Item 1.01Entry into a Material Definitive Agreement.
Registration Rights Agreement
On November 5, 2021, in connection with the Panther Creek Acquisition (as defined below) and pursuant to the Panther Creek ECCA (as defined below), Stronghold Digital Mining, Inc., a Delaware corporation (the “Company”), entered into a registration rights agreement (the “Registration Rights Agreement”) with Panther Creek Reclamation Holdings, LLC, a Delaware limited liability company (“Panther Creek”). Pursuant to the Registration Rights Agreement, the Company agreed to prepare and file a registration statement covering the resale of the shares of Class A common stock, par value $0.0001 per share (“Common Stock”), of the Company that may be received upon redemption of the Panther Creek Shares (as defined below) within thirty business days following the completion of the Panther Creek Acquisition. Pursuant to the Underwriting Agreement, dated October 19, 2021, by and among the Company and B. Riley Securities, Inc. and Cowen and Company, LLC, as representatives of the other underwriters named therein (the “Underwriters”), the Company agreed to, among other things, refrain from, directly or indirectly, filing any registration statement under the Securities Act of 1933, as amended (the “Securities Act”), with respect to any share of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, for a period of 180 days, subject to certain exceptions. On November 5, 2021 and in connection with the Registration Rights Agreement, the Underwriters waived this restriction to permit the filing of a registration statement on Form S-1 registering the shares of Common Stock that may be received upon redemption of the Panther Creek Shares.
Panther Creek will reimburse the Company for up to $75,000 of its reasonable out-of-pocket fees and expenses incurred in connection with such registration obligations.
Panther Creek has entered into a lock-up agreement with respect to the shares of Common Stock that it may receive upon the redemption of the Panther Creek Shares (as defined below) and is subject to certain restrictions with respect to the sale or other disposition of the Common Stock for a period of sixty days following the date on which such registration statement is first declared effective by the Securities and Exchange Commission (the “SEC”).
The foregoing summary of the terms of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Registration Rights Agreement, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated in this Item 1.01 by reference.
Omnibus Services Agreement
On November 2, 2021, in connection with the Panther Creek Acquisition and pursuant to the Panther Creek ECCA, Stronghold Digital Mining Holdings LLC, a Delaware limited liability company and subsidiary of the Company (“Stronghold LLC”), and Olympus Stronghold Services, LLC, a Delaware limited liability company (“Olympus Services”), entered into an Operations, Maintenance and Ancillary Services Agreement (the “Omnibus Services Agreement”), whereby Olympus Services will provide certain operations and maintenance services to Stronghold LLC, as well as, employ certain personnel who operate the Panther Creek Plant and a coal refuse power generation facility located in Scrubgrass Township, Pennsylvania (the “Scrubgrass Plant”). Stronghold LLC will reimburse Olympus Services for those costs incurred by Olympus Services in the course of providing services under the Omnibus Services Agreement, including payroll and benefits costs and insurance costs. The material costs incurred by Olympus Services shall be approved by Stronghold LLC. Stronghold LLC will also pay Olympus Services a management fee at the rate of $1,000,000 per year, payable monthly, and an additional one time mobilization fee of $150,000 upon the effective date of the Omnibus Services Agreement.
The foregoing summary of the terms of the Omnibus Services Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Omnibus Services Agreement, which is attached as Exhibit 10.2 to this Current Report on Form 8-K and incorporated in this Item 1.01 by reference.