation Payment, and Z Squared shall have no further payment obligation under this
Section 7; and
(e) this
Section 7.2A shall not apply if a Changeover Notice has been delivered and the Changeover Date has occurred or is scheduled to occur prior
to the proposed closing.
If Z Squared does not consent, or if Infrastructure
does not timely elect, the Relocation Payment shall be paid in cash in accordance with Sections 7.2 and 7.5.
7.3 Permitted
Deductions. A deduction from the Relocation Payment shall be permitted only for a reasonable, documented, out-of-pocket remediation
cost that: (a) arises from a condition identified in connection with a Phase I or Phase II environmental assessment contemplated by the
MIPA; (b) is legally required by applicable law, a final written governmental order, or an express provision of the MIPA; and
(c) is deductible from the Relocation Payment
under the MIPA. No deduction shall be permitted for the cost of any Phase I or Phase II assessment, related report or consultant cost,
voluntary or recommended work, ordinary maintenance, betterment, or improvement.
7.4 Expense
Statement; Review. Data and Z Squared shall deliver the itemized expense statement attached as Exhibit B, together with reasonable
supporting documentation. Infrastructure shall have fifteen (15) Business Days after receipt to approve or dispute each proposed deduction
in writing. A deduction shall be allowed only to the extent agreed in writing by Infrastructure or finally determined to be deductible
pursuant to Section 7.6. Infrastructure’s failure to respond in writing within such fifteen (15) Business Day period shall constitute
approval of the proposed deductions.
Triple Net Lease and Relocation Agreement — Page 6
7.5 Upfront
Funding. On the Trigger Date, Z Squared shall pay all undisputed amounts directly to Infrastructure and shall deposit the full amount
of each proposed but unresolved deduction with an escrow agent mutually agreed by the parties, on customary terms. The direct payment
and escrow deposit, in the aggregate, shall equal Five Hundred Thousand Dollars ($500,000.00). Notwithstanding the foregoing, the aggregate
amount of proposed but unresolved deductions that may be deposited into escrow rather than paid directly to Infrastructure shall not exceed
twenty-five percent (25%) of the Relocation Payment. Any portion of the Relocation Payment in excess of that amount shall be paid directly
to Infrastructure in immediately available funds on the Trigger Date without regard to any proposed deduction, and Z Squared may pursue
any proposed deduction in excess of that amount as a claim against Infrastructure following payment, pursuant to Section 7.6. For the
anticipated Outside Expiration Date, Data and Z Squared shall use commercially reasonable efforts to deliver Exhibit B at least ten (10)
Business Days before such date; any failure to do so shall not defer the obligation to fully fund the Relocation Payment on the Trigger
Date. Payment of all undisputed amounts to Infrastructure plus deposit into escrow of the full amount of each unresolved proposed deduction
permitted to be escrowed under this Section 7.5 shall constitute full and complete satisfaction of Z Squared’s funding obligation
with respect to the Relocation Payment. Z Squared shall have no obligation to replenish the escrow. Infrastructure’s sole recourse
with respect to any proposed deduction properly deposited into escrow shall be limited to the escrowed funds. Any unused escrowed amounts
shall be promptly returned to Z Squared upon final resolution of all deduction disputes. Z Squared shall have a grace period of five (5)
Business Days after the Trigger Date to complete the wire transfer of undisputed amounts and the escrow deposit of disputed amounts, during
which period the failure to have fully funded shall not constitute an Event of Default under Section 8.3 so long as the funds are in transit
or the escrow is being established in good faith.
7.6 Deduction
Disputes. The parties shall meet and confer within five (5) Business Days after Infrastructure delivers a dispute notice. Any dispute
not resolved within ten (10) Business Days after such meeting shall be submitted to expedited arbitration pursuant to Section 10.3. Data
and Z Squared shall bear the burden of establishing the validity and amount of each proposed deduction. Escrowed funds may be released
only pursuant to joint written instructions or a final arbitration award.
7.7 MIPA
Controls; No Double Recovery. In the event of any conflict concerning environmental responsibility, required remediation, or deduction
eligibility as between this Lease and the MIPA, the MIPA shall control. No cost may be deducted or recovered more than once, and all insurance
proceeds or third-party recoveries relating to a deducted cost shall be credited against such deduction.
7.8 Conditions to Relocation Payment. Notwithstanding anything to the contrary in this Lease:
(a) No
Relocation Payment shall be due, and Z Squared’s obligation to fund the Relocation Payment shall be suspended, during any period
in which Infrastructure is in an uncured Event of Default under this Lease consisting of the failure to pay an undisputed monetary amount,
or in an uncured material Event of Default under the Power Access Agreement that prevents or materially impairs the Assignment or Changeover.
If such Event of Default is subsequently cured, Z Squared shall fund the Relocation Payment within five (5) Business Days after such cure.
Triple Net Lease and Relocation Agreement — Page 7
(b) Release
of any escrowed portion of the Relocation Payment to Infrastructure (other than pursuant to a final arbitration award) shall be conditioned
upon Infrastructure’s actual surrender of the Premises in accordance with Section 6.5. If Infrastructure fails to surrender by the
Surrender Date, Z Squared may instruct the escrow agent to retain escrowed funds pending surrender, and Z Squared may offset against such
escrowed funds any holdover charges, damages, or costs incurred by Data or Z Squared as a result of Infrastructure’s failure to
timely vacate. Notwithstanding the foregoing, Z Squared shall have no right to instruct the escrow agent to retain escrowed funds, and
no right of offset under this subsection (b), with respect to any period during which Infrastructure remains in possession of the Premises
solely because of a delay caused by Data, Z Squared, Entergy, or the Assignment process, as described in Section 2.3. Any dispute as to
whether an item constitutes an Excluded Asset shall not constitute a failure to surrender for purposes of this subsection (b), and shall
be resolved pursuant to Section 7.6 without affecting the release of escrowed funds to Infrastructure.
(c) Z
Squared may offset against the Relocation Payment (or any escrowed portion thereof) the reasonable, documented cost to repair any damage
to the Premises caused by Infrastructure beyond ordinary wear and tear, provided that Z Squared delivers written notice of the claimed
offset with reasonable supporting documentation within thirty (30) days after the Surrender Date. Any disputed offset shall be resolved
pursuant to Section 7.6.
(d) The
Relocation Payment shall be payable solely to Infrastructure or a successor or assignee of Infrastructure that has been approved in writing
by Z Squared. Any assignment of Infrastructure’s right to receive the Relocation Payment without Z Squared’s prior written
consent shall be void and of no effect as to Z Squared.
8. CASUALTY, CLAIMS, AND DEFAULT
8.1 Casualty
or Condemnation. If any casualty or condemnation renders the Premises materially unsuitable for the Permitted Use, either Data or
Infrastructure may terminate this Lease by written notice. Such termination shall constitute a Trigger Event pursuant to Section 7.1(e),
and the Relocation Payment shall become due on the effective date of such termination; provided, however, that no Trigger Event shall
occur, and no Relocation Payment shall be due, if the casualty was caused by the acts or omissions of Infrastructure or any of its affiliates,
agents, or contractors. Infrastructure expressly reserves, and does not waive, the right to claim, pursue, and receive a separate award
in any condemnation or eminent domain proceeding for its leasehold interest, trade fixtures, equipment, relocation costs, and moving expenses,
and any such award shall not reduce, offset, or otherwise affect the Relocation Payment.
8.2 Indemnification.
To the extent caused by Tenant’s use of the Premises, negligence, willful misconduct, or breach of this Lease, Tenant shall indemnify,
defend, and hold harmless Data and Z Squared from and against third-party claims, losses, liabilities, damages, costs, and expenses, including
reasonable attorneys’ fees. To the extent caused by Data’s negligence, willful misconduct, or breach of this Lease, Data shall
indemnify, defend, and hold harmless Infrastructure from and against the same. The MIPA and Power Access Agreement shall govern indemnification
matters within their respective subject matters, and no party shall be entitled to a double recovery.
Triple Net Lease and Relocation Agreement — Page 8
8.3 Events
of Default; Remedies. Failure to pay an undisputed amount within ten (10) Business Days after written notice shall constitute an “Event
of Default.” A material breach of any nonmonetary obligation shall constitute an Event of Default if not cured within fifteen (15)
days after written notice; provided, however, that if the breach cannot reasonably be cured within such period, no Event of Default shall
occur so long as the breaching party commences the cure within such period and diligently prosecutes it to completion. Failure to fully
fund the Relocation Payment when due shall constitute an immediate Event of Default without further notice or cure period. Upon an Event
of Default, the nondefaulting party may exercise any remedy available at law or in equity, including damages, specific performance, and
injunctive relief.
8.4 No
Power Self-Help. Neither Data nor Z Squared shall interrupt, terminate, or impair Tenant’s power access as a remedy under this
Lease except as expressly permitted by the Power Access Agreement, the AES, applicable law, or an emergency presenting an immediate risk
of personal injury or material property damage.
9. TRANSFERS
9.1 Tenant
Transfers. Tenant shall not assign this Lease or sublease any material portion of the Premises without Landlord’s prior written
consent, which shall not be unreasonably withheld, conditioned, or delayed. Tenant may, without Landlord’s consent but upon prior
written notice to Landlord, (i) assign this Lease or sublet the Premises to an affiliate of Tenant upon prior written notice, or (ii)
assign this Lease to
(a) any entity into which Tenant is merged or
consolidated, (b) any entity resulting from a reorganization or recapitalization of Tenant, or (c) any entity that acquires all or substantially
all of the assets or equity interests of Tenant, provided (in the case of an assignment) such affiliate assumes this Lease in writing
and Tenant remains liable for all obligations hereunder.
9.2 Landlord
Transfers. Landlord may transfer its interest in the Premises subject to this Lease, provided the transferee assumes Landlord’s
obligations in writing. No transfer of the Premises and no change in the ownership or control of Data, including a bona fide arm’s-length
transfer of a controlling interest in Data to an unaffiliated third party, shall release Z Squared from the Relocation Payment obligation
unless Infrastructure expressly consents in writing to such release, which consent shall not be unreasonably withheld, conditioned, or
delayed. Any release consented to under this Section 9.2 shall be effective only upon the transferee’s written assumption of the
Relocation Payment obligation and delivery of a copy of such assumption to Infrastructure.
10. NOTICES, PRIORITY, AND GENERAL TERMS
10.1 Notices.
All notices required or permitted under this Lease shall be in writing and delivered by personal delivery, nationally recognized overnight
courier, or certified mail, return receipt requested, to the addresses set forth below, or to such other address as a party may designate
by notice. Non-critical correspondence may also be delivered by email to an email address designated by the receiving party, but email
shall not be used for any Changeover Notice, Vacate Notice, or notice of default; each such notice must be delivered by one of the methods
set forth above. Any power-based notice must also satisfy Section 12.3 of the Power Access Agreement.
Triple Net Lease and Relocation Agreement — Page 9
Infrastructure:
Paradox Infrastructure LLC
Attn: Armand
Nannicola Sr.
713 Industrial Road
El Dorado, AR 71730
Data:
Paradox Data LLC
Attn: Armand Nannicola Sr.
4113 Warren Sharon Road
Vienna,
OH 44473
Z Squared:
Z Squared Inc.
Attn: David Halabu
550 South Andrews Ave., Suite 700
Fort Lauderdale, FL 33301
10.2 Order
of Priority. The Power Access Agreement shall control all matters concerning power, the AES, Capacity, Entergy, Assignment, Changeover,
shutdown, and de-energization. The MIPA shall control environmental responsibility and eligibility of remediation deductions. This Lease
shall control possession, rent, operating costs, taxes, surrender, and the timing and funding of the Relocation Payment. Nothing in this
Lease modifies Entergy’s rights under the AES. For the avoidance of doubt, the Power Access Agreement controls whether a Changeover
Notice is valid; this Lease exclusively controls whether and when a valid Changeover Notice triggers Z Squared’s Relocation Payment
obligation and the amount and funding mechanics thereof.
10.3 Governing
Law; Dispute Resolution. This Lease shall be governed by the laws of the State of Arkansas, without regard to conflict-of-laws principles.
Before commencing arbitration, the parties shall attempt in good faith to resolve any dispute through their senior representatives. Any
unresolved dispute shall be finally resolved by binding arbitration in Little Rock, Arkansas under the Commercial Arbitration Rules of
the American Arbitration Association. Any dispute arising under or relating to this Lease, the Power Access Agreement, or both shall be
consolidated into a single arbitration proceeding before a single arbitral tribunal, and the first-filed proceeding shall govern; each
party consents to such consolidation and to joinder in any such consolidated proceeding. Notwithstanding the foregoing, a party may seek
temporary or preliminary injunctive relief from a court of competent jurisdiction to preserve power rights, enforce the sixty (60)-day
notice period, or compel funding of the Relocation Payment. The prevailing party in any arbitration or court proceeding to enforce rights
under this Agreement shall be entitled to recover its reasonable attorneys’ fees and costs from the other party.
10.4 Entire Agreement; Amendments. This
Lease, the Power Access Agreement, and the MIPA constitute the entire agreement of the parties with respect to their respective
subject matters and supersede prior oral or written understandings concerning those matters. No amendment or waiver shall be
effective unless in writing and signed by the party against whom enforcement is sought; provided that any amendment to Z
Squared’s payment obligations must be signed by Z Squared.
Triple Net Lease and Relocation Agreement — Page 10
10.5 Miscellaneous.
This Lease may be executed in counterparts and by electronic signature, each of which shall be deemed an original and all of which together
constitute one instrument. This Lease shall bind and benefit the parties and their permitted successors and assigns. No failure or delay
in enforcing any provision shall constitute a waiver. If any provision is held invalid or unenforceable, the remaining provisions shall
remain in full force and effect. Time is of the essence with respect to all notice, surrender, and payment obligations. Provisions concerning
payment, environmental matters, indemnification, dispute resolution, priority, and any obligation intended by its nature to survive shall
survive expiration or termination.
10.6 Protection of Relocation Payment Obligation.
(a) No
amendment, modification, waiver, termination, or restatement of the Power Access Agreement (or any provision thereof governing Changeover
Notices, the Changeover Date, the Assignment, or any other matter that could increase, accelerate, delay, or otherwise adversely affect
Z Squared’s obligations under this Lease) shall be effective to increase, accelerate, or otherwise adversely affect Z Squared’s
obligations under this Lease unless Z Squared has expressly approved such amendment, modification, waiver, termination, or restatement
in writing.
(b) Z
Squared is an intended third-party beneficiary of the Power Access Agreement solely with respect to (i) the validity and timing of any
Changeover Notice, (ii) the determination of the Changeover Date, and (iii) any other provision of the Power Access Agreement that affects
the occurrence or timing of a Trigger Event or the amount or funding of the Relocation Payment. Z Squared shall have the right to enforce
such provisions to the extent necessary to protect its interests under this Lease.
(c) Data
shall not deliver a Changeover Notice, and no Changeover Notice shall be effective for purposes of triggering the Relocation Payment,
unless such notice satisfies all applicable requirements of the Power Access Agreement as in effect on the date of this Lease (including
any minimum notice period), without giving effect to any subsequent amendment that has not been approved by Z Squared under subsection
(a).
10.7 Limitation
of Z Squared’s Liability. Notwithstanding anything to the contrary in this Lease or the Power Access Agreement:
(a) Z
Squared’s sole monetary obligation under this Lease is the Relocation Payment (as adjusted solely by the deductions expressly permitted
under Section 7), and in no event shall Z Squared’s aggregate monetary liability under this Lease exceed Five Hundred Thousand Dollars
($500,000), except for liability arising from Z Squared’s own fraud or willful misconduct;
(b) Z
Squared shall have no liability for Base Rent, Additional Rent, operating costs, taxes, maintenance, repair, insurance, indemnification,
holdover charges, environmental obligations, or any other obligation of Tenant or Landlord under this Lease or the Power Access Agreement;
and
(c) the
statement that Z Squared “joins this Lease solely with respect to the obligations expressly imposed upon it” is intended to
be strictly construed, and no implied or constructive obligation of Z Squared shall be found to exist.
10.8 Data
Center Development. Notwithstanding anything to the contrary contained herein, and notwithstanding that Landlord has leased the entire
Premises to Tenant under this Lease, Landlord and its affiliates (including Z Squared) shall have the right, during the Term, to plan,
develop, construct, install, equip, and improve the Data Center on or adjacent to the Premises, together with all related infrastructure,
utilities, access roads, and improvements. Landlord shall conduct such activities in a manner that does not materially interfere with
Tenant’s use and enjoyment of the Premises for the Permitted Use or unreasonably disturb Tenant’s quiet enjoyment thereof
and shall coordinate all development activities affecting Tenant’s operations with Tenant not less than 30 days in advance. Except
to the extent caused by the negligence or intentional misconduct of Tenant, Landlord shall indemnify, defend, and hold harmless Tenant
from and against any and all losses, damages, claims, costs, and expenses (including reasonable attorneys’ fees) arising from or
related to the development of the Data Center.
[Signature Page Follows]
Triple Net Lease and Relocation Agreement — Page 11
IN WITNESS WHEREOF, the parties have
executed this Lease as of the Effective Date.
PARADOX DATA LLC
By: Armand Nannicola Sr.
Name: Armand Nannicola Sr.
Title: Manager
PARADOX INFRASTRUCTURE LLC
By: Armand Nannicola Sr.
Name: Armand Nannicola Sr.
Title: Managing Member
Z SQUARED INC.
By: /s/ David Halabu
Name: David Halabu
Title: Chief Executive Officer
Triple Net Lease and Relocation Agreement — Page 12
EX-10.2 — EXHIBIT 10.2
EX-10.2
Filename: zsqrex10-2.htm · Sequence: 4
Exhibit 10.2
INTERCOMPANY POWER ACCESS AND COST-SHARING AGREEMENT
This Intercompany Power Access and Cost-Sharing
Agreement (this “Agreement”) is entered into as of September 8, 2026 (the “Effective Date”), by and between Paradox
Infrastructure LLC, a Florida limited liability company (“Infrastructure”), and Paradox Data LLC, a Florida limited liability
company (“Data”). Infrastructure and Data are each a “Party” and collectively the “Parties.”
RECITALS
A. Infrastructure holds an Agreement for
Electric Service dated December 8, 2023 (the “AES”), with Entergy Arkansas, LLC (“Entergy”), providing up to 8,000
kVA at approximately 13,800Y/7,960 volts at 713 Industrial Road, El Dorado, Arkansas 71730 (the “Premises”), under Rate Schedule
LPHLDS VAR 4.
B. The AES renews annually each June.
Infrastructure renewed the AES in June 2026 (the “Current Term”), which runs through approximately June 2027 (the “Current
Term Expiration”).
C. Infrastructure currently operates a
bitcoin mining facility at the Premises as the rate-payer of record under the AES.
D. Data is developing an artificial intelligence
data center at the Premises (the “Data Center”). Upon completion, Data requires exclusive access to the full 8,000 kVA Capacity
to operate the Data Center.
E. Infrastructure is willing to maintain
the AES through the Current Term to ensure Data has access to the Capacity if the Data Center is ready before the Current Term Expiration.
Infrastructure does not intend to hold the AES beyond the Current Term, and the Parties desire to complete a formal assignment of the
AES to Data, or otherwise transition the Entergy service relationship to Data directly, no later than the Current Term Expiration.
F. The Parties are under common management
as of the Effective Date and wish to govern the transition of power access on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual
covenants herein, the Parties agree as follows:
1. Definitions
“AES” means the Agreement for Electric
Service between Infrastructure and Entergy dated December 8, 2023, together with the Large Power High Load Density Service Agreement for
Interruptible Service and the Extension of Service Agreement, each dated December 8, 2023, and all associated rate schedules, as each
may be amended.
“Assignment” means the formal written
assignment of the AES from Infrastructure to Data, consented to in writing by Entergy pursuant to Section 11.
“Assignment Date” means the effective
date of a completed Assignment pursuant to Section 11.2.
“Capacity” means all electric service
capacity made available under the AES, up to 8,000 kVA.
“Changeover Date” means the date on
which Data assumes exclusive operational control of the Capacity pursuant to Section 4.
“Changeover Notice” has the meaning
set forth in Section 4.1.
“Current Term” has the meaning set
forth in Recital B.
“Current Term Expiration” has the
meaning set forth in Recital B, being approximately June 2027, as determined by the AES renewal schedule.
“Data Center Ready Date” means the
date on which the Data Center is sufficiently complete and commissioned to receive and utilize the Capacity for its intended AI computing
operations.
“Entergy Charges” means all charges,
fees, deposits, assessments, and other amounts billed by Entergy to Infrastructure under the AES in any billing period, including energy
charges, demand charges, customer charges, fuel adjustment charges, and any MISO-related charges.
“Holdover Period” has the meaning
set forth in Section 11.3(a).
“Interim Mining Period” has the meaning
set forth in Section 11.2(b), being the period from the Assignment Date until the Changeover Date, during which Infrastructure continues
mining operations with Data’s presumed consent.
“Lease” means the Triple Net Lease
and Relocation Agreement by and among Data, Infrastructure, and Z Squared Inc. with respect to the Premises, as the same may be amended.
“Mining Period” means the period from
the Effective Date until the Changeover Date, inclusive of any Interim Mining Period.
“Post-Changeover Period” means the
period from the Changeover Date onward.
2. Grant of Power Access Rights
2.1 Grant. Infrastructure hereby grants
to Data an irrevocable, exclusive right to access and utilize the full Capacity under the AES during the Post-Changeover Period (the “Power
Access Rights”). During the Mining Period, Infrastructure retains operational control of the Capacity.
2.2 Irrevocability. The Power Access Rights
are irrevocable through the Current Term Expiration and may not be revoked, suspended, or encumbered by Infrastructure without Data’s
prior written consent. Infrastructure shall not take any action that would terminate, modify, or impair the AES or the Capacity available
thereunder without Data’s prior written consent. Any purported revocation, suspension, or encumbrance in violation of this Section
2.2 shall be void and of no force or effect.
2.3 Nature of Rights. This Agreement does
not constitute a resale or retail sale of electricity. Infrastructure remains the rate-payer of record under the AES. Data’s rights
hereunder are access and cost-sharing rights as between affiliated entities. The Parties acknowledge that the arrangements set forth in
this Agreement are between affiliated entities under common management and do not constitute the resale, redistribution, or furnishing
of electricity by Infrastructure to Data or any third party within the meaning of Ark. Code Ann. § 23-1-101.
2.4 Survival of Ownership Changes in Data.
The Power Access Rights granted to Data shall survive any change in the ownership, membership, or control of Data, including the sale
of a controlling interest in Data to any third party. A change in Data’s ownership shall not affect the validity, enforceability,
or term of this Agreement; provided, however, that upon any change in ownership or control of Data that results in the Parties no longer
being under common management, the Parties shall cooperate in good faith to restructure this Agreement, if and to the extent necessary,
to ensure continued compliance with applicable law, including without limitation the requirements of Ark. Code Ann. § 23-1-101 and
any applicable rules of the Arkansas Public Service Commission.
3. Mining Period Operations
3.1 Infrastructure Operations. During the
Mining Period, Infrastructure shall continue to operate its bitcoin mining facility at the Premises using the Capacity, subject to the
terms of the AES.
3.2 Maintenance of AES. During the Mining
Period, Infrastructure shall: (a) maintain the AES in good standing; (b) pay all Entergy Charges when due; (c) comply with all material
obligations under the AES; and (d) promptly notify Data of any default, threatened termination, or material modification proposed by Entergy.
3.3 No Competing Commitments. Infrastructure
shall not enter into any agreement, commitment, arrangement, or course of dealing that would restrict, encumber, delay, or materially
interfere with Data’s assumption of exclusive operational control of the Capacity on the Changeover Date or the Assignment.
4. Transition of Operational Control
4.1 Changeover Notice. When Data determines
that the Data Center Ready Date is imminent, Data shall deliver written notice to Infrastructure specifying the proposed Changeover Date
(the “Changeover Notice”). The Changeover Notice must be delivered no fewer than sixty (60) calendar days prior to the proposed
Changeover Date. The Changeover Notice requirement and the 60-day period apply regardless of whether the Assignment has already occurred.
Data shall use commercially reasonable efforts to cause the proposed Changeover Date to be the first day of the month.
Intercompany Power Access and Cost-Sharing Agreement Page 2
Notwithstanding the foregoing sixty (60)-day requirement,
if the Data Center (or the portion thereof requiring the Capacity) is located in a separate building, modular facility, or other structure
at the Premises such that Infrastructure’s continued mining operations in the Existing Building do not draw upon the Capacity allocated
to Data’s operations, Data may deliver a Changeover Notice specifying a shorter period (but not less than thirty (30) calendar days);
provided, however, that the determination of whether the separate-building exception described in this paragraph applies shall be made
by mutual written agreement of the Parties (such agreement not to be unreasonably withheld, conditioned, or delayed by either Party),
and in the absence of such agreement, the standard sixty (60)-day Changeover Notice period shall apply. In such case, Infrastructure’s
shutdown obligations under Section 4.2 shall apply only to mining equipment and operations that draw upon the Capacity allocated to Data.
4.2 Infrastructure Shutdown Obligations. Upon
receipt of a valid Changeover Notice, Infrastructure shall:
(a) begin an orderly wind-down of all
bitcoin mining operations at the Premises;
(b) complete the physical shutdown and
de-energization of all mining equipment no later than 11:59 p.m. on the day immediately preceding the Changeover Date;
(c) vacate or secure all mining equipment
to ensure it does not interfere with Data’s energization of the Data Center; and
(d) coordinate in good faith with Data
and, where applicable, Entergy to facilitate a smooth transfer of operational control of the service point.
4.3 Data Energization. On the Changeover
Date, Data shall assume exclusive operational control of the full 8,000 kVA Capacity. Infrastructure shall have no further right to draw
on or utilize the Capacity after the Changeover Date, except as expressly agreed in writing by Data.
4.4 Entergy Coordination. The Parties shall
cooperate to provide any notices or information to Entergy reasonably required in connection with the transition. Where the Assignment
has not yet occurred, Infrastructure shall not notify Entergy of any service termination or reduction without Data’s prior written
consent.
4.5 Changeover Confirmation. Within five
(5) business days following the Changeover Date, the Parties shall execute a written acknowledgment confirming the Changeover Date and
the commencement of the Post-Changeover Period.
4.6 No Infrastructure Responsibility for Capacity
Reduction After Changeover. During any period on or after the Changeover Date in which the Assignment has not been completed and Infrastructure
remains the rate-payer of record under the AES, Data shall have sole responsibility for the level of electrical load drawn from the Capacity
at the Premises. Any reduction, loss, forfeiture, or downgrade of the Capacity, of the contracted demand under the AES, or of any portion
of either, and any minimum, ratchet, reduced-demand, or similar charge, in each case resulting in whole or in part from the failure of
Data or any of its affiliates, customers, licensees, or invitees to draw or utilize the Capacity, shall not constitute a breach of this
Agreement or of the AES by Infrastructure, shall not constitute an Event of Default under Section 9.1, and shall not give rise to any
liability of Infrastructure to Data. Data shall indemnify, defend, and hold harmless Infrastructure from and against any and all claims,
costs, liabilities, expenses, and damages arising out of or resulting from any such reduction, loss, forfeiture, downgrade, or charge.
Data’s indemnity under this Section 4.6 shall be limited to actual Entergy charges, ratchets, reduced-demand charges, and similar
amounts resulting from such reduction, loss, forfeiture, or downgrade.
4.7 Interruptible Service; Curtailment.
(a) The Parties acknowledge that service
under the AES is interruptible and is subject to the Large Power High Load Density Service Agreement for Interruptible Service, under
which the customer of record may be required to reduce load to its Firm Contract Demand upon notice from Entergy and may be registered
as a Load Modifying Resource with the Midcontinent Independent System Operator, Inc. (“MISO”).
(b) From and after the Changeover Date,
Data shall: (i) designate and maintain a curtailment contact available twenty-four (24) hours per day, seven (7) days per week, and provide
such contact information to Infrastructure and, where applicable, to Entergy; (ii) reduce electrical load at the Premises to the Firm
Contract Demand within the notice period specified in the AES upon any curtailment notice from Entergy or MISO; and (iii) participate
in and satisfy any curtailment test or demonstration that Entergy is entitled to require under the AES.
(c) Data shall indemnify, defend, and
hold harmless Infrastructure from and against any actual Entergy, MISO, or FERC charges, penalties, and credit-support draws arising out
of Data’s failure to reduce load as required by subsection (b) while Data controls the electrical load at the Premises. This indemnity
shall not apply to the extent arising from Infrastructure’s negligence, willful misconduct, or material breach.
Intercompany Power Access and Cost-Sharing Agreement Page 3
(d) On or before the Changeover Date,
Data shall post, or cause to be posted, in its own name any surety bond, letter of credit, or other credit support required in connection
with interruptible service under the AES, and shall use commercially reasonable best efforts to cause any such instrument posted by Infrastructure
to be released.
(e) If two (2) or more failures to reduce
load as set forth in and required by subsection (b) occur during any rolling twelve (12)-month period at any time Data controls the electrical
load at the Premises, Infrastructure may terminate this Agreement upon thirty (30) days’ prior written notice to Data. Termination
pursuant to this Section 4.7(e) shall not constitute a default or breach by Infrastructure and shall constitute a Trigger Event under
the Lease.
5. Cost Pass-Through and Billing
5.1 Mining Period — Infrastructure Pays
Entergy Directly. During the Mining Period, where the Assignment has not yet occurred, Infrastructure bears all Entergy Charges from
its own operations and shall have no right to charge Data for any portion thereof.
5.2 Interim Mining Period — Infrastructure
Pays Data; Data Pays Entergy. During any Interim Mining Period (i.e., after the Assignment Date but before the Changeover Date), the
billing flow shall reverse: Infrastructure shall pay Data one hundred percent (100%) of all Entergy Charges attributable to Infrastructure’s
own metered consumption during that period within thirty (30) calendar days of receipt of Data’s invoice, and Data shall be responsible
for paying Entergy directly as the account holder of record. Infrastructure shall have no liability for, and no invoice delivered under
this Section 5.2 shall include, any Entergy Charges attributable to Data’s construction, testing, commissioning, or operation of
the Data Center. Infrastructure shall not be marked up or surcharged; pass-through shall be at net cost only.
5.3 Post-Changeover Period. During the
Post-Changeover Period, if the Assignment has not yet occurred, Data shall pay Infrastructure one hundred percent (100%) of all Entergy
Charges attributable to periods on or after the Changeover Date, on the same pass-through, net-cost basis. Infrastructure shall deliver
to Data a copy of each Entergy invoice within five (5) business days of receipt, together with a corresponding invoice to Data. Data shall
pay each such invoice in immediately available funds not later than three (3) business days prior to the payment due date shown on the
corresponding Entergy invoice. Infrastructure shall not apply any markup, surcharge, or administrative fee to such Entergy Charges; all
amounts shall be passed through at net cost only.
5.4 Holdover Period. During any Holdover
Period under Section 11.3, Data shall pay Infrastructure one hundred percent (100%) of all Entergy Charges on the same pass-through basis
and subject to the same payment due date as set forth in Section 5.3, and shall additionally indemnify Infrastructure as set forth in
Section 11.3(b).
5.5 Late Payment. Amounts not paid when
due under this Article 5 shall accrue interest from the applicable due date at the lesser of 1.0% per month or the maximum rate permitted
by applicable law.
5.6 Step-In Right. Where Infrastructure
is the rate-payer of record and fails to pay any Entergy Charges within five (5) business days of their due date, or fails to perform
any other material obligation under the AES within any applicable cure period (or, if no cure period is specified in the AES, within ten
(10) business days after Data’s written notice of such failure), Data, after three (3) business days’ advance written notice
to Infrastructure, may pay such Entergy Charges directly to Entergy on Infrastructure’s behalf. Any amounts paid or costs incurred
by Data pursuant to this Section 5.6 shall be offset against amounts owed by Data to Infrastructure under this Agreement, and Infrastructure
shall reimburse Data for any excess within fifteen (15) business days of Data’s written demand. This Section 5.6 is subject to Section
5.8.
5.7 Proration. For any billing period in
which the Changeover Date or the Assignment Date falls mid-cycle, Entergy Charges shall be prorated based on the number of days attributable
to each Party’s relevant period, using metered data or Entergy’s records.
5.8 Data Payment Default; Infrastructure Protection.
If Data fails to pay any amount when due under Section 5.3 or Section 5.4, Infrastructure may (but shall not be obligated to) pay
the corresponding Entergy Charges directly to Entergy, and Data shall reimburse Infrastructure on demand for all amounts so paid, together
with interest at the rate set forth in Section 5.5. No failure by Infrastructure to pay any Entergy Charges when due that results, in
whole or in part, from Data’s failure to pay when due under Section 5.3 or Section 5.4 shall (a) constitute an Event of Default
under Section 9.1, (b) give rise to a step-in right under Section 5.6, or (c) constitute a breach of Section 3.2(b) or Section 7.
6. Term
6.1 Term. This Agreement commences on the
Effective Date and continues through the later of: (a) the Changeover Date; or (b) the date all payment and indemnification obligations
under this Agreement have been fulfilled; or (c) the Assignment Date, if the Assignment is completed prior to the Changeover Date, at
which point only Sections 10, 11.2(b), 11.2(d), 11.2(e), and 12 shall survive; provided, however, that notwithstanding clause (c), where
the Assignment is completed prior to the Changeover Date, this Agreement shall continue in full force and effect in accordance with Section
11.2(e) through the Changeover Date, and clause (c) shall be of no effect. The Agreement shall not automatically renew beyond the Current
Term Expiration unless the Parties are in a Holdover Period pursuant to Section 11.3, in which case it continues solely for the purposes
described in that Section.
Intercompany Power Access and Cost-Sharing Agreement Page 4
6.2 No Renewal Without Consent. Infrastructure
shall not renew or extend the AES beyond the Current Term without Data’s prior written consent, which consent shall not be unreasonably
withheld, conditioned, or delayed. It shall be deemed unreasonable for Data to withhold consent to a renewal solely to the extent that
renewal is required to maintain service for the Permitted Use (as defined in the Lease) for a renewal period that does not exceed one
year, and not for any renewal beyond that date. This Section 6.2 does not apply to any renewal or extension required to maintain continuity
of service during a Holdover Period under Section 11.3.
7. Infrastructure Covenants
Infrastructure covenants that it shall:
(a) maintain the AES in good standing
and timely pay all Entergy Charges during the Mining Period;
(b) not assign, transfer, or encumber
the AES or any rights thereunder without Data’s prior written consent, except pursuant to Section 11;
(c) not modify or amend any material
term of the AES in a manner adverse to Data’s interests without Data’s prior written consent;
(d) promptly provide Data with copies
of all material correspondence with Entergy relating to the AES, the Capacity, or the Premises; and
(e) execute such additional documents
and take such further actions as may be reasonably required to give effect to this Agreement and Data’s rights hereunder.
8. Representations and Warranties
8.1 Mutual. Each Party represents and warrants
that: (a) it is duly organized and validly existing under the laws of the State of Florida; (b) it has full authority to execute and perform
this Agreement; and (c) this Agreement constitutes a valid and binding obligation enforceable against it in accordance with its terms.
8.2 Infrastructure. Infrastructure further
represents and warrants that: (a) the AES is in full force and effect and Infrastructure is not in default thereunder; (b) the deposit
or bond of $688,593. required under the AES has been or will be timely paid; and (c) Infrastructure has not granted any other party any
rights to the Capacity; (d) Infrastructure has the authority to enter into this Agreement and to grant the rights set forth herein without
the consent of any third party (other than Entergy as expressly provided in Section 11); and (e) to Infrastructure’s knowledge,
there is no pending or threatened action by Entergy to terminate, modify, or refuse to renew the AES.
9. Default and Remedies
9.1 Events of Default. An “Event
of Default” shall occur if: (a) Infrastructure permits the AES to lapse or terminate without Data’s written consent outside
of the process in Section 11, and fails to cure such lapse or termination within fifteen (15) days after written notice thereof from Data;
(b) Infrastructure assigns or encumbers the AES without Data’s consent, except pursuant to Section 11, and fails to cure within
fifteen (15) days after written notice thereof from Data; (c) Infrastructure fails to perform its shutdown obligations under Section 4
within the required timeframes, and fails to cure within fifteen (15) days after written notice thereof from Data; or (d) either Party
materially breaches any other provision of this Agreement and fails to cure such breach within fifteen (15) days of written notice; or
(e) either Party fails to pay amounts owed under Article 5 within thirty (30) days of written notice of non-payment. With respect to clauses
(a) through (d), if the breach or failure cannot reasonably be cured within the applicable fifteen (15)-day period, no Event of Default
shall occur so long as the breaching Party commences the cure within such period and thereafter diligently prosecutes it to completion.
This Section 9.1 is subject to Sections 4.6 and 5.8.
9.2 Remedies. Upon an Event of Default,
the non-defaulting Party shall be entitled to all remedies available at law or in equity, including specific performance. The Parties
acknowledge that Data’s Power Access Rights are unique and that monetary damages alone may be an inadequate remedy for Infrastructure’s
breach. The Parties likewise acknowledge that monetary damages alone may be an inadequate remedy for Data’s breach of its obligations
under Section 4.6, Section 4.7, Article 5, Article 10, Section 11.3(b), and Section 11.5.
Intercompany Power Access and Cost-Sharing Agreement Page 5
10. Indemnification
10.1 By Data (Post-Changeover). From and
after the Changeover Date, Data shall indemnify, defend, and hold harmless Infrastructure from and against any claims, losses, liabilities,
costs, and expenses (including reasonable attorneys’ fees) arising out of or relating to: (a) Data’s use of the Capacity;
(b) Data’s operation of the Data Center; or (c) any breach by Data of this Agreement.
10.2 By Infrastructure (Mining Period). During
the Mining Period, Infrastructure shall indemnify, defend, and hold harmless Data from and against any claims, losses, liabilities, costs,
and expenses arising out of or relating to Infrastructure’s operation of the mining facility or Infrastructure’s breach of
this Agreement.
11. AES Assignment; Infrastructure Exit at Current Term Expiration
11.1 Best Efforts to Assign. The Parties
shall use commercially reasonable best efforts to obtain Entergy’s written consent to a formal assignment of the AES from Infrastructure
to Data prior to the Current Term Expiration. Each Party shall cooperate fully in preparing and submitting any required applications,
notices, or documentation to Entergy. Infrastructure shall respond within ten (10) business days after receipt to any request from Data
or Entergy relating to the Assignment, provided that such request is delivered in accordance with Section 12.3 and is addressed to the
individual designated to receive notices on behalf of Infrastructure thereunder. Any material failure by Infrastructure to cooperate with
the Assignment process as required by this Section 11.1 shall constitute an Event of Default under Section 9.1 only if such failure remains
uncured ten (10) business days after Data’s written notice of such failure delivered in accordance with Section 12.3. Infrastructure’s
cooperation obligation shall be at no out-of-pocket cost or incremental liability to Infrastructure beyond the administrative act of executing
and delivering required documents. Data shall bear all out-of-pocket costs and expenses reasonably incurred in connection with the Assignment
process, including any transfer fees, application fees, or new deposit, bond, letter of credit, or other credit support requirements charged
or required by Entergy in connection with the Assignment.
11.2 Successful Assignment Prior to Changeover
Date. If Entergy consents to the Assignment and the Assignment is completed prior to the Changeover Date:
(a) Assignment Mechanics. Infrastructure
and Data shall promptly execute all documents required to complete the Assignment. From and after the Assignment Date, Data shall be the
account holder of record with Entergy and shall be solely responsible for all obligations under the AES arising after the Assignment Date.
(b) Interim Mining Period — Presumed
Consent. From the Assignment Date until the Changeover Date, Infrastructure is hereby presumed to have Data’s consent to continue
operating its bitcoin mining facility at the Premises and utilizing the Capacity. No further written consent from Data is required for
Infrastructure to continue mining operations during the Interim Mining Period. Data may revoke this presumed consent only by delivering
written notice to Infrastructure, which notice shall be treated as a Changeover Notice and shall trigger the 60-day shutdown process under
Section 4.
(c) Billing During Interim Mining Period.
During the Interim Mining Period, billing shall be governed by Section 5.2: Infrastructure pays Data, and Data pays Entergy directly as
account holder.
(d) Infrastructure Release. Upon the
Assignment Date, Infrastructure shall be fully released from all obligations under the AES arising after the Assignment Date, including
during the Interim Mining Period. Infrastructure’s only remaining financial obligation to Data during the Interim Mining Period
is payment of Entergy Charges per Section 5.2.
(e) Agreement Continues. This Agreement
shall continue in effect through the Changeover Date to govern the Interim Mining Period, the Changeover Notice process, Infrastructure’s
shutdown obligations, and all related matters. Upon the Changeover Date, this Agreement shall terminate except for provisions that expressly
survive.
11.3 Entergy Refusal — Holdover and Indemnification.
If Entergy does not consent to the Assignment prior to the Current Term Expiration (“Entergy Refusal”), the following
shall apply:
(a) Holdover Period. Infrastructure
shall continue to hold the AES beyond the Current Term Expiration (the “Holdover Period”) solely in its capacity as the administrative
holder of record for Data’s benefit, while the Parties continue in good faith to pursue the Assignment or an alternative arrangement
acceptable to both Parties. Infrastructure shall not unilaterally terminate the AES during the Holdover Period. Infrastructure’s
continued holding of the AES during the Holdover Period shall not create any ownership interest, lien, or encumbrance in favor of Infrastructure
over the Capacity or the Data Center.
Intercompany Power Access and Cost-Sharing Agreement Page 6
(b) Data’s Full Indemnification.
During the Holdover Period, Data shall fully indemnify, defend, and hold harmless Infrastructure from and against any and all claims,
costs, liabilities, expenses, damages, and obligations (including reasonable attorneys’ fees and all Entergy Charges) arising out
of or related to Infrastructure’s continued holding of the AES. Notwithstanding the foregoing, Data’s indemnification obligations
under this Section 11.3(b) shall not apply to the extent arising out of or resulting from (i) Infrastructure’s negligence, willful
misconduct, or material breach of this Agreement or the AES, or (ii) Infrastructure’s failure to comply with Section 11.1 or Section
11.3(c). Infrastructure’s role during the Holdover Period is purely administrative; all economic risk and operational responsibility
rests with Data.
(c) Continued Best Efforts and Mutual
Cooperation. During the Holdover Period, the Parties shall continue to use commercially reasonable best efforts and work cooperatively
and in good faith to obtain Entergy’s consent to the Assignment or to assist Data in obtaining a new, independent service agreement
with Entergy directly. Neither Party shall take any unilateral action that would frustrate or prejudice the other Party’s ability
to achieve this outcome.
(d) No Unilateral Termination. Infrastructure
shall not unilaterally terminate the AES during the Holdover Period. Any termination of the AES during the Holdover Period shall require
the mutual written agreement of both Parties, and shall be timed and structured to minimize any disruption to Data’s operations
or Data’s ability to obtain replacement service from Entergy.
(e) Data’s Obligation to Pursue
Independent Service. During the Holdover Period, Data shall diligently pursue its own service agreement with Entergy and shall keep Infrastructure
reasonably informed of the status of such efforts on a monthly basis.
(f) Holdover Termination Right. If the
Assignment has not been completed within nine (9) months following the Current Term Expiration, either Party may terminate this Agreement
upon ninety (90) days’ prior written notice to the other Party; provided, however, that Infrastructure may not exercise this termination
right unless Data has failed to diligently pursue its own service agreement with Entergy or an alternative power supply arrangement during
the Holdover Period. During any such notice period: (i) Data shall continue to diligently pursue replacement service; and (ii) Infrastructure
shall not terminate, cancel, or fail to renew the AES until the earlier of (A) the date Data has secured replacement electric service
at the Premises or (B) the expiration of the ninety (90)-day notice period. Upon termination under this Section 11.3(f), Infrastructure
shall cooperate with a seamless transition and shall not take any action to disrupt Data’s power access.
11.4 No Obligation to Renew Beyond Current
Term (Absent Holdover). Except as required during a Holdover Period under Section 11.3, Infrastructure shall have no obligation to
renew, extend, or maintain the AES beyond the Current Term Expiration.
11.5 Infrastructure Deposit or Bond.
(a) Infrastructure has posted, or will
post, with Entergy a deposit or bond in the amount of $688,593 in connection with the AES (the “Infrastructure Deposit”).
(b) On or before the Assignment Date,
Data shall cause Entergy to release the Infrastructure Deposit to Infrastructure in full. To the extent Entergy retains, transfers, applies,
or otherwise fails to release any portion of the Infrastructure Deposit, Data shall reimburse Infrastructure for such portion, dollar
for dollar, within ten (10) business days after the Assignment Date, without setoff, deduction, or counterclaim. Any reimbursement under
this Section 11.5 shall be paid concurrently with the Assignment Date.
(c) No portion of the Infrastructure
Deposit may be applied against any Entergy Charges attributable to any period on or after the Changeover Date. If any portion is so applied,
Data shall restore such portion to Infrastructure within ten (10) business days after such application.
Intercompany Power Access and Cost-Sharing Agreement Page 7
(d) It shall be a condition to the completion
of the Assignment that either (i) Entergy release the Infrastructure Deposit to Infrastructure, or (ii) Data fund the reimbursement described
in subsection (b) concurrently with the Assignment Date. Data represents and covenants that it shall satisfy Entergy’s credit, deposit,
bond, letter of credit, and other security requirements in its own name in connection with the Assignment.
(e) Infrastructure makes no representation
or warranty as to the amount, form, duration, or terms of any deposit, bond, letter of credit, or other credit support that Entergy may
require of Data or of Z Squared Inc., whether in connection with the Assignment or otherwise. The amount of the Infrastructure Deposit
shall not be evidence of, or any limitation upon, the amount or form of credit support Entergy may require, and any such requirement shall
be borne solely by Data pursuant to Section 11.1.
12. General Provisions
12.1 Governing Law. This Agreement shall
be governed by the laws of the State of Arkansas, without regard to conflict of law principles, given that the Premises and the AES are
located in and subject to Arkansas regulatory jurisdiction. The Parties acknowledge that this Agreement does not confer upon either Party
any rights or obligations under the jurisdiction of the Arkansas Public Service Commission, and nothing herein shall be construed to subject
either Party to regulation as a public utility under Ark. Code Ann. § 23-1-101 et seq.
12.2 Dispute Resolution. Disputes shall
first be submitted to good-faith negotiation between senior representatives for thirty (30) days. If unresolved, disputes shall be submitted
to binding arbitration in Little Rock, Arkansas under the Commercial Arbitration Rules of the American Arbitration Association. Notwithstanding
the foregoing, either Party may seek temporary or preliminary injunctive or other interim relief from a court of competent jurisdiction
to preserve the status quo or prevent irreparable harm pending arbitration, without first completing the negotiation period described
above. Any dispute arising under or relating to this Agreement, the Lease, or both shall be consolidated into a single arbitration proceeding
before a single arbitral tribunal, and the first-filed proceeding shall govern; each Party consents to such consolidation and to the joinder
of Z Squared Inc. in any such consolidated proceeding. The prevailing party in any arbitration or court proceeding to enforce rights under
this Agreement shall be entitled to recover its reasonable attorneys’ fees and costs from the other party.
12.3 Notices. All notices shall be in writing
and delivered by hand, overnight courier, or certified mail, return receipt requested, to the addresses set forth below, or to such other
address as a Party may designate by notice given in accordance with this Section 12.3. Each notice shall be accompanied by a courtesy
copy delivered by email to the email address designated below for the receiving Party. Email shall not constitute delivery for purposes
of this Section 12.3; provided, however, that if a notice is delivered without the accompanying email courtesy copy, any response period,
cure period, or other period that such notice would otherwise commence shall be tolled until such courtesy copy has been delivered.
If to Infrastructure:
Paradox Infrastructure LLC
Attn: Jeffery Harris / Armand Nannicola
713 Industrial Road, El Dorado, AR 71730
Email: [______________]
Intercompany Power Access and Cost-Sharing Agreement Page 8
with a copy to: 4113 Warren Sharon Rd., Vienna, OH 44473
and with a copy to:
Tucker Ellis LLP
Attn: Robert M. Loesch
950 Main Avenue, Suite 1100
Cleveland, Ohio 44113
Email: Robert.loesch@tuckerellis.com
If to Data:
Paradox Data LLC
Attn: [______________]
[Address]
Email: [______________]
with a copy to: Z Squared Inc., Attn: [______________]
[Address] Email: [______________]
and with a copy to counsel for Z Squared Inc.: [______________]
12.4 Entire Agreement. This Agreement constitutes
the entire agreement of the Parties with respect to its subject matter and supersedes all prior understandings, whether written or oral.
It may be amended only by a written instrument signed by both Parties.
12.5 Counterparts; Electronic Signatures. This
Agreement may be executed in counterparts. Electronic signatures shall be deemed valid and binding.
12.6 Severability. If any provision is
found invalid or unenforceable, the remaining provisions continue in full force and effect.
12.7 No Waiver. Failure to enforce any
provision shall not constitute a waiver of the right to enforce it thereafter.
12.8 Survival. Sections 4.6, 4.7(c), 10
(Indemnification), 11.3(b) (Holdover indemnification), 11.5 (Infrastructure Deposit), and 12 (General Provisions) shall survive the termination
or expiration of this Agreement. The representations and warranties in Section 8.2 shall survive the Assignment Date and the Changeover
Date for a period of twelve (12) months.
12.9 Disclosure. The Parties acknowledge
that Data is currently engaged in discussions regarding a potential transaction involving a change in the ownership or control of Data.
This Agreement and its terms may be disclosed to potential investors, acquirors, or their representatives in connection with such transaction,
subject to customary confidentiality obligations.
12.10 Entergy Consent Not Required for This
Agreement. The Parties acknowledge and agree that this Agreement does not constitute an assignment of the AES within the meaning of
Section 9 thereof, and that no consent of Entergy is required for the execution, delivery, or performance of this Agreement. Nothing in
this Agreement shall be deemed to waive, modify, or supersede any provision of the AES, and in the event of any conflict between this
Agreement and the AES, the AES shall control as between Infrastructure and Entergy.
12.11. Z Squared. Pursuant to the Membership
Interest Purchase Agreement, dated as of July 31, 2026, by and among (i) Z Squared, Inc., a Delaware corporation (ii) Infrastructure,
(iii) Data, and (iv) the identified owner parties, at closing, Data will become a wholly owned subsidiary of Z Squared, Inc.
[SIGNATURE PAGE FOLLOWS]
Intercompany Power Access and Cost-Sharing Agreement Page 9
IN WITNESS WHEREOF, the Parties
have executed this Agreement as of the Effective Date.
PARADOX
INFRASTRUCTURE LLC
By:
/s/
Armand Nannicola Sr
Name:
Armand
Nannicola Sr
Title:
Managing
Member
PARADOX
DATA LLC
By:
/s/
Armand Nannicola Sr
Name:
Armand
Nannicola Sr.
Title:
Managing
Member
Intercompany Power Access and Cost-Sharing Agreement Page 10
EX-10.3 — EXHIBIT 10.3
EX-10.3
Filename: zsqrex10-3.htm · Sequence: 5
Exhibit 10.3
ASSIGNMENT OF MEMBERSHIP INTERESTS
This ASSIGNMENT OF MEMBERSHIP INTERESTS
(this “Assignment”), dated as of September 8, 2026, is made by and between PARADOX INFRASTRUCTURE LLC, a Florida limited liability
company (“Assignor”), and Z SQUARED INC., a Delaware corporation (“Assignee”), pursuant to that certain Membership
Interest Purchase Agreement, dated as of July 31, 2026, by and among Assignee, Assignor, Paradox Data, LLC, a Florida limited liability
company (the “Company”), and the other parties thereto (the “Purchase Agreement”). Capitalized terms used but
not defined herein have the meanings given in the Purchase Agreement.
1. Assignment.
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor hereby irrevocably sells,
assigns, transfers, conveys and delivers to Assignee one hundred percent (100%) of the Membership Interests, constituting all of the issued
and outstanding membership interests of the Company, together with all of Assignor’s right, title and interest in and to the Company,
including all economic, voting, management, governance, capital account, distribution and other rights and interests of any kind in respect
thereof, free and clear of all Liens other than restrictions on transfer arising under applicable securities Laws, and Assignee hereby
accepts such assignment.
2. Admission;
Withdrawal. Effective upon the execution and delivery of this Assignment and the Joinder, (a) Assignee is hereby admitted as the sole
member of the Company, (b) Assignor hereby withdraws and ceases to be a member of the Company and ceases to have any right, title or interest
in or to the Company, and (c) the Company shall continue without dissolution.
3. Further
Assurances. Assignor shall execute and deliver such further instruments and take such further actions as Assignee may reasonably request
to vest fully in Assignee title to the Membership Interests and to give effect to this Assignment.
4. Purchase
Agreement Controls. This Assignment is delivered pursuant to, and is subject in all respects to, the terms of the Purchase Agreement.
Nothing herein shall limit, expand or modify any representation, warranty, covenant, indemnity or other obligation under the Purchase
Agreement, and in the event of any conflict between this Assignment and the Purchase Agreement, the Purchase Agreement shall control.
5. Governing
Law; Counterparts. This Assignment shall be governed by the internal Laws of the State of Delaware. This Assignment may be executed
in counterparts (including by .pdf or electronic signature), each of which shall be deemed an original.
[Signature page to Assignment of
Membership Interests follows.]
IN WITNESS WHEREOF, the undersigned has caused
this Assignment of Membership Interests to be executed as of the date first listed above.
ASSIGNOR:
PARADOX INFRASTRUCTURE LLC,
a Florida limited liability company
By: /s/ Armand Nannicola Sr.
Armand Nannicola Sr.
Managing Member
ASSIGNEE
Z SQUARED INC.,
a Delaware corporation
By: /s/ David Halabu
David Halabu
Chief Executive Officer
EX-99.1 — EXHIBIT 99.1
EX-99.1
Filename: zsqrex99-1.htm · Sequence: 6
Exhibit 99.1
Z Squared Acquires Energized Arkansas Campus to Advance AI Infrastructure
Strategy
Union County Campus has existing electric service of up to approximately
8.0 MW and a phased development target of an estimated 150+ MW
FT. LAUDERDALE, Fla., Sept. 9, 2026 /PRNewswire/ -- Z Squared Inc.
(Nasdaq: ZSQR) (“Z Squared” or the “Company”) today announced the closing of its acquisition of Paradox Data, LLC
from Paradox Infrastructure LLC, bringing the energized Union County Campus in El Dorado, Arkansas (the “Union County Campus”),
into its computing infrastructure portfolio. The acquisition gives Z Squared its first owned, energized campus and a site from which to
advance its planned AI colocation business.
The campus has electric service already flowing under an existing interruptible
service arrangement with Entergy Arkansas, LLC for up to approximately 8.0 MW. That existing grid connection provides a starting point
for phased conversion into high-density space for customers that bring and operate their own computing equipment.
Paradox Data, LLC also holds contractual rights to acquire adjacent
land and a development pathway targeting 150+ MW of AI-ready capacity over time through a combination of utility power and on-site generation.
Expansion will depend on additional power arrangements, customer commitments, financing, permitting and construction. Capacity above the
existing service arrangement is a development target and is not currently contracted, energized or delivered.
“In August we told our shareholders to judge us on four things:
whether the Paradox acquisition closes, whether we sign our first paying tenant and megawatt commitments, whether energized capacity at
Union County grows beyond the current 8 megawatts, and whether we add sites without taking on debt,” said David Halabu, Chief Executive
Officer of Z Squared. “We have met our first goal. We closed, we paid in stock, and we took on no debt to do it. Union County gives
us power already flowing, land under contract for expansion, and a path to pursue 150+ megawatts of AI-ready capacity. The work now is
the first phase: the engineering, the power planning and the first customer commitment. We will report against those same four measures
as we go. Our intention is for Union County to be the first owned campus rather than the only one, subject to the same discipline we have
applied here.”
Advancing the First Phase
With the acquisition complete, Z Squared’s near-term priorities at
Union County include first-phase high-density electrical and cooling design, utility and on-site generation planning, advancing the adjacent
land acquisition, and securing the first binding customer request for service.
As previously announced, the Company has engaged A2 Advisors, a strategic
advisory and executive management firm focused on digital infrastructure, to support site-development planning, project delivery, vendor
and partner alignment, and leasing and capital strategy at the campus.
Union County is intended to contribute to Z Squared’s previously announced
Phase 1 objective of developing 100 MW of AI-ready capacity across multiple U.S. sites. The Company’s approach is to acquire energized,
grid-connected properties and deploy conversion capital site by site against customer commitments and operational readiness.
The acquisition was completed entirely in stock, with no cash paid
at closing and no debt financing incurred for the transaction.
Additional information regarding the transaction, including the material
terms of the purchase agreement, is contained in the Company’s Current Reports on Form 8-K filed or to be filed with the U.S. Securities
and Exchange Commission.
About Z Squared Inc.
Z Squared Inc. is a computing infrastructure company operating advanced
computing equipment and expanding into AI infrastructure. The Company’s strategy is built on three principles: lead with power by acquiring
operating sites where power is already flowing; build for AI workloads by converting that capacity into AI-ready colocation where the
customer brings the compute and runs what they need; and scale with discipline by deploying conversion capital site by site, against signed
contracts and operational readiness. Z Squared’s common stock began trading on the Nasdaq Global Market under the symbol “ZSQR”
in April 2026.
For more information, visit www.zsquaredinc.com. Investor Relations
Contact:
ZSQR@mzgroup.us
Forward-Looking Statements
This press release contains “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, that are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by the use of words such as “may,” “will,” “should,” “expects,” “plans,”
“anticipates,” “intends,” “targets,” “projects,” “believes,” “estimates,”
“potential,” “continue,” “could,” “would,” “goal,” “objective,” “pursue”
or “seek,” or the negatives of these terms or other comparable terminology. Forward-looking statements in this press release
include, among others, statements regarding the development and conversion of the Union County Campus into AI-ready colocation capacity;
targeted campus capacity of 150+ MW; the availability and expansion of utility power and on-site generation; the acquisition of adjacent
land; customer commitments; the achievement of development milestones and issuance of related preferred stock; the Company’s previously
announced Phase 1 objective of developing 100 MW of AI-ready capacity across multiple U.S. sites; the expected contributions of A2 Advisors;
the assignment to Paradox Data, LLC of the existing electric service agreement with Entergy Arkansas, LLC and the receipt of Entergy’s
consent thereto; the Company’s ability to obtain any stockholder approval required under Nasdaq listing rules in connection with the issuance
of shares of common stock upon conversion of the preferred stock; the potential conversion or redemption of the Series A Convertible Preferred
Stock; the Company’s intention to acquire additional sites without incurring debt; and the Company’s strategy and planned expansion into
AI infrastructure, data center development and power generation.
Forward-looking statements are based on management’s current expectations
and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or
implied, including, among others: the Company’s ability to continue as a going concern and obtain financing for development; the risk
that development milestones are not achieved in whole or in part; the Company’s ability to obtain stockholder approval under Nasdaq Listing
Rule 5635 to the extent required for issuances of common stock in excess of the applicable share cap, and the Company’s obligation to
satisfy the affected portion of any milestone payment in cash if such approval is not obtained; risks related to the availability, cost
and interruptible nature of electric power at the Union County Campus, including the receipt of Entergy Arkansas, LLC’s consent to the
assignment of the existing electric service agreement, and the Company’s ability to secure additional utility power and on-site generation;
risks related to the adjacent land acquisition, permitting, construction, equipment procurement and development of data center capacity;
customer demand for AI-ready capacity and the Company’s ability to secure binding customer commitments; the Company’s ability to integrate
the acquired business and realize the anticipated benefits of the acquisition; dilution resulting from the issuance and conversion of
preferred stock issued in the transaction; volatility in digital asset prices and the economics of the Company’s mining operations; the
Company’s ability to maintain compliance with the continued listing standards of The Nasdaq Stock Market; the Company’s ability to remediate
the material weaknesses in its internal control over financial reporting; and the other risks and uncertainties described under “Risk
Factors” in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, its Registration Statement on Form S-1
(File No. 333-296653) and its other filings with the U.S. Securities and Exchange Commission (Commission File No. 001-39669), available
at www.sec.gov.
Capacity above the existing service arrangement remains a development
target and is not currently contracted, energized or delivered. No milestone has been achieved and achievement is not assured.
Forward-looking statements speak only as of the date of this press
release. Except as may be required by applicable law, the Company undertakes no obligation to update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise. You should not place undue reliance on any forward-looking statement.
SOURCE Z Squared Inc.
XML — IDEA: XBRL DOCUMENT
XML
Filename: R1.htm · Sequence: 11
v3.26.3
Cover
Sep. 08, 2026
Cover [Abstract]
Document Type
8-K
Amendment Flag
false
Document Period End Date
Sep. 08, 2026
Current Fiscal Year End Date
--12-31
Entity File Number
001-39669
Entity Registrant Name
Z SQUARED INC.
Entity Central Index Key
0001759186
Entity Tax Identification Number
98-1465952
Entity Incorporation, State or Country Code
DE
Entity Address, Address Line One
550 South Andrews Ave.
Entity Address, Address Line Two
Suite #700
Entity Address, City or Town
Fort Lauderdale
Entity Address, State or Province
FL
Entity Address, Postal Zip Code
33301
City Area Code
305
Local Phone Number
697-0792
Written Communications
false
Soliciting Material
false
Pre-commencement Tender Offer
false
Pre-commencement Issuer Tender Offer
false
Title of 12(b) Security
Common Stock, par value $0.0001 per share
Trading Symbol
ZSQR
Security Exchange Name
NASDAQ
Entity Emerging Growth Company
false
X
- Definition
Boolean flag that is true when the XBRL content amends previously-filed or accepted submission.
+ References
No definition available.
+ Details
Name:
dei_AmendmentFlag
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Area code of city
+ References
No definition available.
+ Details
Name:
dei_CityAreaCode
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Cover page.
+ References
No definition available.
+ Details
Name:
dei_CoverAbstract
Namespace Prefix:
dei_
Data Type:
xbrli:stringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
End date of current fiscal year in the format --MM-DD.
+ References
No definition available.
+ Details
Name:
dei_CurrentFiscalYearEndDate
Namespace Prefix:
dei_
Data Type:
xbrli:gMonthDayItemType
Balance Type:
na
Period Type:
duration
X
- Definition
For the EDGAR submission types of Form 8-K: the date of the report, the date of the earliest event reported; for the EDGAR submission types of Form N-1A: the filing date; for all other submission types: the end of the reporting or transition period. The format of the date is YYYY-MM-DD.
+ References
No definition available.
+ Details
Name:
dei_DocumentPeriodEndDate
Namespace Prefix:
dei_
Data Type:
xbrli:dateItemType
Balance Type:
na
Period Type:
duration
X
- Definition
The type of document being provided (such as 10-K, 10-Q, 485BPOS, etc). The document type is limited to the same value as the supporting SEC submission type, or the word 'Other'.
+ References
No definition available.
+ Details
Name:
dei_DocumentType
Namespace Prefix:
dei_
Data Type:
dei:submissionTypeItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Address Line 1 such as Attn, Building Name, Street Name
+ References
No definition available.
+ Details
Name:
dei_EntityAddressAddressLine1
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Address Line 2 such as Street or Suite number
+ References
No definition available.
+ Details
Name:
dei_EntityAddressAddressLine2
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Name of the City or Town
+ References
No definition available.
+ Details
Name:
dei_EntityAddressCityOrTown
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Code for the postal or zip code
+ References
No definition available.
+ Details
Name:
dei_EntityAddressPostalZipCode
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Name of the state or province.
+ References
No definition available.
+ Details
Name:
dei_EntityAddressStateOrProvince
Namespace Prefix:
dei_
Data Type:
dei:stateOrProvinceItemType
Balance Type:
na
Period Type:
duration
X
- Definition
A unique 10-digit SEC-issued value to identify entities that have filed disclosures with the SEC. It is commonly abbreviated as CIK.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
+ Details
Name:
dei_EntityCentralIndexKey
Namespace Prefix:
dei_
Data Type:
dei:centralIndexKeyItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Indicate if registrant meets the emerging growth company criteria.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
+ Details
Name:
dei_EntityEmergingGrowthCompany
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Commission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
+ References
No definition available.
+ Details
Name:
dei_EntityFileNumber
Namespace Prefix:
dei_
Data Type:
dei:fileNumberItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Two-character EDGAR code representing the state or country of incorporation.
+ References
No definition available.
+ Details
Name:
dei_EntityIncorporationStateCountryCode
Namespace Prefix:
dei_
Data Type:
dei:edgarStateCountryItemType
Balance Type:
na
Period Type:
duration
X
- Definition
The exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
+ Details
Name:
dei_EntityRegistrantName
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
The Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
+ Details
Name:
dei_EntityTaxIdentificationNumber
Namespace Prefix:
dei_
Data Type:
dei:employerIdItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Local phone number for entity.
+ References
No definition available.
+ Details
Name:
dei_LocalPhoneNumber
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 13e
-Subsection 4c
+ Details
Name:
dei_PreCommencementIssuerTenderOffer
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 14d
-Subsection 2b
+ Details
Name:
dei_PreCommencementTenderOffer
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Title of a 12(b) registered security.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b
+ Details
Name:
dei_Security12bTitle
Namespace Prefix:
dei_
Data Type:
dei:securityTitleItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Name of the Exchange on which a security is registered.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection d1-1
+ Details
Name:
dei_SecurityExchangeName
Namespace Prefix:
dei_
Data Type:
dei:edgarExchangeCodeItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as soliciting material pursuant to Rule 14a-12 under the Exchange Act.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 14a
-Subsection 12
+ Details
Name:
dei_SolicitingMaterial
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Trading symbol of an instrument as listed on an exchange.
+ References
No definition available.
+ Details
Name:
dei_TradingSymbol
Namespace Prefix:
dei_
Data Type:
dei:tradingSymbolItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Securities Act
-Number 230
-Section 425
+ Details
Name:
dei_WrittenCommunications
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration