FEAM 8-K
5E Advanced Materials, Inc. (FEAM)
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
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01 Entry into a Material Definitive Agreement.
The information contained in Item 2.01 of this Current Report on Form 8-K (this “Current Report”) regarding the Promissory Note (as defined below) and the Bridge Facility (as defined below) is incorporated by reference into this Item 1.01 in its entirety.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On October 1, 2026 (the “Closing Date”), 5E SVM, LLC (“5E SVM”), a wholly owned subsidiary of 5E Advanced Materials, Inc. (the “Company”), completed the previously announced purchase of specified real property, production facilities, brine resources and other assets (collectively, the “Assets”) pursuant to an Asset Purchase Agreement (the “Asset Purchase Agreement” and the transactions contemplated thereunder, collectively, the “Acquisition”) with Searles Valley Minerals Inc., Trona Railway Company LLC and Searles Domestic Water Company LLC (collectively, the “Sellers”) and the other parties named therein.
On the Closing Date, 5E SVM purchased the Assets for consideration consisting of (i) approximately $3.4 million in cash (inclusive of a previously paid deposit), (ii) 8.3 million shares (the “Stock Consideration”) of common stock, $0.01 par value per share, of the Company (the “Common Stock”) and (iii) a senior unsecured promissory note, issued by 5E SVM for distribution to certain lenders of the Sellers, in an aggregate amount of approximately $6.2 million (the “Promissory Note”). Under the Asset Purchase Agreement, 5E SVM has also agreed to assume specified liabilities and contracts relating to the Assets, subject to certain limitations. In accordance with the Asset Purchase Agreement, the Stock Consideration includes 312,500 shares of Common Stock to be issued at a subsequent date upon satisfaction of specified conditions regarding the Assets, including Sellers’ delivery of specified deeds.
The Promissory Note accrues interest at a rate of 14.5% per annum, which accrues and is payable in-kind and capitalized quarterly to the principal amount thereof. The Promissory Note requires 5E SVM to make a cash payment of approximately $1.2 million on the 24-month anniversary of the Closing Date but otherwise matures on the fifth anniversary of the Closing Date. 5E SVM may prepay the Promissory Note at any time, in whole or in part, in cash without premium or penalty. The Promissory Note also contains customary covenants of 5E SVM, including specified restrictions on 5E SVM’s ability to make restricted payments, subject to exceptions.
Additionally, 5E SVM entered into a senior secured promissory note (the “Bridge Facility”) with Karnavati Holdings, Inc. (the “Lender”) on the Closing Date pursuant to the Asset Purchase Agreement, providing for $10.0 million in senior secured bridge financing. The Bridge Facility is secured by substantially all of 5E SVM’s assets and is guaranteed by the Company. The Bridge Facility accrues interest at a rate of 8.00% per annum, which accrues and is payable in-kind and capitalized quarterly to the principal amount thereof. On the Closing Date, 5E SVM received $7.0 million of funding pursuant to the Bridge Facility, with the remaining amount to be funded at a later date upon satisfaction of specified conditions. The Bridge Facility matures 270 days after the Closing Date. The Bridge Facility also includes a $1.0 million transaction fee payable by 5E SVM at maturity. The Company may prepay the Bridge Facility at any time, in whole or in part, in cash without premium or penalty. The Bridge Facility also contains customary covenants of the Company, including specified restrictions on the Company’s ability to make restricted payments, subject to exceptions, as well as customary indemnification provisions in favor of the Lender.
On the Closing Date, after giving effect to the transactions described herein, the Company had an aggregate of 49,634,871 shares of Common Stock issued and outstanding. The Company expects to report that it had $15.7 million in cash and cash equivalents as of September 30, 2026 and, after giving effect to the transactions described herein, the Company had $19.6 in cash and cash equivalents.
The foregoing summary of the Asset Purchase Agreement and the transactions contemplated thereby, including the terms of the Acquisition, the Promissory Note and the Bridge Facility, is qualified in its entirety by reference to the full text of (i) the Asset Purchase Agreement, a copy of which was filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on September 15, 2026, (ii) the Promissory Note, a copy of which is filed as Exhibit 10.1 to this Current Report, and (iii) the Bridge Facility, a copy of which is filed as Exhibit 10.2 to this Current Report, each of which is incorporated herein by reference.
Item 2.02 Results of Operations and Financial Condition.
The information contained in Item 2.01 of this Current Report regarding the Company’s cash and cash equivalents as of September 30, 2026 is incorporated by reference into this Item 2.02.
The financial results included in this Current Report are preliminary and do not present all information necessary for an understanding of the Company’s financial condition as of September 30, 2026 and its results of operations for the quarterly period ended September 30, 2026. The Company’s actual results may differ from the preliminary estimates above due to the completion of the Company’s period end accounting procedures and review of the Company’s financial statements for the quarterly period ended September 30, 2026 by the Company’s independent registered public accounting firm, which are ongoing.
The information contained in this Item 2.02 is furnished pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”) and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information contained in Item 2.01 of this Current Report regarding the Promissory Note and the Bridge Facility is incorporated by reference into this Item 2.03 in its entirety.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Businesses or Funds Acquired.
The Company intends to file the financial statements required to be filed pursuant to Item 9.01(a) of Form 8-K by amendment to this Current Report not later than 71 calendar days after the date this Current Report is required to be filed.
(b) Pro Forma Financial Information.
The Company intends to file the pro forma financial information required to be filed pursuant to Item 9.01(b) of Form 8-K by amendment to this Current Report not later than 71 calendar days after the date this Current Report is required to be filed.
(d) Exhibits
Exhibit No. |
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Description |
10.1 |
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10.2* |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules and exhibits upon request by the U.S. Securities and Exchange Commission. The Company may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedules or exhibits so furnished.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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5E Advanced Materials, Inc. |
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Date: |
October 1, 2026 |
By: |
/s/ Paul Weibel |
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Paul Weibel |
Exhibit 10.1
PROMISSORY NOTE
THIS NOTE WAS ISSUED WITH “ORIGINAL ISSUE DISCOUNT” WITHIN THE MEANING OF SECTION 1272, ET SEQ. OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. UPON WRITTEN REQUEST, THE BORROWER WILL PROVIDE TO ANY LENDER (1) THE ISSUE PRICE AND DATE OF THE NOTE, (2) THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THE NOTE AND (3) THE ORIGINAL YIELD TO MATURITY OF THE NOTE. SUCH REQUEST SHOULD BE SENT TO BORROWER AT THE FOLLOWING ADDRESS: 9329 MARIPOSA ROAD, SUITE 210, HESPERIA, CALIFORNIA 92344.
October 1, 2026
FOR VALUE RECEIVED, 5E SVM, LLC, a Delaware limited liability company (the “Borrower”), promises to pay to Karnavati Holdings, Inc. and each of its permitted assigns (each, a “Lender” and collectively, the “Lenders”) on the date set forth in Section 2, in lawful money of the United States in same day funds, such Lender’s Pro Rata Share of $6,220,000.00 (this note, as amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “Note”). The Borrower shall pay interest in kind on the unpaid principal amount of the Loan and any overdue amounts thereon until paid in full on the dates and at a rate per annum as hereinafter set forth.
1. Certain Definitions. As used herein, the following terms have the following meanings:
“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.
“Borrower” has the meaning assigned in the preamble to this Note.
“Bridge Promissory Note” means that certain Promissory Note dated as of October 1, 2026 by and among the Borrower and the Lenders.
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized or required to close under the law of, or are in fact closed in, the state of New York.
“Capital Stock” means, of any Person means any and all shares or units of, rights to purchase, warrants or options for, or other equivalents of or interests in (however designated) equity of such Person, including any preferred stock, but excluding any debt securities convertible into such equity.
“Change of Control” shall be deemed to have occurred if (x) any “person” or “group” (as such terms (and each other reference thereto in this clause) are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Act”), but excluding any employee benefit plan of such Person and its subsidiaries and any Person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than the Permitted Holders, shall become the beneficial owner (as defined in Rules 13(d)-3 and 13(d)-5 under such Act) (a “beneficial owner”), directly or indirectly, of more than 35.00% of outstanding Voting Stock of the Guarantor or (y) the Borrower is no longer a wholly owned subsidiary of the Guarantor.
“Closing Date” means October 1, 2026.
“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium,
rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
“Default” means any event that is, or with the passage of time or the giving of notice or both, would be an Event of Default.
“Event of Default” has the meaning assigned in Section 10.
“Equity Interests” means, with respect to any Person, the Capital Stock of such Person and all warrants, options or other rights to acquire Capital Stock of such Person, but excluding any debt security that is convertible into, or exchangeable for, Capital Stock of such Person.
“Excluded Taxes” means, with respect to any Lender or any other recipient of any payment under any Loan Document: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such recipient being organized under the laws of, or having its principal office or applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof), or (ii) that are Other Connection Taxes; (b) in the case of a Lender or an assignee, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender or assignee with respect to an applicable interest in a Loan pursuant to a law in effect on the date on which such Lender or assignee acquires such interest in the Loan, except to the extent that, pursuant to Section 11, amounts with respect to such Taxes were payable to such assignee’s assignor immediately before such assignee became a party hereto; (c) Taxes attributable to such recipient’s failure to comply with Section 11(e); and (d) any U.S. federal withholding Taxes imposed under FATCA.
“FATCA” means Sections 1471 through 1474 of the Internal Revenue Code of 1986, as amended (as of the date hereof) (or any amended or successor version that is substantively comparable), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code, and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections.
“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state, local, or otherwise, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.
“Lender” has the meaning assigned in the preamble.
“Lender Representative” has the meaning assigned in Section 23.
“Loan Documents” means this Note.
“Loan” has the meaning assigned in Section 4(a).
“Loan Party” means the Borrower.
“Maturity Date” means September 30, 2031.
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“Note” has the meaning assigned in the preamble.
“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising hereunder or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest that accrues after the commencement by or against any Loan Party of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest is an allowed claim in such proceeding. Without limiting the generality of the foregoing, the Obligations of the Loan Parties hereunder include the obligation (including pursuant to the Guarantee) to pay principal, interest, expenses, indemnities and other amounts payable by any Loan Party hereunder.
“Other Connection Taxes” means, with respect to any Lender or any other recipient of any payment under any Loan Document, Taxes imposed as a result of a present or former connection between such recipient and the jurisdiction imposing such Tax (other than connections arising from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to a request by the Borrower).
“Person” means any individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.
“Pro Rata Share” means, with respect to each Lender, at any time a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of the Loan of such Lender at such time and the denominator of which is the aggregate amount of Loan at such time.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto. References herein to a provision of law or statutory enactment are (unless the context otherwise requires) a reference to that provision or enactment as amended or re-enacted.
2. Payments.
(a) The Borrower hereby unconditionally promises to pay to each Lender their Pro Rata Share of the entire outstanding principal amount of the Loan and all accrued and unpaid interest thereon, in full on the Maturity Date (it being understood that such amounts may be reduced as set forth in Section 2(b) below).
(b) Prepayments made in accordance with Section 5 below shall be applied first, to the payment of all accrued but unpaid interest in respect of principal amounts repaid, second, to the remaining principal amount on the Loan and third to any other outstanding Obligations.
3. Interest Rate.
(a) The Loan shall bear interest at a rate per annum equal to 14.50%, which shall be
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payable on the last day of each fiscal quarter following the Closing Date (or if such day is not a Business Day, the next succeeding Business Day) and on the Maturity Date in arrears by adding the accrued amount thereof to the outstanding principal amount of the Loan, after which such interest shall thereafter be deemed principal bearing interest; provided that the Borrower may, in its sole discretion, upon three (3) Business Days’ notice to the Lender Representative, elect to pay accrued interest in cash. For the avoidance of doubt, in connection with any prepayment and on any payment made on the Maturity Date, any accrued and unpaid interest on the principal amount of the Loan to be paid on such date, shall be paid in cash.
(b) All interest shall be computed on the basis of actual days elapsed in a year of 365 or 366 days, as the case may be, based on the aggregate principal amount then outstanding.
4. Reserved.
5. Prepayments.
(a) Subject to Section 6, the Borrower shall have the right at any time to prepay the then-current principal amount of the Loan, in whole or in part without premium or penalty.
(b) Notwithstanding anything to the contrary herein, on the date that is twelve (12) months after the Closing Date, the Borrower shall make a payment in the amount of $1,220,000 with respect to the outstanding Loan.
6. General Provisions Regarding Payments. The Borrower will pay all Obligations free and clear of and without reduction for any Taxes, levies, imposts, deductions, or charges (except as provided in Section 11) and without set-off or counterclaim, in United States dollars available the same day in New York, New York. Payments received that are insufficient to pay amounts then due shall be applied first to payment of interest then due and payable, second to remaining principal amount of the Loan and third to any other outstanding Obligations.
7. Conditions Precedent.
(a) The obligations of the Lenders hereunder on the Closing Date are subject to the satisfaction (or waiver by the Lenders) of the following condition precedent:
(i) the Lenders shall have received this Note duly executed by the Borrower; and
(ii) Asset Purchase Agreement.
8. Representations and Warranties. In order to induce the Lenders to make the Loan on the Closing Date, Borrower represents and warrants to the Lenders:
(a) The Borrower is duly organized, validly existing and in good standing under the laws of the jurisdiction of their organization and have all requisite power and authority to carry on their business as now conducted.
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(b) The execution, delivery and performance by the Borrower of the Note is within the Borrower’s corporate powers and have been duly authorized by all necessary corporate or other organizational action.
(c) The execution, delivery and performance by the Borrower of the Note does not and will not (i) violate (x) any material law or governmental rule or regulation applicable to the Borrower, (y) the charter or by-laws (or equivalent documents) of the Borrower, or (z) any order, judgment or decree of any court or other Governmental Authority binding on the Borrower; (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of the Borrower; or (iii) require any approval of stockholders, members or partners or any approval or consent of any Person under any contractual obligation of the Borrower, or any registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental Authority, except for such approvals or consents which have been obtained on or before the date hereof.
(d) The Note has been duly executed and delivered by the Borrowers and constitutes the legal, valid and binding obligations of the Borrower, enforceable in accordance with its terms, subject to applicable Debtor Relief Laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
9. Covenants. So long as any Obligations are outstanding, the Borrower shall comply with the covenants contained in Schedule I hereto.
10. Events of Default. If any of the following events (“Events of Default”) shall occur and be continuing:
(a) the Borrower shall fail to make payment when due, whether at stated maturity, by acceleration or otherwise, of any principal on the Loan, or the Borrower shall fail to make payment of any interest or any other amount due hereunder on the Loan within five (5) Business Days after the same becomes due;
(b) the Borrower shall fail to observe or perform any covenant contained in any provision of this Note and such failure shall not have been cured within ten (10) Business Days after written notice from the Lender Representative;
(c) any representation, warranty, certification or other statement made by any Loan Party herein shall be false in any material respect as of the date made;
(d) any Loan Party institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator, administrator, administrative receiver or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator, administrator, administrative receiver or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for sixty (60) calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding;
(e) at any time after the execution and delivery thereof, this Note ceases to be in full force and effect (other than by reason of the satisfaction in full of the Obligations or otherwise in accordance with the terms thereof) or shall be declared null and void;
(f) one or more judgments or decrees shall be entered against any Loan Party involving in the aggregate at any time a liability (net of any insurance or indemnity payments actually
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received in respect thereof prior to or within 60 days from the entry thereof, or to be received in respect thereof in the event of any appeal thereof shall be unsuccessful) in excess of $2,500,000 and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 60 days from the entry thereof; or
(g) any Loan Party shall default in the observance or performance of any agreement or condition relating to indebtedness (excluding the Loan) in excess of $2,500,000 or the Bridge Promissory Note, the effect of which default is to cause, or permit the holders or agent of such indebtedness to cause, such indebtedness to become due prior to its stated maturity; or
(h) a Change of Control
THEN, in the case of any Event of Default specified above, the Lender Representative may, by written notice to the Borrower, terminate any Commitments and declare the Loan to be forthwith due and payable, together with accrued interest and any other amounts owing or payable hereunder, whereupon the same shall become forthwith due and payable, without demand, protest, presentment, notice of dishonor or any other notice or demand whatsoever, all of which are hereby waived by the Borrower; provided, that in the case of the Events of Default specified in clause (d) above, without any notice to the Borrower or any other act of the Lender Representative, the Commitments shall automatically terminate and the Loan shall automatically become forthwith due and payable, together with accrued interest and any other amounts owing or payable hereunder, without demand, protest, presentment, notice of dishonor or any other notice or demand whatsoever, all of which are hereby waived by the Borrower.
11. Taxes.
(a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes.
(b) Payment of Other Taxes by the Borrower. Without limiting the provisions of Section 11(a), the Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of any Lender timely reimburse it for the payment of, any Other Taxes.
(c) Tax Indemnification. The Borrower shall, within ten (10) days after demand therefor, indemnify each Lender for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 11) payable or paid by
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such Lender or required to be withheld or deducted from a payment to such Lender, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. For the avoidance of doubt, the indemnification under this Section 11(c) shall extend to Indemnified Taxes imposed by any jurisdiction (including jurisdictions outside the United States) on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (setting forth in reasonable detail the basis for, and the calculation of, such amount) shall be conclusive absent manifest error.
(d) Evidence of Payments. As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority pursuant to this Section 11, the Borrower shall deliver to the applicable Lender the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to such Lender.
(e) Status of Lenders; Tax Documentation.
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12. Tax Treatment. Each Lender and the Borrower agree that the Note shall be treated as indebtedness for U.S. federal and applicable state and local income tax purposes.
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13. Notices. Any notice to be given under this Note shall be in writing and shall be deemed to have been duly given when received by the recipient at the address separately delivered to the Borrower or such Lender in writing.
14. No Waiver. No delay on the part of the Lenders or the Lender Representative in exercising any of its powers or rights, and no partial or single exercise, shall constitute a waiver thereof.
15. Amendments and Waivers. Any provision of this Note may be amended or waived, but only if such amendment or waiver is in writing and signed by each Lender and the Borrower.
16. Successors and Assigns. This Note shall be binding upon the Borrower and its successors and assigns, for the benefit of each Lender and its successors and assigns, except that the Borrower may not assign or otherwise transfer its rights or obligations under this Note without the prior written consent of the Lenders. To the extent any Lender assigns or transfers any interest in this Note to any Person (whether by operation of law or otherwise), the Borrower shall not be obligated to pay any amount pursuant to Section 11 to any such assignee or transferee that is greater than the amount the Borrower would have been obligated to pay to such assigning or transferring Lender had such assignment or transfer not occurred, unless such assignment or transfer was made at the request of the Borrower.
17. GOVERNING LAW. THIS NOTE AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TOTHIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.
18. Submission to Jurisdiction. The Borrower and, by its acceptance of this Note, each Lender, each agree as follows:
(a) each such party hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and the United States District Court for the Southern District of New York, and any relevant appellate court, in any action or proceeding arising out of or relating to this Note, or for recognition or enforcement of any judgment, and each such party hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding shall be heard and determined in New York State court or, to the extent permitted by law, in such federal court; provided, that nothing in this Note shall affect any right that the Lender may otherwise have to bring any action or proceeding relating to this Note against any Loan Party or its properties in the courts of any jurisdiction, and
(b) each such party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Note in any court referred to in subsection (a) of this Section, and each such party also irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of any such suit, action or proceeding in any such court.
19. WAIVER OF JURY TRIAL. THE BORROWER HEREBY WAIVES AND, BY ITS ACCEPTANCE OF THIS NOTE, EACH LENDER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE.
20. Severability. If any provision or this Note is held to be invalid, illegal or unenforceable, the other provisions of this Note shall remain in full force and effect.
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21. Usury Savings. Notwithstanding anything herein to the contrary or otherwise, each Lender shall never be entitled to receive as interest on the obligation evidenced hereby any amount in excess of the maximum rate of interest permitted to be charged by applicable law. In the event that any Lender ever receives any such excess, such amount which would be excessive interest shall be applied to the reduction of the principal sum hereof, and if the principal sum is paid in full, any remaining excess shall forthwith be paid to the Borrower.
22. Indemnification; Expenses.
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23. Confidentiality
24. Lender Representative.
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25. Payments Generally. If, other than as provided elsewhere herein, any Lender shall obtain payment in respect of any principal or interest on account of the Loan made by it, any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) in excess of its Pro Rata Share (or other share contemplated hereunder) thereof, such Lender shall immediately (x) notify each other Lender, of such fact and (y) purchase from the other Lenders such participations in the Loan made by them as shall be necessary to cause such purchasing Lender to share the excess payment in respect of any principal or interest on such Loan pro rata with each of them.
26. Registration of the Note. This Note shall be a registered note. The Borrower will keep, at its principal executive office, books for the registration of the name and address of each Lender and the principal amount (and stated interest) owing to each Lender pursuant to the terms hereof (the “Register”) and will update the Register to reflect any permitted assignments or transfers of the Note (or any portion thereof) subsequent to the date hereof (such assignees or transferees, together with the Lenders, the “Holders,” and each, a “Holder”). The entries in the Register shall be conclusive absent manifest error, and the Borrower and the Holders shall treat each person whose name is recorded in the Register as a lender hereunder for all purposes of this Note, notwithstanding notice to the contrary. Subject to any restrictions on or conditions to transfer set forth in this Note, a Holder, at its option, may in person or by duly authorized attorney surrender the same for exchange at Borrower’s principal executive office, and promptly thereafter and at Borrower’s expense receive in exchange therefore one (1) or more new Note(s), each in the principal amount requested by such Holder, dated the date to which interest shall have been paid on the Note so surrendered or, if no interest shall have yet been so paid, dated the date of the Note so surrendered and registered in the name of such person or persons as shall have been designated in writing by such holder or its attorney for the same principal amount as the then unpaid principal amount of the Note so surrendered. Neither a Lender nor any registered Holder of this Note shall have the right to convert this Note to bearer form. This Section 26 shall be interpreted such that the Note is maintained in “registered form” within the meaning of the United States Internal Revenue Code of 1986, as amended, and the United States Treasury Regulations thereunder.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above,
5E SVM, LLC
By: /s/ Paul Weibel
Name: Paul Weibel
Title: President
[Signature Page to Unsecured Note]
Schedule I
COVENANTS of BORROWER
(i) the declaration and payment of dividends or distributions by the Borrower to, or the making of loans or advances to, the Guarantor in amounts required for the Guarantor to pay, in each case without duplication:
(A) franchise and similar taxes, and other fees and expenses, required to maintain their corporate or other legal existence;
(B) distributions to its members to permit such members to pay taxes that are attributable to the taxable income of the Borrower; provided that, for each taxable period, the aggregate amount of such distributions made in respect of such taxable period shall not exceed the amount that such Borrower would have been required to pay as a stand-alone tax payor, reduced by any portion of such income taxes directly paid by such Borrower;
(C) general corporate or other operating, administrative, compliance and overhead costs and expenses (including expenses relating to auditing and other accounting matters) incurred in the ordinary course of business of any parent company, to the extent such costs and expenses are customary and attributable to the ownership or operation of the Borrower and its Subsidiaries;
(ii) customary payments, loans, advances, or guarantees (or cancellation of loans, advances, or guarantees) to future, present, or former employees, officers, directors, managers, consultants, or independent contractors or guarantees in respect thereof for bona fide business purposes in the ordinary course of business and shall not exceed $500,000 per fiscal year;
(iii) any customary payment of employee compensation, benefit plan or arrangement, or any health, disability or similar insurance plan in the ordinary course of business which covers current, former or future officers, directors, employees, managers, consultants, and independent contractors of the Borrower, any subsidiary or any parent entity;
(iv) the sale, issuance, or transfer of Equity Interests of the Borrower not constituting a Change of Control; or
(v) dividends payments or distributions payable solely in Equity Interests of the Borrower.
Exhibit 10.2
PROMISSORY NOTE
THIS NOTE WAS ISSUED WITH “ORIGINAL ISSUE DISCOUNT” WITHIN THE MEANING OF SECTION 1272, ET SEQ. OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. UPON WRITTEN REQUEST, THE BORROWER WILL PROVIDE TO ANY LENDER (1) THE ISSUE PRICE AND DATE OF THE NOTE, (2) THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THE NOTE AND (3) THE ORIGINAL YIELD TO MATURITY OF THE NOTE. SUCH REQUEST SHOULD BE SENT TO BORROWER AT THE FOLLOWING ADDRESS: 9329 MARIPOSA ROAD, SUITE 210, HESPERIA, CALIFORNIA 92344.
October 1, 2026
FOR VALUE RECEIVED, 5E SVM, LLC, a Delaware limited liability company (the “Borrower”), promises to pay to Karnavati Holdings, Inc. and each of its permitted assigns (each, a “Lender” and collectively, the “Lenders”) on the date set forth in Section 2, in lawful money of the United States in same day funds, such Lender’s Pro Rata Share of the outstanding principal amount of (i) Loans, (ii) Transaction Fee Amount and (iii) Additional Amount (this note, as amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “Note”). Subject to the terms herein, the Borrower shall pay interest in kind on the unpaid principal amount of the Loans and Additional Amounts and any overdue amounts thereon until paid in full on the dates and at a rate per annum as hereinafter set forth.
1. Certain Definitions. As used herein, the following terms have the following meanings:
“Additional Amount” means, collectively, the Drawn LC Amount and Seller Support Amount.
“Additional Amount Maturity Date” means November 1, 2027.
“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.
“Asset Purchase Agreement” means that certain Asset Purchase Agreement dated as of September 14, 2026, by and among Searles Valley Minerals, Inc., Trona Railway Services LLC, Searle Domestic Water Company LLC, the Borrower, the Guarantor and Nirma Limited.
“Assignee” has the meaning assigned in Section 16.
“BLM Transfer Application” has the meaning assigned to such term in the Asset Purchase Agreement.
“Borrower” has the meaning assigned in the preamble to this Note.
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized or required to close under the law of, or are in fact closed in, the state of New York.
“Capital Stock” means, of any Person means any and all shares or units of, rights to purchase, warrants or options for, or other equivalents of or interests in (however designated) equity of such Person, including any preferred stock, but excluding any debt securities convertible into such equity.
“Change of Control” shall be deemed to have occurred if (x) any “person” or “group” (as such terms (and each other reference thereto in this clause) are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Act”), but excluding any employee benefit plan of such Person and its subsidiaries and any Person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than the Permitted Holders, shall become the beneficial owner (as defined in Rules 13(d)-3 and 13(d)-5 under such Act) (a “beneficial owner”), directly or indirectly, of more than 35.00% of outstanding Voting Stock of the Guarantor, (y) the Borrower is no longer a wholly owned subsidiary of the Guarantor or (z) any Subsidiary Guarantor is no longer a wholly owned subsidiary of the Guarantor.
“Closing Date” means October 1, 2026.
“Collateral” means the “Collateral” referred to in the Collateral Documents and all of the other property that is or is intended under the terms of the Collateral Documents to be subject to Liens in favor of the Lender Representative for the benefit of the Lenders.
“Collateral Documents” means, collectively, the Security Agreement, the First Lien/Second Lien Intercreditor Agreement, the Mortgages, each of the collateral assignments, pledge agreements, security agreements or other similar agreements delivered to the Lender Representative pursuant to the Security Agreement and the other Loan Documents, and each of the other agreements, instruments, or documents that creates or purports to create a Lien in favor of the Lender Representative for the benefit of the Lenders under the Loan Documents.
“Commitment” means, collectively, the Tranche 1 Commitments and Tranche 2 Commitments.
“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
“Default” means any event that is, or with the passage of time or the giving of notice or both, would be an Event of Default.
“Drawn LC Amount” has the meaning assigned in Section 4(c).
“Event of Default” has the meaning assigned in Section 10.
“Excluded Taxes” means, with respect to any Lender or any other recipient of any payment under any Loan Document: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such recipient being organized under the laws of, or having its principal office or applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof), or (ii) that are Other Connection Taxes; (b) in the case of a Lender or an Assignee, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender or Assignee with respect to an applicable interest in a Loan pursuant to a law in effect on the date on which such Lender or Assignee acquires such interest in the Loan, except to the extent that, pursuant to Section 11, amounts with respect to such Taxes were payable to such Assignee’s assignor immediately before such Assignee became a party hereto; (c) Taxes attributable to such recipient’s failure to comply with Section 11(e); and (d) any U.S. federal withholding Taxes imposed under FATCA.
“Equity Interests” means, with respect to any Person, the Capital Stock of such Person and all warrants, options or other rights to acquire Capital Stock of such Person, but excluding any debt security that is convertible into, or exchangeable for, Capital Stock of such Person.
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“First Lien / Second Lien Intercreditor Agreement” means that certain First Lien/Second Lien Intercreditor Agreement in the form attached as Exhibit A hereto.
“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state, local, or otherwise, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
“Guarantee Agreement” means the Guaranty, dated as of the date hereof, executed by the Guarantor in favor of the Lender Representative for the benefit of the Lenders.
“Guarantees” means, collectively, (i) the guaranty by the Guarantor pursuant to the Guarantee Agreement and (ii) the guaranty by each Subsidiary Guarantor pursuant to the Subsidiary Guarantee Agreement.
“Guarantor” means 5E Advanced Materials, Inc., a Delaware corporation.
“Indebtedness” means, with respect to any Person, without duplication:
(1) any indebtedness (including principal and premium) of such Person, whether or not contingent:
(a) in respect of borrowed money;
(b) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without duplication, reimbursement agreements and reimbursement obligations in respect thereof);
(c) representing the deferred and unpaid balance of the purchase price of any property, except (i) any such balance that constitutes an obligation in respect of a commercial letter of credit, a trade payable or similar obligation to a trade creditor that is not more than 180 days past its original due date (without giving effect to any extension), in each case incurred in the ordinary course of business, and (ii) accruals for payroll and other liabilities accrued in the ordinary course of business; or
(d) representing the net obligations under any hedging obligations;
(2) to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the obligations of the type referred to in clause (1) of this definition of a third Person (whether or not such items would appear upon the balance sheet of such obligor or guarantor), other than by endorsement of negotiable instruments for collection in the ordinary course of business; and
(3) to the extent not otherwise included, the obligations of the type referred to in clause (1) of this definition of a third Person secured by a Lien on any asset owned by such first Person, whether or not such Indebtedness is assumed by such first Person; provided that the amount of such Indebtedness will be the lesser of (i) the fair market value of such asset at such date of determination and (ii) the amount of such Indebtedness of such other Person; provided that notwithstanding the foregoing, Indebtedness will be deemed not to include:
(i) guarantees incurred in the ordinary course of business,
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(ii) reimbursement obligations under commercial letters of credit, provided that unreimbursed amounts under commercial letters of credit will be counted as Indebtedness three (3) Business Days after such amount is drawn,
(iii) accrued expenses,
(iv) deferred or prepaid revenues, and
(v) asset retirement obligations and obligations in respect of reclamation and workers compensation (including pensions and retiree medical care);
(4) without duplication of any amount under clause (c), accounts payable of such Person that are more than 180 days past their original due date (without giving effect to any extension);
provided, further, that Indebtedness will be calculated without giving effect to (x) the effects of Accounting Standards Codification Topic No. 815, Derivatives and Hedging, and related interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose under this Note as a result of accounting for any embedded derivatives created by the terms of such Indebtedness or (y) any election under Accounting Standards Codification Topic No. 825, Financial Instruments, or any successor thereto, to value any Indebtedness at “fair value,” as defined therein.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.
“KHI Letter of Credit” has the meaning assigned to such term in the Asset Purchase Agreement.
“Lender” has the meaning assigned in the preamble.
“Lender Representative” has the meaning assigned in Section 23.
“Lien” means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge, hypothecation, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction; provided that in no event will an operating lease be deemed to constitute a Lien.
“Loans” has the meaning assigned in Section 4(a).
“Loan Documents” means (i) this Note, (ii) the Guarantee Agreement, (iii) the Subsidiary Guarantee Agreement, (iv) the Collateral Documents, and (v) all other certificates, agreements, documents, and instruments executed and delivered by or on behalf of any Loan Party pursuant to the foregoing.
“Loan Parties” means the Borrower, the Guarantor and the Subsidiary Guarantors.
“Loan Maturity Date” means June 28, 2027.
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“Material Real Property” means those certain real property parcels located at (i) 82090 First Avenue, Trona, CA 93592 (i.e., the “Utilities Facility”) and (ii) 80201 Trona Road, Trona, CA 93592 (i.e., the “Boron Facility”).
“Mortgage” means any mortgage, deed of trust or other similar agreement made by the Borrower in favor of the Lender Representative, for the benefit of the Lenders, on the Material Real Property.
“Nirma” means Nirma Limited, an Indian corporation.
“Note” has the meaning assigned in the preamble.
“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, the Transaction Fee Amount, Drawn LC Amount or Seller Support Amount, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest that accrues after the commencement by or against any Loan Party of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest is an allowed claim in such proceeding. Without limiting the generality of the foregoing, the Obligations of the Loan Parties under the Loan Documents include the obligation (including pursuant to the Guarantees) to pay principal, interest, expenses, indemnities and other amounts payable by any Loan Party under any Loan Document.
“Other Connection Taxes” means, with respect to any Lender or any other recipient of any payment under any Loan Document, Taxes imposed as a result of a present or former connection between such recipient and the jurisdiction imposing such Tax (other than connections arising from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to a request by the Borrower).
“Permitted Corporate Debt” incurred or guaranteed by the Guarantor, the Borrower and/or its subsidiaries for working capital and other general corporate purposes; provided that, any such “Permitted Corporate Debt” may be secured (i) on a senior basis relative to the Obligations, which shall be subject to the First Lien/Second Lien Intercreditor Agreement or (ii) on a pari or junior basis relative to the Obligations, which shall be subject to an Intercreditor Agreement reasonably acceptable to the Lender Representative.
“Permitted Holders” means each of (i) Bluescape Energy Partners, (ii) Meridian Investments Corporation and (iii) Ascend Global Investment Fund SPC for and on behalf of Strategic SP.
“Person” means any individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.
“Pro Rata Share” means, with respect to each Lender, at any time a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount
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of the Loans of such Lender at such time and the denominator of which is the aggregate amount of Loans, Transaction Fee Amount or Additional Amount, as applicable, at such time.
“Required Bonding” has the meaning assigned to such term in the Asset Purchase Agreement.
“Security Agreement” means the Security Agreement, dated as of the date hereof, executed by the Borrower and each Subsidiary Guarantor in favor of the Lender Representative for the benefit of the Lenders.
“Seller Support” means the Supported Seller Bonds, SVM Parent Letter of Credit and any KHI Letter of Credit.
“Seller Support Amount” has the meaning assigned in Section 4(d).
“Seller Support Release” means the release, termination, cancellation and replacement in respect of each Seller Support pursuant to Section 6.15(d) of the Asset Purchase Agreement.
“Subsidiary Guarantee Agreement” means the Guaranty, dated as of the date hereof, executed by each Subsidiary Guarantor in favor of the Lender Representative for the benefit of the Lenders.
“Subsidiary Guarantor” means each of: 5E SVM Domestic Water Company, LLC, a Delaware limited liability company; 5E SVM Railway Company, LLC, a Delaware limited liability company; and 5E SVM Operations Company, LLC, a Delaware limited liability company.
“Supported Seller Bonds” has the meaning assigned to such term in the Asset Purchase Agreement.
“SVM Parent Letter of Credit” has the meaning assigned to such term in the Asset Purchase Agreement.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Tranche 1 Commitments” means, as to each Lender, its obligation to make Loans to the Borrower pursuant to Section 4 in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule I under the caption “Tranche 1 Commitment”, as such amount may be adjusted from time to time in accordance with this Agreement. The aggregate Tranche 1 Commitment of all Lenders shall be $7,000,000 on the Closing Date.
“Tranche 2 Commitments” means, as to each Lender, its obligation to make Loans to the Borrower pursuant to Section 4 in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule I under the caption “Tranche 2 Commitment”, as such amount may be adjusted from time to time in accordance with this Agreement. The aggregate Tranche 2 Commitment of all Lenders shall be $3,000,000 on the Closing Date.
“Tranche 2 Funding Date” means the date that the conditions set forth in Section 7(b) hereto have been satisfied.
“Transaction Fee Amount” has the meaning assigned in Section 4(b).
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“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code or any successor provision thereof as the same may from time to time be in effect in the State of New York or the Uniform Commercial Code or any successor provision thereof (or similar code or statute) of another jurisdiction, to the extent it may be required to apply to any item or items of Collateral.
“Unsecured Promissory Note” means that certain Promissory Note dated as of October 1, 2026 by and among the Borrower and the Lenders.
“Voting Stock” of any Person means capital stock, shares or other Equity Interests of any class or classes (however designated) having ordinary power for the election of directors or other similar governing body of such Person (including, without limitation, general partners of a partnership), other than stock, shares or other Equity Interests having such power only by reason of the happening of a contingency.
References herein to a provision of law or statutory enactment are (unless the context otherwise requires) a reference to that provision or enactment as amended or re-enacted.
2. Payments.
(a) The Borrower hereby unconditionally promises to pay to each Lender their Pro Rata Share of the entire outstanding principal amount of the Loans and all accrued and unpaid interest thereon and the Transaction Fee Amount, in each case, in full on the Loan Maturity Date (it being understood that such amounts may be reduced as set forth in Section 2(c) below).
(b) The Borrower hereby unconditionally promises to pay to each Lender their Pro Rata Share of the entire outstanding principal amount of the Additional Amounts and all accrued and unpaid interest thereon, in full on the Additional Amount Maturity Date (it being understood that such amounts may be reduced as set forth in Section 2(c) below).
(c) Prepayments made in accordance with Section 5 below shall be applied first, to payment of all accrued but unpaid interest in respect of principal amounts repaid, second, the remaining principal amount on the Loans, third to the Transaction Fee Amount and Additional Amounts, and fourth to any other outstanding Obligations.
3. Interest Rate.
(a) The Loans shall bear interest at a rate per annum equal to 8.00%, which shall be payable on the last day of each fiscal quarter following the Closing Date (or if such day is not a Business Day, the next succeeding Business Day) and on the Loan Maturity Date in arrears by adding the accrued amount thereof to the outstanding principal amount of the Loans, after which such interest shall thereafter be deemed principal of the Loans bearing interest; provided that the Borrower may, in its sole discretion, upon three (3) Business Days’ notice to the Lender Representative, elect to pay accrued interest in cash. For the avoidance of doubt, in connection with any prepayment and on any payment made on the Loan Maturity Date, any accrued and unpaid interest on the principal amount of the Loans to be paid on such date, shall be paid in cash.
(b) The Transaction Fee Amount shall not bear interest.
(c) The Drawn LC Amount shall bear interest at a rate per annum equal to 8.00%, which shall be payable on the last day of each fiscal quarter following the date of incurrence (or if such day is not a Business Day, the next succeeding Business Day) and on the Additional Amount Maturity Date in arrears by adding the accrued amount thereof to the outstanding principal amount of the Drawn LC Amount, after which such interest shall thereafter be deemed principal bearing interest; provided that the Borrower may, in its sole discretion, upon three (3) Business Days’ notice to the Lender Representative, elect to pay accrued interest in cash. For the avoidance of doubt, in connection with
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any prepayment and on any payment made on the Additional Maturity Date, any accrued and unpaid interest on the principal amount of the Drawn LC Amount to be paid on such date, shall be paid in cash.
(d) The Seller Support Amount shall bear interest at a rate per annum equal to 8.00%, which shall be payable on the last day of each fiscal quarter following the date of incurrence (or if such day is not a Business Day, the next succeeding Business Day) and on the Additional Amount Maturity Date in arrears by adding the accrued amount thereof to the outstanding principal amount of the Seller Support Amount, after which such interest shall thereafter be deemed principal bearing interest; provided that the Borrower may, in its sole discretion, upon three (3) Business Days’ notice to the Lender Representative, elect to pay accrued interest in cash. For the avoidance of doubt, in connection with any prepayment and on any payment made on the Additional Maturity Date, any accrued and unpaid interest on the principal amount of the Seller Support Amount to be paid on such date, shall be paid in cash.
(e) If (i) all or a portion of the principal amount of any Loan, any Additional Amount or any interest payable thereon or any other amounts owed hereunder shall not be paid when due (whether at the Loan Maturity Date, Additional Amount Maturity Date, by acceleration or otherwise), such overdue amounts, and (ii) upon the occurrence and during the continuation of any Event of Default, upon election by the Lenders, the outstanding principal amount of all Loans and Additional Amounts and, to the extent permitted by applicable law, any interest payments thereon not paid when due and any other amounts then due and payable hereunder, (or if an Event of Default under Section 10(d) has occurred and is continuing, automatically) shall bear interest (including post-petition interest in any proceeding under any Debtor Relief Law) (the “Default Interest”) at a rate per annum which is the rate that would otherwise be applicable thereto pursuant to the relevant foregoing provisions of this Section 3(a) plus 2.00%, which amount shall be payable on demand; provided that, immediately upon the waiver of such Event of Default, the Default Interest shall no longer accrue on such Loan or Additional Amount. Payment or acceptance of the increased rates of interest provided for in this Section 3(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of the Lenders.
(f) All interest shall be computed on the basis of actual days elapsed in a year of 365 or 366 days, as the case may be, based on the aggregate principal amount then outstanding.
4. Fundings; Additional Amounts.
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5. Prepayments. Subject to Section 6, the Borrower shall have the right at any time upon providing written notice to the Lender Representative to prepay the then-current principal amount of the Loans, Transaction Fee Amount or any Additional Amount, in whole or in part without premium or penalty.
6. General Provisions Regarding Payments. The Borrower will pay all Obligations free and clear of and without reduction for any Taxes, levies, imposts, deductions, or charges (except as provided in Section 11) and without set-off or counterclaim, in United States dollars available the same day in New York, New York. Payments received that are insufficient to pay amounts then due shall be applied first to payment of interest then due and payable, second to remaining principal amount of the Loans and third to any other outstanding Obligations.
7. Conditions Precedent.
(a) The obligations of the Lenders hereunder on the Closing Date are subject to the satisfaction (or waiver by Lenders) of the following conditions precedent:
(i) the Lenders shall have received the following documents, each of which shall be in form and substance satisfactory to the Lenders:
(A) Note. This Note duly executed by the Borrower;
(B) Guarantees. Counterparts of (i) the Guarantee Agreement duly executed by the Guarantor and (ii) the Subsidiary Guarantee Agreement duly executed by each Subsidiary Guarantee;
(C) Security Agreement. Counterparts of the Security Agreement duly executed by the Borrower and each Subsidiary Guarantor;
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(D) UCC Financing Statements. Completed UCC financing statements for each appropriate jurisdiction as is necessary to perfect the Lenders’ security interest in the Collateral; and
(E) Other Collateral Documents. Subject to requirement under Exhibit B, to the extent required to be delivered, filed, registered, or recorded pursuant to the terms and conditions of the Collateral Documents, all instruments and documents as may be necessary to create and perfect the Lender’s security interest in the Collateral.
(ii) Asset Purchase Agreement.
(b) The obligations of the Lenders hereunder on the Tranche 2 Funding Date are subject to the satisfaction (or waiver by the Lenders) of the following conditions precedent:
(i) BLM Transfer Application. The BLM Transfer Application shall have been submitted to the Bureau of Land Management as set forth in Section 6.14 of the Asset Purchase Agreement.
(ii) Required Bonding. The Borrower shall have posted the Required Bonding as set forth in Section 6.15(a)(i) of the Asset Purchase Agreement.
(iii) Officer’s Certificate. At least three (3) Business Days prior to the Tranche 2 Funding Date, the Borrower shall deliver an officer’s certificate that affirms that clauses (i) and (ii) above have been satisfied and attaches the true and correct copies of the BLM Transfer Applications and all Required Bonding that has been posted in accordance with Section 6.15(a)(i) of the Asset Purchase Agreement.
Notwithstanding anything to the contrary herein, if the Borrower has taken commercially reasonable efforts to secure any Required Bonding and is unable to obtain such Required Bonding as a result of the failure of the Lenders to cause a KHI Letter of Credit to be issued as financial support for such Required Bonding when and as required under Section 6.15(c) of the Asset Purchase Agreement, in breach of that subsection, and not as a result of any action, inaction, fact or circumstance not caused by the Lenders, then clause (ii) above shall not be a condition precedent to the Tranche 2 Funding Date.
8. Representations and Warranties. In order to induce the Lenders to make the Loans on the Closing Date, Borrower represents and warrants to the Lenders:
(a) Each Loan Party is duly organized, validly existing and in good standing under the laws of the jurisdiction of their organization and have all requisite power and authority to carry on their business as now conducted.
(b) The execution, delivery and performance by the applicable Loan Party of the Loan Documents are within such Loan Party’s corporate powers and have been duly authorized by all necessary corporate or other organizational action.
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(c) The execution, delivery and performance by the applicable Loan Party of the Loan Documents do not and will not (i) violate (x) any material law or governmental rule or regulation applicable to the applicable Loan Party, (y) the charter or by-laws (or equivalent documents) of the applicable Loan Party, or (z) any order, judgment or decree of any court or other Governmental Authority binding on the applicable Loan Party; (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of the applicable Loan Party; or (iii) require any approval of stockholders, members or partners or any approval or consent of any Person under any contractual obligation of the applicable Loan Party, or any registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental Authority, except for such approvals or consents which have been obtained on or before the date hereof.
(d) The Loan Documents have been duly executed and delivered by the applicable Loan Parties and constitute the legal, valid and binding obligations of the applicable Loan Party, enforceable in accordance with such Loan Documents’ terms, subject to applicable Debtor Relief Laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
(e) Except as otherwise contemplated hereby or under any other Loan Documents, the provisions of the Collateral Documents, together with such filings and other actions required to be taken hereby or by the applicable Collateral Documents, are effective to create in favor of the Lender Representative for the benefit of the Lenders, a legal, valid, perfected and enforceable Lien on all right, title and interest of the Borrower in the Collateral described therein.
9. Covenants. So long as any Obligations are outstanding, the Borrower shall comply with the covenants contained in Schedule II hereto.
10. Events of Default. If any of the following events (“Events of Default”) shall occur and be continuing:
(a) the Borrower shall fail to make payment when due, whether at stated maturity, by acceleration or otherwise, of any principal on the Loan, or the Borrower shall fail to make payment of any interest or any other amount due hereunder on the Loan within five (5) Business Days after the same becomes due;
(b) any Loan Party shall fail to observe or perform (i) its obligations under item 1 on Schedule II or (ii) any other covenant contained in any provision of this Note or any other Loan Document and such failure pursuant to this clause (ii) shall not have been cured within ten (10) Business Days after written notice from the Lender Representative;
(c) any representation, warranty, certification or other statement made by any Loan Party herein or in any other Loan Document shall be false in any material respect as of the date made;
(d) any Loan Party institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator, administrator, administrative receiver or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator, administrator, administrative receiver or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for sixty (60) calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding;
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(e) at any time after the execution and delivery thereof, any Loan Document ceases to be in full force and effect (other than by reason of the satisfaction in full of the Obligations or otherwise in accordance with the terms thereof) or shall be declared null and void, or the Lender Representative shall not have or shall cease to have, for the benefit of the Lenders, a valid and perfected Lien in a material portion of the Collateral purported to be covered thereby (to the extent perfection is required pursuant to the terms hereunder or thereunder) in each case except where such failure is the result of the action or inaction of the Lender Representative that was not caused by an act or omission by the Loan Parties;
(f) one or more judgments or decrees shall be entered against any Loan Party involving in the aggregate at any time a liability (net of any insurance or indemnity payments actually received in respect thereof prior to or within 60 days from the entry thereof, or to be received in respect thereof in the event of any appeal thereof shall be unsuccessful) in excess of $2,500,000 and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 60 days from the entry thereof; or
(g) any Loan Party shall default in the observance or performance of any agreement or condition relating to indebtedness (excluding the Loans) in excess of $2,500,000 or the Unsecured Promissory Note, the effect of which default is to cause, or permit the holders or agent of such indebtedness to cause, such indebtedness to become due prior to its stated maturity; or
(h) a Change of Control.
THEN, in the case of any Event of Default specified above, the Lender Representative may, by written notice to the Borrower, terminate any Commitments and declare the Loan, Transaction Fee Amount and any Additional Amounts to be forthwith due and payable, together with accrued interest and any other amounts owing or payable hereunder or under any Loan Documents, whereupon the same shall become forthwith due and payable, without demand, protest, presentment, notice of dishonor or any other notice or demand whatsoever, all of which are hereby waived by the Borrower; provided, that in the case of the Events of Default specified in clause (d) or (h) above, without any notice to the Borrower or any other act of the Lender Representative or any Lender, the Commitments shall automatically terminate and the Loans, Transaction Fee Amount and Additional Amounts shall automatically become forthwith due and payable, together with accrued interest and any other amounts owing or payable hereunder or under any Loan Documents, without demand, protest, presentment, notice of dishonor or any other notice or demand whatsoever, all of which are hereby waived by the Borrower.
11. Taxes.
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12. Tax Treatment. Each Lender and the Borrower agree that the Note shall be treated as indebtedness for U.S. federal and applicable state and local income tax purposes.
13. Notices. Any notice to be given under this Note shall be in writing and shall be deemed to have been duly given when received by the recipient at the address separately delivered to the Borrower or such Lender in writing.
14. No Waiver. No delay on the part of the Lenders or the Lender Representative in exercising any of its powers or rights, and no partial or single exercise, shall constitute a waiver thereof.
15. Amendments and Waivers. Any provision of this Note may be amended or waived, but only if such amendment or waiver is in writing and signed by each Lender and the Borrower.
16. Successors and Assigns. This Note shall be binding upon the Borrower and its successors and assigns, for the benefit of each Lender and its successors and assigns, except that the Borrower may not assign or otherwise transfer its rights or obligations under this Note without the prior written consent of the Lenders. Each Lender may at any time assign to one or more Persons (each, an “Assignee”) all or any portion of its rights under this Note; provided, that unless such assignment is to an Affiliate of such Lender or an Event of Default shall have occurred and be continuing, any such assignment shall not be made without the prior written consent of the Borrower. Unless such assignment is made at the request of the Borrower pursuant to this Note, the Borrower shall not be obligated to pay any amount pursuant to Section 11 to any Assignee that is greater than the amount the Borrower would have been obligated to pay to the assigning Lender had such assignment not been made.
17. GOVERNING LAW. THIS NOTE AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TOTHIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.
18. Submission to Jurisdiction. The Borrower and, by its acceptance of this Note, each Lender, each agree as follows:
(a) each such party hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Chancery Court of the State of Delaware, and any relevant appellate court, in any action or proceeding arising out of or relating to this Note, or for recognition or enforcement of any judgment, and each such party hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding shall be heard and determined in the Chancery Court of the State of Delaware or, to the extent permitted by law, in such federal court; provided, that nothing in this Note shall affect any right that the Lender may otherwise have to bring any action or proceeding relating to this Note against any Loan Party or its properties in the courts of any jurisdiction, and
(b) each such party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Note in any court referred to
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in subsection (a) of this Section, and each such party also irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of any such suit, action or proceeding in any such court.
19. WAIVER OF JURY TRIAL. THE BORROWER HEREBY WAIVES AND, BY ITS ACCEPTANCE OF THIS NOTE, EACH LENDER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OTHER LOAN DOCUMENT.
20. Severability. If any provision or this Note or any other Loan Document is held to be invalid, illegal or unenforceable, the other provisions of this Note or the applicable Loan Document, as the case may be, shall remain in full force and effect.
21. Usury Savings. Notwithstanding anything herein to the contrary or otherwise, each Lender shall never be entitled to receive as interest on the obligation evidenced hereby any amount in excess of the maximum rate of interest permitted to be charged by applicable law. In the event that any Lender ever receives any such excess, such amount which would be excessive interest shall be applied to the reduction of the principal sum hereof, and if the principal sum is paid in full, any remaining excess shall forthwith be paid to the Borrower.
22. Indemnification; Expenses.
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23. Confidentiality
24. Lender Representative.
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25. Payments Generally. If, other than as provided elsewhere herein, any Lender shall obtain payment in respect of any principal or interest on account of the Loans made by it, any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) in excess of its Pro Rata Share (or other share contemplated hereunder) thereof, such Lender shall immediately (x) notify each other Lender, of such fact and (y) purchase from the other Lenders such participations in the Loans made by them as shall be necessary to cause such purchasing Lender to share the excess payment in respect of any principal or interest on such Loans pro rata with each of them.
26. Registration of the Note. This Note shall be a registered note. The Borrower will keep, at its principal executive office, books for the registration of the name and address of each Lender and the principal amount (and stated interest) owing to each Lender pursuant to the terms hereof (the “Register”) and will update the Register to reflect any permitted assignments or transfers of the Note (or any portion thereof) subsequent to the date hereof (such assignees or transferees, together with the Lenders, the “Holders,” and each, a “Holder”). The entries in the Register shall be conclusive absent manifest error, and the Borrower and the Holders shall treat each person whose name is recorded in the Register as a lender hereunder for all purposes of this Note, notwithstanding notice to the contrary. Subject to any restrictions on or conditions to transfer set forth in this Note, a Holder, at its option, may in person or by duly authorized attorney surrender the same for exchange at Borrower’s principal executive office, and promptly thereafter and at Borrower’s expense receive in exchange therefore one (1) or more new Note(s), each in the principal amount requested by such Holder, dated the date to which
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interest shall have been paid on the Note so surrendered or, if no interest shall have yet been so paid, dated the date of the Note so surrendered and registered in the name of such person or persons as shall have been designated in writing by such holder or its attorney for the same principal amount as the then unpaid principal amount of the Note so surrendered. Neither a Lender nor any registered Holder of this Note shall have the right to convert this Note to bearer form. This Section 26 shall be interpreted such that the Note is maintained in “registered form” within the meaning of the United States Internal Revenue Code of 1986, as amended, and the United States Treasury Regulations thereunder.
27. First Lien/Second Lien Intercreditor Proxy. The Lender Representative irrevocably appoints the Borrower as its attorney-in-fact and proxy, with full authority in the place and stead of such Lender Representative to execute the First Lien/Second Lien Intercreditor Agreement in connection with the incurrence of any Permitted Corporate Debt; provided, however, that the Borrower shall not execute the First Lien/Second Lien Intercreditor Agreement under such power until the expiration of five (5) Business Days after written notice has been given to the Lender Representative by the Borrower of its intent to exercise such power
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above,
5E SVM, LLC
By: /s/ Paul Weibel
Name: Paul Weibel
Title: President
[Signature Page to Bridge Note]
Schedule I
Tranche 1 Commitments
Lender |
Pro Rata Share (%) |
Pro Rata Share ($) |
.Karnavati Holdings, Inc. |
100.0000% |
$7,000,000.00 |
Total |
100.0000% |
$7,000,000.00 |
Tranche 2 Commitments
Lender |
Pro Rata Share (%) |
Pro Rata Share ($) |
.Karnavati Holdings, Inc. |
100.0000% |
$3,000,000.00 |
Total |
100.0000% |
$3,000,000.00 |
Schedule II
COVENANTS of BORROWER
(i) the declaration and payment of dividends or distributions by the Borrower to, or the making of loans or advances to, the Guarantor in amounts required for the Guarantor to pay, in each case without duplication:
(A) franchise and similar taxes, and other fees and expenses, required to maintain their corporate or other legal existence;
(B) [reserved].
(C) general corporate or other operating, administrative, compliance and overhead costs and expenses (including expenses relating to auditing and other accounting matters) incurred in the ordinary course of business of any Parent Company, to the extent such costs and expenses are customary and attributable to the ownership or operation of the Borrower and its Subsidiaries;
(ii) customary payments, loans, advances, or guarantees (or cancellation of loans, advances, or guarantees) to future, present, or former employees, officers, directors, managers, consultants, or independent contractors or guarantees in respect thereof for bona fide business purposes in the ordinary course of business and not exceed $500,000 per fiscal year;
(iii) any customary payment of employee compensation, benefit plan or arrangement, or any health, disability or similar insurance plan in the ordinary course of business which covers current, former or future officers, directors, employees, managers, consultants, and independent contractors of the Borrower, any subsidiary;
(iv) the sale, issuance, or transfer of Equity Interests of the Borrower not constituting a Change of Control; or
(v) dividends payments or distributions payable solely in Equity Interests of the Borrower.
7. Post-Closing Covenant. The Borrower shall perform and satisfy the requirements set forth in Exhibit B hereto within the time periods set forth therein.
8. Use of Proceeds. The proceeds of the Loans shall be used by the Borrower for its and its subsidiaries’ working capital and general corporate purposes.
Exhibit A
[See attached]
Exhibit B
POST-CLOSING REAL PROPERTY COLLATERAL DELIVERABLES
Within 90 days after the Closing Date, or such later date as the Lender Representative may approve in writing in its reasonable discretion, the Borrower shall, at its sole cost and expense, deliver or cause to be delivered to the Lender Representative the following items with respect to each Material Real Property:
Each title policy shall include such endorsements as the Lender Representative may reasonably request and as are available in the applicable jurisdiction at commercially reasonable rates, including, as applicable, endorsements addressing access, contiguity, survey matters, zoning, subdivision, restrictions, variable-rate indebtedness, fixtures and aggregation or tie-in coverage.
If the Borrower timely delivers fully executed and recordable documents to the applicable title insurance company or recording office, a delay attributable solely to that title insurance company or recording office shall not constitute a failure to comply with this Exhibit B, provided that the Borrower diligently pursues completion of the applicable recording, filing and title-insurance process.