LCAP 8-K
MSP Recovery, Inc. (MSPR)
8-K
2025-06-27
For: 2025-06-26
View Original
Added on
April 07, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
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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:
Written communications pursuant to Rule 425 under the Securities Act |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act |
Securities registered pursuant to Section 12(b) of the Act:
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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.
Nomura Amended and Restated Promissory Note
As previously disclosed, MSP Recovery, Inc. (the “Company”) entered into a Promissory Note (as amended, the “Nomura Note”) with Nomura Securities International, Inc. (“Nomura”) on May 27, 2022.
On June 26, 2025, the Company further amended and restated the Nomura Note to: (i) increase the principal amount to approximately $33.6 million, and (ii) to memorialize Nomura’s waiver of its entitlement to receive up to $3 million of proceeds from the Yorkville SEPA, subject to certain limitations described therein.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
As previously disclosed, on November 14, 2023, the Company entered into the Standby Equity Purchase Agreement (“SEPA”) with YA II PN, LTD, a Cayman Islands exempt limited partnership (“Yorkville”) pursuant to which the Company has the right to sell to Yorkville up to $250 million of its shares of common stock, subject to certain limitations and conditions set forth in the SEPA, from time to time during the term of the SEPA. Sales of the shares of common stock to Yorkville under the SEPA, and the timing of any such sales, are at the Company’s option, and the Company is under no obligation to sell any shares of common stock to Yorkville under the SEPA except in connection with notices that may be submitted by Yorkville, in certain circumstances as described below.
In connection with the SEPA, and subject to the conditions set forth therein, Yorkville agreed to advance to the Company in the form of convertible promissory notes (the “Convertible Notes”) an aggregate principal amount of $15.0 million (the “Pre-Paid Advances”). In 2023, the Company issued two Convertible Notes to Yorkville for a combined principal amount of $10 million, resulting in net proceeds of $9.48 million, and in 2024 the Company issued a third Convertible Note to Yorkville in the principal amount of $5.0 million, resulting in net proceeds to us of $4.75 million.
On June 26, 2025, YA PN II, Ltd. (“Yorkville”) agreed to issue a fourth Convertible Note for $0.8 million with terms substantially the same as the previous Convertible Notes, issued pursuant to the SEPA. Yorkville may convert the Convertible Notes into shares of the Company’s common stock at a conversion price equal to the lower of the Fixed Price (as defined in each Convertible Note) or 95% of the lowest daily VWAP during the five consecutive trading days immediately preceding the date of the conversion (the “Conversion Price”), which in no event may the Conversion Price be lower than the Floor Price of $1.00, provided that the number of shares issued does not cause Yorkville to exceed the 9.99% ownership limitation.
In addition, Yorkville, in its sole discretion and providing that there is a balance remaining outstanding under the Convertible Notes, may deliver a notice under the SEPA requiring the issuance and sale of shares of common stock to Yorkville at the Conversion Price in consideration of an offset of the Convertible Notes (“Yorkville Advance”). Yorkville, in its sole discretion, may select the amount of any Yorkville Advance, provided that the number of shares issued does not cause Yorkville to exceed the 9.99% ownership limitation or the amount of shares of common stock that are registered. As a result of a Yorkville Advance, the amounts payable under the Convertible Notes will be offset by such amount subject to each Yorkville Advance.
This Current Report on Form 8-K shall not constitute an offer to sell or a solicitation of an offer to buy any shares of common stock, nor shall there be any sale of shares of common stock in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 2.03 of this Current Report on Form 8-K is incorporated herein by reference.
In the SEPA, Yorkville represented to the Company, among other things, that it is an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D under the Securities Act). The securities referred to in this Current Report on Form 8-K are being issued and sold by the Company to Yorkville in reliance upon the exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act.
Item 9.01. Financial Statements and Exhibits.
(d)
Exhibits
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Description |
10.1 |
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10.2 |
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10.3 |
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104 |
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Cover Page Interactive File (the cover page tags are embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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MSP RECOVERY, INC. |
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Dated: June 27, 2025 |
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By: |
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/s/ Alexandra Plasencia |
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Name: |
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Alexandra Plasencia |
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Title: |
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General Counsel |
Exhibit 10.2
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS EXCHANGEABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
Lionheart II Holdings, LLC
Exchangeable Promissory Note
Original Principal Amount: $750,000 |
Issuance Date: June 26, 2025
Number: MSPR-4
FOR VALUE RECEIVED, Lionheart II Holdings, LLC, an entity organized under the laws of the State of Delaware (the "Company"), hereby promises to pay to the order of YA II PN, LTD., or its registered assigns (the “Holder”), the amount set out above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to repayment, redemption, conversion or otherwise, the “Principal”) and Redemption Premium, as applicable, in each case when due, and to pay interest (“Interest”) on any outstanding Principal at the applicable Interest Rate (as defined below) from the date set out above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether upon the Maturity Date or acceleration, exchange, redemption or otherwise (in each case in accordance with the terms hereof). Certain capitalized terms used herein are defined in Section (12). The Issuance Date is the date of the first issuance of this Exchangeable Promissory Note (the “Note”) regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note. This Note was issued with a 5% original issue discount.
This Note is being issued pursuant to Section 2.01 of the Standby Equity Purchase Agreement, dated November 14, 2023 (as supplement by the supplemental agreement on June 26, (the “Supplemental Agreement”), and as may be amended, amended and restated, extended, supplemented or otherwise modified in writing from time to time, the “SEPA”), between MSP Recovery, Inc. (“Parent”) and the YA II PN, Ltd., as the Investor. This Note may be repaid in accordance with the terms of the SEPA, including, without limitation, pursuant to Investor Notices and corresponding Advance Notices (as defined in the SEPA) deemed given by the Parent in connection with such Investor Notices (as defined in the SEPA). The Holder also has the option of exchanging on one or more occasions all or part of the then outstanding balance under this Note
by delivering to the Company one or more Exchange Notices in accordance with Section 3 of this Note.
(1)
GENERAL TERMS
(a)
Maturity Date. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal, accrued and unpaid Interest, and any other amounts outstanding pursuant to the terms of this Note. The "Maturity Date" shall be March 1, 2027, as may be extended at the option of the Holder. Other than as specifically permitted by this Note, the Company may not prepay or redeem any portion of the outstanding Principal and accrued and unpaid Interest.
(b)
Interest Rate and Payment of Interest. Interest shall accrue on the outstanding Principal balance hereof at an annual rate equal to 5% (“Interest Rate”), which Interest Rate shall increase to an annual rate of 18% upon the occurrence of an Event of Default (for so long as such event remains uncured). Interest shall be calculated based on a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.
(c)
[RESERVED]
(d)
Optional Redemption. The Company at its option shall have the right, but not the obligation, to redeem (“Optional Redemption”) early a portion or all amounts outstanding under this Note as described in this Section; provided that (i) the Company provides the Holder with at least three Trading Days’ prior written notice (each, a “Redemption Notice”) of its desire to exercise an Optional Redemption, and (ii) on the date the Redemption Notice is issued, the VWAP of the Common Shares is less than the Fixed Price. Each Redemption Notice shall be irrevocable and shall specify the outstanding balance of the Note to be redeemed and the Redemption Amount. The “Redemption Amount” shall be equal to the outstanding Principal balance being redeemed by the Company, plus the Redemption Premium (as defined below), plus all accrued and unpaid interest. After receipt of the Redemption Notice, the Holder shall have three Trading Days to elect to exchange all or any portion of the Note pursuant to the terms of this Note. On the fourth Trading Day after the Redemption Notice, the Company shall deliver to the Holder the Redemption Amount with respect to the Principal amount redeemed after giving effect to exchanges or other payments effected during the three Trading Day period.
(e)
Payment Dates. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
(2)
EVENTS OF DEFAULT.
(a)
An “Event of Default,” wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
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(i)
The Company's failure to pay to the Holder any amount of Principal, Redemption Premium, Interest, or other amounts when and as due under this Note or any other Transaction Document within five (5) Trading Days after such payment is due;
(ii)
The Company or any Subsidiary of the Company shall commence, or there shall be commenced against the Company or any Subsidiary of the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any Subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect relating to the Company or any Subsidiary of the Company, any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty one (61) days; or the Company or any Subsidiary of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Company or any Subsidiary of the Company suffers any appointment of any custodian, private or court appointed receiver or the like for it or all or substantially all of its property which continues undischarged or unstayed for a period of sixty one (61) days; or the Company or any Subsidiary of the Company makes a general assignment of all or substantially all of its assets for the benefit of creditors; or the Company or any Subsidiary of the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Company or any Subsidiary of the Company shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any Subsidiary of the Company shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any Subsidiary of the Company for the purpose of effecting any of the foregoing;
(iii)
The Company or any Subsidiary of the Company shall default, in any of its obligations under any debenture, mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the Company or any Subsidiary of the Company in an amount exceeding $5,000,000, whether such indebtedness now exists or shall hereafter be created and such default is not cured within the time prescribed by the documents governing such indebtedness or if no time is prescribed, within ten (10) Trading Days, and as a result, such indebtedness becomes or is declared due and payable;
(iv)
The Common Shares shall cease to be quoted or listed for trading, as applicable, on any Primary Market for a period of ten (10) consecutive Trading Days;
(v)
The Parent or any Subsidiary of the Parent shall be a party to any Change of Control Transaction (as defined in Section (12)) unless in connection with such Change of Control Transaction this Note is retired;
(vi)
The Parent’s (A) failure to deliver the required number of Common Shares to the Holder within two (2) Trading Days after the applicable Share Delivery Date or (B) notice, written or oral, to any holder of the Note, including by way of public
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announcement, at any time, of its intention not to comply with a request for Exchange of any Note into Common Shares that is tendered in accordance with the provisions of the Note;
(vii)
The Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined herein) within five (5) Business Days after such payment is due;
(viii)
The Parent’s failure to timely file with the Commission any Periodic Report on or before the due date of such filing as established by the Commission, it being understood, for the avoidance of doubt, that due date includes any permitted filing deadline extension under Rule 12b-25 under the Exchange Act;
(ix)
Any material representation or warranty made or deemed to be made by or on behalf of the Company in or in connection with any Transaction Document, or any waiver hereunder or thereunder, shall prove to have been incorrect in any material respect (or, in the case of any such representation or warranty already qualified by materiality, such representation or warranty shall prove to have been incorrect) when made or deemed made;
(x)
Any material provision of any Transaction Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder, ceases to be in full force and effect; or the Company or any other Person contests in writing the validity or enforceability of any provision of any Transaction Document; or the Company denies in writing that it has any or further liability or obligation under any Transaction Document, or purports in writing to revoke, terminate (other than in line with the relevant termination provisions) or rescind any Transaction Document;
(xi)
The Company uses the proceeds of the issuance of this Note, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulations T, U and X of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof), or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose;
(xii)
Any Event of Default (as defined in the Other Notes or in any Transaction Document other than this Note) occurs with respect to any Other Notes, or any breach of any material term of any other debenture, note, or instrument held by the Holder in the Company or any agreement between or among the Company and the Holder; or
(xiii)
The Company shall fail to observe or perform any material covenant, agreement or warranty contained in, or otherwise commit any material breach or default of any provision of this Note (except as may be covered by Section (2)(a)(i) through (2)(a)(xii) hereof) or any other Transaction Document, which is not cured or remedied within the time prescribed or if no time is prescribed within ten (10) Business Days.
(b)
During the time that any portion of this Note is outstanding, if any Event of Default has occurred (other than an event with respect to the Company described in Section (2)(a)(ii)), the full unpaid Principal amount of this Note, together with interest and other amounts owing in respect thereof, to the date of acceleration shall become at the Holder's election
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given by notice pursuant to Section (5), immediately due and payable in cash; provided that, in the case of any event with respect to the Company described in Section (2)(a)(ii), the full unpaid Principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration, shall automatically become due and payable, in each case without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company. Furthermore, in addition to any other remedies, the Holder shall have the right (but not the obligation) to exchange, on one or more occasions all or part of the Note in accordance with Section (3) (and subject to the limitations set out in Section (3)(c)(i) and Section (3)(c)(ii)) at any time after (x) an Event of Default or (y) the Maturity Date at the Exchange Price. The Holder need not provide and the Company hereby waives any presentment, demand, protest or other notice of any kind, (other than required notice of exchange) and the Holder may immediately enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by the Holder in writing at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.
(3)
EXCHANGE OF NOTE. This Note shall be exchangeable into Common Shares, on the terms and conditions set forth in this Section (3).
(a)
Exchange Right. Subject to the limitations of Section (3)(c), at any time or times on or after the Issuance Date, the Holder shall be entitled to exchange any portion of the outstanding and unpaid Exchange Amount into fully paid and nonassessable Common Shares in accordance with Section (3)(b), at the Exchange Price. The number of Common Shares issuable upon exchange of any Exchange Amount pursuant to this Section (3)(a) shall be determined by dividing (x) such Exchange Amount by (y) the Exchange Price. The Parent shall not issue any fraction of a share of Common Shares upon any exchange. All calculations under this Section (3) shall be rounded to the nearest $0.0001. If the issuance would result in the issuance of a fraction of a share of Common Shares, the Parent shall round such fraction of a share of Common Shares up to the nearest whole share. The Parent shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Shares upon exchange of any Exchange Amount.
(b)
Mechanics of Exchange.
(i)
Optional Exchange. To exchange any Exchange Amount into Common Shares on any date (a "Exchange Date"), the Holder shall (A) transmit by email (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of exchange in the form attached hereto as Exhibit I (the "Exchange Notice") to the Company and (B) if required by Section (3)(b)(iii), surrender this Note to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking reasonably satisfactory to the Company with respect to this Note in the case of its loss, theft or destruction). On or before the third (3rd) Trading Day following the date of receipt of an Exchange Notice (the "Share Delivery Date"), the Parent shall (X) if legends are not required to be placed on certificates of Common Shares and provided that the Transfer Agent is participating in the Depository Trust Company's ("DTC") Fast Automated Securities Transfer Program, credit such aggregate number of Common Shares to which the Holder shall be entitled to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission
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system or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Exchange Notice, a certificate, registered in the name of the Holder or its designee, for the number of Common Shares to which the Holder shall be entitled which certificates shall not bear any restrictive legends unless required pursuant to rules and regulations of the Commission. If this Note is physically surrendered for exchange and the outstanding Principal of this Note is greater than the Principal portion of the Exchange Amount being exchanged, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the holder a new Note representing the outstanding Principal not exchanged. The Person or Persons entitled to receive the Common Shares issuable upon an exchange of this Note shall be treated for all purposes as the record holder or holders of such Common Shares upon the transmission of an Exchange Notice.
(ii)
Parent’s Failure to Timely Exchange. If within three (3) Trading Days after the Company's receipt of an email copy of an Exchange Notice the Parent shall fail to issue and deliver a certificate to the Holder or credit the Holder's balance account with DTC for the number of Common Shares to which the Holder is entitled upon such holder's exchange of any Exchange Amount (a "Exchange Failure"), and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) Common Shares to deliver in satisfaction of a sale by the Holder of Common Shares issuable upon such exchange that the Holder anticipated receiving from the Parent (a "Buy-In"), then the Company or the Parent, as applicable, shall, within three (3) Business Days after the Holder's request and in the Holder's discretion, either (i) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokerage commissions and other out of pocket expenses, if any) for the Common Shares so purchased (the “Buy-In Price”), at which point the Company's obligation to deliver such certificate (and to issue such Common Shares) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Shares and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of Common Shares, times (B) the Closing Price on the Exchange Date.
(iii)
Book-Entry. Notwithstanding anything to the contrary set forth herein, upon exchange of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Exchange Amount represented by this Note is being exchanged or (B) the Holder has provided the Company with prior written notice (which notice may be included in an Exchange Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Principal and Interest exchanged and the dates of such exchanges or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon exchange.
(c)
Limitations on Exchanges.
(i)
Beneficial Ownership. The Holder shall not have the right to exchange any portion of this Note to the extent that after giving effect to such exchange, the Holder, together with any affiliate thereof, would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 4.99% of the number of Common Shares outstanding immediately after giving effect to such exchange or
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receipt of shares as payment of interest. Since the Holder will not be obligated to report to the Company the number of Common Shares it may hold at the time of an exchange hereunder, unless the exchange at issue would result in the issuance of Common Shares in excess of 9.99% of the then outstanding Common Shares without regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular exchange hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the Principal amount of this Note is exchangeable shall be the responsibility and obligation of the Holder. If the Holder has delivered an Exchange Notice for a Principal amount of this Note that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the exchange for the maximum Principal amount permitted to be exchanged on such Exchange Date in accordance with Section (3)(a) and, any Principal amount tendered for exchange in excess of the permitted amount hereunder shall remain outstanding under this Note. The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 65 days prior notice to the Company. Other Holders shall be unaffected by any such waiver.
(ii)
Principal Market Limitation. Notwithstanding anything in this Note to the contrary, the Parent shall not issue any Common Shares upon exchange of this Note, or otherwise, if the issuance of such Common Shares, together with any Common Shares issued in connection with any other related transactions that may be considered part of the same series of transactions, would exceed the aggregate number Common Shares that the Parent may issue in a transaction in compliance with the Parent’s obligations under the rules or regulations of Nasdaq Stock Market LLC (the “Nasdaq”) and shall be referred to as the “Exchange Cap,” except that such limitation shall not apply if the Parent’s stockholders have approved such issuances on such terms in excess of the Exchange Cap in accordance with the rules of the Nasdaq.
(d)
Other Provisions.
(i)
All calculations under this Section (3) shall be rounded to the nearest $0.0001 or whole share.
(ii)
So long as this Note or any Other Notes remain outstanding, the Parent shall maintain available and reserve from its duly authorized share capital the maximum number of Common Shares issuable upon exchange of this Note and the Other Notes (assuming for purposes hereof that (x) this Note and such Other Notes are exchangeable at the Floor Price as of the date of determination, (y) any such exchange shall not take into account any limitations on the exchange of the Note or Other Notes set forth herein or therein (the “Required Reserve Amount”), provided that at no time shall the number of Common Shares reserved pursuant to this Section (3)(d)(ii) be reduced other than proportionally with respect to all Common Shares in connection with any exchange (other than pursuant to the exchange of this Note and the Other Notes in accordance with their terms) and/or cancellation, or reverse stock split. If at any time the number of Common Shares authorized but unissued and not otherwise reserved for issuance (including (i) in relation to equity or debt securities convertible into or exchangeable or exercisable for or that can be settled in Common Shares (other than the Note and the Other Notes) and (ii)
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Common Shares remaining available for issuance under the Parent’s equity incentive plans) is not sufficient to meet the Required Reserve Amount, the Parent will promptly take all corporate action necessary to propose to its general meeting of shareholders (or otherwise through shareholder approval) an increase of its authorized share capital necessary to meet the Parent’s obligations pursuant to this Note, recommending that shareholders vote in favor of such an increase. If at any time the number of Common Shares that remain available for issuance under the Exchange Cap is less than 100% of the maximum number of shares issuable upon exchange of all the Notes and Other Notes then outstanding (assuming for purposes hereof that (x) the Notes are exchangeable at the Exchange Price then in effect, and (y) any such exchange shall not take into account any limitations on the exchange of the Note, other than the Floor Price then in effect but solely with respect to the Variable Price), the Parent will use commercially reasonable efforts to promptly call and hold a shareholder meeting (or otherwise obtain shareholder approval) for the purpose of seeking the approval of its shareholders as required by the applicable rules of the Principal Market, for issuances of shares in excess of the Exchange Cap. The Parent covenants that, upon issuance in accordance with exchange of this Note in accordance with its terms, the Common Shares, when issued, will be validly issued, fully paid and nonassessable.
(iii)
Nothing herein shall limit a Holder's right to pursue actual damages or declare an Event of Default pursuant to Section (2) herein for the Parent’s failure to deliver certificates representing Common Shares upon exchange within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
(iv)
Legal Opinions. The Company is obligated to cause its legal counsel to deliver legal opinions to the Company’s transfer agent in connection with any legend removal upon the expiration of any holding period or other requirement for which the Underlying Shares may bear legends restricting the transfer thereof. The Company has determined, in consultation with its counsel, that for the purposes of Rule 144(d)(1) the Common Shares to be issued to the Holder upon an exchange as contemplated herein should be deemed to have been acquired as of the Issuance Date, and any legal opinion required hereunder shall include the Holder's holding period of this Note. To the extent that a legal opinion is not provided (either timely or at all), then, in addition to being an Event of Default hereunder, the Company agrees to reimburse the Holder for all reasonable costs incurred by the Holder in connection with any legal opinions paid for by the Holder in connection with sale or transfer of Underlying Common Shares. The Holder shall notify the Company of any such costs and expenses it incurs that are referred to in this section from time to time and all amounts owed hereunder shall be paid by the Company with reasonable promptness.
(e)
Adjustment of Exchange Price upon Subdivision or Combination of Common Shares. If the Company, at any time while this Note is outstanding, shall (a) pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Shares or any other equity or equity equivalent securities payable in Common Shares, (b) subdivide outstanding Common Shares into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding Common Shares into a smaller number of shares, or (d) issue by reclassification
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of Common Shares any shares of capital stock of the Company, then each of the Fixed Price and the Floor Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of Common Shares outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
(f)
Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of Common Shares are entitled to receive securities or other assets with respect to or in exchange for Common Shares (a "Corporate Event"), the Company shall make appropriate provision to ensure that the Holder will thereafter have the right to receive upon an exchange of this Note, at the Holder's option, (i) in addition to the Common Shares receivable upon such exchange, such securities or other assets to which the Holder would have been entitled with respect to such Common Shares had such Common Shares been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the exchangeability of this Note) or (ii) in lieu of the Common Shares otherwise receivable upon such exchange, such securities or other assets received by the holders of Common Shares in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Note initially been issued with exchange rights for the form of such consideration (as opposed to Common Shares) at an exchange rate for such consideration commensurate with the Exchange Price. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Required Holders. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the exchange or redemption of this Note.
(g)
Whenever the Exchange Price is adjusted pursuant to Section (3) hereof, the Company shall promptly provide the Holder with a written notice setting forth the Exchange Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
(h)
In case of any (1) merger or consolidation of the Parent or any Subsidiary of the Parent with or into another Person, or (2) sale by the Parent or any Subsidiary of the Parent of more than one-half of the assets of the Parent in one or a series of related transactions, a Holder shall have the right to (A) exercise any rights under Section (2)(a)(xii), (B) exchange the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Shares following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the Common Shares into which such aggregate Principal amount of this Note could have been exchanged immediately prior to such merger, consolidation or sales would have been entitled, or (C) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible or exchangeable Note with a Principal amount equal to the aggregate Principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible or exchangeable Note shall have terms identical (including with respect
9
to exchange) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Note was issued. In the case of clause (C), the conversion or exchange price applicable for the newly issued shares of preferred stock or debentures shall be based upon the amount of securities, cash and property that each Common Shares would receive in such transaction and the Exchange Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any exchange or redemption following such event. This provision shall similarly apply to successive such events.
(i)
Notwithstanding anything to contrary herein, in connection with any exchange of this Note into Common Shares as set forth herein, this Note shall be first converted into an equivalent number of Class B Common Units and Class V Common Stock (each as defined in Parent’s Second Amended and Restated Certificate of Incorporation (the “Parent Charter”)), and such Class B Common Units and Class V Common Stock shall then be immediately exchanged into Common Shares, as provided in the Amended and Restated Limited Liability Company Agreement of the Company and the Parent Charter.
(4)
REISSUANCE OF THIS NOTE.
(a)
Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section (4)(d)), registered in the name of the registered transferee or assignee, representing the outstanding Principal being transferred by the Holder (along with any accrued and unpaid interest thereof) and, if less than the entire outstanding Principal is being transferred, a new Note (in accordance with Section (4)(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section (3)(b)(iii) following exchange or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note.
(b)
Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section (4)(d)) representing the outstanding Principal.
(c)
Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section (4)(d)) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.
(d)
Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms hereof, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding
10
(or in the case of a new Note being issued pursuant to Section 5(4)(a) or Section 5(4)(c), the Principal designated by the Holder which, when added to the Principal represented by the other new Note issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Note), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest from the Issuance Date.
(5)
NOTICES. Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing by letter and email and will be deemed to have been delivered: upon the later of (A) either (i) receipt, when delivered personally or (ii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same and (B) receipt, when sent by electronic mail. The addresses and email addresses for such communications shall be:
If to the Company, to: |
MSP Recovery, Inc. |
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2701 S. Le Jeune Rd, Floor 10
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Attn: John Ruiz, CEO Alexandra Plasencia, General Counsel |
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E-mail: [email protected], [email protected] |
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with a copy (which shall not constitute notice) to:
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Steven Canner Baker & McKenzie LLP 452 Fifth Avenue New York, NY 10018 Telephone: (212) 626-4884
Jeremy L. Moore Baker & McKenzie LLP 700 Louisiana Street Houston, TX 77002 Telephone: (713) 427-5000 |
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If to the Holder: |
YA II PN, Ltd |
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c/o Yorkville Advisors Global, LLC 1012 Springfield Avenue |
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Mountainside, NJ 07092 |
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Attention: Mark Angelo |
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Telephone: 201-985-8300 |
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Email: [email protected] |
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or at such other address and/or email and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) electronically generated by the sender's email service provider containing the time, date, recipient email address or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.
(6)
Except as expressly provided herein, no provision of this Note shall alter or impair the obligations of the Company, which are absolute and unconditional, to pay the Principal of, interest and other charges (if any) on, this Note at the time, place, and rate, and in the currency, herein prescribed. This Note is a direct obligation of the Company. As long as this Note is outstanding, the Company shall not and shall cause their subsidiaries not to, without the consent of the Holder, (i) amend its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of the Holder; (ii) repay, repurchase or offer to repay, repurchase or otherwise acquire shares of its Common Shares or other equity securities; or (iii) enter into any agreement with respect to any of the foregoing.
(7)
This Note shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Company, unless and to the extent exchanged for Common Shares in accordance with the terms hereof.
(8)
CHOICE OF LAW; VENUE; WAIVER OF JURY TRIAL
(a)
Governing Law. This Note and the rights and obligations of the Parties hereunder shall, in all respects, be governed by, and construed in accordance with, the laws (excluding the principles of conflict of laws) of the State of New York (the “Governing Jurisdiction”) (including Section 5-1401 and Section 5-1402 of the General Obligations Law of the State of New York), including all matters of construction, validity and performance.
(b)
Jurisdiction; Venue; Service.
(i)
The Company hereby irrevocably consents to the non-exclusive personal jurisdiction of the state courts of the Governing Jurisdiction and, if a basis for federal jurisdiction exists, the non-exclusive personal jurisdiction of any United States District Court for the Governing Jurisdiction.
(ii)
The Company agrees that venue shall be proper in any court of the Governing Jurisdiction selected by the Holder or, if a basis for federal jurisdiction exists, in any United States District Court in the Governing Jurisdiction. The Company waives any right to object to the maintenance of any suit, claim, action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, in any of the state
12
or federal courts of the Governing Jurisdiction on the basis of improper venue or inconvenience of forum.
(iii)
Any suit, claim, action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or tort or otherwise, brought by the Company against the Holder arising out of or based upon this Note or any matter relating to this Note, or any other Transaction Document, or any contemplated transaction, shall be brought in a court only in the Governing Jurisdiction. The Company shall not file any counterclaim against the Holder in any suit, claim, action, litigation or proceeding brought by the Holder against the Company in a jurisdiction outside of the Governing Jurisdiction unless under the rules of the court in which the Holder brought such suit, claim, action, litigation or proceeding the counterclaim is mandatory, and not permissive, and would be considered waived unless filed as a counterclaim in the suit, claim, action, litigation or proceeding instituted by the Holder against the Company. The Company agrees that any forum outside the Governing Jurisdiction is an inconvenient forum and that any suit, claim, action, litigation or proceeding brought by the Company against the Holder in any court outside the Governing Jurisdiction should be dismissed or transferred to a court located in the Governing Jurisdiction. Furthermore, the Company irrevocably and unconditionally agrees that it will not bring or commence any suit, claim, action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Holder arising out of or based upon this Note or any matter relating to this Note, or any other Transaction Document, or any contemplated transaction, in any forum other than the courts of the State of New York sitting in New York County, and the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such suit, claim, action, litigation or proceeding may be heard and determined in such New York State Court or, to the fullest extent permitted by applicable law, in such federal court. The Company and the Holder agree that a final judgment in any such suit, claim, action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(iv)
The Company and the Holder irrevocably consent to the service of process out of any of the aforementioned courts in any such suit, claim, action, litigation or proceeding by the mailing of copies thereof by registered or certified mail postage prepaid, to it at the address provided for notices in this Note, such service to become effective thirty (30) days after the date of mailing.
(v)
Nothing herein shall affect the right of the Holder to serve process in any other manner permitted by law or to commence legal proceedings or to otherwise proceed against the Company or any other Person in the Governing Jurisdiction or in any other jurisdiction.
(c)
THE PARTIES MUTUALLY WAIVE ALL RIGHT TO TRIAL BY JURY OF ALL CLAIMS OF ANY KIND ARISING OUT OF OR BASED UPON THIS NOTE OR ANY MATTER RELATING TO THIS NOTE, OR ANY OTHER TRANSACTION DOCUMENT, OR ANY CONTEMPLATED TRANSACTION. THE PARTIES ACKNOWLEDGE THAT THIS IS A WAIVER OF A LEGAL RIGHT AND THAT THE PARTIES EACH MAKE THIS WAIVER VOLUNTARILY AND KNOWINGLY AFTER
13
CONSULTATION WITH COUNSEL OF THEIR RESPECTIVE CHOICE. THE PARTIES AGREE THAT ALL SUCH CLAIMS SHALL BE TRIED BEFORE A JUDGE OF A COURT HAVING JURISDICTION, WITHOUT A JURY.
(9)
If the Company fails to strictly comply with the terms of this Note, then the Company shall reimburse the Holder promptly for all fees, costs and expenses, including, without limitation, attorneys’ fees and expenses incurred by the Holder in any action in connection with this Note, including, without limitation, those incurred: (i) during any workout, attempted workout, and/or in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations, (ii) collecting any sums which become due to the Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (iv) the protection, preservation or enforcement of any rights or remedies of the Holder.
(10)
Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.
(11)
If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the Principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.
(12)
CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
(a)
"Bloomberg" means Bloomberg Financial Markets.
(b)
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
(c)
"Buy-In" shall have the meaning set forth in Section (3)(b)(ii).
(d)
“Buy-In Price” shall have the meaning set forth in Section (3)(b)(ii).
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(e)
“Change of Control Transaction” means the occurrence of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty percent (50%) of the voting power of the Company (except that the acquisition of voting securities by the Holder or any other current holder of convertible securities of the Company shall not constitute a Change of Control Transaction for purposes hereof), (b) a replacement at one time or over time of more than one-half of the members of the board of directors of the Company (other than as due to the death or disability of a member of the board of directors) which is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors who are members on the date hereof), (c) the merger, consolidation or sale of fifty percent (50%) or more of the assets of the Company or any Subsidiary of the Company in one or a series of related transactions with or into another entity, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth above in (a), (b) or (c). No transfer to a wholly-owned Subsidiary shall be deemed a Change of Control Transaction under this provision.
(f)
“Closing Price” means the price per share in the last reported trade of the Common Shares on a Primary Market or on the exchange which the Common Shares are then listed as quoted by Bloomberg.
(g)
“Commission” means the Securities and Exchange Commission.
(h)
“Common Shares” means the shares of Class A common stock, par value $0.0001, of the Parent and stock of any other class into which such shares may hereafter be changed or reclassified.
(i)
“Company” shall have the meaning set forth in the Recitals.
(j)
“Corporate Event” shall have the meaning set forth in Section (3)(f).
(k)
“DTC” shall have the meaning set forth in Section (3)(b)(i).
(l)
“Event of Default” shall have the meaning set forth in Section (2).
(m)
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
(n)
“Exchange Amount” means the portion of the Principal, Interest, or other amounts outstanding under this Note to be exchanged, redeemed or otherwise with respect to which this determination is being made.
(o)
"Exchange Date" shall have the meaning set forth in Section (3)(b)(i).
15
(p)
"Exchange Failure" shall have the meaning set forth in Section (3)(b)(ii).
(q)
"Exchange Notice" shall have the meaning set forth in Section (3)(b)(i).
(r)
"Exchange Price" means, as of any Exchange Date or other date of determination the lower of (i) $2.00 per Common Share (the “Fixed Price”), or (ii) 95% of the lowest daily VWAP during the 7 consecutive Trading Days immediately preceding the Exchange Date or other date of determination (the “Variable Price”), but which Variable Price shall not be lower than the Floor Price then in effect. The Exchange Price shall be adjusted from time to time pursuant to the other terms and conditions of this Note.
(s)
“Floor Price” solely with respect to the Variable Price, shall mean $1.00 per share. Notwithstanding the foregoing, the Company may reduce the Floor Price to any amounts set forth in a written notice to the Holder; provided that such reduction shall be irrevocable and shall not be subject to increase thereafter.
(t)
“Fundamental Transaction” means any of the following: (1) the Parent effects any merger or consolidation of the Parent with or into another Person and the Parent is the non-surviving company (other than a merger or consolidation with a wholly owned Subsidiary of the Parent for the purpose of redomiciling the Parent), (2) the Parent effects any sale of all or substantially all of its assets in one or a series of related transactions, (3) any tender offer or exchange offer (whether by the Parent or another Person) is completed pursuant to which holders of Common Shares are permitted to tender or exchange their shares for other securities, cash or property, or (4) the Parent effects any reclassification of the Common Shares or any compulsory share exchange pursuant to which the Common Shares is effectively converted into or exchanged for other securities, cash or property.
(u)
“Holder” shall have the meaning set forth in the Recitals.
(v)
“Interest” shall have the meaning set forth in the Recitals.
(w)
“Issuance Date” shall have the meaning set forth in the Recitals.
(x)
“Note” shall have the meaning set forth in the Recitals.
(y)
“Other Notes” means any other notes issued pursuant to the SEPA and any other debentures, notes, or other instruments issued in exchange, replacement, or modification of the foregoing.
(z)
“Parent” shall have the meaning set forth in the Recitals.
(aa)
“Periodic Reports” shall mean the Parent’s (i) Annual Reports on Form 10-K each fiscal year end, (ii) any current report to be filed on Form 10-Q and (iii) all other reports required to be filed by the Parent with the Commission under applicable laws and regulations (including, without limitation, Regulation S-K) for so long as any amounts are outstanding under this Note or any Other Note; provided that all such Periodic Reports shall
16
include, when filed, all information, financial statements, audit reports (when applicable) and other information required to be included in such Periodic Reports in compliance with all applicable laws and regulations.
(bb)
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
(cc)
“Primary Market” means any of The New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market, and any successor to any of the foregoing markets or exchanges.
(dd)
“Principal” shall have the meaning set forth in the Recitals.
(ee)
“Redemption Premium” means 10% of the Principal amount being redeemed.
(ff)
“Registration Rights Agreement” means the registration rights agreement entered into between the Parent and the Holder on November 14, 2023.
(gg)
“Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement, covering among other things the resale of the Underlying Shares and naming the Holder as a “selling stockholder” thereunder.
(hh)
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(ii)
“SEPA” shall have the meaning set forth in the Recitals.
(jj)
"Share Delivery Date" shall have the meaning set forth in Section (3)(b)(i).
(kk)
“Subsidiary” means, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of capital stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries of such Person; or (iii) one or more Subsidiaries of such Person.
(ll)
“Trading Day” means a day on which the Common Shares are quoted or traded on a Primary Market on which the Common Shares are then quoted or listed; provided, that in the event that the Common Shares are not listed or quoted, then Trading Day shall mean a Business Day.
(mm)
“Transaction Document” means, each of, the Other Notes, the SEPA, the Supplemental Agreement, the Registration Rights Agreement and any and all
17
documents, agreements, instruments or other items executed or delivered in connection with any of the foregoing.
(nn)
“Underlying Shares” means the Common Shares issuable upon exchange of this Note or as payment of interest in accordance with the terms hereof.
(oo)
"VWAP" means, for any security as of any date, the daily dollar volume-weighted average price for such security on the Primary Market during regular trading hours as reported by Bloomberg through its “Historical Prices – Px Table with Average Daily Volume” functions.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company and the Parent have caused this Exchangeable Promissory Note to be duly executed by a duly authorized officer as of the date set forth above.
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COMPANY: |
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LIONHEART II HOLDINGS, LLC |
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By: |
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Name: John H. Ruiz |
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Title: Authorized Representative |
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PARENT: |
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MSP RECOVERY, INC. |
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By: |
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Name: John H. Ruiz |
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Title: CEO |
EXHIBIT I
EXCHANGE NOTICE
(To be executed by the Holder in order to Exchange the Note)
TO: LIONHEART II HOLDINGS, LLC
Via Email:
The undersigned hereby irrevocably elects to exchange a portion of the outstanding and unpaid Exchange Amount of Note No. MSPR-4 into Common Shares of MSP RECOVERY, INC., according to the conditions stated therein, as of the Exchange Date written below.
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Exchange Date: |
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Principal Amount to be Exchanged: |
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Accrued Interest to be Exchanged: |
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Total Exchange Amount to be Exchanged: |
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Fixed Price: |
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Variable Price: |
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Applicable Exchange Price: |
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Number of Common Shares to be issued: |
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Please issue the Common Shares in the following name and deliver them to the following account: |
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Issue to: |
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Broker DTC Participant Code: |
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Account Number: |
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Authorized Signature: |
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Name: |
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Title: |
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Exhibit 10.3
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. NEITHER THIS PROMISSORY NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
MSP RECOVERY, INC.
Amended and Restated Promissory Note
Issuance Date: June 26, 2025 Principal Amount: $33,564,480.81
WHEREAS, MSP Recovery, Inc. d/b/a LifeWallet, a Delaware corporation (formerly known as Lionheart Acquisition Holdings II, the “Company”) and Nomura Securities International, Inc. (together with its permitted successors and assigns, “Holder”) are the issuer and holder respectively of that certain amended and restated promissory note, issued by the Company in an original principal amount of $32,693,919.51 on April 28, 2025, with a maturity date of November 30, 2026 (the “Existing Promissory Note”); and
WHEREAS, the Company has requested to amend the terms of the Existing Promissory Note and Lender has agreed to do so on the terms set forth in this amended and restated promissory note (the “Promissory Note”).
FOR VALUE RECEIVED, the Company hereby promises to pay to the Holder the principal amount of $33,564,480.81 (representing the original principal, capitalized interest and accrued and unpaid interest on the Existing Promissory Note, and as may be reduced pursuant to Section 1(b), Section 4(d) or increased pursuant to Section 2, the “Principal Amount”) when due (whether on the Maturity Date, pursuant to acceleration or otherwise) and to pay interest at the rates and times as set forth in this Promissory Note. The Company acknowledges that such amounts shall be due and payable on November 30, 2026 (the “Maturity Date”).
1.
PAYMENT AT MATURITY.
(a)
Payment at Maturity. On the Maturity Date, the Company shall pay to the Holder an amount in cash equal to the outstanding Principal Amount, plus accrued and unpaid interest, plus any other obligations then due or payable under this Promissory Note.
(b)
Prepayment Right. Upon two (2) Business Days’ irrevocable prior written notice to the Holder (each a “Prepayment Notice”), the Company may prepay all or any portion of the then outstanding Principal Amount together with all accrued and unpaid interest on the Principal Amount. The portion of the Principal Amount to be prepaid by the Company (each a “Prepayment Amount”) and the date selected by the Company for such prepayment (each a “Prepayment Date”) shall be set forth in the applicable Prepayment Notice; provided that the Prepayment Date shall be no later than ten (10) Business Days following the date on which the Prepayment Notice is delivered to the Holder. On the applicable Prepayment Date, the Company shall pay to the Holder the sum of (i) the Prepayment Amount plus (ii) all accrued and unpaid
interest on the Principal Amount so repaid. In connection with any payment of a portion of the Principal Amount pursuant to this Section 1(b), upon payment of such Principal Amount in accordance with this Section 1(b) together with accrued and unpaid interest on such Principal Amount, the Principal Amount of this Note shall be deemed reduced by the portion of the Principal Amount so prepaid.
2.
INTEREST. On and following the Issuance Date and until the Principal Amount and all other Note Obligations have been indefeasibly repaid in full in cash, interest will accrue at a rate of 16.0% per annum (the “Interest Rate”). Interest shall be payable in cash every 30 calendar days after the Issuance Date (each an “Interest Payment Date”) on the then outstanding Principal Amount of this Promissory Note and all other amounts owed and not yet paid as of such date (including any accrued and unpaid interest); provided that, by irrevocable written election to be delivered to Holder no later than two (2) Business Days in advance of each Interest Payment Date, the Company may elect to pay the interest due on such Interest Payment Date in kind (in lieu of payment in cash), which amount of interest shall be automatically added to the Principal Amount and capitalized on such Interest Payment Date. In all cases interest hereunder shall be computed on the basis of a 360-day year comprised of twelve 30-day months. Upon the occurrence and during the continuance of any Event of Default hereunder and election notice from Holder, the Interest Rate shall automatically increase by an additional 200 basis points per annum, which increase may be applied retroactively from the date of occurrence of such Event of Default at Holder’s election.
3.
REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to, and agrees in favor of, Holder that:
(a)
The Company is a corporation duly formed, existing and in good standing under the laws of the State of Delaware, with full and adequate power to carry on and conduct its business as presently conducted. The Company is duly licensed or qualified in all foreign jurisdictions wherein the nature of its activities requires such qualification or licensing. The exact legal name of the Company is as set forth in the first paragraph of this Promissory Note, and the Company currently does not conduct business under any other name or trade name.
(b)
The Company has full right, power and authority to enter into this Promissory Note and to perform all of its duties and obligations under this Promissory Note. The execution and delivery of this Promissory Note will not, nor will the observance or performance of any of its terms or provisions, violate or contravene any provision of law or any of the Company’s certificate of incorporation, by-laws or any other governing documents. All necessary and appropriate action has been taken on the part of the Company to authorize the execution, delivery and performance of this Promissory Note.
(c)
This Promissory Note is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors’ rights generally and to general principles of equity.
4.
COVENANTS. The Company covenants and agrees that until the Note Obligations (as defined below) (other than inchoate indemnification obligations for which no claim has been made) have been indefeasibly paid in full in cash:
(a)
The Company shall provide prompt (and in any event, within one (1) Business Day) written notice to Holder of the occurrence of any Event of Default or Unmatured Event of Default (each as defined below), along with the Company’s plans to address such Event of Default or Unmatured Event of Default.
(b)
The Company shall use its commercially reasonable efforts to prepay the Principal Amount in full within 90 days of the Issuance Date, and in any event as early as possible prior to the Maturity Date, including using its reasonable best efforts to raise additional capital necessary to repay all Note Obligations in accordance with the terms hereof.
(c)
The Company shall provide Holder with a written update report on the status of its capital raise efforts (which may be sent via e-mail) every 30 days after the Issuance Date.
(d)
Within ten (10) Business Days of receipt by the Company of any cash proceeds from any Cash Proceeds Event, the Company shall prepay the Note Obligations in an amount equal to the lesser of (v) the aggregate principal amount of the Note Obligations then outstanding and (w) (i) if the Cash Proceeds Event is the ATM Offering, 50% of the aggregate amount of Net Cash Proceeds received by the Company from the ATM Offering (subject to the last sentence of Section 4(f) below) or (ii) in the case of any other Cash Proceeds Event, 100% of the aggregate amount of Net Cash Proceeds received by the Company from such Cash Proceeds Event.
(e)
The Company shall provide prompt (and in any event, within five (5) Business Days) written notice to Holder of the occurrence of any Cash Proceeds Event, which notice shall specify whether any proceeds from such Cash Proceeds Event are due to (x) any Person other than the Holder pursuant to contractual arrangements existing as of April 12, 2023, reasonably identifying such Person and contractual arrangement or (y) the holder of Permitted Subordinated Debt or 2025 Permitted Subordinated Debt.
(f)
The Company shall not, and shall not permit its subsidiaries to, pay any unsecured indebtedness for borrowed money or other unsecured obligations of the Company or any of its subsidiaries unless the Note Obligations are simultaneously repaid in full, provided that the Company and its subsidiaries may make payments of (i) trade payables and business expenses incurred in the ordinary course and (ii) amounts due under unsecured indebtedness for borrowed money or other unsecured obligations existing as of April 12, 2023; provided, further, that the Company and its subsidiaries may not make voluntarily prepayments of any such existing indebtedness for borrowed money prior to their scheduled maturity date unless the Note Obligations are simultaneously repaid in full. Conditioned on Holder’s receipt of the cash payment set forth in Section 11(b), notwithstanding the foregoing or Section 4(d) above, (i) the Company may use the proceeds of the ATM Offering (other than 2025 Permitted Subordinated Debt or Permitted Subordinated Debt) to repay Permitted Subordinated Debt or 2025 Permitted Subordinated Debt (or a combination thereof) up to a maximum aggregate amount of the lesser of (x) $3,000,000 or (y) the cumulative amount funded under the 2025 Permitted Subordinated Debt (such aggregate amount, the “ATM Priority Cap”), provided that, notwithstanding anything to the contrary herein (including Section 4(d)), while any Permitted Subordinated Debt or 2025 Permitted Subordinated Debt is outstanding, if the holder of such Permitted Subordinated Debt or 2025 Permitted Subordinated Debt waives its right to repayment using proceeds of the ATM
Offering, 100% of such proceeds shall be used by the Company to repay the Note Obligations, (ii) while any notes or similar instruments evidencing Permitted Subordinated Debt or the 2025 Permitted Subordinated Debt are outstanding, the Company may issue capital stock in connection with any conversions initiated by the holder of such notes or similar instruments, and, the principal amount of such notes or similar instruments so converted shall count toward the ATM Priority Cap, and (iii) after the ATM Priority Cap has been paid, the Company may use the proceeds of the ATM Offering (other than Permitted Subordinated Debt or 2025 Permitted Subordinated Debt and subject to the requirements of Section 4(d)) to repay $1 of Permitted Subordinated Debt or 2025 Permitted Subordinated Debt for every $1 of Note Obligations repaid from such proceeds, provided that, notwithstanding anything to the contrary herein (including Section 4(d)), while any Permitted Subordinated Debt or 2025 Permitted Subordinated Debt is outstanding, if the holder of such Permitted Subordinated Debt or 2025 Permitted Subordinated Debt waives its right to repayment using proceeds of the ATM Offering, 100% of such proceeds shall be used by the Company to repay the Note Obligations.
(g)
The Company shall not declare or make, or agree to pay or make, directly or indirectly, any dividend or other distribution (whether in cash, equity interests or other property) with respect to any holder of the Company’s equity interests, or any payment (whether in cash, equity interests or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such equity interests of the Company, any payment of interest, principal or fees in respect of any indebtedness owed by the Company to any holder of any equity interests of the Company, or any option, warrant or other right to acquire any such equity interests of the Company.
(h)
The Company shall not take any action to facilitate the sale of any equity interests of the Company by any holder thereof, other than (i) the filing of any Registration Statements (as defined in the ATM Offering) or any other actions required under the ATM Offering, the related Registration Rights Agreement, or the YA II Notes, (ii) the filing of any Resale Registration Statement, (iii) any related or ancillary filings to any Registration Statement or Resale Registration Statement, including filing a prospectus supplement, in order to keep current the information included within any Registration Statement or Resale Registration Statement. In no event shall this Section 4(h) preclude the Company from (i) directly issuing or selling any securities of the Company, (ii) issuing shares pursuant to the ATM Offering, or (iii) communicating with the Company's transfer agent to facilitate transfers in the Company's securities.
(i)
The Company shall provide no less than five (5) Business Days’ advance written notice to Holder of any intended borrowing pursuant to 2025 Permitted Subordinated Debt.
5.
EVENT OF DEFAULT. Each of the following events shall constitute an “Event of Default” hereunder:
(a)
failure by the Company to pay when due or payable all or any portion of the Principal Amount, interest or other amount under this Promissory Note, whether on the Maturity Date, by acceleration, by notice of voluntary prepayment or otherwise;
(b)
with respect to any mortgage, indenture, contract, note or other instrument by which there is evidenced any indebtedness (i) for money borrowed or assumed by the Company
or (ii) the payment of which is guaranteed by the Company, there shall occur (A) any default, event of default or any similar event, (B) any failure to pay a matured obligation, (C) any event that permits or requires the acceleration of the maturity thereof or payment owed thereunder or (D) any event or condition that might become any of the foregoing with notice or the passage of time or both;
(c)
other than as specifically set forth in another clause of this Section 5, any breach or failure by the Company to comply with any provision of this Promissory Note;
(d)
any representation, warranty, certificate, financial statement, report, notice, or other writing furnished by or on behalf of the Company to Holder is false or misleading in any material respect on the date as of which the facts therein set forth are stated or certified;
(e)
this Promissory Note shall be repudiated or shall become unenforceable or incapable of performance in accordance with its terms;
(f)
the Company shall fail to maintain its existence in good standing in its state of organization or formation or shall fail to be duly qualified, in good standing and authorized to do business in each jurisdiction where failure to do so would reasonably be expected to have a material adverse impact on the assets or condition of the Company;
(g)
a judgment or settlement shall be entered or agreed to in any such proceeding which would reasonably be expected to have a material and adverse effect on the ability of the Company to repay this Promissory Note; or
(h)
any bankruptcy, insolvency, reorganization, arrangement, readjustment, liquidation, dissolution, or similar proceeding, domestic or foreign, is instituted by or against the Company, and, if instituted against the Company, shall not be dismissed or vacated within sixty
(60) days after the filing or other institution thereof; or
(i) the Company shall become insolvent, generally shall fail or be unable to pay its debts as they mature, shall admit in writing its inability to pay its debts as they mature, shall make a general assignment for the benefit of its creditors, shall enter into any composition or similar agreement, or shall suspend the transaction of all or a substantial portion of its usual business.
6.
DEFAULT AND REMEDIES.
(a)
Upon the occurrence and during the continuance of any Event of Default pursuant to any of Sections 5(a) through (f), Holder at its option may declare, upon written notice to Company, this Note (principal, interest and other amounts) immediately due and payable without other notice, presentment, demand, protest or other request of any kind, ALL OF WHICH ARE HEREBY EXPRESSLY WAIVED BY THE COMPANY, whereupon the entire unpaid Principal Amount of this Promissory Note, all interest accrued thereon, and any other amounts payable hereunder, shall thereupon at once mature and become due and payable; provided that, upon the occurrence of an Event of Default pursuant to Sections 5(g) through (i) all principal, interest and other amounts due under this Promissory Note shall be deemed immediately and automatically due and payable without notice, presentment, demand, protest or other request of any kind, ALL OF WHICH ARE HEREBY EXPRESSLY WAIVED BY THE COMPANY. Upon
the occurrence and during the continuance of any Event of Default, Holder may exercise any rights and remedies under this Promissory Note, at law or in equity. Interest shall continue to accrue on the Promissory Note upon the occurrence of an Event of Default and notwithstanding that such amounts are due and payable.
(b)
Upon the occurrence and during the continuance of any Event of Default, to the maximum extent permitted under law, Holder may set off the amounts due under this Promissory Note against any and all accounts, credits, money, securities or other property now or hereafter held by or in the possession of Holder to the credit or for the account of the Company, without notice to or the consent of the Company.
(c)
All of the rights and remedies of Holder under this Promissory Note are cumulative of each other and of any and all other rights at law or in equity, and the exercise by Holder of any one or more of such rights and remedies shall not preclude the simultaneous or later exercise by Holder of any or all such other rights and remedies. No single or partial exercise of any right or remedy shall exhaust it or preclude any other further exercise thereof, and every right and remedy may be exercised at any time or from time to time. No failure by Holder to exercise, nor delay in exercising, any right or remedy shall operate as a waiver of such right or remedy or as a waiver of any Event of Default.
(d)
Holder may, by written notice to the Company, at any time and from time to time, waive any Event of Default or any event or condition that would become an Event of Default with notice or the passage of time or both (each an “Unmatured Event of Default”) which shall be for such period and subject to such conditions as shall be specified in any such notice. In the case of any such waiver, Holder and the Company shall be restored to their former position and rights hereunder, and any Event of Default or Unmatured Event of Default so waived shall be deemed to be cured and not continuing to the extent of, and subject to any and all conditions set forth in, such waiver; but no such waiver shall extend to or impair any subsequent or other Event of Default or Unmatured Event of Default. No failure to exercise, and no delay in exercising, on the part of Holder of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
(e)
The Company irrevocably waives presentment, protest, notice of protest, notice of intent to accelerate, notice of acceleration, demand, diligence, grace, notice of dishonor or default, notice of nonpayment, notice of acceptance, notice of any loans made, extensions granted or other action taken in reliance hereon, and all other demands and notices of any kind in connection with the Company’s entry into this Promissory Note.
(f)
Holder shall have no obligation to give the Company or any other Person notice of the existence of any Event of Default or Unmatured Event of Default or of any decision made or that it is entitled to make hereunder.
7.
PAYMENT DATE. To the extent any payment is due on this Promissory Note on a date which is not a Business Day, such payment shall be due on the preceding Business Day.
8.
AMENDING THE TERMS OF THIS NOTE. This Promissory Note may be amended only with the written consent of the Company and the Holder. Any amendment effected in accordance with this Section 8 shall be binding upon the Holder and the Company.
9.
TRANSFER. This Promissory Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company, subject only to compliance with applicable securities laws. Notwithstanding the foregoing, Holder may not offer to sell, assign or transfer this Promissory Note to any Disqualified Persons. The Company shall cooperate in good faith, provide documentary support and reasonable access to personnel and respond in a prompt manner to any reasonable request by the Holder in relation to any offer, sale, assignment or transfer by the Holder of this Promissory Note, and for avoidance of doubt, shall not take any action to frustrate or seek to hinder any such proposed offer, sale, assignment or transfer; provided that Holder shall notify the Company at least fifteen (15) days in advance of any such proposed offer, sale, assignment or transfer. Upon the Holder giving notice Company of Holder’s intent to propose an offer, sale, assignment or transfer, the Company shall have fifteen (15) days to notify Holder of its intent to prepay the Note Obligations. The Company may not assign this Promissory Note or its rights and obligations under this Promissory Note without the prior written consent of the Holder and any such assignment in violation of the foregoing shall be null and void.
10.
REISSUANCE OF THIS NOTE.
(a)
Transfer. If this Promissory Note is to be transferred by the Holder in accordance with Section 9, the Holder shall surrender this Promissory Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Promissory Note (in accordance with Section 10(c)), registered as the Holder may request, representing the outstanding Principal Amount being transferred by the Holder.
(b)
Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Promissory Note (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Promissory Note, the Company shall execute and deliver to the Holder a new Promissory Note (in accordance with Section 10(c)) representing the outstanding Principal.
(c)
Issuance of New Promissory Note. Whenever the Company is required to issue a new Promissory Note pursuant to the terms of this Promissory Note, such new Promissory Note (i) shall be of like tenor with this Promissory Note, (ii) shall represent, as indicated on the face of such new Promissory Note, the Principal Amount remaining, (iii) shall have an issuance date, as indicated on the face of such new Promissory Note, which is the same as the Issuance Date of this Promissory Note, (iv) shall have the same rights and conditions as this Promissory Note, and (v) shall represent accrued and unpaid interest on the Principal and Interest of this Promissory Note, from the Issuance Date.
11.
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS.
(a)
The Company shall pay all reasonable costs and expenses (including attorney’s fees) incurred by Holder in connection with the negotiation, documentation and enforcement of this Promissory Note, the related transactions or any other matters related thereto; provided that the Company shall not be required to pay costs and expenses (including attorney’s fees) incurred in the negotiation of this Promissory Note in excess of Forty Thousand Dollars ($40,000) (the “Fees and Expenses”).
(b)
On the Issuance Date, the Company shall pay to the Holder $25,000 in cash as partial reimbursement for costs and expenses incurred by Holder in connection with this Promissory Note, the Existing Promissory Note and prior promissory notes amended and restated by the Company and the Holder.
12.
CONSTRUCTION; HEADINGS. This Promissory Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Promissory Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Promissory Note.
13.
FAILURE OR INDULGENCE NOT WAIVER; WAIVERS. No failure or delay
on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.
14.
NOTICES; PAYMENTS.
(a)
Notices. Whenever notice is required to be given under this Promissory Note, unless otherwise provided herein, such notice shall be to the Holder at:
Miguel Espinosa
Head of Americas Investment Banking Facsimile: (646) 587-9706
Email: [email protected]
Karthik Venkatesh
COO, Americas Investment Banking Facsimile: (646) 587-9511
Email: [email protected]
James Chenard
Head of Americas Equity Capital Markets and Solutions Facsimile: (646) 587-8740
Email: [email protected]
Meir Lewis
Head of Americas Financial Institutions
Email: [email protected]
Oliver Trumbo
Head of IBD Legal – Americas Facsimile: (646) 587-9548
Email: [email protected] And to the Company at:
MSP Recovery, Inc.
Attn: Alexandra Plasencia 2701 S. Le Jeune Rd, Floor 10 Coral Gables, Florida 33146 [email protected]
(b)
Currency. All dollar amounts referred to in this Promissory Note are in United States Dollars (“U.S. Dollars”).
(c)
Payments. Whenever any payment is to be made by the Company to any Person pursuant to this Promissory Note, such payment shall be made in lawful money of the United States of America by a check drawn on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing; provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing the Company with prior written notice setting out such request and the Holder’s wire transfer instructions. All payments made under this Promissory Note shall be made without defense, recoupment, setoff or counterclaim and free of any restriction or condition.
15.
CANCELLATION. Subject to Section 16, after the Note Obligations have been indefeasibly paid in full in cash, this Promissory Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued. The “Note Obligations” means the entire Principal Amount, accrued interest, Fees and Expenses and all other amounts due or payable on this Promissory Note, and all other amounts including fees and expenses due or payable to the Holder under this Promissory Note.
16.
REINSTATEMENT. This Promissory Note shall continue to be effective or be reinstated (automatically without any action) as the case may be, if and to the extent at any time payment, in whole or in part, of any of the sums due to the Holder on account of the Note Obligations is rescinded or must otherwise be restored or returned by the Holder upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company, or any guarantors, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to the Company or any or any part of its or their property, or otherwise, all as though such payments had not been made.
17.
WAIVER OF DEFENSES. THE COMPANY WAIVES ANY PRESENT OR FUTURE COMMON LAW OR STATUTORY DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR RIGHT OF SETOFF WHICH THE COMPANY MAY NOW HAVE OR HEREAFTER MAY HAVE TO ANY ACTION BY HOLDER IN ENFORCING THIS NOTE. THE COMPANY WAIVES ANY IMPLIED COVENANT OF GOOD FAITH. THIS PROVISION IS A MATERIAL INDUCEMENT FOR HOLDER GRANTING ANY FINANCIAL ACCOMMODATION TO THE COMPANY.
18.
GOVERNING LAW; FORUM. This Promissory Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Promissory Note shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. In the event that any provision of this Promissory Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Promissory Note. Nothing contained herein
(i) shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder or to enforce a judgment or other court ruling in favor of the Holder or (ii) shall limit, or shall be deemed or construed to limit, any provision of Section 16. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
19.
CERTAIN DEFINITIONS. For purposes of this Promissory Note, the following terms shall have the following meanings:
(a)
“2025 Permitted Subordinated Debt” means unsecured indebtedness of the Company, in an aggregate principal amount not to exceed $3,000,000 in cumulative total borrowings drawn from the applicable facility (regardless of any drawn amounts repaid); provided that (i) no Default or Event of Default shall have occurred and be continuing at the time of incurrence of such indebtedness or would result therefrom; (ii) such indebtedness shall not be guaranteed by any subsidiary of the Company; (iii) until all Note Obligations have been indefeasibly repaid in full in cash, any interest on such indebtedness shall be payable solely in kind, in shares of capital stock of the Company, or offsets from the ATM Offering (as permitted under Section 4(f)); (iv) such indebtedness shall not have a scheduled maturity date earlier than 90 calendar days after the Maturity Date and shall not be subject to any mandatory repayment earlier than 90 calendar days after the Maturity Date (other than payments made directly from proceeds of the ATM Offering (subject to the requirement of Sections 4(d) and 4(f)); and (v) the proceeds of such indebtedness shall be used solely to fund the Company’s operating expenses, including paying trade payables and business expenses incurred in the ordinary course (other than payments (a) for any expenses owed to MSP Recovery Law Firm or any holder of the Company’s equity interests or (b) in respect of liabilities (including salary or any other employee obligations) owed to any “affiliate” of the Company (as defined in Rule 144(a)(1) of the Securities Act of 1933) in excess of $2,000,000 in the aggregate in any calendar year (which aggregate amount shall be decreased dollar for dollar for any such liabilities paid using the proceeds of Permitted Subordinated Debt in such calendar year).
(b)
“ATM Offering” means that certain Company Common Stock Purchase Agreement dated as of January 6, 2023, between the Company and YA II PN, Ltd., as may be amended, supplemented or modified from time to time, including the modifications contemplated on or about the date hereof to add the provision of up to $15,000,000 of Permitted Subordinated
Debt evidenced by the issuance of convertible promissory notes (the “YA II Notes”), and any capital stock of the Company issued in connection with any conversion, exchange, or offset of amounts owed under the YA II Notes or the 2025 Permitted Subordinated Debt, and related Registration Statement to register such shares sold pursuant to the Company Common Stock Purchase Agreement with the Securities and Exchange Commission, or any substantially similar arrangement between the Company and YA II PN, Ltd. or any of its affiliates entered into on or after the Issuance Date modifying or replacing the ATM Offering (which arrangement shall be subject to the prior approval of Holder, not to be unreasonably withheld).
(c)
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.
(d)
“Cash Proceeds Event” means (i) any incurrence or issuance of any indebtedness by the Company (other than Permitted Subordinated Debt or 2025 Permitted Subordinated Debt), including the issuance of debt securities and any securities convertible or exchangeable for capital stock or other equity interests of the Company, in any at-the-market offering or otherwise, (ii) any sale, capital lease, sale and leaseback, assignment, conveyance, transfer or other disposition of property or assets by the Company (including, in the case of capital stock or other equity interests, any issuance thereof, including the ATM Offering), or (iii) any settlement of or payment to the Company with respect to any litigation that is not encumbered or otherwise due to any Person other than the Holder, including pursuant to a required cash sweep arrangement. Notwithstanding the foregoing in (ii)-(iii), a Cash Proceeds Event will not include any proceeds, payments, or receivables of any nature due to any Person other than the Holder pursuant to contractual arrangements existing as of April 12, 2023.
(e)
“Disqualified Persons” means (i) each and all of the Persons listed on Schedule 1 hereto and (ii) any property and casualty insurers, pharmaceutical companies, group health insurers, and healthcare device manufacturers against which the Company or any of its material subsidiaries has filed suit, from time to time, in connection with any healthcare service provider recovery claims.
(f)
“Net Cash Proceeds” means an amount equal to (i) cash payments received by the Company in connection with a Cash Proceeds Event minus (ii) any bona fide costs incurred by the Company in connection with such Cash Proceeds Event, including (a) the amount of all taxes payable that are attributable to such Cash Proceeds Event, (b) any reasonable costs, fees and expenses incurred by the Company in connection with such Cash Proceeds Event and (c) in connection with any Cash Proceeds Event described in clauses (i) and (ii) of the definition thereof, any reasonable underwriting discounts and commissions in connection therewith.
(g)
“Permitted Subordinated Debt” means unsecured indebtedness of the Company, in an aggregate principal amount not to exceed $15,000,000; provided that (i) no Default or Event of Default shall have occurred and be continuing at the time of incurrence of such indebtedness or would result therefrom; (ii) such indebtedness shall not be guaranteed by any subsidiary of the Company; (iii) until all Note Obligations have been indefeasibly repaid in full in cash, any interest on such indebtedness shall be payable solely in kind or in shares of capital stock of the Company (as permitted under Section 4(f)); (iv) such indebtedness shall not have a scheduled maturity date earlier than 90 calendar days after the Maturity Date and shall not be subject to any mandatory repayment earlier than 90 calendar days after the Maturity Date (other
than payments made directly from proceeds of the ATM Offering (subject to the requirement of Sections 4(d) and 4(f)) to repay or convert $1 of permitted Subordinated Debt for every $1 of Note Obligations repaid from such proceeds; (v) the first $166,667 of proceeds of each of the first three borrowings under such indebtedness shall be used solely to repay the Note Obligations (provided that if the first such borrowing is greater than $5,000,000, then $500,000 of such proceeds shall be used to repay the Note Obligations); and (vi) the proceeds of such indebtedness shall be used solely to (x) repay the Note Obligations and (y) fund the Company’s operating expenses, including paying trade payables and business expenses incurred in the ordinary course (other than payments (a) for any expenses owed to MSP Recovery Law Firm or any holder of the Company’s equity interests or (b) in respect of liabilities (including salary or any other employee obligations) owed to any “affiliate” of the Company (as defined in Rule 144(a)(1) of the Securities Act of 1933) in excess of $2,000,000 in the aggregate in any calendar year (which aggregate amount shall be decreased dollar for dollar for any such liabilities paid using the proceeds of 2025 Permitted Subordinated Debt in such calendar year).
(h)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(i)
“Resale Registration Statement” means the registration statements filed, or to be filed, with the Securities and Exchange Commission on Forms S-1 or S-3 in order to satisfy the Company's registration obligations existing as of the Issuance Date, including the obligation to register shares issued in the future to Palantir Technologies Inc. pursuant to the Amended and Restated Order # 1, dated as of April 11, 2022, as amended by that certain Amendment No. 3 to Order #1, dated as of June 30, 2023, as so amended and restated from time to time.
20.
MAXIMUM PAYMENTS. Nothing contained in this Promissory Note shall, or shall be deemed to, establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges under this Promissory Note exceeds the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.
21.
NO WAIVER BY HOLDER. The execution of this Promissory Note shall not be deemed to be a consent by the Holder to the departure from any provisions of any agreement between the Company and the Holder, nor constitute a waiver of any provision of the Existing Promissory Note or any agreement between the Company and the Holder, or any other document, instrument and/or agreement executed or delivered in connection therewith or of any breach, default or Event of Default under any of the foregoing, in each case, whether arising before or after the date hereof or as a result of performance hereunder or thereunder.
[signature page follows]
IN WITNESS WHEREOF, the Company has caused this Promissory Note to be duly executed as of the Issuance Date set out above, intending to create an instrument executed under seal.
MSP Recovery, Inc.
By:
John H. Ruiz CEO
ACKNOWLEDGED AND AGREED TO BY:
NOMURA SECURITIES INTERNATIONAL, INC.
By: Name: James Chenard
Title: Managing Director