Blend Labs, Inc 8-K, filed Apr 29, 2024
Blend Labs, Inc. (BLND)
8-K
2024-04-29
For: 2024-04-23
View Original
Added on
April 10, 2026
About this 8-K
Blend Labs, Inc filed this 8-K on April 29, 2024, reporting on events of April 23, 2024.
Items reported
- Item 1.01: Entered into a material agreement
- Item 1.02: Ended a material agreement
- Item 3.02: Unregistered sale of equity
- Item 3.03: Change to shareholders' rights
- Item 5.02: Director or officer change, or executive pay
- Item 5.03: Charter or bylaw amendment, or fiscal year change
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): April 23, 2024
(Exact name of Registrant, as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) | ||||||||||||
(Address of principal executive offices, including zip code)
(650 ) 550-4810
(Registrant's telephone number, including area code)
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:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
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
Issuance and Sale of Series A Convertible Preferred Stock and Warrant
On April 29, 2024 (the “Closing Date”), Blend Labs, Inc., a Delaware corporation (the “Company” or “Blend”), entered into an Investment Agreement (the “Investment Agreement”) with Haveli Brooks Aggregrator, L.P. (the “Investor” or “Haveli”) and issued 150,000 shares of the Company’s Series A Convertible Preferred Stock, par value $0.00001 per share (the “Series A Preferred Stock”), for an aggregate purchase price of $150 million, or $1,000 per share (the “Issuance”).
Designation of Series A Preferred Stock
On April 29, 2024 the Company filed with the Secretary of State of the State of Delaware a Certificate of Designations designating the Series A Preferred Stock (the “Certificate of Designations”) and establishing the designation, powers, preferences, and rights of the shares of such series and the qualifications, limitations or restrictions thereof. The Certificate of Designations became effective upon filing. The Series A Preferred Stock ranks senior to the Company’s class A common stock, par value $0.00001 per share (“Common Stock”) with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. Dividends do not accrue on the Series A Preferred Stock. The Series A Preferred Stock has a liquidation preference of $1,000 per share.
Conversion Rights
On or after the expiration or earlier termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the “HSR Act”), the Series A Preferred Stock is convertible at the option of the holders thereof at any time into an initial conversion rate of 307.6923 per $1,000 principal amount (equivalent to an initial conversion price of approximately $3.25 per share), and is subject to certain anti-dilution adjustments. In no event will the conversion rate be less than 404.0729 per $1,000 principal amount.
Voting & Consent Rights
Holders of the Series A Preferred Stock are entitled to vote with the holders of the Common Stock on an as-converted basis on or after the expiration or earlier termination of the applicable waiting period under the HSR Act. Holders of the Series A Preferred Stock are be entitled to a separate class vote with respect to, among other things, (i) amendments to the Company’s organizational documents that have an adverse effect on the Series A Preferred Stock, (ii) authorizations or issuances by the Company of securities that are senior to, or equal in priority with, the Series A Preferred Stock, (iii) increases in the number of authorized or issued shares of Series A Preferred Stock or number of shares available under equity compensation plans, (iv) the incurrence of indebtedness for borrowed money in the aggregate of more than $50,000,000 (other than in the ordinary course of business), (v) redemptions or repurchases of the Company’s capital stock, other than in connection with equity plans or with Company employees, (vi) changes to the principal business of the Company, (vii) certain mergers or acquisitions with consideration in excess of $50,000,000, or any divestiture of Company assets for consideration in excess of $100,000,000, (viii) payments of dividends or other distribution with respect to any shares of the Company’s capital stock, (ix) liquidation, dissolution or winding up of the affairs of the Company, (x) certain transactions with affiliates of the Company, (xii) the approval of options or grants under any equity compensation plan in any year that represent more than 3.75% of the total number of fully-diluted shares of capital stock (excluding dilution from the Series A Preferred Stock), (xiii) until the third anniversary after the Closing Date, any increase to the amount of certain publicly-reported non-GAAP expenses in the Board-approved budget, and (xiv) the termination without cause of the employment of the Company’s Chief Executive Officer, Head of Finance and Administration, or the Company’s Head of Revenue, each as set forth in the Certificate of Designations.
Redemption Rights
At any time following the fifth anniversary of the Closing Date, a majority of the holders of the Series A Preferred Stock have the right to cause the Company to redeem, in whole, but not in part, the shares of Series A Preferred Stock for a per share amount in cash equal to: (i) 100% of the then-current liquidation preference thereof, multiplied by (ii)(A) 150% if the redemption occurs at any time on or after the fifth anniversary of the Closing Date and prior to the sixth anniversary of the Closing Date, (B) 175% if the redemption occurs at any time on or after the sixth anniversary of the Closing Date and prior to the seventh anniversary of the Closing Date, and (C) 200% if the redemption occurs at any time on or after the seventh anniversary of the Closing Date.
At any time following the seventh anniversary of the Closing Date, the Company may redeem in whole, but not in part, all of the Series A Preferred Stock for a per share amount in cash equal to: (i) the then-current liquidation preference, multiplied by (ii) 200%.
Upon prior written notice of certain change of control events involving the Company, unless the holders elect to convert the shares of the Series A Preferred Stock into Common Stock, the shares of the Series A Preferred Stock shall automatically be redeemed by the Company for a repurchase price per share equal to the greater of (i) the value of the shares of Series A Preferred Stock as converted into Common Stock at the then-current conversion price and (ii) 200% of the then-current liquidation preference thereof.
Governance Rights
Pursuant to the Investment Agreement, the Company increased the size of its board of directors (the “Board”) in order to appoint, as of the Closing Date, one individual designated by the Investor, who initially is Brian Sheth, to the Board for a term expiring at the 2024 annual meeting of the Company’s stockholders (the “Annual Meeting”). Mr. Sheth has also been nominated for reelection as a director at the Annual Meeting. So long as the Investor beneficially owns at least 33% of the shares of Series A Preferred Stock purchased by the Investor at the closing of the Issuance on an as-converted basis, the Investor will have the right to designate a director nominee for election to the Board.
Standstill
Additionally, until the Standstill Expiration Date (as defined in the Investment Agreement), the Investor is subject to certain standstill restrictions pursuant to which the Investor is restricted, among other things and subject to certain customary exceptions, from (1) acquiring more than 19.9% of the Company’s outstanding Common Stock or securities exchangeable for or convertible into the Common Stock; (2) making, participating in or encouraging any proxy solicitation or submitting any shareholder proposal to the Company; (3) publicly proposing any change of control or other extraordinary transaction involving the Company; (4) seeking representation on the Board (beyond the representation provided for above); (5) seeking to control or influence the management, Board or business of the Company; (6) supporting or encouraging, or entering into any agreements with any person in doing any of the foregoing, or (7) taking any action that would require the Company to make a public announcement regarding the possibility of a transaction or any of the foregoing.
Transfer and Conversion Restrictions
Except as described below, prior to the first anniversary of the Closing Date, the Investor is restricted from transferring Series A Preferred Stock (including the Common Stock issuable upon conversion of the Series A Preferred Stock or upon exercise of the Warrant (as defined below)), or entering into any hedging arrangement with respect to the Series A Preferred Stock or Common Stock. Exceptions include, among others: (i) transfers to affiliates, (ii) transfers to the Company or any of its subsidiaries, (iii) transfers in connection with a bona fide loan or other financing arrangement with a nationally recognized financial institution, including pledges to secure permitted financings, and (iv) transfers in connection with certain merger and acquisition events or tender offer approved by the Board (other than a tender offer commenced by the Company prior to the one-year anniversary of the Closing Date). In no event may the Investor transfer Series A Preferred Stock, the Common Stock issuable upon conversion of the Series A Preferred Stock, or the Common Stock issuable upon exercise of the Warrant to any activist shareholder or competitor, as those terms are defined in the Investment Agreement, or person that would be a 5% stockholder of the Company after giving effect to such transfer, subject to customary exclusions.
The Investment Agreement has been filed as Exhibit 10.1 attached to this Current Report on Form 8-K to provide investors and securityholders with information regarding its terms and conditions. It is not intended to provide any other information about the Investor or the Company. The Investment Agreement contain representations, warranties, and covenants of the parties thereto made to and solely for the benefit of each other, and such representations, warranties, and covenants may be subject to materiality and other qualifiers applicable to the contracting parties that differ from those that may be viewed as material to investors. The assertions embodied in those representations, warranties, and covenants are qualified by information in a confidential disclosure letter that the Company delivered in connection with the execution of the Investment Agreement and were made as of the date of the Investment Agreement and as of the Closing Date, except those made as of a specified date. Accordingly, investors and securityholders should not rely on the representations, warranties, and covenants as characterizations of the actual state of facts. Moreover, information concerning the subject matter of the representations, warranties, and covenants may change after the date of the Investment Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
Warrant
On the Closing Date and in connection with the Issuance, the Company issued to the Investor a warrant (the "Warrant") to purchase up to 11,111,112 shares of Common Stock, at purchase price of $4.50 per share of Common Stock for total consideration of up to $50,000,000. The Warrant is exercisable for a period of 24 months after the Closing Date.
The foregoing description of the Warrant does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Warrant, which is attached hereto as Exhibit 4.1, and is incorporated herein by reference.
Registration Rights Agreement
On the Closing Date, in connection with the Issuance, the Company and the Investor entered into a Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which the Company has agreed to provide to the Investor certain customary registration rights with respect to shares of the Common Stock issued in connection with any conversion of the Series A Preferred Stock or upon exercise of the Warrant. In addition, the Company has agreed to customary indemnification provisions relating to indemnification for any material misstatements or omissions by the Company in connection with the registration of the Investors’ Common Stock.
The foregoing description of the Registration Rights Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Registration Rights Agreement, which is attached hereto as Exhibit 10.2, and is incorporated herein by reference.
This Current Report on Form 8-K does not constitute an offer to sell, or a solicitation of an offer to buy, any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Item 1.02 Termination of a Material Definitive Agreement
On April 29, 2024, the Company paid approximately $146 million to repay in full all amounts outstanding and payable under that certain Credit Agreement, dated as of June 30, 2021, by and among the Company, as borrower, the guarantors party thereto, the lenders party thereto, and Blue Owl Technology Finance Corp., as administrative agent for the lenders (as amended by that certain First Amendment to Credit Agreement, dated as of October 18, 2022, and as further amended by that certain Second Amendment to Credit Agreement, dated as of November 27, 2023, the “Credit Agreement”) and terminated the Credit Agreement.
Item 3.02 Unregistered Sales of Equity Securities
The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
As described in Item 1.01, pursuant to the terms of the Investment Agreement, the Company has agreed to issue shares of Series A Preferred Stock and the Warrant to the Investor. This issuance and sale is exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act. The Investor represented to the Company that it is an “accredited investor” as defined in Rule 501 of the Securities Act and that the Series A Preferred Stock, Warrant and shares of Common Stock that may be issuable upon conversion or exercise, as the case may be, is being acquired for investment purposes and not with a view to, or for sale in connection with, any distribution thereof, and appropriate legends will be affixed to any certificates evidencing shares of the Series A Preferred Stock, Warrant or shares of the Common Stock issued in connection with any future conversion of the Series A Preferred Stock or exercise of the Warrant.
Item 3.03 Material Modification to Rights of Security Holders
The information contained in Item 1.01 with respect to the Investment Agreement and the Registration Rights Agreement and in Item 5.03 with respect to the Certificate of Designations is incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Departure of Directors; Nomination of New Directors
On April 23, 2024, each of Ann Mather, Ciara Burnham and Erin Collard informed the Company that they would not stand for reelection to the Board at the Company’s Annual Meeting. Each of Mses. Mather’s and Burnham’s and Mr. Collard’s decision to not stand for reelection was due to their other professional responsibilities, and neither Mses. Mather nor Burnham nor Mr. Collard resigned from the Board due to any disagreement with the Company on any matter related to the Company’s operations, policies or practices.
“On behalf of Blend’s Board and the management team, I want to express my sincere thanks to Ann, Ciara and Erin for their invaluable leadership and contributions to Blend” said Nima Ghamsari, Head of Blend. “Their strategic insights and expertise have helped position Blend well for the future. I'm excited about this next chapter for Blend and the continuing evolution of the Company.”
Ms. Mather commented “I’ve had the pleasure of spending several fulfilling years on the Board of Blend, during which we took the company public and helped shape it into something we can all be proud of today. I look forward to continuing to celebrate Blend's wins as it builds products that deliver meaningful improvements to customers.”
Ms. Burnham commented “This is a team that is laser-focused on its mission and on seizing the incredible opportunity in front of it. I'd like to congratulate the Company on its new strategic partnership with Haveli, whose investment in Blend strengthens the Company's ability to drive innovation and deliver long-term value for customers and shareholders. I’m proud of all that we’ve accomplished together and look forward to celebrating Blend’s future successes.”
Mr. Collard commented “As a co-founder and former CFO of Blend, I have had the privilege to be a part of its success from the beginning. Working with Nima and contributing to the Blend story has been a profoundly rewarding experience. I look forward to watching Blend continue to push boundaries and deliver excellence to its customers.”
On April 29, 2024, the Board nominated each of Bryan E. Sullivan and Eric Woersching to serve on the Board, subject to the approval of stockholders at the Annual Meeting.
Appointment of New Director
The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Under the terms of the Investment Agreement, the Investor has the right to designate one member of the Board. The Investor has designated Brian Sheth as the Series A Director (as defined in the Investment Agreement) and, accordingly, the Board appointed Mr. Sheth to serve as a member of the Board effective as of the Closing Date.
Pursuant to the Investment Agreement, Mr. Sheth will not be entitled to receive any compensation from the Company for his service.
In accordance with the Company’s customary practice, the Company has entered into its standard form of indemnification agreement with Mr. Sheth, the form of which has been filed as Exhibit 10.1 to the amendment to the Registration Statement on Form S-1 (File No. 333-257223), filed with the SEC on July 6, 2021.
Other than with respect to the Investment Agreement, Mr. Sheth has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). There are no family relationships, as defined in Item 401 of Regulation S-K, promulgated under the Exchange Act, between Mr. Sheth and any of the Company’s executive officers or directors or persons nominated or chosen to become a director or executive officer. There are also no arrangements or understandings between Mr. Sheth and any other persons pursuant to which Mr. Sheth was appointed a director of the Company.
Item 5.03 Amendments to Articles of Incorporation or Bylaws
The information related to the issuance and sale of Series A Preferred Stock contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure
On April 29, 2024, Blend posted supplemental investor materials on the investor relations section of its website (investor.blend.com). Blend announces material information to the public about Blend, its products and services and other matters through a variety of means, including filings with the Securities and Exchange Commission, press releases, public
conference calls, webcasts, the investor relations section of its website (investor.blend.com), its blog (blend.com/blog) and its X account (formerly known as Twitter) (@blendlabsinc) in order to achieve broad, non-exclusionary distribution of information to the public and for complying with its disclosure obligations under Regulation FD.
The information in Item 7.01 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act, or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | |||||
| 3.1 | |||||
| 4.1 | |||||
| 10.1 | |||||
| 10.2 | |||||
| 99.1 | |||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL) | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Blend Labs, Inc. | ||||||||
| Date: April 29, 2024 | ||||||||
| By: | /s/ Amir Jafari | |||||||
| Name: | Amir Jafari | |||||||
| Title: | Head of Finance and Administration (Principal Financial Officer) | |||||||
CERTIFICATE OF DESIGNATIONS OF
SERIES A CONVERTIBLE PERPETUAL PREFERRED STOCK,
PAR VALUE $0.00001 PER SHARE,
OF
BLEND LABS, INC.
Pursuant to Section 151 of the Delaware General Corporation Law (as amended, supplemented or restated from time to time, the “DGCL”), Blend Labs, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Company”), in accordance with the provisions of Section 103 of the DGCL, DOES HEREBY CERTIFY:
That, the Amended and Restated Certificate of Incorporation of the Company, as filed with the Secretary of State of the State of Delaware (as amended, the “Certificate of Incorporation”), authorizes the issuance of 3,200,000,000 shares of capital stock, consisting of 1,800,000,000 shares of Class A Common Stock, par value $0.00001 per share (the “Class A Common Stock”), 600,000,000 shares of Class B Common Stock, par value $0.00001 per share (the “Class B Common Stock”), 600,000,000 shares of Class C Common Stock, par value $0.00001 per share, (the “Class C Common Stock” and, together with the Class A Common Stock and the Class B Common Stock, the “Common Stock”) and 200,000,000 shares of undesignated Preferred Stock, par value $0.00001 per share (“Preferred Stock”);
That, subject to the Certificate of Incorporation, the board of directors of the Company (the “Board”) is authorized to provide for the issuance of shares of Preferred Stock in series, and by filing a certificate pursuant to the applicable law of the State of Delaware, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences, and rights of the shares of each such series and any qualifications, limitations or restrictions thereof.
That, pursuant to the authority conferred upon the Board by the Certificate of Incorporation, the Board adopted the following resolution designating a new series of Preferred Stock as “Series A Convertible Perpetual Preferred Stock”:
RESOLVED, that, pursuant to the authority vested in the Board in accordance with the provisions of Article VI of the Certificate of Incorporation and the provisions of Section 151 of the DGCL, a series of Preferred Stock is hereby authorized, and the number of shares to be included in such series, and designation, powers, preferences, rights, and any qualifications, limitations or restrictions of the shares of Preferred Stock included in such series, shall be as follows:
SECTION 1. Designation and Number of Shares. The shares of such series of Preferred Stock shall be designated as “Series A Convertible Perpetual Preferred Stock” (the “Series A Preferred Stock”). The number of authorized shares constituting the Series A
Preferred Stock shall be 150,000. That number from time to time may be increased or decreased (but not below the number of shares of Series A Preferred Stock then outstanding and subject to Section 12(b)(iii)) by further resolution duly adopted by the Board, or any duly authorized committee thereof and by the filing of a certificate pursuant to the provisions of the DGCL stating that such increase or decrease, as applicable, has been so authorized. The Company shall not have the authority to issue fractional shares of Series A Preferred Stock.
SECTION 2. Ranking. The Series A Preferred Stock will rank, with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company:
(a)on a parity basis with each other class or series of Capital Stock of the Company now existing or hereafter authorized, the terms of which expressly provide that such class or series ranks on a parity basis with the Series A Preferred Stock as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (such Capital Stock, “Parity Stock”);
(b)junior to each other class or series of Capital Stock of the Company now existing or hereafter authorized, the terms of which expressly provide that such class or series ranks senior to the Series A Preferred Stock as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (such Capital Stock, “Senior Stock”); and
(c)senior to the Common Stock and each other class or series of Capital Stock of the Company now existing or hereafter authorized, the terms of which do not expressly provide that such class or series ranks on a parity basis with or senior to the Series A Preferred Stock as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (such Capital Stock, “Junior Stock”).
SECTION 3. Definitions. As used herein for all purposes of this Certificate of Designations:
“Additional Shares” means any and all shares of Class A Common Stock, or any other securities convertible into, exercisable for, or exchangeable into shares of Class A Common Stock that are issued by the Company after the Original Issuance Date, other than (1) shares of Class A Common Stock issued pursuant to conversion of the Series A Preferred Stock as contemplated hereby and (2) the following shares of Class A Common Stock:
(a)shares of Class A Common Stock, or securities convertible, exercisable, or exchangeable into shares of Class A Common Stock, that are issued as a dividend or distribution to Holders of the Series A Preferred Stock (including such dividends or distributions payable in connection with dividends or distributions declared on another class or series of the Company’s Capital Stock, so long as Holders of Series A Preferred Stock participate in such dividend or distribution at the same time and on the same terms
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as the holders of such other class or series, such that the relative beneficial ownership of the Company’s Capital Stock beneficially owned by the Holders of the Series A Preferred Stock is not diluted by such dividend or distribution);
(b)shares of Common Stock, options or convertible securities issued by reason of a dividend, stock split, split-up, tender offer, or other distribution or issuance on shares of Class A Common Stock that is covered by Section 10(a)(i) through Section 10(a)(vi); provided that the requisite adjustment of the Conversion Rate is effected in accordance with the relevant Section;
(c)shares of Class A Common Stock, options or convertible securities issued to banks, equipment lessors or other financial institutions, or to real property lessors, pursuant to a bona fide third party debt financing, equipment leasing or real property leasing transaction;
(d)shares of Class A Common Stock or options issued to employees or directors of, or consultants or advisors to, the Company or any of its subsidiaries pursuant to a Company Stock Plan or any employment, consultancy, or compensation agreement or arrangement approved by the Board;
(e)shares of Class A Common Stock or convertible securities actually issued upon the exercise of options or shares of Class A Common Stock actually issued upon the conversion or exchange of convertible securities, in each case provided (i) such issuance is pursuant to the terms of such option or convertible security and (ii) such option or convertible security is outstanding as of the Original Issuance Date or is issued in compliance with the terms set forth in this Certificate of Designations and having obtained any requisite consent of the Requisite Holders with respect to such issuance;
(f)shares of Class A Common Stock, options or convertible securities issued as acquisition consideration pursuant to the acquisition of another corporation by the Company by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement; or
(g)shares of Class A Common Stock, options or convertible securities issued in connection with sponsored research, collaboration, license, development, marketing or other similar agreements or strategic partnerships.
“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person; provided, however, (i) that the Company and its Subsidiaries shall not be deemed to be Affiliates of any Investor Party or any of its Affiliates, (ii) portfolio companies (as such term is customarily used among institutional investors) in which any Investor Party or any of its Affiliates has an investment (whether as debt or equity) shall not be deemed an Affiliate of such Investor Party and (iii) the Excluded Sponsor Parties shall not be deemed to be Affiliates of any Investor Party, the Company or any of the Company’s Subsidiaries. For this purpose, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean the
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possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise.
Any Person shall be deemed to “beneficially own”, to have “beneficial ownership” of, or to be “beneficially owning” any securities (which securities shall also be deemed “beneficially owned” by such Person) that such Person is deemed to “beneficially own” within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act; provided that any Person shall be deemed to beneficially own any securities that such Person has the right to acquire, whether or not such right is exercisable within sixty (60) days or thereafter (including assuming conversion of all Series A Preferred Stock, if any, owned by such Person to Class A Common Stock).
“Applicable Redemption Price” means the Change of Control Redemption Price, the Company Redemption Price, or the Holder Redemption Price, as applicable.
“Board” has the meaning set forth in the recitals above.
“Business Day” means any weekday that is not a day on which banking institutions in New York, New York are authorized or required by law, regulation or executive order to be closed.
“Bylaws” means the Amended and Restated Bylaws of the Company, as amended and as may be amended from time to time.
“Capital Stock” means, with respect to any Person, any and all shares of, interests in, rights to purchase, warrants to purchase, options for, participations in or other equivalents of or interests in (however designated) stock issued by such Person.
“Certificate of Designations” means this Certificate of Designations relating to the Series A Preferred Stock, as it may be amended from time to time.
“Certificate of Incorporation” has the meaning set forth in the recitals above.
“Change of Control” means the occurrence of one of the following, whether in a single transaction or a series of transactions:
(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than the Company, its wholly-owned Subsidiaries and the employee benefit plans of the Company and its wholly-owned Subsidiaries, who files a Schedule TO or any schedule, form or report under the Exchange Act disclosing or with respect to whom it otherwise becomes known (through public disclosure or otherwise) to the Company that such person or group has become the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a majority of the total voting power of the Voting Stock of the Company, other than as a result of a transaction in which (1) the holders of securities that represented 100% of the Voting
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Stock of the Company immediately prior to such transaction are substantially the same as the holders of securities that represent a majority of the Voting Stock of the surviving Person or its Parent Entity immediately following such transaction in substantially the same proportion to each other as immediately prior to such transaction and (2) the holders of securities that represented 100% of the Voting Stock of the Company immediately prior to such transaction own directly or indirectly Voting Stock of the surviving Person or its Parent Entity in substantially the same proportion to each other as immediately prior to such transaction; provided, however, that any such filing by the Founder shall be a Change of Control pursuant to this clause (a) only if such filing discloses that the Founder directly or indirectly beneficially owns more than 10% of the total voting power of the Voting Stock of the Company, excluding from the numerator and the denominator for the purpose of such calculation (i) any shares of Voting Stock, or such other common equity into which the Voting Stock has been reclassified, directly or indirectly beneficially owned by the Founder on the Original Issuance Date (including any shares of Voting Stock issuable upon conversion of Class B Common Stock held on such date) and (ii) any shares of Voting Stock, or such other common equity into which the Voting Stock has been reclassified, issued or issuable by the Company to the Founder pursuant to a Company Stock Plan after the Original Issuance Date;
(b) the merger or consolidation of the Company with or into another Person or the merger of another Person with or into the Company, or the sale, lease, transfer, exclusive license or other disposition of all or substantially all of the assets of the Company (determined on a consolidated basis), whether in a single transaction or a series of related transactions, to another Person, or any recapitalization, reclassification or other transaction (other than the filing of any amendment to the Certificate of Incorporation solely to change the title of the Class A Common Stock from “Class A Common Stock” to “Common Stock” or a change in par value) in which all or substantially all of the Common Stock is exchanged for or converted into cash, securities or other property, other than a transaction following which (1) in the case of a merger or consolidation transaction, holders of securities that represented 100% of the Voting Stock of the Company immediately prior to such transaction own directly or indirectly (in substantially the same proportion to each other as immediately prior to such transaction, other than changes in proportionality as a result of any cash/stock election provided under the terms of the definitive agreement regarding such transaction) at least a majority of the voting power of the Voting Stock of the surviving Person or Parent Entity in such merger or consolidation transaction immediately after such transaction, and (2) in the case of a sale, transfer or lease of all or substantially all of the assets of the Company, other than to a Subsidiary or a Person that becomes a Subsidiary of the Company; or
(c) shares of Class A Common Stock or shares of any other Capital Stock of the Company into which the Series A Preferred Stock is convertible are not listed for trading on any United States national securities exchange or cease to be traded in contemplation of a de-listing (other than as a result of a transaction described in clause (b) above).
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For purposes of this definition, any transaction or event that constitutes a Change of Control under both clause (a) and clause (b) without giving effect to clause (b)(1) above will be deemed to be solely a Change of Control under clause (b) of such definition (subject to clause (b)(1)).
“Change of Control Effective Date” has the meaning set forth in Section 8(b).
“Change of Control Purchase Date” means, with respect to each share of Series A Preferred Stock, (i) in the case of a conversion pursuant to Section 8(a), the date on which the Company issues the shares of Class A Common Stock upon conversion of such share of Series A Preferred Stock and (ii) in the case of a Change of Control Redemption, the date on which the Company makes the payment in full of the Change of Control Redemption Price for such share of Series A Preferred Stock to the Holder thereof or to the Transfer Agent, irrevocably, for the benefit of such Holder.
“Change of Control Redemption” has the meaning set forth in Section 8(a).
“Change of Control Redemption Price” has the meaning set forth in Section 8(a).
“Class A Common Stock” has the meaning set forth in the recitals above.
“Class B Common Stock” has the meaning set forth in the recitals above.
“Class C Common Stock” has the meaning set forth in the recitals above.
“close of business” means 5:00 p.m. (New York City time).
“Closing Price” of the Common Stock on any date of determination means the closing sale price or, if no closing sale price is reported, the last reported sale price, of the shares of the Class A Common Stock on the NYSE on such date. If the Class A Common Stock is not traded on the NYSE on any date of determination, the Closing Price of the Class A Common Stock on such date of determination means the closing sale price as reported in the composite transactions for the principal United States securities exchange or automated quotation system on which the Class A Common Stock is so listed or quoted, or, if no closing sale price is reported, the last reported sale price on the principal United States securities exchange or automated quotation system on which the Class A Common Stock is so listed or quoted, or if the Class A Common Stock is not so listed or quoted on a United States securities exchange or automated quotation system, the last quoted bid price for the Class A Common Stock in the over-the-counter market as reported by OTC Markets Group Inc. or any similar organization, or, if that bid price is not available, the market price of the Class A Common Stock on that date as determined by an Independent Financial Advisor retained by the Company for such purpose.
“Code” means the U.S. Internal Revenue Code of 1986, as amended, and applicable U.S. Treasury Regulations promulgated thereunder.
“Common Dividend” has the meaning set forth in Section 4(a).
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“Common Stock” has the meaning set forth in the recitals above.
“Company” has the meaning set forth in the recitals above.
“Company Stock Plan” means the Company’s 2012 Equity Incentive Plan, 2021 Equity Incentive Plan, Executive Incentive Compensation Plan, and any other plan approved by the Board for compensation of officers, directors, executives, employees, consultants, or advisors of the Company.
“Company Redemption Price” has the meaning set forth in Section 9(a)(i).
“Company Redemption Right” has the meaning set forth in Section 9(a)(i).
“Constituent Person” has the meaning set forth in Section 11(a).
“Conversion Agent” means the Transfer Agent acting in its capacity as conversion agent for the Series A Preferred Stock, and its successors and assigns.
“Conversion Date” has the meaning set forth in Section 7(a).
“Conversion Notice” has the meaning set forth in Section 7(a)(i).
“Conversion Price” means, for each share of Series A Preferred Stock, a dollar amount equal to $1,000 divided by the Conversion Rate.
“Conversion Rate” means, for each share of Series A Preferred Stock, 307.6923 shares of Class A Common Stock, subject to adjustment as set forth in Section 10 and otherwise herein; provided that in no event will the Conversion Rate be adjusted in connection with any adjustment pursuant to Section 10(a)(vii) to be greater than 404.0729, which maximum shall be adjusted as necessary to reflect adjustments made to the Conversion Rate from time to time pursuant to Section 10(a)(i) through Section 10(a)(vi) and Section 10(a)(viii).
“Current Market Price” means, on a per share basis of Class A Common Stock, as of any date of determination, the arithmetic average of the VWAP per share of Class A Common Stock for each of the ten (10) consecutive full Trading Days ending on the Trading Day immediately preceding such day, appropriately adjusted to take into account the occurrence during such period of any event described in Section 10.
“DGCL” has the meaning set forth in the recitals above.
“Distributed Property” has the meaning set forth in Section 10(a)(iv).
“Distribution Transaction” means any distribution of equity securities of a Subsidiary of the Company to holders of Common Stock, whether by means of a spin-off, split-off, redemption, reclassification, exchange, stock dividend, share distribution, rights offering or similar transaction.
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“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Exchange Property” has the meaning set forth in Section 11(a).
“Excluded Sponsor Parties” has the meaning set forth in the Investment Agreement.
“Expiration Date” has the meaning set forth in Section 10(a)(iii).
“Fair Market Value” means, with respect to any security or other property, the fair market value of such security or other property as reasonably determined in good faith by the Board, or an authorized committee thereof, (i) after consultation with an Independent Financial Advisor, as to any security or other property with a Fair Market Value of less than $50,000,000, or (ii) otherwise using an Independent Financial Advisor to provide a valuation opinion.
“Founder” shall mean Nima Ghamsari, co-founder of the Company.
“GAAP” shall mean the generally accepted accounting principles in the United States of America.
“Holder” means a Person in whose name the shares of the Series A Preferred Stock are registered, which Person shall be treated by the Company, Transfer Agent, Registrar, paying agent and Conversion Agent as the absolute owner of the shares of Series A Preferred Stock for the purpose of making payment and settling conversions and for all other purposes; provided that, to the fullest extent permitted by law, no Person that has received shares of Series A Preferred Stock in violation of the Investment Agreement shall be a Holder, the Transfer Agent, Registrar, paying agent and Conversion Agent, as applicable, shall not, unless directed otherwise by the Company, recognize any such Person as a Holder and the Person in whose name the shares of the Series A Preferred Stock were registered immediately prior to such transfer shall remain the Holder of such shares.
“Holder Redemption Price” has the meaning set forth in Section 9(b).
“Holder Redemption Right” has the meaning specified in Section 9(b).
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“Independent Financial Advisor” means an accounting, appraisal, investment banking firm or consultant of nationally recognized standing; provided, however, that such firm or consultant is not an Affiliate of the Company.
“Initial Change of Control Notice” has the meaning set forth in Section 8(b).
“Investment Agreement” means that certain Investment Agreement, between the Company and the Investor dated as of April 29, 2024, as it may be amended, supplemented or
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otherwise modified from time to time, with respect to certain terms and conditions concerning, among other things, the rights of and restrictions on the Holders.
“Investor” has the meaning set forth in the Investment Agreement.
“Investor Parties” means the Investor and each Permitted Transferee of the Investor to whom shares of Series A Preferred Stock or Class A Common Stock are transferred pursuant to Section 5.08(b)(i) of the Investment Agreement.
“Junior Stock” has the meaning set forth in Section 2(c).
“Liquidation Preference” means, with respect to any share of Series A Preferred Stock, as of any date, $1,000 per share, plus any accrued and unpaid dividends (including any unpaid Participating Dividends).
“Market Disruption Event” means any of the following events:
(a)any suspension of, or limitation imposed on, trading of the Class A Common Stock by any exchange or quotation system on which the Closing Price is determined pursuant to the definition of the term “Closing Price” (the “Relevant Exchange”) during the one-hour period prior to the close of trading for the regular trading session on the Relevant Exchange (or for purposes of determining the VWAP per share of Class A Common Stock, any period or periods aggregating one half-hour or longer during the regular trading session on the relevant day) and whether by reason of movements in price exceeding limits permitted by the Relevant Exchange as to securities generally, or otherwise relating to the Class A Common Stock or options contracts relating to the Class A Common Stock on the Relevant Exchange; or
(b)any event that disrupts or impairs (as determined by the Company in its reasonable discretion) the ability of market participants during the one-hour period prior to the close of trading for the regular trading session on the Relevant Exchange (or for purposes of determining the VWAP per share of Class A Common Stock, any period or periods aggregating one half-hour or longer during the regular trading session on the relevant day) in general to effect transactions in, or obtain market values for, the Class A Common Stock on the Relevant Exchange or to effect transactions in, or obtain market values for, options contracts relating to the Class A Common Stock on the Relevant Exchange.
“Notice Deadline” has the meaning set forth in Section 8(b).
“Notice of Company Redemption” has the meaning set forth in Section 9(a)(ii).
“Notice of Holder Redemption” has the meaning set forth in Section 9(b).
“NYSE” means the New York Stock Exchange.
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“Officer’s Certificate” means a certificate signed by the Head of Blend, the Head of Finance and Administration, Head of Legal, the Secretary, or any President or Vice President of the Company (whether or not designated by a number or numbers or word or words added before or after the title “President” or “Vice President”).
“Original Issuance Date” means the Closing Date, as defined in the Investment Agreement.
“Parent Entity” means, with respect to any Person, any other Person of which such first Person is a direct or indirect wholly owned Subsidiary.
“Parity Stock” has the meaning set forth in Section 2(a).
“Participating Dividend” has the meaning set forth in Section 4(a).
“Permitted Transferee” has the meaning set forth in the Investment Agreement.
“Person” means any individual, corporation, estate, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or any other entity.
“Preferred Stock” has the meaning set forth in the recitals above.
“Record Date” means, with respect to any dividend, distribution or other transaction or event in which holders of Common Stock have the right to receive any cash, securities or other property or in which Common Stock is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of Common Stock entitled to receive such cash, securities or other property (whether such date is fixed by the Board or by statute, contract or otherwise).
“Redemption Date” means, with respect to each share of Series A Preferred Stock, the date on which the Company makes the payment in full of the Applicable Redemption Price for each such share either to the Holder of such share or to the Transfer Agent, irrevocably, for the benefit of such Holder.
“Registrar” means the Transfer Agent acting in its capacity as registrar for the Series A Preferred Stock, and its successors and assigns.
“Relevant Exchange” has the meaning set forth in the definition of the term “Market Disruption Event”.
“Reorganization Event” has the meaning set forth in Section 11(a).
“Required Number of Shares” has the meaning set forth in Section 8(g).
“Requisite Holders” means the holders of a majority of the outstanding Series A Preferred Stock, voting as a single class on an as-converted basis.
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“Senior Stock” has the meaning set forth in Section 2(b).
“Series A Preferred Stock” has the meaning set forth in Section 1.
“Series G Preferred Stock Warrant” means that certain Warrant to Purchase Class A Common Stock between the Company, OR Lending LLC, OR Tech Lending LLC, and OR BL LLC., dated as of July 2, 2021, as it may be amended from time to time.
“Subsidiary”, when used with respect to any Person, means any corporation, limited liability company, partnership, association, trust or other entity of which (i) securities or other ownership interests representing more than 50% of the ordinary voting power (or, in the case of a partnership, more than 50% of the general partnership interests) or (ii) sufficient voting rights to elect at least a majority of the board of directors or other governing body are, as of such date, owned by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.
“Trading Day” means a Business Day on which the Relevant Exchange is scheduled to be open for business and on which there has not occurred a Market Disruption Event.
“Transfer Agent” means the Person acting as Transfer Agent, Registrar and paying agent and Conversion Agent for the Series A Preferred Stock, and its successors and assigns. The Transfer Agent initially shall be Computershare Trust Company, N.A.
“Trigger Event” has the meaning set forth in Section 10(a)(viii).
“Voting Stock” means (i) with respect to the Company, the Common Stock, the Series A Preferred Stock (subject to the limitations set forth herein) and any other Capital Stock of the Company having the right to vote generally in any election of directors of the Board and (ii) with respect to any other Person, all Capital Stock of such Person having the right to vote generally in any election of directors of the board of directors of such Person or other similar governing body.
“VWAP” per share of Class A Common Stock on any Trading Day means the per share volume-weighted average price as displayed under the heading Bloomberg VWAP on Bloomberg (or, if Bloomberg ceases to publish such price, any successor service reasonably chosen by the Company) page “BLND <equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from the open of trading on the relevant Trading Day until the close of trading on such Trading Day (or if such volume-weighted average price is unavailable, the market price of one share of Class A Common Stock on such Trading Day determined, using a volume-weighted average method, by an Independent Financial Advisor retained for such purpose by the Company).
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SECTION 4. Dividends.
(a) Participating Dividends. Subject to obtaining the requisite approval pursuant to Section 12(b), dividends or distributions may be authorized by the Board, or any duly authorized committee thereof, and declared and paid by the Company, or any duly authorized committee thereof, on any Junior Stock and Parity Stock from time to time (a “Common Dividend”); provided that, notwithstanding anything to the contrary in this Certificate of Designations, at the time of such authorization, the Board or such committee authorizes an equivalent dividend or distribution on the Series A Preferred Stock (a “Participating Dividend”) such that (1) the Record Date and the payment date for such Participating Dividend occur on the same respective date as the Record Date and payment date for such Common Dividend and (2) the kind and amount of consideration payable per share of Series A Preferred Stock in such Participating Dividend is the same kind and amount of consideration that would be payable to holders of Junior Stock and Parity Stock in the Common Dividend in respect of a number of shares of Class A Common Stock that would be issuable upon conversion of a share of Series A Preferred Stock (pursuant to Section 6 without regard for any of the limitations on convertibility contained therein) immediately prior to the Record Date for such Common Dividend.
(b) Conversion Following a Record Date. If the Conversion Date for any shares of Series A Preferred Stock is after the close of business on a Record Date but prior to the corresponding payment date for such dividend or distribution, the Holder of such shares as of such Record Date shall be entitled to receive such dividend or distribution, notwithstanding the conversion of such shares prior to the applicable payment date.
SECTION 5. Liquidation Rights.
(a) Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the Holders shall be entitled, out of assets legally available therefor, before any distribution or payment out of the assets of the Company may be made to or set aside for the holders of any Junior Stock, and subject to the rights of the holders of any Senior Stock or Parity Stock and the rights of the Company’s existing and future creditors, to receive in full a liquidating distribution in cash and in the amount per share of Series A Preferred Stock equal to the greater of (i) the Liquidation Preference as of the date of such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, and (ii) the amount such Holders would have received had such Holders, immediately prior to such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, converted such shares of Series A Preferred Stock into Class A Common Stock (pursuant to Section 6 without regard for any of the limitations on convertibility contained therein). Holders shall not be entitled to any further payments in the event of any such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company other than what is expressly provided for in this Section 5 and will have no right or claim to any of the Company’s remaining assets.
(a) Partial Payment. If in connection with any distribution described in Section 5(a) above, the assets of the Company or proceeds therefrom are not sufficient to pay in full the aggregate liquidating distributions required to be paid pursuant to Section 5(a) to all
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Holders and the liquidating distributions payable to all holders of any Parity Stock, the amounts distributed to the Holders and to the holders of all such Parity Stock shall be paid pro rata in accordance with the respective aggregate liquidating distributions to which they would otherwise be entitled if all amounts payable thereon were paid in full, and the Company shall not make or agree to make any payments or distributions to holders of Junior Stock, or set aside any assets or amounts for payments for the benefit of holders of Junior Stock, in connection with such liquidation, dissolution, or winding up of affairs.
(b) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 5, the sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property and assets of the Company shall not be deemed a voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, nor shall the merger, consolidation, exchange or any other business combination transaction of the Company into or with any other Person or the merger, consolidation, exchange or any other business combination transaction of any other Person into or with the Company be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.
SECTION 6. Right of the Holders to Convert.
(a) Each Holder shall have the right, at such Holder’s option, subject to the conversion procedures set forth in Section 7, to convert each share of such Holder’s Series A Preferred Stock at any time into (i) the number of shares of Class A Common Stock equal to the quotient of (A) the Liquidation Preference as of the applicable Conversion Date divided by (B) the Conversion Price as of the applicable Conversion Date plus (ii) cash in lieu of fractional shares as set out in Section 10(i); provided that no such conversion by any Holder shall be permitted until the expiration or early termination of the applicable waiting period, if any, under the HSR Act with respect to any conversion of the Series A Preferred Stock by such Holder. The right of conversion may be exercised as to all or any portion of such Holder’s Series A Preferred Stock from time to time; provided that, in each case, no right of conversion may be exercised by a Holder in respect of fewer than 1,000 shares of Series A Preferred Stock (unless such conversion relates to all shares of Series A Preferred Stock held by such Holder).
(b) The Company shall at all times reserve and keep available out of its authorized and unissued Class A Common Stock, solely for issuance upon the conversion of the Series A Preferred Stock, such number of shares of Class A Common Stock as shall from time to time be issuable upon the conversion of all the shares of Series A Preferred Stock then outstanding. Any shares of Class A Common Stock issued upon conversion of Series A Preferred Stock shall be duly authorized, validly issued, fully paid and nonassessable.
SECTION 7. Conversion Procedures and Effect of Conversion. (a) Conversion Procedure. A Holder must do each of the following in order to convert shares of Series A Preferred Stock pursuant to Section 6(a):
(i)in the case of a conversion pursuant to Section 6(a), complete and manually sign the conversion notice provided by the Conversion Agent (the “Conversion
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Notice”), and deliver such notice to the Conversion Agent; provided that a Conversion Notice may be conditional on a later time or the completion of a Change of Control or other corporate transaction as may be specified in such notice;
(ii)deliver to the Conversion Agent the certificate or certificates (if any) representing the shares of Series A Preferred Stock to be converted; and
(iii)if required, furnish appropriate endorsements and transfer documents.
The “Conversion Date” means, with respect to conversion of any shares of Series A Preferred Stock at the option of any Holder pursuant to Section 6(a), the date on which such Holder complies with the procedures in this Section 7(a) (including the satisfaction of any conditions to conversion set forth in the Conversion Notice).
(a) Effect of Conversion. Effective immediately prior to the close of business on the Conversion Date applicable to any shares of Series A Preferred Stock, no dividends shall accrue or be declared on any such shares of Series A Preferred Stock (subject to Section 4(b)), and such shares of Series A Preferred Stock shall cease to be outstanding.
(b) Record Holder of Underlying Securities as of Conversion Date. The Person or Persons entitled to receive the Class A Common Stock and, to the extent applicable, cash, securities or other property issuable upon conversion of Series A Preferred Stock on a Conversion Date shall be treated for all purposes as the record holder(s) of such shares of Class A Common Stock and/or cash, securities or other property as of the close of business on such Conversion Date. As promptly as practicable on or after the Conversion Date and, if applicable, compliance by the applicable Holder with the relevant procedures contained in Section 7(a) (and in any event no later than three (3) Trading Days thereafter; provided however that, if a written notice from the Holder in accordance with Section 7(a)(i) specifies a date of delivery for any shares of Class A Common Stock, such shares shall be delivered on the date so specified, which shall be no earlier than the second (2nd) Business Day immediately following the date of such notice and no later than the seventh (7th) Business Day thereafter), the Company shall issue the number of whole shares of Class A Common Stock issuable upon conversion (and deliver payment of cash in lieu of fractional shares as set out in Section 10(i)) and, to the extent applicable, any cash, securities or other property issuable in connection therewith. Such delivery of shares of Class A Common Stock, securities or other property shall be made by book-entry or, at the request of the Holder, by delivering a notice to the Conversion Agent, through the facilities of The Depository Trust Company or in certificated form. Any such certificate or certificates shall be delivered by the Company to the appropriate Holder on a book-entry basis, through the facilities of The Depository Trust Company, or by mailing certificates evidencing the shares to the Holders, in each case, at their respective addresses as set forth in the Conversion Notice. In the event that a Holder shall not by written notice designate the name in which shares of Class A Common Stock (and payments of cash in lieu of fractional shares) and, to the extent applicable, cash, securities or other property to be delivered upon conversion of shares of Series A Preferred Stock should be registered or paid, or the manner in which such shares, cash, securities or other property should be delivered, the Company shall be entitled to register and deliver such shares,
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securities or other property, and make such payment, in the name of the Holder and in the manner shown on the records of the Company.
(c) Status of Converted or Reacquired Shares. Shares of Series A Preferred Stock converted in accordance with this Certificate of Designations, or redeemed or otherwise acquired by the Company in any manner whatsoever, shall be retired promptly after the conversion, redemption or other acquisition thereof and shall not be reissued as shares of such series. All such shares shall, upon their retirement and any filing required by the DGCL, become authorized but unissued shares of Preferred Stock, without designation as to series until such shares are once more designated as part of a particular series by the Board pursuant to the provisions of the Certificate of Incorporation.
(d) Partial Conversion. In case any certificate for shares of Series A Preferred Stock shall be surrendered for partial conversion, the Company shall, at its expense, execute and deliver to or upon the written order of the Holder of the certificate so surrendered a new certificate for the shares of Series A Preferred Stock not converted.
SECTION 8. Change of Control.
(a) Holder Rights Upon Change of Control. Upon the occurrence of a Change of Control, each Holder of outstanding shares of Series A Preferred Stock may, at such Holder’s election, effective as of immediately prior to the Change of Control, convert all or a portion of its shares of Series A Preferred Stock pursuant to Section 6(a), provided that if the Holder does not make such an election with respect to all of its shares of Series A Preferred Stock on or prior to the Notice Deadline, the Company shall redeem (the “Change of Control Redemption”) all of such Holder’s shares of Series A Preferred Stock that have not been so converted at a purchase price per share of Series A Preferred Stock, payable in cash, equal to the greater of (A) the Liquidation Preference of such share of Series A Preferred Stock multiplied by 200% and (B) the amount of cash and the Fair Market Value of any other property that the Holder would have received if such Holder had converted such share of Series A Preferred Stock into Class A Common Stock immediately prior to the Change of Control (the greater of (A) and (B), the “Change of Control Redemption Price”); provided that the Company’s obligation to make payment of the Change of Control Redemption Price at the time of the Change of Control Redemption shall be subject to the conditions set forth in Section 8(g).
(a) Initial Change of Control Notice. On or before the twentieth (20th) Business Day prior to the effective date of a Change of Control (the “Change of Control Effective Date”) (or, if later, promptly after the Company discovers that a Change of Control may occur), a written notice (the “Initial Change of Control Notice”) shall be sent by or on behalf of the Company to the Holders as they appear in the records of the Company, which notice shall contain (i) the date on which the Change of Control is anticipated to be effected (or, if applicable, the date on which a Schedule TO or other schedule, form or report disclosing a Change of Control was filed), (ii) a description of the material terms and conditions of the Change of Control and (iii) the then applicable Conversion Rate. No later than ten (10) Business Days prior to the Change of Control Effective Date as set forth in the Initial Change of Control Notice (or, if the Change of Control has already occurred as provided in the Initial Change of
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Control Notice, promptly, but no later than the tenth (10th) Business Day following receipt thereof) (the “Notice Deadline”), any Holder that desires to exercise its rights pursuant to Section 8(a) shall notify the Company in writing thereof and shall specify (x) whether such Holder is electing to exercise its right to convert all or a portion of its shares of Series A Preferred Stock pursuant to Section 8(a), and (y) the number of shares of Series A Preferred Stock subject to such conversion.
(b) Final Change of Control Redemption Notice. Within two (2) Business Days prior to the Change of Control Effective Date (or if the Company discovers later than such date that a Change of Control has occurred, promptly following the date of such discovery), a final written notice shall be sent by or on behalf of the Company to the Holders as they appear in the records of the Company on the Business Day immediately prior to the date such notice is sent, which notice shall contain:
(i)a statement setting forth in reasonable detail the calculation of the Change of Control Redemption Price with respect to such Holder;
(ii)the Change of Control Purchase Date, which shall be no later than 60 days after such notice is sent; provided, that a reasonable amount of time shall be provided between delivery of such notice and the Change of Control Purchase Date to allow such Holder to comply with the instructions delivered pursuant to Section 8(c)(iii) below; and
(iii)the instructions a Holder must follow to receive the Change of Control Redemption Price in connection with such Change of Control.
(c) Change of Control Redemption Procedure. To receive the Change of Control Redemption Price, a Holder must surrender to the Transfer Agent in accordance with the instructions delivered pursuant to Section 8(c)(iii), the certificates representing the shares of Series A Preferred Stock to be repurchased by the Company or lost stock affidavits therefor, to the extent applicable, or book entry statements evidencing such shares, if uncertificated.
(d) Delivery upon Change of Control Redemption. Upon a Change of Control Redemption, subject to Section 8(g) and Section 8(j) below, the Company (or its successor) shall deliver or cause to be delivered to the Holder by wire transfer of immediately available funds, the Change of Control Redemption Price for such Holder’s shares of Series A Preferred Stock.
(e) Treatment of Shares. Until a share of Series A Preferred Stock is redeemed by the payment or deposit in full of the applicable Change of Control Redemption Price as provided in Section 8(i), such share of Series A Preferred Stock will remain outstanding and will be entitled to all of the powers, designations, preferences and other rights provided herein; provided that no such shares of Series A Preferred Stock may be converted into shares of Class A Common Stock following the later of the Change of Control Effective Date and the Notice Deadline.
(f) Sufficient Funds. If the Company shall not have sufficient funds legally available under applicable law to redeem all shares of Series A Preferred Stock required under
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Section 8(a) (the “Required Number of Shares”), the Company shall (i) redeem, pro rata among the Holders (for the avoidance of doubt, other than any shares that have been converted into Class A Common Stock in accordance with Section 8(a)), a number of shares of Series A Preferred Stock with an aggregate Change of Control Redemption Price equal to the maximum amount legally available for the purchase of shares of Series A Preferred Stock under applicable law and (ii) cause all shares of Series A Preferred Stock not redeemed under clause (g)(i) to be returned to the holders thereof, and (iii) shall purchase any and all such shares of Series A Preferred Stock that were not purchased because of the foregoing limitations at the applicable Change of Control Redemption Price as soon as practicable after the Company is able to make such purchase out of assets legally available for the purchase of such share of Series A Preferred Stock. The inability of the Company (or its successor) to make a purchase payment for any reason shall not relieve the Company (or its successor) from its obligation to effect any required purchase when, as and if permitted by applicable law, and until such shares of Series A Preferred Stock that were not purchased are fully redeemed and the aggregate redemption price is paid in full, all of the unredeemed shares of Series A Preferred Stock shall remain outstanding and continue to have the rights, preferences, privileges and powers expressed herein. Notwithstanding the foregoing, in the event of a Change of Control Redemption pursuant to this Section 8 at a time when the Company is restricted or prohibited (contractually or otherwise) from redeeming some or all of the Series A Preferred Stock subject to the Change of Control Redemption, the Company will use its commercially reasonable efforts to obtain the requisite consents to remove or obtain an exception or waiver to such restrictions or prohibition. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to comply with its obligations under this Section 8.
(g) Change of Control Agreements. The Company shall not enter into any agreement for a transaction constituting a Change of Control unless (i) such agreement provides for or does not interfere with or prevent (as applicable) a Change of Control Redemption in a manner that is consistent with and gives effect to this Section 8, and (ii) the acquiring or surviving Person in such Change of Control represents or covenants, in form and substance reasonably satisfactory to the Board acting in good faith, that at the closing of such Change of Control that such Person shall have sufficient funds (which may include, without limitation, cash and cash equivalents on the Company’s balance sheet, the proceeds of any debt or equity financing, available lines of credit or uncalled capital commitments) to consummate such Change of Control and the payment of the Change of Control Redemption Price in respect of shares of Series A Preferred Stock that have not been converted into Class A Common Stock prior to the Change of Control Effective Date pursuant to Section 6 or this Section 8, as applicable.
(h) With respect to any share of Series A Preferred Stock to be redeemed by the Company pursuant to the Change of Control Redemption and which has been redeemed in accordance with the provisions of this Section 8, or for which the Company has irrevocably deposited an amount equal to the Change of Control Redemption Price in respect of such share with the Transfer Agent, (i) such share shall no longer be deemed outstanding and (ii) all rights with respect to such share shall cease and terminate other than the rights of the Holder thereof to receive the Change of Control Redemption Price therefor.
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(i) Notwithstanding anything to the contrary contained in this Section 8, in the event of a Change of Control Redemption, the Company shall only pay the Change of Control Redemption Price in cash required above after paying in full in cash all obligations of the Company and its subsidiaries under any credit agreement, indenture or similar agreement evidencing indebtedness for borrowed money (including the termination of all commitments to lend, to the extent required by such credit agreement, indenture or similar agreement), which requires prior payment of the obligations thereunder (and termination of commitments thereunder, if applicable) as a condition to the payment of such Change of Control Redemption Price in cash; provided¸ that the foregoing shall not limit a Holder’s right to receive the Change of Control Redemption Price in cash under this Section 8, or a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to comply with its obligations under this Section 8.
SECTION 9. Redemption.
(a) Redemption at the Option of the Company.
(i)At any time on or after the seven (7)-year anniversary of the Original Issuance Date, the Company shall have the right (the “Company Redemption Right”) to redeem, in whole, but not in part, all shares of Series A Preferred Stock outstanding at such time at a redemption price equal to (A) the Liquidation Preference multiplied by (B), 200% (such price, the “Company Redemption Price”). Notwithstanding the foregoing, the Company will not exercise the Company Redemption Right, or otherwise send a Notice of Company Redemption, in respect of the redemption of any Series A Preferred Stock pursuant to this Section 9 unless the Company has sufficient funds legally available to fully pay the Company Redemption Price in respect of all shares of Series A Preferred Stock outstanding at such time. The Company Redemption Price shall be payable in cash.
(ii)To exercise the Company Redemption Right pursuant to this Section 9(a), the Company shall deliver written notice thereof (a “Notice of Company Redemption”) to the Holders and the Transfer Agent at least ten (10) days prior to the Redemption Date designated therein for such redemption. The Notice of Company Redemption shall contain instructions whereby Holders will surrender to the Transfer Agent certificates (if any) representing all shares of Series A Preferred Stock specified in the Notice of Company Redemption to be redeemed by the Company or book entry statements evidencing such shares, if uncertificated. The Company shall deliver or cause to be delivered to each Holder that has complied with the instructions set forth in such Notice of Company Redemption, cash by wire transfer in an amount equal to the Company Redemption Price of the shares of Series A Preferred Stock in respect of which such Holder has complied with such instructions in accordance herewith.
(iii)Prior to any redemption, each Holder of outstanding shares of Series A Preferred Stock may, at such Holder’s election, effective prior to such redemption on a
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date designated by the Holder, convert all or a portion of its shares of Series A Preferred Stock pursuant to Section 6(a).
(a) Redemption at the Option of the Holder At any time on or after the five (5)-year anniversary of the Original Issuance Date, the Requisite Holders shall have the right (the “Holder Redemption Right”) to cause the Company to redeem, in whole, but not in part, but only out of funds legally available therefor, all shares of Series A Preferred Stock outstanding at such time at a redemption price equal to (A) the Liquidation Preference multiplied by (B) (1) if the Redemption Date occurs at any time on or on or after the fifth (5th) anniversary of the Original Issuance Date and prior to the sixth (6th) anniversary of the Original Issuance Date, 150%, (2) if the Redemption Date occurs at any time on or after the sixth (6th) anniversary of the Original Issuance Date and prior to the seventh (7th) anniversary of the Original Issuance Date, 175%, or (3) if the Redemption Date occurs at any time on or after the seventh (7th) anniversary of the Original Issuance Date, 200% (such price, the “Holder Redemption Price”). To exercise the Holder Redemption Right pursuant to this Section 9(b), the Requisite Holders shall deliver written notice thereof (a “Notice of Holder Redemption”) to the Company (which notice may be delivered prior to the five (5)-year anniversary of the Original Issuance Date provided that such notice provides for a redemption on or after the five (5)-year anniversary of the Original Issuance Date). The Company shall notify all other Holders of the receipt of such notice within five (5) days following receipt of the Notice of Holder Redemption and in such notice set out the date on which the Company shall redeem the shares of Series A Preferred Stock set forth in the Notice of Holder Redemption and any other shares for which the Company receives a Notice of Holder Redemption, which shall be no less than ten (10) days from the date of such notice, and no more than twenty (20) days from the date of such notice.
(b) Effect of Redemption. With respect to any share of Series A Preferred Stock specified to be redeemed by the Company pursuant to the Company Redemption Right or the Holder Redemption Right and which has been redeemed in accordance with the provisions of this Section 9, or for which the Company has irrevocably deposited an amount equal to the Company Redemption Price or the Holder Redemption Price, as applicable, in respect of such share with the Transfer Agent, then (i) such share shall no longer be deemed outstanding and (ii) all rights with respect to such share shall cease and terminate.
SECTION 10. Anti-Dilution Adjustments. (a) Adjustments. The Conversion Rate will be subject to adjustment, without duplication, upon the occurrence of the following events, except that the Company shall not make any adjustment to the Conversion Rate if Holders of the Series A Preferred Stock participate, at the same time and upon the same terms as holders of Class A Common Stock and solely as a result of holding shares of Series A Preferred Stock, in any transaction described in this Section 10(a), without having to convert their Series A Preferred Stock, as if they held a number of shares of Class A Common Stock equal to the number of shares of Class A Common Stock into which the shares of Series A Preferred Stock held by such Holder are convertible as of the date of such transaction pursuant to Section 6 (without regard for any of the limitations on convertibility contained therein):
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(i) The issuance of Common Stock as a dividend or distribution to all or substantially all holders of Common Stock, or a subdivision or combination of Common Stock or a reclassification of Common Stock into a greater or lesser number of shares of Common Stock, in which event the Conversion Rate shall be adjusted based on the following formula:
CR1 = CR0 x (OS1 / OS0)
CR0 = the Conversion Rate in effect immediately prior to the close of business on (i) the Record Date for such dividend or distribution, or (ii) the effective date of such subdivision, combination or reclassification
CR1 = the new Conversion Rate in effect immediately after the close of business on (i) the Record Date for such dividend or distribution, or (ii) the effective date of such subdivision, combination or reclassification
OS0 = the number of shares of Common Stock outstanding immediately prior to the close of business on (i) the Record Date for such dividend or distribution or (ii) the effective date of such subdivision, combination or reclassification (in each case before giving effect to any such dividend, distribution, subdivision, or consolidation)
OS1 = the number of shares of Common Stock that would be outstanding immediately after, and solely as a result of, the completion of such subdivision, combination or reclassification
Any adjustment made pursuant to this clause (i) shall be effective immediately after the close of business on the Record Date for such dividend or distribution, or the effective date of such subdivision, combination or reclassification. If any such event is announced or declared but does not occur, the Conversion Rate shall be readjusted, effective as of the date the Board announces that such event shall not occur, to the Conversion Rate that would then be in effect if such event had not been announced or declared.
(ii) The dividend, distribution or other issuance to all or substantially all holders of Common Stock of rights, options or warrants (other than rights, options or warrants distributed in connection with a stockholder rights plan (in which event the provisions of Section 10(a)(viii) shall apply)), entitling them to subscribe for or purchase shares of Common Stock for a period expiring forty-five (45) days or less from the date of issuance thereof, at a price per share that is less than the Current Market Price as of the Record Date for such issuance, in which event the Conversion Rate will be increased based on the following formula:
CR1 = CR0 x [(OS0+X) / (OS0+Y)]
CR0 = the Conversion Rate in effect immediately prior to the close of business on the Record Date for such dividend, distribution or issuance
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CR1 = the new Conversion Rate in effect immediately following the close of business on the Record Date for such dividend, distribution or issuance
OS0 = the number of shares of Common Stock outstanding immediately prior to the close of business on the Record Date for such dividend, distribution or issuance
X = the total number of shares of Common Stock issuable pursuant to such rights, options or warrants
Y = the number of shares of Common Stock equal to the aggregate price payable to exercise such rights, options or warrants divided by the Current Market Price as of the Record Date for such dividend, distribution or issuance.
For purposes of this clause (ii), in determining whether any rights, options or warrants entitle the holders to purchase the Common Stock at a price per share that is less than the Current Market Price as of the Record Date for such dividend, distribution or issuance, there shall be taken into account any consideration the Company receives for such rights, options or warrants, and any amount payable on exercise thereof, with the value of such consideration, if other than cash, to be the Fair Market Value thereof.
Any adjustment made pursuant to this clause (ii) shall become effective immediately following the close of business on the Record Date for such dividend, distribution or issuance. In the event that such rights, options or warrants are not so issued, the Conversion Rate shall be readjusted, effective as of the date the Board publicly announces its decision not to issue such rights, options or warrants, to the Conversion Rate that would then be in effect if such dividend, distribution or issuance had not been declared. To the extent that such rights, options or warrants are not exercised prior to their expiration or shares of Common Stock are otherwise not delivered pursuant to such rights, options or warrants upon the exercise of such rights, options or warrants, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect had the adjustments made upon the dividend, distribution or issuance of such rights, options or warrants been made on the basis of the delivery of only the number of shares of Common Stock actually delivered.
(iii) The Company or one or more of its Subsidiaries purchases Common Stock pursuant to a tender offer or exchange offer (other than an exchange offer that constitutes a Distribution Transaction subject to Section 10(a)(v)) by the Company or a Subsidiary of the Company for all or any portion of the Common Stock, or otherwise acquires Common Stock (except (1) in an open market purchase in compliance with Rule 10b-18 promulgated under the Exchange Act, (2) through an “accelerated share repurchase” on customary terms, or (3) in connection with tax withholding upon vesting or settlement of options, restricted stock units, performance share units or other similar equity awards or upon forfeiture or cashless exercise of options or other equity awards) (a “Covered Repurchase”), if the cash and value of any other consideration included in the payment per share of Common Stock validly tendered, exchanged or otherwise acquired through a Covered Repurchase exceeds the arithmetic average of the VWAP per share of
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Class A Common Stock for each of the ten (10) consecutive full Trading Days commencing on, and including, the Trading Day next succeeding the last day on which tenders or exchanges may be made pursuant to such tender or exchange offer (as it may be amended) or shares of Common Stock are otherwise acquired through a Covered Repurchase (the “Expiration Date”), in which event the Conversion Rate shall be increased based on the following formula:
CR1 = CR0 x [(FMV + (SP1 x OS1)) / (SP1 x OS0)]
CR0 = the Conversion Rate in effect immediately prior to the close of business on the Expiration Date
CR1 = the new Conversion Rate in effect immediately after the close of business on the Expiration Date
FMV = the Fair Market Value, on the Expiration Date, of all cash and any other consideration paid or payable for all shares validly tendered or exchanged and not withdrawn, or otherwise acquired through a Covered Repurchase, as of the Expiration Date
OS0 = the number of shares of Common Stock outstanding immediately prior to the last time tenders or exchanges may be made pursuant to such tender or exchange offer (including the shares to be purchased in such tender or exchange offer) or shares are otherwise acquired through a Covered Repurchase
OS1 = the number of shares of Common Stock outstanding immediately after the last time tenders or exchanges may be made pursuant to such tender or exchange offer (after giving effect to the purchase of shares in such tender or exchange offer) or shares are otherwise acquired through a Covered Repurchase
SP1 = the arithmetic average of the VWAP per share of Class A Common Stock for each of the ten (10) consecutive full Trading Days commencing on, and including, the Trading Day next succeeding the Expiration Date
Such adjustment shall become effective immediately after the close of business on the Expiration Date. If an adjustment to the Conversion Rate is required under this Section 10(a)(iii), delivery of any additional shares of Common Stock that may be deliverable upon conversion as a result of an adjustment required under this Section 10(a)(iii) shall be delayed to the extent necessary in order to complete the calculations provided for in this Section 10(a)(iii).
In the event that the Company or any of its Subsidiaries is obligated to purchase Common Stock pursuant to any such tender offer, exchange offer or other commitment to acquire shares of Common Stock through a Covered Repurchase but is permanently prevented by applicable law from effecting any such purchases, or all such purchases are rescinded, then the Conversion Rate shall be readjusted to be the Conversion Rate that would have been then in effect if such tender offer, exchange offer or Covered Repurchase had not been made.
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(iv) The Company shall, by dividend or otherwise, distribute to all or substantially all holders of its Common Stock (other than for cash in lieu of fractional shares), shares of any class of its Capital Stock, evidences of its indebtedness, assets, other property or securities, but excluding (A) dividends, distributions or issuances referred to in Section 10(a)(i) or Section 10(a)(ii) hereof, (B) Distribution Transactions as to which Section 10(a)(v) shall apply, (C) dividends or distributions paid exclusively in cash as to which Section 10(a)(vi) shall apply and (D) rights, options or warrants distributed in connection with a stockholder rights plan as to which Section 10(a)(viii) shall apply (any of such shares of its Capital Stock, indebtedness, assets or other property or securities that are not so excluded are hereinafter called the “Distributed Property”), then, in each such case the Conversion Rate shall be increased based on the following formula:
CR1 = CR0 x [SP0 / (SP0 – FMV)]
CR0 = the Conversion Rate in effect immediately prior to the close of business on the Record Date for such dividend or distribution
CR1 = the new Conversion Rate in effect immediately after the close of business on the Record Date for such dividend or distribution
SP0 = the Current Market Price as of the Record Date for such dividend or distribution
FMV = the Fair Market Value of the portion of Distributed Property distributed with respect to each outstanding share of Common Stock on the Record Date for such dividend or distribution; provided that, if FMV is equal or greater than SP0, then in lieu of the foregoing adjustment, the Company shall distribute to each holder of Series A Preferred Stock on the date the applicable Distributed Property is distributed to holders of Class A Common Stock, but without requiring such holder to convert its shares of Series A Preferred Stock, in respect of each share of Series A Preferred Stock held by such holder, the amount of Distributed Property such holder would have received had such holder owned a number of shares of Class A Common Stock equal to the Conversion Rate on the Record Date for such dividend or distribution
Any adjustment made pursuant to this clause (iv) shall be effective immediately after the close of business on the Record Date for such dividend or distribution. If any such dividend or distribution is declared but does not occur, the Conversion Rate shall be readjusted, effective as of the date the Board announces that such dividend or distribution shall not occur, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.
(v) The Company effects a Distribution Transaction, in which case the Conversion Rate in effect immediately prior to the effective date of the Distribution Transaction shall be increased based on the following formula:
CR1 = CR0 x [(FMV + MP0) / MP0]
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CR0 = the Conversion Rate in effect immediately prior to the close of business on the effective date of the Distribution Transaction
CR1 = the new Conversion Rate in effect immediately after the close of business on the effective date of the Distribution Transaction
FMV = the arithmetic average of the volume-weighted average prices for a share of the capital stock or other interest distributed to holders of Common Stock on the principal United States securities exchange or automated quotation system on which such capital stock or other interest trades, as reported by Bloomberg (or, if Bloomberg ceases to publish such price, any successor service chosen by the Company) in respect of the period from the open of trading on the relevant Trading Day until the close of trading on such Trading Day (or if such volume-weighted average price is unavailable, the market price of one share of such capital stock or other interest on such Trading Day determined, using a volume-weighted average method, by an Independent Financial Advisor retained for such purpose by the Company), for each of the ten consecutive full Trading Days commencing with, and including, the effective date of the Distribution Transaction
MP0 = the arithmetic average of the VWAP per share of Class A Common Stock for each of the ten (10) consecutive full Trading Days commencing on, and including, the effective date of the Distribution Transaction
Such adjustment shall become effective immediately following the close of business on the effective date of the Distribution Transaction. If an adjustment to the Conversion Rate is required under this Section 10(a)(v), delivery of any additional shares of Class A Common Stock that may be deliverable upon conversion as a result of an adjustment required under this Section 10(a)(v) shall be delayed to the extent necessary in order to complete the calculations provided for in this Section 10(a)(v).
(vi) The Company makes a cash dividend or distribution to all or substantially all holders of the Common Stock, the Conversion Rate shall be increased based on the following formula:
CR1 = CR0 x [SP0 / (SP0 – C)]
CR0 = the Conversion Rate in effect immediately prior to the close of business on the Record Date for such dividend or distribution
CR1 = the new Conversion Rate in effect immediately after the close of business on the Record Date for such dividend or distribution
SP0 = the Current Market Price as of the Record Date for such dividend or distribution
C = the amount in cash per share of Common Stock the Company distributes to all or substantially all holders of its Common Stock; provided that, if C is equal to or greater than SP0, then in lieu of the foregoing adjustment, the Company shall pay to each holder of Series A Preferred Stock on the date the applicable cash dividend or distribution is made to holders of Common Stock, but without requiring such holder to convert its
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shares of Series A Preferred Stock, in respect of each share of Series A Preferred Stock held by such holder, the amount of cash such holder would have received had such holder owned a number of shares of Class A Common Stock equal to the Conversion Rate on the Record Date for such dividend or distribution
Any adjustment made pursuant to this clause (vi) shall be effective immediately after the close of business on the Record Date for such dividend or distribution. If any dividend or distribution is declared but not paid, the Conversion Rate shall be readjusted, effective as of the date the Board announces that such dividend or distribution will not be paid, to the Conversion Rate that would then be in effect if such had dividend or distribution not been declared.
(vii) In the event the Company shall after the Original Issuance Date and until the second (2nd) anniversary of the Original Issuance Date, issue Additional Shares without consideration or for a consideration per share less than the Conversion Price of the Series A Preferred Stock in effect immediately prior to such issuance, then the Conversion Rate for the Series A Preferred Stock shall be increased, concurrently with such issue, in accordance with the following formula:
CR1 = CR0 x [(OS0 + OS2) / (OS0 + OS1)]
CR1 = the Conversion Rate of the Series A Preferred Stock in effect immediately after such issuance or deemed issuance of Additional Shares
CR0 = the Conversion Rate of the Series A Preferred Stock in effect immediately prior to such issuance or deemed issuance of Additional Shares
OS0 = the number of shares of Common Stock outstanding immediately prior to such issuance of Additional Shares (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of any options or warrants outstanding immediately prior to such issuance or upon conversion or exchange of any convertible securities (including the Series A Preferred Stock) outstanding immediately prior to such issue)
OS1 = the number of shares of Common Stock that would have been issued if such Additional Shares had been issued at a price per share equal to CR0 (determined by dividing the aggregate consideration received by the Company in respect of such issue by CR0)
OS2 = the number of such Additional Shares issued in such transaction
Any adjustment made pursuant to this clause (vii) shall be effective immediately after the close of business on the issue date of Additional Shares.
(viii)If the Company has a stockholder rights plan in effect with respect to the Class A Common Stock on any Conversion Date, upon conversion of any shares of the Series A Preferred Stock, Holders of such shares will receive, in addition to the applicable number of shares of Class A Common Stock, the rights under such rights plan
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relating to such Class A Common Stock, unless, prior to such Conversion Date, the rights have (i) become exercisable or (ii) separated from the shares of Class A Common Stock (the first of such events to occur, a “Trigger Event”), in which case, the Conversion Rate will be adjusted, effective automatically at the time of such Trigger Event, as if the Company had made a distribution of such rights to all holders of Common Stock as described in Section 10(a)(ii) (without giving effect to the forty-five (45) day limit on the exercisability of rights, options or warrants ordinarily subject to such Section 10(a)(ii)), subject to appropriate readjustment in the event of the expiration, termination or redemption of such rights prior to the exercise, deemed exercise or exchange thereof. Notwithstanding the foregoing, to the extent any such stockholder rights are exchanged by the Company for shares of Common Stock or other property or securities, the Conversion Rate shall be appropriately readjusted as if such stockholder rights had not been issued, but the Company had instead issued such shares of Common Stock or other property or securities as a dividend or distribution of shares of Common Stock pursuant to Section 10(a)(i) or Section 10(a)(iv), as applicable.
To the extent that such rights are not exercised prior to their expiration, termination or redemption, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect had the adjustments made upon the occurrence of the Trigger Event been made on the basis of the issuance of, and the receipt of the exercise price with respect to, only the number of shares of Class A Common Stock actually issued pursuant to such rights.
Notwithstanding anything to the contrary in this Section 10(a)(viii), no adjustment shall be required to be made to the Conversion Rate with respect to any Holder which is, or is an “affiliate” or “associate” of, an “acquiring person” under such stockholder rights plan or with respect to any direct or indirect transferee of such Holder who receives Series A Preferred Stock in such transfer after the time such Holder becomes, or its affiliate or associate becomes, such an “acquiring person”.
(a) Applicable Adjustments. For purposes of the adjustments to the Conversion Rate set forth in Section 10(a)(i) through Section 10(a)(vi), references to dividends, issuances, grants, or other distributions to “all or substantially all holders of Common Stock” shall refer to any such dividends, issuances, grants, or other distributions made to (i) all or substantially all holders of the Class A Common Stock, (ii) all or substantially all of the holders of the Class B Common Stock and/or (iii) all or substantially all of holders of the Common Stock.
(b) Calculation of Adjustments. All adjustments to the Conversion Rate shall be calculated by the Company to the nearest 1/10,000th of one share of Class A Common Stock (or if there is not a nearest 1/10,000th of a share, to the next lower 1/10,000th of a share). No adjustment to the Conversion Rate will be required unless such adjustment would require an increase or decrease of at least one percent of the Conversion Rate; provided, however, that any such adjustment that is not required to be made will be carried forward and taken into account in any subsequent adjustment; provided, further that any such adjustment of less than one percent
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that has not been made will be made upon any Conversion Date or redemption or repurchase date.
(c) When No Adjustment Required. (i) Except as otherwise provided in this Section 10, the Conversion Rate will not be adjusted for the issuance of Common Stock or any securities convertible into or exchangeable for Common Stock or carrying the right to purchase any of the foregoing, or for the repurchase of Common Stock.
(i)Except as otherwise provided in this Section 10, the Conversion Rate will not be adjusted as a result of the issuance of, the distribution of separate certificates representing, the exercise or redemption of, or the termination or invalidation of, rights pursuant to any stockholder rights plans.
(ii)No adjustment to the Conversion Rate will be made:
(A)upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the Company and the investment of additional optional amounts in Common Stock under any plan in which purchases are made at market prices on the date or dates of purchase, without discount, and whether or not the Company bears the ordinary costs of administration and operation of the plan, including brokerage commissions;
(B)upon the issuance of any shares of Common Stock or options or rights to purchase such shares pursuant to any Company Stock Plan or that certain stand-alone stock option agreement between the Company and the Founder;
(C)upon the issuance of any shares of Common Stock pursuant to any option, warrant, right, or exercisable, exchangeable or convertible security pursuant to any agreement outstanding as of the date hereof, including the Series A Preferred Stock and the Series G Preferred Stock Warrant;
(D)upon the issuance of any shares of Class B Common Stock pursuant to any right or agreement outstanding as of the date hereof;
(E)upon the issuance of shares of Class A Common Stock upon conversion of Class B Common Stock; or
(F)for a change in the par value of the Class A Common Stock.
(d) Successive Adjustments. After an adjustment to the Conversion Rate under this Section 10, any subsequent event requiring an adjustment under this Section 10 shall cause an adjustment to each such Conversion Rate as so adjusted.
(e) Multiple Adjustments. For the avoidance of doubt, if an event occurs that would trigger an adjustment to the Conversion Rate pursuant to this Section 10 under more than one subsection hereof, such event, to the extent fully taken into account in a single adjustment,
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shall not result in multiple adjustments hereunder; provided, however, that if more than one subsection of this Section 10 is applicable to a single event, the subsection shall be applied that produces the largest adjustment.
(f) Notice of Adjustments. Whenever the Conversion Rate is adjusted as provided under this Section 10, the Company shall as soon as reasonably practicable following the occurrence of an event that requires such adjustment (or if the Company is not aware of such occurrence, as soon as reasonably practicable after becoming so aware):
(i)compute the adjusted applicable Conversion Rate in accordance with this Section 10 and prepare and transmit to the Conversion Agent an Officer’s Certificate setting forth the applicable Conversion Rate, the method of calculation thereof, and the facts requiring such adjustment and upon which such adjustment is based; and
(ii)provide a written notice to the Holders of the occurrence of such event and a statement in reasonable detail setting forth the method by which the adjustment to the applicable Conversion Rate was determined and setting forth the adjusted applicable Conversion Rate.
(g) Conversion Agent. The Conversion Agent shall not at any time be under any duty or responsibility to any Holder to determine whether any facts exist that may require any adjustment of the Conversion Rate or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed in making the same. The Conversion Agent shall be fully authorized and protected in relying on any Officer’s Certificate delivered pursuant to this Section 10(h) and any adjustment contained therein and the Conversion Agent shall not be deemed to have knowledge of any adjustment unless and until it has received such certificate. The Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Class A Common Stock, or of any securities or property, that may at the time be issued or delivered with respect to any Series A Preferred Stock and the Conversion Agent makes no representation with respect thereto. The Conversion Agent shall not be responsible for any failure of the Company to issue, transfer or deliver any shares of Class A Common Stock pursuant to the conversion of Series A Preferred Stock or to comply with any of the duties, responsibilities or covenants of the Company contained in this Section 10.
(h) Fractional Shares. No fractional shares of Class A Common Stock will be delivered to the Holders upon conversion. In lieu of fractional shares otherwise issuable, the Holders will be entitled to receive, at the Company’s sole discretion, either (i) an amount in cash equal to the fraction of a share of Class A Common Stock multiplied by the Closing Price of the Class A Common Stock on the Trading Day immediately preceding the applicable Conversion Date or (ii) one additional whole share of Class A Common Stock. In order to determine whether the number of shares of Class A Common Stock to be delivered to a Holder upon the conversion of such Holder’s shares of Series A Preferred Stock will include a fractional share, such determination shall be based on the aggregate number of shares of Series A Preferred Stock of such Holder that are being converted and/or issued on any single Conversion Date or Change of Control Purchase Date.
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SECTION 11. Adjustment for Reorganization Events.
(a) Reorganization Events. In the event of:
(i)any reclassification, statutory exchange, merger, consolidation or other similar business combination of the Company with or into another Person, in each case, pursuant to which at least a majority of the total voting power of the outstanding Voting Stock of the Company is changed or converted into, or exchanged for, cash, securities or other property of the Company or another Person;
(ii)any sale, transfer, lease or conveyance to another Person of all or substantially all of the property and assets of the Company, in each case pursuant to which the Class A Common Stock is converted into cash, securities or other property; or
(iii)any statutory exchange of securities of the Company with another Person (other than in connection with a merger or acquisition) or reclassification, recapitalization or reorganization of the Class A Common Stock into other securities;
other than, in each case, any such transaction that constitutes a Change of Control, with respect to which, for the avoidance of doubt, the provisions of Section 8 shall apply (each of which is referred to as a “Reorganization Event”), each share of Series A Preferred Stock outstanding immediately prior to such Reorganization Event will, without the consent of the Holders and subject to Section 11(d) and Section 12(b), remain outstanding but shall become convertible into, out of funds legally available therefor, the number, kind and amount of securities, cash and other property (the “Exchange Property”) (without any interest on such Exchange Property and without any right to dividends or distribution on such Exchange Property which have a Record Date that is prior to the applicable Conversion Date, other than Participating Dividends with respect to the Series A Preferred Stock being converted) that the Holder of such share of Series A Preferred Stock would have received in such Reorganization Event had such Holder converted its shares of Series A Preferred Stock into the applicable number of shares of Class A Common Stock immediately prior to the effective date of the Reorganization Event using the Conversion Rate applicable immediately prior to the effective date of the Reorganization Event and the Liquidation Preference applicable at the time of such subsequent conversion; provided that the foregoing shall not apply if such Holder is a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be (any such Person, a “Constituent Person”), or an Affiliate of a Constituent Person, to the extent such Reorganization Event provides for different treatment of Class A Common Stock held by such Constituent Person or such Affiliate thereof. If the kind or amount of securities, cash and other property receivable upon such Reorganization Event is not the same for each share of Class A Common Stock held immediately prior to such Reorganization Event by a Person (other than a Constituent Person or an Affiliate thereof), then for the purpose of this Section 11(a), the kind and amount of securities, cash and other property receivable upon conversion following such Reorganization Event will be deemed to be the weighted average of the types and amounts of consideration received by the holders of Class A Common Stock.
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(b) Successive Reorganization Events. The above provisions of this Section 11 shall similarly apply to successive Reorganization Events and the provisions of Section 10 shall apply to any shares of Capital Stock received by the holders of the Class A Common Stock in any such Reorganization Event.
(c) Reorganization Event Notice. The Company (or any successor) shall, no less than thirty (30) days prior to the anticipated effective date of any Reorganization Event, provide written notice to the Holders of such occurrence of such event and of the kind and amount of the cash, securities or other property that constitutes the Exchange Property (a “Reorganization Event Notice”). Failure to deliver a Reorganization Event Notice shall not affect the operation of this Section 11.
(d) Reorganization Event Agreements. The Company shall not enter into any agreement for a transaction constituting a Reorganization Event unless (i) such agreement provides for or does not interfere with or prevent (as applicable) conversion of the Series A Preferred Stock into the Exchange Property in a manner that is consistent with and gives effect to this Section 11, and (ii) to the extent that the Company is not the surviving corporation in such Reorganization Event or will be dissolved in connection with such Reorganization Event, proper provision shall be made in the agreements governing such Reorganization Event for the conversion of the Series A Preferred Stock into Capital Stock of the Person surviving such Reorganization Event or such other continuing entity in such Reorganization Event.
SECTION 12. Voting Rights.
(a) General. Except as provided in Section 12(b) or required by applicable law, Holders of shares of Series A Preferred Stock shall be entitled to vote as a single class with the holders of the Class A Common Stock and the holders of any other class or series of Capital Stock of the Company then entitled to vote with the Class A Common Stock on all matters submitted to a vote of the holders of Class A Common Stock (and, if applicable, holders of any other class or series of Capital Stock of the Company); provided that if a filing under the HSR Act is required for a Holder of shares of Series A Preferred Stock with respect to either its acquisition of such shares of Series A Preferred Stock or any conversion of the Series A Preferred Stock, then such Holder’s shares of Series A Preferred Stock shall have no right to vote on matters submitted to vote of the holders of any series of the Capital Stock of the Company pursuant to this Section 12(a) until the expiration or earlier termination of the applicable waiting period under the HSR Act, but the Holders shall at all times be entitled to the voting and consent rights set forth in Section 12(b). Subject to the foregoing, each Holder of Series A Preferred Stock shall be entitled to the number of votes equal to the product of (i) the largest number of whole shares of Class A Common Stock into which all issued and outstanding shares of Series A Preferred Stock could be converted pursuant to Section 6 multiplied by (ii) a fraction the numerator of which is the number of shares of Series A Preferred Stock held by such Holder and the denominator of which is the aggregate number of issued and outstanding shares of Series A Preferred Stock, in each case, at and calculated as of the record date for the determination of stockholders entitled to vote or consent on such matters or, if no such record date is established, at and as of the date such vote or consent is taken or any written consent of stockholders is first
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executed. The Holders shall be entitled to notice of any meeting of holders of Common Stock in accordance with the Certificate of Incorporation and Bylaws of the Company.
(b) Negative Covenants. For so long as any shares of Series A Preferred Stock are outstanding, in addition to any other vote or consent of the stockholders required by law or by the Certificate of Incorporation, each and any of the following events and actions set forth in this Section 12(b) shall require, and cannot be effected or undertaken (and shall be void ab initio and ultra vires) without the affirmative vote or consent of the Requisite Holders, voting together as a separate class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, whether or not such approval is required pursuant to the DGCL:
(i)any amendment, modification, alteration, repeal or waiver (whether by merger, consolidation or otherwise) of any provision of (A) the Certificate of Incorporation (other than this Certificate of Designations and the amendment to this Certificate of Designations pursuant to and in accordance with Section 5.08(j) of the Investment Agreement) or Bylaws that would have an adverse effect on the rights, preferences, privileges or powers (voting or otherwise) of the Series A Preferred Stock or the Holders thereof or (B) any provision of this Certificate of Designations (other than the amendment to this Certificate of Designations pursuant to and in accordance with Section 5.08(j) of the Investment Agreement);
(ii)any amendment, modification, or alteration (whether by merger, consolidation or otherwise) of, or any supplement (whether by a certificate of designations or otherwise) to, the Certificate of Incorporation or any provision thereof, or any other action to (A) authorize or create, or increase the number of authorized or issued shares of, (B) authorize, create or increase the number of authorized or issued securities convertible into shares of, or (C) reclassify any security into, or (D) issue (x) any Parity Stock or Senior Stock, or (y) any other class or series of Capital Stock of the Company ranking senior to, or on a parity basis with, the Series A Preferred Stock as to the rights, preferences and privileges of the Series A Preferred Stock;
(iii)any increase in the authorized number of shares of Series A Preferred Stock or any issuance of shares of Series A Preferred Stock after the Original Issuance Date;
(iv)any incurrence, assumption or endorsement of indebtedness for borrowed money, or any other agreement to become liable for any indebtedness for borrowed money (including guarantees of indebtedness for borrowed money), or any issuance of debt securities for borrowed money, in the aggregate of more than $50,000,000 (taken together with all indebtedness for borrowed money incurred by the Company following the Original Issuance Date), other than trade credit incurred in the ordinary course of business, or any incurrence, assumption, or endorsement, or any other agreement to become liable for (including guarantees), or any issuance of debt securities for, indebtedness for borrowed money that prohibits or otherwise restricts redemption of the Series A Preferred Stock in accordance with its terms;
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(v)any redemption, purchase or other acquisition (or payment into or setting aside of funds for a sinking fund for such purpose) of any of the Capital Stock of the Company, other than the following:
(A)repurchases of Capital Stock deemed to occur upon the exercise of stock options to the extent the Capital Stock represents a portion of the exercise price thereof and satisfaction of any tax obligations related thereto;
(B)repurchases of Capital Stock held by current or former officers, directors, employees or consultants (or their transferees, spouses, ex-spouses, estate heirs, family members or beneficiaries under their estates) (including, without limitation, upon their death, disability, retirement, severance or termination of employment or service) pursuant to the terms of any employment contract, benefit plan or other similar arrangement approved by the Board with or for the benefit of any such Person;
(C)redemptions contemplated in Section 8 or Section 9; and
(D)repurchases deemed to occur in lieu of issuing fractional shares pursuant to Section 10(i);
(vi)any change to the principal business of the Company, or exiting the principal business of the Company;
(vii)any entry into any merger or acquisition (in one transaction or a series of related transactions) involving the payment, contribution or assignment by the Company or to the Company of any equity interest or assets in excess of $50,000,000, or any divestiture of any rights, properties or assets of the Company (in one transaction or a series of related transactions) for consideration in excess of $100,000,000;
(viii)the declaration or payment of a dividend or other distribution with respect to any shares of the Capital Stock of the Company;
(ix)the liquidation, dissolution or winding up of the affairs of the Company, or the voluntarily declaration of bankruptcy, or making of an assignment for the benefit of creditors, or the filing of any petition seeking relief under bankruptcy rearrangement, reorganization or other debtor relief laws of the United States or any state or any other competent jurisdiction for the Company;
(x)the entry into any transaction with an Affiliate of the Company, other than a transaction on terms no less favorable to the Company than would be obtained in an arms’ length transaction with a bona fide third party, and approved by a majority of the disinterested directors on the Board, other than the following:
(A)transactions among the Company and its Subsidiaries; and
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(B)director, officer and employee compensation (including bonuses) and other benefits (including, without limitation, retirement, health, incentive equity and other benefit plans) and expense reimbursement and indemnification agreements and severance agreements, subject in each case to the approvals set forth in Section 12(b)(xi) and (xii);
(xi)any increase in the number of shares of Capital Stock available for grant under any Company Stock Plan or other equity (or equity-linked) compensation plan;
(xii)in any fiscal year, any approval of options or grants under any Company Stock Plan or any other equity (or equity-linked) compensation plan, or any other options or grants outside of compensation plans that, in the aggregate with all other such options and grants approved during that fiscal year, represent on an as-exercised and net basis more than 3.75% of the total number of shares Common Stock (determined on a fully diluted basis, excluding any shares of Class A Common Stock issuable upon conversion of the Series A Preferred Stock) outstanding on the last day of the immediately preceding fiscal year;
(xiii)until the third (3rd) anniversary of the Original Issuance Date, any increase to the amount of any publicly-reported non-GAAP (i) sales and marketing, (ii) research and development and (iii) general and administrative expense in the Board-approved budget (as in effect as of January 1st of the applicable fiscal year) if the Company’s actual expenditure with respect to any such expense over two consecutive fiscal quarters is on average greater than 110% of the Board-budgeted amount for such expense over that period; or
(xiv)the termination without cause of the employment of the Founder, the Company’s Head of Finance and Administration (or equivalent executive officer), or the Company’s Head of Revenue (or equivalent executive officer);
provided, however, that the authorization or creation of, or the increase in the number of authorized or issued shares of, or any securities convertible into shares of, or the reclassification of any security (other than the Series A Preferred Stock) into, or the issuance of, Junior Stock, will not require the vote the holders of the Series A Preferred Stock.
For purposes of this Section 12, the filing in accordance with applicable law of a certificate of designations or any similar document setting forth or changing the designations, powers, preferences, rights, qualifications, limitations and restrictions of any class or series of stock of the Company shall be deemed an amendment to the Certificate of Incorporation.
(c) Notwithstanding anything to the contrary in this Certificate of Designations, any amendment, alteration or repeal (whether by merger, consolidation or otherwise) of any provision of the Certificate of Incorporation (including this Certificate of Designations) or Bylaws that adversely affects the Conversion Price, Conversion Rate, Liquidation Preference, Change of Control Redemption or Change of Control Redemption Price, Company Redemption Right, Holder Redemption Right, or the Applicable Redemption Price
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shall not be effective as to the shares of Series A Preferred Stock held by any Holder without the consent of such Holder.
(d) Each Holder of Series A Preferred Stock will have one vote per share held by such Holder as of the applicable record date on any matter on which Holders of Series A Preferred Stock are entitled to vote separately as a class, whether at a meeting or by written consent.
(e) The affirmative vote or consent of the Requisite Holders, voting together as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, will be sufficient to waive or amend the provisions of Section 8(h) of this Certificate of Designations, and any amendment or waiver of any of the provisions of Section 8(h) approved by such percentage of the Holders shall be binding on all of the Holders.
(f) For the avoidance of doubt and notwithstanding anything to the contrary in the Certificate of Incorporation or Bylaws, the Holders of Series A Preferred Stock shall have the exclusive consent and voting rights set forth in Section 12(b) and may take action or consent to any action with respect to such rights without a meeting by delivering a consent in writing or by electronic transmission of the Holders of the Series A Preferred Stock entitled to cast not less than the minimum number of votes that would be necessary to authorize, take or consent to such action at a meeting of stockholders.
SECTION 13. Preemptive Rights. Except for the right to participate in any issuance of new equity securities by the Company as set forth in the Investment Agreement, and without prejudicing the rights of the Holders expressly set forth in this Certificate of Designations, the Holders shall not have any preemptive rights.
SECTION 14. Term. Except as expressly provided in this Certificate of Designations, the shares of Series A Preferred Stock shall not be redeemable or otherwise mature and the term of the Series A Preferred Stock shall be perpetual.
SECTION 15. Creation of Capital Stock. Subject to Section 12(b)(ii), Section 12(b)(iii), Section 12(b)(xi), or Section 12(b)(xii), the Holder’s preemptive rights under the Investment Agreement, and any requisite adjustment of the Conversion Rate as may be required under Section 10 or Section 11, the Board, or any duly authorized committee thereof, without the vote of the Holders, may authorize and issue additional shares of Capital Stock of the Company.
SECTION 16. No Sinking Fund. Shares of Series A Preferred Stock shall not be subject to or entitled to the operation of a retirement or sinking fund.
SECTION 17. Transfer Agent, Conversion Agent, Registrar and Paying Agent. The duly appointed Transfer Agent, Conversion Agent, Registrar and paying agent for the Series A Preferred Stock shall be Computershare Trust Company, N.A.. The Company may, in its sole discretion, appoint any other Person to serve as Transfer Agent, Conversion Agent, Registrar or paying agent for the Series A Preferred Stock and thereafter may remove or replace
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Computershare Trust Company, N.A. or such other Person at any time. Upon any such appointment or removal, the Company shall send or cause to be sent notice thereof to the Holders.
SECTION 18. Replacement Certificates. (a) Mutilated, Destroyed, Stolen or Lost Certificates. If physical certificates evidencing the Series A Preferred Stock are issued, the Company shall replace any mutilated certificate at the Holder’s expense upon surrender of that certificate to the Transfer Agent for cancellation. The Company shall replace certificates that become destroyed, stolen or lost at the Holder’s expense upon delivery to the Company and the Transfer Agent of satisfactory evidence that the certificate has been destroyed, stolen or lost, together with any indemnity that may be required by the Transfer Agent and the Company.
(a) Certificates Following Conversion. If physical certificates representing the Series A Preferred Stock are issued, the Company shall not be required to issue replacement certificates representing shares of Series A Preferred Stock on or after the Conversion Date applicable to such shares (except if any certificate for shares of Series A Preferred Stock shall be surrendered for partial conversion, the Company shall, at its expense, execute and deliver to or upon the written order of the Holder of the certificate so surrendered a new certificate for the shares of Series A Preferred Stock not converted). In place of the delivery of a replacement certificate following the applicable Conversion Date, the Transfer Agent, upon receipt of the satisfactory evidence and indemnity described in clause (a) above, shall deliver certificates representing the shares of Class A Common Stock issuable upon conversion of such shares of Series A Preferred Stock formerly evidenced by the physical certificate.
SECTION 19. Taxes.
(a) Transfer Taxes. The Company shall pay any and all stock transfer, documentary, stamp and similar taxes that may be payable in respect of any issuance or delivery of shares of Series A Preferred Stock or shares of Common Stock or other securities issued on account of Series A Preferred Stock pursuant hereto or certificates representing such shares or securities. However, in the case of conversion of Series A Preferred Stock, the Company shall not be required to pay any such tax that may be payable in respect of any transfer involved in the issuance or delivery of shares of Series A Preferred Stock, shares of Common Stock or other securities to a beneficial owner other than the beneficial owner of the Series A Preferred Stock immediately prior to such conversion, and shall not be required to make any such issuance, delivery or payment unless and until the Person otherwise entitled to such issuance, delivery or payment has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid or is not payable.
(b) Withholding; Tax Treatment. All payments and distributions (or deemed distributions) on the shares of Series A Preferred Stock (and on the shares of Common Stock received upon their conversion) shall be subject to withholding and backup withholding of taxes by the Company or its paying agent to the extent required by the Code, Treasury Regulations, or other applicable law, subject to applicable exemptions, and amounts withheld, if any, shall be treated as received by the Holders; provided, that to the extent that a Holder has previously delivered an appropriate Internal Revenue Service (“IRS”) Form W-8 or W-9 to the Company
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establishing an exemption for U.S. federal withholding (including backup withholding), the Company shall not be permitted to withhold unless the Company has provided the Holder advance written notice of its intent to withhold at least five (5) days prior to the payment of the amount subject to withholding, and has given the Holder a reasonable opportunity to provide any form or certificate available to reduce or eliminate such withholding. Within a reasonable amount of time after making such withholding payment, the Company shall furnish the Holder with copies of any tax certificate, receipt or other documentation reasonably acceptable to the Holder evidencing such payment. Absent a change in law or a contrary determination (as defined in Section 1313(a) of the Code), the Holders and the Company agree (i) not to treat the Series A Preferred Stock as “preferred stock” within the meaning of Section 305 of the Code and Treasury Regulation Section 1.305-5 for United States federal income tax and withholding tax purposes, (ii) not to treat any Common Dividend that may be paid on the Common Stock in which the Series A Preferred Stock participates as giving rise to a “disproportionate distribution” within the meaning of Section 305(b)(2) of the Code with respect to the corresponding Participating Dividend to be received by a Holder in the same type and amount of consideration pursuant to Section 4(a), and (iii) not to take any action, other than any action contemplated by this Certificate of Designation or the Investment Agreement, that would reasonably be expected to cause any Holder to recognize taxable income by reason of the operation of Section 305(b)(2) of the Code. Absent a change in law or a contrary determination (as defined in Section 1313(a) of the Code), the Company shall treat any adjustment to the Conversion Price pursuant to Section 10 as being made pursuant to a “bona fide, reasonable, adjustment formula” within the meaning of Treasury Regulations Section 1.305-7(b) for U.S. federal and applicable state and local income tax and withholding purposes, and shall not take any position inconsistent with such treatment.
SECTION 20. Notices. All notices referred to herein shall be in writing and, unless otherwise specified herein, all notices hereunder shall be deemed to have been given upon the earlier of receipt thereof or three (3) Business Days after the mailing thereof if sent by registered or certified mail with postage prepaid, or by nationally recognized private courier service addressed: (i) if to the Company, to its office at Blend Labs, Inc., 415 Kearny Street, San Francisco, CA 94108 (Attention: Head of Finance and Administration), (ii) if to any Holder, to such Holder at the address of such Holder as listed in the stock record books of the Company (which may include the records of the Transfer Agent) or (iii) to such other address as the Company or any such Holder, as the case may be, shall have designated by notice similarly given in writing.
SECTION 21. Facts Ascertainable. When any term of this Certificate of Designations refers to a specific agreement or other document to determine the meaning or operation of a provision hereof, the Secretary of the Company shall maintain a copy of such agreement or document at the principal executive offices of the Company and a copy thereof shall be provided free of charge to any Holder who makes a request therefor. The Secretary of the Company shall also maintain a written record of the Original Issuance Date, the number of shares of Series A Preferred Stock issued to a Holder and the date of each such issuance, and shall furnish such written record free of charge to any Holder who makes a request therefor.
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SECTION 22. Waiver. Notwithstanding any provision in this Certificate of Designations to the contrary, any provision contained herein and any right of the Holders of Series A Preferred Stock granted hereunder may be waived as to all shares of Series A Preferred Stock (and the Holders thereof) upon the vote or written consent of the Requisite Holders; provided that any waiver that adversely affects the Conversion Price, Conversion Rate, Liquidation Preference, Change of Control Redemption or Change of Control Redemption Price, Company Redemption Right, Holder Redemption Right, or the Applicable Redemption Price shall not be effective as to the shares of Series A Preferred Stock held by any Holder without the consent of such Holder.
SECTION 23. Severability. If any term of the Series A Preferred Stock set forth herein is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other terms set forth herein which can be given effect without the invalid, unlawful or unenforceable term will, nevertheless, remain in full force and effect, and no term herein set forth will be deemed dependent upon any other such term unless so expressed herein.
SECTION 24. Business Opportunities. To the fullest extent permitted by Section 122(17) of the DGCL (or any successor provision) and except as may be otherwise expressly agreed in writing by the Company and the Investor Parties, the Company, on behalf of itself and its Subsidiaries, renounces any interest or expectancy of the Company and its Subsidiaries in, or in being offered an opportunity to participate in, business opportunities, that are from time to time presented to the Investor Parties or any of their respective officers, representatives, directors, agents, stockholders, members, partners, Affiliates, Subsidiaries (other than the Company and its Subsidiaries), or any of their respective designees on the Board and/or any of their respective representatives who, from time to time, may act as officers of the Company, even if the opportunity is one that the Company or its Subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so, unless, in the case of any such person who is a director or officer of the Company, such business opportunity is expressly offered to such director or officer solely in his or her capacity as a director or officer of the Company. Any Person purchasing or otherwise acquiring any interest in any shares of Capital Stock of the Company shall be deemed to have notice of and consented to the provisions of this Section 24. Neither the alteration, amendment or repeal of this Section 24, nor the adoption of any provision of the Certificate of Incorporation or this Certificate of Designations inconsistent with this Section 24, nor, to the fullest extent permitted by Delaware law, any modification of law, shall eliminate or reduce the effect of this Section 24 in respect of any business opportunity first identified or any other matter occurring, or any cause of action, suit or claim that, but for this Section 24, would accrue or arise, prior to such alteration, amendment, repeal, adoption or modification. If any provision or provisions of this Section 24 shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (a) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Section 24 (including, without limitation, each portion of any paragraph of this Section 24 containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (b) to the fullest extent possible, the provisions of this Section 24 (including, without limitation, each such portion of any paragraph
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of this Section 24 containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Company to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Company to the fullest extent permitted by law. This Section 24 shall not limit any protections or defenses available to, or indemnification or advancement rights of, any director, officer, employee or agent of the Company under the Certificate of Incorporation, the Bylaws, any other agreement between the Company and such director, officer, employee or agent or applicable law.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to be executed this 29th day of April, 2024.
BLEND LABS, INC.
By: /s/ Nima Ghamsari
Name: Nima Ghamsari
Title: Head of Blend
[Signature Page to Certificate of Designations]
Execution Version
THE OFFER AND SALE OF THIS WARRANT AND THE SHARES OF CLASS A COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE ACT, OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF SECTIONS 6 AND 7 BELOW, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER OF THIS WARRANT, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.
WARRANT TO PURCHASE STOCK
This Warrant to Purchase Stock (“Warrant”) is issued by Blend Labs, Inc., a Delaware corporation (the “Company”) as of April 29, 2024 (the “Issuance Date”) and certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Haveli Brooks Aggregator, L.P., a Delaware limited partnership (“Holder”) is entitled to purchase that number of fully paid and non-assessable shares of Stock equal to the Warrant Number at a purchase price per share equal to the Exercise Price, subject to the provisions and upon the terms and conditions set forth in this Warrant. Capitalized terms used but not defined herein shall have the meaning provided in the Investment Agreement.
SECTION 1.Exercise.
1.1.Exercise Period. This Warrant may be exercised by Holder during the period beginning on the Issuance Date and ending on or before midnight Pacific time on the Expiration Date (the “Exercise Period”); provided, however, that this Warrant may not be exercised by any Holder until the expiration or early termination of the applicable waiting period, if any, under the HSR Act with respect to the Holder’s investment in the Company’s Class A Common Stock pursuant to the Investment Agreement. This Warrant will terminate automatically and immediately upon the expiration of the Exercise Period.
1.2.Method of Exercise. A Holder may exercise this Warrant (in whole or in part, in its entirety or in such increments, at any time and from time to time, as in each case the Holder may in its sole discretion elect) throughout the Exercise Period. Each such exercise shall be accomplished by Holder’s (i) delivery to the Company, in accordance with Section 7.13, of a duly executed Notice of Exercise in substantially the form attached as Appendix 1, which Notice of Exercise shall specify the number of shares of Stock if any, with respect to which the Holder elects to make a cash exercise pursuant to this Section 1.2, and the number of shares of Stock, if any, with respect to which the Holder elects to make a net-issue exercise pursuant to Section 1.3, and (ii) tender to the Company of an amount equal to the Exercise Price multiplied by the number of underlying shares of Stock, if any, then being purchased pursuant to a cash exercise (the “Purchase Price”), by wire transfer of immediately available funds in accordance with wiring coordinates provided to the Holder by the Company, or by certified or bank cashier’s check payable to the order of the Company. Notwithstanding anything to the contrary herein, any
exercise of this Warrant shall be subject to and conditioned upon making and receipt of any filings, waivers and approvals, and the expiration or early termination of the applicable waiting period, if any, as may be required under the HSR Act (“HSR Approval”) in connection with the issuance of the Stock upon any exercise of this Warrant. The Holder and Company shall both use reasonable best efforts to seek early termination of any such applicable waiting period under the HSR Act.
1.3.Net Issue Exercise. In lieu of exercising this Warrant on a cash basis by payment of the Purchase Price pursuant to Section 1.2, the Holder may exercise this Warrant in whole or in part on a net-issue basis by electing on one or more occasions, at any time and from time to time during the Exercise Period, as in each case the Holder may in its sole discretion elect, to receive Stock issuable in accordance with this Warrant (or the portion thereof being exercised) by surrender of this Warrant to the Company, in which event the Company shall issue to the Holder a number of shares of Stock computed using the following formula:
X= ((Y*(A-B)) / A)
Where: X = the number of shares of Stock to be issued to the Holder.
Y = the number of the shares of Stock with respect to which the Warrant is exercised.
A = the fair market value of one share of Stock on the date of determination.
B = the Exercise Price (as adjusted to the date of such calculation).
For purposes of this Section 1.3, the fair market value of one share of Stock on the date of determination shall mean:
(i) if the Stock is publicly traded, fair market value of the Stock shall be the VWAP of the Stock for the five (5) consecutive Trading Days ending on the date immediately preceding the date of the Exercise Notice; and
(ii) if the Stock is not so publicly traded, the per share fair market value of the Stock shall be such fair market value as determined in good faith by the Board in reliance on an opinion of an Independent Financial Advisor; provided that Holder shall have a right to receive from the Board the calculations performed to arrive at such fair market value and a certified resolution of the fair market value from the Board.
The date of determination for purposes of this Section 1.3 shall be the date the Notice of Exercise is delivered by the Holder to the Company. If a Holder exercises a Warrant in part on a net issue basis, the Company shall deliver to such Holder, in addition to the number of shares of Stock calculated as described above with respect to the portion of the Warrant that being exercised, a New Warrant covering the aggregate number of shares of Stock as to which this Warrant remains exercisable, if any.
Warrant – Blend Labs, Inc.
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1.4.Delivery of Certificate. Promptly, but in no event more than three (3) Business Days after the date on which Holder exercises or converts this Warrant and the Company receives the Notice of Exercise and payment of the Purchase Price, if any, with respect of the portion of the Stock underlying this Warrant that is the subject of the relevant exercise or conversion (the “Exercise Date”), the Company shall deliver to Holder certificates or make appropriate book entries for the Stock acquired and/or other property to be delivered in connection with such exercise or conversion; provided, however, if the Stock is then traded in a public market, the Company may provide electronic evidence from its transfer agent of such issuance in book entry. With respect to each exercise of this Warrant, if any, the Holder (or its transferee, if any, as the case may be) shall for all purposes be deemed to have become the holder of record of the number of shares of Stock purchased hereunder on the Exercise Date (subject to obtaining HSR Approval, if applicable), irrespective of the date of delivery to the Holder of the certificate(s) evidencing such shares. If this Warrant is exercised with respect to less than all of the Stock underlying the Warrant, and this Warrant has not then expired, then the Company shall promptly (and in all events within two (2) Trading Days of the respective date of such partial exercise) issue a new warrant in substantially the form and having substantially the same terms and conditions as this Warrant (a “New Warrant”) to the Holder covering the aggregate number of shares of Stock as to which this Warrant remains exercisable, and the Company shall also deliver a statement setting forth the number of shares of Stock that remain available for exercise under the New Warrant.
1.5.Replacement of Warrants. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company shall execute and deliver, in lieu of this Warrant, a New Warrant.
SECTION 2.Adjustments To The Stock and Exercise Price. The Exercise Price and the number of shares of Stock purchasable upon the exercise of this Warrant are subject to adjustment from time to time upon the occurrence of any of the events specified in this Section 2.
2.1.Stock Dividends, Splits, Etc. If the Company (a) declares or pays a dividend or makes a distribution on the outstanding shares of Stock payable in Stock, other securities or other property, then upon exercise of this Warrant, for each share of Stock acquired, Holder shall receive, without cost to Holder, the total number and kind of additional shares of Stock, or other securities or property, to which Holder would have been entitled had Holder owned the Stock of record as of the date the dividend or distribution had occurred, (b) subdivides the outstanding shares of Stock by reclassification, split-up or otherwise into a greater number of shares, then the number of shares of Stock issuable on exercise of this Warrant shall be increased in proportion to such increase in the outstanding shares of Stock pursuant to such subdivision, (c) combines or consolidates, by reclassification, reverse stock split or otherwise, its outstanding shares of Stock into a lesser number of shares, then the number of shares of Stock issuable on exercise of this Warrant shall be decreased in proportion to such decrease in the Company’s outstanding shares of Stock pursuant to such combination or consolidation. Whenever the number of shares of Stock purchasable upon the exercise of this Warrant is adjusted as provided in this Section 2.1,
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the Exercise Price shall be adjusted (to the nearest cent) by multiplying the Exercise Price immediately prior to such adjustment by a fraction (a) the numerator of which shall be the number of shares of Stock purchasable upon the exercise of this Warrant immediately prior to such adjustment, and (b) the denominator of which shall be the number of shares of Stock so purchasable immediately thereafter. The provisions of this Section 2.1 shall similarly apply to each and every successive subdivision, combination, consolidation or other applicable event.
2.2.Other Distributions. If the Company shall fix a record date for the making of a distribution to all holders of Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the surviving corporation) of cash, evidences of indebtedness or assets, options, or subscription rights or warrants, the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the fair market value per share of Stock on such record date, less the amount of cash so to be distributed or the fair market value (as determined in good faith by, and reflected in a formal resolution of, the board of directors of the Company) of the portion of the assets or evidences of indebtedness so to be distributed, or of such subscription rights or warrants, applicable to one share of Stock, and the denominator of which shall be the fair market value per share of Stock. Such adjustment shall be made successively whenever, and each time, such a record date is fixed; and in the event that such distribution is not so made, the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed.
2.3.Reclassification, Exchange, Combinations or Substitution. At any time this Warrant is outstanding, if (i) the Company effects any merger or consolidation of the Company with or into another company, (ii) the Company effects any conveyance, lease, sale, lease, exclusive license, or other disposition of all or substantially all of the assets or other property of the Company in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another company or person) is completed pursuant to which holders of Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any reclassification of the Stock, any compulsory share exchange, a conversion of the Company, or other event or transaction that results in a change to the Stock (each, a “Fundamental Transaction”), then in each case each Holder shall be entitled to receive, upon exercise or conversion of this Warrant, the same amount, number and kind of securities and property that Holder would have been entitled to receive upon the occurrence of such Fundamental Transaction if the Holder had been, immediately prior to such Fundamental Transaction, the holder of the number of Stock then issuable upon exercise in full of this Warrant (the “Fundamental Transaction Consideration”). If holders of the Stock are given any choice as to the securities, cash or property to be received in connection with such Fundamental Transaction, then the Holder shall be given the same choice as to the type of consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. At the Holder’s request, the Company or its successor or surviving entity in such Fundamental Transaction shall issue to the Holder a New Warrant substantially in the form of this Warrant and consistent with the foregoing provisions, and evidencing the Holder’s right to purchase the number, class and series or other designation of such new securities or other property issuable upon exercise or conversion of this Warrant as a result of such Fundamental Transaction, for the
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aggregate Exercise Price, upon exercise thereof. Any such successor or surviving entity shall be deemed to be required to comply with the provisions of this Section 2.3 and shall insure that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. The provisions of this Section 2.3 shall similarly apply to each and every successive Fundamental Transaction.
2.4.Other Events. In case any event shall occur as to which the other provisions of this Section 2 are not strictly applicable but the failure to make any adjustment would not fairly protect the purchase rights represented by this Warrant in accordance with the essential intent and principles hereof, then, in each such case, the Company shall effect such adjustment, on a basis consistent with the essential intent and principles established in this Section 2, as may be necessary to preserve, without dilution, the purchase rights represented by this Warrant.
2.5.Adjustments to Other Capital Stock. In the event that at any time, as a result of an adjustment made pursuant to this Section 2, the Holder of this Warrant thereafter exercised shall become entitled to receive any shares of capital stock of the Company other than shares of Stock, thereafter the number of such other shares so receivable upon exercise of this Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the shares of Stock contained in this Section 2, and the other provisions of this Warrant shall apply on like terms to any such other shares of the Company’s capital stock.
2.6.No Impairment; Successor Entity. The Company shall not, by amendment of the Charter or through a reorganization, transfer of assets, consolidation, merger, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in carrying out of all the provisions of this Section 2 and in taking all such action as may be necessary or appropriate to protect Holder’s rights under this Section against impairment.
2.7.Fractional Shares. No fractional shares of Stock shall be issuable upon exercise or conversion of the Warrant and the number of shares of Stock to be issued shall be rounded down to the nearest whole share; provided, that in lieu of any fractional shares that would have been issued but for the immediately preceding clause, the Holder shall be entitled to receive cash equal to the current market price of such fraction of a share of Stock on the Trading Day immediately preceding the respective date of exercise.
2.8.Certificate as to Adjustments. Upon each adjustment of the Exercise Price, Stock and/or number of shares of Stock subject to this Warrant, the Company shall promptly notify Holder in writing, and, at the Company’s expense, promptly compute such adjustment, and furnish Holder with a certificate of a duly authorized officer setting forth such adjustment and the facts upon which such adjustment is based. The Company shall, upon written request, furnish Holder a certificate setting forth the Exercise Price, Stock and number of shares of Stock subject to this Warrant in effect upon the date thereof and the series of adjustments leading to such Exercise Price, Stock and number of shares of Stock.
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2.9.Notice of Certain Events. If the Company proposes at any time (a) to declare any dividend or distribution upon the outstanding shares of Stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend, or to grant to outstanding shares of Stock any other right, (b) to offer for subscription or sale pro rata to all of the holders of the outstanding shares of Stock any additional shares of any other class or series of the Company’s stock (other than pursuant to contractual rights in effect as of the date hereof); (c) to effect any reclassification, reorganization or recapitalization of the shares of Stock; or (d) to effect Fundamental Transaction or to liquidate, dissolve or wind up; then, in connection with each such event, the Company shall give Holder: (1) at least 10 days prior written notice of the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of shares of Stock will be entitled thereto) or for determining rights to vote, if any, in respect of the matters referred to in (a) and (b) above; and (2) in the case of the matters referred to in (c) and (d) above at least 10 days prior written notice of the date when the same will take place (and specifying the date on which the holders of shares of Stock will be entitled to exchange their shares for the securities or other property deliverable upon the occurrence of such event).
2.10.Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer-agent fee, or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Stock or Warrants in a name other than that of the Holder. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Stock upon any exercise hereof.
SECTION 3.Representations, Warranties and Covenants.
2.1.Representations and Warranties of the Company. The Company represents, warrants and covenants to the Holder as follows:
(a)The Company is duly authorized to issue this Warrant and has obtained all necessary board and stockholder consents necessary in order for the proper issuance of this Warrant.
(b)The issuance of this Warrant and the rights granted hereunder do not (i) conflict with or give rise to a breach of the Company’s Charter or any other agreement, judgment or other obligations binding on the Company, or (ii) violate any applicable laws, including without limitation, laws relating to the offer and sale of securities.
(c)This Warrant has been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject
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to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
(d)All shares of Stock which may be issued upon the exercise of the purchase right represented by this Warrant, and all securities, if any, issuable upon conversion of Stock, shall, when issued, sold and delivered in accordance with the terms and for the consideration set forth in this Warrant, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable securities laws.
(e)The Company has reserved and covenants that it shall at all times reserve and keep available for issuance upon exercise of the Warrant out of the aggregate of its authorized but unissued and otherwise unreserved Stock, the maximum number of shares of Stock that could possibly be issued and deliverable upon exercise of the Warrant from time to time outstanding, and any securities, if any, into which such shares are convertible, and any other securities of the Company, if any, to which Holders are entitled to receive upon exercise pursuant to Section 2.
2.2.Representations and Warranties of the Holder. The Holder represents and warrants to and covenants and agrees with the Company as follows:
(a)Purchase for Own Account. This Warrant and the securities to be acquired upon exercise of this Warrant by Holder will be acquired for investment for Holder’s account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act. Holder also represents that Holder has not been formed for the specific purpose of acquiring this Warrant or the shares of Stock.
(b)Disclosure of Information. Holder is aware of the Company’s business affairs and financial condition and has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities. Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.
(c)Investment Experience. Holder understands that the acquisition of this Warrant and its underlying securities involves substantial risk. Holder has such knowledge and experience in financial and business matters and in investments of this type that it is capable of evaluating the merits and risks of its investment and making an informed business decision. Holder can bear the economic risk of such Holder’s investment in this Warrant and its underlying securities indefinitely and a total loss in respect of such investment.
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(d)Accredited Investor Status. Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act.
(e)The Act. Holder understands that the sale and issuance of this Warrant and the shares of Stock issuable upon exercise or conversion hereof have not been registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holder’s investment intent as expressed herein. Holder understands that this Warrant and the shares of Stock issuable upon exercise or conversion hereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available. Holder is aware of the provisions of Rule 144 promulgated under the Act.
(f)Independent Tax Advice. Holder has reviewed with its own tax advisors the U.S. federal, state and local and non-U.S. tax consequences of this investment and the transactions contemplated by this Warrant. With respect to such tax consequences, Holder relies solely on any such advisors and not on any advice from the Company or any of its agents, written or oral. Holder understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment.
(g)No “Bad Actor” Disqualification. Neither (i) the Holder, (ii) any of its directors, executive officers, other officers that may serve as a director or officer of any company in which it invests, general partners or managing members, nor (iii) any beneficial owner of any of the Company’s voting equity securities (in accordance with Rule 506(d) of the Securities Act) held by the Holder is subject to any of the “bad actor” disqualifications described in Rule 506(d)(1)(i) through (viii) under the Securities Act, except as set forth in Rule 506(d)(2)(ii) or (iii) or (d)(3) under the Securities Act and disclosed, reasonably in advance of the acceptance of this Warrant, in writing in reasonable detail to the Company.
SECTION 4.Definitions.
2.1.Defined Terms. The following capitalized terms shall have the meanings provided:
(a)Act means the Securities Act of 1933, as amended.
(b)Charter means the Company’s certificate of incorporation as filed in its jurisdiction of organization, as may be amended or amended and restated from time to time.
(c)Class A Common Stock means the Company’s Class A Common Stock, par value $0.00001 per share, or such securities into which the Company’s Class A Common Stock are exchanged or converted.
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(d)Exercise Price means, as of the date this Warrant is exercised, $4.50, as adjusted for stock splits, combinations and other actions and transactions in accordance with the terms set forth in this Warrant.
(e)Expiration Date means April 29, 2026.
(f)Holder shall have the meaning provided in the first paragraph of this Warrant, as may be modified by Section 7.4 of this Warrant.
(g)Holder Entities shall have the meaning provided in Section 7.12 of this Warrant.
(h)HSR Act means the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended.
(i)Independent Financial Advisor means an accounting, appraisal, investment banking firm or consultant of nationally recognized standing; provided, however, that such firm or consultant is not an affiliate of the Company.
(j)Investment Agreement means that certain Investment Agreement by and between the Company and Holder, dated April 29, 2024, as may be amended, restated, supplemented, amended and restated or otherwise modified from time to time.
(k)Issuance Date shall have the meaning provided in the first paragraph of this Warrant.
(l)Market Disruption Event means any of the following events: (i) any suspension of, or limitation imposed on, trading of the Class A Common Stock by any the Relevant Exchange during the one-hour period prior to the close of trading for the regular trading session on the Relevant Exchange (or for purposes of determining the VWAP of the Class A Common Stock, any period or periods aggregating one half-hour or longer during the regular trading session on the relevant day) and whether by reason of movements in price exceeding limits permitted by the Relevant Exchange as to securities generally, or otherwise relating to the Class A Common Stock or options contracts relating to the Class A Common Stock on the Relevant Exchange; or (ii) any event that disrupts or impairs (as determined by the Company in its reasonable discretion) the ability of market participants during the one-hour period prior to the close of trading for the regular trading session on the Relevant Exchange (or for purposes of determining the VWAP of the Class A Common Stock, any period or periods aggregating one half-hour or longer during the regular trading session on the relevant day) in general to effect transactions in, or obtain market values for, the Class A Common Stock on the Relevant Exchange or to effect transactions in, or obtain market values for, options contracts relating to the Class A Common Stock on the Relevant Exchange. A “Market Disruption Event” for any other relevant security shall be defined consistent herewith.
(m)NYSE means the New York Stock Exchange.
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(n)Relevant Exchange means the NYSE or, if the relevant security is not then traded on the NYSE, the principal United States securities exchange or automated quotation system on which the relevant security is so listed or quoted, or if the relevant security is not so listed or quoted on a United States securities exchange or automated quotation system, the over-the-counter market of OTC Markets Group Inc. or any similar organization.
(o)Registration Rights Agreement means that certain Registration Rights Agreement to be entered into by the Company and Holder on the date hereof, as it may be amended, supplemented or otherwise modified.
(p)Stock means Class A Common Stock (or other security issuable upon the exercise hereof or the conversion of the Stock).
(q)Trading Day means any day on which the Relevant Exchange is scheduled to be open for business and on which there has not occurred a Market Disruption Event.
(r)VWAP per share of Class A Common Stock on any Trading Day means the per share volume-weighted average price as displayed under the heading Bloomberg VWAP on Bloomberg (or, if Bloomberg ceases to publish such price, any successor service reasonably chosen by the Company) page “BLND <equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from the open of trading on the relevant Trading Day until the close of trading on such Trading Day (or if such volume-weighted average price is unavailable, the market price of one share of Class A Common Stock on such Trading Day determined, using a volume-weighted average method, by an Independent Financial Advisor retained for such purpose by the Company). “VWAP” with respect to any other relevant security shall be determined consistent with this definition. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.
(s)Warrant shall have the meaning provided in the first paragraph of this agreement.
(t)Warrant Number means 11,111,112 shares of Stock, as adjusted for stock splits, combinations and other actions and transactions in accordance with the terms set forth in this Warrant .
(u)Warrant Stock means the Stock underlying the Warrant.
SECTION 5.Voting.
2.1.No Stockholder Rights. Without limiting any provision in this Warrant, Holder agrees that this Warrant does not entitle Holder to any voting rights or other rights as a stockholder of the Company with respect to any share of Warrant Stock, until the exercise of this Warrant with respect to such share of Warrant Stock; provided that the foregoing shall not limit any rights of Holder pursuant to the Investment Agreement.
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SECTION 6.Registration Requirements.
2.1.Registration Rights. Holder shall be entitled to the registration rights for the resale of the Warrant Stock as set forth in the Registration Rights Agreement.
SECTION 7.Miscellaneous.
2.1.Absolute Nature of Company’s Obligations. The Company’s obligations to issue and deliver Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Stock. Nothing herein shall limit the Holder’s right to pursue any other remedies available to him hereunder, at law or in equity, including, without limitation, seeking a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Stock upon exercise of this Warrant as required pursuant to the terms hereof.
2.2.Legends. The shares of Stock (and the securities issuable, directly or indirectly, upon conversion of Stock, if any) shall be imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER RESTRICTIONS SET FORTH IN AN INVESTMENT AGREEMENT, DATED AS OF APRIL 29, 2024, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE ISSUER.
Subject to the restrictions on transfer set forth in the Investment Agreement, such legend shall be removed and the Company shall, or shall instruct its transfer agent to, issue a certificate without such legend or any other legend to the holder of such shares of Stock (i) if such shares of Stock are sold or transferred pursuant to an effective registration statement under the Act covering the resale of such shares of Stock by the holder thereof, (ii) if such shares of Stock are sold or transferred pursuant to Rule 144 under the Act, (iii) if such shares of Stock are eligible for resale without any restrictions under Rule 144 under the Act, or (iv) upon the request of such holder if such request is accompanied (at such holder’s expense) by a written opinion of counsel
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reasonably satisfactory to the Company that registration is not required under the Act or any applicable state securities laws for the resale of such shares of Stock. The removal of such restrictive legend from any certificates representing the shares of Stock purchased upon any exercise of this Warrant is predicated upon the Company’s reliance that the holder of such shares of Stock would sell, transfer, assign, pledge, hypothecate or otherwise dispose of such shares of Stock pursuant to either the registration requirements of the Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if such shares of Stock are sold pursuant to a registration statement, they will be sold in compliance with the plan of distribution set forth therein.
2.3.Compliance with Securities Laws on Transfer. This Warrant and the shares of Stock issuable upon exercise of this Warrant (and the securities issuable, directly or indirectly, upon conversion of Stock, if any) may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws with respect to any such transfer or assignment by the transferor and the transferee (including, without limitation, the delivery of a legal opinion reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transferee is an Affiliate of Holder, provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Act. Additionally, the Company shall also not require an opinion of counsel if there is no material question as to the availability of Rule 144 promulgated under the Act or the availability of another exemption under applicable securities laws.
2.4.Transfer Procedure. Subject to the provisions of Section 7.3 and the terms of the Investment Agreement applicable to any such transfer, and upon providing the Company with written notice in substantially the form as provided in Appendix 2 hereto and countersigned by the proposed transferee, a Holder may transfer all or part of this Warrant or the shares of Stock issuable upon exercise of this Warrant (or the securities issuable directly or indirectly, upon conversion of Stock, if any) to any transferee so long, for any transfer of this Warrant, such transferee agrees to be bound by the terms and conditions of this Warrant. In connection with any such transfer, the transferor Holder will give the Company notice of the portion of the Warrant being transferred with the name, address and taxpayer identification number, if any, of the transferee. In connection with any such transfer, the transferor Holder shall surrender this Warrant (if an original of this Warrant was delivered to Holder) to the Company, and the Company shall issue a New Warrant to the transferee evidencing the portion of this Warrant so transferred, and, if applicable, shall issue to the transferor Holder a New Warrant evidencing the remaining portion of this Warrant not so transferred. The acceptance of the New Warrant by such transferee shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant. Upon effectiveness of any such transfer of all or any part of this Warrant in accordance herewith, the transferee shall be considered a Holder with respect to such New Warrant and entitled to the rights of a Holder with respect thereto.
2.5.[Reserved]
2.6.Attorney’s Fees. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to
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collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees, costs and expenses.
2.7.Counterparts. This Warrant may be executed in counterparts and by facsimile (e.g., PDF), all of which together shall constitute one and the same agreement.
2.8.Governing Law. Jurisdiction. Waiver of Jury Trial.
(a)Governing Law. This Warrant and all matters, claims or Actions (whether at law, in equity, in Contract, in tort or otherwise) based upon, arising out of or relating to this Warrant or the negotiation, execution or performance of this Warrant (collectively, the “Relevant Matters”), shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under any applicable conflict of Laws principles.
(b)Jurisdiction. All Actions arising out of or relating to any Relevant Matter shall be heard and determined in the Chancery Court of the State of Delaware (or, if the Chancery Court of the State of Delaware declines to accept jurisdiction over any Action, any state or federal court within the State of Delaware) and the parties hereto hereby irrevocably submit to the exclusive jurisdiction and venue of such courts in any such Action and irrevocably waive the defense of an inconvenient forum or lack of jurisdiction to the maintenance of any such Action. The consents to jurisdiction and venue set forth in this Section 7.8 shall not constitute general consents to service of process in the State of Delaware and shall have no effect for any purpose except as provided in this Section 7.8 and shall not be deemed to confer rights on any Person other than the parties hereto. Each party hereto agrees that service of process upon such party in any Action arising out of or relating to this Warrant shall be effective if notice is given by overnight courier at the address set forth in Section 7.13 of this Warrant. The parties hereto hereby waive any right to stay or dismiss any action or proceeding in connection with any Relevant Matter brought before the foregoing courts on the basis of (i) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason or that it or any of its property is immune from the above-described legal process, (ii) that such action or proceeding is brought in an inconvenient forum, that venue for the action or proceeding is improper or that this Warrant may not be enforced in or by such courts, or (iii) any other defense that would hinder or delay the levy, execution or collection of any amount to which any party hereto is entitled pursuant to any final judgment of any court having jurisdiction. The parties hereto agree that a final judgment in any such Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law; provided that nothing in the foregoing shall restrict any party’s rights to seek any post-judgment relief regarding, or any appeal from, a final trial court judgment.
(c)WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE IN CONNECTION WITH ANY RELEVANT MATTER IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
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UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO ANY RELEVANT MATTER. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ACTION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) IT MAKES SUCH WAIVER VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS WARRANT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 7.8.
2.9.Time of Essence. Time is of the essence for the performance of all obligations in this Warrant.
2.10.Severability of Provisions. Each provision of this Warrant is severable from every other provision and the invalidity or unenforceability of any provision will not affect the validity or enforceability of any other provision hereof.
2.11.Amendments in Writing; Waiver; Integration. No purported amendment, modification, or change of this Warrant, or waiver, discharge or termination of any obligation under this Warrant, shall be enforceable or admissible unless, and only to the extent, expressly set forth in a writing signed by the party against which enforcement or admission is sought. Without limiting the generality of the foregoing, no oral promise or statement, nor any action, inaction, delay, failure to require performance or course of conduct shall operate as, or evidence, an amendment, supplement or waiver or have any other effect on this Warrant. Any waiver granted shall be limited to the specific circumstance expressly described in it, and shall not apply to any subsequent or other circumstance, whether similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waiver. This Warrant represents the entire agreement about this subject matter and supersedes prior negotiations or agreements, including any commitment letter or term sheet and modifications thereto, whether or not formally signed. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Warrant merge into this Warrant.
2.12.Confidentiality. In handling any confidential information provided pursuant to this Warrant, Holder shall exercise the same degree of care that it exercises for its own proprietary information, and shall not use such information other than to monitor or value such its investment in the Company or disclose such information, provided that disclosure of such information may be made: (a) to Holder’s subsidiaries or Affiliates (such Subsidiaries and Affiliates, together with Holder, collectively, “Holder Entities”); (b) to prospective transferees or purchasers of any interest in the Warrant (provided, however, that any prospective transferee or purchaser shall have entered into an agreement containing provisions substantially the same as those in this Section 7.12); (c) as required by law, regulation, subpoena, judicial or regulatory process, or other order; (d) to Holder Entities’ regulators or as otherwise required in connection with Holder Entities’ examination or audit; (e) as Holder considers appropriate in exercising
Warrant – Blend Labs, Inc.
14
remedies under this Warrant or reasonably necessary in connection with enforcing its rights hereunder; and (f) to Holder Entities’ attorneys, accountants, consultants and financial and other professional advisors to the extent necessary to obtain their services in connection with exercise of the Warrant or other actions related hereto so long as such service providers are subject to confidentiality obligations no less restrictive than those contained herein. Confidential information does not include information that is either: (i) in the public domain or in any Holder Entity’s possession when disclosed to Holder, or becomes part of the public domain after disclosure to Holder (in each case, through no fault of any of the Holder Entities); or (ii) disclosed to any Holder Entity by a third party if such Holder Entity does not know that the third party is prohibited from disclosing the information.
2.13.Notices. All notices, requests and other communications to any party hereunder shall be in writing and shall be deemed given if delivered personally, emailed (which is confirmed) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses:
(a) If to the Company, at:
Blend Labs, Inc.
415 Kearny Street
San Francisco, California 94108
Attention: [ ]
Email: [ ]
Attention: [ ]
Email: [ ]
with a copy (which shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304
Attn: [ ]
650 Page Mill Road
Palo Alto, CA 94304
Attn: [ ]
Email: [ ]
(b) If to the Holder, at:
Haveli Brooks Aggregator, L.P.
c/o Haveli Investments Software Fund I, L.P.
405 Colorado Street, Suite 1600
405 Colorado Street, Suite 1600
Austin, TX 78701
Attention: [ ]
Email: [ ]
Warrant – Blend Labs, Inc.
15
with a copy (which shall not constitute notice) to:
Bailey Duquette P.C.
104 Charlton Street, 1W
104 Charlton Street, 1W
New York, NY 10014
Attention: [ ]
Email: [ ]
2.14.No Third-Party Beneficiaries; Successors and Assigns. No Person other than a party to this Warrant shall have any rights under this Warrant. This Warrant shall be binding upon and inure to the benefit of the Company, the Holder, and their respective successors and permitted assigns.
2.15.Electronic Execution of Documents. The words “execution,” “signed,” “signature” and words of like import shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity and enforceability as a manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act.
2.16.Captions. The headings used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.
2.17. Construction of Agreement. The parties mutually acknowledge that they and their attorneys have participated in the preparation and negotiation of this Agreement. In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the uncertainty to exist.
Warrant – Blend Labs, Inc.
16
IN WITNESS WHEREOF, the parties have caused this Warrant to be executed and delivered as of the Issuance Date.
“COMPANY”
Blend Labs, Inc. /s/ Nima Ghamsari______________ Name: Nima Ghamsari Title: Head of Blend | ||||||||
“HOLDER”
Haveli Brooks Aggregator, L.P.
By: Haveli Investments Software Fund I GP, LLC
By: Whanau Interests LLC, its sole member
By: /s/ Brian N. Sheth_______________
Name: Brian N. Sheth
Title: Managing Member
Address: 405 Colorado St., Suite 1600
Austin, TX 78701
Warrant – Blend Labs, Inc.
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Appendix 1
NOTICE OF EXERCISE
1. Holder elects to exercise the Warrant to Purchase Stock dated April [ ], 2024 and initially issued to Haveli Brooks Aggregator, L.P., a Delaware limited partnership (the “Warrant”) to:
(a) purchase ________ shares of Class A Common Stock of Blend Labs, Inc., a Delaware corporation for cash pursuant to Section 1.2 of the Warrant, and tenders payment of the purchase price of such number of shares of Class A Common Stock in full; and/or
(b) purchase, via net issue exercise pursuant to Section 1.3 of the Warrant, such number of shares of Stock as calculated pursuant to the formula set forth therein for an exercise of the Warrant with respect to __________ shares of Stock.
2. The undersigned represents and warrants that the aforesaid shares of capital stock are being acquired in compliance with applicable federal and state securities law.
3. Capitalized terms used but not defined herein shall have the meaning provided in the Warrant.
4. Please issue a certificate or certificates representing the shares of Stock in the name specified below:
Holder’s Name | ||
(Address) | ||
| HOLDER: | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
Warrant – Blend Labs, Inc.
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| (Date): | ||||||||
Warrant – Blend Labs, Inc.
19
Appendix 2
NOTICE OF TRANSFER
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto _______________________________________________ the right represented by the attached Warrant to purchase Stock of Blend Labs, Inc., a Delaware corporation (the “Company”) to which the attached Warrant relates, and appoints __________________________ as attorney in fact to transfer such right on the books of the Company, with full power of substitution in the premises.
Dated: ____________________
(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)
Address:
Acknowledgement and Acceptance:
The undersigned transferee of the Warrant hereby accepts the transfer of the Warrant and agrees to be bound by the Warrant as if it were the original Holder thereof.
[insert name of transferee]
________________________________
Name:
Title:
Tax Payer Identification Number:
Address:
Name:
Title:
Tax Payer Identification Number:
Address:
Warrant – Blend Labs, Inc.
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Warrant – Blend Labs, Inc.
21
Execution Version
INVESTMENT AGREEMENT
by and between
BLEND LABS, INC.,
and
HAVELI BROOKS AGGREGATOR, L.P.
Dated as of April 29, 2024
Active.39812068.12
TABLE OF CONTENTS
PAGE
Article I Definitions........................................................................................................................ 1
Section 1.01 Definitions............................................................................................................... 1
Article II Purchase and Sale........................................................................................ ..................10
Section 2.01 Purchase and Sale.................................................................................................. 10
Section 2.02 Closing.................................................................................................................. 10
Article III Representations and Warranties of the Company........................................................ 11
Section 3.01 Organization; Standing.......................................................................................... 11
Section 3.02 Capitalization........................................................................................................ 12
Section 3.03 Authority; Noncontravention................................................................................ 13
Section 3.04 Governmental Approvals...................................................................................... 14
Section 3.05 Company SEC Documents; Undisclosed Liabilities............................................. 14
Section 3.06 Absence of Certain Changes................................................................................. 16
Section 3.07 Legal Proceedings................................................................................................. 16
Section 3.08 Compliance with Laws; Permits........................................................................... 16
Section 3.09 Data Security; Privacy........................................................................................... 18
Section 3.10 Contracts................................................................................................................ 19
Section 3.11 Tax Matters............................................................................................................19
Section 3.12 Employee Benefit Plans........................................................................................ 19
Section 3.13 Labor Matters........................................................................................................ 20
Section 3.14 No Rights Agreement; Anti-Takeover Provisions................................................ 20
Section 3.15 Brokers and Other Advisors.................................................................................. 21
Section 3.16 Sale of Securities................................................................................................... 21
Section 3.17 Listing and Maintenance Requirements................................................................ 21
Section 3.18 Status of Securities................................................................................................ 21
Section 3.19 Certain Material Indebtedness............................................................................... 22
Section 3.20 Investment Company Status.................................................................................. 22
Section 3.21 IP; Security............................................................................................................ 22
Section 3.22 Affiliate Transactions............................................................................................ 22
Section 3.23 No Other Company Representations or Warranties.............................................. 23
Section 3.24 No Other Investor Representations or Warranties................................................ 23
Article IV Representations and Warranties of the Investor.......................................................... 24
Section 4.01 Organization; Standing.......................................................................................... 24
Section 4.02 Authority; Noncontravention................................................................................ 24
Section 4.03 Governmental Approvals...................................................................................... 25
Section 4.04 Financing............................................................................................................... 25
Section 4.05 Brokers and Other Advisors.................................................................................. 25
Section 4.06 Non-Reliance on Company Estimates, Projections, Forecasts, Forward-Looking Statements and Business Plans .....................................................................................................25
Section 4.07 Purchase for Investment........................................................................................ 26
Section 4.08 No Other Investor Representations or Warranties................................................ 26
Section 4.09 No Other Company Representations or Warranties.............................................. 27
Article V Additional Agreements................................................................................................. 27
Section 5.01 Reasonable Best Efforts; Filings........................................................................... 27
Section 5.02 Corporate Actions..................................................................................................29
Section 5.03 Public Disclosure................................................................................................... 29
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Section 5.04 Confidentiality....................................................................................................... 29
Section 5.05 Standstill................................................................................................................ 30
Section 5.06 Transfer Restrictions............................................................................................. 33
Section 5.07 Legend................................................................................................................... 35
Section 5.08 Election of Directors............................................................................................. 36
Section 5.09 Tax Matters........................................................................................................... 38
Section 5.10 Use of Proceeds..................................................................................................... 40
Section 5.11 Corporate Opportunities........................................................................................ 40
Section 5.12 Haveli Sponsor...................................................................................................... 41
Section 5.13 Preemptive Rights................................................................................................. 42
Section 5.14 Section 16 Matters................................................................................................. 45
Section 5.15 Financing Cooperation.......................................................................................... 46
Section 5.16 CUSIP.................................................................................................................... 47
Section 5.17 State Securities Laws............................................................................................ 47
Article VI Conditions to Closing................................................................................................. 48
Section 6.01 Conditions to the Obligations of the Company and the Investors......................... 48
Section 6.02 Conditions to the Obligations of the Company..................................................... 48
Section 6.03 Conditions to the Obligations of the Investor....................................................... 48
Article VII Termination; Survival................................................................................................ 49
Section 7.01 Termination........................................................................................................... 49
Section 7.02 Effect of Termination............................................................................................ 50
Section 7.03 Survival................................................................................................................. 50
Article VIII Miscellaneous........................................................................................................... 50
Section 8.01 Amendments; Waivers.......................................................................................... 50
Section 8.02 Extension of Time, Waiver, Etc............................................................................ 51
Section 8.03 Assignment............................................................................................................ 51
Section 8.04 Counterparts.......................................................................................................... 51
Section 8.05 Entire Agreement; No Third Party Beneficiaries; No Recourse........................... 51
Section 8.06 Governing Law; Jurisdiction................................................................................. 52
Section 8.07 Specific Enforcement............................................................................................ 53
Section 8.08 WAIVER OF JURY TRIAL................................................................................. 53
Section 8.09 Notices................................................................................................................... 53
Section 8.10 Severability............................................................................................................ 55
Section 8.11 Expenses................................................................................................................ 55
Section 8.12 Interpretation......................................................................................................... 55
Section 8.13 Not a Group; Independent Nature of Holders’ Obligations and Rights................ 56
EXHIBITS
EXHIBIT A – Form of Series A Certificate of Designations
EXHIBIT B – Form of Registration Rights Agreement
EXHIBIT C – Form of Permitted Transferee Joinder
EXHIBIT D – Form of Warrant
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This INVESTMENT AGREEMENT dated as of April 29, 2024 (this “Agreement”), is made and entered into by and between Blend Labs, Inc., a Delaware corporation (the “Company”), and Haveli Brooks Aggregator, L.P., a Delaware limited partnership ( the “Investor”).
RECITALS
WHEREAS, the Company desires to issue, sell and deliver to the Investor, and the Investor desires to purchase and acquire from the Company, pursuant to the terms and conditions set forth in this Agreement, an aggregate of 150,000 shares of the Company’s Series A Convertible Perpetual Preferred Stock, par value $0.00001 per share (the “Series A Preferred Stock”), having the designations, powers, preferences, rights and any qualifications, limitations and restrictions thereof specified in the form of Certificate of Designations attached hereto as Exhibit A (as amended in accordance with this Agreement, the “Certificate of Designations”);
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained in this Agreement, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:
Article I
Definitions
Definitions
Section 1.01Definitions. (a) As used in this Agreement (including the recitals hereto), the following terms shall have the following meanings:
“33% Beneficial Ownership Requirement” means that the Investor, together with the other Permitted Transferees of the Investor, continues to beneficially own at all times Acquired Shares and/or shares of Common Stock issued or issuable upon conversion of such Acquired Shares, that represent in the aggregate and on an as converted basis, at least 33% of the number of shares of Common Stock issued or issuable upon conversion of the Acquired Shares beneficially owned by the Investor in the aggregate on an as-converted basis, as of immediately following the Closing Date, in each case, as appropriately adjusted to account for any event that results in an adjustment to the Conversion Rate in accordance with the applicable section of the Certificate of Designations.
“Activist Shareholder” means, as of any date of determination, a Person (other than the Investor Parties and their respective Affiliates) that has, directly or indirectly through its Affiliates, whether individually or as a member of a “group” (as defined in Section 13(d)(3) of the Exchange Act), within the three-year period immediately preceding such date of determination (i) called or publicly sought to call a meeting of the stockholders or other equityholders of any Person not publicly approved (at the time of the first such action) by the board of directors or similar governing body of such Person, (ii) publicly initiated any proposal for action by stockholders or other equityholders of any Person initially publicly opposed by the board of directors or similar governing body of such Person, (iii) publicly sought election to, or to place a director or representative on, the board of directors or similar governing body of a
Active.39812068.12
Person, or publicly sought the removal of a director or other representative from such board of directors or similar governing body, in each case which election or removal was not recommended or approved publicly (at the time such election or removal is first sought) by the board of directors or similar governing body of such Person, (iv) made, engaged in or been a participant in any “solicitation” of “proxies”, as such terms are used in the proxy rules of the SEC promulgated under Section 14 of the Exchange Act, with respect to the matters set forth in clauses (i) through (iii), or (v) publicly disclosed any intention, plan or arrangement to do any of the foregoing. For the avoidance of doubt, neither the Investor nor any Permitted Transferee of the Investor, or any if its or their respective Affiliates shall be considered Activist Shareholders.
“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person; provided, however, (i) that the Company and its Subsidiaries, on the one hand, and any Investor Party or any of its Affiliates, on the other hand, shall not be deemed to be Affiliates, (ii) “portfolio companies” (as such term is customarily used among institutional investors) in which any Investor Party or any of its Affiliates has an investment (whether as debt or equity) shall not be deemed an Affiliate of any Investor Party and (iii) the Excluded Sponsor Parties shall not be deemed to be Affiliates of any Investor Party, the Company or any of the Company’s Subsidiaries. For this purpose, “control” (including its correlative meanings, “controlling”, “controlled by” and “under common control with”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, by Contract or otherwise.
“Anti-Money Laundering Laws” means anti-money laundering-related laws, regulations, and codes of practice applicable to the Company and its Subsidiaries and their operations from time to time, including without limitation the EU Anti-Money Laundering Directives and any laws, decrees, administrative orders, circulars, or instructions implementing or interpreting the same.
“as converted basis” means, with respect to a Person or Persons, all outstanding shares of Common Stock beneficially owned by such Person or Persons, calculated on a basis in which all shares of Common Stock issuable upon conversion of the outstanding shares of Series A Preferred Stock (at the Conversion Rate in effect on such date as set forth in the Certificate of Designations) are assumed to be outstanding as of such date.
Any Person shall be deemed to “beneficially own”, to have “beneficial ownership” of, or to be “beneficially owning” any securities (which securities shall also be deemed “beneficially owned” by such Person) that such Person is deemed to “beneficially own” within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act; provided that any Person shall be deemed to beneficially own any securities that such Person has the right to acquire, whether or not such right is exercisable immediately (including assuming conversion of all Series A Preferred Stock, if any, owned by such Person to Common Stock). For the avoidance of doubt, for purposes of this Agreement, an Investor Party (or any other person) shall at all times be deemed to have beneficial ownership of the Series A Preferred Stock, including shares of
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Common Stock issuable upon conversion of the Series A Preferred Stock directly or indirectly held by it, irrespective of any restrictions on transfer or voting contained in this Agreement or the Certificate of Designations.
“Board” means the Board of Directors of the Company.
“Business Day” means any day except a Saturday, a Sunday or other day on which the SEC or banks in the City of New York are authorized or required by Law to be closed with respect to the provision of “essential services” (as defined by any applicable Governmental Authority from time to time).
“Class B Common Stock” means the Class B Common Stock, par value $0.00001 per share, of the Company.
“Class C Common Stock” means the Class C Common Stock, par value $0.00001 per share, of the Company.
“Code” means the United States Internal Revenue Code of 1986, as amended.
“Common Stock” means the Class A Common Stock, par value $0.00001 per share, of the Company.
“Company Charter Documents” means the Company’s certificate of incorporation and bylaws, each as amended to the date of this Agreement, and shall include the Certificate of Designations, as filed with the Secretary of State of the State of Delaware.
“Company Plan” means each plan, program, policy, agreement or other arrangement covering current or former employees, directors or consultants, that is (i) an employee welfare plan within the meaning of Section 3(1) of ERISA, (ii) an employee pension benefit plan within the meaning of Section 3(2) of ERISA, other than any plan which is a “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA), (iii) a stock option, stock purchase, stock appreciation right or other stock-based agreement, program or plan, (iv) an individual employment, consulting, severance, retention or other similar agreement or (v) a bonus, incentive, deferred compensation, profit-sharing, retirement, post-retirement, vacation, severance or termination pay, benefit or fringe-benefit plan, program, policy, agreement or other arrangement, in each case that is sponsored, maintained or contributed to by the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is obligated to contribute to or has or may have any liability, other than any plan, program, policy, agreement or arrangement sponsored and administered by a Governmental Authority.
“Company PSU” means a restricted stock unit with respect to Common Stock that was granted subject to performance-based vesting conditions.
“Company RSU” means a restricted stock unit with respect to Common Stock, other than a Company PSU.
“Company Stock Option” means an option to purchase shares of Common Stock.
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“Company Stock Plans” means the 2012 Stock Plan and the 2021 Equity Incentive Plan.
“Competitor” means (i) any Person that is primarily engaged in any business that directly or indirectly competes with the business of the Company and its Subsidiaries of providing mortgage or consumer banking services or (ii) any Person that owns or controls any Person referenced in the foregoing clause (i).
“Conversion Rate” has the meaning set forth in the Certificate of Designations.
“Data Privacy Laws” means all applicable Laws, regulations, and legally binding guidelines concerning the collection, receiving, processing, handling, disposal, privacy, protection, accessing, using, disclosing, electronically transmitting, securing, sharing, transferring and storing of Protected Information.
“DGCL” means the Delaware General Corporation Law, as amended, supplemented or restated from time to time.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Existing Credit Agreement” means the Credit Agreement, dated as of June 30, 2021, by and among the Company, the guarantors from time to time party thereto, the lenders from time to time party thereto, Owl Rock Technology Finance Corp., as administrative and collateral agent, Owl Rock Technology Advisors LLC, as lead arranger and bookrunner and OR Tech Lending LLC, OR Lending LLC and ORO BL LLC, as co-syndication agents, as amended by that certain First Amendment to Credit Agreement, dated as of October 18, 2022 and as further amended by that certain Second Amendment to Credit Agreement, dated as of November 27, 2023.
“Export Control Laws” means the EC Regulation 428/2009 and the implementing laws and regulations of the EU member states; the U.S. Export Administration Act, U.S. Export Administration Regulations, U.S. Arms Export Control Act, U.S. International Traffic in Arms Regulations, and their respective implementing rules and regulations; the U.K. Export Control Act 2002 (as amended and extended by the Export Control Order 2008) and its implementing rules and regulations; and other similar export control laws or restrictions applicable to the Company, its Subsidiaries and their respective operations from time to time.
“Fall-Away of Investor Board Rights” means the first day on which the Investor Parties no longer meet the 33% Beneficial Ownership Requirement.
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“Fundamental Representations” “Fundamental Representations” means the representations and warranties of the Company set forth in Section 3.01, Section 3.02, Section 3.03(a), Section 3.14, Section 3.15 and Section 3.18.
“Fraud” means actual, not constructive, common law fraud (under the laws of the State of Delaware), committed with scienter, in the making of the representations and warranties expressly given in this Agreement.
“GAAP” means generally accepted accounting principles, as in effect in the United States from time to time.
“Governmental Authority” means any government, court, regulatory or administrative agency, commission, arbitrator or authority or other legislative, executive or judicial governmental official or entity (in each case including any self-regulatory organization), whether federal, state or local, domestic, foreign or multinational.
“Haveli Sponsor” means Haveli Investments, L.P.
“Hedge” means the making of any swap, short sale of, derivative transaction, granting any option for the purchase of, or entering into any hedging or similar transaction that transfers to any Person, directly or indirectly, in whole or in part, any of the economic consequences of ownership of any shares of Series A Preferred Stock or Common Stock, or otherwise establishing or increasing, directly or indirectly, a put equivalent position, as defined in Rule 16a-1(h) under the Exchange Act, with respect to the any of the Series A Preferred Stock or Common Stock or any other capital stock of the Company.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“Intellectual Property” means all intellectual property rights, including patents, trade secrets, know-how, inventions, methods, processes, copyrights, trademarks, service marks, domain names, social and mobile media identifiers, trade dress, processes and technology, source codes, works of authorship and other source indicators and all associated goodwill and documentation constituting, describing or related to the foregoing.
“Investor” has the meaning set forth in the Preamble.
“Investor Designee” means an individual designated in writing by the Investor Parties to be appointed or nominated by the Company for election to the Board pursuant to Section 5.08(a), Section 5.08(c) or Section 5.08(d), as applicable.
“Investor Director” means a member of the Board who was appointed or elected to the Board as an Investor Designee.
“Investor Material Adverse Effect” means any effect, change, event or occurrence that, individually or in the aggregate, would or would reasonably be expected to, prevent,
5
materially delay, interfere with, hinder or impair (i) the consummation by the Investor of any of the Transactions or (ii) the compliance by the Investor its obligations under this Agreement.
“Investor Parties” means the Investor and its Permitted Transferees.
“IT Assets” means all hardware, software, code, systems, networks, websites, applications, databases and other information technology assets and equipment.
“Knowledge” means, with respect to the Company, the actual knowledge of the individuals listed on Section 1.01 of the Company Disclosure Letter, after reasonable inquiry of their direct reports.
“Labor Laws” means all Laws relating to labor and employment, including but not limited to, all Laws relating to employment and independent contractor practices, wages, equal employment opportunity, affirmative action and other hiring practices, immigration (including the completion of I-9s for all employees and the proper confirmation of employee visas), workers’ compensation, unemployment, the payment of social security and other employment-related taxes, employment standards, employment of minors, occupational health and safety, labor relations, unions, withholdings, payment of wages and overtime, meal and rest periods, workplace safety, pay equity, employee and worker classification (including the classification of independent contractors and exempt and non-exempt employees), leaves of absence, family and medical leave, civil rights, retaliation, discrimination, sexual or other workplace harassment, the Worker Adjustment and Retraining Notification Act of 1988, and the regulations promulgated thereunder and any similar state, local or foreign Law, the National Labor Relations Act, the Labor Management Relations Act, the Occupational Safety and Health Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Family Medical Leave Act, the Fair Labor Standards Act, the Equal Pay Act, the Rehabilitation Act, the Uniform Services Employment and Reemployment Rights Act, the Genetic Information Nondiscrimination Act, 42 U.S.C. §§ 1981, 1983, 1985 and 1986, the Sarbanes-Oxley Act and the Immigration Reform and Control Act, or any similar state, local or foreign Law.
“Liens” means any mortgage, pledge, lien, charge, encumbrance, security interest, adverse ownership interest or other restriction of any kind or nature, whether based on common law, statute or contract.
“Lock-Up Period” means the period commencing on the date hereof and ending on the earlier of the (i) first anniversary of the Closing Date, and (ii) announcement of a Change of Control (as defined in the Certificate of Designations).
“Material Adverse Effect” means any effect, change, event or circumstance (an “Effect”) that, individually or in the aggregate, has had, or would reasonably be expected to have a material adverse effect on the business, assets, properties, financial condition or results of operation of the Company and its Subsidiaries, taken as a whole; provided, however, that any changes or events resulting from the following items shall not be considered when determining whether a Material Adverse Effect has occurred: (a) changes in economic, political, regulatory,
6
financial or capital market conditions generally or in the industries in which the Company and its Subsidiaries operate, (b) any acts of war, sabotage, terrorist activities or changes imposed by a Governmental Authority associated with national security, (c) epidemics, pandemics or disease outbreaks, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other natural disasters or weather or meteorological events, and other force majeure events in the United States or any other country or region in the world (or escalation or worsening of any of the foregoing, including, as applicable, second or subsequent wave(s)), (d) any change of Law, accounting standards, regulatory policy or industry standards after the date of this Agreement, (e) the announcement, execution or delivery of this Agreement or the consummation of the Transactions, including the impact thereof on the relationships, contractual or otherwise, of the Company and its Subsidiaries with employees, suppliers, customers, partners, vendors or any other third Person (it being understood that this clause (e) shall not apply to a breach of any representation or warranty set forth in Section 3.01, Section 3.03 or Section 3.04), (f) any actions taken by, or at the written request of, Investor or the Investor Parties (g) any failure by the Company to meet projections or forecasts or revenue or earnings predictions for any period (but, for the purposes of clarity, not the underlying cause of such failure), (h) any Actions arising from this Agreement or the Transactions contemplated hereby, (i) changes in the price or trading volume of the Common Stock, or any change in the credit ratings or ratings outlook of the Company (provided, that the underlying causes of such changes may, to the extent not otherwise excluded by another clause of this definition, be considered in determining whether there is or has been a Material Adverse Effect), except, solely with respect to clauses (a), (b), (c) and (d), to the extent the Company and its Subsidiaries, taken as a whole, are materially and disproportionately affected thereby relative to other participants in the industry or industries in which the Company and its Subsidiaries operate (in which case only the incremental material and disproportionate effect or effects may be taken into account in determining whether there has been a Material Adverse Effect).
“NYSE” means the New York Stock Exchange.
“Permitted Transferee” means, with respect to any Investor Party (i) an Affiliate of such Investor Party that executes and delivers to the Company a Joinder becoming an Investor Party to this Agreement, (ii) any successor entity to such Investor Party, (iii) any investment fund, vehicle, holding company or similar entity for separately managed accounts with respect to which the Investor or any Affiliate thereof serves as a general partner, managing member, manager or fund advisor, or any successor entity of the Persons described in this clause (iii) that executes and delivers to the Company a Joinder to this Agreement; provided, however, that in no event shall (x) the Company or any of its Subsidiaries, (y) any “portfolio company” (as such term is customarily used among institutional investors) of the Investor Party or (z) any Competitor or Activist Shareholder (whether or not an Affiliate of such Person) constitute a “Permitted Transferee”.
“Person” means any individual, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof, any other form of entity or any group comprised of two or more of the foregoing.
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“Personal Data” shall mean any information about an identifiable natural person that is defined as “personal data,” “personally identifiable information,” “biometric information,” “nonpublic personal information,” “protected health information,” “individually identifiable health information,” “protected health information” or “personal information” under any Data Privacy Law relating to privacy, data protection, or information security.
“Preferred Stock” means the Series A Preferred Stock.
“Registration Rights Agreement” means that certain Registration Rights Agreement to be entered into by the Company and the Investor on the date hereof, the form of which is set forth as Exhibit B hereto, as it may be amended, supplemented or otherwise modified.
“Representatives” means, with respect to any Person, its officers, directors, principals, partners, managers, members, employees, consultants, agents, financial advisors, investment bankers, attorneys, accountants, other advisors and other representatives.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary” means with respect to any entity, (i) any corporation of which a majority of the securities entitled to vote generally in the election of directors thereof, at the time as of which any determination is being made, are owned by such entity, either directly or indirectly, and (ii) any joint venture, general or limited partnership, limited liability company or other legal entity in which such entity is the record or beneficial owner, directly or indirectly, of a majority of the voting interests or the general partner.
“Tax” or “Taxes” mean all taxes, imposts, levies, duties, deductions, withholdings (including backup withholding), assessments, fees or other like assessments or charges, in each case in the nature of a tax, imposed by a Governmental Authority, together with all interest, penalties and additions imposed with respect to such amounts.
“Tax Return” means any report, return, information return, filing, claim for refund or other information filed or required to be filed with a Governmental Authority in connection with Taxes, including any schedules or attachments thereto, and any amendments to any of the foregoing.
“Transaction Documents” means this Agreement, the Certificate of Designations, the Registration Rights Agreement, the Warrant and all other documents, certificates or agreements executed in connection with the transactions contemplated by this Agreement, the Certificate of Designations, the Registration Rights Agreement and the Warrant.
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“Transactions” means the Purchase and the other transactions expressly contemplated by this Agreement and the other Transaction Documents, including the exercise by any Investor Party of the right to convert Acquired Shares into shares of Common Stock.
“Transfer” means, directly or indirectly, to sell, transfer, assign, pledge, encumber, mortgage, gift, hypothecate or dispose of, either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, mortgage, gift, hypothecation or disposition of, any shares of equity securities beneficially owned by a Person or any interest in any shares of equity securities beneficially owned by a Person; provided, however, that, notwithstanding anything to the contrary in this Agreement, a Transfer shall not include (i) the conversion of one or more shares of Series A Preferred Stock into shares of Common Stock pursuant to the Certificate of Designations, (ii) the redemption or other acquisition of Common Stock or Series A Preferred Stock by the Company or (iii) the direct or indirect transfer of any limited partnership interests or other equity interests in any Investor Party (or any direct or indirect parent entity of such Investor Party) (provided that if any transferor or transferee referred to in this clause (iii) ceases to be controlled (directly or indirectly) by the Person (directly or indirectly) controlling such Person immediately prior to such transfer, such event shall be deemed to constitute a “Transfer”). In the event that any Person that is a corporation, partnership, limited liability company or other legal entity (other than an individual, trust or estate) ceases to be controlled by the Person controlling such Person or a Permitted Transferee thereof, such event shall be deemed to constitute a “Transfer” subject to the restrictions on Transfer contained or referenced herein.
“Treasury Regulations” means any proposed, temporary, or final U.S. Treasury Regulations promulgated or issued under the Code.
“Warrant” means that certain warrant issued to the Investor to purchase an aggregate of up to 11,111,112 shares of Common Stock at a purchase price of $4.50 per share of Common Stock, in the form attached hereto as Exhibit D.
“Willful Breach” means, with respect to any Person, a material breach or failure to perform that is the consequence of an act or omission of such party with the knowledge that such act or omission would, or would be reasonably expected to, cause a material breach of this Agreement.
(a)In addition to the terms defined in Section 1.01(a), the following terms have the meanings assigned thereto in the Sections set forth below:
| Term | Section | ||||
| Acquired Shares | Section 2.01 | ||||
| Acquisition Proposal | Section 5.05 | ||||
| Action | Section 3.07 | ||||
| Agreement | Preamble | ||||
| Allocation | Section 5.09(e) | ||||
| Anti-Corruption Laws | Section 3.08(b) | ||||
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| Balance Sheet Date | Section 3.05(c) | ||||
| Bankruptcy and Equity Exception | Section 3.03(a) | ||||
| Capitalization Date | Section 3.02(a) | ||||
| Certificate of Designations | Recitals | ||||
| Closing | Section 2.01 | ||||
| Closing Date | Section 2.02(a) | ||||
| Company | Preamble | ||||
| Company Disclosure Letter | Article III | ||||
| Company SEC Documents | Section 3.05(a) | ||||
| Company Securities | Section 3.02(b) | ||||
| Confidential Information | Section 5.04 | ||||
| Contract | Section 3.03(b) | ||||
| DOJ | Section 5.01(c) | ||||
| Excluded Sponsor Parties | Section 5.12(a) | ||||
| Filed SEC Documents | Article III | ||||
| FTC | Section 5.01(c) | ||||
| HSR Approval | Section 5.01(a) | ||||
| HSR Form | Section 5.01(a) | ||||
| Initial Investor Director Designee | Section 5.08(a) | ||||
| IRS | Section 5.09(a) | ||||
| Joinder | Section 8.03 | ||||
| Judgments | Section 3.07 | ||||
| Laws | Section 3.08(a) | ||||
| New Security | Section 5.13(a) | ||||
| Non-Recourse Party | Section 8.05(b) | ||||
| OFAC | Section 3.08(d) | ||||
| Permits | Section 3.08(a) | ||||
| Permitted Loan | Section 5.06(b)(v) | ||||
| Preemptive Rights Portion | Section 5.13(b) | ||||
| Preemptive Securities | Section 5.13(a) | ||||
| Purchase | Section 2.01 | ||||
| Purchase Price | Section 2.01 | ||||
| Restraints | Section 6.01(a) | ||||
| Restricted Country | Section 3.08(e) | ||||
| Restricted Issuance Information | Section 5.13(a) | ||||
| Sanctions | Section 3.08(d) | ||||
| Series A Preferred Stock | Recitals | ||||
| Standstill Expiration Date | Section 5.05 | ||||
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Article II
Purchase and Sale
Purchase and Sale
Section 1.01Purchase and Sale. On the terms of this Agreement and subject to the satisfaction (or, to the extent permitted by applicable Law, waiver by the party entitled to the benefit thereof) of the conditions set forth in Article VI, at the closing (the “Closing”), the Investor shall purchase and acquire from the Company, and the Company shall issue, sell and deliver to the Investor an aggregate of 150,000 shares of Series A Preferred Stock (the “Acquired Shares”) for a purchase price per Acquired Share equal to $1,000, representing an aggregate purchase price of $150,000,000 (such aggregate purchase price, the “Purchase Price”). The purchase and sale of the Acquired Shares pursuant to this Section 2.01 is referred to, collectively, as the “Purchase”.
Section 1.02Closing. (a) The date on which the Closing occurs shall be the “Closing Date”. The Closing Date shall occur on the date hereof subject to the satisfaction of the conditions to the Closing set forth in Article VI of this Agreement or, to the extent permitted by applicable Law, waived by the party entitled to the benefit thereof. The Closing shall be conducted remotely via the electronic exchange of documents and signatures, or at such other place, time and date as shall be agreed between the Company and the Investor.
(a)At the Closing:
(i)the Company shall deliver to the Investor (A) the Acquired Shares, free and clear of all Liens, except restrictions imposed by the Certificate of Designations, the Securities Act, Section 5.06 and any applicable securities Laws and evidence of the issuance of the Acquired Shares to the Investor, credited to book-entry accounts maintained by the transfer agent of the Company, and (B) the Registration Rights Agreement, duly executed by the Company; and
(ii)the Investor shall (A) pay an aggregate amount equal to the Purchase Price to the Company, net of the expense reimbursement set forth in Section 8.11 that the Company is obligated to pay to Investor, by wire transfer of immediately available U.S. federal funds, to the account designated by the Company in writing at least one (1) Business Day prior to the Closing Date, and (B) deliver to the Company the Registration Rights Agreement, duly executed by the Investor.
Article III
Representations and Warranties of the Company
Representations and Warranties of the Company
The Company represents and warrants to the Investor as of the date of this Agreement (except to the extent made only as of a specified date, in which case such representation and warranty is made as of such date) that, except as (A) set forth in the confidential disclosure letter delivered by the Company to the Investor prior to the execution of this Agreement (the “Company Disclosure Letter”) (it being understood that any information, item or matter set forth on one section or subsection of the Company Disclosure Letter shall only
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be deemed disclosure with respect to, and shall only be deemed to apply to and qualify, the section or subsection of this Agreement to which it corresponds in number and each other section or subsection of this Agreement to the extent that it is reasonably apparent on its face that such information, item or matter is relevant to such other section or subsection), or (B) disclosed in any report, schedule, form, statement or other document (including exhibits) filed with, or furnished to, the SEC (and publicly available) after January 1, 2023 and prior to the date of this Agreement (the “Filed SEC Documents”), other than any risk factor disclosures in any such Filed SEC Document contained in the “Risk Factors” section or any forward-looking statements within the meaning of the Securities Act or the Exchange Act thereof (it being acknowledged that nothing disclosed in the Filed SEC Documents shall be deemed to qualify or modify the representations and warranties set forth in Section 3.01(a), Section 3.02, Section 3.03(a), Section 3.06, Section 3.14, Section 3.15 and Section 3.18):
Section 1.01Organization; Standing. (a) The Company is a corporation duly organized and validly existing under the Laws of the State of Delaware, is in good standing and has all requisite corporate power and corporate authority necessary to carry on its business as it is now being conducted, except (other than with respect to the Company’s due organization and valid existence) as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company is duly licensed or qualified to do business and is in good standing (where such concept is recognized under applicable Law) in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. True and complete copies of the Company Charter Documents are included in the Filed SEC Documents.
(a)Each of the Company’s Subsidiaries is duly organized, validly existing and in good standing (where such concept is recognized under applicable Law) under the Laws of the jurisdiction of its organization, except where the failure to be so organized, existing and in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each of the Company’s Subsidiaries is duly licensed or qualified to do business and is in good standing (where such concept is recognized under applicable Law) in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 1.02Capitalization. (a) The authorized capital stock of the Company consists of 1,800,000,000 shares of Common Stock, 600,000,000 shares of Class B Common Stock, 600,000,000 shares of Class C Common Stock and 200,000,000 shares of undesignated Preferred Stock, par value $0.00001 per share. At the close of business on April 24, 2024 (the “Capitalization Date”), (i) 242,827,253 shares of Common Stock were issued and outstanding, (ii) 97,959,296 shares of Common Stock were reserved and available for future issuance pursuant to the Company Stock Plans, (iii) 44,564,908 shares of Common Stock were subject to outstanding Company Stock Options, (iv) 20,653,060 Company RSUs were outstanding, (v)
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5,500,000 Company PSUs were outstanding, (vi) 9,550,352 shares of Class B Common Stock were issued and outstanding, (vii) no shares of Class C Common Stock were issued and outstanding, and (viii) no shares of Preferred Stock, par value $0.00001 per share, of the Company were issued or outstanding.
(a)Except as described in this Section 3.02, there are (i) no outstanding shares of capital stock of, or other equity or voting interests of any character in, the Company as of the date hereof other than shares that have become outstanding after the Capitalization Date which were reserved for issuance as of the Capitalization Date as set forth in Section 3.02(a), (ii) no outstanding securities of the Company convertible into or exercisable or exchangeable for shares of capital stock of, or other equity or voting interests of any character in, the Company, (iii) no outstanding obligations, options, warrants, rights, pledges, calls, puts, phantom equity, premptive rights, or other rights, commitments, agreements or arrangements of any character to acquire from the Company, or that obligate the Company to issue, any capital stock of, or other equity or voting interests (or voting debt) in, or any securities convertible into or exercisable or exchangeable for shares of capital stock of, or other equity or voting interests (or voting debt) in, the Company other than obligations under the Company Plans in the ordinary course of business, (iv) no obligations of the Company to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock of, or other equity or voting interests (or voting debt) in, the Company (the items in clauses (i), (ii), (iii) and (iv) being referred to collectively as “Company Securities”) and (v) no other obligations by the Company or any of its Subsidiaries to make any payments based on the price or value of any Company Securities. There are no outstanding agreements of any kind which obligate the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Company Securities (other than pursuant to the cashless exercise of Company Stock Options or settlement of Company RSUs and Company PSUs or the forfeiture or withholding of Taxes with respect to Company Stock Options, Company PSUs or Company RSUs), or obligate the Company to grant, extend or enter into any such agreements relating to any Company Securities, including any agreements granting any preemptive rights, subscription rights, anti-dilutive rights, rights of first refusal or similar rights with respect to any Company Securities. Except as set forth on Section 3.02(b) of the Company Disclosure Letter, none of the Company or any Subsidiary of the Company is a party to any stockholders’ agreement, voting trust agreement, registration rights agreement or other similar agreement or understanding relating to any Company Securities or any other agreement relating to the disposition, voting or dividends with respect to any Company Securities. All outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and were not issued in violation of any purchase option, call option, right of first refusal, subscription right, preemptive or similar rights of a third Person, the Company Charter Documents or any agreement to which the Company is a party. All of the outstanding shares of capital stock or equity interests of the Company’s Subsidiaries have been duly authorized, validly issued, fully paid and non-assessable and none of such capital stock or equity interests are subject to or were issued in violation of any applicable Laws and are not subject to and have not been issued in violation of any stockholders agreement, proxy, voting trust or similar agreement, or any preemptive rights, rights of first refusal or similar rights of any Person, except as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole.
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Section 1.03Authority; Noncontravention. (a) The Company has all necessary corporate power and corporate authority to execute and deliver this Agreement and the other Transaction Documents and to perform its obligations hereunder and thereunder and to consummate the Transactions. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents, and the consummation by it of the Transactions, have been duly authorized and approved by the Board and no other corporate action on the part of the Company is necessary to authorize the execution, delivery and performance by the Company of this Agreement and the other Transaction Documents and the consummation by it of the Transactions. This Agreement and the other Transaction Documents have been duly executed and delivered by the Company and, assuming due authorization, execution and delivery hereof or thereof, as applicable, by the Investor and the other parties hereto or thereto, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar Laws of general application affecting or relating to the enforcement of creditors’ rights generally and (ii) is subject to general principles of equity, whether considered in a proceeding at law or in equity (the “Bankruptcy and Equity Exception”).
(a)Neither the execution and delivery of this Agreement or the other Transaction Documents by the Company, nor the consummation by the Company of the Transactions, nor performance or compliance by the Company with any of the terms or provisions hereof or thereof, will (i) conflict with or violate any provision of (A) the Company Charter Documents or (B) the similar organizational documents of any of the Company’s Subsidiaries or (ii) assuming that the authorizations, consents and approvals referred to in Section 3.04(a) and Section 3.04(c) are obtained prior to the Closing Date, and any necessary HSR Approval is obtained in accordance with Section 5.01, (x) violate any Law, or Judgment applicable to the Company or any of its Subsidiaries or (y) violate or constitute a default (or constitute an event which, with notice or lapse of time or both, would violate or constitute a default) under, result in the termination of or a right of termination or cancellation under, result in the loss of any benefit or require a payment or incur a penalty under, any of the terms or provisions of any loan or credit agreement, indenture, debenture, note, bond, mortgage, deed of trust, lease, sublease, license, contract or other agreement (each, a “Contract”) to which the Company or any of its Subsidiaries is a party or by which it is bound or accelerate the Company’s or, if applicable, any of its Subsidiaries’ obligations under any such Contract, except, in the case of clause (ii), as would not, individually or in the aggregate, have or reasonably be expected to have, a Material Adverse Effect or prevent or materially delay, interfere with, hinder or impair the consummation by the Company or its Subsidiaries of any of the Transactions on a timely basis.
Section 1.04Governmental Approvals. Except for (a) the filing of the Certificate of Designations with the Secretary of State of the State of Delaware, (b) filings required under, and compliance with other applicable requirements of the HSR Act, if required, and (c) compliance with any applicable state securities or blue sky laws, no consent or approval of, or filing, license, permit or authorization, declaration or registration with, any Governmental Authority is necessary for the execution and delivery of this Agreement and the other
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Transaction Documents by the Company, the performance by the Company of its obligations hereunder and thereunder and the consummation by the Company of the Transactions, other than such other consents, approvals, filings, licenses, permits or authorizations, declarations or registrations that, if not obtained, made or given, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or prevent or materially delay, interfere with, hinder or impair the consummation by the Company or its Subsidiaries of any of the Transactions on a timely basis.
Section 1.05Company SEC Documents; Undisclosed Liabilities. (a) The Company has filed with the SEC, on a timely basis, all required reports, schedules, forms, statements and other documents required to be filed by the Company with the SEC pursuant to the Exchange Act since January 1, 2023 (collectively, the “Company SEC Documents”). As of their respective SEC filing dates, the Company SEC Documents complied in all material respects with the requirements of the Securities Act, the Exchange Act and/or the Sarbanes-Oxley Act of 2002 (and the regulations promulgated thereunder), as the case may be, applicable to such Company SEC Documents, and none of the Company SEC Documents as of such respective dates (or, if amended prior to the date of this Agreement, the date of the filing of such amendment, with respect to the disclosures that are amended) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
(a)The consolidated financial statements of the Company and its Subsidiaries (including all related notes or schedules) included or incorporated by reference in the Company SEC Documents (i) complied as to form, as of their respective dates of filing with the SEC, in all material respects with the published rules and regulations of the SEC with respect thereto, (ii) have been prepared in accordance with GAAP (except, in the case of unaudited quarterly statements, as permitted by Form 10-Q of the SEC or other rules and regulations of the SEC) applied on a consistent basis during the periods involved (except (A) as may be indicated in the notes thereto or (B) as permitted by Regulation S-X) and (iii) present fairly, in all material respects, the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods shown (subject, in the case of unaudited quarterly financial statements, to normal year-end adjustments which are not reasonably expected to be materially adverse individually or in the aggregate to the Company and its Subsidiaries, taken as a whole).
(b)Neither the Company nor any of its Subsidiaries has any liabilities of any nature (whether accrued, absolute, contingent or otherwise) that would be required under GAAP, as in effect on the date hereof, to be reflected on a consolidated balance sheet of the Company (including the notes thereto) except liabilities (i) reflected or reserved against in the balance sheet (or the notes thereto) of the Company and its Subsidiaries as of December 31, 2023 (the “Balance Sheet Date”) included in the Filed SEC Documents, (ii) incurred after the Balance Sheet Date in the ordinary course of business and that do not arise from any breach of a Contract, violation of Law or tort, (iii) as expressly contemplated by this Agreement, (iv) that have been
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discharged or paid prior to the date of this Agreement or (v) as would not, individually or in the aggregate, have had or reasonably be expected to have, a Material Adverse Effect.
(c)The Company has established and maintains, and at all times since January 1, 2023 has maintained, disclosure controls and procedures and a system of internal controls over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act relating to the Company and its consolidated Subsidiaries sufficient to provide reasonable assurance that (a) transactions are executed in accordance with Company management’s general or specific authorization, (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP, consistently applied, and to maintain accountability for assets, (c) access to assets is permitted only in accordance with Company management’s general or specific authorization and (d) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. There are no “significant deficiencies” or “material weaknesses” (as defined by the Public Company Accounting Oversight Board) in the design or operation of the Company’s internal controls over, and procedures relating to, financial reporting which would reasonably be expected to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial data, in each case which has not been subsequently remediated. Since January 1, 2023, there has not been any Fraud, whether or not material, that involves management or other employees of the Company or any of its Subsidiaries who have a significant role in the Company’s internal controls over financial reporting. As of the date of this Agreement, to the Knowledge of the Company, there is no reason that its chief executive officer and chief financial officer will not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, without qualification, when next due (it being understood that the Company makes no representation that its internal control over financial reporting has been or will be attested to by the Company’s independent registered public accounting firm). The Company is, and has been at all times since January 1, 2023, in compliance in all material respects with the applicable listing requirements and corporate governance rules and regulations of the NYSE.
(d)There is no transaction, arrangement or other relationship between the Company and/or any of its Subsidiaries and an unconsolidated or other off-balance sheet entity that is required by applicable Law to be disclosed by the Company in its Filed SEC Documents and is not so disclosed.
Section 1.06Absence of Certain Changes. (a) Since the Balance Sheet Date through the date of this Agreement, except for the execution and performance of this Agreement and any other agreements contemplated hereby and evaluations, processes, discussions, negotiations and transactions contemplated hereby and other strategic transactions, the business of the Company and its Subsidiaries has been carried on and conducted in all material respects in the ordinary course of business, and (b) since the Balance Sheet Date, there has not been any Material Adverse Effect or any event, change or occurrence that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
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Section 1.07Legal Proceedings. As of the date hereof, neither the Company nor any of its Subsidiaries is a party to any, and there are no pending, or to the Knowledge of the Company, threatened, legal, administrative, arbitral or other proceedings, claims, actions or governmental investigations (an “Action”) of any nature against the Company or any of its Subsidiaries (i) that, individually or in the aggregate, have had or would reasonably be expected to have a Material Adverse Effect or (ii) that challenge the validity of or seek to prevent the Transactions. As of the date hereof, neither the Company nor any of its Subsidiaries is subject to any order, judgment or decree of a Governmental Authority (“Judgments”) that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect. As of the date hereof, except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect, there is no investigation or review pending or, to the Knowledge of the Company, threatened by any Governmental Entity with respect to the Company or any of its Subsidiaries.
Section 1.08Compliance with Laws; Permits.
(a)The Company and each of its Subsidiaries are and since January 1, 2023 have been, in compliance with all (i) state or federal laws, common law, statutes, ordinances, codes, rules or regulations or other similar requirement enacted, adopted, promulgated, or applied by any Governmental Authority (“Laws”) and (ii) Judgments, in each case of clauses (i) and (ii), that are applicable to the Company or any of its Subsidiaries, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company and each of its Subsidiaries hold all licenses, franchises, permits, certificates, approvals and authorizations from Governmental Authorities (“Permits”) necessary for the lawful conduct of their respective businesses, except where the failure to hold the same would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b)The Company, each of its Subsidiaries, and each of their respective officers, directors, employees and, to the Company’s Knowledge, agents acting on their behalf is, and for the last five years has been, in compliance in all material respects with (i) the Foreign Corrupt Practices Act of 1977 and any rules and regulations promulgated thereunder, (ii) the United Kingdom Bribery Act, (iii) anti-bribery legislation promulgated by the European Union and implemented by its member states, (iv) legislation adopted in furtherance of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and (v) any other Laws applicable to the Company and its Subsidiaries that address the prevention of corruption, bribery or terrorism (collectively, the “Anti-Corruption Laws”). None of the Company, any of its Subsidiaries or any director, officer, or, to the Company’s Knowledge, any agent, employee, or other person associated with or acting on behalf of the Company or its Subsidiaries within the last five (5) years has offered, promised, provided, or authorized the provision of any money or other thing of value, directly or indirectly, to any Person to improperly influence official action or secure an improper advantage, or to encourage the recipient to breach a duty of good faith or loyalty or the policies of his/her employer, nor has violated or is in violation of any provision of any Anti-Corruption Laws.
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(c)The Company, each of its Subsidiaries, and to the Company’s Knowledge, each of their respective officers, directors, employees and, to the Company’s Knowledge, agents acting on their behalf is, and for the last five (5) years has been, in material compliance with Anti-Money Laundering Laws and Export Control Laws.
(d)The Company, each of its Subsidiaries, and each of their officers, directors, employees and, to the Company’s Knowledge, agents acting on their behalf is, and, for the last five (5) years has been, in material compliance with all Laws or other financial restrictions administered by (i) the United States (including without limitation the Office of Foreign Assets Control of the United States Treasury Department (“OFAC”), including OFAC’s Specially Designated Nationals and Blocked Persons List, and the U.S. Department of State), (ii) the European Union and enforced by its member states, (iii) the United Nations, (iv) His Majesty’s Treasury or (v) other similar governmental bodies with regulatory authority over the Company, its Subsidiaries and their respective operations from time to time (collectively, “Sanctions”). None of the Company, any of its Subsidiaries, or any director, officer, or to the Company’s Knowledge, agent, or employee of the Company or any of its Subsidiaries is currently the subject or the target of any Sanctions, nor is the Company or any of its Subsidiaries (x) located, organized or resident in a country or territory that is the subject or target of Sanctions, including, without limitation, Crimea Region of Ukraine, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, Cuba, Iran, North Korea and Syria, or (y) majority-owned or controlled by a Person that is the subject of Sanctions.
(e)To the Company’s Knowledge, the Company and its Subsidiaries have not engaged in, nor are now engaged in, any dealings or transactions with or for the benefit of any person located, organized, or ordinarily resident in Cuba, Iran, North Korea, Sudan, Syria, or Crimea (each a “Restricted Country”), in each case directly or indirectly, including through agents or other persons acting on its behalf.
(f)Neither the Company nor any of its Subsidiaries is party to any actual or threatened legal proceedings or outstanding enforcement action relating to any breach or suspected breach of Anti-Corruption Laws, Anti-Money Laundering Laws, Sanctions or Export Control Laws.
(g)The Company and its Subsidiaries will not use the proceeds from the Transactions (i) in furtherance of an offer, payment, promise to pay or authorization of the payment or giving of money or anything else of value, to any Person in violation of any Anti-Corruption Laws, or (ii) directly, or Knowingly, indirectly fund or facilitate any activities of or business with any person, or in any country or territory, that, at the time of such funding, is the subject or the target of Sanctions.
(h)The Company and its Subsidiaries have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, compliance with all applicable Anti-Corruption Laws and Sanctions. No action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its Subsidiaries with respect to Anti-Corruption Laws or Sanctions is pending or, to the Knowledge of the Company, threatened.
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Section 1.09Data Security; Privacy.
(a)Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (i) Company and each of its Subsidiaries are in compliance, and have since January 1, 2023 complied, with all applicable Data Privacy Laws; (ii) neither Company nor any of its Subsidiaries has, since January 1, 2023, received any written notice from any applicable Governmental Authority alleging any violation of applicable Data Privacy Laws by Company, any of its Subsidiaries or, to the knowledge of Company, any third-party service providers, outsourcers, processors or other third parties who process, store or otherwise handle Personal Data for or on behalf of Company or any of its Subsidiaries (“Company Data Processors”), nor has Company or any of its Subsidiaries been threatened in writing to be charged with any such violation by any Governmental Authority; (iii) Company and each of its Subsidiaries have, since January 1, 2023, taken commercially reasonable steps (including, as appropriate, implementing reasonable technical, physical or administrative safeguards) designed to protect Personal Data in their possession or under their control against loss and unauthorized access, use, modification or disclosure, and, to the knowledge of Company, since January 1, 2023, there has been no incident of the same, or of the same with respect to any Personal Data maintained or otherwise processed for or on behalf of Company or its Subsidiaries; (iv) Company and each of its Subsidiaries have, since January 1, 2023, taken commercially reasonable steps with respect to Company Data Processors to obligate such persons to comply in all material respects with applicable Data Privacy Laws and to take reasonable steps to protect and secure Personal Data from loss or unauthorized use, access, modification or disclosure; and (v) the execution, delivery and performance of this Agreement complies with all applicable Data Privacy Laws and Company’s and each of its Subsidiaries’ applicable published policies, statements, and notices relating to privacy, data protection or information security regarding Personal Data.
(b)Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) to the Knowledge of the Company and its Subsidiaries, since January 1, 2023, there has been no security breach or incident, unauthorized access or disclosure, or other compromise of the Company’s and its Subsidiaries’ information technology and computer systems, networks, equipment, hardware, software, data and databases, including all personally identifiable information and sensitive and confidential data maintained, processed or stored by the Company and its Subsidiaries (collectively, “IT Systems and Data”), and any such personally identifiable information and sensitive and confidential data of the Company and its Subsidiaries that is processed or stored by third parties on behalf of the Company and its Subsidiaries, except for those that have been remedied; and (ii) the Company and its Subsidiaries have implemented and maintain controls, policies, procedures, and technological safeguards designed to maintain and protect the integrity, continuous operation, redundancy and security of their IT Systems and Data reasonably consistent with industry standards, or as required by applicable laws or statutes.
Section 1.10Contracts. Each Contract that is material to the business of the Company and its Subsidiaries, taken as a whole (each, a “Material Contract”), and to which the Company or any of its Subsidiaries is a party or by which the Company, any of its Subsidiaries or any of their respective properties or assets is bound is valid, binding and enforceable on the Company and any of its Subsidiaries to the extent such Person is a party thereto, as applicable,
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and to the Knowledge of the Company, each other party thereto, and is in full force and effect, except where the failure to be valid, binding or in full force and effect, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect. The Company and each of its Subsidiaries, and, to the Knowledge of the Company, any other party thereto, is in compliance in all material respects with all Material Contracts and has performed all obligations required to be performed by it, except where such noncompliance, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect.
Section 1.11Tax Matters. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect: (a) the Company and each of its Subsidiaries has prepared (or caused to be prepared) and timely filed (taking into account valid extensions of time within which to file) all Tax Returns required to be filed by it, and all such filed Tax Returns (taking into account all amendments thereto) are true, complete and accurate, (b) all Taxes owed by the Company and each of its Subsidiaries that are due (whether or not shown on any Tax Return) have been timely paid, except for Taxes that are being contested in good faith by appropriate proceedings and that have been adequately reserved against in accordance with GAAP, (c) no examination or audit of any Tax Return relating to any Taxes of the Company or any of its Subsidiaries or with respect to any Taxes due from the Company or any of its Subsidiaries by any Governmental Authority is currently in progress or threatened in writing for which reserves that are adequate under GAAP have not been established, (d) none of the Company or any of its Subsidiaries has liability for the Taxes of any other Person (other than the Company and its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign Law), as a transferee or successor, or by contract and (e) none of the Company or any of its Subsidiaries has engaged in any “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(2).
Section 1.12Employee Benefit Plans. (a) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) each material Company Plan has been established, operated, maintained and administered in accordance with its terms and in compliance with the applicable provisions of ERISA, the Code and other applicable Laws; (ii) with respect to each material Company Plan subject to the Laws outside of the United States which covers individual service providers located outside of the United States, all required contributions have been timely made or accrued in accordance with applicable legal and accounting requirements; and (iii) to the Knowledge of the Company, each “multiemployer plan” (as defined in Section 4001 of ERISA) to which the Company, its Subsidiaries or their respective ERISA Affiliates contributes (a “Multiemployer Plan”) is in compliance with ERISA. Except as would not, individually or in the aggregate, have a Material Adverse Effect, (i) no “reportable event” (within the meaning of Section 4043(c) of ERISA) has occurred or, to the Knowledge of the Company, is reasonably expected to occur with respect to any “employee pension benefit plan” (as defined under Section 3(2) of ERISA) established or maintained by the Company, its Subsidiaries or any of their respective ERISA Affiliates; (ii) no Company Plan is a “single-employer plan” (as defined in Section 4001 of ERISA) ; (iii) neither the Company, its Subsidiaries nor any of their respective ERISA Affiliates has incurred or, to the Knowledge of the Company, reasonably expects to incur (A) any liability under Title IV of ERISA with respect to termination of, or withdrawal from, any “employee benefit plan” or (B) any liability under
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Section 412 of the Code or tax imposed by Section 4971, 4975 or 4980B of the Code; and (iv) each “employee pension benefit plan” established or maintained by the Company, its Subsidiaries or any of their respective ERISA Affiliates that is intended to be qualified under Section 401 of the Code is so qualified and, to the Knowledge of the Company, nothing has occurred, whether by action or failure to act, which would reasonably be expected to cause the loss of such qualification.
(c)Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (either alone or together with the occurrence of a subsequent event (e.g., a termination of employment or service)) (i) result in any material payment becoming due, or materially increase the amount of any compensation or benefits due, to any current or former employee of the Company and its Subsidiaries with respect to any Company Plan; or (ii) result in the acceleration of the time of payment or vesting of any compensation or benefits for any current or former employee of the Company and its Subsidiaries.
Section 1.13Labor Matters. The Company and its Subsidiaries, taken as a whole, have not sustained since the date of the latest audited financial statements any material loss or interference with its business from (i) fire, explosion, flood or other calamity, whether or not covered by insurance, (ii) any labor dispute or court or governmental action, order or decree or (iii) any Actions against the Company or any of its Subsidiaries alleging violation of any Labor Laws or breach of any collective bargaining agreement. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, each of the Company and its Subsidiaries is in compliance with all Labor Laws. Neither the Company nor any of its Subsidiaries is party to or bound by any collective bargaining agreement or Contract with any labor organization, labor union, or works council, nor to the Knowledge of the Company, are there any union organizational activities or proceedings to organize any employees of the Company or any of its Subsidiaries. There are no active, nor, to the Knowledge of the Company, threatened, labor strikes, slowdowns, work stoppages, pickets, walkouts, lockouts or other collective labor actions by or with respect to the employees of the Company or any of its Subsidiaries.
Section 1.14No Rights Agreement; Anti-Takeover Provisions. (a) As of the date of this Agreement, neither the Company nor any of its Subsidiaries is party to a stockholder rights agreement, “poison pill” or similar anti-takeover agreement or plan.
(d)The Board has taken all necessary actions to ensure that no restrictions included in any “control share acquisition,” “fair price,” “moratorium,” “business combination” or other state anti-takeover Law (including Section 203 of the DGCL) is, or as of the Closing will be, applicable to the Transactions, including the Company’s issuance of shares of Common Stock upon conversion of the Series A Preferred Stock and any issuance pursuant to Section 5.13.
Section 1.15Brokers and Other Advisors. Other than fees payable in accordance with Section 8.11 and except as set forth on Section 3.11 of the Company Disclosure Letter, no broker, investment banker, financial advisor or other Person is entitled to any broker’s,
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finder’s, financial advisor’s or other similar fee or commission, or the reimbursement of expenses as a result of such capacities, in connection with the Transactions based upon arrangements made by or on behalf of the Company or any of its Subsidiaries.
Section 1.16Sale of Securities. Assuming the accuracy of the representations and warranties set forth in Section 4.07, the offer, sale and issuance of the shares of Series A Preferred Stock and the Warrant pursuant to this Agreement is and will be exempt from the registration and prospectus delivery requirements of the Securities Act and the rules and regulations thereunder. Without limiting the foregoing, neither the Company nor any other Person authorized by the Company to act on its behalf, has engaged in a general solicitation or general advertising (within the meaning of Regulation D of the Securities Act) of investors with respect to offers or sales of Series A Preferred Stock or the Warrant, and neither the Company nor any Person acting on its behalf has made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the offering or issuance of Series A Preferred Stock or the Warrant under this Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act that would result in none of Regulation D or any other applicable exemption from registration under the Securities Act to be available, nor will the Company take any action or steps that would cause the offering or issuance of Series A Preferred Stock or the Warrant under this Agreement to be integrated with other offerings by the Company.
Section 1.17Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and listed on the NYSE, and the Company has taken no action designed to, or which to the Knowledge of the Company is reasonably likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from the NYSE, nor has the Company received any notification that the SEC or the NYSE is contemplating terminating such registration or listing. The Company is in compliance in all material respects with the listing and listing maintenance requirements of the NYSE applicable to it for the continued trading of its Common Stock on the NYSE.
Section 1.18Status of Securities. As of the Closing Date, the Acquired Shares, and the shares of Common Stock issuable upon conversion of any of the Acquired Shares and the Warrant, will be, when issued, duly authorized by all necessary corporate action on the part of the Company, validly issued, fully paid and nonassessable and issued in compliance with all applicable federal and state securities Laws and will not be subject to preemptive rights of any other stockholder of the Company, and will be free and clear of all Liens, except restrictions imposed by the Certificate of Designations, the Securities Act, Section 5.07 and any applicable securities Laws. The respective rights, preferences, privileges, and restrictions of the Series A Preferred Stock and the Common Stock are as stated in the Company Charter Documents (including the Certificate of Designations) or as otherwise provided by applicable Law. All of the Acquired Shares and the shares of Common Stock issuable upon conversion of any of the Acquired Shares and the shares of Common Stock issuable upon exercise of the Warrant have been duly reserved for issuance.
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Section 1.19Certain Material Indebtedness. Neither the Company nor any of its Subsidiaries is, as of the date of this Agreement, in default in the payment of any material indebtedness.
Section 1.20Investment Company Status. Neither the Company nor any of its Subsidiaries is, and immediately after the sale of the Acquired Shares hereunder, none of the Company nor any of its Subsidiaries will be, required to be registered as an “investment company” under the Investment Company Act of 1940, as amended.
Section 1.21IP; Security. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect: (i) each of the Company and its Subsidiaries own, have the valid and enforceable right to use or can acquire on commercially reasonable terms, all Intellectual Property used in the conduct of their businesses as currently conducted; (ii) the conduct of the Company and its Subsidiaries has not infringed, violated or misappropriated at any time since January 1, 2023, and does not infringe, violate or constitute a missappropriation of, any Intellectual Property of any Person; (iii) the Company and each of its Subsidiaries have not distributed, conveyed or made available to third parties any software that is subject to any open source or similar license that requires the disclosure, licensing or availability of material proprietary source code in such circumstances; and (iv) neither the Company nor any of its Subsidiaries has received any notice of any third-party allegations or claims that the Company or any of its Subsidiaries or the conduct of their respective businesses infringe or conflict with asserted Intellectual Property of others. The Company has taken commercially reasonable precautions and security measures to protect and maintain the confidentiality and value of the material trade secrets owned (or purportedly to be owned) by the Company or any of its Subsidiaries. The IT Assets used by the Company and its Subsidiaries are, in the Company’s belief, adequate for the operation of their businesses as currently conducted and are free of defects, malware, viruses or other corruptant. The Company and its Subsidiaries take, and have taken, commercially reasonable actions (including implementing organizational, physical, administrative and technical measures) to protect and maintain the integrity, security, operation and redundancy of the IT Assets used by or on behalf of the Company and its Subsidiaries, whether proprietary or those of third parties (including all data, including personal and confidential data, stored thereon and processed thereby). Since January 1, 2023, there have been no violations, breaches, outages, corruptions or unauthorized uses of, or unauthorized access to same, except for instances that were resolved without material cost, liability or the duty to notify any other Person, except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
Section 1.22Affiliate Transactions. None of the officers or directors of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than as holders of options, and/or other grants or awards under the Company Stock Plans, and for services as employees, officers and directors) that is material to the Company and its Subsidiaries, taken as a whole. Since January 1, 2023, neither the Company nor any Subsidiary has entered into any transaction between the Company or any of its Subsidiaries, on the one hand, and any Affiliate of the Company (other than (i) between the Company itself and any of its Subsidiaries or (ii) between any of the Subsidiaries themselves), on the other hand, except in compliance with the Company’s related party transaction policy.
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Section 1.23No Other Company Representations or Warranties. Except for the representations and warranties made by the Company in this Article III (as modified by the Company Disclosure Letter) and in any Transaction Document or certificate delivered in connection with this Agreement or the Transaction Documents, neither the Company nor any other Person acting on its behalf makes any other express or implied representation or warranty with respect to the Series A Preferred Stock, the Warrant, the Common Stock, the Company or any of its Subsidiaries or their respective businesses, operations, properties, assets, liabilities, condition (financial or otherwise) or prospects, notwithstanding the delivery or disclosure to the Investor or its Representatives of any documentation, forecasts or other information with respect to any one or more of the foregoing, and the Investor acknowledges the foregoing. In particular, and without limiting the generality of the foregoing, except for the representations and warranties made by the Company in this Article III (as modified by the Company Disclosure Letter) and in any Transaction Document or certificate delivered in connection with this Agreement or the Transaction Documents, neither the Company nor any other Person makes or has made any express or implied representation or warranty to the Investor or its Representatives with respect to (a) any financial projection, forecast, estimate, budget or prospect information relating to the Company, any of its Subsidiaries or their respective businesses or (b) any oral or written information presented to the Investor or its Representatives in the course of its due diligence investigation of the Company, the negotiation of this Agreement or the course of the Transactions or any other transactions or potential transactions involving the Company and the Investor.
Section 1.24No Other Investor Representations or Warranties. Except for the representations and warranties expressly set forth in Article IV and in any Transaction Document or certificate delivered in connection with this Agreement or the Transaction Documents, the Company hereby acknowledges that neither the Investor nor any other Person acting on its behalf, (a) has made or is making any other express or implied representation or warranty with respect to the Investor or any of its Affiliates or their respective businesses, operations, assets, liabilities, condition (financial or otherwise) or prospects, including with respect to any information provided or made available to the Company or any of its Representatives or any information developed by the Company or any of its Representatives or (b) will have or be subject to any liability or indemnification obligation to the Company resulting from the delivery, dissemination or any other distribution to the Company or any of its Representatives, or the use by the Company or any of its Representatives, of any information, documents, estimates, projections, forecasts or other forward-looking information, business plans or other material developed by or provided or made available to the Company or any of its Representatives, including in due diligence materials, in anticipation or contemplation of any of the Transactions or any other transactions or potential transactions involving the Company and the Investor. The Company, on behalf of itself and on behalf of its respective Affiliates, expressly waives any such claim relating to the foregoing matters.
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Article IV
Representations and Warranties of the Investor
Representations and Warranties of the Investor
The Investor represents and warrants to the Company, as of the date of this Agreement (except to the extent made only as of a specified date, in which case such representation and warranty is made as of such date):
Section 1.01Organization; Standing. The Investor is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization and the Investor has all requisite power and authority necessary to carry on its business as it is now being conducted and, except (other than with respect to the Investor’s due organization and valid existence) as would not, individually or in the aggregate, reasonably be expected to have an Investor Material Adverse Effect. The Investor is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have an Investor Material Adverse Effect.
Section 1.02Authority; Noncontravention. The Investor has all necessary power and authority to execute and deliver this Agreement and the other Transaction Documents, to perform its obligations hereunder and thereunder and to consummate the Transactions. The execution, delivery and performance by the Investor of this Agreement and the other Transaction Documents and the consummation by the Investor of the Transactions have been duly authorized and approved by all necessary action on the part of the Investor, and no further action, approval or authorization by any of its stockholders, partners, members or other equity owners, as the case may be, is necessary to authorize the execution, delivery and performance by the Investor of this Agreement and the other Transaction Documents and the consummation by the Investor of the Transactions. This Agreement and the other Transaction Documents have been duly executed and delivered by the Investor and, assuming due authorization, execution and delivery hereof or thereof, as applicable, by the Company and the other parties hereto or thereto, constitute legal, valid and binding obligations of the Investor, enforceable against it in accordance with their terms, subject to the Bankruptcy and Equity Exception. Neither the execution and delivery of this Agreement or the other Transaction Documents by the Investor, nor the consummation of the Transactions by the Investor, nor performance or compliance by the Investor with any of the terms or provisions hereof or thereof, will (i) conflict with or violate any provision of the certificate or articles of incorporation, bylaws or other comparable charter or organizational documents of the Investor or (ii) assuming that the authorizations, consents, and approvals referred to in Section 4.03(a) and Section 4.03(b) are obtained prior to the Closing Date, and any necessary HSR Approval is obtained in accordance with Section 5.01, (x) violate any Law or Judgment applicable to the Investor or any of its Subsidiaries or (y) violate or constitute a default (or constitute an event which, with notice or lapse of time or both, would violate or constitute a default) under any of the terms, conditions or provisions of any Contract to which the Investor or any of its Subsidiaries is a party or accelerate the Investor’s or any of its Subsidiaries’, if
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applicable, obligations under any such Contract, except, in the case of clause (ii), as would not, individually or in the aggregate, reasonably be expected to have an Investor Material Adverse Effect.
Section 1.03Governmental Approvals. Except for (a) the filing by the Company of the Certificate of Designations with the Secretary of State of the State of Delaware, (b) the filing with the SEC of a Schedule 13D or Schedule 13G and a Form 3 to report the Investor’s ownership of the Acquired Shares, and (c) filings required under, and compliance with other applicable requirements of, the HSR Act, if required, no consent or approval of, or filing, license, permit or authorization, declaration or registration with, any Governmental Authority is necessary for the execution and delivery of this Agreement and the other Transaction Documents by the Investor, the performance by the Investor of its obligations hereunder and thereunder and the consummation by the Investor of the Transactions, other than such other consents, approvals, filings, licenses, permits, authorizations, declarations or registrations that, if not obtained, made or given, would not, individually or in the aggregate, reasonably be expected to have an Investor Material Adverse Effect.
Section 1.04Financing. On the Closing Date, the Investor will have available funds necessary to consummate the purchase of the Acquired Shares and pay the Purchase Price payable by the Investor, in each case, on the terms and conditions contemplated by this Agreement.
Section 1.05Brokers and Other Advisors. No broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission, or the reimbursement of expenses in connection therewith, in connection with the Transactions based upon arrangements made by or on behalf of the Investor or any of its Affiliates, except for Persons, if any, whose fees and expenses will be paid by the Investor (or pursuant to the expense reimbursement provisions hereof).
Section 1.06Non-Reliance on Company Estimates, Projections, Forecasts, Forward-Looking Statements and Business Plans. In connection with the due diligence investigation of the Company by the Investor and its Representatives, the Investor and its Representatives have received and may continue to receive from the Company and its Representatives certain estimates, projections, forecasts and other forward-looking information, as well as certain business plan information containing such information, regarding the Company and its Subsidiaries and their businesses and operations. The Investor hereby acknowledges that there are uncertainties inherent in attempting to make such estimates, projections, forecasts and other forward-looking statements, as well as in such business plans, with which the Investor is familiar, that the Investor is making its own evaluation of the adequacy and accuracy of all estimates, projections, forecasts and other forward-looking information, as well as such business plans, so furnished to the Investor (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, forward-looking information or business plans), and that except for the representations and warranties made by the Company in Article III of this Agreement (as modified by the Company Disclosure Letter), the Transaction Documents and in any certificate or other document delivered in connection with this Agreement or the Transaction
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Documents, and other than for Fraud, the Investor will have no claim against the Company and its Subsidiaries, or any of their respective Representatives with respect thereto.
Section 1.07Purchase for Investment. The Investor acknowledges that the Series A Preferred Stock and the Common Stock issuable upon the conversion of the Series A Preferred Stock and upon exercise of the Warrant have not been registered under the Securities Act or under any state or other applicable securities Laws. The Investor (a) acknowledges that it is acquiring the Series A Preferred Stock and the Common Stock issuable upon the conversion of the Series A Preferred Stock and upon exercise of the Warrant pursuant to an exemption from registration under the Securities Act solely for investment with no intention to distribute any of the foregoing to any Person, (b) will not sell, transfer or otherwise dispose of any Series A Preferred Stock and the Common Stock issuable upon the conversion of the Series A Preferred Stock and upon exercise of the Warrant, except in compliance with this Agreement and the registration requirements or exemption provisions of the Securities Act and any other applicable securities Laws, (c) has such knowledge and experience in financial and business matters and in investments of this type that it is capable of evaluating the merits and risks of its investment in the Series A Preferred Stock and the Common Stock issuable upon the conversion of the Series A Preferred Stock and upon exercise of the Warrant and of making an informed investment decision, (d) is an “accredited investor” (as that term is defined by Rule 501(a) of Regulation D promulgated under the Securities Act), and (e) (i) has been furnished with or has had access to all the information that it considers necessary or appropriate to make an informed investment decision with respect to the Series A Preferred Stock and the Common Stock issuable upon the conversion of the Series A Preferred Stock and upon exercise of the Warrant, (ii) has had an opportunity to discuss with the Company and its Representatives the intended business and financial affairs of the Company and to obtain information necessary to verify any information furnished to it or to which it had access and (iii) can bear the economic risk of (x) an investment in the Series A Preferred Stock and the Common Stock issuable upon the conversion of the Series A Preferred Stock and upon exercise of the Warrant indefinitely and (y) a total loss in respect of such investment.
Section 1.08No Other Investor Representations or Warranties. Except for the representations and warranties made by the Investor in this Article IV, the Transaction Documents and in any certificate or other document delivered in connection with this Agreement or the Transaction Documents, neither the Investor nor any other Person acting on its behalf makes any other express or implied representation or warranty with respect to the Investor or any of its Affiliates or their respective businesses, operations, properties, assets, liabilities, condition (financial or otherwise) or prospects, notwithstanding the delivery or disclosure to the Company or its Representatives of any documentation, forecasts or other information with respect to any one or more of the foregoing, and the Company acknowledges the foregoing. In particular, and without limiting the generality of the foregoing, except for the representations and warranties made by the Investor in this Article IV, the Transaction Documents and in any certificate or other document delivered in connection with this Agreement or the Transaction Documents, neither the Investor nor any other Person makes or has made any express or implied representation or warranty to the Company or its Representatives with respect to (a) any financial projection, forecast, estimate, budget or prospect information relating to the Investor, any of its Affiliates or
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their respective businesses or (b) any oral or written information presented to the Company or its Representatives in the course of the negotiation of this Agreement or the course of the Transactions or any other transactions or potential transactions involving the Investor and the Company.
Section 1.09No Other Company Representations or Warranties. Except for the representations and warranties expressly set forth in Article III (as modified by the Company Disclosure Letter), the Transaction Documents and in any certificate or other document delivered in connection with this Agreement or the Transaction Documents, the Investor hereby acknowledges that neither the Company nor any of its Subsidiaries, nor any other Person, (a) has made or is making any other express or implied representation or warranty with respect to the Series A Preferred Stock, the Common Stock, the Company or any of its Subsidiaries or their respective businesses, operations, assets, liabilities, condition (financial or otherwise) or prospects, including with respect to any information provided or made available to the Investor or any of its Representatives or Affiliates or any information developed by the Investor or any of its Representatives or Affiliates, and none of the Investor, its Affiliates or any of its or their Representatives has relied, is relying, or will rely on any other representations, warranties, or other statements, or the accuracy or completnes thereof, or (b) other than for Fraud, will have or be subject to any liability or indemnification obligation to the Investor resulting from the delivery, dissemination or any other distribution to the Investor or any of its Representatives or Affiliates, or the use by the Investor or any of its Representatives, of any information, documents, estimates, projections, forecasts or other forward-looking information, business plans or other material developed by or provided or made available to the Investor or any of its Representatives, including in due diligence materials, or management presentations (formal or informal), in anticipation or contemplation of any of the Transactions and the Investor, on behalf of itself and on behalf of its respective Affiliates, expressly waives any such claim relating to the foregoing matters.
Article V
Additional Agreements
Additional Agreements
Section 1.01Reasonable Best Efforts; Filings.
(a)Subject to the terms and conditions of this Agreement, each of the Company and the Investor Parties shall cooperate with each other and use (and shall cause their Affiliates to use) their respective reasonable best efforts (unless, with respect to any action, another standard of performance is expressly provided for herein) to promptly (i) take, or cause to be taken, all actions, and do, or cause to be done, and assist and cooperate with each other in doing, all things necessary, proper or advisable to obtain the expiration or termination of the waiting period under the HSR Act (the “HSR Approval”) to the extent applicable to such Investor Party , including preparing and filing promptly and fully all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents, (ii) obtain all approvals, consents, registrations, waivers, permits, authorizations, orders and other confirmations or non-objections from any Governmental Authority or third party necessary, proper or advisable to consummate the
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Transactions, (iii) execute and deliver any additional instruments necessary to consummate the Transactions and obtain HSR Approval and (iv) defend or contest in good faith any Action brought by a third party that could otherwise prevent or impede, interfere with, hinder or delay in any material respect consummating the Transactions and obtaining HSR Approval.
(b)As set forth in the Certificate of Designations, the Acquired Shares shall be initially issued to the Investor without voting rights or conversion rights into Common Stock. After issuance and following the expiration or termination of the waiting period (and any extension thereof) under the HSR Act, the Acquired Shares shall gain the right to vote on an as-converted basis with the Common Stock and shall be convertible into Common Stock, in each case, pursuant to, and in accordance with, the terms of the Certificate of Designations. The Company and the Investor Parties shall, and shall cause their ultimate parent entities to, (i) make an appropriate filing of a Notification and Report Form (“HSR Form”) pursuant to the HSR Act as soon as practicable and in any event within ten (10) Business Days after the date of this Agreement, and request, if legally available, the early termination of any waiting period applicable to the Transactions under the HSR Act, (ii) supply as promptly as reasonably practicable any additional information and documentary material that may be requested pursuant to the HSR Act, in connection with such other filings or by any Governmental Authority, and use reasonable best efforts to promptly take any and all steps necessary to avoid or eliminate each and every impediment and obtain all consents that may be required pursuant to the HSR Act, in connection with such other filings or other applicable Law, so as to enable the parties hereto to consummate the Transactions and the voting and conversion rights to attach to the Acquired Shares as soon as reasonably practicable. Notwithstanding anything to the contrary in this Section 5.01, nothing in this Section 5.01 or this Agreement shall require or obligate any Investor Party to, and the Company shall not, without prior written consent of the Investor Parties, agree, propose, commit to, or effect, or otherwise be required, by consent decree, hold separate, or otherwise, any sale, divestiture, hold separate, or any other action otherwise limiting the freedom of action in any respect with respect to any businesses, products, rights, services, licenses, assets, or interest therein, of (A) the Investor Party or any Affiliate, or (B) the Company or any its Affiliates or subsidiaries.
(c)Each of the Company and the Investor Parties shall, and shall cause their Affiliates to, use their respective reasonable best efforts to (i) cooperate in all respects with the other party in connection with any filing or submission with a Governmental Authority in connection with the Transactions and in connection with any investigation or other inquiry by or before a Governmental Authority relating to the Transactions (including to determine whether a Governmental Authority has jurisdiction over the Transactions), (ii) keep the other party informed in all material respects and on a reasonably timely basis of any material communication received by the Company, the Investor Parties or their Affiliates, as the case may be, from or given by the Company, the Investor Parties or their Affiliates, as the case may be, to the Federal Trade Commission (“FTC”), the Department of Justice (“DOJ”) or any other Governmental Authority, in each case regarding the Transactions, (iii) subject to applicable Laws relating to the exchange of information, consult with the other party with respect to information relating to such party and its respective Subsidiaries, as the case may be, that appears in any filing made with, or written materials submitted to, any Governmental Authority in connection with the Transactions, other than “4(c) and 4(d) documents” as that term is used in the rules and regulations under the HSR Act and other confidential information contained in the HSR Form and (iv) to the extent
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permitted by the FTC, the DOJ or such other applicable Governmental Authority, give the other party the opportunity to attend and participate in meetings and conferences with the FTC, DOJ, or any other applicable Governmental Authority. Any documents or other materials provided pursuant to this Section 5.01(c) may be redacted or withheld as necessary to address reasonable privilege or confidentiality concerns, and to remove references concerning the valuation of the Company or other competitively sensitive material, and the parties may, as each deems advisable, reasonably designate any material provided under this Section 5.01(c) as “outside counsel only material”.
Section 1.02Corporate Actions. At any time that any Series A Preferred Stock and/or the Warrant is outstanding, the Company shall:
(a)from time to time take all lawful action within its control to cause the authorized capital stock of the Company to include a sufficient number of authorized but unissued shares of Common Stock to satisfy (x) the conversion requirements of all shares of the Series A Preferred Stock then outstanding and all accrued and unpaid dividends thereon, and (y) the exercise of the Warrant; and
(b)not effect any voluntary deregistration under the Exchange Act or any voluntary delisting of the Common Stock from the NYSE other than in connection with a Change of Control (as defined in the Certificate of Designations) with respect to which each holder of Series A Preferred Stock has elected (x) to exercise its conversion rights under Section 9 of the Certificate of Designations or (y) a Change of Control Redemption and the Company agrees to satisfy, or will otherwise cause the satisfaction in full of its obligations under Section 8 of the Certificate of Designations.
Section 1.03Public Disclosure. The Investor Parties and the Company, and their respective Affiliates, shall consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements with respect to the Transaction Documents or the Transactions, and shall not, and shall cause their respective Affiliates not to, issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable Law, Judgment, court process or the rules and regulations of any national securities exchange or national securities quotation system. The initial announcement (the “Initial Press Release”) with respect to the Transaction Documents or the Transactions shall be mutually agreed between the Investor and the Company. Notwithstanding the forgoing, this Section 5.03 shall not apply to any press release or other public statement made by the Company or the Investor Parties (a) which does not contain any information relating to the Transactions that has not been previously announced or made public in accordance with the terms of this Agreement or (b) is made in the ordinary course of business and does not relate specifically to the signing of the Transaction Documents or the Transactions. Notwithstanding anything to the contrary in this Agreement, in no event shall either this Section 5.03 or Section 5.04 limit disclosure by any Investor Party or any of their Affiliates of ordinary course communications regarding this Agreement and the Transactions to its existing or prospective general and limited partners, equityholders, members, managers and investors of any Affiliates of such Person who are subject to a confidentiality obligation with respect thereto, or
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disclosing public information about the Transactions on their websites in the ordinary course of business consistent with past practice or as part of any sales and Transfers to any co-investors.
Section 1.04Confidentiality. The Investor will, and will cause its Affiliates and Representatives who actually receive Confidential Information to, keep confidential any information (including oral, written and electronic information) concerning the Company, its Subsidiaries or its Affiliates that may be furnished to the Investor, its Affiliates or its or their respective Representatives by or on behalf of the Company or any of its Representatives pursuant to this Agreement (“Confidential Information”) and to use the Confidential Information solely for the purposes of monitoring, administering or managing the Investor Parties’ investment in the Company made pursuant to this Agreement; provided, that Confidential Information will not include information that (a) was or becomes available to the public other than as a result of a breach of any confidentiality obligation in this Agreement by the Investor or its Affiliates or their respective Representatives, (b) was or becomes available to the Investor or its Affiliates or their respective Representatives from a source other than the Company or its Representatives; provided that such source is reasonably believed by the Investor or such Affiliates not to be subject to an obligation of confidentiality (whether by agreement or otherwise), (c) at the time of disclosure is already in the possession of the Investor or its Affiliates or their respective Representatives from a source other than the Company or any of its Subsidiaries or any of their respective Representatives, (d) was independently developed by the Investor or its Affiliates or their respective Representatives without reference to, incorporation of, or other use of any Confidential Information or (e) from and after the Closing Date, the Investor’s participation in the Transactions contemplated by this Agreement; provided that the Investor may disclose Confidential Information (i) to its attorneys, accountants, consultants and financial and other professional advisors to the extent necessary to obtain their services in connection with its investment in the Company or the other Transactions contemplated by this Agreement, (ii) to any prospective purchaser of any Acquired Shares from the Investor, or prospective financing sources in connection with the syndication and marketing of any Permitted Loan, in each case, as long as such prospective purchaser or lender, as applicable, agrees to be bound by similar confidentiality or non-disclosure terms as are contained in this Agreement (with the Company as an express third party beneficiary of such agreement), (iii) to any Affiliate, partner, member, limited partners, prospective partners or co-investors, or related investment fund of the Investor and their Affiliates and their respective directors, officers, employees, consultants, financing sources and representatives, in each case in the ordinary course of business (provided that the recipients of such confidential information are directed to abide by the confidentiality and non-disclosure obligations contained herein), (iv) as may be reasonably determined by the Investor to be necessary in connection with the Investor’s enforcement of its rights in connection with this Agreement or its investment in the Company, or (v) as may otherwise be required by law or legal, judicial or regulatory process; and provided, further, that (x) any breach of the confidentiality and use terms herein by any Person to whom the Investor may disclose Confidential Information pursuant to clauses (i) and (iii) of the preceding proviso shall be attributable to such Investor Party for purposes of determining such Investor Party’s compliance with this Section 5.04, except those who have entered into a separate confidentiality or non-disclosure agreement or obligation with the Company and (y) that the Investor takes
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commercially reasonable steps (at the Company’s sole expense) to minimize the extent of any required disclosure described in clause (v) of the preceding proviso.
Section 1.05Standstill. Each Investor Party agrees with the Company, severally and not jointly, that, until the applicable Standstill Expiration Date, without the prior written approval of the Board, such Investor Party shall not, directly or indirectly, and shall cause its Affiliates not to:
(a)acquire, offer or seek to acquire, agree to acquire or make a proposal to acquire, whether by private or open market purchase, a block trade, a tender or exchange offer, beneficial ownership of, or any economic interest in, any right to direct the voting or disposition of, or any other right with respect to any equity or equity-linked securities of the Company or direct or indirect rights to acquire any equity securities or equity-linked of the Company, any securities convertible into or exchangeable for any such equity securities of the Company, any options puts, calls, swaps or other derivative or convertible instruments, hedging contracts or other derivative securities or contracts or instruments in any way related to the price of shares of Common Stock; provided, however, that restriction set forth in this Section 5.05(a) shall apply to a transaction only to the extent that, after giving effect to such transaction, such Investor Party and its Affiliates would beneficially own, in the aggregate, greater than 19.9% of the then-outstanding Common Stock;
(b)(i) make or in any way knowingly encourage or participate in any “solicitation” of “proxies” or consents (whether or not relating to the election or removal of directors), as such terms are used in the rules of the SEC (but without regard to the exclusion set forth in Rule 14a-1(l)(2)(iv)), to vote, or knowingly seek to advise, encourage or influence any Person with respect to voting of, any voting securities of the Company or any of its Subsidiaries or any securities convertible or exchangeable into or exercisable for any such securities, (ii) request, call or seek to call (or, for the avoidance of doubt, publicly support another Person’s request or call for) a meeting of the Company’s stockholders or action by written consent (or the setting of a record date therefor), (iii) initiate or be the proponent of any stockholder proposal for action by the Company’s stockholders, (iv) seek, alone or in concert with others, election to or to place a representative on the Board or nominate or propose the nomination of, or recommend the nomination of, any candidate to the Board, except as expressly set forth herein or in the Certificate of Designations, (v) seek, alone or in concert with others (including through any “withhold” or similar campaign), the removal of any director from the Board (other than, in the case of the Investor Parties, the Investor Designee), or (vi) become a “participant” in any contested “solicitation” (as such terms are defined or used under the Exchange Act) for the election of directors with respect to the Company;
(c)make any public announcement with respect to, or offer, seek, propose or indicate an interest in (in each case with or without conditions), either alone or in concert with others, any merger, consolidation, business combination, tender or exchange offer, recapitalization, reorganization or purchase of more than 50% of the assets, properties or securities of the Company or any Subsidiary of the Company, or any other extraordinary transaction involving the Company or any Subsidiary of the Company or any of their respective
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securities, or enter into any discussions, negotiations, arrangements, understandings or agreements (whether written or oral) with any other Person regarding any of the foregoing (it being understood that the foregoing shall not restrict any Investor Parties from tendering shares, receiving payment for shares or otherwise participating in any such transaction on the same basis as other stockholders of the Company);
(d)otherwise act, alone or in concert with others, to seek to control or influence, in any manner, the management, board of directors or business, of the Company or any of its Subsidiaries, including (i) controlling or changing the Board or management of the Company, including any plans or proposals to declassify the Board or to change the number or term of directors or to fill any vacancies on the Board (except as permitted herein or in the Certificate of Designations with respect to the Investor Designee), (ii) any material change in the capitalization, capital allocation policy or dividend policy of the Company, or (iii) seeking to have the Company waive or make amendments or modifications to the Company’s certificate of incorporation or bylaws, or other actions that may impede or facilitate the acquisition of control of the Company by any person;
(e)make any proposal or statement of inquiry or disclose any intention, plan or arrangement inconsistent with any of the foregoing;
(f)advise, assist, knowingly encourage or direct any Person to do, or to advise, assist, knowingly encourage or direct any other Person to do, any of the foregoing;
(g)take any action that would require the Company to make a public announcement regarding the possibility of a transaction or any of the events described in this Section 5.05;
(h)enter into any agreements, arrangements or understandings with any third party (including security holders of the Company, but excluding, for the avoidance of doubt, any Investor Party) with respect to any of the foregoing, including forming, joining or in any way participating in a “group” (as defined in Section 13(d)(3) of the Exchange Act) with any third party in connection with any of the foregoing;
(i)request the Company or any of its Representatives, directly or indirectly, to amend or waive any provision of this Section 5.05; provided that this clause shall not prohibit any Investor Party from making a confidential request to the Company seeking an amendment or waiver of the provisions of this Section 5.05, which the Company may accept or reject in its sole discretion, so long as any such request is made in a manner that does not require public disclosure thereof by any Person;
(j)contest the validity of this Section 5.05 or make, initiate, take or participate in any demand, Action (legal or otherwise) or proposal to amend, waive or terminate any provision of this Section 5.05;
provided, however, that nothing in this Section 5.05 will (1) limit any Investor Party’s ability to (A) vote, Transfer or Hedge (subject to this Agreement, including Section 5.06), (B) convert
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shares of Series A Preferred Stock into Common Stock, (C) exercise the Warrant, (D) acquire Preemptive Securities pursuant to Section 5.13, (E) privately make and submit to the Board any proposal that is intended by such Investor Party to be made and submitted on a non-publicly disclosed or announced basis (and would not reasonably be expect to require public disclosure by any Person), (F) participate in rights offerings made by the Company to all holders of its Common Stock, receive any dividends or similar distributions with respect to any securities of the Company held by such Investor Party, (G) tender shares of Common Stock or Series A Preferred Stock into any tender or exchange offer (subject to Section 5.06), or (H) effect an adjustment to the Conversion Rate pursuant to the Certificate of Designations or otherwise exercise rights under its Common Stock or Series A Preferred Stock that are not the subject of this Section 5.05, (2) limit the acquisition by any Investor Director of any equity securities of the Company pursuant to (x) the grant or vesting of any equity compensation awards granted by the Company to any Investor Director, or (y) the exercise of any stock options, restricted stock units, or similar awards relating to any equity securities granted by the Company to any Investor Director, or (3) limit the ability of the Investor Director to vote or otherwise exercise his or her legal duties or otherwise act in his or her capacity as a member of the Board.
For purposes of this Section 5.05, the “Standstill Expiration Date” shall mean the date upon which (i) any Person shall have entered into a binding definitive agreement that has been approved the Board to acquire more than 50% of the outstanding voting securities of the Company, (ii) any Person commences an exchange or tender offer which, if consummated, would result in such Person’s acquisition of beneficial ownership of more than 50% of the outstanding voting securities of the Company and the Board does not recommend against such transaction within ten (10) Business Days of the commencement thereof or (iii) any Person shall have entered into a binding definitive agreement that has been approved by the Board to undertake a transaction that would constitute a Change of Control (as defined in the Certificate of Designations) other than those contemplated in clause (i) and (ii) of this paragraph.
Following the Closing and until the occurrence of the Fall-Away of Investor Board Rights, the Company shall invite the Investor to participate in any process commenced by the Company that could reasonably be expected to lead to (x) any transaction of the type described in clause (i) and (ii) of the immediately preceding paragraph (to the extent that the Company has prior notice of such events) and/or (y) a Change of Control (as defined in the Certificate of Designations) (collectively, an “Acquisition Proposal”). The Company shall provide in reasonable detail notice to Investor of any such process promptly following commencement thereof, and shall negotiate and cooperate in good faith with the Investor to enable the Investor’s participation in said process, subject to applicable Laws. The Company will promptly provide the Investor reasonable access to all facilities, personnel, management, documents and other information relating to the Company, and its business, products and technology to enable the Investor to conduct a due diligence investigation customary in a merger and acquisition context, which such access in either case will be no less extensive than that provided to any other party that has made or is contemplating making or has been invited by the Company to make an Acquisition Proposal.
Section 1.06Transfer Restrictions.
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(a)Except as otherwise permitted in this Agreement, including Section 5.06(b), until the expiration of the Lock-Up Period, each Investor Party agrees with the Company, severally and not jointly, that such Investor Party will not Transfer any Series A Preferred Stock or any Common Stock issued upon conversion of the Series A Preferred Stock or upon exercise of the Warrant or Hedge any Series A Preferred Stock or Common Stock.
(b)Notwithstanding Section 5.06(a), each Investor Party shall be permitted to Transfer any portion or all of their Series A Preferred Stock or Common Stock issued or issuable upon conversion of the Series A Preferred Stock at any time under the following circumstances:
(i)Transfers to any Permitted Transferees (but only if the transferee executes and delivers to the Company a Joinder in the form set forth in Exhibit C (or as may otherwise be reasonably agreed by the Company) agreeing to be bound by the terms of this Agreement) and if the transferee and the transferor agree for the express benefit of the Company that the transferee shall Transfer the Series A Preferred Stock or Common Stock so Transferred back to the transferor at or before such time as the transferee ceases to be a Permitted Transferee of the transferor;
(ii)Transfers pursuant to a merger, tender offer or exchange offer or other business combination, acquisition of assets or similar transaction or any change of control transaction involving the Company or any Subsidiary that, in each case, is approved by the Board;
(iii)Transfers pursuant to a tender offer or exchange offer that is (A) approved by the Board prior to the one-year anniversary of the Closing Date, (B) for less than all of the outstanding shares of Common Stock of the Company prior to the one-year anniversary of the Closing Date or (C) part of a two-step transaction in which a tender offer is followed by a second step merger, in which the consideration to be received in the first step of such transaction is not identical to the amount or form of consideration to be received in the second step merger;
(iv)Transfers to the Company or any of its Subsidiaries or that have been approved in writing by the Board;
(v)Transfers in connection with a bona fide loan or other financing arrangement, in each case entered into with a nationally recognized financial institution, including a pledge to such a financial institution to secure a bona fide debt financing and any foreclosure by such financial institution or transfer to such financial institution in lieu of foreclosure and subsequent sale of the securities (each, a “Permitted Loan”). Nothing contained in this Agreement or the Registration Rights Agreement shall prohibit or otherwise restrict the ability of any lender (or its securities’ affiliate) or collateral agent to foreclose upon, or accept a Transfer in lieu of foreclosure, and sell, dispose of or otherwise Transfer the Series A Preferred Stock and/or shares of Common Stock issued upon conversion of Series A Preferred Stock or upon exercise of the Warrant (including shares of Common Stock received upon conversion or redemption of the Series A Preferred Stock following foreclosure or Transfer in lieu of foreclosure on a Permitted Loan) mortgaged, hypothecated and/or pledged to secure the obligations of the borrower following an event of default under a Permitted Loan. Subject to the
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preceding provisions of this clause (vi) and Section 5.06(c), in the event that any lender or other creditor under a Permitted Loan transaction (including any agent or trustee on their behalf) or any Affiliate of the foregoing exercises any rights or remedies in respect of the Series A Preferred Stock or the shares of Common Stock issuable or issued upon conversion of the Series A Preferred Stock or upon exercise of the Warrant or any other collateral for any Permitted Loan, no lender, creditor, agent or trustee on their behalf or affiliate of any of the foregoing (other than, for the avoidance of doubt, any Investor Party or its Affiliates) shall be entitled to any rights or have any obligations or be subject to any transfer restrictions or limitations hereunder except and to the extent for those expressly provided for in Registration Rights Agreement.
(c)Notwithstanding Section 5.06(a) and Section 5.06(b), each Investor Party will not at any time knowingly (after reasonable inquiry), directly or indirectly (without the prior written consent of the Board), Transfer any Series A Preferred Stock or Common Stock issued or issuable upon conversion of the Series A Preferred Stock or upon exercise of the Warrant (x) to a Competitor or an Activist Shareholder, and (y) any Person (other than the Company or its Subsidiaries) that, together with its Affiliates, to the knowledge of such Investor Party at the time it enters into such transaction (after reasonable inquiry), would hold 5% or more of the outstanding Common Stock after giving effect to such transfer; provided, that the restrictions set forth in this Section 5.06(c) shall not apply to (i) Transfers into the public market pursuant to a bona fide, broadly distributed underwritten public offering, in each case made pursuant to the Registration Rights Agreement or through a bona fide sale to the public without registration effectuated pursuant to Rule 144 under the Securities Act, (ii) any Transfer of shares of Series A Preferred Stock or Common Stock issued upon conversion of the Series A Preferred Stock in connection with any foreclosure or exercise of remedies under a Permitted Loan, (iii) any transfer in connection with a transaction described in Section 5.06(b)(ii) through Section 5.06(b)(v), or a transaction otherwise approved by the Board. None of the Investor Parties shall be deemed to have breached its obligations under this Section 5.06(c) as it relates to any Activist Shareholder with respect to a Transfer of Series A Preferred Stock or Common Stock issued upon conversion of the Series A Preferred Stock to any Person so long as such Investor Party acts in good faith, based on generally available public information and the advice of its financial advisors, to determine whether such Person is an Activist Shareholder.
(d)The restrictions set forth in this Section 5.06 shall terminate automatically upon the commencement by the Company or one of its significant Subsidiaries (as such term is defined in Rule 12b-2 under the Exchange Act) of bankruptcy, insolvency or other similar proceedings.
(e)Any attempted Transfer in violation of this Section 5.06 shall be null and void ab initio.
Section 1.07Legend. (a) All certificates or other instruments representing the Acquired Shares or Common Stock issued upon conversion of the Acquired Shares will bear a legend substantially to the following effect:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
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AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER RESTRICTIONS SET FORTH IN AN INVESTMENT AGREEMENT, DATED AS OF APRIL 29, 2024, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE ISSUER.
(a)(i) Upon request of any Investor Party, upon receipt by the Company of an opinion of counsel reasonably satisfactory to the Company to the effect that such legend is no longer required under the Securities Act and applicable state securities Laws, the Company shall promptly cause the first paragraph of the legend to be removed from any certificate for Series A Preferred Stock or Common Stock to be Transferred in accordance with the terms of this Agreement and (ii) the second paragraph of the legend shall be removed upon the expiration of such transfer restrictions set forth in this Agreement (and, for the avoidance of doubt, immediately prior to any termination of this Agreement).
Section 1.08Election of Directors. (a) Effective as of the Closing, the Company will increase the size of the Board in order to appoint Brian N. Sheth (the “Initial Investor Director Designee”) to the Board to serve as a director of the Company. The Initial Investor Director Designee shall serve for a term expiring at the 2025 annual meeting of the Company’s stockholders and until his or her successor is duly elected and qualified.
(a)Upon the occurrence of the Fall-Away of Investor Board Rights, at the request of the Board, the Investor Director shall immediately resign, and the Investor Parties shall cause such Investor Director immediately to resign from the Board and any committee thereof effective as of the date of the Fall-Away of Investor Board Rights, and the Investor Parties shall no longer have any rights under this Section 5.08, including, for the avoidance of doubt, any designation or nomination rights under Section 5.08(c). Investor shall provide prompt written notice to the Company upon occurrence of the Fall-Away of Investor Board Rights.
(b)Following the Closing and until the occurrence of the Fall-Away of Investor Board Rights, at any annual meeting of the Company’s stockholders at which the term of the Investor Director shall expire, the Investor Parties shall have the right to designate an Investor Designee to the Board at such annual meeting for election to the Board at such annual meeting. The Company shall include the Investor Designee designated by the Investor Parties in accordance with this Section 5.08(c) in the Company’s slate of nominees for the applicable annual meeting of the Company’s stockholders and shall recommend that the holders of Common Stock vote in favor of any such Investor Designee’s election and shall support the Investor Designee in a manner no less rigorous and favorable than the manner in which the Company supports its other nominees in the aggregate. Without the prior written consent of the Investor Parties, so long as such Investor Parties is entitled to designate an Investor Designee for
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election to the Board in accordance with this Section 5.08, the Board shall not remove the Investor Director from his or her directorship (except as required by Law, the Certificate of Designations or the Company Charter Documents or as required by the Company’s governance and similar policies applicable to all directors).
(c)In the event of the death, disability, resignation or removal of the Investor Director as a member of the Board (other than resignation pursuant to Section 5.08(b)), the Investor Parties, if it is entitled to nominate a director pursuant to this Section 5.08, may designate an Investor Designee to replace such Investor Director and, subject to Section 5.08(e) and any applicable provisions of the DGCL, the Company shall take all actions necessary at any time and from time to time to cause the vacancy created thereby to be filled by such Investor Designee and to cause the Board to elect such designee to the Board as soon as possible.
(d)The Company’s obligations to have any Investor Designee elected to the Board or any committee thereof or nominate any Investor Designee for election as a director at any meeting of the Company’s stockholders pursuant to this Section 5.08, as applicable, shall in each case be subject to such Investor Designee’s satisfaction of all requirements regarding service as a director of the Company or member of such committee under applicable Law and stock exchange rules regarding service as a director of the Company or member of such committee and all other criteria and qualifications for service as a director or member of such committee applicable to all directors of the Company, including the Company’s Code of Conduct, Corporate Governance Guidelines and Insider Trading Policy. The Investor Parties will cause each Investor Designee to make himself or herself reasonably available for interviews and to consent to such reference and background checks or other investigations as the Board may reasonably request to determine the Investor Designee’s eligibility and qualification to serve as a director of the Company or member of such committee. No Investor Designee shall be eligible to serve on the Board if he or she has been involved in any of the events enumerated under Item 2(d) of Schedule 13D under the Exchange Act or Item 401(f) of Regulation S-K under the Securities Act, is a “Bad Actor” as defined in Rule 506(d)(1)(i)-(viii) promulgated under the Securities Act or is subject to any Judgment prohibiting service as a director of any public company. As a condition to any Investor Designee’s election to the Board or nomination for election as a director of the Company at any meeting of the Company’s stockholders, the Investor Parties and the Investor Designee must provide to the Company:
(i)all information reasonably requested by the Company that is required to be or is customarily disclosed for directors, candidates for directors and their respective Affiliates and Representatives in a proxy statement or other filings in accordance with applicable Law, any stock exchange rules or listing standards or the Company Charter Documents or corporate governance guidelines, in each case, relating to the Investor Designee’s election as a director of the Company or the Company’s operations in the ordinary course of business;
(ii)all information reasonably requested by the Company in connection with assessing eligibility and other criteria applicable to directors or satisfying compliance and legal or regulatory obligations, in each case, (1) relating to the Investor Designee’s nomination or election, as applicable, as a director of the Company or the Company’s operations in the ordinary
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course of business and (2) to the same extent requested or required of other candidates for appointment or election to the Board; and
(iii)an undertaking in writing by the Investor Designee to be subject to, bound by and duly comply with the Company’s Corporate Governance Guidelines, Code of Conduct and Insider Trading Policy with such changes thereto (or such successor policies) as are applicable to all other directors, in each case, as such changes or successor policies are adopted in good faith by the Board of Directors, and do not by their terms materially, adversely and disproportionately impact the Investor Designee relative to all other directors; provided that no such code of conduct or Insider Trading Policy shall restrict any Transfer of securities by any of the Investor Parties or any of their respective Affiliates (other than with respect to the Investor Director solely in his or her individual capacity).
(e)Subject to Section 5.08(e), the Company shall, effective as of the Closing and until the occurrence of the Fall-Away of Investor Board Rights, cause the Compensation Committee of the Board to include the Investor Director.
(f)The Company shall indemnify each Investor Director and provide the Investor Director with director and officer insurance to the same extent as it indemnifies and provides such insurance to other members of the Board, pursuant to the Company Charter Documents, the DGCL or otherwise. The Company acknowledges and agrees that it (1) is the indemnitor of first resort (i.e., its obligations to the Investor Director are primary and any obligation of the Investor Group or their Affiliates to advance expenses or to provide indemnification for the same expenses or liabilities incurred by any Investor Director are secondary) and (2) shall be required to advance the amount of expenses incurred by the Investor Director and shall be liable for the amount of all expenses and liabilities incurred by the Investor Director, in each case to the same extent as it indemnifies and provides such insurance to other members of the Board, pursuant to the Company Charter Documents, the DGCL or otherwise, without regard to any rights the Investor Director may have against the Investor Group or their Affiliates.
(g)Prior to the Fall-Away of Investor Board Rights, the Company shall not decrease the size of the Board or the Compensation Committee without, in each case, the consent of the Investor Group if such decrease would require the resignation of the Investor Designee from the Board or the Compensation Committee, respectively.
(h)The parties hereto agree that the Investor Director shall be entitled to reimbursement from the Company for the reasonable out-of-pocket fees or expenses incurred in connection with his or her service as a director of the Board, in each case, in a manner consistent with the Company’s practices with respect reimbursement for other members of the Board, including reimbursement pursuant to customary indemnification arrangements. The Investor Director shall not be entitled to receive any other compensation from the Company for his or her service, including compensation to which the Investor Director would otherwise be entitled pursuant to the Company’s outside director compensation policy.
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(i)As soon as practicable (but in no event later than five (5) Business Days) following the receipt of HSR Approval, the Company shall take all necessary steps to duly adopt and file with the Secretary of State of the State of Delaware an amended Certificate of Designations incorporating the right of holders of the Series A Preferred Stock to nominate and designate the Investor Director on the same terms and subject to the same conditions as set forth in this Section 5.08, and otherwise substantially identical to the Certificate of Designations attached hereto as Exhibit A, and shall deliver a certified copy of such amended Certificate of Designations to the Investor promptly upon effectiveness.
Section 1.09 Tax Matters. (a) The Company and its paying agent shall be entitled to deduct and withhold any and all Taxes that may be imposed with respect to any payments made (or deemed made) on the Series A Preferred Stock or Common Stock or other securities issued upon conversion of the Series A Preferred Stock or upon exercise of the Warrant to the extent required by the Code, Treasury Regulations or other applicable Law; provided, that to the extent that an Investor Party has previously delivered an appropriate Internal Revenue Service (“IRS”) Form W-8 or W-9 to the Company establishing an exemption for U.S. federal withholding (including backup withholding), the Company shall not be permitted to withhold unless the Company has provided the Investor advance written notice of its intent to withhold at least five (5) days prior to the payment of the amount subject to withholding, and has given the Investor a reasonable opportunity to provide any form or certificate available to reduce or eliminate such withholding. Prior to or as of the Closing Date or, in the case of a Permitted Transferee, the date such Permitted Transferee first acquires any Series A Preferred Stock or other securities issued upon conversion of Series A Preferred Stock (or first acquires the Warrant or other securities issued upon exercise of the Warrant), each Investor Party shall deliver to the Company or its paying agent a duly executed, accurate and properly completed IRS Form W-8 or W-9, as applicable. If the information on any such form provided by such Investor Party changes, or upon the Company’s reasonable request, such Investor Party shall provide the Company with an updated version of such form. Within a reasonable amount of time after making such withholding payment, the Company shall furnish the Investor Party with copies of any tax certificate, receipt or other documentation reasonably acceptable to the Investor Party evidencing such payment.
(a)Absent a change in law or a contrary determination (as defined in Section 1313(a) of the Code), the Investor Parties and the Company agree not to treat the Series A Preferred Stock as “preferred stock” within the meaning of Section 305 of the Code and Treasury Regulation Section 1.305-5 for United States federal income tax purposes, and shall not take a U.S. federal income tax position inconsistent with such treatment for purposes of filing any applicable Tax Returns.
(b)The Company shall pay any and all documentary, stamp and similar issue or transfer Tax due on (x) the original issue of the Series A Preferred Stock, (y) the issue of shares of Common Stock upon conversion of the Series A Preferred Stock, and (z) the issue of shares of Common Stock upon exercise of the Warrant. However, in the case of conversion of Series A Preferred Stock or exercise of the Warrant, the Company shall not be required to pay any Tax or duty that may be payable in respect of any Transfer involved in the issue and delivery
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of shares of Common Stock to a beneficial owner other than the beneficial owner of the Series A Preferred Stock immediately prior to such conversion or of the Warrant immediately prior to such exercise, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Company the amount of any such Tax or duty, or has established to the satisfaction of the Company that such Tax or duty has been paid.
(c)Upon the reasonable request of an Investor Party that is not a “United States person” within the meaning of Section 7701(a)(30) of the Code, and to the extent required by applicable Law in order to eliminate potential U.S. federal income tax withholdings, the Company shall provide a duly executed and correctly completed statement, in accordance with Treasury Regulations Sections 1.897-2(h) and 1.1445-2(c)(3) (or any successor Treasury Regulations thereto), that the Series A Preferred Stock is not a U.S. real property interest.
(d)For U.S. federal income tax purposes, and as soon as reasonably practicable following the Closing Date (which shall in no event be later than 90 days following the Closing Date), the Investor Parties and the Company shall allocate the Purchase Price paid for the Acquired Shares as between the Warrant and the Acquired Shares based on their relative fair market values (the “Allocation”), with the applicable Purchase Price paid by the Investor Parties for the Acquired Shares thereby being effectively reduced by the amount allocated to the Warrant (as determined on a per share basis). The Investor Parties and the Company shall not take any U.S. federal income tax position that is inconsistent with the Allocation for purposes of filing any applicable Tax Returns.
Section 1.10Use of Proceeds. The Company shall use the proceeds from the issuance and sale of the Acquired Shares to fully repay borrowings under the Existing Credit Agreement and for general corporate purposes.
Section 1.11Corporate Opportunities. In recognition and anticipation that (1) certain directors, principals, partners, officers, employees and/or other representatives of the Investor and its Affiliates may serve as directors, officers or agents of the Company, (2) the Investor and its Affiliates may now engage and may continue to engage, and/or may in the future engage, in the same or similar activities or related lines of business as those in which the Company or its Affiliates, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Company, directly or indirectly, may engage or proposes to engage, and (3) members of the Board who are not employees of the Company or its subsidiaries (the “Non-Employee Directors”) and their respective Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Company, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Company, directly or indirectly, may engage or proposes to engage, the provisions of this Section 5.11 are set forth to regulate and define the conduct of certain affairs of the Company with respect to certain classes or categories of business opportunities as they may involve the Investor, the Non-Employee Directors or their respective Affiliates, as applicable, and the powers, rights, duties and liabilities of the Company and its directors, officers and stockholders in connection therewith. None of (1) the Investor or any of its Affiliates, or (2) any Non-Employee Director or his or her Affiliates (the Persons identified in (1) and (2) above being referred to, collectively, as “Identified Persons” and, individually, as an
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“Identified Person”) shall, to the fullest extent permitted by law, have any duty to refrain from, directly or indirectly, (A) engaging in the same or similar business activities or lines of business in which the Company or any of its Affiliates now engages or proposes to engage or (B) otherwise competing with the Company or any of its Affiliates, and, to the fullest extent permitted by law, no Identified Person shall be liable to the Company or its stockholders or to any Affiliate of the Company for breach of any fiduciary duty solely by reason of the fact that such Identified Person engages in any such activities. To the fullest extent permitted by law, the Company, on behalf of itself and any Subsidiaries, hereby renounces any interest or expectancy in, or right to be offered an opportunity to participate in, any business opportunity that may be a corporate opportunity for an Identified Person and the Company or any of its Affiliates. Subject to the following sentence, in the event that any Identified Person acquires knowledge of a potential transaction or other business opportunity that may be a corporate opportunity for itself, herself or himself and the Company or any of its Affiliates, such Identified Person shall, to the fullest extent permitted by law, have no duty to communicate or offer or otherwise make available such transaction or other business opportunity to the Company or any of its Affiliates and, to the fullest extent permitted by law, shall not be liable to the Company or its stockholders or to any Affiliate of the Company for breach of any fiduciary duty as a stockholder, director or officer of the Company solely by reason of the fact that such Identified Person pursues or acquires such corporate opportunity for itself, herself or himself, or offers or directs such corporate opportunity to another Person or does not communicate information regarding such corporate opportunity to the Company. The Company, on behalf of itself and each of its Subsidiaries, (x) acknowledges that the Identified Persons may now own, may continue to own, and from time to time may acquire and own, investments in one or more other entities (each such entity, a “Related Company” and all such entities, collectively, “Related Companies”) that are direct competitors of, or that otherwise may have interests that do or could conflict with those of, the Company, any of its Subsidiaries, any of the Company’s stockholders or any of their respective Affiliates, and (y) agree that (A) the enjoyment, exercise and enforcement of the rights, interests, privileges, powers and benefits granted or available to the Identified Persons under this Agreement shall not be in any manner reduced, diminished, affected or impaired, and the obligations of the Identified Persons under this Agreement (if any) shall not be in any manner augmented or increased, by reason of any act, circumstance, occurrence or event arising from or in any respect relating to (1) the ownership by an Identified Person of any interest in any Related Company, (2) the affiliation of any Related Company with an Identified Person or (3) any action taken or omitted by any Related Company or an Identified Person in respect of any Related Company, (B) no Identified Person who is not an Investor Director shall, by reason of such ownership, affiliation or action, become subject to any fiduciary duty to the Company, any of its Subsidiaries, any of the Company’s stockholders or any of their respective Affiliates, (C) none of the duties imposed on an Identified Person who is not an Investor Director, whether by contract or law, do or shall limit or impair the right of any Identified Person lawfully to compete with the Company, any of its Subsidiaries, any of the Company’s stockholders or any of their respective Affiliates as if the Identified Persons were not a party to this Agreement, and (D) to the fullest extent permitted by Delaware Law, the Identified Persons are not and shall not be obligated to disclose to the Company, any of its Subsidiaries, any of the Company’s stockholders or any of their respective Affiliates any information related to their respective businesses or opportunities, including acquisition opportunities, or to refrain from or in any respect to be restricted in competing against the Company, any of its Subsidiaries, any of the Company’s stockholders or any of their respective Affiliates in any such business or as to any such opportunities.
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Notwithstanding the foregoing, the Company does not renounce its interest in any corporate opportunity offered to any Non-Employee Director (including any Non-Employee Director who serves as an officer of this Company) if such opportunity is offered to such person solely in his or her capacity as a director or officer of the Company, and this section shall not apply to any such corporate opportunity. In addition to and notwithstanding the foregoing provisions of this Agreement or anything to the contrary in the Certificate of Designations, to the fullest extent permitted by law, a potential corporate opportunity shall not be deemed to be a corporate opportunity for the Company if it is a business opportunity that (1) the Company is neither financially or legally able, nor contractually permitted to undertake, (2) from its nature, is not in the line of the Company’s business or is of no practical advantage to the Company, or (3) is one in which the Company has no interest or reasonable expectancy.
Section 1.12Haveli Sponsor.
(a)Notwithstanding anything to the contrary set forth in this Agreement, none of the terms or provisions of this Agreement (including, for the avoidance of doubt, Section 5.05) shall in any way limit the activities of Haveli Sponsor or any of its Affiliates, other than the Investor Parties Affiliated with the Haveli Sponsor, in their businesses distinct from the investment business of Haveli Sponsor (the “Excluded Sponsor Parties”), so long as (i) no such Excluded Sponsor Party or any of its Representatives is acting on behalf of or at the direction of any Investor Party with respect to any matter that otherwise would violate any term or provision of this Agreement and (ii) no Confidential Information is made directly available to any Excluded Sponsor Party or any of its Representatives who are not involved in the investment business of Haveli Sponsor by or on behalf of any Investor Party or any of their Representatives, except with respect to any such Representative who is (x) compliance personnel for compliance purposes and (y) non-compliance personnel of Haveli Sponsor who are directors or officers of, or function in a similar oversight role at, such Affiliate as long as Confidential Information is not otherwise disclosed to such Affiliate.
(b)The Investor Parties and the Company hereby agree that, to the maximum extent permitted by Law, when any Investor Party takes any action under this Agreement to give or withhold its consent, such Investor Party shall have no duty (fiduciary or other) to consider the interests of the Company or the other stockholders of the Company and may act exclusively in its own interest; provided, however, that the foregoing shall in no way affect the obligations of the parties hereto to comply with the provisions of this Agreement. For the avoidance of doubt, the foregoing sentence shall not limit or otherwise affect the fiduciary duties of the Investor Director or Investor Designee.
Section 1.13Preemptive Rights.
(a)From and after the Closing, if the Company makes any public or non-public offering of any capital stock of, other equity or voting interests in, or equity-linked securities of, the Company or any securities that are convertible or exchangeable into (or exercisable for) capital stock of, other equity or voting interests in, or equity-linked securities of, the Company (collectively “Preemptive Securities”), including, for the purposes of this Section 5.13, warrants, options or other such rights (any such security, a “New Security”) (other than
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(1) issuances of Preemptive Securities to directors, officers, employees, consultants or other agents of the Company, (2) issuances of Preemptive Securities pursuant to an employee stock option plan, management incentive plan, restricted stock plan, stock purchase plan or stock ownership plan or similar benefit plan, program or agreement, (3) issuances made as consideration for any bona fide acquisition (by sale, merger in which the Company is the surviving corporation, or otherwise) by the Company or any of its Subsidiaries of equity in, or assets of, another Person, business unit, division or business, (4) issuances of any securities issued as a result of a stock split, stock dividend, reclassification or reorganization or similar event, (5) issuances of Preemptive Securities in connection with a bona fide research, collaboration, technology license, development, OEM, marketing or other strategic partnership or commercial arrangement with a Person that is not an Affiliate of the Company or any of its Subsidiaries (other than (x) any such strategic partnership or commercial arrangement with a private equity firm or similar financial institution or (y) an issuance the primary purpose of which is the provision of financing), (6) securities issued pursuant to the conversion, exercise or exchange of Series A Preferred Stock issued to the Investor Parties, and (7) shares of a Subsidiary of the Company issued to the Company or a wholly owned Subsidiary of the Company), each Investor Party shall be afforded the opportunity to acquire from the Company such Investor Party’s Preemptive Rights Portion of such New Securities for the same price as that offered to the other purchasers of such New Securities; provided, that, subject to compliance with the terms and conditions set forth in Section 5.13(f), the Investor Parties shall not be entitled to acquire any New Securities pursuant to this Section 5.13(f)to the extent the issuance of such New Securities to the Investor Parties would require approval of the stockholders of the Company as a result of the status, if applicable, of any Investor Party as an Affiliate of the Company or pursuant to the rules and listing standards of the NYSE (including NYSE Listed Company Manual Section 312.03(c)), in which case, subject to the terms and conditions of Section 5.13(f), the Company may consummate the proposed issuance of New Securities to other Persons prior to obtaining approval of the stockholders of the Company; provided, further, however, that the Company shall still be obligated to provide written notice of any such proposed issuance of New Securities to the Investor Parties pursuant to Section 5.13(c), which notice shall include, in addition to the other information as required by Section 5.13(c), a description of any New Securities (including the number thereof) that would require stockholder approval in respect of the issuance thereof to the Investor Parties (the “Restricted Issuance Information”).
(b)Subject to the foregoing proviso in Section 5.13(a), the amount of New Securities that each Investor Party shall be entitled to purchase in the aggregate shall be determined by multiplying (1) the total number of New Securities by (2) a fraction, the numerator of which is the number of shares of Acquired Shares and/or shares of Common Stock issued upon conversion of Acquired Shares (in the aggregate and on an as converted basis) held by such Investor Party, as of such date, and the denominator of which is the aggregate number of shares of Common Stock held by all stockholders of the Company (on an as converted basis) outstanding as of such date (the “Preemptive Rights Portion”).
(c)If the Company proposes to offer New Securities, it shall give each Investor Party written notice of its intention, describing the anticipated price (or range of anticipated prices), anticipated amount of New Securities and other material terms and timing
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upon which the Company proposes to offer the same (including, in the case of a registered public offering and to the extent possible, a copy of the prospectus included in the registration statement filed with respect to such offering) at least five (5) Business Days prior to such issuance (or, in the case of a registered public offering, at least five (5) Business Days prior to the commencement of such registered public offering) (provided, that, to the extent the terms of such offering cannot reasonably be provided five (5) Business Days prior to such issuance, notice of such terms may be given as promptly as reasonably practicable but in any event prior to such issuance). The Company may provide such notice to such Investor Party on a confidential basis prior to public disclosure of such offering. Other than in the case of a registered public offering, such Investor Party may notify the Company in writing at any time on or prior to the second (2nd) Business Day immediately preceding the date of such issuance (or, if notice of all such terms has not been given prior to the second (2nd) Business Day immediately preceding the date of such issuance, at any time prior to such issuance) whether such Investor Party will exercise such preemptive rights and as to the amount of New Securities such Investor Party desires to purchase, up to the maximum amount calculated pursuant to Section 5.13(b). In the case of a registered public offering, any Investor Party may notify the Company in writing at any time prior to the second (2nd) Business Day immediately preceding the date of commencement of such registered public offering (or, if notice of all such terms has not been given prior to the second (2nd) Business Day immediately preceding the date of commencement of such registered public offering, at any time prior to the date of commencement of such registered public offering) whether such Investor Party will exercise such preemptive rights and as to the amount of New Securities such Investor Party desires to purchase, up to the maximum amount calculated pursuant to Section 5.13(b). Such notice to the Company shall constitute a binding commitment by such Investor Party to purchase the amount of New Securities so specified at the price and other terms set forth in the Company’s notice to it. Subject to receipt of the requisite notice of such issuance by the Company, the failure of such Investor Party to respond prior to the time a response is required pursuant to this Section 5.13(c) shall be deemed to be a waiver of such Investor Party’s purchase rights under this Section 5.14 only with respect to the offering described in the applicable notice.
(d)Each Investor Party shall purchase the New Securities that it has elected to purchase under this Section 5.13 concurrently with the related issuance of such New Securities by the Company (subject to the receipt of any required approvals from any Governmental Authority to consummate such purchase by such Investor Party); provided, that if such related issuance is prior to the twentieth (20th) Business Day following the date on which such Investor Party has notified the Company that it has elected to purchase New Securities pursuant to this Section 5.13, then each Investor Party shall purchase such New Securities within twenty (20) Business Days following the date of the related issuance. If the proposed issuance by the Company of securities which gave rise to the exercise by the Investor Parties of their preemptive rights pursuant to this Section 5.13 shall be terminated or abandoned by the Company without the issuance of any New Securities, then the purchase rights of the Investor Parties pursuant to this Section 5.13 shall also terminate as to such proposed issuance by the Company (but not any subsequent or future issuance), and any funds in respect thereof paid to the Company by the Investor Parties in respect thereof shall be promptly refunded in full.
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(e)In the case of the offering of securities for consideration in whole or in part other than cash, including securities acquired in exchange therefor (other than securities by their terms so exchangeable), the consideration other than cash shall be deemed to be the fair value thereof as reasonably determined by the Board; provided, however, that such fair value as determined by the Board shall not exceed the aggregate market price of the securities being offered as of the date the Board authorizes the offering of such securities.
(f)In the event that the Investor Parties are not otherwise entitled to acquire any New Securities pursuant to the proviso in Section 5.13(a) because such issuance would require the Company to obtain stockholder approval in respect of the issuance of such New Securities to the Investor Party as a result of the status, if applicable, of any Investor Party as an Affiliate of the Company or pursuant to the rules and listing standards of the NYSE (including NYSE Listed Company Manual Section 312.03(c)), the Company shall, upon the Investor Parties’ reasonable request delivered to the Company in writing within no later than three (3) Business Days following receipt of the written notice of such issuance to the Investor Parties pursuant to Section 5.13(c) (together with the Restricted Issuance Information), at the Investor Parties’ election:
(i)waive the restrictions set forth in Section 5.05 solely to the extent necessary to permit any Investor Party to acquire such lesser number of securities of the Company (including Common Stock) that would otherwise constitute its Preemptive Rights Portion of the New Securities such Investor Party would be entitled to purchase had it been entitled to acquire such Proposed Securities pursuant to Section 5.14(b) (provided, that such request by Investor Parties shall not be deemed to be a violation of Section 5.05);
(ii)consider and discuss in good faith any modifications proposed by the Investor Parties to the terms and conditions of such portion of the New Securities which would otherwise constitute the Investor Parties’ Preemptive Rights Portion but for the proviso in Section 5.13(a) such that the Company would not be required to obtain stockholder approval in respect of the issuance of such New Securities as so modified to the Investor Parties; and/or
(iii)solely to the extent that stockholder approval is required in connection with the issuance of any such New Securities to Persons other than the Investor Parties in connection with the relevant issuance, take such actions as may be reasonably necessary to seek stockholder approval in respect of the issuance of the full Preemptive Rights Portion of the New Securities to the Investor Parties in such issuance.
(g)The election by any Investor Party to not exercise its subscription rights under this Section 5.13 in any one instance shall not affect its rights as to any subsequent proposed issuance. Upon the expiration of the offering period described in Section 5.13(c), the Company will be free to sell such New Securities that the Investor Parties have not elected to purchase during the ninety (90) days following such expiration on terms and conditions no more favorable to the purchasers thereof than those offered to the Investor Parties in the notice delivered in accordance with Section 5.13(b). Any New Securities offered or sold by the Company after such ninety (90)-day period must be reoffered to the Investor Parties pursuant to this Section 5.13.
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(h)The Company and the Investor Parties shall cooperate in good faith to facilitate the exercise of the Investor Parties’ rights pursuant to this Section 5.13 including using reasonable best efforts to secure any required approvals or consents.
Section 1.14Section 16 Matters. If the Company becomes a party to a consolidation, merger or other similar transaction, or if the Company proposes to take or omit to take any other action under Section 5.13 (including granting to the Investor Parties or their respective Affiliates the right to participate in any issuance of securities) or otherwise or if there is any event or circumstance that may result in the Investor, its Affiliates and/or the Investor Director being deemed to have made a disposition or acquisition of equity securities of the Company or derivatives thereof for purposes of Section 16 of the Exchange Act (including the purchase by the Investor or any of its Affiliates of any securities under Section 5.13), and if the Investor Director is serving on the Board at such time or has served on the Board during the preceding six (6) months (i) the Board or a committee thereof composed solely of two or more “non-employee directors” as defined in Rule 16b-3 of the Exchange Act will pre-approve such acquisition or disposition of equity securities of the Company or derivatives thereof for the express purpose of exempting the Investor and its Affiliates’ and the Investor Director’s interests (for the Investor Parties and/or their respective Affiliates, to the extent such persons may be deemed to be “directors by deputization”) in such transaction from Section 16(b) of the Exchange Act pursuant to Rule 16b-3 thereunder and (ii) if the transaction involves (A) a merger or consolidation to which the Company is a party and the Common Stock is, in whole or in part, converted into or exchanged for equity securities of a different issuer, (B) a potential acquisition or deemed acquisition, or disposition or deemed disposition, by the Investor, its Affiliates, and/or the Investor Director of equity securities of such other issuer or derivatives thereof and (C) an Affiliate or other designee of the Investor or any of its Affiliates will serve on the board of directors (or its equivalent) of such other issuer pursuant to the terms of an agreement to which the Company is a party (or if the Investor notifies the Company of such service a reasonable time in advance of the closing of such transactions), then if the Company requires that the other issuer pre-approve any acquisition of equity securities or derivatives thereof for the express purpose of exempting the interests of any director or officer of the Company or any of its subsidiaries in such transactions from Section 16(b) of the Exchange Act pursuant to Rule 16b-3 thereunder, the Company shall require that such other issuer pre-approve any such acquisitions of equity securities or derivatives thereof for the express purpose of exempting the interests of the Investor, its Affiliates and the Investor Director (for the Investor Parties and/or their respective Affiliates, to the extent such persons may be deemed to be “directors by deputization” of such other issuer) in such transactions from Section 16(b) of the Exchange Act pursuant to Rule 16b-3 thereunder.
Section 1.15Financing Cooperation. If requested by any Investor Party, the Company will provide the following cooperation in connection with such Investor Party obtaining any Permitted Loan: (i) entering into an issuer agreement (an “Issuer Agreement”) with each lender in customary form in connection with such transactions (which agreement may include, without limitation, agreements and obligations of the Company relating to procedures and specified time periods for effecting Transfers and/or conversions upon foreclosure, agreements to not hinder or delay exercises of remedies on foreclosure, acknowledgments
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regarding corporate policy, if applicable, certain acknowledgments regarding securities Law status of the pledge arrangements and a specified list of Competitors) and subject to the consent of the Company (which will not be unreasonably withheld or delayed), with such changes thereto as are requested by such lender and customary for similar financings, (ii) using commercially reasonable efforts to (A) remove any restrictive legends on certificates representing pledged Series A Preferred Stock, Common Stock issued upon conversion of Series A Preferred Stock, or Common Stock issued upon exercise of the Warrant, and depositing such pledged Series A Preferred Stock or Common Stock issued upon conversion of Series A Preferred Stock or issued upon exercise of the Warrant in book entry form on the books of The Depository Trust Company when eligible to do so (and providing any necessary indemnities to the transfer agent in connection therewith) or (B) without limiting the generality of clause (A), if such Series A Preferred Stock is eligible for resale under Rule 144A, depositing such pledged Series A Preferred Stock in book entry form on the books of The Depository Trust Company or other depository with customary Rule 144A restrictive legends in lieu of the legends specified in Section 5.07(a) above, (iii) if so requested by such lender or counterparty, as applicable, (x) re-registering the pledged Series A Preferred Stock or Common Stock issued upon conversion of Series A Preferred Stock or issued upon exercise of the Warrant in the name of the relevant lender, counterparty, custodian or similar party to a Permitted Loan, with respect to Permitted Loans solely as securities intermediary and only to the extent such Investor Party or its Affiliates continues to beneficially own such pledged Series A Preferred Stock or Common Stock issued upon conversion of Series A Preferred Stock or issued upon exercise of the Warrant or (y) certificating the pledged Series A Preferred Stock or Common Stock issued upon conversion of Series A Preferred Stock or issued upon exercise of the Warrant, (iv) entering into customary triparty agreements with each lender and such Investor Party relating to the delivery of the Series A Preferred Stock or Common Stock issued upon conversion of Series A Preferred Stock or issued upon exercise of the Warrant to the relevant lender for crediting to the relevant collateral accounts upon funding of the loan and payment of the purchase price including a right for such lender as a third party beneficiary of the Company’s obligations under hereunder to issue the Series A Preferred Stock or Common Stock issued upon conversion of Series A Preferred Stock or issued upon exercise of the Warrant upon payment of the purchase price therefor in accordance with the terms of this Agreement and (v) such other cooperation and assistance as such Investor Party may reasonably request (which cooperation and assistance, for the avoidance of doubt, shall not include any requirements that the Company deliver information, compliance certificates or any other materials typically provided by borrowers to lenders) that will not unreasonably disrupt the operation of the Company’s business. Notwithstanding anything to the contrary in the preceding sentence, the Company’s obligation to deliver an Issuer Agreement is conditioned on such Investor Party certifying to the Company in writing that (A) the loan agreement with respect to which the Issuer Agreement is being delivered constitutes a Permitted Loan being entered into in accordance with this Agreement, the Investor has pledged the Series A Preferred Stock and/or the underlying shares of Common Stock as collateral to the lenders under such Permitted Loan and that the execution of such Permitted Loan and the terms thereof do not violate the terms of this Agreement, (B) to the extent applicable, whether the registration rights under the Registration Rights Agreement are being assigned to the lenders under that Permitted Loan and (C) such Investor Party acknowledges and agrees that the Company will be relying on such certificate when entering into the Issuer Agreement and any inaccuracy in such certificate will be deemed a breach of this Agreement. The Investor Parties acknowledge and agree that the statements and agreements of the Company in an Issuer Agreement are solely for
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the benefit of the applicable lenders party thereto and that in any dispute between the Company and the Investor Parties under this Agreement, the Investor Parties shall not be entitled to use the statements and agreements of the Company in an Issuer Agreement against the Company.
Section 1.16CUSIP. No later than the first (1st) anniversary of the Closing Date, the Company will upon request from an Investor Party obtain appropriate and effective CUSIPs for the shares of Series A Preferred Stock.
Section 1.17State Securities Laws. Promptly following the date hereof, the Company shall use its reasonable best efforts to (a) obtain all necessary permits and qualifications, if any, or secure an exemption therefrom, required by any state or country prior to the offer and sale of Common Stock and/or Series A Preferred Stock and (b) cause such authorization, approval, permit or qualification to be effective as of the Closing and as of any conversion of Series A Preferred Stock; provided, that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction or subject itself to taxation in any jurisdiction in which it is not otherwise subject to taxation on the date of this Agreement.
Article VI
Conditions to Closing
Conditions to Closing
Section 1.01Conditions to the Obligations of the Company and the Investors. The respective obligations of each of the Company and the Investor to effect the Closing shall be subject to the satisfaction (or waiver, if permissible under applicable Law) on or prior to the Closing Date of the following condition:
(a)no temporary or permanent Judgment shall have been enacted, promulgated, issued, entered, amended or enforced by any Governmental Authority nor shall any proceeding brought by a Governmental Authority seeking any of the foregoing be pending, or any applicable Law shall be in effect enjoining or otherwise prohibiting consummation of the Transactions (collectively, “Restraints”).
Section 1.02Conditions to the Obligations of the Company. The obligations of the Company to effect the Closing shall be further subject to the satisfaction (or waiver, if permissible under applicable Law) on or prior to the Closing Date of the following conditions:
(a)the representations and warranties of the Investor Parties set forth in Section 4 of this Agreement are true and correct in all material respects as of the date hereof (except (A) to the extent such representations and warranties are made as of a specified date, in which case such representations and warranties shall be true and correct in all material respects as of such date, and (B) any representations and warranties that have “material” or “Investor Material Adverse Effect” qualifications, in which case such representations and warranties shall be true in all respects);
(b)the Investor Parties shall have complied with or performed in all material respects its obligations required to be complied with or performed by it pursuant to this Agreement at or prior to the Closing; and
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(c)the Company shall have received a certificate, signed on behalf of each Investor Party by a duly authorized officer thereof, certifying that, with respect to such Investor Party the conditions set forth in Section 6.02(a) and Section 6.02(b) have been satisfied.
Section 1.03Conditions to the Obligations of the Investor. The obligations of the Investor to effect the Closing shall be further subject to the satisfaction (or waiver, if permissible under applicable Law) on or prior to the Closing Date of all of the conditions set forth below:
(a)the representations and warranties of the Company set forth in Section 3 of this Agreement are true and correct in all material respects as of the date hereof (except (A) to the extent such representations and warranties are made as of a specified date, in which case such representations and warranties shall be true and correct in all material respects as of such date, and (B) any representations and warranties that have “material” or “Material Adverse Effect” qualifications, in which case such representations and warranties shall be true in all respects);
(b)the Company shall have complied with or performed in all material respects its obligations required to be complied with or performed by it pursuant to this Agreement at or prior to the Closing Date;
(c)at the Closing, the Investor shall have received a certificate, signed on behalf of the Company by a duly authorized officer thereof, certifying that the conditions set forth in Section 6.03(a) and Section 6.03(b) have been satisfied;
(d)prior to the Closing Date, the Company shall have duly adopted and filed with the Secretary of State of the State of Delaware the Certificate of Designations, and a certified copy thereof shall have been delivered to the Investor;
(e)prior to the Closing Date, the Board shall have taken all actions necessary and appropriate to cause to be elected or appointed to the Board, effective immediately following the Closing, the Initial Investor Director Designee;
(f)prior to the Closing Date, the Company shall have filed a Supplemental Listing Application with NYSE to list the Acquired Shares; and
(g)at the Closing, the Company shall issue the Warrant to the Investor.
Article VII
Termination; Survival
Termination; Survival
Section 1.01Termination. This Agreement may be terminated and the Transactions abandoned at any time prior to the Closing:
(a)by the mutual written consent of the Company and the Investor;
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(b)by either the Company or the Investor if any Restraint enjoining or otherwise prohibiting consummation of the Transactions shall be in effect and shall have become final and non-appealable; provided that the right to terminate this Agreement pursuant to this Section 7.01(b) shall not be available to any party unless such party has complied in all material respects with its obligations under Section 5.01;
(c)by the Investor if the Company shall have breached any of its representations or warranties or failed to perform any of its covenants or agreements set forth in this Agreement, which breach or failure to perform would give rise to the failure of a condition set forth in Section 6.03(a) or Section 6.03(b) following receipt by the Company of written notice of such breach or failure to perform from the Investor stating the Investor’s intention to terminate this Agreement pursuant to this Section 7.01(c) and the basis for such termination; provided that the Investor shall not have the right to terminate this Agreement pursuant to this Section 7.01(c) if the Investor is then in material breach of any of its representations, warranties, covenants or agreements hereunder which breach would give rise to the failure of a condition set forth in Section 6.02(a) or Section 6.02(b);
(d)by the Company if any of the Investor Parties shall have breached any of their respective representations or warranties or failed to perform any of its covenants or agreements set forth in this Agreement or any Joinder, which breach or failure to perform would give rise to the failure of a condition set forth in Section 6.02(a) or Section 6.02(b) following receipt by the Investor of written notice of such breach or failure to perform from the Company stating the Company’s intention to terminate this Agreement pursuant to this Section 7.01(d) and the basis for such termination; provided that the Company shall not have the right to terminate this Agreement pursuant to this Section 7.01(d) if the Company is then in material breach of any of its representations, warranties, covenants or agreements hereunder which breach would give rise to the failure of a condition set forth in Section 6.03(a) or Section 6.03(b); or
Section 1.02Effect of Termination. Any termination of this Agreement as provided in Section 7.01, shall be effective upon delivery of written notice thereof to the other party, specifying the provision hereof pursuant to which such termination is made, and this Agreement shall forthwith become null and void (other than this Section 7.02 and Article VIII), all of which shall survive termination of this Agreement, and there shall be no liability on the part of the Investor or the Company in connection with this Agreement, except that no such termination shall relieve any party hereto from liability for damages to another party resulting from a Willful Breach of any representation, warranty, covenant or agreement in this Agreement prior to the date of termination or from Fraud. Notwithstanding any other provision set forth in this Agreement, except in the case of Fraud, whether or not this Agreement is terminated (a) no Investor shall have any such liability in excess of Purchase Price paid by such Investor at Closing and (b) the Company shall not have any such liability in excess of the Purchase Price.
Section 1.03Survival. All of the covenants or other agreements of the parties contained in this Agreement, other than those that by their terms are to be performed following the Closing (which shall survive the Closing until fully performed or fulfilled, unless and to the extent that non-compliance with such covenants or agreements is waived in writing by the party
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entitled to such performance), shall terminate upon the Closing. The representations and warranties made herein shall survive for one (1) year following the Closing Date and shall then expire; provided, that the Fundamental Representations shall survive the Closing for forty-eight (48) months following the Closing; and provided; further, that nothing herein shall relieve any party of liability for any inaccuracy or breach of such representation or warranty to the extent that any good faith allegation of such inaccuracy or breach is made in writing prior to such expiration by a Person entitled to make such claim pursuant to the terms and conditions of this Agreement; and provided, further, that nothing herein shall relieve any party of liability for any inaccuracy or breach of such representations and warranties in the case of Fraud. For the avoidance of doubt, claims may be made with respect to the breach of any representation, warranty or covenant until the applicable survival period therefor as described above expires.
Article VIII
Miscellaneous
Miscellaneous
Section 1.01Amendments; Waivers. Subject to compliance with applicable Law, this Agreement may be amended or supplemented in any and all respects only by written agreement of the parties hereto.
Section 1.02Extension of Time, Waiver, Etc. The Company and the Investor may, subject to applicable Law and pursuant to a written instrument delivered by such party, (a) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered pursuant hereto, (b) extend the time for the performance of any of the obligations or acts of the other party contained herein or (c) waive compliance by the other party with any of the agreements contained herein applicable to such party or, except as otherwise provided herein, waive any of such party’s conditions. Notwithstanding the foregoing, no failure or delay by the Company or any Investor Party in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right hereunder. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party.
Section 1.03Assignment
. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation of Law or otherwise, by any of the parties hereto without the prior written consent of the other party hereto; provided, however, that (a) the Investor may assign its rights, interests and obligations under this Agreement, in whole or in part (including the right to purchase the Acquired Shares at the Closing in accordance with Section 2.02) to one or more of its respective Permitted Transferees or as otherwise contemplated by Section 5.06, and (b) in the event of such assignment, the assignee shall agree in writing to be bound by the provisions of this Agreement, including the rights, interests and obligations so assigned (including, in the case of the Permitted Transferees, by executing and delivering to the Company a joinder in the form attached hereto as Exhibit C (such applicable joinder, a “Joinder”)); provided that no such assignment will relieve any Investor Party of its obligations
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hereunder at or prior to the Closing except at the Closing to the extent that a portion of the Purchase Price is paid by any such assignee; provided, further, that no party hereto shall assign any of its obligations hereunder with the primary intent of avoiding, circumventing or eliminating such party’s obligations hereunder. Subject to the terms of this Section 8.03, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and permitted assigns.
Section 1.04Counterparts. This Agreement may be executed in one or more counterparts (including by facsimile or electronic mail), each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other parties hereto.
Section 1.05Entire Agreement; No Third Party Beneficiaries; No Recourse. (a) This Agreement, including the Company Disclosure Letter, together with the Registration Rights Agreement, the Warrant and the Certificate of Designations, constitutes the entire agreement, and supersedes all other prior agreements and understandings, both written and oral, among the parties and their Affiliates, or any of them, with respect to the subject matter hereof and thereof.
(a)No provision of this Agreement shall confer upon any Person other than the parties hereto and their permitted assigns any rights or remedies hereunder, except that the Non-Recourse Parties shall be third party beneficiaries of this Section 8.05(b). This Agreement may only be enforced against, and any claims or causes of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement may only be made against the entities that are expressly identified as parties hereto, including entities that become parties hereto after the date of this Agreement or that agree in writing for the benefit of the Company to be bound by the terms of this Agreement applicable to the Investor Parties, and no former, current or future equityholders, controlling persons, directors, officers, employees, general or limited partner, member, manager, advisor, agents, successors, assigns or Affiliates of any party hereto or any former, current or future equityholder, controlling person, director, officer, employee, general or limited partner, member, manager, advisor, agent successors, assigns or Affiliate of any of the foregoing (each, a “Non-Recourse Party”) shall have any liability for any obligations or liabilities of the parties to this Agreement or for any claim (whether in tort, contract or otherwise) based on, in respect of, or by reason of, the transactions contemplated hereby or in respect of any representations (whether written or oral) made or alleged to be made in connection herewith, and no personal liability shall attach to, be imposed upon or otherwise be incurred by the Non-Recourse Parties through the Investor or otherwise, whether by or through attempted piercing of the corporate (or partnership or limited liability company) veil, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute, regulation or applicable Law, or otherwise. Without limiting the rights of any party against the other parties hereto, in no event shall any party or any of its Affiliates seek to enforce this Agreement against, make any claims for breach of this Agreement against, or seek to recover monetary damages from, any Non-Recourse Party.
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Section 1.06Governing Law; Jurisdiction. (a) This Agreement and all matters, claims or Actions (whether at law, in equity, in Contract, in tort or otherwise) based upon, arising out of or relating to this Agreement or the negotiation, execution or performance of this Agreement (collectively, the “Relevant Matters”), shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under any applicable conflict of Laws principles.
(a)All Actions arising out of or relating to any Relevant Matter shall be heard and determined in the Chancery Court of the State of Delaware (or, if the Chancery Court of the State of Delaware declines to accept jurisdiction over any Action, any state or federal court within the State of Delaware) and the parties hereto hereby irrevocably submit to the exclusive jurisdiction and venue of such courts in any such Action and irrevocably waive the defense of an inconvenient forum or lack of jurisdiction to the maintenance of any such Action. The consents to jurisdiction and venue set forth in this Section 8.06 shall not constitute general consents to service of process in the State of Delaware and shall have no effect for any purpose except as provided in this Section 8.06(b) and shall not be deemed to confer rights on any Person other than the parties hereto. Each party hereto agrees that service of process upon such party in any Action arising out of or relating to this Agreement shall be effective if notice is given by overnight courier at the address set forth in Section 8.09 of this Agreement. The parties hereto hereby waive any right to stay or dismiss any action or proceeding in connection with any Relevant Matter brought before the foregoing courts on the basis of (i) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason or that it or any of its property is immune from the above-described legal process, (ii) that such action or proceeding is brought in an inconvenient forum, that venue for the action or proceeding is improper or that this Agreement may not be enforced in or by such courts, or (iii) any other defense that would hinder or delay the levy, execution or collection of any amount to which any party hereto is entitled pursuant to any final judgment of any court having jurisdiction. The parties hereto agree that a final judgment in any such Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law; provided that nothing in the foregoing shall restrict any party’s rights to seek any post-judgment relief regarding, or any appeal from, a final trial court judgment.
Section 1.07Specific Enforcement. The parties hereto agree that irreparable damage for which monetary relief, even if available, might not be an adequate remedy, would occur in the event that any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached, including if the parties hereto fail to take any action required of them hereunder to cause the Closing to occur. The parties acknowledge and agree that (a) the parties shall be entitled to seek an injunction or injunctions, specific performance or other equitable relief to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions hereof in the courts described in Section 8.06 without proof of damages or otherwise (in each case, subject to the terms and conditions of this Section 8.07), this being in addition to any other remedy to which they are entitled under this Agreement and (b) the right of specific enforcement is an integral part of the Transactions and without that right, neither the Company nor the Investor would have entered into this Agreement. The parties hereto agree not to assert that a remedy of specific enforcement is unenforceable,
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invalid, contrary to Law or inequitable for any reason, and agree not to assert that a remedy of monetary damages would provide an adequate remedy or that the parties otherwise have an adequate remedy at Law. The parties hereto acknowledge and agree that any party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 8.07 shall not be required to provide any bond or other security in connection with any such order or injunction.
Section 1.08WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE IN CONNECTION WITH ANY RELEVANT MATTER IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO ANY RELEVANT MATTER. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ACTION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) IT MAKES SUCH WAIVER VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 8.08.
Section 1.09Notices. All notices, requests and other communications to any party hereunder shall be in writing and shall be deemed given if delivered personally, emailed (which is confirmed) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses:
(a) If to the Company, at:
Blend Labs, Inc.
415 Kearny Street
San Francisco, California 94108
Attention: [ ]
Email: [ ]
Attention: [ ]
Email: [ ]
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with a copy (which shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304
Attention: [ ]
Palo Alto, CA 94304
Attention: [ ]
Email: [ ]
(b) If to the Investor, at:
Haveli Brooks Aggregator, L.P.
c/o Haveli Investments Software Fund I, L.P.
405 Colorado Street, Suite 1600
405 Colorado Street, Suite 1600
Austin, TX 78701
Attention: [ ]
Email: [ ]
with a copy (which shall not constitute notice) to:
Bailey Duquette P.C.
104 Charlton Street, 1W
104 Charlton Street, 1W
New York, NY 10014
Attention: [ ]
Attention: [ ]
Email: [ ]
(c) If to another Investor Party, to the address(es) and e-mail(s) set forth in such Investor Party’s Joinder;
or such other address or email address as such party may hereafter specify by like notice to the other parties hereto. All such notices, requests and other communications shall be deemed received on the date of actual receipt by the recipient thereof if received prior to 5:00 p.m. local time in the place of receipt and such day is a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt.
Section 1.10Severability. If any term, condition or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other terms, provisions and conditions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term, condition or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable Law.
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Section 1.11Expenses. Contingent upon the occurrence of the Closing, the Investor Parties shall be entitled to receive reimbursement for their costs and expenses in connection with the Transactions in the amount of $625,000 in the aggregate, which amount the Company shall pay at the Closing in accordance with Section 2.02(b)(ii). Subject to the foregoing, and except as otherwise expressly provided herein, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.
Section 1.12Interpretation. (a) When a reference is made in this Agreement to an Article, a Section, Exhibit or Schedule, such reference shall be to an Article of, a Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement unless the context requires otherwise. The terms “or”, “any” and “either” are not exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. The words “made available to the Investor” and words of similar import refer to documents delivered in Person or electronically to the Investor or its Representatives in each case no later than one (1) Business Day prior to the date of this Agreement. All accounting terms used and not defined herein shall have the respective meanings given to them under GAAP. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. Unless otherwise specifically indicated, all references to “dollars” or “$” shall refer to the lawful money of the United States. References to a Person are also to its permitted assigns and successors. When calculating the period of time between which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded (and unless, otherwise required by Law, if the last day of such period is not a Business Day, the period in question shall end on the next succeeding Business Day).
(a)The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party hereto by virtue of the authorship of any provision of this Agreement.
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Section 1.13Not a Group; Independent Nature of Holders’ Obligations and Rights. The Investor Parties and the Company agree that the arrangements contemplated by this Agreement are not intended to constitute the formation of a “group” (as defined in Section 13(d)(3) of the Exchange Act). Each Investor Party agrees that, for purposes of determining beneficial ownership of such Investor Party and its Permitted Transferees, it shall disclaim any beneficial ownership by virtue of this Agreement of any Series A Preferred Stock or any Common Stock issued upon conversion of the Series A Preferred Stock owned by the other Investor Parties (other than such Investor Party’s Permitted Transferees), and the Company agrees to recognize such disclaimer in its Exchange Act and Securities Act reports. The obligations of each Investor Party under this Agreement are several and not joint with the obligations of any other Investor Party, and no Investor Party shall be responsible in any way for the performance of the obligations of any other Investor Party under this Agreement. Nothing contained herein, and no action taken by any Investor Party pursuant hereto, shall be deemed to constitute the Investor Parties as, and the Company acknowledges that the Investor Parties do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Investor Parties are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by this Agreement, and the Company acknowledges that the Investor Parties are not acting in concert or as a group by virtue of this Agreement, and the Company shall not assert any such claim, with respect to such obligations or the transactions contemplated by this Agreement. Each Investor Party shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement, and it shall not be necessary for any other Investor Party to be joined as an additional party in any proceeding for such purpose.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written.
BLEND LABS, INC.
By: /s/ Nima Ghamsari
Name: Nima Ghamsari
Title: Head of Blend
Title: Head of Blend
[Signature Page to Investment Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written.
INVESTOR:
HAVELI BROOKS AGREGGATOR, L.P.
By: Haveli Investments Software Fund I GP, LLC
By: Whanau Interests LLC,
its sole member
By: /s/ Brian N. Sheth__________________
Name: Brian N. Sheth
Title: Managing Member
[Signature Page to Investment Agreement]
EXHIBIT A
FORM OF SERIES A CERTIFICATE OF DESIGNATIONS
[To be separately provided.]
Active.39812068.12
EXHIBIT B
FORM OF REGISTRATION RIGHTS AGREEMENT
[To be separately provided.]
Active.39812068.12
EXHIBIT C
FORM OF PERMITTED TRANSFEREE JOINDER
[To be separately provided.]
Active.39812068.12
EXHIBIT D
FORM OF WARRANT
[To be separately provided.]
Active.39812068.12
Execution Version
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of April 29, 2024 (the “Agreement”), is entered into by and between Blend Labs, Inc., a Delaware corporation (the “Company”) and Haveli Brooks Aggregator, L.P. (the “Investor”, and together with its successor any other party that may become a party hereto pursuant to Section 9(c), collectively the “Stockholders”, and each individually a “Stockholder”).
RECITALS
WHEREAS, the Company and the Investor are parties to the Investment Agreement, dated as of April 29, 2024 (as amended from time to time, the “Investment Agreement”), pursuant to which the Company is selling to the Investor, and the Investor is purchasing from the Company, an aggregate of 150,000 shares of the Company’s Series A Convertible Perpetual Preferred Stock, par value $0.00001 per share (the “Series A Preferred Stock”), which is convertible into shares of Common Stock;
WHEREAS, in connection with and as consideration for entering into the above purchase of the Series A Preferred Stock pursuant to the Investment Agreement, the Company is issuing to Investor in accordance with the Investment Agreement a Warrant to Purchase Common Stock by and between the Company and the Investor dated as of April 29, 2024 (the “Warrant”), giving the Investor the right to acquire up to 11,111,112 shares of Class A Common Stock, on such terms and subject to such conditions as set forth in the Warrant; and
WHEREAS, as a condition to the obligations of the Company and the Investor under the Investment Agreement, the Company and the Investor are entering into this Agreement for the purpose of granting certain registration and other rights to the Stockholders.
NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual promises hereinafter set forth, the parties hereto agree as follows:
AGREEMENT
1.Definitions. As used in this Agreement, the following capitalized terms shall have the following respective meanings:
“Adverse Disclosure” means public disclosure of material non-public information that, in the good faith judgment of the Company (after consultation with external legal counsel): (i) would be required to be made in any Registration Statement or report filed with the SEC by the Company so that such registration statement would not contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading; (ii) would not be required to be made at such time but for the filing, effectiveness or continued use of such Registration Statement; and (iii) the Company has a bona fide business purpose for not disclosing publicly.
“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person. For this purpose, “control” (including its correlative meanings, “controlling”, “controlled by” and “under common control with”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.
“as converted basis” means with respect to the outstanding shares of Common Stock as of any date, all outstanding shares of Common Stock calculated on a basis in which all shares of Common Stock issuable upon conversion of the outstanding shares of Series A Preferred Stock (at the Conversion Rate in effect on such date as set forth in the Certificate of Designations) and all shares of Common Stock issuable upon exercise of the Warrant are assumed to be outstanding as of such date.
“Business Day” or “business day” means any day except a Saturday, a Sunday or other day on which the SEC or banks in the City of New York are authorized or required by law to be closed.
“Certificate of Designations” means the Certificate of Designations setting forth voting powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions of the Series A Preferred Stock, dated as of the date hereof.
“Charitable Gifting Event” means any transfer by a Holder, or any subsequent transfer by such Holder’s members, partners or other employees, in connection with a bona fide gift to any Charitable Organization made in connection with sales of Registrable Securities by a Holder pursuant to an effective registration statement.
“Charitable Organization” means a charitable organization as described by Section 501(c)(3) of the Internal Revenue Code of 1986, as in effect from time to time.
“Common Stock” means all shares currently or hereafter existing of the Company’s class A common stock, par value $0.00001 per share.
“Conversion Rate” has the meaning set forth in the Certificate of Designations.
“Demand Registration Effectiveness Period” has the meaning set forth in Section 3(a).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor statute thereto and the rules and regulations of the SEC promulgated thereunder.
“FINRA” means the Financial Industry Regulatory Authority.
“Holdback Period” means the period commencing on the date of an underwriters’ request (which shall be no earlier than four (4) Business Days prior to the expected “pricing” of
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the related underwritten offering) and continuing for not more than ninety (90) calendar days after the date of the final prospectus (or final prospectus supplement if the offering is made pursuant to a shelf registration), pursuant to which such underwritten offering shall be made, or such lesser period as is required by such underwriters (which shall also apply equally to all Holders).
“Holder” means any Stockholder holding Registrable Securities.
“Lock-Up Period” has the meaning set forth in the Investment Agreement.
“NYSE” means the New York Stock Exchange.
“Person” means any individual, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof, any other form of entity or any group comprised of two or more of the foregoing.
“Piggyback Registration Notice” has the meaning set forth in Section 2(a).
“Piggyback Registration Statement” has the meaning set forth in Section 2(a).
“Piggyback Request” has the meaning set forth in Section 2(a).
“Prospectus” means the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such prospectus.
“register”, “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement or the automatic effectiveness of such registration statement, as applicable.
“Registrable Securities” means, as of any date of determination, any shares of Common Stock issued pursuant to the conversion of any shares of Series A Preferred Stock and any shares of Common Stock issued upon exercise of the Warrant, and any other securities issued or issuable with respect to any such shares of Common Stock or Series A Preferred Stock by way of share split, share dividend, distribution, recapitalization, merger, exchange, replacement or similar event or otherwise. As to any particular Registrable Securities, once issued, such securities shall cease to be Registrable Securities when (i) they are sold pursuant to an effective Registration Statement under the Securities Act, (ii) they are sold pursuant to Rule 144 (or other exemption from registration under the Securities Act) or, following the Fall-
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Away of Investor Board Rights (as defined in the Investment Agreement), they may be sold without restriction under Rule 144, including without limitation, any volume and manner of sale restrictions which may be applicable to affiliates and without the requirement for the Company to be in compliance with the current public information required under Rule 144(c)(1) or Rule 144(i)(2), (iii) in the case of any shares of Common Stock held by a Holder, all shares of Common Stock held by such Holder, on an as converted basis, constitute less than 1% of all outstanding shares of Common Stock and may be sold in a single day pursuant to, and in accordance with Rule 144(e)(1), (iv) they shall have ceased to be outstanding or (v) they have been sold in a private transaction in which the transferor’s rights under this Agreement are not assigned to the transferee of the securities.
“Registration Statement” means any registration statement of the Company filed with the SEC under the Securities Act which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.
“Rule 144” means Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.
“SEC” means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act or the Exchange Act.
“Securities Act” means the Securities Act of 1933, as amended, and any successor statute thereto and the rules and regulations of the SEC promulgated thereunder.
“Trading Day” has the meaning set forth in the Certificate of Designations.
2.Piggyback Registration.
(a)Right to Include Registrable Securities. If, following the expiration of the Lock-Up Period, the Company proposes to file a registration statement under the Securities Act with respect to an offering of Common Stock or securities convertible, exchangeable, or exercisable for Common Stock, whether or not for sale for its own account (other than pursuant to (i) a registration statement filed by the Company on Form S-4 or S-8, or any successor or other forms promulgated for similar purposes or (ii) filed solely in connection with an exchange offer or any employee benefit or dividend reinvestment plan), including, without limitation, a Registration Statement in connection with a Demand Registration pursuant to Section 3(a) or a Shelf Registration Statement pursuant to Section 3(e), then the Company will, at each such time, give prompt written notice to all Holders of its intention to make such filing, and of such Holders’ rights under this Section 2 (the “Piggyback Registration Notice”), which notice shall be given to Holders, to the extent reasonably practicable, no later than five (5) Business Days prior to the filing date of the registration statement. The Piggyback Registration Notice shall offer such Holders the opportunity to include (or cause to be included) in such registration statement (each, a “Piggyback Registration Statement”) the number of shares of Registrable Securities as
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each such Holder may request. Subject to Section 2(b), the Company shall include in each Piggyback Registration Statement all Registrable Securities with respect to which the Company has received a written request from the Holder thereof for inclusion of such Registrable Securities in the Piggyback Registration Statement (each, a “Piggyback Request”) promptly following delivery of the Piggyback Notice but in any event no later than two (2) Business Days prior to the filing date of a Piggyback Registration Statement; provided that (i) if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the Piggyback Registration Statement filed in connection with such registration, the Company shall determine for any reason not to proceed with the proposed registration of the securities to be sold by it, the Company may, at its election, give written notice of such determination to each Holder and, thereupon, shall be relieved of its obligation to register any Registrable Securities in connection with such proposed registration (but not from its obligation to pay the registration expenses pursuant to Section 6 hereof in connection therewith), without prejudice to the rights of the Holders to request that such registration be effected as a registration under Section 3, and without prejudice to the obligations of the Company under Section 3(e), and (ii) if such registration under this Section 2(a) involves an underwritten offering, all Holders requesting to be included in the Company’s registration pursuant to such Piggyback Registration Statement and to participate in the underwritten offering must sell their Registrable Securities to the underwriters selected by the Company on the same terms and conditions as apply to the Company, with such differences, including any with respect to indemnification and liability, as are customary in combined primary and secondary offerings by the Company and the participating Holders. If a registration pursuant to this Section 2(a) involves an underwritten public offering, any Holder requesting to be included in such registration pursuant to a Piggyback Request may elect in writing at least two (2) Business Days prior to the effective date of the Piggyback Registration Statement or, in the case of a takedown from a Shelf Registration Statement, prior to the launch of such takedown, not to register such Holder’s Registrable Securities in connection with such registration. Except as otherwise provided in Section 3(e) with respect to a Shelf Registration Statement, the Company shall not be required to maintain the effectiveness of a Piggyback Registration Statement for a registration pursuant to this Section 2(a) beyond the earlier to occur of (i) 180 calendar days after the effective date thereof and (ii) consummation of the distribution by the Holders of the Registrable Securities included in such Piggyback Registration Statement. Any Holder who has elected to sell Registrable Securities in an offering pursuant to this Section 2 shall be permitted to withdraw from such registration by written notice to the Company (x) at any time prior to two (2) Business Days prior to the effectiveness of the Piggyback Registration Statement, or (y) if the price to the public at which the Registrable Securities are proposed to be sold will be less than 90% of the average closing price of the class of stock being sold in the offering during the 10 Trading Days preceding the date on which the notice of such offering was given pursuant to this Section 2(a).
(b)Priority in Underwritten Registrations. If any of the securities to be offered or sold pursuant to the registration giving rise to rights under this Section 2 are to be sold in an underwritten offering, the Company shall use reasonable efforts to cause the managing underwriter or underwriters of any such proposed underwritten offering to permit Holders who have requested to include Registrable Securities in such offering pursuant to this Section 2 to include in such underwritten offering all Registrable Securities so requested to be included on the
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same terms and conditions as any other shares of capital stock, if any, of the Company included in the underwritten offering. Notwithstanding the foregoing, if the managing underwriter or underwriters of such underwritten offering have informed the Company in writing that it is their good faith opinion that the total amount of securities that are intended to be included in such offering is such as to adversely affect the success of such offering (including adversely affect the per-share offering price), then the amount of securities to be offered shall be reduced to only such number of securities that can be sold without adversely affecting the marketability of the offering as recommended by such managing underwriter or underwriters in its or their good faith opinion. Except for underwritten offerings in connection with a Demand Registration, and Shelf Underwritten Offerings, the priority for which shall be governed by Section 3(b), the securities included in an underwritten offering subject to this Section 2(b) will be allocated in the following order of priority: (i) first, the securities to be proposed to be sold by the Company for its own account, (ii) second, the Registrable Securities of the Investor, (iii) third, the Registrable Securities of the Holders other than the Investor that have submitted a Piggyback Request, allocated pro rata among such Holders on the basis of the percentage of Registrable Securities owned by each such Holder relative to the number of Registrable Securities owned by all such Holders and (iv) fourth, for the account of any other holders of Common Stock that have requested to be included in such underwritten offering as a result of registration rights or otherwise.
3.Registration on Request.
(a)Request by the Demand Party. Subject to the following paragraphs of this Section 3(a), at any time following the expiration of the Lock-up Period and pursuant to the terms of this Agreement, each of the Investor and the Holders holding a majority of the Registrable Securities on an as converted basis shall have the right, by delivering a written notice to the Company, to require the Company to register, under and in accordance with the provisions of the Securities Act, the number of Registrable Securities held by such Holder or Holders requested to be so registered pursuant to the terms of this Agreement (any such written notice, a “Demand Notice”, any such registration, a “Demand Registration” and any such Holder or Holders, the “Demand Party”); provided, however, that the Company shall not be required to effect more than two (2) registrations in any twelve (12) month period under this Section 3(a) and (y) a Demand Notice may only be made if the sale of the Registrable Securities is reasonably expected to result in aggregate gross cash proceeds in excess of $25,000,000 (without regard to any underwriting discount or commission); provided, further, that the Company shall not be obligated to file a registration statement relating to any registration request under this Section 3(a), (i) within the period as may be specified by the Company’s insider trading policy as applicable to Company employees generally for any fiscal quarter or year or any special blackout period as specified by the Company’s insider trading policy (each, a “Blackout Period”) or (ii) within a period of sixty (60) calendar days after the effective date of any other registration statement relating to any Demand Registration under this Section 3(a); provided, further, that nothing in this Section 3(a) or elsewhere herein shall be construed as limiting the frequency by which a Holder may effect a Shelf Underwritten Offering or Non-Underwritten Shelf Take-Down pursuant to Section 3(f). Following receipt of a Demand Notice for a Demand Registration in accordance with this Section 3(a), the Company shall use its reasonable best
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efforts to file a Registration Statement covering the Registrable Securities requested to be so registered pursuant to the Demand Notice as promptly as practicable and shall use its reasonable best efforts to cause such Registration Statement to be declared effective under the Securities Act as promptly as practicable after the filing thereof, in each case, in accordance with this terms of this Agreement.
No Demand Registration shall be deemed to have occurred for purposes of this Section 3 if (i) the Registration Statement relating thereto (x) does not become effective, (y) is not maintained effective for the entire Demand Registration Effectiveness Period, or (z) the offering of the Registrable Securities pursuant to such Registration Statement is subject to a stop order, injunction, or similar order or requirement of the SEC during such period, in which case, such requesting Holder or Holders shall be entitled to an additional Demand Registration in lieu thereof, (ii) more than 90% of the Registrable Securities requested by the Demand Party to be included in the Demand Registration are not so included pursuant to Section 3(b) or (iii) in the case of a Demand Registration for an underwritten offering, the conditions to closing specified in any underwriting agreement, purchase agreement or similar agreement entered into in connection with the registration relating to such request are not satisfied (other than as a result of a material default or breach thereunder by such Demand Party) or otherwise waived by such Demand Party; provided that the Company’s obligation to pay the registration expenses pursuant to Section 6 hereof in connection therewith shall still apply.
As promptly as practicable and in any event within two (2) calendar days after receipt by the Company of a Demand Notice in accordance with this Section 3(a), the Company shall give written notice (the “Demand Follow-up Notice”) of such Demand Notice to all other Holders of Registrable Securities and shall, subject to the provisions of Section 3(b) hereof, include in such Demand Registration all Registrable Securities with respect to which the Company received written requests for inclusion therein from the Holders of such Registrable Securities within five (5) calendar days after such Demand Follow-up Notice is given by the Company to such Holders, provided that the Company shall not provide a Demand Follow-up Notice to any other Holder or holder of the Company’s equity securities in the case of a sale of Registrable Securities by any Holder or Holders to one or several purchasers pursuant to a Shelf Underwritten Offering by means of a bought deal, a block trade or a similar transaction that is an underwritten offering (a “Block Sale”).
All requests made pursuant to this Section 3 will specify the number of Registrable Securities requested to be registered and the intended methods of disposition thereof.
The Company shall be required to maintain the effectiveness of the Registration Statement with respect to any Demand Registration for a period of at least one hundred and eighty (180) calendar days after the effective date thereof, or such shorter period during which all Registrable Securities included in such Registration Statement have actually been sold (the “Demand Registration Effectiveness Period”); provided, however, that such period shall be extended for a period of time equal to the period any participating Holder or Holders refrains from selling any securities included in such Registration Statement at the request of the Company or an underwriter of the Company pursuant to the provisions of this Agreement.
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(b)Priority on Demand Registration. If any of the Registrable Securities registered pursuant to a Demand Registration are to be sold in a firm commitment underwritten offering, and the managing underwriter or underwriters advise the Holders of such securities in writing that in its or their good faith opinion the total number or dollar amount of Registrable Securities proposed to be sold in such offering (including, without limitation, securities proposed to be included by other holders of securities entitled to include securities in such Registration Statement pursuant to incidental or piggyback registration rights) is such as to adversely affect the success of such offering, then there shall be included in such firm commitment underwritten offering the number or dollar amount of Registrable Securities that in the good faith opinion of such managing underwriter or underwriters can be sold without adversely affecting such offering, and such number of Registrable Securities shall be allocated as follows, unless the underwriter or underwriters require a different allocation:
(i)first, to the Demand Party, until all Registrable Securities requested for registration by the Demand Party have been included in such registration;
(ii)second, to any Holders other than the Demand Party (whether pursuant to a Demand Follow-Up Notice or a Piggyback Request), allocated among such Holders pro rata on the basis of the percentage of Registrable Securities owned by each such Holder relative to the number of Registrable Securities owned by all such Holders;
(iii)third, the securities for which inclusion in such Demand Registration, as the case may be, was requested by any other holders of Common Stock as a result of registration rights or otherwise; and
(iv)fourth, the securities for which inclusion in such Demand Registration was requested by the Company.
(c)Cancellation of a Demand Registration. Each Demand Party and the Holders of a majority of the Registrable Securities which are to be registered in a particular offering pursuant to Section 3(a) shall have the right, prior to the effectiveness of the Registration Statement, to notify the Company that it or they, as the case may be, has or have determined that such Registration Statement be abandoned or withdrawn, in which event the Company shall abandon or withdraw such Registration Statement. Any Holder who has elected to sell Registrable Securities in an underwritten offering pursuant to Section 3(a) (including the Demand Party of such Demand Registration) shall be permitted to withdraw from such registration by written notice to the Company (i) at any time prior to two (2) Business Days prior to the effectiveness of the Registration Statement, or (ii) if the price to the public at which the Registrable Securities are proposed to be sold will be less than 90% of the average closing price of the class of stock being sold in the offering during the ten (10) Trading Days preceding the date on which the Demand Notice of such offering was given pursuant to Section 3(a).
(d)Postponements in Requested Registrations. If the Company shall at any time furnish to the Holders a certificate signed by the Company’s chairperson of the board, Head of Blend or Head of Legal stating that the filing of a Registration Statement or conducting a Shelf Underwritten Offering or Non-Underwritten Shelf Take-Down would, in the good faith
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judgment of the board of directors of the Company (after consultation with external legal counsel), (i) require the Company to make an Adverse Disclosure, (ii) materially interfere with any material proposed acquisition, disposition, financing, reorganization, recapitalization or similar transaction involving the Company or any of its subsidiaries then under consideration or (iii) be materially detrimental to the Company and its stockholders, the Company may postpone the filing (but not the preparation) of a Registration Statement or the commencement of a Shelf Underwritten Offering or Non-Underwritten Shelf Take-Down, as applicable, required by this Section 3 until such circumstance is no longer continuing but not to exceed sixty (60) days (such period, a “Postponement Period”); provided that the Company shall at all times in good faith use its commercially reasonable best efforts to cause any Registration Statement required by this Section 3 to be filed as soon as possible or any Shelf Underwritten Offering or Non-Underwritten Shelf Take-Down to be conducted as soon as possible, as applicable; provided, further, that the Company shall not be permitted to commence a Postponement Period pursuant to this Section 3(d) more than once in any 180-day period. The Company shall promptly give the Holder or Holders requesting registration thereof or that delivered a Take-Down Notice, as applicable, pursuant to this Section 3 written notice of any postponement made in accordance with the preceding sentence.
(e)Shelf Registration Statement.
(i)Subject to the other appliable provisions of this Agreement, if requested in writing by the Investor or by the Holders holding a majority of the Registrable Securities on an as converted basis prior to the 20th Business Day prior to the expiration of the Lock-up Period, the Company shall file with the SEC a shelf Registration Statement on Form S-3 to the extent permissible (which may be in the form of a prospectus supplement to an existing Form S-3) or as otherwise provided in Section 3(e)(iii) (a “Shelf Registration Statement”) covering the sale or distribution from time to time of all Registrable Securities by the Holders thereof, on a delayed or continuous basis pursuant to Rule 415 of the Securities Act, and in accordance with any reasonable method of distribution elected by the Holders, and shall use reasonable best efforts to cause such Shelf Registration Statement to become effective no later than the expiration of the Lock-Up Period. If the Shelf Registration Statement is not effective as of the expiration of the Lock-up Period, the Company shall use reasonable best efforts to cause such Shelf Registration Statement to become effective as soon as practicable thereafter. Upon filing the Shelf Registration Statement, the Company shall use its reasonable best efforts to cause the Shelf Registration Statement to be continuously effective and usable until such time as there are no longer any Registrable Securities (the “Effectiveness Period”). If any Shelf Registration Statement shall expire or cease to be effective under the Securities Act for any reason at any time during the Effectiveness Period, the Company shall use its reasonable best efforts to as promptly as is reasonably practicable cause such Shelf Registration Statement to again become effective under the Securities Act (including obtaining the prompt withdrawal of any order suspending the effectiveness of such Shelf Registration Statement), and shall use its reasonable best efforts to as promptly as is reasonably practicable amend such Shelf Registration Statement in a manner reasonably expected to result in the withdrawal of any order suspending the effectiveness of such
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Shelf Registration Statement, or file an additional or replacement Shelf Registration Statement, and shall use its reasonable best efforts to (a) cause such additional or replacement Shelf Registration Statement to become effective under the Securities Act as promptly as reasonably practicable after the filing thereof, and (b) keep such additional or replacement Shelf Registration Statement continuously effective and usable until the end of the Effectiveness Period. Subject to the terms and conditions set forth in Section 3(f) and Section 3(g), the Company shall use reasonable best efforts to cooperate in any shelf take-down, whether or not underwritten, by amending or supplementing the Prospectus related to any Shelf Registration Statement as may be reasonably requested by the Holders or as otherwise required, until such time as all Registrable Securities that could be sold in such Shelf Registration Statement have been sold or are no longer outstanding. The Company shall supplement and amend any Shelf Registration Statement if required by the Securities Act or the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement.
(ii)If the Company is a well-known seasoned issuer (as defined in Rule 405) (a “WKSI”) at a time when it is obligated to file a Shelf Registration Statement pursuant to this Agreement, the Company shall file an automatic shelf registration statement (as defined in Rule 405 of the Securities Act) on Form S-3 (an “Automatic Shelf Registration Statement”) in accordance with the requirements of the Securities Act and the rules and regulations of the SEC thereunder, that covers the Registrable Securities. The Company shall pay the registration fee for all Registrable Securities to be registered pursuant to an Automatic Shelf Registration Statement at the time of filing of the Automatic Shelf Registration Statement and shall not elect to pay any portion of the registration fee on a deferred basis. If at any time following the filing of an Automatic Shelf Registration Statement when the Company is required to re-evaluate its WKSI status the Company determines that it is not a WKSI, the Company shall use its reasonable best efforts to post-effectively amend the Automatic Shelf Registration Statement to a Shelf Registration Statement that is not automatically effective or file a new Shelf Registration Statement.
(iii)To the extent that the Company becomes ineligible to use Form S-3, the Company shall file a “shelf” registration statement on Form S-1 registering the Registrable Securities for resale not later than thirty (30) calendar days after the date of such ineligibility and use its reasonable best efforts to have such Registration Statement declared effective as promptly as practicable, and upon effectiveness of such Registration Statement, the Company shall have the same obligations with respect to maintaining the effectiveness thereof, and amending and supplementing the same, as it has with respect to a Shelf Registration Statement under this Section 3(e).
(iv) If a Person entitled to the benefits of this Agreement becomes a Holder after a Shelf Registration Statement becomes effective under the Securities Act, the Company shall as promptly as is reasonably practicable following delivery of (i) written notice to the Company of such Person becoming a Holder and requesting for its name to be included as a selling securityholder in the Prospectus related to the Shelf Registration
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Statement with respect to its Registrable Securities and (ii) such information as is reasonably requested by the Company within two (2) Business Days of receipt of such notice as is reasonably necessary for the Company to comply with its obligations of this Section 3(e)(iv);
(a) if required and permitted by applicable law, file with the SEC a supplement to the related Prospectus or a post-effective amendment to the Shelf Registration Statement so that such Holder is named as a selling securityholder in the Shelf Registration Statement and the related Prospectus in such a manner as to permit such Holder to deliver a Prospectus to purchasers of the Registrable Securities in accordance with applicable law;
(b)if, pursuant to Section 3(e)(iv)(a), the Company shall have filed a post-effective amendment to the Shelf Registration Statement that is not automatically effective, use its reasonable best efforts to cause such post-effective amendment to become effective under the Securities Act as promptly as is reasonably practicable; and
(c)notify such Holder as promptly as is reasonably practicable after the effectiveness under the Securities Act of any post-effective amendment filed pursuant to Section 3(e)(iv)(a).
(f)Shelf-Take Downs. At any time that a Shelf Registration Statement covering Registrable Securities pursuant to Section 2 or Section 3 is effective, any Holder or Holders may deliver a written notice to the Company (a “Take-Down Notice”) stating that such Holder or Holders intend to effect an underwritten offering (a “Shelf Underwritten Offering”) or other non-underwritten sale (a “Non-Underwritten Shelf Take-Down”) of all or part of the Registrable Securities held by such Holder or Holders and covered by the Shelf Registration Statement. Upon receipt of a Take-Down Notice the Company shall amend or supplement the Shelf Registration Statement as may be necessary in order to enable such Registrable Securities to be distributed pursuant to the Shelf Underwritten Offering (taking into account the inclusion of Registrable Securities by any other Holders that have requested have their Registrable Securities included in such Shelf Underwritten Offering pursuant to Section 3(b)) or Non-Underwritten Shelf Take-Down; provided, however that the Holders may not, without the Company’s prior written consent, (i) launch a Shelf Underwritten Offering the anticipated gross cash proceeds of which shall be less than $25,000,000 (unless the Holders participating in such Shelf Underwritten Offering are proposing to sell all of their remaining Registrable Securities), (ii) launch more than two (2) Shelf Underwritten Offerings at the request of the Holders within any 365-day period or (iii) launch a Shelf Underwritten Offering within any Blackout Period. Holders shall be entitled to deliver an unlimited number of Take-Down Notices to effect a Non-Underwritten Shelf Take-Down with respect to the Registrable Securities held by such Holder, in addition to the other registration rights provided in Section 2 and this Section 3. In connection with any Shelf Underwritten Offering:
(i)the Company shall also as promptly as practicable within two (2) Business Days deliver the Take-Down Notice to all other Holders with Registrable Securities included on such Shelf Registration Statement and permit each Holder to include its
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Registrable Securities included on the Shelf Registration Statement in the Shelf Underwritten Offering if such Holder notifies the Company (who shall notify the Holder or Holders that delivered the Take-Down Notice) within two (2) Business Days after delivery of the Take-Down Notice to such Holder, provided that the Company shall not provide a Take-Down Notice to any other Holder or holder of the Company’s equity securities in the case of a Block Sale by the Holder or Holders delivering a Take-Down Notice; and
(ii)in the event that the underwriter advises the Company (who shall notify the Holder or Holders that delivered the Take-Down Notice) in its good faith opinion that the total number or dollar amount of Registrable Securities proposed to be sold in such offering is such as to adversely affect the success of such offering (including an adverse effect on the per-share offering price), the underwriter may limit the number of shares which would otherwise be included in such Shelf Underwritten Offering in the same manner as described in Section 3(b) with respect to a limitation of shares to be included in a registration, the priority of allocation of Registrable Securities participating in such Shelf Underwritten Offering shall be in the order of priority and subject to the same conditions set forth in Section 3(b).
(g)Selection of Underwriters. If a requested registration pursuant to this Section 3 involves an underwritten offering the investment banker(s) and manager(s) and lead investment banker(s) and manager(s) to administer the offering shall be chosen by the Investor, if the Investor is participating in the underwritten offering, or by the Holders holding a majority of the Registrable Securities on an as converted basis participating in such underwritten offering, if the Investor is not participating in the underwritten offering, subject in each case to the approval of the Company (not to be unreasonably delayed or withheld). If the offering is underwritten, the right of any Holder to include the Registrable Securities held by such Holder in such underwritten offer pursuant to this Section 3 will be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting (unless otherwise agreed by the Demand Party, for an underwritten offer pursuant to a Demand Registration, or by the Holder or Holders delivering the Take-Down Notice, for a Shelf Underwritten Offering), and each such Holder will (together with the Company and the other Holders distributing their securities through such underwritten offering) enter into an underwriting agreement and lock-up agreement in customary form with the underwriter or underwriters selected for such underwritten offering (including pursuant to the terms of any over-allotment or “green shoe” option requested by the managing underwriter(s)); provided that (x) no Holder shall be required to sell more than the number of Registrable Securities that such Holder has requested the Company to include in any registration and (y) if any Holder disapproves of the terms of the underwriting, such Holder may elect to withdraw prior to launching the applicable underwritten offering by written notice to the Company, the managing underwriter or underwriters and, in connection with an underwritten Demand Registration pursuant to this Section 3, the Demand Party.
4.Registration Procedures. If and whenever the Company is required to use its reasonable best efforts to effect the registration of any Registrable Securities under the Securities
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Act as provided in Section 2 and Section 3 hereof, the Company shall effect such registration to permit the sale of such Registrable Securities in accordance with the intended method or methods of disposition thereof, and pursuant thereto the Company shall cooperate in the sale of the securities and shall, as expeditiously as possible:
(a)prepare and file, in each case as promptly as practicable, with the SEC a Registration Statement or Registration Statements on such form as shall be available for the sale of the Registrable Securities by the Holders thereof or by the Company in accordance with the intended method or methods of distribution thereof, make all required filings with FINRA and use its reasonable best efforts to cause such Registration Statement to become effective as soon as practicable and to remain effective as provided herein; provided, however, that before filing a Registration Statement or Prospectus or any amendments or supplements thereto (including any free writing prospectuses under Rule 433 under the Securities Act (each a “Free Writing Prospectus”) and including such documents that would be incorporated or deemed to be incorporated therein by reference), the Company shall furnish or otherwise make available to the Holders of the Registrable Securities covered by such Registration Statement, their counsel and the managing underwriters, if any, copies of all such documents proposed to be filed, which documents will be subject to the reasonable review and comment of such counsel, and such other documents reasonably requested by such counsel, including any comment letter from the SEC, and, if requested by such counsel, provide such counsel reasonable opportunity to participate in the preparation of such Registration Statement and each Prospectus included therein and such other opportunities to conduct a reasonable investigation within the meaning of the Securities Act, including reasonable access to the Company’s books and records, officers, accountants and other advisors. The Company shall not file any such Registration Statement or Prospectus or any amendments or supplements thereto (including any Free Writing Prospectuses and including such documents that, upon filing, would be incorporated or deemed to be incorporated by reference therein) with respect to a Demand Registration to which the Demand Party, the Holders of a majority of the Registrable Securities covered by such Registration Statement, or their counsel, or the managing underwriters, if any, shall reasonably object, in writing, on a timely basis, unless, in the opinion of the Company, such filing is necessary to comply with applicable law;
(b)prepare and file with the SEC such amendments, post-effective amendments and supplements to each Registration Statement and the Prospectus used in connection therewith and such Free Writing Prospectuses and Exchange Act reports as may be necessary to keep such Registration Statement continuously effective for the period of the distribution contemplated thereby as provided herein and comply in all material respects with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Registration Statement in accordance with the participating Holders’ intended method of distribution set forth in such Registration Statement; and cause the related Prospectus to be supplemented by any Prospectus supplement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of the Registrable Securities covered by such Registration
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Statement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act, in each case, until such time as all of such Registrable Securities have been disposed of in accordance with the intended method or methods of disposition by the seller or sellers thereof set forth in such Registration Statement;
(c)notify each selling Holder, its counsel and the managing underwriters, if any, promptly, and (if requested by any such Person) confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment or any Free Writing Prospectus has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC or any other federal or state governmental authority for amendments or supplements to a Registration Statement or related Prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) if at any time the Company has reason to believe that the representations and warranties of the Company contained in any agreement (including any underwriting agreement) contemplated by Section 4(n) below cease to be true and correct, (v) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose, and (vi) of the happening of any event that makes any statement made in such Registration Statement, related Prospectus, Free Writing Prospectus, amendment or supplement thereto or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in such Registration Statement, Prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, not misleading or incomplete in the light of the circumstances then existing, and that in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading (which notice shall notify the selling Holders only of the occurrence of such an event and shall provide no additional information regarding such event to the extent such information would constitute material non-public information);
(d)use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction at the earliest date reasonably practical;
(e)if requested by the managing underwriters, if any, the Demand Party with respect to the offering, or the Holders of a majority of the then issued and outstanding Registrable Securities being sold in connection with an underwritten offering, promptly include in a Prospectus supplement or post-effective amendment such information as the
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managing underwriters, if any, or such Demand Party or Holders, as the case may be, may reasonably request in order to permit the intended method of distribution of such Registrable Securities and make all required filings of such Prospectus supplement or such post-effective amendment as soon as practicable after the Company has received such request; provided, however, that the Company shall not be required to take any actions under this Section 4(e) that are not, in the opinion of counsel for the Company, in compliance with applicable law;
(f)deliver to each selling Holder, its counsel, and the underwriters, if any, without charge, as many copies of the Registration Statement, Prospectus or Prospectuses (including each form of Prospectus) and each amendment, supplement or post-effective amendment thereto as such Persons may reasonably request from time to time in connection with the distribution of the Registrable Securities; and the Company, subject to the last paragraph of this Section 4, hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any such amendment or supplement thereto;
(g)prior to any public offering of Registrable Securities, use its reasonable best efforts to register or qualify (or exempt from such registration or qualification), or cooperate with the selling Holders, the underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification), of such Registrable Securities for offer and sale under such other securities or “Blue Sky” laws of such jurisdictions within the United States as any such Holder or underwriter reasonably requests in writing and to keep each such registration or qualification (or exemption therefrom) effective during the period such Registration Statement is required to be kept effective and to take any other action that may be necessary or advisable to enable such Holders to consummate the disposition of such Registrable Securities in such jurisdiction in accordance with the intended method or methods of disposition thereof; provided, however, that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it is not then so required to qualify but for this paragraph (g) or (ii) take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject (other than service of process in connection with such registration or qualification or any sale of Registrable Securities in connection therewith;
(h)cooperate with the selling Holders and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates (not bearing any legends) representing Registrable Securities to be sold after receiving written representations from each Holder of such Registrable Securities that the Registrable Securities represented by the certificates so delivered by such Holder will be transferred in accordance with the Registration Statement, and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters, if any, or Holders may request;
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(i)use its reasonable best efforts to cause the Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities within the United States as may be necessary in light of the business or operations of the Company to enable the seller or sellers thereof or the managing underwriters, if any, to consummate the disposition of such Registrable Securities, in accordance with the intended method or methods thereof, except as may be required solely as a consequence of the nature of such selling Holder’s business, in which case the Company will cooperate in all reasonable respects with the filing of such Registration Statement and the granting of such approvals, as may be necessary to enable the selling Holder or Holders thereof or the underwriters, if any, to consummate the disposition of such Registrable Securities in accordance with the intended method or methods thereof;
(j)upon the occurrence of any event contemplated by Section 4(c)(vi) above, promptly prepare a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or incomplete in the light of the circumstances then existing, and deliver such reasonable number of copies thereof as a selling Holder or underwriter may request;
(k)prior to the effective date of the Registration Statement relating to the Registrable Securities, provide a CUSIP number for the Registrable Securities;
(l)provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by such Registration Statement from and after a date not later than the effective date of such Registration Statement (and in connection therewith, if reasonably required by the Company’s transfer agent, the Company will cause an opinion of counsel as to the effectiveness of the Registration Statement to be delivered to such transfer agent, together with any other authorizations, certificates and directions reasonably required by the transfer agent which authorize and direct the transfer agent to issue such Registrable Securities without any legend upon sale by the Holder or the underwriter or managing underwriter of an underwritten offering of Registrable Securities, if any, of such Registrable Securities under the Registration Statement);
(m)use its reasonable best efforts to cause all shares of Registrable Securities covered by such Registration Statement to be listed on the NYSE or other national securities exchange on which the Common Stock is then listed, prior to the effectiveness of such Registration Statement (or, if no Common Stock issued by the Company is then listed on any securities exchange, use its reasonable best efforts to cause such Registrable Securities to be so listed on the NYSE or NASDAQ, as determined by the Company);
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(n)enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings) and take all such other actions reasonably requested by the Demand Party or the Holders of a majority of the Registrable Securities being sold in connection with any offering including Registrable Securities (including those actions reasonably requested by the managing underwriters, if any) to expedite or facilitate the disposition of such Registrable Securities, and in such connection, whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten registration, (i) make such representations and warranties to the Holders of such Registrable Securities and the underwriters, if any, with respect to the business of the Company and its subsidiaries, and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings, and, if true, confirm the same if and when requested, (ii) use its reasonable best efforts to furnish to the selling Holders and the underwriters, if any, opinions of outside counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any) addressed to each of the underwriters, if any, covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such counsel and underwriters, (iii) use its reasonable best efforts to obtain “cold comfort” letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement) who have certified the financial statements included in such Registration Statement, addressed to each selling Holder (unless such accountants shall be prohibited from so addressing such letters by applicable standards of the accounting profession) and each of the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in “cold comfort” letters in connection with underwritten offerings, (iv) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures substantially to the effect set forth in Section 5 hereof with respect to all parties to be indemnified pursuant to Section 5 except as otherwise agreed by the Holders of a majority of the Registrable Securities being sold pursuant to such Registration Statement and (v) deliver such documents and certificates as may be reasonably requested by the Demand Party, the Holders of a majority of the Registrable Securities being sold pursuant to such Registration Statement, its or their counsel and/or the managing underwriters, if any, to evidence the continued validity of the representations and warranties made pursuant to Section 4(n)(i) above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. The above shall be done at each closing under such underwriting or similar agreement, or as and to the extent required thereunder;
(o)make available for inspection by the selling Holder or Holders, any underwriter participating in any such disposition of Registrable Securities, if any, and any attorneys or accountants retained by such selling Holder or Holders or underwriter, at the
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offices where normally kept, during reasonable business hours, all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries, and cause the officers, directors and employees of the Company and its subsidiaries to supply all information and participate upon reasonable prior written notice and during regular business hours, in customary due diligence sessions in each case reasonably requested by any such Holders, underwriter(s), attorney(s) or accountant(s) in connection with such Registration Statement; provided, however, that any information that is not generally publicly available at the time of delivery of such information shall be kept confidential by such Persons unless (i) disclosure of such information is required by court or administrative order or in connection with an audit or examination by, or a blanket document request from, a regulatory or self-regulatory authority, bank examiner or auditor, (ii) disclosure of such information, in the opinion of counsel to such Person, is required by law or applicable legal process (including in connection with the offer and sale of securities pursuant to the rules and regulations of the SEC), (iii) such information is or becomes generally available to the public other than as a result of a non-permitted disclosure or failure to safeguard by such Person or (iv) such information (A) was known to such Persons or their representatives from a source other than the Company when such source, to the knowledge of the Persons, was not bound by any contractual, legal or fiduciary obligation of confidentiality to the Company with respect to such information, (B) becomes available to the Persons from a source other than the Company when such source, to the knowledge of the Persons, is not bound by any contractual, legal or fiduciary obligation of confidentiality to the Company with respect to such information or (C) was developed independently by the Persons or their respective representatives without the use of, or reliance on, information provided by the Company. In the case of a proposed disclosure pursuant to (i) or (ii) above, such Person shall be required to give the Company written notice of the proposed disclosure prior to such disclosure and, if requested by the Company, assist the Company in seeking to prevent or limit the proposed disclosure. Without limiting the foregoing, no such information shall be used by such Person as the basis for any market transactions in securities of the Company or its subsidiaries in violation of law;
(p)cause its officers, including its executive officers, to use their reasonable best efforts to support the marketing of the Registrable Securities covered by the Registration Statement (including, without limitation, participation in “road shows” and other customary marketing activities) taking into account the Company’s business needs;
(q)cooperate with each Holder selling Registrable Securities and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA including the use of reasonable best efforts to obtain FINRA’s pre-clearance or pre-approval of the registration statement and applicable prospectus upon filing with the SEC;
(r)otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as
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reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement, which earnings statement will satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; and
(s)cooperate with the Holders subject to the Registration Statement and with the underwriter(s) or agent participating in the distribution, if any, to facilitate any Charitable Gifting Event and to prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to permit any such recipient Charitable Organization to sell in the underwritten offering if it so elects.
The Company may require each Holder as to which any registration is being effected to furnish to the Company in writing such information required in connection with such registration regarding such Holder and the distribution of such Registrable Securities as the Company may, from time to time, reasonably request in writing and the Company may exclude from such registration the Registrable Securities of any Holder who unreasonably fails to furnish such information within a reasonable time after receiving such request.
The Company agrees not to file or make any amendment to any Registration Statement with respect to any Registrable Securities, or any amendment of or supplement to the Prospectus or any Free Writing Prospectus used in connection therewith, that refers to any Holder covered thereby by name, or otherwise identifies such Holder as the holder of any securities of the Company, without the consent of such Holder, such consent not to be unreasonably withheld or delayed, unless and to the extent such disclosure is required by law.
If the Company files any shelf registration statement for the benefit of the holders of any of its securities other than the Holders, the Company agrees that it shall use its reasonable best efforts to include in such registration statement such disclosures as may be required by Rule 430B under the Securities Act (referring to the unnamed selling security holders in a generic manner by identifying the initial offering of the securities to the Holders) in order to ensure that the Holders may be added to such Shelf Registration Statement at a later time through the filing of a Prospectus supplement rather than a post-effective amendment.
Notwithstanding any provision hereof to the contrary, to the extent that any pro rata or other allocation or reduction of Registrable Securities is required pursuant to Sections 2(b), 3(b), 3(g)(ii) or any other section herein, (i) all Registrable Securities transferred by a Holder to a Charitable Organization in connection with an underwritten offering for which such pro rata or other allocation is required shall be included in the number of Registrable Securities deemed to be held by each Holder (or deemed to be included in such Holder’s request for inclusion of Registrable Securities) for purposes of calculating such Holder’s pro rata allocation or reduction in such underwritten offering and (ii) the number of Registrable Securities that a Holder is otherwise entitled to include in such underwritten offering shall be reduced by the number of Registrable Securities transferred by such Holder to a Charitable Organization in connection with such underwritten offering.
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Each Holder agrees if such Holder has Registrable Securities covered by such Registration Statement that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(c)(ii), Section 4(c)(iii), Section 4(c)(iv), Section 4(c)(v) or Section 4(c)(vi) hereof, such Holder will forthwith discontinue disposition of such Registrable Securities covered by such Registration Statement or Prospectus until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 4(j) hereof, or until it is advised in writing by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus; provided, however, that the time periods under Section 3 with respect to the length of time that the effectiveness of a Registration Statement must be maintained shall automatically be extended by the amount of time any Holder is required to discontinue disposition of such securities.
5.Indemnification.
(a)Indemnification by the Company. The Company shall, without limitation as to time, indemnify and hold harmless, to the fullest extent permitted by law, each Holder whose Registrable Securities are covered by a Registration Statement or Prospectus, or as to whose Registrable Securities registration, qualification, or compliance under applicable “blue sky” or other state securities laws has been effected pursuant to this Agreement, together with such Holder’s current and former officers, directors, partners, members, managers, shareholders, accountants, attorneys, agents and employees of each of them, each Person who controls each such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, partners, members, managers, shareholders, accountants, attorneys, agents and employees of each such controlling person, each underwriter, if any, and each Person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) such underwriter (each such person being referred to herein as a “Covered Person”), from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, costs of preparation and reasonable attorneys’ fees and any legal or other fees or expenses incurred by such party in connection with any investigation or proceeding), expenses, judgments, fines, penalties, charges and amounts paid in settlement and other liabilities, joint or several (or any actions in respect thereof) (collectively, “Losses”), as incurred, arising out of or based upon any untrue statement (or alleged untrue statement) of a material fact contained in any Registration Statement, Prospectus, offering circular, or other document relating to any such document or incident to any such registration, qualification, or compliance, (including any related notification or Free Writing Prospectus) or any amendment thereof or supplement thereto or any document incorporated by reference therein, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation thereunder applicable to the Company and (without limitation of the preceding portions of this Section 5(a)) will reimburse each such Covered Person for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any such Loss, provided that the Company will not be liable in any such case to the extent that any such Loss arises out of or is based on any untrue statement or omission by such Covered Person related to such Covered
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Person or its Affiliates (other than the Company or any of its subsidiaries, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement, Prospectus, offering circular, Free Writing Prospectus or any amendment thereof or supplement thereto, or any document incorporated by reference therein, or other document in reliance upon and in conformity with written information furnished to the Company by such Covered Person with respect to such Covered Person for use therein. It is agreed that the indemnity agreement contained in this Section 5(a) shall not apply to amounts paid in settlement of any such Loss or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably delayed or withheld).
(b)Indemnification by Holder. The Company may require, as a condition to including any Registrable Securities in any Registration Statement filed in accordance with Section 4 hereof, that the Company shall have received an undertaking reasonably satisfactory to it from the participating Holder of such Registrable Securities to indemnify, to the fullest extent permitted by law, severally and not jointly with any other Holders, the Company, its directors and officers and each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), from and against all Losses arising out of or based on any untrue statement of a material fact contained in any such Registration Statement, Prospectus, Free Writing Prospectus, offering circular, or other document, or any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will (without limitation of the portions of this Section 5(b)) reimburse the Company, such directors, officers and controlling persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such Loss, in each case to the extent, but only to the extent, that such untrue statement or omission is made in such Registration Statement, Prospectus, Free Writing Prospectus, offering circular, or other document in reliance upon and in conformity with written information furnished to the Company by such Holder with respect to such Holder and stated to be specifically for inclusion in such Registration Statement, Prospectus, offering circular or other document; provided, however, that the obligations of such Holder hereunder shall not apply to amounts paid in settlement of any such Losses (or actions in respect thereof) if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld); and provided, further, that the liability of such Holder shall be individual, not joint and several, for each Holder and; provided, further, that the liability of such Holder for any Loss shall be limited to the aggregate gross proceeds (net of any underwriting commissions and discounts, but before deducting other expenses) received by such selling Holder from the sale of Registrable Securities covered by such Registration Statement, Prospectus, offering circular or other document containing such untrue statement (or alleged untrue statement) or omission (or alleged omission) (less the aggregate amount of any damages which such Holder has otherwise been required to pay in respect of such Loss or any substantially similar Loss arising from the sale of such Registrable Securities).
(c)Conduct of Indemnification Proceedings. If any Person shall be entitled to indemnification hereunder (an “Indemnified Party”), such Indemnified Party shall give prompt notice to the party from which such indemnity is sought (the “Indemnifying Party”) of any claim or of the commencement of any proceeding with respect to which such Indemnified Party seeks
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indemnification or contribution pursuant hereto; provided, however, that the delay or failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party from any obligation or liability except to the extent that the Indemnifying Party has been materially prejudiced by such delay or failure. The Indemnifying Party shall have the right, exercisable by giving written notice to an Indemnified Party promptly after the receipt of written notice from such Indemnified Party of such claim or proceeding, to, unless in the Indemnified Party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, assume, at the Indemnifying Party’s expense, the defense of any such claim or proceeding, with counsel reasonably satisfactory to such Indemnified Party; provided, however, that an Indemnified Party shall have the right to employ separate counsel in any such claim or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless: (i) the Indemnifying Party agrees to pay such fees and expenses; or (ii) the Indemnifying Party fails promptly to assume, or in the event of a conflict of interest cannot assume, the defense of such claim or proceeding or fails to employ counsel reasonably satisfactory to such Indemnified Party; in which case the Indemnified Party shall have the right to employ counsel and to assume the defense of such claim or proceeding at the Indemnifying Party’s expense; provided, further, however, that the Indemnifying Party shall not, in connection with any one such claim or proceeding or separate but substantially similar or related claims or proceedings in the same jurisdiction, arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one firm of attorneys (together with appropriate local counsel) at any time for all of the Indemnified Parties, or for fees and expenses that are not reasonable. Whether or not such defense is assumed by the Indemnifying Party, such Indemnifying Party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably delayed or withheld). Without the prior written consent of the Indemnified Party, the Indemnifying Party shall not consent to entry of any judgment or enter into any settlement that (x) does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release, in form and substance reasonably satisfactory to the Indemnified Party, from all liability in respect of such claim or litigation for which such Indemnified Party would be entitled to indemnification hereunder or (y) involves the imposition of equitable remedies or the imposition of any obligations on the Indemnified Party or adversely affects such Indemnified Party other than as a result of financial obligations for which such Indemnified Party would be entitled to indemnification hereunder.
(d)Contribution. If the indemnification provided for in this Section 5 is unavailable to an Indemnified Party in respect of any Losses (other than in accordance with its terms), then each applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party, on the one hand, and such Indemnified Party, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party, on the one hand, and Indemnified Party, on the other hand, shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made (or omitted) by, or relates to
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information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent any such action, statement or omission.
The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), an Indemnifying Party that is a selling Holder shall not be required to contribute any amount in excess of the net proceeds to such Holder from the Registrable Securities sold pursuant to the Registration Statement which gives rise to such obligation to contribute (less the aggregate amount of any damages which the Holder has otherwise been required to pay in respect of such Loss or any substantially similar Loss arising from the sale of such Registrable Securities). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. No selling Holder shall be liable for contribution under this Section 5(d), except under such circumstances as such selling Holder would have been liable for indemnification under this Section 5 if such indemnification were enforceable under applicable law.
Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten offering are more favorable to the Holders than the foregoing provisions, the provisions in the underwriting agreement shall control.
(e)Deemed Underwriter. To the extent that any of the Holders is, or would be expected to be, deemed to be an underwriter of Registrable Securities pursuant to any SEC comments or policies or any court of law or otherwise, the Company agrees that (i) the indemnification and contribution provisions contained in this Section 5 shall be applicable to the benefit of such Holder in its role as deemed underwriter in addition to its capacity as a Holder (so long as the amount for which any other Holder is or becomes responsible does not exceed the amount for which such Holder would be responsible if the Holder were not deemed to be an underwriter of Registrable Securities) and (ii) such Holder and its representatives shall be entitled to conduct the due diligence which would normally be conducted in connection with an offering of securities registered under the Securities Act, including receipt of customary opinions and comfort letters.
(f)Other Indemnification. Indemnification similar to that specified in the preceding provisions of this Section 5 (with appropriate modifications) shall be given by the Company and each seller of Registrable Securities with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Securities Act.
(g)Non-Exclusivity. The obligations of the parties under this Section 5 shall be in addition to any liability which any party may otherwise have to any other party.
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(h)Survival. The indemnification provided for under this Section 5 shall survive the sale or other transfer of the Registrable Securities and the termination of this Agreement.
6.Registration Expenses. All reasonable fees and expenses incident to the performance of or compliance with this Agreement by the Company (including, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the SEC, NYSE, FINRA or the National Association of Securities Dealers, Inc. and (B) of compliance with securities or Blue Sky laws, including, without limitation, any fees and disbursements of counsel for the underwriters in connection with Blue Sky qualifications of the Registrable Securities pursuant to Section 4(h)), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing Prospectuses if the printing of Prospectuses is requested by the managing underwriters, if any, the Demand Party or by the Holders of a majority of the Registrable Securities included in any Registration Statement), (iii) messenger, telephone and delivery expenses of the Company, (iv) fees and disbursements of counsel for the Company, (v) expenses of the Company incurred in connection with any road show, (vi) fees and disbursements of all independent certified public accountants referred to in Section 4(o) hereof (including, without limitation, the expenses of any “cold comfort” letters required by this Agreement) and any other persons, including special experts retained by the Company and (vii) reasonable and documented fees and disbursements of one counsel for the Holders whose shares are included in a Registration Statement (which counsel shall be selected as set forth in Section 8) shall be borne by the Company whether or not any Registration Statement is filed or becomes effective. In addition, the Company shall pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit, the fees and expenses incurred in connection with the listing of the securities to be registered on the NYSE or such other national securities exchange on which the Common Stock is listed and rating agency fees and the fees and expenses of any Person, including special experts, retained by the Company.
The Company shall not be required to pay (i) fees and disbursements of any counsel retained by any Holder or by any underwriter (except as set forth in this Section 6 and in Section 8 or pursuant to the underwriting agreement entered into in connection with such offering), (ii) any underwriter’s fees (including discounts, commissions or fees of underwriters, selling brokers, dealer managers or similar securities industry professionals) relating to the distribution of the Registrable Securities (other than with respect to Registrable Securities sold by the Company), or (iii) any other expenses of the Holders not specifically required to be paid by the Company pursuant to the first paragraph of this Section 6.
7.Rule 144. The Company covenants that it will use reasonable best efforts to file in a timely manner the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Demand Party, make publicly available such information so long as necessary to permit sales of Registrable Securities pursuant
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to Rule 144), and it will take such further action as any Holder (or, if the Company is not required to file reports as provided above, any Demand Party) may reasonably request, all to the extent required from time to time to enable such Holder to sell shares of Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements and, if not, the specific requirements with which it did not so comply. Notwithstanding anything contained in this Section 7, the Company may deregister under Section 12 of the Exchange Act if it then is permitted to do so pursuant to the Exchange Act and the rules and regulations thereunder.
8.Selection of Counsel. In connection with any registration of Registrable Securities pursuant to Section 2 or Section 3 hereof, if the Investor is participating in such registration pursuant to Section 2 or Section 3 hereof, the Investor may select one counsel to represent it and all other Holders participating in such registration, and if the Investor is not participating in such registration pursuant to Section 2 or Section 3 hereof, the Holders of a majority of the Registrable Securities covered by any such registration may select one counsel to represent such Holders covered by such registration; provided, however, that in the event that the counsel selected as provided above is also acting as counsel to the Company in connection with such registration, the Holders shall be entitled to select one additional counsel at the Company’s expense to represent all Holders.
9.Miscellaneous.
(a)Holdback Agreement. In consideration for the Company agreeing to its obligations under this Agreement, each Holder agrees in connection with any underwritten offering of the Company’s securities with respect to which the Company has complied with its obligations under Section 2 or Section 3 hereof, as applicable (whether or not such Holder is participating in such offering) upon the request of the underwriters managing any such underwritten offering, not to effect (other than pursuant to such offering) any public sale or distribution of Registrable Securities, including, but not limited to, any sale pursuant to Rule 144, or make any short sale of, grant any option for the purchase of, or otherwise dispose of any Registrable Securities, any other equity securities of the Company or any securities convertible into or exchangeable or exercisable for any equity securities of the Company, in each case without the prior written consent of such underwriters and subject to customary exceptions, during the Holdback Period; provided that nothing herein will prevent (i) any Holder that is a partnership or corporation from making a transfer to an Affiliate that is otherwise in compliance with applicable securities laws, (ii) any pledge of Registrable Securities by a Holder in connection with a Permitted Loan (as defined in the Investment Agreement) or (iii) any foreclosure in connection with a Permitted Loan (as defined in the Investment Agreement) or transfer in lieu of a foreclosure thereunder, in each case that is otherwise in compliance with applicable securities laws. Notwithstanding the foregoing, any discretionary waiver or termination of this holdback provision by such underwriters with respect to any of the Holders
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shall apply to the other Holders as well, pro rata based upon the number of shares subject to such obligations.
If any registration pursuant to Section 3 of this Agreement shall be in connection with any underwritten public offering, if requested by the managing underwriter or underwriters, the Company will not effect any public sale or distribution of any common equity (or securities convertible into or exchangeable or exercisable for common equity) (other than a registration statement (i) on Form S-4, Form S-8 or any successor forms thereto or (ii) filed solely in connection with an exchange offer or any employee benefit or dividend reinvestment plan) for its own account, during the Holdback Period.
(b)Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given without the written consent of each of the Company and the Holders of a majority of the Registrable Securities on an as-converted basis; provided, however, that (x) for so long as the 33% Beneficial Ownership Requirement (as defined in the applicable Investment Agreement) is met, this Agreement may not be amended modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, without Investor’s prior written consent, (y) any amendment, modification, supplement, waiver or consent to departures from the provisions of this Agreement that would subject a Holder to adverse differential treatment relative to the other Holders shall require the agreement of the differentially treated Holder, and (z) any amendment, modification, supplement, waiver or consent to departures from the provisions of this Agreement that would be adverse to a right specifically granted to a specific Stockholder herein (but not to other Stockholders) shall require the agreement of that Stockholder. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by Holders of at least a majority of the Registrable Securities being sold by such Holders pursuant to such Registration Statement.
(c)Successors, Assigns and Transferees. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. The provisions of this Agreement which are for the benefit of the parties hereto other than the Company may be transferred or assigned to any Person in connection with a Transfer (as defined in the Investment Agreement) of Series A Preferred Stock or Common Stock issued upon conversion of the Series A Preferred Stock to such Person in a Transfer permitted by Section 5.06(b)(i) or Section 5.06(b)(iv) (for transfers approved in writing by the Board) of the Investment Agreement or to any lender under a Permitted Loan (as defined in the Investment Agreement) in connection with a Transfer permitted by Section 5.06(b)(vi) of the Investment Agreement (any such transferee or assignee, a “Permitted Transferee”); provided, however, that (i) prior written notice of such assignment of rights is given to the Company and (ii) such Permitted Transferee agrees in writing to be bound by, and subject to, this Agreement as a Holder pursuant to a written instrument in form and substance reasonably acceptable to the Company. Except as provided in Section 5 with respect to an Indemnified Party, nothing
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expressed or mentioned in this Agreement is intended or shall be construed to give any Person other than the parties hereto and their respective successors and permitted assigns any legal or equitable right, remedy or claim under, or in respect of this Agreement or any provision herein contained.
(d)Notices. All notices, requests and other communications to any party hereunder shall be in writing and shall be deemed given if delivered personally, emailed (which is confirmed) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses:
if to the Company, to:
Blend Labs, Inc.
Blend Labs, Inc.
415 Kearny Street
San Francisco, California 94108
Attention: [ ]
Email: [ ]
Attention: [ ]
Email: [ ]
with a copy (which shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304
Attn: [ ]
Palo Alto, CA 94304
Attn: [ ]
Email: [ ]
if to the Investor:
Haveli Brooks Aggregator, L.P.
c/o Haveli Investments Software Fund I, L.P.
405 Colorado Street, Suite 1600
405 Colorado Street, Suite 1600
Austin, TX 78701
Attention: [ ]
Email: [ ]
with a copy (which shall not constitute notice) to:
Bailey Duquette P.C.
104 Charlton Street, 1W
104 Charlton Street, 1W
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New York, NY 10014
Attention: [ ]
Attention: [ ]
Email: [ ]
if to any other Stockholder, to such address or email address as set forth in any written joinder agreement executed by such Stockholder as contemplated by Section 9(c);
or, with respect to any party hereto, such other address or email address as such party may hereafter specify by like notice to the other parties hereto (and, to the extent applicable, Schedule I hereto will be updated to reflect any such change in address or email address specified in such notice), or as set forth in any written joinder agreement contemplated by Section 9(c). All such notices, requests and other communications shall be deemed received on the date of actual receipt by the recipient thereof if received prior to 5:00 p.m. local time in the place of receipt and such day is a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt.
(e)Descriptive Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of terms contained herein.
(f)Severability. If any term, condition or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms, provisions and conditions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term, condition or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law.
(g)Counterparts. This Agreement may be executed in one or more counterparts (including by facsimile or electronic mail), each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other parties hereto.
(h)Governing Law; Submission to Jurisdiction. (i) This Agreement and all matters, claims or Actions (whether at law, in equity, in Contract, in tort or otherwise) based upon, arising out of or relating to this Agreement or the negotiation, execution or performance of this Agreement (collectively, the “Relevant Matters”), shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under any applicable conflict of Laws principles.
All Actions arising out of or relating to any Relevant Matter shall be heard and determined in the Chancery Court of the State of Delaware (or, if the Chancery Court of the State
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of Delaware declines to accept jurisdiction over any Action, any state or federal court within the State of Delaware) and the parties hereto hereby irrevocably submit to the exclusive jurisdiction and venue of such courts in any such Action and irrevocably waive the defense of an inconvenient forum or lack of jurisdiction to the maintenance of any such Action. The consents to jurisdiction and venue set forth in this Section 9(h) shall not constitute general consents to service of process in the State of Delaware and shall have no effect for any purpose except as provided in this Section 9(h) and shall not be deemed to confer rights on any Person other than the parties hereto. Each party hereto agrees that service of process upon such party in any Action arising out of or relating to this Agreement shall be effective if notice is given by overnight courier at the address set forth in Section 9(d) of this Agreement. The parties hereto and the parties hereby waive any right to stay or dismiss any action or proceeding in connection with any Relevant Matter brought before the foregoing courts on the basis of (i) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason or that it or any of its property is immune from the above-described legal process, (ii) that such action or proceeding is brought in an inconvenient forum, that venue for the action or proceeding is improper or that this Agreement may not be enforced in or by such courts, or (iii) any other defense that would hinder or delay the levy, execution or collection of any amount to which any Party hereto is entitled pursuant to any final judgment of any court having jurisdiction. The parties hereto agree that a final judgment in any such Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law; provided that nothing in the foregoing shall restrict any party’s rights to seek any post-judgment relief regarding, or any appeal from, a final trial court judgment.
(i)Specific Performance. Each party hereto acknowledges that money damages would not be an adequate remedy in the event that any of the covenants or agreements in this Agreement are not performed in accordance with its terms, and it is therefore agreed that in addition to and without limiting any other remedy or right it may have, the non-breaching party will have the right to an injunction, temporary restraining order or other equitable relief in any court of competent jurisdiction enjoining any such breach and enforcing specifically the terms and provisions hereof.
(j)Further Assurances. At any time or from time to time after the date hereof, the parties agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and to otherwise carry out the intent of the parties hereunder.
(k)Termination. The provisions of this Agreement (other than Section 5 and Section 6) shall terminate upon the earliest to occur of (i) its termination by the written agreement of all parties hereto or their respective successors in interest, (ii) the date on which all shares of Common Stock and Series A Preferred Stock have ceased to be Registrable Securities, and (iii) the dissolution, liquidation or winding up of the Company. Nothing herein shall relieve any party from any liability for the breach of any of the agreements set forth in this Agreement.
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(l)No Inconsistent Agreements; Most Favored Nations. The Company shall not hereafter enter into any agreement with respect to its securities that is inconsistent with, violates or otherwise conflicts with the rights granted to the Holders in this Agreement. In the event that the Company desires to enter into any agreement with any Person, including any holder or prospective holder of any securities of the Company, giving or granting any registration (or related) rights the terms of which are more favorable than or senior to the registration or other rights granted to the Holders hereunder, then (i) the Company shall provide prior written notice thereof to the Holders and (ii) upon execution by the Company of such other agreement, the terms and conditions of this Agreement shall be, without any further action by the Holders or the Company, automatically amended and modified in an economically and legally equivalent manner such that the Holders shall receive the benefit of the more favorable terms and/or conditions (as the case may be) set forth in such other agreement, provided that upon written notice to the Company at any time, any Holder may elect not to accept the benefit of any such amended or modified term or condition, in which event the term or condition contained in this Agreement shall apply to such Holder as it was in effect immediately prior to such amendment or modification as if such amendment or modification never occurred with respect to such Holder.
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IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or caused this Agreement to be duly executed on its behalf as of the date first written above.
BLEND LABS, INC.
By: /s/ Nima Ghamsari
Name: Nima Ghamsari
Title: Head of Blend
Signature Page to Registration Rights Agreement
HAVELI BROOKS AGGREGATOR, L.P.
By: Haveli Investments Software Fund I GP, LLC
By: Whanau Interests LLC,
its sole member
By: /s/ Brian N. Sheth________________________
Name: Brian N. Sheth
Title: Managing Member
Signature Page to Registration Rights Agreement
SCHEDULE I
| Stockholder Name | Address | ||||
| Haveli Brooks Aggregator, L.P. | Haveli Brooks Aggregator, L.P. c/o Haveli Investments Software Fund I, L.P. 405 Colorado Street, Suite 1600 Austin, TX 78701 Attention: Jason Mathews Della Richardson Email: jmathews@havelii.com drichardson@havelii.com with a copy (which shall not constitute notice) to: Bailey Duquette P.C. 104 Charlton Street, 1W New York, NY 10014 Attention: Jeffrey Geron Email: jeffrey@baileyduquette.com | ||||
Blend Labs Announces Strategic Partnership with Haveli Investments, including $150 Million Investment
Brian Sheth, Haveli’s Chief Investment Officer, to Join Blend’s Board
April 29, 2024 4:05 PM Eastern Standard Time
SAN FRANCISCO--(BUSINESS WIRE)--Blend Labs, Inc. (NYSE: BLND), (“Blend” or the “Company”), a leading provider of cloud banking services, and Haveli Investments (“Haveli”), a technology-focused private equity firm, today announced a $150 million investment in the Company by Haveli Investments in the form of convertible preferred stock with a zero percent coupon. Blend will use approximately $145 million of the proceeds to repay all amounts payable under its existing credit agreement, and the remainder for general corporate purposes. This investment further strengthens Blend’s financial position and balance sheet for long-term growth and value creation.
“This partnership with Haveli reflects confidence in Blend’s continued journey to transform financial services and is an important show of faith in our growth strategy,” said Nima Ghamsari, Co-founder and Head of Blend. “We look forward to working with Haveli to advance our goal of driving innovation in the space and delivering lasting value for our customers and shareholders.”
“We are pleased to announce our partnership with Blend, a market leader in both Mortgage and Consumer Banking software for banks, credit unions, and other lending institutions,” said Brian Sheth, Chief Investment Officer of Haveli Investments. “We have known the Blend team for several years and have been impressed with their innovation and vision. With a blue-chip customer base and an improved balance sheet, we believe Blend is well positioned to succeed with its modern, next-gen platform. We’re excited to start this partnership, and we believe that we can work together with Blend to increase long-term value for all shareholders, customers, employees, and other key stakeholders.”
In connection with the investment, Mr. Sheth will join Blend’s Board of Directors.
Investment Terms
Haveli Investments purchased $150 million of Series A convertible preferred stock. The Series A preferred stock will be convertible into shares of Blend’s Class A common stock at an initial conversion price of $3.25 per share, representing a 31% premium to the closing price on April 26, 2024 and a 13% premium to the volume-weighted average closing price over the 30-day period ending on the same date.
The preferred stock can be converted into Class A common stock at any time. Further, Haveli may require the Company to repurchase the preferred stock after five years and Blend may redeem the preferred stock after seven years.
Blend issued Haveli a warrant to purchase approximately 11 million shares of Class A common stock, at a purchase price of $4.50 per share, representing an 81% premium to the closing price of April 26, 2024 and a 57% premium to the volume-weighted average closing price over the 30-day period ending on the same date. The warrant represents a total consideration of up to $50 million and is exercisable for a period of 24 months.
Webcast Information
Webcast Information
On Monday, April 29, 2024 at 6:00 pm ET, Blend will host a live webcast to provide more information on this investment. A link to the discussion will be made available on the Company's investor relations website at https://investor.blend.com. A replay will also be made available following the discussion at the same website.
In addition, the Company will host an earnings conference call on Wednesday, May 8, 2024, at 4:30 pm ET to discuss its first quarter 2024 financial results. A link to the live discussion will be made available at https://investor.blend.com.
Advisors
Financial Technology Partners (FT Partners) served as financial and strategic advisor to Blend. Wilson Sonsini Goodrich & Rosati, P.C. served as legal advisor to Blend.
Jefferies LLC served as financial advisor to Haveli. Bailey Duquette P.C. served as legal advisor to Haveli.
About Blend
Blend (NYSE:BLND) is the infrastructure powering the future of banking. Financial providers— from large banks, fintechs, and credit unions to community and independent mortgage banks—use Blend’s platform to transform banking experiences for their customers. Blend powers billions of dollars in financial transactions every day. To learn more, visit blend.com.
About Haveli Investments
Haveli Investments is an Austin-based private equity firm that seeks to invest in the highest quality companies in the technology sector through control, minority or structured equity and debt investments with a focus on software, data, gaming and adjacent industries. The firm partners with innovative companies, entrepreneurs and management teams throughout a company’s life cycle. Haveli’s experienced team of investors and diverse industry experts will provide operational and strategic support, enabling portfolio companies to focus on driving innovation and increasing growth, scale and operating margins. Underscoring Haveli’s investments is an unwavering focus on DEI and sustainability. For more information, please visit www.haveliinvestments.com, or follow Haveli on LinkedIn, @Haveli Investments.
Haveli, Haveli Investments, the Haveli logos and related names are registered trademarks or service marks of Whanau Interests LLC. All rights reserved.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements may relate to, but are not limited to, quotations of management and others; Blend’s expectations regarding its financial condition and operating performance, including growth opportunities and plans for future operations and competitive position; Blend’s products, pipeline, and technologies; Blend’s strategies for growth; the impact of the Haveli investment on Blend’s financial position; Blend’s ability to create long-term shareholder value; and Blend’s expectations for changes in
revenue, as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “would,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other comparable terminology that concern Blend’s expectations, strategy, plans or intentions. You should not put undue reliance on any forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by which such performance or results will be achieved, if at all.
Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith beliefs and assumptions as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include the risks that: changes in economic conditions, such as mortgage interest rates, credit availability, real estate prices, inflation or consumer confidence, adversely affect our industry, markets and business, we fail to retain our existing customers or to acquire new customers in a cost-effective manner; our customers fail to maintain their utilization of our products and services; our relationships with any of our key customers were to be terminated or the level of business with them significantly reduced over time; we are unable to compete in highly competitive markets; we are unable to manage our growth; we are unable to make accurate predictions about our future performance due to our limited operating history in an evolving industry and evolving markets; we are unable to successfully integrate or realize the benefits of our acquisition of Title365; our restructuring actions do not result in the desired outcomes or adversely affect our business, impairment charges on certain assets have an adverse effect on our financial condition and results of operations; Blend’s expectations regarding the investment and its impact do not materialize; we are unable to generate sufficient cash flows or otherwise maintain sufficient liquidity to fund our operations and satisfy our liabilities. Further information on these risks and other factors that could affect our financial results are set forth in our filings with the Securities and Exchange Commission, including in our Annual Report on Form 10-K for the year ended December 31, 2023. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this press release may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. These factors could cause actual results, performance, or achievement to differ materially and adversely from those anticipated or implied in the forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this press release. Except as required by law, Blend does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise.
Blend Contacts:
Investor Relations
ir@blend.com
ir@blend.com
Media
press@blend.com
press@blend.com
Haveli Investments Contacts:
Investor Relations
Caroline Bal Doherty
Haveli Investments
SVP of Capital Partnerships
cdoherty@havelii.com
Media
Hugh Burns/Pamela Greene
Reevemark
(212) 433-4600
HaveliTeam@Reevemark.com