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As filed with the Securities and Exchange Commission on July 11, 2025

No. 333-     

 

 
 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

Firefly Aerospace Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   3761   81-5194980

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

1320 Arrow Point Drive #109

Cedar Park, TX 78613

512-893-5570

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Jason Kim

Chief Executive Officer

1320 Arrow Point Drive #109

Cedar Park, TX 78613

512-893-5570

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies of all communications, including communications sent to agent of service, should be sent to:

 

Robert M. Hayward, P.C.

Kevin M. Frank

Ashley Sinclair

Kirkland & Ellis LLP

333 West Wolf Point Plaza

Chicago, IL 60654

(312) 862-2000

 

David Wheeler

General Counsel

1320 Arrow Point Drive #109

Cedar Park, TX 78613

512-893-5570

 

Michael Kaplan

Stephen Byeff

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, NY 10017

(212) 450-4000

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934. (Check one):

 

Large accelerated filer   ☐    Accelerated filer   ☐
Non-accelerated filer   ☒    Smaller reporting company   ☐
     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 7(a)(2)(B) of the Securities Act of 1933. ☐

 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 
 


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This information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell, and it is not soliciting an offer to buy, these securities in any jurisdiction where the offer or sale is not permitted.

 

Subject to Completion, dated     , 2025

Shares

 

 

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Common Stock

 

 

This is the initial public offering of shares of common stock of Firefly Aerospace Inc. We are offering      shares of common stock.

Prior to this offering, there has been no public market for our common stock. We anticipate that the initial public offering price for our common stock will be between $    and $    per share. We intend to list our common stock on The Nasdaq Global Market, or Nasdaq, under the symbol “FLY.” However, no assurance can be given that our listing application will be approved. If our listing application is not approved by Nasdaq, we will not be able to consummate this offering.

After giving effect to this offering, investment funds managed by AE Industrial Partners, LP (“AE Industrial Partners”), will hold approximately  % of our outstanding common stock (or approximately  % of our outstanding common stock, if the underwriters’ option to purchase additional shares from us is exercised in full) and be party to a director nomination agreement creating a group controlling more than 50% of the total voting power of our common stock with respect to the election of our directors. See “Risk Factors—Risks Related to This Offering and Ownership of Our Common Stock—AE Industrial Partners controls us, and its interests may conflict with ours or yours in the future.” Accordingly, we expect to be a “controlled company” as defined in the corporate governance rules of Nasdaq and will be exempt from certain corporate governance requirements of such rules. As a result, AE Industrial Partners will have significant power to control our affairs and policies and influence the outcome of matters that require stockholder approval, including with respect to the election of directors, the adoption of amendments to our certificate of incorporation and bylaws and the approval of any merger or sale of substantially all of our assets. See “Management—Controlled Company Exemption.”

We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and have elected to comply with certain reduced public company reporting requirements. See “Risk Factors” and “Prospectus Summary—Implications of Being an Emerging Growth Company.”

 

 

Investing in our common stock involves risks. See “Risk Factors” beginning on page 33 to read about factors you should consider before buying shares of our common stock.

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

     Per Share      Total  

Initial public offering price

   $           $       

Underwriting discounts and commissions(1)

   $        $    
  

 

 

    

 

 

 

Proceeds, before expenses, to us

   $        $    
  

 

 

    

 

 

 

 

(1)

See “Underwriting” for additional information regarding underwriting compensation.

We have granted the underwriters an option to purchase up to      additional shares of our common stock at the initial public offering price, less the underwriting discounts and commissions within 30 days of the date of this prospectus.

The underwriters expect to deliver the shares of common stock against payment in New York, New York on or about     , 2025.

 

Goldman Sachs & Co. LLC   J.P. Morgan   Jefferies   Wells Fargo Securities

 

Morgan Stanley   Deutsche Bank Securities   Cantor

Co-Managers

Roth Capital Partners   Academy Securities

Prospectus dated     , 2025.

 


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PROSPECTUS SUMMARY

     2  

RISK FACTORS

     33  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     83  

MARKET AND INDUSTRY DATA

     85  

USE OF PROCEEDS

     86  

DIVIDEND POLICY

     87  

CAPITALIZATION

     88  

DILUTION

     90  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     93  

BUSINESS

     112  

MANAGEMENT

     127  

EXECUTIVE COMPENSATION

     133  

PRINCIPAL STOCKHOLDERS

     146  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     149  

DESCRIPTION OF CERTAIN INDEBTEDNESS

     154  

DESCRIPTION OF CAPITAL STOCK

     156  

SHARES ELIGIBLE FOR FUTURE SALE

     162  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS

     165  

UNDERWRITING

     170  

LEGAL MATTERS

     179  

EXPERTS

     180  

WHERE YOU CAN FIND ADDITIONAL INFORMATION

     181  

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

     F-1  

Neither we nor the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is not an offer to sell nor is it seeking an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. We are offering to sell, and seeking offers to buy, shares of our common stock only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.

For investors outside the United States: neither we nor the underwriters have done anything that would permit this offering or the possession or distribution of this prospectus in any jurisdiction where action for those purposes is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, this offering of our common stock and the distribution of this prospectus outside the United States.

Through and including     , 2025 (25 days after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

 

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TRADEMARKS AND TRADE NAMES

“Firefly Aerospace,” “Firefly,” “Blue Ghost,” “Elytra,” and other trademarks or service marks of Firefly Aerospace and its direct and indirect subsidiaries appearing in this prospectus are the property of Firefly Aerospace. This prospectus contains additional trade names, trademarks, and service marks of others, which are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this prospectus generally appear without the ® or ™ symbols. Other trademarks, trade names, service marks or copyrights of any other company appearing in this prospectus are, to our knowledge, the property of their respective owners.

 

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PROSPECTUS SUMMARY

The following summary contains selected information contained elsewhere in this prospectus about us and about this offering. It does not contain all of the information that is important to you and your investment decision. Before you make an investment decision, you should review this prospectus in its entirety, including matters set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our Consolidated Financial Statements and the related notes included elsewhere in this prospectus. Some of the statements in the following summary constitute forward-looking statements. See “Special Note Regarding Forward-Looking Statements.” Unless the context otherwise requires, all references in this prospectus to “Firefly Aerospace,” the “Company,” “we,” “us,” “our,” or similar terms refer to Firefly Aerospace Inc. and its consolidated subsidiaries.

Overview

Firefly Aerospace is a market leading space and defense technology company with an established track record of success providing comprehensive mission solutions to national security, government, and commercial customers. Our mission is to enable responsive, regular, and reliable launch, transit, and operations in space for our customers across the globe. Backed by our world-class team and proven technology, we have designed, developed, and deployed our class-leading launch vehicles and dynamic spacecraft solutions to support critical customer missions across the space domain. As a leader of responsive mission solutions and the only commercial company to achieve a fully successful Moon landing, we are a partner of choice for national security, government, and commercial customers for their critical space missions. As a U.S.-based company, our purpose-built family of products aligns with the ongoing paradigm shift in government missions and procurement processes, where speed, dependability, efficiency, and economics drive customer decision-making.

We have a differentiated and scalable platform of Launch and Spacecraft Solutions with flight heritage. Within Launch, we have two offerings built on common technologies: Alpha and Eclipse. Our operational launch vehicle, Alpha, is the first and only U.S.-based orbital rocket in the 1,000 kilograms class to successfully reach orbit, with four launches completed successfully. These successful launches include responsive space missions, which are a significant differentiator for Firefly and a critical national defense solution. Eclipse, a reusable and scaled up version of Alpha, is in final development in partnership with Northrop Grumman and is expected to deliver 16,000-kilogram payloads to Low Earth Orbit (“LEO”) and can access Medium Earth Orbit (“MEO”), Geostationary Orbit (“GEO”), Highly Elliptical Orbit (“HEO”) and Trans-lunar Injection (“TLI”). We expect that Eclipse will first launch from Wallops Island, Virginia, as early as 2026 and it will be able to support space station resupply, commercial spacecraft, critical national security missions, and scientific payloads for the domestic and international markets.

 

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Our Spacecraft Solutions—our Blue Ghost lander (“Blue Ghost”) and Elytra offerings—highlight the heritage of common technologies from our launch vehicles. Blue Ghost Lander and Elytra are highly maneuverable spacecraft enabled by high performance rocket engine technology. Our Blue Ghost lander is the only commercial vehicle to ever achieve a fully successful Moon landing and the first U.S.- based lander to successfully complete a lunar surface mission since NASA’s Apollo 17 in 1972. We have a flight proven spacecraft that has operated in LEO, MEO, GEO, and Cislunar orbits. Elytra is our high thrust spacecraft platform creating new categories for space domain awareness and warfighting, long-range communications relays, on-orbit edge processing, and advanced space exploration. Elytra is capable of a wide-range of spacecraft missions across multiple orbits, including satellite delivery, on-orbit transfers, hosted payloads, communications relay, and more–which positions us to help establish a dominant U.S. and allied national security position in space. Elytra will support near-term Blue Ghost missions, highlighting both space-readiness and scalability of the underlying technology. Elytra will also support a responsive on-orbit mission for the U.S. Department of Defense’s (the “DoD”) Defense Innovation Unit (“DIU”) and perform multiple Rendezvous Proximity Operations (“RPO”) and space domain awareness operations on-demand. Additionally, we expect to offer a lunar imaging service, named Ocula, through Elytra as early as 2026. These foundational capabilities and underlying technologies form the basis of our responsive, dedicated, and scalable solutions that are evolving alongside the rapidly shifting defense technology and space landscape.

 

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We operate in a highly attractive and growing industry. According to McKinsey’s report from 2024, the global space economy is projected to reach $1.8 trillion in value by 2035 driven by accelerating national security and commercial demand. In recent years, record demand for satellites caused a supply shortage of orbital launch vehicles. In 2024, nearly 2,800 satellites launched to orbit, representing more than a 500% increase in demand for launch services compared to just five years prior, according to a 2025 report by BryceTech. The scarcity of launch capacity and increasing government and commercial demand has led these customers to seek out defense technology companies with cost-efficient and proven production systems for increasing capacity.

In the 21st century, space evolved from frontier exploration into a critical domain for global infrastructure and contested dominance. From 2024 – 2029, the DoD’s average proposed space budget has increased 82% from 2018 – 2023 averages. Governments from militarily competitive and adversarial countries continue to make significant investments in space and develop their capabilities, which we believe makes our unique mission solutions a crucial resource for the United States’ national defense strategy. Space is the critical backbone of national security communications, intelligence gathering, and support for terrestrial military operations. As one of the only U.S.-based commercial companies currently equipped to provide reliable access to launch, transit, and operations in space, we are leading the way in end-to-end services for the rapidly expanding defense, space exploration, and commercial space markets.

Our products are designed to address our customers’ space and defense technology needs. Within Launch, we provide satellite customers with reliable, regular, and rapid access to space. Including its inaugural launch in 2021, Alpha has conducted six launches and has more than 30 planned launches under contract as of March 2025. The successful FLTA002 mission using Alpha made us the first U.S. company to achieve orbit on its second attempt. Our leading launch offerings are tailored to support the demands of our customers in the national security space. The VICTUS NOX mission using Alpha set a new responsive launch record for the U.S. Space Force (“Space Force”), with a turnaround time from notification to launch in approximately 24 hours, shattering the previous industry record of 21 days. The mission established a responsive launch defense capability that previously did not exist, which provides critical warfighting advantages to the United States. As a result of the success of VICTUS NOX, we have won additional responsive launch contracts for Alpha, including the VICTUS SOL and VICTUS HAZE missions.

 

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Alpha is an attractive platform for providing hypersonic flight test capabilities to the DoD and other federal agencies. Alpha is contracted to be utilized for MACH-TB, the DoD’s Multi-Service Advanced Capability Hypersonics Test Bed, to carry and deploy payloads into hypersonic trajectories, a crucial testing step for national security customers in the development of next generation weapon systems. Our Alpha platform allows us to provide cost effective hypersonic test capabilities, making us a partner of choice for defense companies looking to advance in the arena of hypersonics.

The Eclipse rocket is a next-generation vehicle designed to fill a gap in the current launch market. Building on the scalable technological foundation of our Alpha launch vehicle, we are developing Eclipse in partnership with Northrop Grumman to be reusable and deliver upwards of 16 times the mass to orbit compared to Alpha. Eclipse leverages key technologies and expertise from Alpha, including a carbon composite structure and patented tap-off cycle engine technology. Additionally, Alpha laid the foundation for our production systems and test stands that are being used for rapid production of Eclipse. These design features and foundation enable enhanced performance, flexible launch schedules, and competitive pricing.

To complement our Launch platform, we offer customizable Spacecraft that are versatile and launch vehicle agnostic: our proven Blue Ghost Lander and our multi mission orbital spacecraft line, Elytra, which is being built using the Blue Ghost technological framework. This pair of spacecraft product lines leverages common technologies including flight software, thrusters, batteries, avionics, and composite structures. Our spacecraft are flexible and can be launched individually or together to enable lander and on-orbit missions.

 

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On March 2, 2025, we became the first private company to successfully land and operate on the Moon with Blue Ghost Mission 1. The achievement marked the first fully successful U.S. lunar surface landing since the Apollo era over 50 years ago. Historically, only five countries—the United States, China, Russia, Japan, and India—have achieved the feat of a lunar soft-landing, putting Firefly’s capability in the realm of global superpowers. Blue Ghost Mission 1 carried 10 NASA payloads to the Moon for a total contract value of $102.1 million and completed all NASA missions for 14 days on the surface and five hours into the lunar night,

 

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while successfully meeting mission expectations. The success of our Blue Ghost lander delivered valuable data and positions us to push forward rapidly with additional lunar missions, as well as future interplanetary expeditions.

During Blue Ghost Mission 1, we also proved our common Elytra spacecraft technology by operating through LEO, MEO, GEO, and Cislunar space prior to landing. Elytra will directly support Blue Ghost Mission 2 in 2026, providing data relay services from lunar orbit. Elytra is also contracted to conduct an on-orbit mission that supports the National Reconnaissance Office (“NRO”), and is onboarded to perform technology missions to support the Proliferated Warfighter Space Architecture of Tracking and Transport layer constellations for the Space Development Agency (“SDA”). Elytra has also been placed on contract for a Space Maneuver Vehicle to support the DoD’s DIU with high delta-v to perform hundreds of RPO maneuvers to perform Space Domain Awareness to deter rival space threats.

Firefly’s state-of-the-art facilities support our Launch and Spacecraft product lines. Our research and development, iterative testing, and scalable manufacturing processes are vertically integrated and streamlined. Our corporate headquarters, the Rocket Ranch, and the Hive are located just north of Austin, Texas. The Rocket Ranch, our 200-acre, state-of-the-art manufacturing and testing facility, is strategically located within 25 miles of our Austin facilities. The Rocket Ranch has approximately 200,000 square feet of production capacity, six test stands, and advanced manufacturing equipment which leverages automation through robotics. The Hive houses our spacecraft, software, and avionics teams, in addition to a state-of-the-art clean room and a mission control room that supports launch, land, and orbit missions. We perform assembly and testing in-house and are co-located with design and manufacturing, enabling fast and high-quality development cycles and efficient use of working capital.

Our full suite of manufacturing capabilities is supplemented by four launch sites, which will continue to enhance flexibility and responsiveness for our missions. We can arrange ongoing launch rockets from the Vandenberg Space Force Base launch site in California. Additional launch sites are under construction at Virginia’s Mid-Atlantic Regional Spaceport on Wallops Island and the Esrange Space Center in Sweden, and future launch pad capacity will be unlocked from expansion at Cape Canaveral SFS in Florida. Our significant scale and unique blueprint are strategically planned to support our increasing launch cadence as we grow.

 

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Firefly’s Established Infrastructure and Global Launch Sites

 

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Firefly’s Key Highlights

 

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We began operations in 2017 and successfully reached orbit with Alpha in October 2022, after extensive research, development, and testing. This achievement made us the first and only U.S. commercial company with a rocket ready to fulfill critical space missions in the 1,000 kilograms payload class.

 

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Alpha set a new responsive launch record with the VICTUS NOX mission in September 2023, when we flew a rocket for Space Force with a turnaround time from notification to launch in approximately 24 hours, shattering the previous industry record of 21 days. The mission established a responsive launch defense capability that provides new critical warfighting advantages to the United States.

 

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The Blue Ghost mission landed on the Moon on March 2, 2025, marking the first fully successful lunar landing by a commercial company.

 

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We are developing a new, reusable launch vehicle called Eclipse, in a first-of-its-kind partnership with Northrop Grumman. Announced in August 2022, our teams joined to create an American-built rocket to replace a critical gap in the U.S. market, while also delivering a new long-term capability for serving national security, government, and commercial launch customers.

 

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Our team developed four engines in rapid succession, with investments in cutting-edge advanced technology, such as our patented tap-off cycle that unlocks critical weight and component savings for our launch vehicles. Firefly designed, built, tested, and flew a suite of in-house developed propulsion systems– including the Reaver, Lightning, and Spectre engines. Additionally, in less than 23 months, our new Miranda engine went from clean sheet design to 71 test fires and counting. Firefly’s scaled architecture across engines allows for fast and reliable development.

Our Mission Solutions

We provide full cycle, dedicated, and responsive launch and spacecraft solutions, and continue to redefine space access by delivering complementary platforms for mission success. Our common technologies, components, and know-how are woven across our launch vehicles and spacecraft solutions.

Launch: Firefly’s launch vehicles provide dedicated and responsive launch for national security, government, and commercial customers. We are the only U.S. company with a liquid-powered orbital launch vehicle in the 1,000 kilograms payload class. Our Alpha launch vehicle employs a distinct combination of technologies designed to ensure high performance and efficiency at low cost. It uses a unique lightweight, rigid, and thermally insulated carbon composite technology for both the primary rocket structure as well as the propellant tanks, which ensures more of the usable mass goes to the mission payload. Alpha is also powered by our patented tap-off cycle engine technology which is more efficient than legacy systems and provides greater reliability by employing fewer parts than traditional rocket engines. We have utilized this proprietary technology to develop all our rocket engines in-house. Alpha has five engines: four first stage Reaver engines, and one second stage Lightning engine. In addition to its track record of successful, dedicated, and responsive launch, Alpha is also designed to support testing of hypersonic payloads, providing significant growth opportunities for hypersonic deterrents, reconnaissance, and future national security needs. We are also expanding our pad operations from Vandenberg Space Force Base to add Wallops, VA and Esrange, Sweden to support more missions, customers, and additional launch cadence opportunities. The Sweden pad is designed to expand Alpha production and operations to strategic international locations to service the European, UK, Japan, South Korea, Middle East, and Australia regions, which we expect will provide the foundation for a future business model to service the global market.

Eclipse is powered by seven Miranda engines, each of which produces 230,000 pounds-force of thrust. The Miranda engine is built using the same engine architecture and patented tap-off cycle as the Reaver engine, which produces 45,000 pounds-force of thrust. These common technologies are facilitating fast, cost-efficient, and reliable development of Eclipse. Eclipse is being built to serve national security, commercial, and international launch markets at competitive pricing. Eclipse’s Stage 1 is designed to be reusable, lowering production costs and improving cycle times for this launch platform. We are planning to construct a refurbishment facility that will facilitate this reusability. The first launch of Eclipse is expected to take place from Virginia’s Mid-Atlantic Regional Spaceport on Wallops Island as early as 2026, and Eclipse is designed to be compatible with additional launch ranges on the East and West Coasts of the United States.

 

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Spacecraft Solutions: Firefly is the only company to achieve a fully successful Moon landing, completing all 17 objectives set out before launch. We expect our Blue Ghost lander to fly annual missions to the Moon, with payload services customized to the technology and exploration goals of our customers. Offering ride-share opportunities and dedicated missions, Blue Ghost is built to host and deliver payloads nearly anywhere on the lunar surface. Blue Ghost Mission 2 is expected to land on the far side of the Moon and conduct at least 10 days of lunar surface operations with the Blue Ghost lander, with an Elytra Dark spacecraft supporting as a communications relay. Elytra Dark is one of three Elytra configurations supporting on-orbit servicing missions. This Elytra Dark spacecraft is expected to remain operational in lunar orbit for up to five years. Mission 2 is fully manifested with both NASA and commercial payloads, including a commercial rover and a ride-sharing international satellite. Blue Ghost Mission 3 is already under contract with NASA, and we selected Blue Origin as a partner to deliver their rover to the lunar surface. Additionally, we were selected by a proprietary commercial customer for a future dedicated Blue Ghost lander mission.

Elytra is a dynamic spacecraft that is highly maneuverable and extensible to perform hundreds of Rendezvous Proximity Operations in support of Space Domain Awareness and Warfighting missions, long-range communications relay missions, on-orbit edge processing missions, and advanced Space Exploration missions. Blue Ghost and Elytra are highly complementary and compatible technologies that share a common core. Most of Elytra’s core hardware and software were proven at a variety of orbits through Blue Ghost’s successful Mission 1. As part of our end-to-end space services, Elytra offers robust on-orbit solutions and responsive defense capabilities when and where customers need them. As of April 2025, Elytra is contracted to perform a responsive on-orbit mission in support of the DoD’s DIU Sinequone Project. During this mission, Elytra will serve as a space maneuver vehicle to perform a series of on-orbit tasks including space domain awareness in LEO. Available to launch on Alpha and Eclipse, our Elytra vehicles are positioned to service the entire lifecycle of government and commercial missions. This unique interoperability makes Firefly a one-stop shop and partner of choice for national security, government, and commercial customers requiring these capabilities.

 

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Our Industry and Addressable Markets

Firefly’s business operates in the critical launch and spacecraft sectors with a focus on national security within the large and expanding space economy. The space economy includes launch, spacecraft, satellite constellations, and on-orbit and in-space services. We believe our main sources of competition fall into the following categories: companies providing dedicated and rideshare launch vehicles across payload classes, companies providing spacecraft and satellite constellations, and companies providing launch and spacecraft solutions that enable on-orbit and in-space services. According to McKinsey’s report from 2024, the global space economy is projected to reach $1.8 trillion in value by 2035 driven by accelerating national security and commercial demand. National security and advancements in space-based technologies are core focuses of the U.S. government on a bi-partisan basis and closely align with the key messages from the current administration regarding space. Given the critical role of space across the defense, national security, and commercial sectors, customers seek out trusted providers with proven, flexible, and responsive capabilities to deliver critical missions. As one of the only U.S.-based commercial companies currently equipped to provide reliable access to launch, transit, and operations in space, we are poised to grow in this attractive market.

Small and Medium Launch Market: Alpha is the only provider of small size launch that has achieved orbit and addresses a critical gap in the market in the 1,000 kilograms category. Eclipse, with its greater payload capacity and customizable five-meter payload fairing, will serve commercial customers and is also expected to launch large dedicated national security satellites or constellations of smaller national security satellites for the National Security Space Launch (“NSSL”) program.

Additionally, in the past decade the global market right-sized toward satellites between 200 kilograms to 1,200 kilograms, according to analysis by BryceTech in 2025. While Starlink represents a significant number of these satellites, 64% of the satellites launched since 2015 fit within this range. The global satellite market is projected to grow to over $600 billion in 2032, at an 8% compound annual growth rate from 2023, according to Allied Market Research. Small launch vehicles such as Alpha offer dedicated launches, flexibility, and cost-effectiveness in delivering the majority of these payloads to specific orbits. These dynamics are favorable for Alpha as the only U.S. launch vehicle in its class. In comparison, heavy lift launch vehicles do not provide dedicated access to specific orbits, and micro launch players lack the capacity to carry multiple payloads, leading to unfavorable unit economics.

 

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There is scarcity in the market for providers with proven launch platforms and differentiated capabilities, and customers place a premium value on dedicated, reliable, and rapid response. With the successful development of Eclipse, we will be able to operate in the Medium Launch space, which is similarly underserved and benefits from ongoing sector tailwinds related to the demand for launch from national security and commercial customers. With growing national security and governmental requirements, defense spend, increasing demand for commercial launch, and the introduction of new space applications, our total addressable launch market is expected to grow to $32 billion by 2035 according to the World Economic Forum and McKinsey.

In particular, we believe the expansion of adversarial budgets to fund the development of space warfighting and intelligence, surveillance, reconnaissance satellites, and hypersonic vehicles will create additional demand from governmental national security customers for our solutions. According to the World Economic Forum and McKinsey, total state-sponsored defense spending is projected to grow from $66 billion in 2023 to $180 billion in 2035, and key adversaries are a major part of that. In 2025, China announced that it will increase its defense budget by 7.2% year over year, with a significant focus on space spending. This momentum in adversarial spending poses a direct threat to the U.S. and has further fueled the demand for launch. Our launch vehicles are well-positioned to deploy hypersonic payloads, driven by their ability to accelerate these payloads to high velocities. Our rapid response and hypersonics enablement capabilities position us to be a partner of choice as space-based defense becomes a more contested domain in the coming years.

Spacecraft Market: Our Spacecraft Solutions, Blue Ghost and Elytra, address the $7 billion spacecraft market as of 2024 according to Research and Markets. We are one of the few providers of lunar lander services with multiple planned launches under contracts and a multi-capability offering. Our successful Blue Ghost mission this year proves our capability to execute on challenging milestones: enter lunar orbit, measure radiation levels and the magnetic field in transit, land on the Moon, study the surface, and collect the most amount of data ever on the environment. We expect our significant competitive advantage will grow as we continue to execute on our upcoming Blue Ghost missions, with contracts already underway as part of NASA’s $2.6 billion CLPS program.

Our solutions also address critical space needs in applications, including in-space operations, data communications, and threat security capabilities. Our expanding complementary products and services in the defense and space market enable us to capture additional verticals within this ecosystem going forward, which is expected to reach $9 billion in value by 2030 according to Research and Markets. Space Force has been exploring dynamic space operations, which involves allowing satellites to move freely in and out of orbit. Given the ongoing global race to win in “satellite dogfighting,” Space Force is increasingly focused on ensuring space superiority by defending satellites with on-orbit solutions. As near peer threats rise in space and the U.S. government examines proactive orbital deterrence systems, we expect our Elytra spacecraft solution will become an essential part of the U.S. and allied nations’ security posture.

Challenges

We face a number of challenges inherent to our industry, including, among others: our focus on the defense markets and concentration of primary contracts with various governmental entities that account for a meaningful portion of our revenue; our ability to manage the increasing technological complexity of our business and the solutions we offer; and the impact of governmental budget and spending trends. We have historically generated net losses and there can be no assurance that we will generate net income at any point in the future. We may also seek growth by pursuing acquisitions or investment opportunities to complement or expand our existing business, some of which may be material and which could prove to be costly, time consuming, and challenging to consummate and/or integrate with our existing business. In addition, certain disruptions to the global economy, including market disruptions, monetary and fiscal policy uncertainty, supply chain challenges, high interest rates,

 

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and inflationary pressures have contributed to an inflationary environment that has adversely affected, and may continue to adversely affect, the price and availability of certain products and services necessary for our operations, which in turn may adversely impact our business and operating results. In addition, the global trade environment is uncertain and rapidly evolving. Tariffs imposed by the U.S. presidential administration or retaliatory tariffs announced by other countries could result in a trade war. The impact of tariffs on our business and results of operations will depend on their timing, duration, and magnitude.

Any number of these challenges, and others, could have a negative impact on our business, financial condition, and results of operations. For a discussion of the challenges, risks, and limitations that could harm our prospects, see “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

Indebtedness

We have a substantial amount of indebtedness and may incur additional indebtedness in the future. As of March 31, 2025, our total indebtedness, excluding capitalized debt issuance costs, was $173.6 million, including $136.1 million under our Term Loan Facility (as defined herein) and $37.5 million under finance leases and other obligations. Although we intend to use a portion of the net proceeds received by us from this offering to repay all of our borrowings under the Credit Agreement, we may incur additional indebtedness in the future, including in connection with this offering. We have historically relied on a substantial amount of debt to finance our operations and investments and may continue to be reliant on such financing in the future. For a discussion of the risks associated with our indebtedness, see “Risk Factors—Risks Related to Our Indebtedness—Our substantial indebtedness could materially adversely affect our financial condition.”

Competitive Strengths

Pioneering a Flywheel of Space and Defense Technology Mission Solutions

Our family of products and mission solutions provide us with the ability to serve the entire space domain and fuel our complementary technologies and comprehensive missions for national security, government, and commercial customers. Our heritage and proven technology are resetting the standard for success in launch, lander, and space markets. Our Alpha launch vehicle is the only orbit-ready U.S. rocket in the 1,000 kilograms payload vehicle class. We are a leader in tactically responsive space missions, having completed a record-breaking launch with an approximately 24-hour turnaround for VICTUS NOX. This mission showcased our ability to deliver payloads to orbit on short notice, which is a critical capability for national security operations. The success of this mission has resulted in multiple subsequent contract awards. We are a partner of choice for our customers’ most complex missions and assignments, with rapid response capabilities to address critical threats. With these proven launch capabilities and innovative technologies, we are a crucial partner for large national defense primes who need access to space.

In addition to our launch vehicles, we offer launch platform agnostic spacecraft solutions to address customers’ various in-space mission requirements. As the only company to have successfully landed and completed NASA missions on the Moon, we set the standard for landers. Our first Blue Ghost mission was launched in January 2025 and successfully completed a 60-day operation, making it the longest commercial lunar surface mission to date. Our multi-mission orbital vehicle, Elytra, is poised to serve numerous strategic and defense-related functions within orbit, including carrying payloads into and out of orbit, performing long-haul communications missions, fostering space domain awareness, and other responsive space capabilities.

Firefly’s launch and spacecraft services differentiate the company by providing a one-stop shop solution for customers. Our services work agnostically with partners and are additive to our own systems as well—for

 

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example, we can deliver payloads to the Moon using our Blue Ghost in tandem with another organization’s launch vehicle or pair our platforms together, such as a mission launched on our Alpha rocket that uses an Elytra spacecraft. Therefore, we are able to benefit from demand for our family of products, which we expect to continue to grow as our finalized intercoastal launch pads facilitate increased launch cadence. This flywheel streamlines our development, reduces costs, and expands our total addressable market, all while differentiating Firefly from competitors.

Innovative Patented Technology and Unmatched Technical Expertise

We have taken a reliability-first approach to building our launch vehicles, landers, and spacecraft. We successfully built the world’s largest all-composite launch vehicle, our Alpha rocket. Our rockets are built using lightweight and strong carbon fiber, leveraging automated fiber placement technology to ensure unified production methodology across all of our product lines. We produce the only launch vehicles with liner-less carbon fiber liquid oxygen tanks that are manufactured through proprietary bonding operations. This technology allows us to keep liquid oxygen at -300F, saving significant weight versus certain of our competitors’ vehicles.

Our propulsion systems represent another patented technology, with highly efficient tap-off cycle engines. We are unique in developing and scaling this technology, having built and successfully flown the highest thrust tap-off cycle technology in the world. Additionally, our advanced propulsion and avionics systems are designed and tested in-house to facilitate high performance in tough environments. Our launch vehicles are readily scalable, with the Reaver and Lightning engines in our Alpha vehicle providing the patented technology for the Miranda and Vira engines in Eclipse. In addition to the launch vehicle engines, we have also developed proprietary Spectre thrusters utilized on both Blue Ghost and Elytra.

As of June 22, 2025, we have a team that consists of 296 engineers and 173 skilled technicians that bring deep subject matter expertise and discipline from across the defense sector. We have progressed development at an exceptional pace, as evidenced by the fact that in less than 20 months we have developed from a clean design and tested our patented Miranda engine based on a scaled design of the Reaver engine. This success has been built on leading intellectual property, world-class infrastructure, and the strength of our technical team. These factors collectively support our competitive moat. Our technology portfolio and expertise are based on years of testing and operating.

Purpose-Built Infrastructure Creates High Barriers to Entry

We strategically deployed capital to build state-of-the-art infrastructure to design, produce, test, and manufacture our products to the highest standard at a regular cadence. Our three primary facilities—our corporate headquarters, the Hive spacecraft facility, and our Rocket Ranch manufacturing and testing site—are only 25 miles apart, providing unique proximity between design, manufacturing, and production. The proximity of our core facilities enables agile and rapid vehicle development and production at lower cost versus competitors. By maintaining a vertically integrated manufacturing process, we are less reliant on the timelines of outside suppliers and reduce risk within our supply chain.

Our purpose-built research and development (“R&D”), manufacturing, and testing footprint is the product of significant investments and the backbone of our manufacturing process. We designed our advanced manufacturing process through years of optimization that now allows us to replicate our additional facilities with significantly less capital. Our early investment in cutting-edge technology and best-in-class facilities is a competitive advantage, creating a platform primed for continued growth.

 

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LOGO

Strong Customer Relationships and Market Leading Strategic Partnerships

As the space market continues to grow and evolve, we are well-positioned to serve our customers’ most complex missions with rapid response times and purpose-built solutions. Our collaborations with leading national security agencies and aerospace companies, such as Lockheed Martin Corporation, Northrop Grumman, L3Harris, Space Force, SDA, NRO, and NASA demonstrate the value and criticality of our new space defense and technology leadership in this market.

 

  •  

Lockheed Martin: We have a multi-launch agreement with Lockheed Martin that includes up to 25 missions over the next five years. Under this agreement, we plan to routinely launch a variety of future Lockheed Martin spacecraft, including new payload technologies, into LEO from our launch facilities on the West and East Coasts of the United States.

 

  •  

Northrop Grumman: We have an exclusive partnership with Northrop Grumman on our development of Eclipse. This platform combines leading flight-proven technologies and mission experience from both companies to fill a void in the underserved medium-lift market. Supported by a $50 million equity investment from Northrop Grumman, Eclipse builds on our Alpha rocket technology and Northrop Grumman’s Antares rocket, combining our technologies and expertise with the first partnership of its kind between the best of legacy and new space.

 

  •  

L3Harris: We have a multi-launch agreement with L3Harris for up to 20 launches on our Alpha rocket, including two to four missions per year from 2027 to 2031 depending on customer needs. The new agreement is in addition to our existing multi-launch agreement with L3Harris for three Alpha missions in 2026.

 

  •  

Space Force: We set a responsive launch record by launching the VICTUS NOX mission for Space Force within an approximately 24-hour window. As a result, we are the leading tactically responsive launch provider, and Space Force is leveraging our responsive launch capabilities on two additional upcoming missions, VICTUS HAZE and VICTUS SOL.

 

  •  

Space Development Agency: Firefly has been onboarded as a selected vendor for the SDA’s Hybrid Acquisition for Proliferated LEO (“HALO”) program. Using our Elytra orbital vehicles, we will

 

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support end-to-end demonstration missions for the SDA’s military satellite constellation, including launch, on-orbit transit, and tracking services.

 

  •  

National Reconnaissance Office: We have been selected to serve as a launch provider to the NRO, with our Alpha rocket as part of their Streamlined Launch Indefinite Delivery / Indefinite Quality Contract (“SLIC”). Our rapid response capabilities are essential to the NRO’s defensive missions, providing them with a launch vehicle with leading capabilities and proven flight heritage. In addition to this, Elytra is contracted to support an on-orbit mission for the NRO. Elytra is designed to perform a rapid payload reconfiguration, deploy commercial rideshare payloads, execute an on-orbit maneuver, and stand ready to deploy U.S. government payloads on demand.

 

  •  

NASA: NASA contracts us for spacecraft and launch missions. We are the only company to successfully land, operate, and complete NASA missions on the Moon. We won the largest active NASA Commercial Lunar Payload Services (“CLPS”) contract in December 2024 at $179 million. We are a prime contractor on three missions and four CLPS task orders to the Moon through contracts with a total potential value of $411.7 million with additional commercial payloads. NASA also contracts us for launch services, including a Venture-Class Acquisition of Dedicated and Rideshare (“VADR”) contract for a dedicated Alpha launch. This Alpha launch will deliver the agency’s Investigation of Convective Updrafts (“INCUS”) mission from NASA’s Wallops Flight Facility.

 

  •  

Blue Origin: We have recently selected Honeybee Robotics, a Blue Origin company, to provide a rover to accompany our Blue Ghost lander in an upcoming task order from NASA to explore the Gruithuisen Domes on the Moon. The rover will be transported by Elytra Dark and deployed by Blue Ghost to help study the composition of the domes using instruments provided by NASA. We successfully collaborated with Honeybee on two prior payloads during Blue Ghost’s first mission.

 

  •  

Jet Propulsion Laboratory: Firefly partners with JPL for test facilities and technologies licenses. Our Blue Ghost lander was tested thoroughly with vibration, acoustic, thermal vacuum, and electromagnetic interference and compatibility to ensure the vehicle would withstand the rigors of a lunar mission.

 

  •  

Lawrence Livermore National Laboratory (LLNL): We have a partnership with Lawrence Livermore National Laboratory, announced in June 2025, for a lunar imaging service named Ocula. Ocula will be offered through our Elytra orbital vehicles as early as 2026. LLNL provides high-resolution telescopes that operate onboard Elytra in lunar orbit and provide ultraviolet and visible spectrum imaging. Combined with Elytra, this is a key capability to identify mineral deposits on the Moon’s surface, map future landing sites with higher fidelity, and enable cislunar situational awareness.

 

  •  

SpaceX: We also have a strong strategic partnership with SpaceX for payload processing facilities and launch vehicles. Most recently, our Blue Ghost lander was launched on a SpaceX Falcon 9 rocket, ensuring a smooth start to our groundbreaking lunar mission.

 

  •  

Defense Innovation Unit: We signed an agreement with the DIU to conduct a trade study on our capabilities to rapidly launch our Elytra vehicles and support missions beyond Geosynchronous Orbit (“xGEO”). Once completed, we will conduct up to two demonstrations to deliver multiple payloads to xGEO orbits aboard our Elytra Dark spacecraft with the first mission completed within 18 months of receiving the approval to proceed. The contract will support the Sinequone Project, the DIU’s mission to develop responsive access to xGEO.

Additionally, we have built a robust portfolio of contracts composed of blue-chip customers across both government and commercial end markets including NASA, Space Force, the DoD’s SDA, the NRO, Northrop Grumman, Lockheed Martin, L3 Harris Technologies, Inc. and True Anomaly, Inc. Our customizable offerings across launch, lander, and spacecraft, and our speed of execution as proven through our existing successes, are well-recognized by our growing list of government and commercial customers.

 

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Differentiated National Security and Defense Technology Capabilities

Firefly’s portfolio of multi-launch agreements and contracts with defense primes, national security agencies, and government partners demonstrates a high degree of trust in our company as a key national security partner. Alpha’s track record of success and repeated demonstrations of rapid response missions make Firefly a leader in tactically responsive space capabilities. With its dedicated and responsive service to preferred orbits, 1,000 kilograms capability, and ability to deliver multiple hypersonic payloads, Alpha provides an unrivaled service. Additionally, Eclipse, with its greater payload capacity, is purpose-designed to support national security space launch and commercial missions. Within our spacecraft solutions, Blue Ghost and Elytra platforms support national security needs by traveling further into space and supporting larger, more advanced on-orbit missions. Blue Ghost has proven our capability to deliver on NASA priorities while harnessing national security benefits related to lunar exploration. Elytra is primed to add to our competitive moat by expanding to on-orbit responsive missions for the DoD. Poised to launch on Alpha and Eclipse, as well as other vehicles, Elytra is intended to provide space maneuver vehicles, long-haul communications relays, edge processing, as well as space exploration capabilities for the entire lifecycle of national security missions.

Our proven, extensive national security capabilities position the Firefly platform for future growth. Critical civil and national security infrastructure on Earth depends on satellite systems in space, and threats from adversaries have been on the rise. Established space nations are expected to increase spending over the next decade on national security, specifically in intelligence capabilities. The DoD has also enhanced its strategy to meet the growing challenges of the space domain. With our diverse space technology offerings, we are well-positioned to benefit from these national security tailwinds in this contested domain.

Established Business Model Backed by Robust Backlog

Our track record of success and our reputation as a trusted provider for our customers results in a highly attractive, diversified business model defined by significant backlog and cash flow visibility. Strong customer demand backs our financial profile with approximately $1.1 billion in backlog as of March 31, 2025, and multi-launch agreements across our product lines. Underpinning our financial profile is the combination of efficient contract structure and milestone-based billing. Before launch, we typically have collected approximately 90% of the total contract value, which is highly advantageous as production ramps. We are also differentiated in our ability to successfully execute on fixed firm price contracts. We are ahead of the curve as the industry shifts in favor of fixed firm price contracts and are well-positioned to capitalize on this change. As we scale, we have and expect to continue to replicate our proprietary manufacturing and testing processes, resulting in reduced cycle times and further capital efficiency. Our established business model has set us up to capitalize on the growth of the industry and continue to win with customers based on our proven track record.

World-Class Management Team and Employee Base

Our mission-focused leadership team, with decades of experience across advanced engineering and manufacturing sectors, is driven by a commitment to excellence and unified behind the Firefly mission. Our team possesses the leadership, innovational, operational and financial experience necessary to successfully lead Firefly through its continued growth:

 

  •  

Jason Kim, our Chief Executive Officer, has more than two decades of experience in the aerospace and defense sectors, bringing both executive leadership and a highly technical background to Firefly. Most recently, Jason served as CEO of Millennium Space Systems, Inc., where he led the company through a period of significant expansion and technology advancements. At Millennium Space Systems, Inc., he served as a key partner and customer in Firefly’s VICTUS NOX mission for Space Force. His extensive career also includes leadership roles at Raytheon Intelligence & Space, Northrop Grumman Aerospace Systems, and the U.S. Air Force.

 

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  •  

Shea Ferring, our Chief Technology Officer, has more than three decades of experience in design, integration, and test of space systems. Shea has held numerous engineering and leadership roles throughout his career including at NASA Launch Services Program, ECAPS, Vencore, and Orbital ATK. Over the years, Shea participated in over 50 space missions spanning numerous launch vehicles, including Minotaur, Atlas V, Delta IV, Pegasus, and Falcon 9.

 

  •  

Darren Ma, our Chief Financial Officer, has more than two decades of finance experience helping scale large-cap, mid-cap, and small-cap public companies, most recently as the CFO and SVP of Spectra7 Microsystems Inc. and as the CFO for GigPeak, Inc. (NYSE: GIG), where he was instrumental in strategically raising capital, driving profitable growth, and selling the company.

 

  •  

Dan Fermon, our Chief Operating Officer, is a seasoned operations leader with decades of experience leading teams in highly technical industries, primarily in aerospace. Prior to Firefly, Dan was a Vice President at AE Industrial Partners, LP in the firm’s Portfolio Strategy and Optimization Group, where he focused on improving the operational performance of its portfolio companies. He also served as the P&L and Operations Leader for GE Aerospace’s Global Component Repair team, driving operational excellence by utilizing technology, lean improvements, and powerful team engagement.

 

  •  

Brigette Oakes, our VP of Engineering, has more than 15 years of experience in the industry from both legacy and new space companies, with robust experience spanning propulsion design, modeling, and test in addition to guidance, navigation, and control software, performance analysis, and ground support equipment. Prior to Firefly, Brigette held a variety of roles in the space sector at companies including SpaceX, Relativity Space Inc., and Lockheed Martin.

Growth Strategy

Increase Launch Cadence to Meet Growing Market Demand

We are increasing our launch frequency to meet the growing demand for reliable space access. The launch market is rapidly expanding, with significant demand for launch and space services. This demand is reflected in our robust backlog of approximately $1.1 billion as of March 31, 2025, and in the fact that we have over 30 planned launches under contract as of March 2025. We are well-positioned to continue to increase our production rate and launch cadence for our small and medium launch vehicles. Through Space Force’s VICTUS NOX mission, we showcased our ability to deliver critical payloads to orbit on short notice–a crucial asset for national security operations. Our end-to-end mission solutions position us to leverage Alpha’s track record of success and replicate it using the larger Eclipse rocket.

Given our tailored launch capabilities, we have been awarded additional critical defense missions and multi-launch agreements as space increasingly becomes a contested area of focus for national security agencies and commercial customers. To meet this growing demand and accelerate production, we doubled our production facility size to approximately 200,000 square feet and expanded our processes to manufacture one Alpha launch vehicle per month. Firefly designed our launch facility infrastructure to be scalable throughout the U.S. and internationally. We currently launch from Vandenberg Space Force Base in California and have strategically secured space in Virginia, Florida, and Sweden for additional launch facilities as we increase global capacity to address our customers’ needs. We expect to continue to expand our infrastructure in a capital efficient manner to meet anticipated customer demand.

Scale Across Mission Solutions to Enable Profitable Growth Driven by Common Technologies

Following our success with Alpha and Blue Ghost, we are focused on increasing the frequency of launch and spacecraft deployment in a cost-efficient manner. On the demand side, our customers value flexibility, access to preferred orbits, and dedicated launch vehicles–a value proposition that we built our rockets and spacecraft

 

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around. Our strong backlog demonstrates the need to scale our launch platform. In parallel, we have additional contracts backing Blue Ghost missions, and our spacecraft pipeline continues to be bolstered by demand stemming from national security missions and commercial space exploration. We are also expanding into the medium payload class with Eclipse and our orbital solutions. Our Elytra spacecraft will enable us to provide constellations of space maneuver vehicles, long-range communications relays, and space exploration orbiters. Alpha, Eclipse, Blue Ghost, and Elytra share common technologies, processes, team expertise, and production lines, enabling capital efficiency as well as first time quality across products. All products utilize the carbon composite primary and tank structures and leverage the automated fiber placement machine, power milling tool, and other test capabilities. Our products also share avionics, software, and rocket engine technology to enable economies of scale, responsive delivery schedules, fungible inventory, and flight proven mission assurance.

With each launch, we expect our cost structure and unit economics to meaningfully improve, as our increased launch cadence will result in fixed cost amortization and operating efficiencies. Additional efficiencies are unlocked by our streamlined development and production processes. Eclipse’s development is progressing rapidly given Alpha and Eclipse share significant carryover from our engineering team and substantial component commonality and supply chain compatibility.

As a provider of choice, we have selected strategic partnerships that enable synergistic development and expansion. Our exclusive partnership with Northrop Grumman combines our companies’ respective technologies to co-develop Eclipse. We believe our strategic partnerships unlock access to additional infrastructure and new customers as we propel our partners with our new space capabilities to develop and deliver purpose-built technology for customers across the space and defense technology sector.

Our intentional common technologies approach to our mission solutions have enabled the evolutionary development of Eclipse from Alpha and Elytra from Blue Ghost, allowing for faster and more reliable production while keeping costs low. As we increase our launch cadence and scale our solutions, we expect to grow our revenue base and improve and stabilize our cost structure. We thoughtfully invest capital to enable scaled production with favorable unit economics while keeping costs and capital expenditure minimized to yield profitable growth.

Deploying Our In-Space Heritage for Advanced Operations and Services

Elytra is designed to support rapid, end-to-end demonstration missions, especially for military satellites. Elytra was recently selected to support the DoD’s DIU Sinequone Project. As part of the mission, Elytra will host a suite of government payloads, including optical visible and infrared cameras, a responsive navigation unit, and a universal electrical bus. Elytra’s configuration will utilize common components, structures, and propulsion systems to enable on-demand mobility, plane changes and maneuvers with high performance capabilities and reliability.

In addition to Elytra’s existing revenue-generating contracts, there are numerous customers interested in using Firefly’s platform for space domain awareness and other heavy lift applications. There are a myriad national security applications for Elytra’s in-orbit technology, such as providing long-haul communications, radio frequency calibration services, and deploying government payloads on demand. Furthermore, the global race to solidify abilities in “satellite dogfighting” have made establishing space domain dominance a priority of Space Force, which Elytra is designed to help address. As space becomes a further contested domain, we believe Elytra’s on-orbit services will be a key avenue for our growth.

Seek Value-Added Acquisitions Complementary to our Existing Offerings

We may choose to strengthen our internal capabilities and accelerate development through acquisitions. We intend to take a disciplined approach to future acquisitions. Our focus is to continue scaling and increasing

 

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launch cadence to achieve profitable growth while serving our customers’ critical missions. We are currently evaluating acquisition opportunities and expect to continue to do so in the future, with a view towards potentially accelerating these objectives.

Although we are not party to any definitive agreements at this time and no acquisition is probable as of the date hereof, we are actively considering an add-on acquisition opportunity in the software industry that is expected to be complementary to our business and may enter into a definitive agreement with respect to this or other opportunities after the completion of this offering, and the transactions contemplated by such agreements could be material to our business. See “Risk Factors—Risks Related to Our Business—We may experience difficulties or disruptions in consummating future acquisitions and integrating the operations of acquired companies into our business, or entering into any partnerships or joint ventures, and in realizing the expected benefits of these transactions.” In pursuing any acquisitions, we expect to target companies that increase our share of the national security market, promote vertical integration, or automate production processes while maintaining quality and enabling further market expansion. We believe that there currently are and, as the space industry matures will continue to be, opportunities to acquire targets and make investments that enhance our capabilities and financial profile. Our goal is to position ourselves as the acquirer of choice for space services and technology companies.

Recent Developments

Preliminary Unaudited Estimated Financial Results as of and for the Six Months Ended June 30, 2025

We are in the process of finalizing our results as of and for the six months ended June 30, 2025. We have presented below ranges of certain unaudited preliminary results and estimates of selected key business metrics as of and for the six months ended June 30, 2025, as well as the comparative period for the six months ended June 30, 2024. The following information reflects our preliminary estimates with respect to such data based on currently available information and does not present all necessary information for an understanding of our financial condition as of and for the six months ended June 30, 2025. These estimated metrics should not be viewed as a substitute for our financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) included in this prospectus.

We have prepared and provided ranges, rather than specific amounts, for the information below, primarily because our financial closing and analysis procedures are not yet completed. This financial information has been prepared by, and is the responsibility of, our management and is subject to revisions based on our procedures and controls associated with our financial reporting process. Accordingly, undue reliance should not be placed on these preliminary estimates. Our independent registered public accounting firm, Grant Thornton LLP, has not audited, reviewed, or performed any procedures with respect to our preliminary results or the accounting treatment thereof and does not express an opinion or any other form of assurance with respect thereto. Our actual unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2025, and June 30, 2024, are not expected to be filed with the Securities and Exchange Commission (the “SEC”) until after the completion of this offering.

While we believe that such information and estimates are based on reasonable assumptions and management’s reasonable judgment, our actual results may vary. Factors that could cause the actual results to differ include (but are not limited to) the discovery of new information that affects accounting estimates and management’s judgments, or impacts valuation methodologies underlying these estimated results; the completion of our auditors’ procedures for the review of our interim consolidated condensed financial statements; and a variety of business, economic, and competitive risks and uncertainties, many of which are not within our control, and we undertake no obligation to update this information, unless required by law. Further, our preliminary

 

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estimates below are not necessarily indicative of the metrics to be expected for any future period as a result of various factors, including, but not limited to, those discussed in “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” This information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus.

Adjusted EBITDA and Free Cash Flow are non-GAAP (as defined below) supplemental financial measures. For further information about the limitations to the use of the non-GAAP financial measures presented in this prospectus, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Non-GAAP Information.” Backlog is a key performance indicator. The following tables provide detail on our preliminary unaudited estimated financial results as of and for the six months ended June 30, 2025, and reconcile Adjusted EBITDA and Free Cash Flow to net loss and net cash used in operating activities, respectively, the most directly comparable U.S. GAAP financial measures:

 

     As of and for the Six Months Ended June 30,  
    

2025

     2024  
     (Estimated)      (Actual)  
     High      Low     

 

 

($ in thousands)

        

U.S. GAAP Financial Measures:

        

Revenue

   $             $             $         

Net loss

   $        $        $    

Net cash used in operating activities

   $        $        $    

Non-GAAP Financial Measures:

        

Adjusted EBITDA(1)

   $        $        $    

Free Cash Flow(1)

   $        $        $    

Key Performance Indicator:

        

Backlog(1)

   $        $        $    

 

  (1)

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the definitions of Adjusted EBITDA, Free Cash Flow, and backlog.

 

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Reconciliation of net loss to Adjusted EBITDA

 

     For the Six Months Ended June 30,  
    

2025

     2024  
     (Estimated)      (Actual)  
     High      Low     

 

 

($ in thousands)

        

Net loss

   $             $             $         

Adjusted for:

        

Interest expense, net

        

Depreciation and amortization

        

Share-based compensation expense

        

Change in fair value of warrant liabilities

        

Loss (gain) on disposal of fixed assets

        

One-time costs related to the IPO (1)

        

Other (2)

        
  

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $        $        $    
  

 

 

    

 

 

    

 

 

 

 

  (1)

Represents costs incurred related to the initial public offering (“IPO”) that do not meet the direct and incremental criteria per SEC Staff Accounting Bulletin Topic 5.A to be charged against the gross proceeds of the transactions but are not expected to recur in the future.

  (2)

Other includes loss on foreign exchange, executive severance, and fees in connection with acquisitions, which are required to be expensed as incurred.

Reconciliation of net cash used in operating activities to Free Cash Flow

 

     For the Six Months ended June 30,  
     2025      2024  
     (Estimated)      (Actual)  
     High      Low     

 

 

($ in thousands)

        
Net cash used in operating activities    $             $             $         
Purchases of property and equipment         
  

 

 

    

 

 

    

 

 

 

Free Cash Flow

   $        $        $    
  

 

 

    

 

 

    

 

 

 

Adjusted EBITDA and Free Cash Flow should be considered in addition to, and not as a replacement for or superior to, the respective comparable U.S. GAAP measures, and may not be comparable to similarly titled measures reported by other companies. Management believes that these measures provide useful information to investors by offering an additional way of viewing our results that, when reconciled to the respective corresponding U.S. GAAP measure, helps our investors to understand the operating income of our business and compare our operating income to prior and future periods and to our peers. We urge you to review the reconciliations found above and elsewhere in this prospectus. For a reconciliation of Adjusted EBITDA and Free Cash Flow to other periods and more information regarding our use of these metrics and their usefulness to investors, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures.”

 

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New Revolving Credit Facility

We currently anticipate entering into a new revolving credit facility (the “Revolving Credit Facility”) substantially concurrently with the closing of this offering. The maturity, interest rates, and other terms of the Revolving Credit Facility are in the process of being negotiated with prospective lenders; however, we expect that the initial aggregate principal amount of the revolving commitments available under the Revolving Credit Facility will be approximately $125.0 million. The Revolving Credit Facility will be a senior secured revolving credit facility that will be guaranteed by certain of our subsidiaries and secured by substantially all of our assets and the assets of certain of our subsidiaries, in each case, subject to customary exceptions. The Revolving Credit Facility is anticipated to contain representations and warranties, affirmative, negative and financial covenants, and events of default customary for secured financings of this type.

Borrowings under the Revolving Credit Facility may vary significantly from time to time depending on our cash needs at any given time. We cannot assure you that we will obtain binding commitments for the Revolving Credit Facility on favorable terms or at all. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt” and “Description of Certain Indebtedness” for additional information.

Declaration of Dividend on Preferred Stock

On July 10, 2025, our board of directors declared a dividend (the “Preferred Stock Dividend”) payable in common stock in respect of all accrued and unpaid dividends of the Company’s outstanding shares of Series C, Series D-1, Series D-2, and Series D-3 Preferred Stock, contingent upon receipt of the required consent of certain third parties. Upon receipt of such consent, and prior to the commencement of this offering, we anticipate paying the dividend by issuing approximately 10.6 million shares of common stock to the existing holders of our Series C, Series D-1, Series D-2, and Series D-3 Preferred Stock. We currently anticipate that any additional dividends on our outstanding shares of Series C, Series D-1, Series D-2, and Series D-3 Preferred Stock that accrue following the declaration of the Preferred Stock Dividend will be paid in cash, contingent upon the closing of this offering, and repayment in full of the Term Loan Facility. See “Use of Proceeds.”

Risk Factors Summary

Investing in our common stock involves risks, which are discussed more fully under “Risk Factors.” You should carefully consider all the information in this prospectus, including under “Risk Factors,” before making an investment decision. Some of the most significant risks we face are the following:

 

  •  

our failure to manage our growth effectively and our ability to achieve and maintain profitability;

 

  •  

the potential for delayed or failed launches, and any failure of our launch vehicles and spacecraft to operate as intended;

 

  •  

our inability to manufacture our launch vehicles, landers, or orbital vehicles at a quantity and quality that our customers demand;

 

  •  

the hazards and operational risks that our products and service offerings are exposed to and a wide and unique range of risks due to the unpredictability of space;

 

  •  

the market for commercial launch services for small- and medium-sized payloads is still emerging, and shifting, and the market may not achieve the growth potential we expect;

 

  •  

our dependence on contracts entered into in the ordinary course of business and our dependence on major customers and vendors;

 

  •  

concentration of our customers and backlog customers;

 

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  •  

we may not be successful in developing new technology;

 

  •  

uncertain global macro-economic and political conditions, including the implementation of tariffs;

 

  •  

disruptions in U.S. government operations and funding and budgetary priorities of the U.S. government;

 

  •  

a failure of our information technology systems, physical or electronic security protections;

 

  •  

we are dependent on our current CEO and other members of management, as well as our highly trained employees;

 

  •  

we face significant competition in the global space market;

 

  •  

any inability to operate Alpha at our anticipated launch rate or finalize the development and delivery of Eclipse;

 

  •  

the scarcity or unavailability of critical components or raw materials used to manufacture our products or used in our development programs;

 

  •  

our operating results may fluctuate significantly;

 

  •  

adverse publicity stemming from any incident involving us, our competitors, or our customers;

 

  •  

the failure to adequately protect our proprietary intellectual property rights;

 

  •  

shortfalls in available external R&D funding;

 

  •  

the inability to comply with any of our contracts or meet eligibility requirements to obtain certain government contracts;

 

  •  

our failure to establish and maintain important relationships with government agencies and prime contractors;

 

  •  

we have classified contracts with the U.S. government, which may limit investor insight into portions of our business;

 

  •  

the inability to realize our backlog;

 

  •  

our operations depend on our manufacturing facilities, which are subject to physical and other risks;

 

  •  

our leases may be terminated or we may be unable to renew our leases on acceptable terms;

 

  •  

we have identified a material weakness in our internal control over financial reporting;

 

  •  

our business is subject to a wide variety of extensive and evolving government laws and regulations and contracting in the defense industry is subject to significant regulation;

 

  •  

we are subject to complex tax laws;

 

  •  

we have substantial indebtedness, and we may not be able to generate sufficient cash to service all of such indebtedness;

 

  •  

the market price of our common stock may be volatile or may decline steeply or suddenly regardless of our operating performance and you may not be able to resell your shares at or above the initial public offering price;

 

  •  

we will incur increased costs and devote substantial management time as a result of operating as a public company;

 

  •  

as an emerging growth company, we are able to avail ourselves of reduced disclosure requirements;

 

  •  

AE Industrial Partners controls us, and its interests may conflict with ours or yours in the future;

 

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  •  

provisions in our certificate of incorporation and bylaws, each of which will be in effect upon the completion of this offering, could make a merger, tender offer, or proxy contest difficult, thereby depressing the trading price of our common stock; and

 

  •  

we are a “controlled company” within the meaning of the Nasdaq rules and, as a result, qualify for and intend to rely on exemptions from certain corporate governance requirements.

These and other risks are more fully described in the section entitled “Risk Factors” in this prospectus. If any of these risks actually occurs, our business, financial condition, results of operations, cash flows, and prospects could be materially and adversely affected. As a result, you could lose all or part of your investment in our common stock.

Implications of Being an Emerging Growth Company

We qualify as an “emerging growth company” as defined in the JOBS Act. We will remain an emerging growth company until the earliest of (1) the last day of the fiscal year following the fifth anniversary of the completion of this offering, (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (3) the date on which we are deemed to be a large accelerated filer (which, in addition to certain other criteria, means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the end of the second quarter of that fiscal year), or (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

An emerging growth company may take advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:

 

  •  

not being required to comply with the independent registered public accounting firm attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”);

 

  •  

only being required to present two years of audited financial statements, plus unaudited condensed financial statements for any interim period, and related management’s discussion and analysis of financial condition and results of operations in this prospectus;

 

  •  

reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements, and registration statements; and

 

  •  

exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We have elected to take advantage of certain of the reduced disclosure obligations regarding financial statements and executive compensation in this prospectus and expect to elect to take advantage of other reduced burdens in future filings. As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests.

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We are electing to take advantage of this extended transition period for complying with new or revised accounting standards provided for by the JOBS Act. We will therefore comply with new or revised accounting standards when they apply to private companies. As a result, our financial statements may not be comparable with companies that comply with public company effective dates for accounting standards.

 

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Our Principal Stockholder

AE Industrial made its initial investment in Firefly Aerospace in 2022 and is a   % stakeholder in the Company as of the date of this registration statement.

After giving effect to this offering, AE Industrial Partners will hold approximately   % of our outstanding common stock (or approximately   % of our outstanding common stock, if the underwriters’ option to purchase additional shares from us is exercised in full). In addition, AE Industrial Partners will have the right to designate nominees to our board of directors pursuant to a director nomination agreement (the “Director Nomination Agreement”) to be entered into in connection with this offering between us, AE Industrial Partners, and certain other stockholders (together with AE Industrial Partners, the “Investor Group”). As a result, upon the completion of this offering, the Investor Group will control more than 50% of the total voting power of our common stock with respect to the election of our directors. See “Risk Factors—Risks Related to This Offering and Ownership of Our Common Stock—AE Industrial Partners controls us, and its interests may conflict with ours or yours in the future” and “Certain Relationships and Related Party Transactions—Agreements with our Significant Stockholders—Director Nomination Agreement.” Accordingly, we expect to be a “controlled company” as defined in the corporate governance rules of Nasdaq and will be exempt from certain corporate governance requirements of such rules. As a result, AE Industrial Partners will have significant power to control our affairs and policies and influence the outcome of matters that require stockholder approval, including with respect to the election of directors, the adoption of amendments to our certificate of incorporation and bylaws and the approval of any merger or sale of substantially all of our assets. See “Management—Controlled Company Exemption.” For a description of certain potential conflicts between our principal stockholder and our other stockholders, see “Risk Factors—Risks Related to Our Organizational Structure—We are a ‘controlled company’ within the meaning of the rules of Nasdaq, as a result, qualify for and intend to rely on exemptions from certain corporate governance requirements.” For a description of AE Industrial Partners’ ownership interests in us and its rights with respect to such ownership interests, see “Certain Relationships and Related Party Transactions,” “Principal Stockholders” and “Description of Capital Stock.”

AE Industrial Partners is a leading global alternative investment manager headquartered in Boca Raton, Florida. As of December 31, 2024, AE Industrial Partners’ global platform had approximately $6.4 billion of assets under management with approximately 7,000 employees operating across North America, Europe, Asia Pacific and the Middle East.

Corporate Information

Firefly Aerospace was formed on January 27, 2017, acquired the assets of Firefly Systems Inc. in a bankruptcy proceeding, and ultimately commenced operations on May 1, 2017. We are a Delaware corporation. Our principal executive offices are located at 1320 Arrow Point Drive #109, Cedar Park, TX 78613, and our telephone number is 512-893-5570. Our website address is www.fireflyspace.com. Information contained on, or that can be accessed through, our website is not part of and is not incorporated by reference into this prospectus, and you should not consider information on our website to be part of this prospectus.

 

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The Offering

 

Common stock offered by us

     shares.

 

Underwriters’ option to purchase additional shares of common stock to cover over-allotments

     shares.

 

Common stock to be outstanding after this offering

     shares (or      shares if the underwriters exercise in full their option to purchase additional shares of common stock).

 

Use of proceeds

We estimate that we will receive net proceeds from this offering of approximately $    million (or approximately $    million if the underwriters exercise in full their option to purchase additional shares of common stock), based on an assumed initial public offering price of $     per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 

  We intend to use net proceeds received by us from this offering to repay our outstanding borrowings under the Credit Agreement (as defined herein), together with any applicable prepayment premiums and accrued interest, and to pay any accrued and unpaid dividends on our outstanding Series C and Series D Preferred Stock that accrue following the declaration of the Preferred Stock Dividend, with any remaining amounts being used for general corporate and working capital purposes. As of March 31, 2025, we had an aggregate of $136.1 million outstanding under our Credit Agreement. The interest rate on both tranches of the Term Loan Facility (as defined herein) was 13.875% per annum as of March 31, 2025. The maturity date of the Term Loan Facility is July 17, 2028. Each share of Series C and Series D Preferred Stock accrues dividends at a rate of 12% per annum. As of March 31, 2025, we had aggregate accrued and unpaid dividends of $47.6 million and $20.1 million under the Series C and Series D Preferred Stock, respectively. In connection with this offering, we expect that our board of directors will declare all such accrued and unpaid dividends payable (to the extent such dividends accrue following the declaration of the Preferred Stock Dividend), contingent upon the closing of this offering, and repayment in full of the Term Loan Facility.

 

  See “Use of Proceeds.”

 

Dividend policy

We currently do not anticipate paying any cash dividends after this offering and for the foreseeable future. Any future determination relating to dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including restrictions in our current and future debt instruments, our future

 

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earnings, capital requirements, financial condition, future prospects, and applicable Delaware law, which provides that dividends are only payable out of surplus or current net profits. See “Dividend Policy.”

 

Risk factors

See “Risk Factors” and the other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock.

 

Controlled company

Following this offering, and pursuant to the Director Nomination Agreement, AE Industrial Partners, as representative of the Investor Group, will continue to control a majority of the voting power of our outstanding common stock with respect to the election of our directors, and as a result we will be a controlled company within the meaning of corporate governance standards. See “Risk Factors” and “Management—Controlled Company Exemption.”

 

Proposed symbol

We have applied for the listing of our common stock on Nasdaq under the symbol “FLY.”

The number of shares of common stock that will be outstanding following this offering is based on      shares of common stock outstanding as of     , 2025, after giving effect to (i) the Preferred Stock Dividend which occurred on     , 2025, (ii) the effectiveness of our amended and restated certificate of incorporation, (iii) the conversion of      shares of our preferred stock outstanding as of     , 2025, into an aggregate of      shares of common stock, and (iv) the automatic net exercise of warrants to purchase      shares of common stock outstanding as of     , 2025, at an exercise price of $   per share, in each case upon close of this offering, and does not include (i)      shares of common stock reserved for future issuance under our omnibus equity incentive plan to be adopted upon completion of this offering (the “Equity Incentive Plan”), or (ii)      shares reserved for issuance upon exercise of warrants to purchase preferred stock outstanding as of     , 2025. See “Executive Compensation—Equity Incentive Compensation.”

In addition, unless otherwise expressly stated or the context otherwise requires, the information in this prospectus assumes:

 

  •  

a 1-for-     reverse stock split of our common stock effected on July  , 2025;

 

  •  

no exercise of the underwriters’ option to purchase additional shares of our common stock;

 

  •  

an initial public offering price of $     per share, which is the midpoint of the estimated price range set forth on the cover of this prospectus; and

 

  •  

the effectiveness of our amended and restated certificate of incorporation and bylaws in connection with the completion of this offering.

 

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Summary Consolidated Financial Data

The following tables set forth our summary unaudited consolidated financial data. The summary consolidated statements of net loss data and cash flow data for the three months ended March 31, 2025 and 2024 and the summary consolidated balance sheet data as of March 31, 2025 has been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. The summary consolidated statements of net loss data and cash flow data for the years ended December 31, 2024 and 2023 has been derived from our audited consolidated financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future.

You should read the following summary unaudited consolidated financial data in conjunction with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus. The summary consolidated financial data in this section are not intended to replace, and are qualified in their entirety by, the unaudited condensed consolidated financial statements and related notes and the audited consolidated financial statements and related notes.

 

     For the Three Months
Ended March 31,
     For the Year Ended
December 31,
 

($ in thousands, except share and per share amounts)

   2025      2024      2024      2023  

Consolidated Statements of Net Loss Data:

           

Revenue

   $ 55,855      $ 8,317      $ 60,792      $ 55,235  

Cost of sales

     53,635        10,240        72,157        28,635  
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit (loss)

     2,220        (1,923 )       (11,365 )       26,600  

Operating expenses

           

Research and development

     48,012        37,635        149,498        117,871  

Selling, general, and administrative

     12,752        9,580        46,848        40,605  

Loss (gain) on disposal of fixed assets

     —         3        1,742        (1 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating expenses

     60,764        47,218        198,088        158,475  
  

 

 

    

 

 

    

 

 

    

 

 

 

Loss from operations

     (58,544 )       (49,141 )       (209,453 )       (131,875 ) 

Other (expense) income

           

Interest expense, net

     (5,164 )       (3,753 )       (20,373 )       (3,963 ) 

Other income (expense), net

     3,615        123        (1,307 )       381  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other expense, net

     (1,549 )       (3,630 )       (21,680 )       (3,582 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 

Loss before provision for income taxes

   $ (60,093 )     $ (52,771 )     $ (231,133 )     $ (135,457 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 

Provision for income taxes

     —         —         —         —   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net loss and comprehensive loss

   $ (60,093 )     $ (52,771 )     $ (231,133 )     $ (135,457 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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     March 31, 2025  

($ in thousands)

   Actual      Pro Forma (1)      Pro Forma
As Adjusted (2)
 

Consolidated Balance Sheet Data:

        

Cash and cash equivalents

   $ 176,879      $            $        

Working capital

     58,564        

Total assets

     439,166        

Total liabilities

     390,816        

Redeemable convertible preferred stock

     887,074        

Additional paid-in capital, net of issuance costs

     —         

Accumulated deficit

     (838,729 )       

Total stockholders’ deficit

     (838,724 )       
 
(1)

The Pro Forma column reflects (i) the Preferred Stock Dividend which occurred on    , 2025, (ii) the effectiveness of our amended and restated certificate of incorporation, (iii) the conversion of shares of our preferred stock outstanding as of    , 2025, into an aggregate of     shares of common stock, and (iv) the automatic net exercise of warrants to purchase     shares of common stock outstanding as of    , 2025, at an exercise price of $     per share, in each case upon close of this offering.

(2)

The Pro Forma As Adjusted column reflects the sale of      shares of common stock in this offering and the application of the net proceeds from this offering as set forth under “Use of Proceeds.” The pro forma as adjusted information set forth below does not include (i)      shares of common stock reserved for future issuance under our Equity Incentive Plan, or (ii)      shares reserved for issuance upon exercise of warrants to purchase preferred stock outstanding as of    , 2025. See “Executive Compensation—Equity Incentive Compensation.”

Each $1.00 increase or decrease in the assumed initial public offering price of $    per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase or decrease the net proceeds to us from this offering by approximately $    million, assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each 1,000,000 increase or decrease in the number of shares offered would increase or decrease the net proceeds to us from this offering by approximately $    million, assuming that the assumed initial public offering price per share for the offering remains at $    , which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 

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     For the Three Months
Ended March 31,
     For the Year Ended
December 31,
 

($ in thousands)

   2025      2024      2024      2023  

Consolidated Statements of Cash Flow Data:

           

Net cash used in operating activities

   $ (56,537 )     $ (60,583 )     $ (157,650 )     $ (93,434 ) 

Net cash used in investing activities

     (2,654 )       (4,503 )       (32,697 )       (69,994 ) 

Net cash provided by financing activities

     113,907        21,877        232,759        240,731  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net change in cash, cash equivalents, and restricted cash

   $ 54,716      $ (43,209 )     $ 42,412      $ 77,303  
  

 

 

    

 

 

    

 

 

    

 

 

 
     As of and for the
Three Months Ended
March 31,
     As of and for the
Year Ended December 31,
 

($ in thousands)

   2025      2024      2024      2023  

Other Operating and Financial Information:

           

Adjusted EBITDA(1)

   $ (47,133 )     $ (47,136 )       (190,568 )       (123,942 ) 

Free Cash Flow(1)

     (59,191 )       (65,086 )       (190,347 )       (170,682 ) 

Backlog(2)

     1,116,487        559,366        1,098,793        560,339  
 
(1)

This prospectus includes non-GAAP (as defined below) financial measures that are supplemental measures of financial performance and not recognized or required under U.S. GAAP. We utilize these non-GAAP measures to provide investors and analysts with additional tools for evaluating our financial performance and assessing our prospects for the future. Specifically, we make use of the non-GAAP financial measures “Adjusted EBITDA,” which is defined as net loss adjusted for interest expense, net, provision for income taxes, depreciation and amortization, stock-based compensation expense, change in fair value of warrant liabilities, loss (gain) on disposal of fixed assets, transaction costs, and loss (gain) on foreign exchange, and “Free Cash Flow,” which is defined as net cash used in operating activities, less purchases of property and equipment. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion on how this measure is useful to investors and utilized by management as well as the reconciliation of Adjusted EBITDA and Free Cash Flow to net loss and net cash used in operating activities, respectively, the closest U.S. GAAP measures.

(2)

This prospectus includes key performance indicators such as “backlog,” which is a key measure of our business growth. Backlog represents our estimate of the revenue we expect to realize in future periods as a result of performing work on contracts that have been awarded to us (net of any revenue already recognized as of the date of measurement). We include the aggregate expected revenue of awarded contracts in our backlog upon the execution of a legally binding agreement, even though our contracts include termination rights exercisable by our customers with advance notice. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion on how this measure is useful to investors and see “Risk Factors—Risks Related to Our Business” for a further discussion of certain risks related to our backlog.

 

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RISK FACTORS

Investing in our common stock involves a high degree of risk. Before you decide to invest in our common stock, you should consider carefully the risks described below, together with the other information contained in this prospectus, including our consolidated financial statements and the related notes appearing elsewhere in this prospectus. We believe the risks described below are the risks that are material to us as of the date of this prospectus. If any of the following risks actually occur, our business, financial condition, results of operations, and future growth prospects could be materially and adversely affected. In these circumstances, the market price of our common stock could decline, and you may lose all or part of your investment.

Risks Related to Our Business

If we fail to manage our growth effectively, we may be unable to execute our business plan and our business, financial condition, and results of operations could be harmed.

We have experienced, and may continue to experience, rapid growth, which has placed, and may continue to place, significant demands on our management, sales and marketing, administrative, financial, R&D, and other resources. Additionally, our organizational structure is becoming more complex as we scale our operational, financial and management controls, as well as our reporting systems and procedures. If we fail to manage our anticipated growth, such failure could negatively affect our reputation and harm our ability to attract new customers and to grow our business.

In order to achieve the future revenue growth we have projected, we must develop and market new products and services. We intend to expand our operations significantly. To properly manage our growth, we will need to hire and retain additional personnel, upgrade our existing operational management and financial and reporting systems, and improve our business processes and controls. Our future expansion will include:

 

  •  

scaling our revenue and achieving the operating efficiencies necessary to achieve and maintain profitability;

 

  •  

anticipating and responding to changing customer preferences;

 

  •  

anticipating and responding to macroeconomic changes generally, including changes in the markets for launch services and spacecraft solutions and services and related technology and components;

 

  •  

improving and expanding our operations and information systems;

 

  •  

successfully competing against established companies and new market entrants;

 

  •  

managing and improving our business processes in response to changing business needs;

 

  •  

effectively scaling our operations while maintaining high customer satisfaction;

 

  •  

integrating any future acquisitions, including personnel, systems, and business processes;

 

  •  

avoiding or managing interruptions in our business from information technology downtime, cybersecurity breaches and other factors affecting our physical and digital infrastructure;

 

  •  

adapting to changing conditions in our industry;

 

  •  

complying with regulations applicable to our business;

 

  •  

hiring and training talented employees at all levels of our business;

 

  •  

developing new technologies;

 

  •  

controlling expenses and investments in anticipation of expanded operations;

 

  •  

upgrading the existing operational management and financial reporting systems and team to comply with requirements as a public company; and

 

  •  

implementing and enhancing administrative infrastructure, systems, and processes.

 

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If our operations continue to grow as planned, of which there can be no assurance, we will need to expand our sales and marketing, R&D, customer and commercial strategy, products and services, supply, and manufacturing functions. These efforts will require us to invest significant financial and other resources, including in industries and sales channels in which we have limited experience to date. We will also need to continue to leverage our manufacturing and operational systems and processes, and there is no guarantee that we will be able to scale the business as currently planned or within the planned timeframe. The continued expansion of our business may also require additional manufacturing and operational facilities, as well as space for administrative support, and there is no guarantee that we will be able to find suitable locations for the manufacture of our space vehicles and related equipment. Our continued growth could increase the strain on our resources, and we could experience operating difficulties, including difficulties in hiring and training employees, finding manufacturing capacity to produce our space vehicles and related equipment, and delays in production. These difficulties may divert the attention of management and key employees and impact financial and operational results. If we are unable to drive commensurate growth, these costs, which include lease commitments, headcount, and capital assets, could result in decreased margins, which could have a material adverse effect on our business, financial condition, and results of operations.

We have a history of losses, we anticipate increasing operating expenses and capital expenditures in the future and we may not be able to achieve and, if ever achieved, maintain profitability.

We experienced net losses of $231.1 million and $135.5 million for the years ended December 31, 2024 and 2023, respectively, and net losses of $60.1 million and $52.8 million for the three months ended March 31, 2025 and 2024, respectively. We expect to continue to incur net losses for the next several years and we may not achieve or maintain profitability in the future. Because the markets for launch services, space systems, related components and space data applications are evolving, it is difficult for us to predict our future results of operations or the limits of our market opportunity. In addition, our customers for whom we provide these products and services may experience delays or technical challenges with their products and services that limit or delay our expected revenue and future growth opportunities from those customers. We expect our operating expenses and capital expenditures to significantly increase as we make significant investments, expand our operations and infrastructure, develop and introduce new technologies, and hire additional personnel. These efforts may be more costly than we expect and may not result in revenue growth or increased efficiency. In addition, as we grow as a public company, we will continue to incur additional significant administrative expenses that we did not incur as a private company. If our revenue does not increase to offset these expected increases in our operating expenses, we will not be profitable in future periods. Our ability to achieve profitability is dependent on our ability to generate cash flows from operations, identify and obtain additional sources of funding and pursue expense reduction opportunities, but we may be unable to successfully implement these strategies. Any failure to increase our revenue sufficiently to keep pace with our investments and other expenses could prevent us from achieving or maintaining profitability or positive cash flow on a consistent basis. If we are unable to successfully address these risks and challenges as we encounter them, our business, financial condition, and results of operations could be adversely affected. We cannot assure you that we will ever achieve or sustain profitability and may continue to incur significant losses going forward. Any failure by us to achieve or sustain profitability on a consistent basis could cause the value of our common stock to decline.

We may experience delayed launches, launch failures, failure of our launch vehicles, landers, or orbital vehicles to reach their planned orbital locations, significant increases in the costs related to launches of launch vehicles, landers, or orbital vehicles, and insufficient capacity available from third-party providers of launch services with whom we partner. Any such issue could result in the loss of our launch vehicles, landers, or orbital vehicles or cause significant delays in their deployment, which could harm our business, financial condition, and results of operations.

Delays in launching launch vehicles, landers or orbital vehicles are common and can result from manufacturing delays, supply chain delays, natural or man-made disasters, adverse weather conditions or issues at the facilities used for testing, training, and operating space-related activities, including launch sites, extended

 

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product development programs, unavailability of reliable launch opportunities with suppliers, launch supplier schedule delays, delays in obtaining required regulatory approvals, regulatory standards preventing us from launching at certain times, unexpected national priority events, changes in landing coordinates, updates to mission specifications (including mission scope and objectives), our customers exercising their right to delay for a fee pursuant to the terms of their contractual arrangements, launch failures, and unexpected events or disruptions that occur during transportation of launch vehicles or other equipment to the launch payload processing facility. If launch vehicle or lander manufacturing schedules are not met, a launch opportunity may not be available at the time the satellites or landers are ready to be launched. We also share launches with other satellite or launch vehicle manufacturers (particularly in the context of our ridesharing arrangements with customers) and launch service providers who have caused, and may in the future cause, launch delays that are outside of our control. In addition, launch vehicles or satellite deployment mechanisms may fail, which could result in the destruction of any satellites or landers we have in such launch vehicle or an inability for the satellites or landers to perform their intended mission. Launch failures also result in significant delays in the deployment of satellites or landers because of the need to manufacture replacement parts and to obtain alternative launch opportunities and FAA approval to launch again. We also regularly review intended landing coordinates in order to determine the optimal landing site for our landers in consultation with NASA, while also updating mission specifications such as the scope of missions and the mission objectives. As such, from time to time, we have made, and expect to continue to make, material modifications to our missions, each of which may, alone or in the aggregate, cause us to experience material delays. Further, it could be more costly, and potentially prohibitively more costly, for us to launch and deploy our satellites or landers in the future due to increases in the cost of launches, launch insurance rates, and launch-related services. We have previously experienced, and may experience in the future, delays or other complications in the design, development, manufacture, launch, production, delivery, or servicing ramp of our product and service offerings. If delays like this arise or recur, if our remediation measures and process changes are not successful, if our customers exercise their right to delay pursuant to the terms of our contractual arrangements, if there is an increase in the cost of launches or related services, or if we experience other issues with design, production, or quality underperformance or failures, there could be a material adverse effect on our business, financial condition, and results of operations.

If we are unable to adapt to and satisfy customer demands with respect to our product and service offerings in a timely and cost-effective manner, or if we are unable to manufacture our launch vehicles, landers, or orbital vehicles at a quantity and quality that our customers demand, our ability to grow our business may suffer.

The success of our business depends in part on effectively managing and maintaining our commercial launch services, manufacturing a sufficient volume of launch vehicles, landers, and orbital vehicles, conducting a sufficient number of launches to meet customer demand, and providing customers with a high-quality experience that meets or exceeds their expectations. Even if we succeed in developing launch vehicles, landers, and orbital vehicles or producing these and other products consistent with our targeted timelines and customers’ expectations, we could thereafter fail to develop the ability to produce these products or provide the corresponding cislunar services at a sufficient volume with a quality management system that ensures each unit performs as required. Any delay in our ability to produce launch vehicles, landers, and orbital vehicles or provide cislunar services at the rate our customers require and with a reliable quality management system could have a material adverse effect on our business. If our current or future launch services do not meet expected performance or quality standards, including with respect to customer safety and satisfaction, we could experience operational delays. Further, launch operations within restricted airspace require advance scheduling and coordination with government agencies and owners of launch sites and other users, and any high priority national defense assets will have priority in the use of these resources, which may impact the cadence of our launch operations or could result in cancellations, launch facility transfers, additional costs, or rescheduling. Any operational or manufacturing delays or other unplanned changes to our ability to conduct our launches or manufacture our products could have a material adverse effect on our business, financial condition, and results of operations.

 

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Space is a harsh and unpredictable environment where our products and service offerings are exposed to a wide and unique range of environmental risks, including, among others, coronal mass ejections, solar flares, and other extreme space weather events and potential collision with space debris or another spacecraft, which could adversely affect our launch vehicle and spacecraft performance.

Space weather, including coronal mass ejections and solar flares have the potential to impact the performance and controllability of launch vehicles and spacecraft on orbit, including completely disabling our launch vehicles or spacecraft on orbit. Although we have some ability to actively maneuver our spacecraft to avoid potential collisions with space debris or other spacecraft, this ability is limited by, among other factors, uncertainties, and inaccuracies in the projected orbit location of and predicted conjunctions with debris objects tracked and cataloged by the U.S. government. Additionally, some space debris is too small to be tracked and therefore its orbital location is completely unknown; nevertheless, this debris is still large enough to potentially cause severe damage or a failure of our launch vehicles or spacecraft should a collision occur. Any such damage to our launch vehicles and spacecraft could impact the success of our customers’ missions, our reputation, the reusability of certain of our products and have other negative effects that we do not currently anticipate, any of which could adversely impact our business, results of operation and financial condition.

We derive a substantial amount of our revenues and backlog from only a few of our customers. A loss of, or default by, one or more of these major customers, or a material adverse change in any such customer’s business or financial condition, could materially reduce our revenues and backlog.

For the three months ended March 31, 2025, our top five customers together accounted for over 99% of our revenue and our top five backlog customers accounted for approximately 92% of our backlog as of March 31, 2025. Our customers may change their ordering patterns or business strategy, be delayed in the fulfillment of their contractual obligations to us, reduce or cease their use of our services, or become unable to pay for services they had contracted to buy, whether due to a downturn in their business or otherwise. A substantial amount of our backlog for government customers is also subject to risks of future government funding levels, which may be substantially curtailed or abandoned, resulting in contract cancellations, modifications, delays, or reduction in orders. In particular, the current administration has indicated it is committed to decreasing federal spending and the size of government. If the administration were to take actions that impacted the amount our government customers are able to spend on our services, it could materially adversely impact our business, results of operations, and financial condition. In addition, some of our customers’ industries are undergoing significant consolidation, and our customers may be acquired by each other or other companies, including by our competitors. Such acquisitions could adversely affect our ability to sell services to such customers and to any end-users whom they serve. Our customers may in the future default, on their obligations to us due to bankruptcy, lack of liquidity, operational failure, or other reasons. Such defaults could adversely affect our revenues, operating margins, and cash flows. In addition, under our contracts, our customers generally have the right to terminate, cancel, or curtail our contracts for convenience. Any decisions by our customers to terminate, cancel, or curtail our contracts would adversely affect our backlog revenues, revenue growth, and profitability. If our backlog is reduced due to the financial difficulties of our customers or other reasons, including cancellations for convenience, our revenues, operating margins, and cash flows would be further negatively impacted.

Disruptions in U.S. government operations and funding could have a material adverse effect on our revenues, earnings, and cash flows, and otherwise adversely affect our financial condition.

Any disruptions in federal government operations could have a material adverse effect on our revenues, earnings, and cash flows. A prolonged failure to maintain significant U.S. government operations, particularly those pertaining to our business, could have a material adverse effect on our revenues, earnings, and cash flows. Continued uncertainty related to recent and future government shutdowns, the budget and/or the failure of the government to enact annual appropriations, such as long-term funding under a continuing resolution, could have a material adverse effect on our revenues, earnings, and cash flows. Additionally, disruptions in government operations may negatively impact regulatory approvals and guidance that are important to our operations.

 

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Our business may be adversely affected by changes in budgetary priorities of the U.S. government.

Changes in federal government budgetary priorities could directly affect our financial performance and could have a material adverse effect on our business, results of operations, prospects, and financial condition. A significant decline in government expenditures, a shift of expenditures away from programs that support the industry in which we operate or related industries or a change in federal government contracting policies could cause federal government agencies to reduce their purchases under contracts, to exercise their right to terminate contracts at any time without penalty or not to exercise options to renew contracts, any of which could result in decreased sales of our products, and could adversely impact the trading price of our common stock. In addition, if government budgets are not approved in a timely fashion, our U.S. government customers may not be able to start new programs and may not have adequate funding for existing programs, which could impact the progress in achieving certain milestones under our contracts and our business, results of operations, and financial condition.

Increased congestion from the proliferation of LEO constellations could materially increase the risks of potential collision with space debris or another spacecraft and limit or impair our launch flexibility and/or access to our own orbital slots.

Recent years have seen increases in the number of spacecraft deployed to LEOs, and publicly announced plans call for many thousands of additional spacecraft deployments over the next decade. The proliferation of these LEO constellations could materially increase the risks of potential collision with space debris or another spacecraft and affect our ability to effectively access sufficient orbital slots to support the expected growth across our business, which could in turn have an adverse impact on the trading price of our common stock and our business.

The market for commercial launch services for small- and medium-sized payloads is still emerging, and shifting, and the market may not achieve the growth potential we expect. Our own growth relies on our ability to add new launch sites, which could be delayed by business or regulatory challenges.

The market for in-space infrastructure services, in particular, commercial launch services for small-sized payloads, has not been well established and is still emerging and shifting, with many players acting as customers, prime contractors, or acquirers, or targets of acquisitions. Our estimates for the total addressable launch market and satellite market are based on a number of internal and third-party estimates, including our backlog, the number of potential customers who have expressed interest in our launch services, assumed prices and production costs for our launch vehicles, assumed flight cadence, our assumptions regarding our ability to leverage our current manufacturing and operational processes, and general market conditions. While we believe our assumptions and the data underlying our estimates are reasonable at this date and time, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors. As a result, our estimates of the potential customers, total addressable market for our services, as well as the expected growth rate for the total addressable market for our services, may prove to be incorrect. Further, should any of our customers be acquired by one of our competitors, our future revenue and prospects may be impacted as those customers may decide not to continue to purchase our launch and other services. In addition, part of our strategy involves increasing our launch frequency and capability. We currently operate a launch site at the Vandenberg Space Force Base in California, and we have a collaborative agreement with SSC to jointly launch satellites with our Alpha rocket from the spaceport at Esrange Space Center in Sweden, with an estimated starting date some time in 2026. In the future, we expect to enter into a variety of arrangements to secure additional launch sites within and outside the United States. We have in the past and may in the future experience delays in our efforts to secure additional launch sites around the globe. Regulatory challenges or our inability to timely secure the necessary permissions to establish these launch sites could delay our ability to achieve our target launch cadence and could adversely affect our business.

 

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If we are unable to manage the increasing technological complexity of our business, or achieve or manage our expected growth, our business could be adversely affected.

The technological complexity of our business has increased significantly over the last several years. This increased complexity and our expected growth has placed, and will continue to place, a strain on our management and our administrative, operational, and financial infrastructure. We anticipate that a further growth of headcount and facilities, domestically as well as internationally, will be required to address expansion in our product and service offerings and the geographic scope of our customer base. However, if we are unsuccessful in our efforts, our business could decline. Our success will depend in part upon the ability of our senior management to manage our increased complexity and expected growth effectively. To do so, we must continue to hire, train, manage, and integrate a significant number of qualified managers and engineers. If our new employees perform poorly, or if we are unsuccessful in hiring, training, managing, and integrating these new employees, or retaining these or our existing employees, then our business may experience declines. To support our expected growth, we must continue to improve our operational, financial, and management information systems. If we are unable to manage our growth while maintaining our quality of service, or if new systems that we implement to assist in managing our growth do not produce the expected benefits, then our business, financial condition, and results of operations could be materially adversely affected.

We have a limited operating history in an evolving industry, which makes it difficult to forecast our revenue, plan our expenses and evaluate our business and future prospects.

We have a limited operating history in a rapidly evolving industry that may not develop in a manner favorable to our business. While our business has grown rapidly, and much of that growth has occurred in recent periods, the markets for launch services, landers, orbital vehicles, related components, and space data applications may not continue to develop in a manner that we expect or that otherwise would be favorable to our business. As a result of our limited operating history and ongoing changes in our new and evolving industry, including evolving demand for our products and services from government and commercial customers, our ability to forecast our future results of operations and plan for and model future growth is limited and subject to a number of uncertainties. We have encountered and expect to continue to encounter risks and uncertainties frequently experienced by growing companies in rapidly evolving industries, such as the risks and uncertainties described herein. Accordingly, we may be unable to prepare accurate internal financial forecasts or replace anticipated revenue that we do not receive as a result of delays arising from these or other factors, and our results of operations in future reporting periods may be below the expectations of investors or analysts. If we do not address these risks successfully, our results of operations could differ materially from our estimates and forecasts or the expectations of investors or analysts, causing our business to suffer and our common stock price to decline.

If we continue to expand outside the United States, we will be exposed to a variety of risks associated with international operations that could materially and adversely affect our business.

As part of our growth strategy, we have in the past identified, and in the future will aim to continue identifying, potential customers and launch sites outside of the United States. For example, in June 2024, we signed a collaborative agreement with Swedish Space Corporation (“SSC”) to jointly launch satellites with our Alpha rocket from the spaceport at Esrange Space Center in Sweden, with an estimated starting date some time in 2026. As we expand internationally, we are subject to additional risks related to doing international business, including:

 

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restructuring our operations to comply with local regulatory regimes;

 

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identifying, hiring, and training highly skilled personnel in foreign jurisdictions to the extent required;

 

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unexpected changes in law, including tariffs, trade barriers, and regulatory requirements, including through the International Traffic in Arms Regulations (“ITAR”), Export Administration Regulations (“EAR”), and Office of Foreign Assets Control (“OFAC”), especially in light of recent tariffs announced by the U.S. presidential administration or any retaliatory tariffs announced by other countries;

 

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economic weakness, including inflation, or political instability in foreign economies and markets;

 

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compliance with tax, employment, immigration, and labor laws for employees living or traveling abroad;

 

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foreign taxes;

 

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the need for U.S. government approval to operate our space systems outside the United States;

 

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foreign currency fluctuations, which could result in increased operating expenses and reduced revenue;

 

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government appropriation of assets or technology;

 

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the infringement, misappropriation, or other violation of our intellectual property by our partners or other third parties;

 

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workforce uncertainty in countries where labor unrest is more common than in the United States;

 

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reduced spend from our U.S. government customers; and

 

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disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including the U.S. Foreign Corrupt Practices Act, OFAC regulations and U.S. anti-money laundering regulations, as well as exposure of our foreign operations to liability under these regulatory regimes.

In addition, any non-U.S. sales are subject to both U.S. and non-U.S. governmental regulations and procurement policies and practices, including regulations relating to import-export control, tariffs, investment, exchange controls, anti-corruption laws, and repatriation of earnings. Non-U.S. sales are also subject to varying currency, political, and economic risks. The violation of any regulation could adversely affect our plans for international expansion.

Many of our contracts are government contracts or issued under government contracts. The inability to comply with any of our contracts or meet eligibility requirements may result in financial liabilities, failure to receive security clearance certifications, and loss of current and future business.

A number of our contracts are with a government customer, or are subcontracts entered into in connection with a prime contract with a government customer. U.S. government contracts generally are subject to the FAR, agency-specific regulations that supplement FAR, such as the DoD’s Federal Acquisition Regulations, and other applicable laws, security requirements, and regulations. These regulations impose a broad range of requirements and terms, many of which are unique to U.S. government contracting, including various procurement, import and export, security, contract pricing and cost, contract termination and adjustments, mandatory disclosure, and audit requirements. For example, we are at times required to obtain approval to export, re-export or transfer (in-country) our products from U.S. government agencies and similar agencies elsewhere in the world. Failure to obtain approval to export, or a determination by the U.S. government or similar agencies elsewhere in the world from which we failed to receive required approvals or licenses, could eliminate or restrict our ability to sell our products outside the United States or another country of origin, and the penalties that could be imposed by the U.S. government or other applicable government for failure to comply with these laws could be significant. Our customers are often required to flow down additional government contract terms to us, and we have no ability to negotiate or object to such terms. These requirements and terms that may increase our costs of doing business and reduce our profits under these contracts. Our failure to comply with any of the terms of our contracts could result in delays in the performance of our services, an inability to acquire government or commercial contracts, reductions of the value of contracts, contract modifications or termination, inability to bill and collect receivables from customers, contractual damages, the requirement to reperform work, the assessment of penalties and fines that could lead to suspension or debarment from U.S. government contracting or subcontracting, and potential civil and criminal liability. Government contracts are also generally subject to greater scrutiny by the government, which can initiate reviews, audits, and investigations regarding our compliance with government contract requirements. Government contracts may be subject to the approval of appropriations being made by the U.S. Congress to fund the expenditures under these contracts. In particular, “whistleblower” provisions under

 

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federal law also allow private individuals, including present and former employees, to sue on behalf of the U.S. government. Any penalties, damages, fines, suspension, or damages could adversely affect our ability to operate our business and our financial results.

We are subject to certain unique business risks as a result of supplying services to the U.S. government.

Companies engaged in supplying defense-related services to U.S. government agencies, whether through direct contracts with the U.S. government or as a subcontractor to customers contracting with the U.S. government, are subject to business risks specific to the defense industry. These risks include the ability of the U.S. government to unilaterally:

 

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suspend us from receiving new contracts based on alleged violations of procurement laws or regulations;

 

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terminate existing contracts;

 

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revoke required security clearances;

 

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reduce the value of existing contracts; and

 

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audit our contract-related costs and fees, including allocated indirect costs.

U.S. government contracts can be terminated by the U.S. government at its convenience without notice. Termination for convenience provisions provide only for our recovery of costs incurred or committed, settlement expenses and profit on the work completed prior to termination.

U.S. government in-sourcing could result in loss of business opportunities and personnel. The U.S. government has continued to reduce the percentage of contracted services in favor of more federal employees through an initiative called “in-sourcing.” Over time, in-sourcing could have an adverse effect on our business, financial condition, and results of operations. Specifically, as a result of in-sourcing, government procurements for services could be fewer and smaller in the future. In addition, work we currently perform could be in-sourced by the federal government and, as a result, our revenues could be reduced. Moreover, our employees could also be hired by the government. This loss of our employees would necessitate the need to retain and train new employees. Accordingly, the effect of in-sourcing or the continuation of in-sourcing at a faster-than-expected rate could have a material adverse effect on our business, financial condition, and results of operations.

Moreover, U.S. government purchasing regulations contain a number of operational requirements that apply to entities engaged in government contracting. Failure to comply with such government contracting requirements could result in civil and criminal penalties that could have a material adverse effect on our business, financial condition, and results of operations.

If a government inquiry or investigation uncovers improper or illegal activities, we could be subject to civil or criminal penalties or administrative sanctions, including contract termination, fines, forfeiture of fees, suspension of payment, civil False Claims Act allegations (which can include civil penalties and treble damages) and suspension or debarment from doing business with U.S. government agencies, any of which could materially adversely affect our reputation, business, financial condition, and results of operations.

Our business is substantially dependent on contracts entered into with customers in the ordinary course of business. As such, we are subject to counterparty risk. If a counterparty to one of our contracts were to default or otherwise fail to perform or be delayed in its performance on any of its contractual obligations to us, such default, failure to perform or delay could have a material adverse effect on our business, financial condition, and results of operations.

Our business is substantially dependent on contracts entered into with customers in the ordinary course of business. Our budgeted capital expenditures for our backlog, forecasted growth, and strategic plan are based on

 

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revenues expected to be generated pursuant to existing contracts. If a customer were to default or otherwise fail to perform or be delayed in the fulfillment of its contractual obligations to us, we would be required to adjust our budget, forecasts, and strategic plans, which may negatively affect our business, financial condition, cash flows, and/or liquidity. Additionally, if the scope of anticipated work related to any customer contract were to change due to unforeseen circumstances or evolving requirements of one or more of our counterparties, we may be unable to generate revenue on our anticipated timeline or may be required to incur increased costs from those originally estimated for a project, which could cause our budgets, forecasts, and plans to be inaccurate. It is not possible to predict with accuracy the impact of any default, failure to perform or delay, which results in our inability to completely mitigate such risks. As such, the counterparty default, failure to perform or delay in performance may have a material adverse impact on our business, financial condition, and results of operations.

We may not be successful in developing new technology, and the technology we are successful in developing may not meet the needs of our customers or potential new customers.

The markets in which we operate are characterized by changing technology and evolving industry standards, and we may not be successful in identifying, developing, and marketing products and services that respond to rapid technological change, evolving technical standards and systems developed by others. Our competitors may develop technology that better meets the needs of our customers. Such development is also expensive. If we do not continue to develop, manufacture, and market innovative technologies or applications that meet customers’ requirements, sales may suffer, and our business may not continue to grow in line with historical rates or at all. If we are unable to achieve sustained growth, we may be unable to execute our business strategy, expand our business, or fund other liquidity needs, and our business prospects, financial condition, and results of operations could be materially and adversely affected.

Uncertain global macro-economic and political conditions could materially adversely affect our results of operations and financial condition.

Our results of operations and growth prospects are materially affected by economic and political conditions in the United States and internationally, including inflation, deflation, interest rates, recession or fears of recession, availability of capital, energy and commodity prices, the availability and cost of labor, tariffs, trade laws and trade wars, and the effects of governmental initiatives to manage economic conditions. In particular, the recent reciprocal tariffs announced by the U.S. government and countermeasures that may be taken in response thereto could materially adversely impact global economic and political conditions, and disrupt the business of our customers and suppliers, and thereby harm our business. In certain prior periods, we have seen a broad-based weakening in the global macroeconomic environment which has impacted and could impact in the future certain of our markets. Additionally, instability in the global credit markets, the impact of uncertainty regarding global trade and central bank monetary policy, the instability in the geopolitical environment in many parts of the world (including as a result of the ongoing Russia and Ukraine war, conflict in the Middle East, and China-Taiwan relations), the current economic challenges in China, including global economic ramifications of Chinese economic difficulties, and other disruptions may continue to put pressure on global economic conditions. If global economic and market conditions, or economic conditions in key markets, remain uncertain or deteriorate further, we may experience material impacts on our business, financial condition, and results of operations. For example, such conditions may cause current or potential customers to delay or decrease spending on our products and services or render our suppliers unable to meet our demand requirements, maintain the pricing of their products or continue operations, as their businesses and/or budgets are impacted by economic conditions. The inability of current and potential customers to pay us for our products and services, and the inability of our suppliers to provide us with products or services with the expected volumes or prices, may adversely affect our earnings and cash flows. The current invasion of Ukraine by Russia has escalated tensions among the United States, the North Atlantic Treaty Organization (“NATO”), and Russia. Such invasion, ongoing military conflict, resulting sanctions, and related countermeasures by NATO states, the United States, and other countries are likely to lead to market disruptions, including significant volatility in commodity prices, credit, and capital markets, as well as supply chain interruptions for equipment, which could have an adverse impact on our

 

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operations and financial performance. Volatility in equity capital markets may adversely affect the market price of our common stock, which may affect our ability to fund our business through the sale of equity securities and retain key employees through our equity compensation plans.

If critical components or raw materials used to manufacture our products or used in our development programs become scarce or unavailable, then we may incur delays in manufacturing and delivery of our products and in completing our development programs, which could damage our business.

Although we maintain a qualification and performance surveillance process and we believe that sources of supply for raw materials and components are generally adequate, it is difficult to predict what effects shortages or price increases may have in the future. Our ability to meet customers’ demands depends, in part, on our ability to obtain timely and adequate delivery of quality materials, parts, and components from our suppliers. We obtain certain of our hardware components, various subsystems and systems and other products and services from a limited group of suppliers and vendors, some of which are sole source suppliers and vendors. Although we hold long-term non-binding contracts with certain key suppliers that establish pricing, minimize lead times and to some degree mitigate risk, we do not have long-term agreements with all suppliers that obligate them to continue to sell components, products required to build our systems, or products to us. Our reliance on suppliers without long-term non-binding contracts involves significant risks and uncertainties, including whether our suppliers will provide an adequate supply of required components or products of sufficient quality, will increase prices for the components or products, and will perform their obligations on a timely basis. Moreover, if our suppliers change their processes and quality control without notice, such change could impact the quality of our subassemblies, which could materially adversely affect our business. We obtain certain components from suppliers outside of the United States, which exposes us to risks associated with international trade, including, but not limited to, the impact of tariffs and retaliatory measures taken in response thereto, including controls on the export of rare earth minerals to the United States, such as China’s recently announced ban on exports of rare earth minerals to the United States. In addition, certain raw materials and components used in the manufacture of our products and in our development programs are periodically subject to supply shortages, and our business is subject to the risk of price increases and periodic delays in delivery. Particularly, the market for electronic components has been and currently still is experiencing increased demand and a global shortage of semiconductors, creating substantial uncertainty regarding our suppliers’ ongoing timely delivery of these components to us. Shortages in components for our products and delays in obtaining components for our products could cause customers to terminate their contracts with us, delay orders from us or cause us to delay accepting orders, negatively impact our ability to win new programs and/or contracts, negatively impact and disrupt our development programs, increase our costs and accordingly, our losses on fixed-price contracts and materially adversely affect our business, financial condition, and results of operations.

Moreover, if any of our suppliers become capacity constrained, financially unstable, or otherwise unable or unwilling to provide us with raw materials or components, then we may have to find new suppliers. In particular, the market for semiconductors is highly competitive and other customers, including AI companies, may have significantly greater financial resources than we do. It may take several months to locate alternative suppliers, if required, and if we are able to at all, or to redesign our products to accommodate components from different suppliers. Even if we identify alternate suppliers, we may experience significant delays in manufacturing and shipping our products to customers and incur additional development, manufacturing, and other costs to establish such alternative sources, be required to redesign our products and to complete additional quality control procedures. In addition, credit constraints of key suppliers could result in accelerated payment of accounts payable by us, adversely impacting our cash flow. We have experienced increased costs for components, as well as increased shipping, warehousing, and inventory costs. We cannot predict the extent to which these costs will continue and/or continue to increase or if we will be able to obtain replacement components within the time frames that we require at an affordable cost, if at all. Prolonged disruptions in the supply of any of our key raw materials or components could cause us to experience cancellations or delays of scheduled launches, customer cancellations, or reductions in our prices and margins, any of which could harm our business, financial condition, and results of operations. Additionally, shortages of components may result in increased inventory of unfinished

 

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products and significant quantities of other unused components remaining in inventory, which could expose us to increased risks of obsolescence and losses which may not be fully covered by insurance.

The U.S. government’s budget deficit and the national debt, as well as any inability of the U.S. government to complete its budget process for any government fiscal year could have an adverse impact on our business, financial condition, and results of operations.

The U.S. government’s budget deficit and the national debt, as well as any inability of the U.S. government to complete its budget process for any government fiscal year and consequently having to shut down or operate on funding levels equivalent to its prior fiscal year pursuant to a “continuing resolution,” could have an adverse impact on our business, financial condition, and results of operations. Considerable uncertainty exists regarding how future budget and program decisions will unfold, including the defense spending priorities of the U.S. government, what challenges budget reductions will present for the defense industry and whether annual appropriations bills for all agencies will be enacted for U.S. government fiscal year 2025 and thereafter due to many factors, including but not limited to, changes in the political environment, including before or after a change to the leadership within the government administration, and any resulting uncertainty or changes in policy or priorities and resultant funding. The U.S. government’s budget deficit and the national debt could have an adverse impact on our business, financial condition, and results of operations in a number of ways, including the following:

 

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The U.S. government could reduce or delay its spending on, reprioritize its spending away from, or decline to provide funding for the government programs in which we participate;

 

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U.S. government spending could be impacted by alternate arrangements to sequestration, which increases the uncertainty as to, and the difficulty in predicting, U.S. government spending priorities and levels; and

 

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We may experience declines in revenue, profitability, and cash flows as a result of reduced or delayed orders or payments or other factors caused by economic difficulties of our customers and prospective customers, including U.S. federal, state, and local governments.

Furthermore, we believe continued budget pressures could have serious negative consequences for the security of the U.S., the defense industrial base and the customers, employees, suppliers, investors, and communities that rely on companies in the defense industrial base. Budget and program decisions made in this environment would have long-term implications for us and the entire defense industry.

A failure of our information technology systems, physical or electronic security protections, or an interruption in their operation due to internal or external factors including cyber-attacks or insider threats, could have a material adverse effect on our business, financial condition, or results of operations.

Our operations are dependent on our ability to protect our employees, business systems, manufacturing capabilities, information systems, computer equipment and information databases from system failures or malicious acts. We rely on both internal information technology systems, physical controls and policies, and certain external services and service providers to manage the day-to-day operation of our business, operate elements of our manufacturing facilities, manage relationships with our employees, customers, and suppliers, fulfill customer orders and maintain our financial and accounting records. In addition, many of our systems are required to comply with higher standards applicable to systems that hold controlled technology or data. If our main data center were to fail, or if we were to suffer an interruption or degradation of services at our main data center, we could lose important manufacturing and technical data, which could harm our business. Similarly, we rely on third-party providers and in the event that any third-party provider’s systems or service abilities failed or are interrupted, our ability to operate may be impaired. Some of these third-party providers may store or have access to our data and may not have effective controls, processes, or practices to protect our information from attack, damage, or unauthorized access. Any of these risks may be augmented if our or any third-party provider’s business continuity and disaster recovery plans prove to be inadequate. We are vulnerable to damage or

 

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interruption from earthquakes, hurricanes, floods, fires, terrorist attacks, actual or threatened acts of war, power losses, telecommunications failures, personnel misconduct, human error, and similar events. We are also vulnerable to cyber attacks or cybersecurity incidents, such as computer viruses, worms, ransomware, and other malicious and destructive code, phishing attacks, and denial or degradation of service attacks, and have been the target of attempted cyber attacks. Because of the nature of our business and our support of the U.S. government, we (and our customers and suppliers) may be targeted for such attacks by hostile foreign governments. The failure of our information technology systems to perform as anticipated for any reason or any significant breach of security could disrupt our business and result in numerous adverse consequences, including reduced effectiveness and efficiency of operations, increased costs, or loss of important information or capabilities, any of which could have a material adverse effect on our business, financial condition, or results of operations. Any security breach, including personal data breaches, or incident, including cybersecurity incidents, that we or our third-party providers experience could result in unauthorized access to, misuse of or unauthorized acquisition of our or our customers’ data, the loss, corruption, or alteration of this data, interruptions in our operations or damage to our computer hardware or systems or those of our customers. Moreover, negative publicity arising from these types of disruptions could damage our reputation. Such disruptions may have adverse legal and regulatory consequences to us and our business, particularly if we or our third-party providers are unable to anticipate such acts or implement adequate preventative measures. For more information on our legal and regulatory obligations with respect to data protection, privacy, and information security, see “Risk Factors—Risks Related to Litigation and Regulation—Our business is subject to federal, state, and international laws regarding data protection, privacy, and information security, as well as confidentiality obligations under various agreements, and our actual or perceived failure to comply with such obligations could damage our reputation, expose us to litigation risk and materially adversely affect our business and operating results.”

Our systems utilize third-party open-source software, and any failure to comply with the terms of one or more of these open-source software licenses could adversely affect our business, subject us to litigation, or create potential liability.

Our systems include software licensed from third parties under any one or more open-source licenses, and we expect to continue to incorporate open-source software in our systems and technology in the future. Moreover, we cannot ensure that we have effectively monitored our use of open-source software, or validated the quality or source of such software, or that we are always in compliance with the terms of the applicable open-source licenses or our current policies and procedures. From time to time, there have been claims against companies that use open-source software in their products and services asserting that the use of such open-source software infringes the claimants’ intellectual property rights. As a result, we could be subject to suits by third parties claiming that what we believe to be licensed open-source software infringes such third parties’ intellectual property rights. Additionally, if an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages and required to comply with onerous conditions or restrictions on these solutions, which could disrupt the distribution and sale of these solutions. Litigation could be costly for us to defend, have a negative effect on our business, financial condition, and results of operations, or require us to devote additional R&D resources to change our solutions. We may continue to experience such vulnerabilities in the future. Use of open-source software may entail greater risks than use of third-party commercial software, as open-source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code, including with respect to security vulnerabilities where open-source software may be more susceptible. In addition, certain open-source licenses require that source code for software programs that incorporate, use, or combine with such open-source software be made available to the public at no cost and that any modifications or derivative works to such open-source software continue to be licensed under the same terms as the open-source software license. The terms of various open-source licenses to which we are subject are ambiguous and have not or may not have been interpreted by courts in the relevant jurisdictions, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to market or provide our software and data. By the terms of certain open-source licenses, we could be required to release the

 

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source code of our proprietary software, and to make our proprietary software available under open-source licenses, if we combine our proprietary software with open-source software in a certain manner. In the event that portions of our proprietary software are determined to be subject to an open-source license, we could be required to publicly release the affected portions of our source code, re-engineer all or a portion of our solutions, seek licenses from third parties on terms that are not commercially feasible or otherwise be limited in the provision of our products and services, each of which could reduce or eliminate the value of our solutions. Disclosing our proprietary source code could allow our competitors to create similar products with lower development effort and time and ultimately could result in a loss of sales. Furthermore, any such re-engineering or other remedial efforts could require significant additional R&D resources, and we may not be able to successfully complete any such re-engineering or other remedial efforts. Any of these events could create liability for us and damage our reputation, which could have a material adverse effect on our business, financial condition, and results of operations.

We depend on our current CEO and other executive officers, senior management team, and highly trained employees, and any work stoppage, difficulty in hiring similar employees, or ineffective succession planning could materially adversely affect our business and could impair our relationships with U.S. government customers and disrupt the management of our business.

Because our products are highly engineered, we depend on an educated and trained workforce. There is substantial competition for skilled personnel in our industry, and we could be materially adversely affected by a shortage of skilled employees. We may not be able to fill new positions or vacancies created by expansion or turnover or attract and retain qualified personnel. We may not be able to continue to hire, train, and retain qualified employees at current wage rates since we operate in a competitive labor market, and currently significant inflationary and other pressures on wages exist.

In addition, our success depends in part on our ability to attract and motivate senior management and highly skilled key employees, including engineering, manufacturing and quality assurance, design, finance, marketing, sales and support, and finance and accounting personnel. Achieving this objective may be difficult due to a variety of factors, including fluctuations in economic and industry conditions, competitors’ hiring practices, and the effectiveness of our compensation programs. Competition for qualified personnel can be strong. Our senior management team has extensive experience in the aerospace industry, and we believe that their depth of experience is instrumental to our continued success. The loss of any one or more members of our senior management team, for any reason, including resignation or retirement, could impair our ability to execute our business strategy, and if we are unable to effectively provide for the succession of key personnel, senior management, and our executive officers, our business, financial condition, and results of operations could be materially adversely affected.

We depend on our ability to recruit and retain employees who have advanced engineering and technical services skills and who work well with our customers. These employees are in great demand and are likely to remain a limited resource in the foreseeable future. The current tight labor market has adversely impacted our ability to recruit qualified personnel, including engineers. Increased restrictions on the import or retention of foreign labor may also increase demand for engineering personnel and adversely impact our ability to hire and retain qualified personnel. Further, significant amounts of time and resources are required to train technical, sales, and other personnel, and we may lose new employees to our competitors or other companies before we realize the benefit of our investment in recruiting and training them. If we are unable to recruit and retain a sufficient number of these employees, then our ability to maintain our competitiveness and grow our business could be negatively affected. In addition, because of the highly technical nature of our products, the loss of any significant number of our existing engineering personnel could have a material adverse effect on our business and operating results.

Furthermore, the relationships and reputation that our CEO and other members of our senior management team have established and maintain with U.S. government agencies and personnel contribute to our ability to

 

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maintain strong customer relationships and to identify new business opportunities. The loss of any member of our senior management could impair our ability to identify and secure new contracts, to maintain good customer relations, and to otherwise manage our business.

Misconduct of employees, subcontractors, agents, suppliers, business partners, or joint ventures and others working on our behalf could cause us to lose existing contracts or customers and adversely affect our ability to obtain new contracts and customers and could have a material adverse impact on our reputation, business, financial condition, and results of operations.

Our employees, subcontractors, agents, suppliers, business partners, joint ventures or others working on our behalf may engage in misconduct that could adversely impact our business including by committing fraud or engaging other improper activities such as falsifying time or other records, and violating laws and failing to comply with our policies and procedures or with federal, state, or local government procurement regulations, regulations regarding the use and safeguarding of classified or other protected information, legislation regarding the pricing of labor and other costs in government contracts, laws, and regulations relating to environmental, health or safety matters, bribery of foreign government officials, import-export control, lobbying or similar activities, and any other applicable laws or regulations. Although we have implemented policies, procedures, training, and other compliance controls to prevent and detect these activities, these precautions may not prevent all misconduct, and as a result, we could face unknown risks or losses. This risk of improper conduct may increase as we continue to expand and do business with new partners. In the ordinary course of our business, we form and are members of joint ventures (meaning joint efforts or business arrangements of any type). Our failure to comply with applicable laws or regulations could damage our reputation and subject us to administrative, civil, or criminal investigations and enforcement actions, fines, and penalties, restitution or other damages including civil False Claims Act allegations (which can include civil penalties and treble damages), loss of security clearance, loss of current and future customer contracts, loss of privileges and other sanctions, including suspension or debarment from contracting with federal, state, or local government agencies, any of which would materially adversely affect our reputation, business, financial condition, and results of operations.

Changes in our accounting estimates and assumptions could negatively affect our financial position and results of operations.

We prepare our consolidated financial statements in accordance with U.S. GAAP. These accounting principles require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our financial statements. We are also required to make certain judgments that affect the reported amounts of revenues and expenses during each reporting period. We periodically evaluate our estimates and assumptions including, but not limited to, those relating to revenue recognition, recoverability of assets, valuation of derivatives and nonredeemable non-controlling interests, contingencies, stock-based compensation, and income taxes. We base our estimates on historical experience and various assumptions that we believe to be reasonable based on specific circumstances. In particular, estimating our contract revenues requires judgments relative to assessing risks, including risks associated with estimating contract transaction prices and costs, assumptions for schedule and technical issues, customer-directed delays and reductions in scheduled deliveries, and unfavorable resolutions of claims and contractual matters. Due to the size and nature of many of our contracts, the estimation of total costs at completion is complicated and subject to many variables. For example, we must make assumptions regarding the length of time to complete the contract because costs include expected increases in wages and prices for materials; we also consider incentives or penalties related to performance on contracts and include them in the variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the related uncertainty is resolved. There are many reasons estimated contract costs can increase, including inflation, labor challenges, supply chain challenges, and market volatility; delays or limitations in customer funding; design or other development challenges; production challenges (including from technical or quality issues and other performance concerns); inability to realize learning curves or other cost savings; changes in laws or regulations; actions necessary for long-term customer satisfaction; and

 

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natural disasters or environmental matters. Fixed-price contracts inherently tend to have more financial risk than cost-type contracts, including as a result of inflationary pressures, labor rates and shortages, challenges in estimating contract revenues and costs, and supplier challenges, some of which we may be particularly exposed to given the nature of our business. While management uses its best judgment to estimate costs associated with fixed-price contracts, future events can result in significant adjustments. These assumptions and estimates involve the exercise of a significant amount of judgment and discretion, which may evolve over time in light of operational experience, regulatory direction, developments in accounting principles and other factors. Actual results could differ from these estimates as a result of changes in circumstances, assumptions, policies, or developments in the business, which could materially affect our consolidated financial statements. In addition, we sometimes receive advanced payments and billings in excess of the amount of revenue we recognize, which we record as deferred revenue. As a result, our cash flows may be subject to fluctuation across periods in a manner that may be unrelated to our underlying performance.

We often rely on a single vendor or a limited number of vendors to provide certain key products or services and the inability of these key vendors to meet our needs could have a material adverse effect on our business.

We contract with a single vendor or a limited number of vendors to provide certain key products or services, such as composite prepegs, spin forming of engine chambers, and chamber electroplating. In addition, our manufacturing operations depend on specific technologies and companies for which there may be a limited number of vendors. If these vendors are unable to meet our needs because they fail to perform adequately, are unable to match new technological requirements or problems, or are unable to dedicate engineering and other resources necessary to provide the services contracted for, our business, financial condition, and results of operations may be adversely affected. While alternative sources for these products, services, and technologies may exist or develop in the future, including through foreign vendors, we may not be able to develop these alternative sources quickly and cost-effectively, which could materially impair our ability to operate our business. Furthermore, our current or future vendors may request changes in pricing, payment terms, or other contractual obligations, which could cause us to make substantial additional investments. Additionally, certain of our suppliers’ employees are represented by labor unions, and any labor union actions at our suppliers may also affect us. Work stoppages and instability in our relationships with labor unions could delay the production and/or development of our products, which could strain relationships with customers and cause a loss of revenues which would adversely affect our operations.

We face significant competition in the global space market.

We operate in the highly competitive global space industry, which has been more competitive recently, given the increased focus of the U.S. presidential administration on human missions to space. Competitors across our launch, land, and orbit businesses range in size from divisions of large public corporations to small, privately held entities. We face intense competition in the global space market. In addition, we are aware of a significant number of competitors actively engaged in developing commercial launch capabilities for small and medium sized payloads in the U.S. and globally. Many of our current and potential competitors are larger and have substantially greater financial or other resources than we currently have or expect to have in the future, and thus may be better positioned to exploit the market need for spacecraft propulsion systems and launch services for small and medium sized payloads with targeted orbital delivery, which is one primary focus of our launch business. Our ability to compete depends on high product performance, consistent high quality, short lead time and timely delivery, competitive pricing, superior customer service and support, and continued certification under customer quality requirements and assurance programs. Our competitors may also be able to devote greater resources to the development of their current and future technologies, which could overlap with our technologies, or the promotion and sale of their products and services. Our competitors could offer products and services at lower prices, which could undercut our business strategy and potential competitive edge. Our current and potential competitors may also establish cooperative or strategic relationships amongst themselves or with third parties that may further enhance their resources and offerings relative to ours, and may reduce the size of our addressable market. Further, it is possible that domestic or foreign companies or governments, some with greater

 

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experience in the aerospace industry or greater financial resources than we possess, will seek to provide products or services that compete directly or indirectly with ours in the future. Any such foreign competitor could benefit from subsidies from, or other protective measures by, its home country. We believe our ability to compete successfully as a provider of comprehensive space mission solutions does and will depend on number of factors, which may change in the future due to increased competition, including the price of our products and services, customer satisfaction for the experiences we offer, and the frequency and availability of our products and services. If we encounter difficulties in scaling our production capabilities, if we fail to develop and successfully commercialize our launch systems, landers, orbital vehicles, and related technologies, if we fail to develop such technologies before our competitors, or if such technologies fail to perform as expected, are inferior to those of our competitors or are perceived as less safe than those of our competitors, our business, financial condition, and results of operations could be materially and adversely impacted.

Any inability to operate Alpha at our anticipated launch rate could adversely impact our business, financial condition, and results of operations.

Our launch services business is currently dependent to a significant extent on Alpha. To be successful, we will need to maintain a sufficient launch rate, which will be negatively impacted if we are not able to operate Alpha for any reason, including not being granted appropriate government clearance after a launch failure. We may be unable to operate Alpha at our anticipated launch rate for a number of reasons, including, but not limited to, production delays or failures, design and engineering flaws, launch failures, natural disasters, epidemics or pandemics, changes in governmental regulations or in the status of our regulatory approvals or applications, customer delays or cancellations, or other events that force us to cancel or reschedule launches.

Any inability to finalize the development and delivery of Eclipse could adversely impact our business, financial condition, and results of operations.

We have an exclusive partnership with Northrop Grumman to develop Eclipse. The success of the development and delivery of Eclipse is dependent on our combined performance with Northrop Grumman. If Northrop Grumman prioritizes the development of other products, fails to devote sufficient resources to the development of Eclipse, or does not have agile processes in place for the design, development, integration, and testing of launch operations, we may be unable to introduce Eclipse to the market, which could have an adverse impact on our business and projected growth. Furthermore, the ability of Eclipse to go to market may be impacted if Northrop Grumman is unable to approve internal or other governmental and commercial bids.

We may need to invest in new information technology systems and infrastructure to scale our operations.

The markets in which we operate are characterized by changing technology and evolving industry standards, and accordingly we may need to adopt new information technology systems and infrastructure to scale our business and obtain the synergies from prior and future acquisitions. Our information technology and business systems and infrastructure could create product development or production work stoppages, unnecessarily increase our inventory, negatively impact product delivery times and quality, and increase our compliance costs. Failure to invest in newer information technology and business systems and infrastructure (including when certain software applications become obsolete or are no longer used in our business) may lead to operational inefficiencies and increased compliance costs and risks. In addition, an inability to maximize the utility and benefit of our current information technology and business tools could impact our ability to meet cost reduction and planned efficiency and operational improvement goals. Furthermore, operational inefficiencies may occur and our business may be impacted if certain of our software applications are no longer usable, including due to the foreign acquisition of such applications. As we implement new systems or integrate existing systems, they may not perform as expected. An inability to maximize the utility and benefit of our current information technology and business tools could impact our ability to meet cost reduction and planned efficiency and operational improvement goals. Moreover, our competitors may develop technology systems and infrastructure that better meets the needs of our customers. If we do not continue to develop, manufacture, and market

 

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innovative technologies or infrastructure that meet customers’ requirements or expectations, sales may suffer, and our business may not continue to grow in line with historical rates or at all. If we are unable to achieve sustained growth, we may be unable to execute our business strategy, expand our business, or fund other liquidity needs, and our business prospects, financial condition, and results of operations could be materially and adversely affected.

Tariffs on certain imports to the United States and other potential changes to U.S. tariff and import/export regulations could have a material adverse effect on global economic conditions and our business, financial condition, and results of operations.

We are subject to tariffs on certain imports into the United States. On April 2, 2025, the U.S. administration announced the imposition of tariffs on substantially all countries that trade with the United States. As the implementation of tariffs is ongoing, more tariffs may be added in the future and countermeasures may be adopted by other countries. In addition, any additional tariffs imposed by the U.S. presidential administration or retaliatory tariffs announced by other countries could result in a trade war, lead to market disruptions, including significant volatility in commodity prices, credit, and capital markets, as well as supply chain interruptions for equipment. These tariffs could adversely impact our business, financial condition, and results of operations, and if we are unable to pass such price increases through to our customers, it would likely increase our cost of sales and, as a result, decrease our gross margins, operating income, and net income.

Interruption or failure of our infrastructure could hurt our ability to effectively perform our daily operations and provide and produce our products and services, which could damage our reputation and harm our operating results.

We are vulnerable to natural disasters and significant disruptions including tsunamis, hurricanes, floods, earthquakes, fires, water shortages, other extreme weather conditions, epidemics, or pandemics, acts of terrorism, power shortages and blackouts, aging infrastructures, telecommunications failures, and disruptive political events. In the event of such a natural disaster or other disruption, we could experience: disruptions to our operations or the operations of suppliers, subcontractors, distributors, or customers; destruction of facilities; loss of life; and/or damage or disruption to our employee’s homes and/or their ability to commute to our facilities. The availability of many of our products and services depends on the continuing operation of our information technology and communications systems. Any downtime, damage to, or failure of our systems could result in interruptions in our operations and services, which could reduce our revenue and profits. Our systems are vulnerable to damage or interruption from extreme weather events, fires, power loss, aging infrastructure, telecommunications failures, computer viruses, computer denial of service attacks, and other attempts to harm our systems. Our manufacturing facilities are also subject to risks associated with an aging infrastructure. An infrastructure failure could result in the destruction of launch vehicles, spacecraft, and related components being manufactured or in inventory, manufacturing delays, or additional costs. Terrorist attacks, actual or threatened acts of war or the escalation of current hostilities, or any other military or trade disruptions impacting our suppliers of components of our products, may impact our operations by, among other things, causing supply chain disruptions and increases in commodity prices, which could adversely affect our raw materials or transportation costs. In addition, because we participate in the defense and national security industries, we could ourselves become the target of such an attack or disruption. Such events also could impact one or more of our suppliers or contractors or result in the closure of any of their facilities or our facilities, which would make it difficult to continue our commercial launch activities as planned or thereafter increase our launch cadence or may also delay our customers’ plans to launch their payloads. Generally, the disaster recovery and business continuity plans we have in place currently are limited and may prove inadequate in the event of a serious disaster or similar event, particularly as the majority of our operations and employees are concentrated within a 25-mile radius encompassing our Cedar Park and Briggs, Texas facilities. We do not maintain back-up manufacturing facilities or operations. The occurrence of any of the foregoing could result in lengthy interruptions in our operations and services and/or damage our reputation, which could have a material adverse effect on our business, financial condition, and results of operations.

 

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Our operating results may fluctuate significantly, which makes forecasting our future operating results difficult and could cause our operating results to fall below expectations or any guidance we may provide.

Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future operating results. These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to:

 

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the number of launch missions or cislunar services (including on-orbit transfers, hosting, delivery, and servicing) we schedule for a period, the price at which we sell them and our ability to schedule additional launch missions for repeat customers;

 

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the shift in receiving milestone payments for our launch or spacecraft solutions and services (including as a result of one of our customers exercising its delay right pursuant to its contractual arrangement with us);

 

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the cost of raw materials or supplied components critical for the manufacture and operation of space products or launch systems;

 

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the timing and cost of, and level of investment in, R&D relating to our technologies and our current or future facilities, including as a result of changes in government spending;

 

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our financial condition;

 

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developments involving our competitors;

 

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changes in governmental regulations or in the status of our regulatory approvals or applications;

 

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future accounting pronouncements or changes in our accounting policies; and

 

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general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.

The individual or cumulative effects of factors discussed above could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. Further, projections are based upon a number of assumptions and estimates that, while presented with numerical specificity, are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control and are based upon specific assumptions with respect to future business decisions, some of which will change. The rapidly evolving market in which we operate may make it difficult to evaluate our current business and our future prospects, including our ability to plan for and model future growth. The principal reason that we may release this data is to provide a basis for our management to discuss our business outlook with analysts and investors. We do not accept any responsibility for any projections or reports published by any such persons. Guidance is necessarily speculative in nature, and it can be expected that some or all of the assumptions of the guidance furnished by us will not materialize or will vary significantly from actual results, particularly any guidance relating to the results of operations of acquired businesses or companies as our management will be less familiar with their business, procedures, and operations. This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period. If our revenue or operating results fall below the expectations of analysts or investors or below any guidance we may provide, or if the guidance we provide is below the expectations of analysts or investors, the price of our common stock could decline substantially. Such a stock price decline could occur even when we have met any previously publicly stated guidance we may provide.

Our customers’ inability to obtain financing for their purchases from us and/or their inability to obtain financing to maintain their business could have a material adverse effect on our business.

Some of our customers may require substantial financing to fund their operations and make purchases from us. The inability of these customers to obtain sufficient credit to finance purchases of our products, including the

 

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ability of our government customers to receive adequate funding for new and current programs, or otherwise meet their payment obligations to us could adversely impact our financial condition and results of operations. In addition, if a market downturn results in insolvencies for our customers, it could materially adversely impact our business, financial condition, and results of operations.

Our business involves significant risks and uncertainties that may not be covered by insurance. Also, due to the inherent risks associated with commercial spaceflight, there is the possibility that any accident or catastrophe could lead to the loss of human life or a medical emergency.

Although there have been and will continue to be technological advances in spaceflight, it is still an inherently dangerous activity. Explosions and other accidents on launch or during the flight have occurred and will likely occur in the future. If such incident should occur, we will likely experience a total loss of our systems, products, technologies and services, and our payloads and payloads of our customers. The total or partial loss of one or more of our products or payloads could have a material adverse effect on our reputation, business, financial condition, and results of operations. For some missions, we can elect to buy launch insurance, which can reduce our monetary losses from the launch failure, but even in this case we will have losses associated with our inability to test our technology in space and delays with further technology development. Further, commercial spaceflight is an inherently risky activity that can lead to accidents or catastrophes impacting human life. It is impossible to completely eliminate the potential for human or other error, and there is a possibility that other accidents may occur in the future as a result of human error or for a variety of other reasons, some of which may be out of our control. Any such accident could result in substantial losses to us, including reputational harm and legal liability, and, as a result, could have a material adverse effect on our business, financial condition, and results of operations.

We routinely conduct hazardous operations in manufacturing, test, and launch of our launch systems, space products and various subsystems, which could result in damage to property or persons. The release, unplanned ignition, explosion, or improper handling of dangerous materials used in our business could disrupt our operations and adversely affect our financial results.

We manufacture, test, and operate highly sophisticated launch systems and Space Products and we conduct launch activities that depend on complex technology. Although there have been, and will continue to be, technological advances in spaceflight, our operations remain an inherently hazardous and risky activity. Our business operations involve the handling, production, and disposition of potentially explosive and ignitable energetic materials, and other dangerous chemicals, including materials used in rocket propulsion. The handling, production, transport, and disposition of hazardous materials could result in incidents that temporarily shut down or otherwise disrupt our manufacturing operations and could cause production delays. A release of these chemicals or an unplanned ignition or explosion could result in death or significant injuries to employees and others. Material property damage to us and third parties could also occur. Extensive regulations apply to the handling of explosive and energetic materials, including but not limited to regulations governing hazardous substances and hazardous waste. The failure to properly store and ultimately dispose of such materials could create significant liability and/or result in regulatory sanctions. While we have built operational processes designed to ensure that the design, manufacture, performance, and servicing of our spacecraft meet rigorous quality standards, there can be no assurance that we will not experience operational or process issues that could result in potential safety risks. Any actual or perceived safety or reliability issues may result in significant reputational harm to our businesses, in addition to tort liability, maintenance, increased safety infrastructure, and other costs that may arise. Such issues could result in canceled contracts, delaying or cancelling planned launches, increased regulation, or other systemic consequences. Our inability to meet our safety standards or adverse publicity affecting our reputation as a result of accidents, mechanical failures, damages to customer property, or other complications could have a material adverse effect on our business, financial condition, and results of operations.

 

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We are subject to many hazards and operational risks that can disrupt our business, including interruptions or disruptions in service at our Cedar Park and Briggs, Texas facilities, which could have a material adverse effect on our business, financial condition, and results of operations.

Our operations are subject to many hazards and operational risks inherent to our business, including general business risks, product liability and damage to third parties, our infrastructure or properties that may be caused by fires, floods and other natural disasters, power losses, telecommunications failures, terrorist attacks, human errors, epidemics and pandemics, and other similar health crises and similar events. Additionally, our manufacturing operations are hazardous at times and may expose us to safety risks, including environmental risks and health and safety hazards to our employees or third parties. At our facilities, particularly our Cedar Park and Briggs, Texas facilities where the majority of our manufacturing and other operations are concentrated, any significant interruption due to any of the above hazards and operational to the manufacturing or operation of our spacecraft systems including from weather conditions, growth constraints, performance by third-party providers (such as electric, utility, or telecommunications providers), failure to properly handle and use hazardous materials, failure of computer systems, power supplies, fuel supplies, infrastructure damage, disagreements with the owners of the land on which our facilities are located, or damage sustained to our runway could result in manufacturing delays or the delay or cancellation of our spacecraft and, as a result, could have a material adverse effect on our business, financial condition, and results of operations. Moreover, our insurance coverage may be inadequate to cover our liabilities related to such hazards or operational risks. In addition, we may not be able to maintain adequate insurance in the future at rates we consider reasonable and commercially justifiable, and insurance may not continue to be available on terms as favorable as our current arrangements. The occurrence of a significant uninsured claim, or a claim in excess of the insurance coverage limits maintained by us, could harm our business, financial condition, and results of operations.

Our insurance, customer indemnifications, or other liability protections may be insufficient to protect us from product and other liability claims or losses.

We maintain insurance coverage with third-party insurers as part of our overall risk management strategy and because some of our contracts require us to maintain specific insurance coverage limits. Not every risk or liability is or can be protected by insurance given we may incur liabilities that are unique to our products and services, and for those risks we insure, the limits of coverage that are reasonably obtainable may not be sufficient to cover all actual losses or liabilities incurred. We are limited in the amount of insurance we can obtain to cover certain risks, such as cybersecurity risks and natural hazards, including earthquakes, fires, and extreme weather conditions, some of which can be worsened by climate change and pandemics. If any of our third-party insurers fail, become insolvent, cancel our coverage or otherwise are unable to provide us with adequate insurance coverage or renew our insurance coverage on favorable terms, then our overall risk exposure and our operational expenses would increase, and the management of our business operations would be disrupted. Our insurance may be insufficient to protect us from significant product and other liability claims or losses. Moreover, there is a risk that commercially available liability insurance will not continue to be available to us at a reasonable cost, if at all. In some circumstances, we are entitled to certain legal protections or indemnifications from our customers through contractual provisions, laws, regulations, or otherwise. However, these protections are not always available, can be difficult to obtain, are typically subject to certain terms or limitations, including the availability of funds, and may not be sufficient to cover all losses or liabilities incurred. For example, although the U.S. government may pay claims for third-party damages to the extent they exceed our insurance coverage, this depends on a government appropriation and is subject to a statutory limit. In addition, this insurance will not protect us against our own losses, including to our launch vehicle, launch complex and spacecraft. If liability claims or losses exceed our current or available insurance coverage, customer indemnifications, or other legal protections, our business, financial condition, and results of operations could have a material adverse effect on the Company. Any significant claim may have a material adverse effect on our industry and market reputation, leading to a substantial decrease in demand for our products and services and reduced revenues, making it more difficult for us to compete effectively, and could affect the cost and availability of insurance coverage at adequate levels in the future.

 

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A significant portion of our management team has limited experience managing a public company.

Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company that is subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could harm our business, financial condition, and results of operations.

Adverse publicity stemming from any incident involving us, our competitors, or our customers could have a material adverse effect on our business, financial condition, and results of operations.

To continue to be successful, we must continue to preserve, grow, and capitalize on the value of our brand in the marketplace. We have previously been and continue to be at risk of adverse publicity stemming from any public incident involving our company, our people, or our brand, or our competitors or customers. For example, in December 2023, our Fly the Lightning mission did not obtain the specified target orbit and a number of media outlets reported on the mission. Although we do not believe that this particular publicity had a material adverse impact on our business, in the future, if our launch vehicles or space products, those of one of our competitors, or satellites of our customers were to be involved in a public incident, accident, or catastrophe, this could create an adverse public perception of launch or manufacturing activities and result in decreased customer demand for launch and space products, which could cause a material adverse effect on our business, financial condition, and results of operations. Even an isolated incident or the aggregate effect of individually insignificant incidents, can erode trust and confidence, particularly if such incident or incidents result in adverse publicity, governmental investigations, or litigation. Further, if our launch vehicles or rockets were to be involved in a public incident, accident, or catastrophe, we could be exposed to significant reputational harm or potential legal liability. Any reputational harm to our business or industry could tarnish our brand or cause customers with existing contracts with us to cancel their contracts, and lead to a material adverse effect on our business, and financial condition and results of operations. The insurance we carry may be inapplicable or inadequate to cover any such incident, accident, or catastrophe. In the event that our insurance is inapplicable or not adequate, we may be forced to bear substantial losses from such incident, adverse media, or accident.

Labor-related matters, including labor disputes, may adversely affect our operations.

None of our employees are currently represented by a union. If our employees decide to form or affiliate with a union, or if we expand into a jurisdiction with different labor laws that are more favorable to unions and works councils, we cannot predict the negative effects such future organizational activities will have on our business and operations. If we were to become subject to work stoppages, we could experience disruption in our operations, including delays in manufacturing and operations, and increases in our labor costs, which could harm our business, financial condition, and results of operations. In addition, we have in the past and could face in the future a variety of employee claims against us, including but not limited to general discrimination, privacy, wage and hour, labor and employment, Employee Retirement Income Security Act, and disability claims. Any claims could also result in litigation against us or regulatory proceedings being brought against us by various government agencies that regulate our business, including the U.S. Equal Employment Opportunity Commission. Often these cases raise complex factual and legal issues and create risks and uncertainties.

Efforts by the U.S. government to revise its organizational conflict of interest rules could limit our ability to successfully compete for new contracts or task orders, which would materially adversely affect our business, financial condition, and results of operations.

Efforts by the U.S. government to reform its procurement practices have focused on, among other areas, the separation of certain types of work to facilitate objectivity and avoid or mitigate organizational conflicts of

 

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interest and the strengthening of regulations governing organizational conflicts of interest. Organizational conflicts of interest may arise from circumstances in which a contractor has impaired objectivity during performance; unfair access to non-public information; or the ability to set the “ground rules” for another procurement for which the contractor competes. A focus on organizational conflicts of interest issues has resulted in legislation and a proposed regulation aimed at increasing organizational conflicts of interest requirements, including, among other things, separating sellers of products and providers of advisory services in major defense acquisition programs. The passage of a new federal law in December 2022 requires the Federal Acquisition Regulation (“FAR”) council to provide and update definitions of each of the above types of conflicts of interest and provide illustrative examples of various relationships that contractors could have that would give rise to potential conflicts of interest. The passage of this legislation comes as this topic continues to garner increased scrutiny of such alleged conflicts among federal contractors. The resulting rule-making process, as well as continuing reform initiatives in procurement practices, may, however, result in future amendments to the FAR, increasing the restrictions in current organizational conflicts of interest regulations and rules. Similarly, organizational conflicts of interest remain an active area of bid protest litigation, increasing the likelihood that competitors may leverage such arguments in an attempt to overturn agency award decisions. To the extent that proposed and future organizational conflicts of interest laws, regulations, and rules or interpretations thereof limit our ability to successfully compete for new contracts or task orders with the U.S. government, either because of organizational conflicts of interest issues arising from our business, or because companies with which we are affiliated, or with which we otherwise conduct business, create organizational conflicts of interest issues for us, our business, financial condition, and results of operations could be materially adversely affected.

Our revenue, results of operations and reputation may be negatively impacted if our products contain defects or fail to operate in the expected manner.

We sell complex and technologically advanced products and services, including launch services, spacecraft solutions and services and related technology and components. Sophisticated software used in our products and services, including software developed by us, may contain defects that can unexpectedly interfere with the software’s intended operation. Defects may also occur in components and products that we manufacture or purchase from third parties. Most of the launch vehicles, spacecraft, and related components we have developed must function under demanding and unpredictable operating conditions and in harsh and potentially destructive environments. Our products and services may not be successfully implemented, pass required acceptance criteria, or operate or give the desired output, or we may not be able to detect and fix all defects in the launch vehicles, spacecraft, related components and systems we sell and/or use. Failure to do so could result in lost backlog and revenue and damage to our reputation and may adversely affect our ability to win new contract awards.

If our launch vehicles and spacecraft fail to operate as intended, we may experience warranty claims for product failures, schedule delays or other problems with existing or new products, which could have a material adverse effect on our business, financial condition, and results of operations.

Many of the launch vehicles and spacecraft we develop and manufacture are technologically advanced systems that must function under demanding operating conditions. The sophisticated and rigorous design, manufacturing, and testing processes and practices we employ do not entirely prevent the risk that we may not be able to successfully launch or manufacture our products on schedule or that our products may not perform as intended, whether due to reasons attributable to us or third parties (such as technical limitations of customer payloads or our suppliers’ launch vehicles). When our products fail to perform adequately, some of our contracts require us to forfeit a portion of our expected profit, receive reduced payments, provide a replacement product or service, or reduce the price of subsequent sales to the same customer. Performance penalties may also be imposed when we fail to meet delivery schedules or other measures of contract performance. Our business partners may also cancel existing contracts, which could adversely affect our backlog, business, results of operations, and financial condition. We do not generally insure against potential costs resulting from any required remedial actions or costs or loss of sales due to postponement or cancellation of scheduled operations or product deliveries.

 

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If we fail to adequately protect our proprietary intellectual property rights, including our unpatented proprietary intellectual property, our competitive position could be impaired and we may lose valuable assets, generate reduced revenue, and incur costly litigation to protect our rights. We have granted licenses in our intellectual property to certain customers, which creates an additional risk of unauthorized use or disclosure of our intellectual property.

The success of both our space products and launch services businesses depend, in part, on our ability to protect our proprietary intellectual property rights. To date, we have relied primarily on patents, trademarks, trade secrets, other intellectual property laws, licensing arrangements, non-disclosure or confidentiality agreements with our employees, consultants, and other relevant persons, and other measures to protect our intellectual property (including our intellectual property that may not be patentable or subject to copyright, trademark, trade dress or service mark protection), and intend to continue to rely on these and other means. We also rely on trade secrets, designs, know-how, and other confidential information to protect our intellectual property that may not be patentable or subject to copyright, trademark, trade dress, or service mark protection, or that we believe is best protected by means that do not require public disclosure. However, the steps we take to protect our intellectual property may be inadequate, and we may choose not to pursue or maintain certain types of intellectual property protection or registration for our intellectual property in the United States or foreign jurisdictions. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. To the extent we expand our international activities, our exposure to unauthorized copying and use of our technologies and proprietary information may increase. Despite our precautions, our proprietary rights in the United States or abroad may not be adequate, and it may be possible for unauthorized third parties to copy, reverse engineer or misappropriate our technology or intellectual property rights and use information that we regard as proprietary to create technology that competes with ours. In addition, although we seek to enter into non-disclosure and invention assignment agreements with our employees and enter into non-disclosure agreements with our customers, consultants and other parties with whom we have strategic relationships and business alliances and enter into intellectual property assignment agreements with our consultants, contractors and vendors, no assurance can be given that these agreements will be effective in controlling access to and distribution of our technology and proprietary information. While we seek to enter into such agreements, we may fail to enter into such agreements with all relevant entities, such agreements may be breached or may not be self-executing, and we may be subject to claims that employees misappropriated relevant rights from their previous employers. Accordingly, we cannot guarantee that the steps we have taken to protect our intellectual property will be adequate to prevent infringement of our rights or misappropriation of our technology, trade secrets or know-how, or that we have secured, or will be able to secure, appropriate permissions or protections for all of the intellectual property rights we use or claim rights to. Further, these agreements do not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our products. In certain instances, we have granted customers licenses to our intellectual property, and we have disclosed the necessary intellectual property, including our trade secrets, proprietary know-how and other confidential information, to these customers. Additionally, certain of our customer agreements contain provisions permitting the customer to become a party to, or beneficiary of, an escrow agreement under which we place certain intellectual property in escrow with a third party. Under these escrow agreements, such intellectual property may be released to the customer for certain purposes, including to manufacture (or coordinate the manufacture of) certain of our products upon the occurrence of specified events, such as our filing for bankruptcy or ceasing our business operations generally. Although our license grants contain certain restrictions and protections for our intellectual property, we cannot control the actions by third parties, their affiliates and manufacturing partners, and their respective employees.

If we fail to protect our intellectual property rights adequately, we may lose an important advantage in the markets in which we compete. Our efforts to protect these rights may be insufficient or ineffective, and any of our intellectual property rights may be challenged, which could result in them being narrowed in scope or declared invalid or unenforceable. Any unauthorized use or disclosure of our intellectual property, including by our current or future manufacturing partners and suppliers, would cause us material harm in a manner that monetary damages alone could not redress, and this unauthorized use or disclosure could have a material adverse

 

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effect on our business and operations. Other parties may also independently develop technologies, products, and services that are substantially similar or superior to ours. We also may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain protection for our proprietary information could adversely affect our competitive business position. Further, adequate remedies may not be available in the event of an unauthorized use or disclosure of our trade secrets and manufacturing expertise. Finally, for those products in our portfolio that rely on patent protection, once a patent has expired, the product is generally open to competition. Products under patent protection usually generate significantly higher revenues than those not protected by patents. If we fail to successfully enforce our intellectual property rights, our competitive position could suffer, which could harm our business, financial condition, results of operations, and cash flows.

We also rely on physical and electronic security measures to protect our proprietary information, but we cannot provide assurance that these security measures will not be breached or will provide adequate protection for our property. There is a risk that third parties may obtain and improperly utilize our proprietary information to our competitive disadvantage. We may not be able to detect or prevent the unauthorized use of such information or take appropriate and timely steps to enforce our intellectual property rights.

Protecting and defending against intellectual property claims may have a material adverse effect on our business.

Our success depends in part upon successful prosecution, maintenance, enforcement, and protection of our owned and licensed intellectual property. To protect our intellectual property rights, we may be required to spend significant resources to monitor and protect these rights. Litigation may be necessary in the future to enforce our intellectual property rights and to protect our trade secrets. Such litigation could be costly, time consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. Our inability to protect our proprietary technology, as well as any costly litigation or diversion of our management’s attention and resources, could disrupt our business, as well as have a material adverse effect on our financial condition and results of operations. The results of intellectual property litigation are difficult to predict and may result in significant damage awards or settlement costs. We may also be required to undertake workarounds or substantial reengineering of our products or services, stop using certain technologies, stop offering certain services or enter into royalty or licensing agreements, which may include terms that are not commercially acceptable to us. There is no guarantee that any action to defend, maintain or enforce our owned or licensed intellectual property rights will be successful, and an adverse result in any such proceeding could have a material adverse impact on our business, financial condition, and results of operations. In addition, we may from time-to-time face allegations that we are infringing, misappropriating, or otherwise violating the intellectual property rights of third parties, including the intellectual property rights of our competitors. We may be unaware of the intellectual property rights that others may claim cover some or all of our technology or services. Irrespective of the validity of any such claims, we could incur significant costs and diversion of resources in defending against them, and there is no guarantee any such defense would be successful, which could have a material adverse effect on our business, financial condition, and results of operations. Even if these matters do not result in litigation or are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could divert the time and resources of our management team and harm our business, financial condition, our results of operations, and our reputation.

A significant deferment of orders by customers could have a material adverse effect on our business, results of operations, prospects, and financial condition.

Uncertainty about current and future global economic conditions may cause the U.S. government, customers, and businesses to modify, defer or cancel purchases in response to tighter credit, decreased cash

 

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availability and declining customer confidence. Accordingly, future demand for our products could differ materially from our current expectations. Additionally, if customers are not successful in generating sufficient revenue or are precluded from securing financing, they may not be able to pay, or may delay payment of, accounts receivable that are owed to us. Any inability of current and/or potential customers to pay us for our products may adversely affect our earnings and cash flow.

Shortfalls in available external R&D funding could adversely affect us.

We depend on our R&D activities to develop the core technologies used in our products and for the development of our future products. A portion of our R&D activities depends on funding by commercial companies and the U.S. government. U.S. government and commercial spending levels can be impacted by a number of variables, including general economic conditions, specific companies’ financial performance, changes in U.S. government contracting policies and competition for U.S. government funding with other U.S. government-sponsored programs in the budget formulation and appropriation processes. To the extent that these external sources of funding are reduced or eliminated, U.S. government agencies may elect to reduce their purchases under contracts, to exercise their right to terminate contracts at any time without penalty or not to exercise options to renew contracts, any of which could result in decreased sales of our products, consequently harming our business, financial condition, and results of operations.

Due to the competitive process to obtain contracts and the likelihood of bid protests, we may be unable to achieve or sustain revenue growth and profitability.

We expect that a majority of the business that we seek in the foreseeable future will be awarded through a competitive bidding process. The U.S. government has increasingly relied on contracts that are subject to a continuing competitive bidding process, including multi-award contracts, which has resulted in greater competition and increased pricing pressure. The competitive bidding process involves substantial costs, including labor cost and managerial time to prepare bids and proposals for contracts that may not be awarded to us, may be split among competitors, or that may be awarded but for which we do not receive meaningful task orders, and several risks, including the risk of inaccurately estimating the resources and costs that will be required to fulfill any contract we win. Following contract award, we may encounter significant expense, delay, contract modifications, or even cancellation of the contract award as a result of our competitors protesting the award of contracts to us. Any resulting loss or delay of start-up and funding of work under protested contract awards may adversely affect our revenues and profitability. In addition, multiple-award contracts require that we make sustained post-award efforts to obtain task orders under the contract. As a result, we may not be able to obtain these task orders or recognize revenues under these multiple-award contracts. Our failure to compete effectively in this procurement environment would adversely affect our revenues and profitability.

The U.S. government’s determination to award a future contract or contract option may be challenged by an interested party, and, if that challenge is successful, that future contract or option may be terminated.

The laws and regulations governing procurements by the U.S. government provide procedures by which other bidders and interested parties may challenge the award of a government contract at the U.S. Government Accountability Office (“GAO”) or in federal court. If we are awarded a government contract, such challenges or protests could be filed even if there are not any valid legal grounds on which to base the challenge or protest. If any such challenges or protests are filed, the government agency may decide to suspend our performance under the contract while such challenges or protests are being considered by the GAO or the applicable federal court, thus potentially delaying delivery of payment.

In addition, we could be forced to expend significant funds to defend any potential award. If a challenge or protest is successful, the government agency may be ordered to terminate any one or more of our contracts and reselect bids. The government agencies with which we have contracts could even be directed to award a potential contract to one of the other bidders. Finally, the government agency, in its discretion, may elect to take corrective

 

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action to resolve a pending bid protest which could result in the government agency reevaluating bidders, or asking bidders to re-compete for the contract, and the selection of a new bidder.

Environmental matters, including costs associated with compliance and remediation efforts and government and third-party claims, could have a material adverse effect on our reputation and our business, financial condition, and results of operations.

Our operations are subject to and affected by various federal, state, local, and foreign environmental laws, and regulations, which can frequently be expanded, changed, or enforced differently over time. Compliance with these existing and evolving environmental laws and regulations requires and is expected to continue to require significant operating and capital costs. We may be subject to substantial administrative, civil, or criminal fines, penalties, or other sanctions (including suspension and debarment) for violations. If we are found to be in violation of the Federal Clean Air Act or the Clean Water Act, the facility or facilities involved in the violation could be placed by the Environmental Protection Agency on a list of facilities that generally cannot be used in performing on U.S. government contracts until the violation is corrected. Stricter or different remediation standards or enforcement of existing laws and regulations; new requirements, including regulation of new substances; discovery of previously unknown contamination or new contaminants; imposition of fines, penalties, or damages (including natural resource damages); a determination that certain remediation or other costs are unallowable; rulings on allocation or insurance coverage; and/or the insolvency, inability or unwillingness of other parties to pay their share, could require us to incur material additional costs in excess of those anticipated. We may become a party to legal proceedings and disputes involving government and private parties (including individual and class actions) relating to alleged impacts from pollutants released into the environment, including bodily injury and property damage. These matters could result in material compensatory or other damages, remediation costs, penalties, non-monetary relief, and adverse allowability or insurance coverage determinations. The impact of these factors is difficult to predict, but one or more of them could harm our reputation and business and have a material adverse effect on our results of operations, prospects, and financial condition.

Failure to maintain a level of corporate social responsibility could damage our reputation and could materially adversely affect our business, financial condition, and results of operations.

In light of evolving expectations around corporate social responsibility, our reputation could be materially adversely impacted by a failure (or perceived failure) to maintain a level of corporate social responsibility. In today’s environment, an allegation or perception regarding quality, safety, or corporate social responsibility can negatively impact our reputation. This may include, without limitation: failure to maintain certain ethical, social and environmental practices for our operations and activities, or failure to require our suppliers or other third parties to do so; our environmental impact, including our impact on the environment, greenhouse gas emissions and climate-related risks, renewable energy, water stewardship and waste management; responsible sourcing in our supply chain; the practices of our employees, agents, customers, suppliers, or other third parties (including others in our industry) with respect to any of the foregoing, actual or perceived; the failure to be perceived as appropriately addressing matters of social responsibility; customer perception of statements made by us, our employees and executives, agents, customers, suppliers, or other third parties (including others in our industry); or our responses to any of the foregoing. A number of our customers have adopted, or may adopt, procurement policies that include social and environmental responsibility provisions or requirements that their suppliers should comply with, or they may seek to include such provisions or requirements in their procurement terms and conditions. Stakeholders also may have very different views on corporate social responsibility, including differing or conflicting views of regulators in various jurisdictions in which we operate. Various regulatory authorities have imposed, and may continue to impose, mandatory substantive or disclosure requirements with respect to corporate social responsibility matters. These requirements may not always be uniform across jurisdictions and may conflict with legal requirements, particularly in certain U.S. states that seek to discourage or penalize consideration of corporate social responsibility factors in business operations, which may result in increased complexity, and cost for compliance, as well as could lead to increased litigation risks related to disclosures made pursuant to these regulations and legal requirements, any of which could adversely affect our

 

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financial performance. Certain investors are also requiring companies to disclose corporate, social and environmental policies, practices, and metrics. If we are unable to comply with, or are unable to cause our suppliers to comply with such policies, or meet the requirements of our customers and investors, a customer may stop purchasing products from us or an investor may sell their shares, and may take legal action against us, which could materially adversely affect our reputation, business, financial condition, and results of operations. As a result, we may become subject to new or more stringent regulations, legislation or other governmental requirements, customer requirements or industry standards and/or an increased demand to meet voluntary criteria related to such matters. Increased regulations, customer requirements or industry standards, including around climate change concerns, could subject us to additional costs and restrictions and require us to make certain changes to our manufacturing practices and/or product designs, which could materially adversely affect our business, financial condition, and results of operations.

Our business with various governmental entities is concentrated in a small number of primary contracts. The loss or reduction in scope of our IDIQ contracts could impair our ability to attract new business.

We are party to several Indefinite Delivery, Indefinite Quantity (“IDIQ”) contracts. The IDIQ contracts allow the government to procure services from us over a fixed period of time without a predetermined quantity, issuing task or delivery orders as needed. We believe that our ability to provide services under these contracts will continue to be important to our business because of the multiple opportunities for new engagements each contract provides. If one or more of these contracts were cancelled, we could lose substantial revenues and our operating results could suffer, which could have a material adverse effect on our business, financial condition, and results of operations. Furthermore, we cannot be assured that our government clients will continue to exercise the options remaining on our current contracts, nor can we be assured that our future clients will exercise options on any contracts we may receive in the future.

Some of our contracts with the U.S. government allow it to use technical data developed under the contracts and to disclose technical data to third parties, which could harm our ability to compete.

Some of our contracts allow the U.S. government to use, royalty-free, or have others use, technical data developed under those contracts on behalf of the government. Some of the contracts allow the federal government to disclose technical data or computer software developed in the performance of the agreement or delivered to the government during the performance of the agreement without constraining the recipient on how that technical data or computer software is used. The ability of third parties to use technical data or computer software (for any purposes) and patents for government purposes creates the possibility that the government could attempt to establish alternative suppliers or to negotiate with us to reduce our prices. The potential that the government may release some of the technical data or computer software without constraint creates the possibility that third parties may be able to use this technical data or computer software to compete with us, which could have a material adverse effect on our business, financial condition, and results of operations.

A preference for small, small disadvantaged, service-disabled veteran-owned, woman-owned businesses or other preferred socioeconomic designations could impact our ability to be a prime contractor and limit our opportunity to work as a subcontractor on certain governmental procurements.

As a result of the Small Business Administration (“SBA”) set-aside program, the federal government may decide to restrict certain procurements only to bidders that qualify as small, small disadvantaged, service-disabled veteran-owned, woman-owned businesses or meeting some other socioeconomic designation. We do not qualify as a small, small disadvantaged, service-disabled veteran-owned, woman-owned business or having any other preferred socioeconomic designation. As a result, we would not be eligible to perform as a prime contractor on those programs and in general would be restricted to no more than 49% of the work as a subcontractor on those programs. An increase in the amount of procurements under the SBA set-aside program, or other similar governmental programs, may impact our ability to bid on new procurements as a prime contractor, limit our opportunity to work as a subcontractor or restrict our ability to compete on incumbent work that is placed in the set-aside program.

 

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If we fail to establish and maintain important relationships with government agencies and prime contractors, our ability to successfully maintain and develop new business could be materially adversely affected.

Our reputation and relationship with the U.S. government, and in particular with the agencies of the DoD and the U.S. intelligence community, are key factors in maintaining and developing new business opportunities. In addition, we often act as a subcontractor or in “teaming” arrangements in which we and other contractors bid together on particular contracts or programs for the U.S. government or government agencies. We expect to continue to depend on relationships with other prime contractors for a portion of our revenue for the foreseeable future. Negative press reports regarding conflicts of interest, poor contract performance, employee misconduct, information security breaches or other aspects of our business, regardless of accuracy, could harm our reputation. Additionally, as a subcontractor or team member, we often lack control over fulfillment of a contract, and poor performance on the contract could tarnish our reputation, even when we perform as required. As a result, we may be unable to successfully maintain our relationships with government agencies or prime contractors, and any failure to do so could materially adversely affect our ability to maintain our existing business and compete successfully for new business.

We have classified contracts with the U.S. government, which may limit investor insight into portions of our business.

We derive a portion of our revenues from programs with the U.S. government and its agencies that are subject to security restrictions (e.g., contracts involving classified information and classified programs), which preclude the dissemination of information and technology that is classified for national security purposes under applicable law and regulation. In general, access to classified information, technology, facilities, or programs requires appropriate personnel security clearances, is subject to additional contract oversight and potential liability, and also requires appropriate facility security clearances and other specialized infrastructure. In the event of a security incident involving classified information, technology, facilities, programs, or personnel holding clearances, we may be subject to legal, financial, operational, and reputational harm. We are limited in our ability to provide information about these classified programs, their risks or any disputes or claims relating to such programs. As a result, investors have less insight into our classified business or our business overall. However, historically the business risks associated with our work on classified programs have not differed materially from those of our other government contracts.

U.S. government contracts are generally not fully funded at inception, contain certain provisions that may be unfavorable to us and may be undefinitized at the time of the start of performance, which could prevent us from realizing our backlog and materially harm our business, financial condition, and results of operations.

U.S. government contracts typically involve long lead times for design and development and are subject to significant changes in contract scheduling. Congress generally appropriates funds on a fiscal year basis even though a program may continue for several years. Consequently, programs are often only partially funded initially, and additional funds are committed only as Congress makes further appropriations. The termination or reduction of funding for a government program would result in a loss of anticipated future revenue attributable to that program. The actual receipt of revenue on awards included in backlog may never occur or may change because a program schedule could change or the program could be canceled, or a contract could be reduced, modified, or terminated early. In addition, U.S. government contracts generally contain provisions permitting termination, in whole or in part, at the government’s convenience or for contractor default. Since a substantial majority of our revenue is dependent on the procurement, performance. and payment under our U.S. government contracts, the termination of one or more critical government contracts could have a material adverse effect on our business, financial condition, and results of operations. Termination arising out of our default could result in damage to our reputation, expose us to liability and have a material adverse effect on our ability to re-compete for future contracts and orders. Moreover, several of our contracts with the U.S. government do not contain a limitation of liability provision, creating a risk of responsibility for indirect, incidental damages and consequential damages. These provisions could cause substantial liability for us, especially given the use to

 

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which our products may be put. Furthermore, we may in the future operate from time to time under undefinitized contract actions (“UCA”s), under which we may begin performance at the direction of the U.S. government prior to completing contract negotiations regarding pricing, specifications, and other terms. Under a UCA, the U.S. government has the ability to unilaterally definitize contracts and, absent a successful appeal of such action, the unilateral definitization of the contract would obligate us to perform under terms and conditions imposed by the U.S. government. Such unilaterally imposed contract terms could include less favorable pricing and/or terms and conditions more burdensome than those negotiated in other circumstances, which could negatively affect our expected profitability under such contract and could materially adversely affect our business, financial condition, and results of operations.

Failure to comply with the requirements of the National Industrial Security Program Operating Manual could result in interruption, delay, or suspension of our ability to provide our products and services and could result in loss of current and future business with the U.S. government.

Certain contracts with the U.S. government may require us to be issued facility security clearances under the National Industrial Security Program. The National Industrial Security Program requires that a corporation maintaining a facility security clearance be effectively insulated from foreign ownership, control, or influence (“FOCI”). Failure to maintain an agreement with the DoD regarding the appropriate FOCI mitigation arrangement could result in invalidation or termination of the facility security clearances, which in turn would mean that we would not be able to enter into future contracts with the U.S. government requiring facility security clearances, and which may result in the loss of our ability to complete existing contracts with the U.S. government.

Our cash flow and profitability could be reduced if expenditures are incurred prior to the final receipt of a contract.

From time to time, in order to ensure that we satisfy our customers’ delivery requirements and schedules, we may elect to initiate procurement and production in advance of receiving a contract award, or final authorization from the government customer or a prime contractor. In addition, from time to time, we may build production units in advance of receiving an anticipated contract award. These actions that we may take to procure materials and/or commence production in advance of contract award require use of our working capital resources which impact our near-term operating cash flows. If we do not receive final authorization for a contract, or if contract requirements change, we may be unable to efficiently repurpose or resell some or all of the materials procured or items produced in anticipation of such contract. These actions could also reduce anticipated earnings or result in a loss, materially adversely affecting our business, financial condition, and results of operations.

We may experience difficulties or disruptions in consummating future acquisitions and integrating the operations of acquired companies into our business, or entering into any partnerships or joint ventures, and in realizing the expected benefits of these transactions.

We may from time to time enter into transactions to acquire other businesses which are complementary to or expand our existing offerings, as we did when we acquired the Spaceflight business. We are currently evaluating acquisition opportunities, and although we are not party to any definitive agreements at this time and no acquisition is probable as of the date hereof, we are actively considering an opportunity in the software industry that is expected to be complementary to our business and may enter into a definitive agreement with respect to this or other opportunities after the completion of this offering, and the transactions contemplated by such agreements could be material to our business. Acquisitions involve numerous risks, any of which could harm our business and negatively affect our financial condition and results of operations. As a public company, we will be subject to the reporting requirements of the Exchange Act and certain acquisitions, including acquisition opportunities we are currently considering, may be “significant” under Regulation S-X, requiring us to compile and file additional historical and/or pro forma financial information in connection with such acquisitions. In addition, the rules of Nasdaq will limit our ability to issue equity securities as consideration in acquisition transactions without seeking shareholder approval. Any of these requirements could impair or delay our ability to

 

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negotiate, sign, and execute potentially desirable transactions and any disputes or litigation which may result from such transactions could be costly and time consuming. In addition, we may make acquisitions that are dilutive to our existing stockholders for a variety of reasons, including because we may use equity for all or a portion of the consideration we pay for these acquisitions (including acquisition opportunities we are currently considering).

The success of our acquisitions, once consummated, will depend in part on our ability to realize the anticipated business opportunities from combining their and our operations in an efficient and effective manner. These integration processes could take longer than anticipated and could result in the loss of key employees, the disruption of each company’s ongoing businesses, tax costs or inefficiencies, write-offs or impairments, or inconsistencies in standards, controls, information technology systems, procedures, and policies, any of which could adversely affect our ability to maintain relationships with customers, employees or other third parties, or our ability to achieve the anticipated benefits of the acquisitions, and could harm our financial performance. We may also evaluate potential partnerships or joint ventures with third parties. We may not be successful in identifying partnership and joint venture candidates, and any partnerships or joint ventures may not be successful, may reduce our cash reserves, may negatively affect our earnings and financial performance and, to the extent financed with the proceeds of debt, may increase our indebtedness. Pursuing acquisitions, partnerships and joint ventures may divert management’s time and resources from our core business and disrupt our operations or may result in conflicts with our business. We cannot ensure that any acquisition, partnership, or joint venture we make or enter into will not have a material adverse effect on our business, financial condition, and results of operations.

When we enter into fixed-price contracts with some of our customers, we take the risk of cost overruns.

We also have entered into multi-year, fixed-price contracts with some of our customers, pursuant to which we have agreed to perform the work for a fixed price and, accordingly, realize all of the profit or loss resulting from variations in the costs of performing the contract. To the extent we incur unanticipated cost overruns on a fixed-price contract, our profitability would be adversely affected. This risk is greater in a high inflationary environment. Sometimes, we accept a fixed-price contract for a product that we have not yet produced or that otherwise involves development work, and this increases the risk of cost overruns or delays in the completion of the design and manufacturing of the product, given that development work is inherently more uncertain as to future events than non-development contracts. Further, certain of our contracts do not permit us to recover increases in raw material prices, taxes, or labor costs, which could further decrease our profitability with respect to such contracts.

Our operations depend on our manufacturing facilities, which are subject to physical and other risks that could disrupt production.

Our operations and those of our customers and suppliers have been and may again be subject to natural disasters, climate change-related events, pandemics, or other business disruptions, which could seriously harm our results of operations and increase our costs and expenses. Our manufacturing facilities are located in regions that may be impacted by severe weather events, such as increased storm frequency or severity and fires in hotter and drier climates. These could result in potential damage to our physical assets as well as disruptions in manufacturing activities. Our manufacturing facilities are located in areas that may be at risk due to rising sea levels. Moreover, our manufacturing facilities are located in areas that could experience decreased access to water due to climate issues. We are also vulnerable to damage from other types of disasters, including power loss, fire, explosions, floods, communications failures, terrorist attacks, and similar events. Disruptions could also occur due to health-related outbreaks and crises, cyberattacks, computer or equipment malfunction (accidental or intentional), operator error, or process failures. Should insurance or other risk transfer mechanisms, such as our existing disaster recovery and business continuity plans, be insufficient to recover all costs, we could experience a material adverse effect on our business, results of operations, prospects, and financial condition.

 

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Our leases may be terminated, or we may be unable to renew our leases on acceptable terms and if we wish to relocate, we may incur additional costs if we terminate a lease.

We have made significant capital expenditures to improve our leased facilities to make them suitable for our purposes as well as to meet requirements that we are subject to as a U.S. government contractor and obtain facility security clearances. However, at the end of the lease term and during any renewal period for a facility, we may be unable to renew the lease without substantial additional cost, if at all. If we are unable to renew our facility leases, we may close or relocate a facility, which could subject us to construction and other costs and risks, which in turn could have a material adverse effect on our business, financial condition, and results of operations, including significant capital expenses that may materially impact our results of operations and ability to meet certain contractual schedule commitments. Additionally, we may have to seek qualification of any new facilities to meet customer or contractual requirements. We would also have to obtain facility security clearances for the new facility to continue to perform on classified contracts. Further, we may not be able to secure a replacement facility in a location that is as commercially viable as that of the lease we are unable to renew, due to contracts that may require us to have facilities in certain locations. Having to close a facility, even briefly to relocate, would reduce the sales that such facility would be able to contribute to our revenues. Additionally, a relocated facility may generate less revenue and profit, if any, than the facility it was established to replace. Certain of our facilities are located on leased premises subject to non-cancellable leases. Typically, our leases have initial terms ranging from five to 25 years, with options to renew for specified periods of time. We believe that our future leases will likely also be long-term and non-cancellable and have similar renewal options. If we close or stop fully utilizing a facility, we will most likely remain obligated to perform under the applicable lease, which would include, among other things, making the base rent payments, and paying insurance, taxes, and other expenses on the leased property for the remainder of the lease term. Our inability to terminate a lease when we stop fully utilizing a facility could materially adversely impact our business, financial condition, and results of operations.

We currently have, and will continue to have, significant lease obligations, and our failure to meet those obligations could adversely affect our financial condition and business.

We currently have, and will continue to have, significant lease obligations for properties, vehicles and equipment. We depend on cash flow from operations to pay our lease expenses.

If our business does not generate sufficient cash flow from operating activities to fund these expenses, we may not be able to meet our lease obligations, which could have a material adverse effect on our financial condition and business. Furthermore, the significant cash flow required to satisfy our financial obligations under the leases could limit our ability to incur indebtedness and make capital expenditures or other investments in our business.

Certain future operational facilities may require significant expenditures in capital improvements and operating expenses to develop and foster basic levels of service needed for our operations, and the ongoing need to maintain existing operational facilities requires us to expend capital.

As part of our growth strategy, we may need to acquire, build, or utilize additional facilities. Construction of incremental factories and launch pads or other facilities in which we conduct our operations may require significant capital expenditures to develop, and in the future, we may be required to make similar expenditures to expand, improve or construct adequate facilities for our operations. If we cannot access the capital we need, we may not be able to execute on our growth strategy, take advantage of future opportunities or respond to competitive pressures. If the costs of funding new launch sites or other locations or renovations or enhancements at existing launch sites or other locations exceed budgeted amounts or the time for building or renovation is longer than anticipated, our business, financial condition, and results of operations could be materially adversely affected.

 

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Our future revenue and operating results are dependent on our ability to generate a sustainable order rate for our products and services and develop new technologies to meet the needs of our customers or potential new customers.

The ability to generate a sustainable order rate for our products and services can be challenging and may fluctuate on an annual basis as the number of contracts awarded varies. If we are unable to win new awards or execute existing contracts as expected, our business, financial condition, and results of operations could be further adversely affected. Furthermore, if our customers experience delays or technical challenges with their products or services or exercise delay or termination rights under new or existing contracts, our ability to recognize the full potential value of such contracts could also adversely affect our business, financial condition, and results of operations.

The cyclical nature of the launch services and spacecraft solutions and services markets could negatively impact our ability to accurately forecast customer demand. The markets that we serve may not grow in the future and we may not be able to maintain adequate gross margins or profits in these markets. Our growth is dependent on the growth in the sales of services provided by our customers, our customers’ ability to anticipate market trends, and our ability to anticipate changes in the businesses of our customers and to successfully identify and enter new markets. If we fail to anticipate such changes in demand, or such demand does not materialize to the extent we expected or at all, our business, financial condition, and results of operations could be adversely affected.

The launch services and spacecraft solutions and services industries are each characterized by development of technologies to meet changing customer demand for complex and reliable products and services. Our products and services embody complex technology and may not always be compatible with current and evolving technical standards and systems developed by others. Failure or delays to meet the requisite and evolving industry or user standards could have a material adverse effect on our business, financial condition, and results of operations. Failure of suppliers to deliver against end customer requirements could lead to a material adverse effect on our financial results.

We have previously experienced, and may experience in the future, delays or other complications in the design, manufacture, and commercialization of new launch services and spacecraft solutions and services and related technology and components. If we fail to develop and successfully commercialize new technologies, if we fail to develop such technologies before our competitors, or if such technologies fail to perform as expected, or are inferior to those of our competitors, our business, financial condition, and results of operations could be materially and adversely impacted.

We may require additional capital to support business growth and this capital might not be available or may be available only by diluting existing stockholders.

We intend to continue making investments to support our business growth and may require additional funds to support this growth and respond to business challenges, including the need to develop our services, expand our inventory, enhance our operating infrastructure, expand the markets in which we operate and potentially acquire complementary businesses and technologies. Accordingly, we expect to need to engage in equity or debt financings to secure additional funds in the future. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock. Any debt financing secured by us in the future could involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities. In addition, we may not be able to obtain additional financing on terms favorable to us, if at all, including for reasons outside our control such as negative economic conditions. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited and our business and prospects could fail or be adversely affected.

 

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We have identified a material weakness in our internal control over financial reporting. If we are unable to maintain effective internal controls, the accuracy and timeliness of our financial reporting may be materially adversely affected, if left unremediated, which could cause the market price of our common stock to decline, lessen investor confidence and harm our business.

We have identified a material weakness in our internal control over financial reporting related to our controls around the accounting for certain complex transactions that were not effectively designed or maintained. We have concluded that our internal control over financial reporting was ineffective as of March 31, 2025, because a material weakness existed in our internal control over financial reporting. The PCAOB defines a material weakness as “a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.” The Company has performed additional accounting analysis and other procedures, including consulting with subject matter experts, to ensure the proper accounting and financial disclosures for these financial instruments. The Company has recently hired a Chief Accounting Officer and will continue to utilize subject matter experts to enhance its internal controls processes to remediate this material weakness. Until our remediation plan is implemented, tested, and deemed effective, we cannot assure that our actions will adequately remediate the material weakness or that additional material weaknesses in our internal controls will not be identified in the future.

As a public company, the Company will be required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of its internal control over financial reporting in for future annual reports on Form 10-K to be filed with the SEC beginning with the second annual report following our initial public offering. Failure to comply with the Sarbanes-Oxley Act could potentially subject us to sanctions or investigations by the SEC, or other regulatory authorities, which would require additional financial and management resources. However, for as long as the Company is an emerging growth company under the Jumpstart Our Business Startups Act of 2012, its independent registered public accounting firm will not be required to attest to the effectiveness of its internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. We could be an emerging growth company for up to five years from the last day of the fiscal year of our initial public offering.

If we are unable to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404, our independent registered public accounting firm may not issue an unqualified opinion. If we are unable to conclude that we have effective internal control over financial reporting, investors could lose confidence in our reported financial information, which could have a material adverse effect on the trading price of our common stock. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

Risks Related to Litigation and Regulation

Our business is subject to various regulatory risks that could adversely affect our operations.

The environment in which we operate is highly regulated due to the sensitive nature of our complex and technologically advanced systems, including launch vehicles, landers, orbital vehicles, and related components, and the fact that we contract with national security and defense customers, in addition to those regulations broadly applicable to publicly traded corporations. There are numerous regulatory risks that could adversely affect operations, including but not limited to:

Changes in laws and regulations. It is possible that the laws and regulations governing our business and operations will change in the future. While our current revenue is generated exclusively within the U.S., we are committed to expanding into the global market and enhancing our growth potential. There may be a material adverse effect on our financial condition and results of operations if we are required to alter our business to comply with changes in both domestic and foreign regulations, tariffs, or taxes and other trade barriers that

 

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reduce or restrict our ability to sell our products and services on a global basis, or by political and economic instability in the countries in which we conduct business. Any failure to comply with such regulatory requirements could also subject us to various penalties or sanctions.

Import and Export Restrictions. Our business is subject to stringent U.S. import and export control laws and regulations as well as economic sanctions laws and regulations. We are required to import and export our products, software, technology, and services, as well as run our operations in the United States, in full compliance with such laws and regulations, which include the EAR, the ITAR, and economic sanctions administered by the Treasury Department’s OFAC. Although our operations and customers are primarily based in the U.S., certain of our launch vehicles, landers, spacecraft and vehicle components, systems, services, or technologies we have developed have required, and may in the future require, the implementation or acquisition of products or technologies from third parties and affiliates, including those in other jurisdictions. In addition, certain of our launch vehicles, landers, spacecraft and vehicle components, systems, services, or technologies may be required to be forwarded, imported, or exported to other jurisdictions. In certain cases, if the use of such technologies can be viewed by the jurisdiction in which that supplier, subcontractor or affiliate resides as being subject to import or export constraints or restrictions relating to national security, we may not be able to obtain the technologies and products that we require from subcontractors and suppliers who would otherwise be our preferred choice or may not be able to obtain the export permits necessary to transfer or export our technology. The inability to obtain or maintain export approvals and export restrictions or changes during contract execution or non-compliance by our suppliers, subcontractors, and customers, could have an adverse effect on our revenues and margins. Further, we have had, and may in the future have, inadvertent disclosures of certain of our products or components that are subject to the requirements of U.S. import and export control laws, and may be found to be in violation of these laws and regulations, which could have a material adverse effect our business, financial condition, and results of operations.

U.S. Government Approval Requirements. For certain aspects of our business operations, we are required to obtain U.S. government licenses and approvals and to enter into agreements with various government bodies to export launch vehicles, landers, orbital vehicles, and related components, to disclose technical data, or provide defense services to foreign persons. The delayed receipt of or the failure to obtain the necessary U.S. government licenses, approvals, and agreements may prohibit entry into or interrupt the completion of contracts which could lead to a customer’s termination of a contract for default or monetary penalties, which could materially adversely affect our financial condition and results of operations. Given the great discretion the government has in issuing or denying such authorizations to advance U.S. national security and foreign policy interests, there can be no assurance we will be successful in our future efforts to secure and maintain necessary licenses, registrations, or other U.S. government regulatory approvals. Under the “Exon-Florio Amendment” to the U.S. Defense Production Act of 1950, as amended (the “DPA”), the U.S. President has the power to disrupt or block certain foreign investments in U.S. businesses if he or she determines that such a transaction threatens U.S. national security. The Committee on Foreign Investment in the United States (“CFIUS”) has been delegated the authority to conduct national security reviews of certain foreign investments. CFIUS may impose mitigation conditions to grant clearance of a transaction. The Foreign Investment Risk Review Modernization Act (“FIRRMA”), enacted in 2018, amended the DPA to, among other things, expands CFIUS’s jurisdiction beyond acquisitions of control of U.S. businesses. Under FIRRMA, CFIUS also has jurisdiction over certain foreign non-controlling investments in U.S. businesses that have involvement with critical technology or critical infrastructure, or that collect and maintain sensitive personal data of U.S. citizens (“TID U.S. Businesses”), if the foreign investor receives specified triggering rights in connection with its investment. We are a TID U.S. Business because we develop and design technologies that would be considered critical technologies. Certain foreign investments in TID U.S. Businesses are subject to mandatory filing with CFIUS. These restrictions on the ability of foreign persons to invest in us has in the past, and could in the future, limit our ability to engage in strategic transactions that could benefit our stockholders, including a change of control, and could also affect the price that an investor may be willing to pay for our common stock.

 

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Other Government Regulations. Our ability to pursue our business activities is regulated by various agencies and departments of the U.S. government and the governments of other countries. Commercial space launch activities require licenses from the Department of Transportation and, for launches from Esrange Space Center, the SSC. Our license to conduct launches at Esrange Space Center requires certification of our flight termination system software by NASA. Radio communications for launch activities and spacecraft operations require licenses from the Federal Communications Commission (the “FCC”) and/or the Swedish National Space Agency and frequency coordination with the International Telecommunication Union. The operation of private remote sensing space systems requires a license from the Department of Commerce. Any failure to comply with these and other regulatory requirements could subject us to various penalties or sanctions and could have a significant adverse effect on our reputation, financial condition, and results of operations.

Competitive Impact of U.S. Regulations. Export and import control, economic sanction, and trade embargo laws and regulations, including those administered by the U.S. Department of Commerce’s Bureau of Industry and Security, the U.S. State Department’s Directorate of Defense Trade Controls and the U.S. Treasury Department’s Office of Foreign Assets Control, including, but not limited to, the International Traffic in Arms Regulations (“ITAR”) and EAR, may limit certain business opportunities or delay or restrict our ability to contract with potential foreign customers or suppliers. To the extent that our non-U.S. competitors are not currently or in the future subject to similar export and import controls, economic sanctions, and trade embargo laws and regulations, they may enjoy a competitive advantage with foreign customers, and it could become increasingly difficult for us to recapture this lost market share.

Anti-Corruption Laws. As part of the regulatory and legal environments in which we operate, we are subject to domestic and international anti-corruption laws, including the U.S. Foreign Corrupt Practices Act (the “FCPA”) that prohibit improper payments directly or indirectly to government officials, authorities or persons defined in those anti-corruption laws in order to obtain or retain business or other improper advantages in the conduct of business. Our policies mandate compliance with anti-corruption laws. Failure by our employees, agents, subcontractors, suppliers and/or existing or future partners to comply with anti-corruption laws and our policies could impact us in various ways that include, but are not limited to, criminal, civil and administrative fines and/or legal sanctions and the inability to bid for or enter into contracts with certain entities, all of which could have a significant adverse effect on our reputation, operations, and financial results. Our exposure for violating these laws will increase as our international presence expands and as we increase sales and operations in foreign jurisdictions.

Our business is subject to federal, state, and international laws regarding data protection, privacy, and information security, as well as confidentiality obligations under various agreements, and our actual or perceived failure to comply with such obligations could damage our reputation, expose us to litigation risk and materially adversely affect our business and operating results.

In connection with our business, we receive, collect, process, and retain certain personal information about our customers, vendors, and employees. As a result, we are subject to the evolving and increasingly complex data protection laws and regulatory frameworks of the jurisdictions in which we operate or conduct our business, including to state comprehensive privacy laws, such as the California Consumer Privacy Act, as amended by the California Privacy Rights Act (collectively, the “CCPA”), the General Data Protection Regulation (“GDPR”), and the U.K. General Data Protection Regulation (“U.K. GDPR”) (collectively, “Data Protection Laws”). These laws impose obligations in relation to the collection, use, and disclosure of personal information, including providing customers with certain rights to access, correct, delete, and restrict the processing of their personal information. Failure to comply with applicable laws may result in regulatory scrutiny, enforcement actions, fines, litigation, or other liabilities or costs, and the evolving complexity of the privacy landscape could impact our ability to collect, use or disclose personal information, decrease demand for our products, require us to restrict our business operations, increase our costs, and impair our ability to maintain and grow our customer base and increase our revenue.

We are also subject to the DoD Cybersecurity Maturity Model Certification (“CMMC”) requirements, which requires companies that do business with the DoD to, depending on the level of security required, meet, or

 

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exceed certain specified cybersecurity standards to be eligible for new contract awards. The DoD expects that nearly all new contracts will be required to comply with the CMMC by 2026. We are currently CMMC Lv2 compliant; however, to the extent we are unable to achieve or maintain certification at the level required for a particular contract award, we will be unable to bid on such contract awards or follow-on awards for existing work with the DoD, which could materially adversely impact our revenue, profitability, and cash flows. Additionally, our subcontractors, and certain of our vendors, may also need to comply with CMMC requirements. We may be negatively impacted if our subcontractors or vendors are not compliant with CMMC requirements. The obligations imposed on us under the CMMC may be different from, or in addition to those, otherwise required by the Data Protection Laws to which we are subject. The costs to comply with the new CMMC requirements are significant and may increase, which could materially adversely affect our business, financial condition, or results of operations. Failure to comply with CMMC requirements may also make us subject to bid protest challenges or False Claims Act allegations claiming damages to the government based on such non-compliance.

We have implemented internal controls and procedures designed to comply with the Data Protection Laws to which we are subject, the CMMC and other applicable standards, as well as contractual obligations related to data protection. However, data protection laws, regulations, standards, and obligations are evolving and may be modified, replaced, interpreted, and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another, other requirements, or legal obligations. We cannot yet determine the impact that such modifications may have on our business. As such, our practices may not have complied with, and we cannot assure ongoing compliance with, all such laws or regulations and other legal obligations. Further, we expect that new industry standards, laws, and regulations will continue to be proposed regarding privacy, data protection, and information security in many jurisdictions. We cannot yet determine the impact that such future laws, regulations, and standards may have on our business. Our efforts to comply with these evolving obligations may cause us to incur significant costs or require changes to our business practices, which could materially adversely affect our business, financial condition, and results of operations. Any failure or perceived failure by us to comply with applicable laws or regulations, or other contractual or legal obligations, or to adequately address privacy and security concerns, even if unfounded, may result in governmental enforcement actions, private litigation (including class actions), fines and penalties or adverse publicity and could cause our customers to lose trust in us, which could have a material adverse effect on our reputation, inhibit sales, and materially adversely affect our business, financial condition, and results of operations.

We may become involved in litigation that may materially adversely affect us.

From time to time, we have been and may in the future become involved in various legal proceedings relating to matters incidental to the ordinary course of our business, supplier, customer, or other third party relationships, including intellectual property, commercial, product liability, employment, class action, whistleblower and other litigation and claims, and governmental and other regulatory investigations and proceedings. Such matters can be time-consuming, divert management’s attention and resources from the operation of our business, and cause us to incur significant expenses or liability or require us to change our business practices. Because of the potential risks, expenses, and uncertainties of litigation, we may, from time to time, settle disputes, even where we believe that we have meritorious claims or defenses. Because litigation is inherently unpredictable, we cannot assure you that the results of any of these actions will not have a material adverse effect on our business. The outcome of litigation, particularly class action lawsuits and regulatory actions, is difficult to assess or quantify, as plaintiffs may seek recovery of very large or indeterminate amounts in these types of lawsuits, and the magnitude of the potential loss may remain unknown for substantial periods of time. We can provide no assurance that litigation or disputes will not arise in the future. We may also choose to settle such actions if we believe that doing so is in the best interests of the company, and the amount of such settlement could also have a material adverse effect on our business, financial condition, and results of operations.

 

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Our business and operations could be negatively affected if we become subject to any securities litigation or stockholder activism, which could cause us to incur significant expense, hinder execution of business and growth strategy, and impact our stock price.

Our share price may be volatile and, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities litigation, including class action litigation. Stockholder activism, which could take many forms or arise in a variety of situations, has been increasing recently. Once our common stock is publicly traded, volatility in the stock price of our common stock or other reasons may in the future cause us to become the target of securities litigation or stockholder activism. Securities litigation and stockholder activism, including potential proxy contests, could result in substantial costs and divert management’s and our Board’s attention and resources from our business. Additionally, such securities litigation and stockholder activism could give rise to perceived uncertainties as to our future, adversely affect our relationships with service providers and make it more difficult to attract and retain qualified personnel. Also, we may be required to incur significant legal fees and other expenses related to any securities litigation and activist stockholder matters. Further, our stock price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks, and uncertainties of any securities litigation and stockholder activism.

Our business is subject to a wide variety of extensive and evolving government laws and regulations. Failure to comply with such laws and regulations could have a material adverse effect on our business.

We are subject to a wide variety of laws and regulations relating to various aspects of our business, including with respect to employment and labor, health care, tax, privacy and data security, health and safety, and environmental issues. The commercial space industry, particularly launch providers, are also subject to an array of laws and regulations, such as those imposed by the Department of Transportation and those relating to hazardous substances and waste. Laws and regulations at the foreign, federal, state, and local levels frequently change, especially in relation to new and emerging industries, and we cannot always reasonably predict the impact from, or the ultimate cost of compliance with, current or future regulatory or administrative changes. While we monitor these developments and devote a significant amount of management’s time and external resources towards compliance with these laws and regulations, we cannot guarantee that these measures will be satisfactory to regulators or other third parties, such as our customers. Moreover, changes in law, the imposition of new or additional regulations or the enactment of any new or more stringent legislation that impacts our business could require us to change the way we operate and could have a material adverse effect on our sales, profitability, cash flows and financial condition. Failure to comply with these laws, such as with respect to obtaining and maintaining licenses, certificates, authorizations and permits critical for the operation of our business, may result in civil penalties or private lawsuits, or the suspension or revocation of licenses, certificates, authorizations or permits, which would prevent us from operating our business. For example, conducting commercial space launches in the United States require licenses and permits from certain agencies of the Department of Transportation, including the FAA, and review by other agencies of the U.S. government, including the DoD, Department of State, NASA, and the FCC. License approval may include an interagency review of safety, operational, national security, and implications on foreign policy and international obligations, as well as a review of foreign ownership. Any delays in regulatory actions allowing us to conduct commercial space launches could adversely affect our ability to operate our business and our financial results.

Regulation of our industry is still evolving, and new or different laws or regulations could affect our operations, increase direct compliance costs for us or cause any third-party suppliers or contractors to raise the prices they charge us because of increased compliance costs. Moreover, changes in law, the imposition of new or additional regulations or the enactment of any new or more stringent legislation that impacts our business could require us to change the way we operate and could have a material adverse effect on our sales, profitability, cash flows and financial condition. The regulatory approaches of different jurisdictions may be multi-layered and may be in conflict with one another, and our compliance could require alteration of our manufacturing processes or operational parameters which may adversely impact our business. We may not be in complete compliance with all such requirements at all times and, even when we believe we are in complete compliance, a regulatory agency

 

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may determine that we are not. In addition, the actions of third parties may cause us to fail to comply with certain requirements. We aim to produce our launch and spacecraft systems at an increasing rate over the near to medium term. A component of our near-term strategy involves increasing our launch cadence by accelerating our development and production efforts and adding additional launch sites. Our ability to achieve this increased launch cadence within the timeframe in which we hope to do so will depend on our ability to secure the necessary regulatory licenses from the FAA, the FCC, and other regulatory authorities. Our failure to obtain the licenses necessary to support our anticipated launch cadence, or any delays or hurdles that present in our interactions with the FAA, the FCC, or other regulatory authorities, could impact our ability to grow our business, could delay our ability to execute on our existing and future customer contracts and could adversely affect our business, financial condition, and results of operations.

Contracting in the defense industry is subject to significant regulation, including rules related to bidding, billing, and accounting kickbacks and false claims, and any non-compliance could subject us to fines and penalties or possible debarment.

Like all government contractors, we are subject to risks associated with this contracting. These risks include the potential for substantial civil and criminal fines and penalties. These fines and penalties could be imposed for failing to follow procurement integrity and bidding rules, employing improper billing practices, or otherwise failing to follow cost accounting standards, receiving, or paying kickbacks or filing false claims. We have been, and expect to continue to be, subjected to audits and investigations by government agencies. The failure to comply with the terms of our government contracts could harm our business reputation, which could significantly reduce our sales and earnings. It could also result in our suspension or debarment from future government contracts, which could materially adversely affect our business, financial condition, and results of operations. In addition, we could be subject to criminal or civil penalties or administrative sanctions, including contract termination, breach of contract actions including related damages, fines, forfeiture of fees, suspension of payment, and civil False Claims Act allegations (which can include civil penalties and treble damages), any of which could materially adversely affect our reputation, business, financial condition, and results of operations.

We are subject to procurement rules and regulations, which increase our performance and compliance costs under our U.S. government contracts. Our failure to comply with various complex procurement rules and regulations could result in our being liable for penalties, including termination of our U.S. government contracts, disqualification from bidding on future U.S. government contracts, civil False Claims Act allegations, and suspension or debarment from U.S. government contracting.

We must comply with laws and regulations relating to the formation, administration, and performance of U.S. government contracts, which affect how we do business with our customers. These laws and regulations may require, among other things, certification and disclosure of all cost and pricing data in connection with contract negotiation, define allowable and unallowable costs and otherwise govern our right to reimbursement under certain cost-based U.S. government contracts, and restrict the use and dissemination of classified information and the exportation of certain products and technical data. Such laws and regulations may impose added costs on our business and our failure to comply with them, or the failure of our agents’ to comply with them, may lead to civil or criminal penalties, termination of our U.S. government contracts, civil False Claims Act allegations (which can include civil penalties and treble damages), suspension or debarment from contracting with federal agencies and could have a material adverse effect on our reputation and ability to receive other U.S. government contract awards in the future. Government contract laws and regulations can impose terms or obligations that are different than those typically found in commercial transactions. One of the significant differences is that the U.S. government may terminate any of our government contracts, not only for default based on our performance but also at its convenience. Generally, prime contractors have a similar right under subcontracts related to government contracts. If a contract is terminated for convenience, we typically would be entitled to receive payments for our allowable costs incurred and the proportionate share of fees or earnings for the work performed. If a contract is terminated for default, the U.S. government could make claims to reduce the contract value or recover its procurement costs and could assess other special penalties, exposing us to liability

 

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and materially adversely affecting our ability to compete for future contracts and orders. In addition, the U.S. government could terminate a prime contract under which we are a subcontractor, notwithstanding the fact that our performance and the quality of the products or services we delivered were consistent with our contractual obligations as a subcontractor. Similarly, the U.S. government could indirectly terminate a program or contract by not funding it. The decision to terminate programs or contracts for convenience or default could materially adversely affect our business, financial condition, and results of operations.

Laws and regulations designed to address climate change may result in additional compliance costs.

Our operations and the products we sell are currently subject to rules limiting emissions and to other climate-related regulations in certain jurisdictions where we operate. The increased prevalence of global climate change concerns may result in new regulations that may negatively impact us, our suppliers, and customers. We are continuing to evaluate short-, medium- and long-term risks related to climate change. We cannot predict what climate-related legislation or regulations will be enacted in the future, how existing or future laws or regulations will be administered or interpreted, or what environmental conditions may be found to exist. Compliance with any new or more stringent laws or regulations, or stricter interpretations of existing laws, could require additional expenditures by us or our suppliers, in which case, the costs of raw materials and component parts could increase.

New sustainability and climate-related disclosure obligations, including those resulting from the State of California’s Climate Corporate Data Accountability Act and Climate-Related Financial Risk Act, among others, could result in unforeseen costs associated with compliance, government and third-party claims, operations, and increased reputational and litigation risk.

We may be subject to rulemaking regarding corporate social responsibility and/or disclosure, as public awareness and focus on social and environmental issues has led to legislative and regulatory efforts to impose or increase regulations and require further disclosure. We operate in various jurisdictions in the U.S. that have adopted or proposed federal and state laws related to sustainability and climate change reporting. For example, the Governor of California signed the Climate Corporate Data Accountability Act (the “CCDAA” or SB 253), into law in October 2023, alongside the Climate-Related Financial Risk Act (“CRFRA” or SB 261). The CCDAA requires both public and private U.S. companies that are “doing business in California” and that have a total annual revenue of $1 billion to publicly disclose and verify, on an annual basis, Scope 1, 2 and 3 GHG emissions. The CRFRA requires the disclosure of a climate-related financial risk report (in line with the Task Force on the Climate-related Financial Disclosures recommendations or equivalent disclosure requirements under the International Sustainability Standards Board’s climate-related disclosure standards) every other year for public and private companies that are “doing business in California” and have total annual revenue of $500 million. Reporting under both laws would begin in 2026, though the Governor of California has directed further consideration of the implementation deadlines for each of the laws. Both laws have been challenged in federal court.

We are currently assessing the potential impacts of these laws, as well as other sustainability and climate-related disclosure obligations and evolving legal and regulatory requirements, that we may be subject to. The adopted or proposed laws could impose significant new burdens on the company and our suppliers, with significant potential costs and operational impacts, and restrict access to capital if our disclosures are not perceived as meeting applicable third-party verification standards. Our failure to adequately comply with such disclosure obligations could jeopardize our competitive position and ability to win business, as well as adversely affect our results of operations and financial condition. Separately, enhanced sustainability and climate-related disclosure requirements could lead to reputational or other harm to our relationships with customers, regulators, investors, or other stakeholders. We may also face increased litigation risks arising from enhanced sustainability and climate-related disclosure requirements relating to alleged damages resulting from our reported or projected GHG emissions or statements allegedly made by us or others in our industry regarding social and climate change risks.

 

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We are subject to complex tax laws, and changes in tax laws or in positions by the relevant tax authorities regarding the application, administration or interpretation of tax laws or regulations, particularly if applied retrospectively, or challenges to our tax position could adversely affect our financial condition and results of operations.

Tax laws are complex and subject to subjective evaluations and interpretative decisions, and we may be subject in the future to tax audits aimed at addressing our compliance with direct and indirect taxes. Changes in tax laws could adversely affect our tax position, including our effective tax rate or tax payments. We often rely on generally available interpretations of applicable tax laws and regulations. We cannot be certain that the relevant tax authorities agree with our interpretation of these laws, or with the positions we have taken or intend to take, on tax laws applicable to our ordinary activity and extraordinary transactions. If our tax positions are challenged by relevant tax authorities, we could face long tax proceedings and the imposition of additional taxes or the denial of tax benefits could require us to pay taxes that we currently do not collect or pay or increase the cost of our services to track and collect such taxes. We cannot, therefore, rule out that claims by the tax authorities may give rise to burdensome and long tax litigation and to the payment of significant amounts for taxes, penalties, and interest for late payment. Any of these risks could increase our cost of operations or our effective tax rate and have a negative effect on our business, financial condition, operating results, and cash flows.

Our ability to use our net operating loss carryforwards may be limited.

As of December 31, 2024, we had $511.6 million of U.S. federal and $188.6 million of U.S. state net operating loss (“NOL”) carryforwards available to reduce future taxable income. While the federal NOL carryforwards generally can be carried forward indefinitely, state NOL carryforwards begin to expire in the year ending December 31, 2039. It is possible that we will not generate taxable income in time to use these NOL carryforwards before their expiration or at all. Under legislative changes made in December 2017, U.S. federal NOL carryforwards incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such NOL carryforwards is limited. In addition, the federal and state NOL carryforwards and certain tax credits may be subject to significant limitations under Section 382 and Section 383 of the Code (as defined herein), respectively, and similar provisions of state law. Under those sections of the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards and to offset its post-change income or tax may be limited. In general, an “ownership change” will occur if there is a cumulative change in our ownership by “5-percent stockholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. Future issuances or sales of our common stock, including certain transactions involving our common stock that are outside of our control, could result in future “ownership changes.” “Ownership changes” that have occurred in the past or that may occur in the future could result in the imposition of an annual limit on the amount of pre-ownership change NOL carryforwards and other tax attributes we can use to reduce our taxable income, potentially increasing and accelerating our liability for income taxes, and also potentially causing those tax attributes to expire unused. States may impose other limitations on the use of our NOL carryforwards. We may have undergone an ownership change within the previous five years, and we may undergo one in connection with transactions contemplated by this offering. Any limitation on using NOL carryforwards could, depending on the extent of such limitation and the NOL carryforwards previously used, result in us retaining less cash after payment of U.S. federal and state income taxes during any year in which we have taxable income, rather than losses, than we would otherwise retain if such NOL carryforwards were available as an offset against such income for U.S. federal and state income tax purposes. As a result, such limitations on our NOL carryforwards could adversely impact our operating results.

Risks Related to Our Indebtedness

Our substantial indebtedness could materially adversely affect our financial condition.

We have, and after this offering we expect that we will continue to have, a significant amount of indebtedness. As of March 31, 2025, our total indebtedness, excluding capitalized debt issuance costs, was $173.6 million, including

 

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$136.1 million under our Term Loan Facility and $37.5 million under finance leases and other obligations. We intend to use net proceeds received by us from this offering to repay all of our borrowings under the Credit Agreement and to pay accrued and unpaid dividends on our outstanding Series C and Series D Preferred Stock, with any remaining proceeds being used for general corporate and working capital purposes. We may also incur additional indebtedness in connection with this offering. After giving effect to this offering, on an as adjusted basis, as of     , 2025, our total indebtedness would have been approximately $  million.

Our substantial indebtedness under the Credit Agreement, and any future indebtedness we may incur, could have important consequences to the holders of our common stock, including the following:

 

  •  

making it more difficult for us to satisfy our obligations with respect to our and our subsidiaries’ other debt;

 

  •  

limiting our and our subsidiaries’ ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions, or other general corporate requirements;

 

  •  

requiring us to dedicate a substantial portion of our cash flows to debt service payments, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions, and other general corporate purposes;

 

  •  

increasing our vulnerability to general adverse economic and industry conditions;

 

  •  

exposing us to the risk of increased interest rates, to the extent any of our borrowings are at variable rates of interest;

 

  •  

limiting our flexibility in planning for and reacting to changes in the industry in which we compete;

 

  •  

placing us at a disadvantage compared to other, less leveraged competitors; and

 

  •  

increasing our cost of borrowing.

In addition, the Credit Agreement contains, and agreements governing our future borrowing may contain, restrictive covenants that limit our and certain of our subsidiaries’ ability to engage in activities that may be in our long-term best interest. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of substantially all our debt. See “Description of Certain Indebtedness.”

We and our subsidiaries may be able to incur significant additional indebtedness in the future. Although the Credit Agreement contains restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the amount of additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also will not prevent us from incurring obligations that do not constitute “indebtedness” under the Credit Agreement.

The Term Loan Facility will mature in July 2028. The Term Loan Facility will be repaid with proceeds from this offering, with approximately $ million of the net proceeds of this offering to repay outstanding borrowings under the Credit Agreement, any applicable prepayment premiums, and accrued interest. See “Use of Proceeds.” We may need to refinance all or a portion of our indebtedness on or before the maturity thereof. Depending on market conditions, we may not be able to obtain such financing on commercially reasonable terms or at all. Failure to refinance our indebtedness could have a material adverse effect on us.

We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled principal and interest payments on or refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to financial, business, legislative, regulatory, and other factors, some of which are beyond our control. We cannot be sure that our business will generate sufficient cash flows from operating activities, or that future borrowings will be available, to permit us to pay the principal and interest on our indebtedness.

 

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If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness. We may not be able to effect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. The Credit Agreement restricts, and any agreement governing any debt we incur in the future may restrict, our ability to dispose of assets and use the proceeds from those dispositions and also limits our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due. See “Description of Certain Indebtedness.”

Additionally, if we cannot make scheduled payments on our debt, we will be in default, and the outstanding principal amount of indebtedness thereunder may be accelerated, commitments to loan money may be terminated and/or assets securing such borrowings may be foreclosed against, as applicable in the relevant debt instrument, and we could be forced into bankruptcy or liquidation. Any of these events could result in you losing all or a portion of your investment in the common stock.

Agreements governing our current and future indebtedness will contain covenants that restrict our current and future operations, including our ability to respond to changes or to take certain actions.

The Credit Agreement contains, and any future indebtedness agreements we enter into will likely contain, a number of restrictive covenants that impose significant operating and financial restrictions on us and our subsidiaries and may limit our and our subsidiaries’ abilities to engage in acts that may be in our long-term best interest. See “Description of Certain Indebtedness.” These covenants may include restrictions on our and our subsidiaries abilities to:

 

  •  

incur additional indebtedness and guarantee indebtedness;

 

  •  

pay dividends or make other distributions or repurchase or redeem our capital stock;

 

  •  

prepay, redeem, or repurchase junior debt;

 

  •  

issue certain preferred stock or similar equity securities;

 

  •  

make loans and investments;

 

  •  

sell assets or property, except in certain circumstances;

 

  •  

sell or license intellectual property, except in certain circumstances;

 

  •  

incur liens;

 

  •  

dispose of our assets;

 

  •  

enter into transactions with affiliates;

 

  •  

modify or waive certain material agreements in a manner that is adverse in any material respect to the lenders;

 

  •  

enter into agreements restricting our subsidiaries’ ability to pay dividends;

 

  •  

ensure that IPCo (as defined below) remains bankruptcy remote; and

 

  •  

make fundamental changes in our business, corporate structure, or capital structure, including, among other things, entering into mergers, acquisitions, consolidations, and other business combinations or selling all or substantially all of our assets.

As a result of these restrictions, we may be:

 

  •  

limited in how we conduct our business;

 

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  •  

unable to raise additional debt or equity financing to operate during general economic or business downturns; or

 

  •  

unable to compete effectively or to take advantage of new business opportunities.

These restrictions may affect our ability to grow in accordance with our strategy. If we incur indebtedness provided or guaranteed by the U.S. government, we may be subject to additional restrictions on our operations, including limitations on employee headcount and compensation reductions and other cost reduction activities.

Risks Related to This Offering and Ownership of Our Common Stock

The market price of our common stock may be volatile or may decline steeply or suddenly regardless of our operating performance. You may not be able to resell your shares at or above the initial public offering price and may lose all or part of your investment.

There has been no prior public market for our common stock prior to our initial public offering. The initial public offering price for our common stock will be determined through negotiations among the underwriters and us, and may vary from the market price of our common stock following this offering. If you purchase shares of common stock in this offering, you may not be able to resell those shares at or above the initial public offering price. The market price of our common stock may fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including:

 

  •  

actual or anticipated fluctuations in our revenues or other operating results;

 

  •  

variations between our actual operating results and the expectations of securities analysts, investors, and the financial community;

 

  •  

any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information or our failure to meet expectations based on this information;

 

  •  

actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow us or our failure to meet these estimates or the expectations of investors;

 

  •  

additional shares of common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales, including if existing stockholders sell shares into the market when the applicable “lock-up” periods end;

 

  •  

announcements by us or our competitors of significant products or features, innovations, acquisitions, strategic partnerships, joint ventures, capital commitments, divestitures, or other dispositions;

 

  •  

loss of relationships with significant suppliers or other customers;

 

  •  

changes in operating performance and stock market valuations of companies in our industry, including our competitors;

 

  •  

difficulties in integrating any new acquisitions we may make;

 

  •  

loss of services from members of management or employees or difficulty in recruiting additional employees;

 

  •  

deterioration of economic conditions in the United States and reduction in demand for our products;

 

  •  

price and volume fluctuations in the overall stock market, including as a result of general economic trends;

 

  •  

lawsuits threatened or filed against us, or events that negatively impact our reputation; and

 

  •  

developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies.

 

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In addition, extreme price and volume fluctuations in the stock markets have affected and continue to affect the stock prices of many companies. Often, their stock prices have fluctuated in ways unrelated or disproportionate to their operating performance. In the past, stockholders have filed securities class action litigation against companies following periods of market volatility. Such securities litigation, if instituted against us, could subject us to substantial costs, divert resources and the attention of management from our business and seriously harm our business.

An active trading market for our common stock may never develop or be sustained.

We have applied for the listing of our common stock on Nasdaq under the symbol “FLY.” However, we cannot be certain that an active trading market for our common stock will develop on that exchange or elsewhere or, if developed, that any market will be sustained. Furthermore, we cannot be certain that we will continue to satisfy the continued listing standards of Nasdaq. If we fail to satisfy the continued listing standards, we could be de-listed, which would have a material adverse effect on the liquidity and price of our common stock. Accordingly, we cannot assure you of the liquidity of any trading market, your ability to sell your shares of our common stock when desired or the prices that you may obtain for your shares of our common stock.

Future sales of our common stock and other actions by existing stockholders could cause our stock price to decline.

If our existing stockholders, including employees, who have or obtain equity, sell, or indicate an intention to sell, substantial amounts of our common stock in the public market after the lock-up and legal restrictions on resale discussed in this prospectus lapse, the trading price of our common stock could decline. Upon the completion of this offering, we will have outstanding a total of     shares of common stock (assuming the underwriters exercise their option to purchase additional shares in full). Of these shares, only the shares of common stock sold in this offering will be freely tradable without restrictions or further registration under the Securities Act of 1933, as amended, or the Securities Act, except for any shares held by persons who are not our “affiliates” as defined in Rule 144 under the Securities Act and who have complied with the holding period requirements of Rule 144 under the Securities Act.

In connection with this offering, we and our officers, directors, and holders of substantially all of our common stock and securities convertible into or exercisable for our common stock, including AE Industrial Partners, have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of     .

When the lock-up period in these agreements expires, we, our officers and directors, AE Industrial Partners, and such other stockholders will be able to sell shares in the public market. In addition,      may, in their sole discretion, release all or some portion of the shares subject to the lock-up agreements prior to the expiration of the lock-up period. See “Shares Eligible for Future Sale.” Sales of a substantial number of such shares, or the perception that such sales may occur, upon the expiration or early release of the securities subject to the lock-up agreements could cause the price of our common stock to decline or make it more difficult for you to sell your common stock at a time and price that you deem appropriate.

In addition, certain of our stockholders will have demand and “piggy-back” registration rights with respect to our common stock that they will retain following this offering. See “Shares Eligible for Future Sale” for a discussion of the shares of our common stock that may be sold into the public market in the future, including in connection with registration rights we have granted.

 

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Your ability to achieve a return on your investment will depend on appreciation in the price of our common stock because we currently do not intend to pay dividends on our common stock, and our indebtedness could limit our ability to pay dividends on our common stock.

After completion of this offering, we currently do not anticipate paying any cash dividends for the foreseeable future. In addition, the terms of our indebtedness limit our ability to pay dividends or make other distributions on, or to repurchase or redeem, shares of our capital stock. See “Description of Certain Indebtedness.” Consequently, your only opportunity to achieve a return on your investment in our company will be if the market price of our common stock appreciates and you sell your shares at a profit. There is no guarantee that the price of our common stock that will prevail in the market after this offering will ever exceed the price that you pay. See “Dividend Policy.” We cannot be sure that we will pay dividends in the future or continue to pay dividends if we do commence paying dividends.

If securities or industry analysts either do not publish research about us or publish inaccurate or unfavorable research about us, our business, or our market, if they adversely change their recommendations regarding our common stock, or if our operating results do not meet their expectations or any financial guidance we may provide, the trading price or trading volume of our common stock could decline.

The trading market for our common stock will be influenced in part by the research and reports that securities or industry analysts may publish about us, our business, our market, or our competitors. If one or more of the analysts initiate research with an unfavorable rating or downgrade our common stock, provide a more favorable recommendation regarding our competitors, or publish inaccurate or unfavorable research about our business, our common stock price would likely decline. If one or more analysts who may cover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the trading price or trading volume of our common stock to decline.

In addition, if we do not meet any financial guidance that we may provide to the public or if we do not meet expectations of securities analysts or investors, the trading price of our common stock could decline significantly. Our operating results may fluctuate significantly from period to period as a result of changes in a variety of factors affecting us or our industry, many of which are difficult to predict. As a result, we may experience challenges in forecasting our operating results for future periods.

Future issuances of our common stock could result in significant dilution to our stockholders, dilute the voting power of our common stock and depress the market price of our common stock.

Future issuances of our common stock could result in dilution to existing holders of our common stock. Such issuances, or the perception that such issuances may occur, could depress the market price of our common stock. We may issue additional equity securities from time to time, including equity securities that could have rights senior to those of our common stock. As a result, purchasers of shares of common stock in this offering bear the risk that future issuances of equity securities may reduce the value of their shares and dilute their ownership interests. Also, to the extent outstanding stock-based awards are issued or become vested, there will be further dilution to the holders of our common stock.

We will incur increased costs and devote substantial management time as a result of operating as a public company.

As a public company, we will incur significant legal, accounting, investor relations, and other expenses that we did not incur as a private company. For example, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will be required to comply with the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the SEC and     , including the establishment and maintenance of effective disclosure and financial controls and changes in corporate

 

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governance practices. We expect that the requirements of operating as a public company will increase our legal and financial compliance and investor relations costs and will make some activities more time consuming and costly. In addition, we expect that our management and other personnel will need to divert attention from operational and other business matters to devote substantial time to these public company requirements. In particular, we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, which will increase when we are no longer an emerging growth company, as defined by the JOBS Act. We will also need to establish an investor relations function. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of those costs.

Public company reporting and disclosure obligations and a broader stockholder base as a result of our status as a public company may expose us to a greater risk of claims by stockholders, and we may experience threatened or actual litigation from time to time. If claims asserted in such litigation are successful, our business and operating results could be adversely affected, and, even if claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them and the diversion of management resources, could adversely affect our business and operating results.

In addition, we expect that being a public company subject to these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating these rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

We are an “emerging growth company” and will be able to avail ourselves of reduced disclosure requirements applicable to emerging growth companies, which could make our common stock less attractive to investors.

We are an emerging growth company, as defined in the JOBS Act, and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, under the JOBS Act, emerging growth companies can delay the adoption of certain new or revised accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies or that have opted out of using such extended transition period, which may make comparison of our financial statements with those of other public companies more difficult. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

We may take advantage of these reporting exemptions until we are no longer an emerging growth company or, with respect to adoption of certain new or revised accounting standards, until we irrevocably elect to opt out of using the extended transition period. We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of this offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

 

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If you purchase shares of our common stock in this offering, you will experience substantial and immediate dilution in net tangible book value per share.

The assumed initial public offering price of $     per share, the midpoint of the estimated offering price range set forth on the cover page of this prospectus, is substantially higher than the net tangible book value per share of our outstanding common stock immediately after this offering. If you purchase shares of common stock in this offering, you will experience substantial and immediate dilution in the as adjusted net tangible book value per share of $    based on the assumed initial public offering price of $    per share. That is because the price that you pay will be substantially greater than the as adjusted net tangible book value per share of common stock that you acquire. This dilution is due in large part to the fact that our earlier investors paid substantially less than the initial public offering price when they purchased their shares of our capital stock. You will experience additional dilution to the extent that new securities are issued under our equity incentive plans or we issue additional shares of common stock in the future. See “Dilution.”

Risks Related to Our Organizational Structure

AE Industrial Partners controls us, and its interests may conflict with ours or yours in the future.

Immediately following this offering and the application of net proceeds therefrom, AE Industrial Partners will beneficially own approximately   % of our common stock (or   % if the underwriters exercise in full their option to purchase additional shares of common stock), with each share of common stock entitling the holder to one vote on all matters submitted to a vote of our stockholders. Moreover, we will agree to nominate to our board of directors certain individuals designated by AE Industrial Partners, as representative of the Investor Group, in accordance with our Director Nomination Agreement (as defined below). Pursuant to the Director Nomination Agreement, AE Industrial Partners will initially have the right to nominate up to       directors to our board of directors, with such number decreasing based on the percentage of our common stock owned by AE Industrial Partners. See “Certain Relationships and Related Party Transactions—Agreements with our Significant Stockholders—Director Nomination Agreement.” Even when AE Industrial Partners ceases to own shares of our common stock representing a majority of the total voting power, for so long as AE Industrial Partners continues to own a significant percentage of our common stock, it will still be able to significantly influence or effectively control the composition of our board of directors and the approval of actions requiring stockholder approval through their voting power. Accordingly, for such period of time, AE Industrial Partners will have significant influence with respect to our management, business plans, and policies, including the appointment and removal of our officers. In particular, for so long as AE Industrial Partners continues to own a significant percentage of our common stock, AE Industrial Partners will be able to cause or prevent a change of control of our Company or a change in the composition of our board of directors, and could preclude any unsolicited acquisition of our Company. The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of our Company and ultimately might affect the market price of our common stock.

AE Industrial Partners engages in a broad spectrum of activities, including investments in our industry generally. In the ordinary course of their business activities, AE Industrial Partners may engage in activities where their interests conflict with our interests or those of our other stockholders, such as investing in or advising businesses that directly or indirectly compete with certain portions of our business or are suppliers or customers of ours. Our certificate of incorporation to be effective at or prior to the consummation of this offering will provide that none of AE Industrial Partners, any of its affiliates, or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his or her director and officer capacities) or its affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. AE Industrial Partners also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. In addition, AE Industrial Partners may have an interest in pursuing acquisitions, divestitures, and other transactions that, in their judgment, could enhance their investment, even though such transactions might involve risks to you or may not prove beneficial.

 

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Provisions in our certificate of incorporation and bylaws, each of which will be in effect upon the completion of this offering, could make a merger, tender offer, or proxy contest difficult, thereby depressing the trading price of our common stock.

Our certificate of incorporation and bylaws, each of which will be in effect upon the completion of this offering, contain provisions that could depress the trading price of our common stock by acting to discourage, delay or prevent a change of control of our company or changes in our management that our stockholders may deem advantageous. In particular, our certificate of incorporation and bylaws:

 

  •  

establish a classified board of directors so that not all members are elected at one time, which could delay the ability of stockholders to change the membership of a majority of our board of directors;

 

  •  

permit our board of directors to establish the number of directors and fill any vacancies (including vacancies resulting from an expansion in the size of our board of directors), except in the case of the vacancy of directors appointed pursuant to the Director Nomination Agreement (in which case such vacancy would be filled in accordance with such agreement);

 

  •  

establish limitations on the removal of directors following the Trigger Date (as defined herein);

 

  •  

authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan;

 

  •  

provide that our board of directors is expressly authorized to make, alter, or repeal our bylaws without stockholder approval and that stockholders may adopt, amend, alter, or repeal our bylaws by the affirmative vote of a majority of the voting power of our outstanding common stock (other than certain specified bylaws which, following the Trigger Date, will require the affirmative vote of two-thirds of our outstanding common stock);

 

  •  

restrict the forum for certain litigation against us to Delaware;

 

  •  

provide that stockholders may not act by written consent following the Trigger Date, which would require stockholder action to be taken at an annual or special meeting of our stockholders;

 

  •  

prohibit stockholders from calling special meetings following the Trigger Date, which would delay the ability of our stockholders to force consideration of a proposal or to take action, including with respect to the removal of directors; and

 

  •  

establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings, other than with respect to AE Industrial Partners prior to the Trigger Date, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.

Section 203 of the Delaware General Corporation Law (the “DGCL”) prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person, individually or together with any other interested stockholder, who owns or within the last three years has owned 15% of our voting stock, unless the business combination is approved in a prescribed manner. We have elected to opt out of Section 203 of the DGCL. However, our certificate of incorporation will contain a provision that is of similar effect, except that it will exempt from its scope AE Industrial Partners, any of its affiliates and certain of their respective direct or indirect transferees as described under “Description of Capital Stock—Anti-Takeover Provisions.”

Any provision of our certificate of incorporation, our bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of common stock and could also affect the price that some investors are willing to pay for our common stock. See “Description of Capital Stock—Anti-Takeover Provisions.”

 

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Our certificate of incorporation will designate the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders and the federal district courts of the United States as the exclusive forum for litigation arising under the Securities Act, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees, or agents.

Pursuant to our certificate of incorporation to be effective in connection with the closing of this offering, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any claims in state court for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, other employees, or stockholders to us or our stockholders, (3) any action asserting a claim against us arising pursuant to any provision of the DGCL, our certificate of incorporation or our bylaws, or (4) any other action asserting a claim against us that is governed by the internal affairs doctrine; provided that for the avoidance of doubt, the forum selection provision that identifies the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation, including any “derivative action”, will not apply to suits to enforce a duty or liability created by Securities Act, the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction.

Moreover, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder and our certificate of incorporation will also provide that, unless we consent in writing to the selection of an alternative forum and to the fullest extent permitted by law, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. While there can be no assurance that federal or state courts will follow the holding of the Delaware Supreme Court or determine that our federal forum provision should be enforced in a particular case, application of our federal forum provision means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court.

Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder and our certificate of incorporation will provide that neither the exclusive forum provision nor our federal forum provision applies to suits brought to enforce any duty or liability created by the Exchange Act. Accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder must be brought in federal court. Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder.

Our certificate of incorporation will further provide that any person or entity purchasing or otherwise acquiring or holding any interest in shares of our capital stock is deemed to have notice of and consented to the provisions of our certificate of incorporation described above. The forum selection provision in our certificate of incorporation may have the effect of discouraging lawsuits against us or our directors and officers and may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us. If the enforceability of our forum selection provisions were to be challenged, we may incur additional costs associated with resolving such challenge. While we currently have no basis to expect any such challenge would be successful, if a court were to find our forum selection provisions to be inapplicable or unenforceable with respect to one or more of these specified types of actions or proceedings, we may incur additional costs associated with having to litigate in other jurisdictions, which could have an adverse effect on our business, financial condition, results of operations, cash flows, and prospects and result in a diversion of the time and resources of our employees, management, and board of directors.

Our certificate of incorporation will contain a provision renouncing our interest and expectancy in certain corporate opportunities.

Under our certificate of incorporation, neither of AE Industrial Partners nor any of its respective portfolio companies, funds, or other affiliates, nor any of its officers, directors, employees, agents, stockholders, members,

 

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or partners will have any duty to refrain from engaging, directly, or indirectly, in the same business activities, similar business activities, or lines of business in which we operate. In addition, our certificate of incorporation provides that, to the fullest extent permitted by law, no officer or director of ours who is also an officer, director, employee, agent, stockholder, member, partner, or affiliate of either of AE Industrial Partners will be liable to us or our stockholders for breach of any fiduciary duty by reason of the fact that any such individual directs a corporate opportunity to AE Industrial Partners, instead of to us, or does not communicate information regarding a corporate opportunity to us that the officer, director, employee, agent, stockholder, member, partner or affiliate has directed to AE Industrial Partners. For example, a director of our company who also serves as an officer, director, employee, agent, stockholder, member, partner, or affiliate of AE Industrial Partners, or any of their respective portfolio companies, funds, or other affiliates may pursue certain acquisitions or other opportunities that may be complementary to our business and, as a result, such acquisition or other opportunities may not be available to us. These potential conflicts of interest could have a material adverse effect on our business, financial condition, results of operations, or prospects if attractive corporate opportunities are allocated by AE Industrial Partners to itself or its respective portfolio companies, funds, or other affiliates instead of to us. A description of our obligations related to corporate opportunities under our certificate of incorporation are more fully described in “Description of Capital Stock—Corporate Opportunity.”

We are a “controlled company” within the meaning of the rules and, as a result, qualify for and intend to rely on exemptions from certain corporate governance requirements.

Following this offering and pursuant to the Director Nomination Agreement, AE Industrial Partners will continue to control a majority of the voting power of our outstanding voting stock with respect to the election of our directors, and as a result we will be a controlled company within the meaning of Nasdaq corporate governance standards. Under Nasdaq rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a controlled company and may elect not to comply with certain corporate governance requirements, including the requirements that:

 

  •  

a majority of the board of directors consist of independent directors;

 

  •  

the nominating and corporate governance committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

 

  •  

the compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.

We intend to utilize these exemptions as long as we remain a controlled company. As a result, we may not have a majority of independent directors and our nominating and corporate governance committee and compensation committee may not consist entirely of independent directors. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the     .

Pursuant to Rule 10C-1 under the Exchange Act, Nasdaq has adopted amendments to its listing standards that require, among other things, that:

 

  •  

compensation committees be composed of fully independent directors, as determined pursuant to new independence requirements;

 

  •  

compensation committees be explicitly charged with hiring and overseeing compensation consultants, legal counsel, and other committee advisors; and

 

  •  

compensation committees be required to consider, when engaging compensation consultants, legal counsel, or other advisors, certain independence factors, including factors that examine the relationship between the consultant or advisor’s employer and us.

As a “controlled company,” we will not be subject to these compensation committee independence requirements. See “Management—Controlled Company Exemption.”

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. Many statements included in this prospectus that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. These risks and other factors include, but are not limited to, those listed under “Risk Factors.” In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “predict,” “project,” “potential,” “should,” “will,” “would,” or the negative of these terms or other comparable terminology. In particular, statements about the markets in which we operate, including growth of our various markets, statements about potential new products and product innovation and our expectations, beliefs, plans, strategies, objectives, prospects, assumptions, or future events or performance contained in this prospectus under the headings “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business” are forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

 

  •  

our market opportunity and the potential growth of that market;

 

  •  

our strategy, outcomes, and growth prospects;

 

  •  

trends in our industry and markets; and

 

  •  

the competitive environment in which we operate.

Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include:

 

  •  

our failure to manage our growth effectively and our ability to achieve and maintain profitability;

 

  •  

the potential for delayed or failed launches, and any failure of our launch vehicles and spacecraft to operate as intended;

 

  •  

our inability to manufacture our launch vehicles, landers, or orbital vehicles at a quantity and quality that our customers demand;

 

  •  

the hazards and operational risks that our products and service offerings are exposed to, including the wide and unique range of risks due to the unpredictability of space;

 

  •  

the market for commercial launch services for small- and medium-sized payloads not achieving the growth potential we expect;

 

  •  

our dependence on contracts entered into in the ordinary course of business and our dependence on major customers and vendors;

 

  •  

we may not be successful in developing new technology;

 

  •  

uncertain global macro-economic and political conditions, including the implementation of tariffs;

 

  •  

disruptions in U.S. government operations and funding and budgetary priorities of the U.S. government;

 

  •  

the failure of our information technology systems, physical or electronic security protections;

 

  •  

the inability to operate Alpha at our anticipated launch rate or finalize the development and delivery of Eclipse;

 

  •  

the scarcity or unavailability of critical components or raw materials used to manufacture our products or used in our development programs;

 

  •  

the fluctuation of our operating results;

 

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  •  

adverse publicity stemming from any incident involving us, our competitors, or our customers;

 

  •  

the failure to adequately protect our proprietary intellectual property rights;

 

  •  

shortfalls in available external R&D funding.

 

  •  

our inability to comply with our contractual obligations;

 

  •  

our failure to establish and maintain important relationships with government agencies and prime contractors;

 

  •  

risks relating to the laws, security requirements, regulations and policies applicable to government contracting;

 

  •  

the inability to realize our backlog;

 

  •  

the dependence on our facilities;

 

  •  

evolving government laws and regulations;

 

  •  

our inability to generate sufficient cash to service all of our indebtedness; and

 

  •  

the other factors set forth under “Risk Factors.”

We have based the forward-looking statements contained in this prospectus primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, business strategy, and financial needs. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, assumptions, and other factors described under “Risk Factors” and elsewhere in this prospectus. These risks are not exhaustive. Other sections of this prospectus include additional factors that could adversely affect our business and financial performance. 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 prospectus. We cannot be sure that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in, or implied by, the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this prospectus, and while we believe that information forms a reasonable basis for such statements, that information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.

The forward-looking statements made in this prospectus relate only to events as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements after the date of this prospectus or to conform such statements to actual results or revised expectations, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not rely on our forward-looking statements in making your investment decision. Actual results or events could differ materially from the plans, intentions, and expectations disclosed in the forward-looking statements we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.

 

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MARKET AND INDUSTRY DATA

Unless otherwise indicated, market data and industry information used throughout this prospectus is based on management’s knowledge of the industry and the good faith estimates of management. We have also relied, to the extent available, upon management’s review of independent industry surveys and publications and other publicly available information. All of the market data and industry information used in this prospectus involves a number of assumptions and limitations and you are cautioned not to give undue weight to such estimates. Although we believe that these sources are reliable, neither we nor the underwriters can guarantee the accuracy or completeness of this information and neither we nor the underwriters have independently verified this information. Additionally, from time to time, these sources may change their input information or methodologies, which may change the related results. While we believe the estimated market position, market opportunity, and market size information included in this prospectus is generally reliable, such information, which is derived in part from management’s estimates and beliefs, is inherently uncertain and imprecise. Projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors,” “Special Note Regarding Forward-Looking Statements” and elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in our estimates and beliefs and in the estimates prepared by independent parties.

 

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USE OF PROCEEDS

We estimate that we will receive net proceeds from this offering of approximately $    million (or approximately $    million if the underwriters exercise their option to purchase additional shares of common stock from us in full) based upon an assumed initial public offering price of $    per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

We intend to use net proceeds received by us from this offering to repay all of our borrowings under the Credit Agreement, any applicable prepayment premiums, accrued interest, and to pay any accrued and unpaid dividends on our outstanding Series C and Series D Preferred Stock that accrue following the declaration of the Preferred Stock Dividend, with any remaining proceeds being used for general corporate and working capital purposes. As of March 31, 2025, we had an aggregate of $136.1 million outstanding under our Credit Agreement. The interest rate on both tranches of the Term Loan Facility was 13.875% per annum as of March 31, 2025. The maturity date of the Term Loan Facility is July 17, 2028. Each share of Series C and Series D Preferred Stock accrues dividends at a rate of 12% per annum. As of March 31, 2025, we had aggregate accrued and unpaid dividends of $47.6 million and $20.1 million under the Series C and Series D Preferred Stock, respectively. In connection with this offering, we expect that our board of directors will declare all such accrued and unpaid dividends payable (to the extent such dividends accrue following the declaration of the Preferred Stock Dividend), contingent upon the closing of this offering, and repayment in full of our borrowings under the Credit Agreement. Following the declaration and payment of any applicable dividends, all outstanding series of Preferred Stock will convert into shares of common stock upon completion of this offering, in accordance with their respective terms. A portion of the outstanding Series C and Series D Preferred Stock is held by affiliates of AE Industrial Partners. See “Certain Relationship and Related Party Transactions” and “Prospectus Summary—Recent Developments—Declaration of Dividend on Preferred Stock.”

Each $1.00 increase or decrease in the assumed initial public offering price of $    per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase or decrease the net proceeds to us from this offering by approximately $    million, assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Each 1,000,000 increase or decrease in the number of shares offered would increase or decrease the net proceeds to us from this offering by approximately $    million, assuming that the assumed initial public offering price per share for the offering remains at $    , which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 

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DIVIDEND POLICY

We currently intend to retain any future earnings to fund the development and growth of our business. Therefore, we do not anticipate paying any cash dividends in the foreseeable future. Any future determination relating to dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including restrictions in our current and future debt instruments, our future earnings, capital requirements, financial condition, prospects, and applicable Delaware law, which provides that dividends are only payable out of surplus or current net profits.

See “Risk Factors—Risks Related to This Offering and Ownership of Our Common Stock,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources,” and “Description of Certain Indebtedness.”

 

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CAPITALIZATION

The following table describes our cash and cash equivalents and capitalization as of March 31, 2025 as follows:

 

  •  

on an actual basis;

 

  •  

on a pro forma basis, after giving effect to (i) the Preferred Stock Dividend which occurred on      , 2025, (ii) the effectiveness of our amended and restated certificate of incorporation, (iii) the conversion of      shares of our preferred stock outstanding as of     , 2025, into an aggregate of      shares of common stock, and (iv) the automatic net exercise of warrants to purchase      shares of common stock outstanding as of     , 2025, at an exercise price of $      per share, in each case upon close of this offering; and

 

  •  

on a pro forma as adjusted basis after giving effect to the sale of      shares of common stock in this offering and the application of the net proceeds from this offering as set forth under “Use of Proceeds,” and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. The pro forma as adjusted information set forth below does not include (i)      shares of common stock reserved for future issuance under our Equity Incentive Plan, or (ii)      shares reserved for issuance upon exercise of warrants to purchase preferred stock outstanding as of     , 2025. See “Executive Compensation—Equity Incentive Compensation.”

 

The pro forma and pro forma as adjusted information set forth in the table below is illustrative only and will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. You should read this table in conjunction with our consolidated financial statements and the related notes, “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

 

    As of March 31, 2025  
    Actual     Pro Forma      Pro Forma
As Adjusted (1)
 
   

(in thousands, except share

and per share amounts)

 

Cash and cash equivalents

  $ 176,879     $           $        
 

 

 

   

 

 

   

 

 

 

Debt:

     

Finance lease liabilities (including current portion)

  $ 3,848     $       $    

Notes payable, including current portion, net of debt issuance costs(2)

    129,955         —   

Notes payable held by a related party, including current portion, net of debt issuance costs(3)

    17,746         —   
 

 

 

   

 

 

   

 

 

 

Total debt

    151,549      

Temporary equity:

     

Redeemable convertible preferred stock, $0.0001 par value; 212,863 shares authorized, 157,665 shares issued and outstanding, actual; no shares issued or outstanding, pro forma and pro forma as adjusted

    887,074         —   

 

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    As of March 31, 2025  
    Actual     Pro Forma      Pro Forma
As Adjusted (1)
 
   

(in thousands, except share

and per share amounts)

 

Stockholders’ deficit:

     

Common stock, $0.0001 par value per share; 549,250 shares authorized, 44,733 shares issued and outstanding, actual;      shares authorized pro forma and pro forma as adjusted, and      shares issued and outstanding, pro forma and pro forma as adjusted

    5      

Additional paid-in-capital, net of issuance costs

    —       

Accumulated deficit

    (838,729 )     
 

 

 

   

 

 

   

 

 

 

Total stockholders’ deficit and temporary equity

    48,350      
 

 

 

   

 

 

   

 

 

 

Total capitalization

  $ 199,899     $       $    
 

 

 

   

 

 

   

 

 

 
 
(1)

A $1.00 increase or decrease in the assumed initial public offering price of $     per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase or decrease each of cash and cash equivalents, additional paid-in capital, total stockholders’ equity and total capitalization on a pro forma as adjusted basis by approximately $     million, assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Similarly, each 1,000,000 increase or decrease in the number of shares of common stock offered by us in this offering would increase or decrease each of cash and cash equivalents, additional paid-in capital, total stockholders’ equity and total capitalization on a pro forma as adjusted basis by approximately $     million, based on an assumed initial public offering price of $     per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 

(2)

Amount includes $115.0 million outstanding under the Term Loan Facility, net of $18.4 million in related unamortized debt issuance costs.

 

(3)

Amount includes $21.1 million outstanding under the Term Loan Facility, net of $3.4 million in related unamortized debt issuance costs.

In addition, unless otherwise expressly stated or the context otherwise requires, the information in this prospectus assumes:

 

  •  

a 1-for-     reverse stock split of our common stock effected on July  , 2025;

 

  •  

no exercise of the underwriters’ option to purchase additional shares of our common stock;

 

  •  

an initial public offering price of $     per share, which is the midpoint of the estimated price range set forth on the cover of this prospectus; and

 

  •  

the effectiveness of our amended and restated certificate of incorporation and bylaws in connection with the completion of this offering.

 

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DILUTION

If you invest in our common stock, your ownership interest in us will be diluted to the extent of the difference between the initial public offering price in this offering per share of our common stock and the pro forma as adjusted net tangible book value per share of our common stock upon consummation of this offering. Net tangible book value dilution per share to new investors represents the difference between the amount per share paid by purchasers of shares of our common stock in this offering and the pro forma as adjusted net tangible book value per share of our common stock immediately after completion of this offering.

As of    , 2025, we had a historical net tangible book value of $     million, or $    per share of common stock. Net tangible book value per share is equal to our total tangible assets, less total liabilities, divided by the number of outstanding shares of our common stock. Our pro forma net tangible book value as of     , 2025 was $     million, or $     per share, based on the total number of shares of our common stock outstanding as of     , 2025, after giving effect to (i) the Preferred Stock Dividend which occurred on     , 2025, (ii) the effectiveness of our amended and restated certificate of incorporation, (iii) the conversion of      shares of our preferred stock outstanding as of     , 2025, into an aggregate of      shares of common stock, and (iv) the automatic net exercise of warrants to purchase      shares of common stock outstanding as of     , 2025, at an exercise price of $     per share, in each case upon close of this offering.

After giving further effect to the sale of shares of common stock in this offering, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, at an assumed initial public offering price of $     per share, which is the midpoint of the estimated public offering price range set forth on the cover of this prospectus, and after giving effect to the sale of      shares of common stock in this offering, and the application of the net proceeds of this offering to repay (i) $    million of outstanding borrowings under our Term Loan Facility, (ii) to pay any accrued and unpaid dividends on our outstanding Series C and Series D Preferred Stock that accrue following the declaration of the Preferred Stock Dividend, and (iii) the remainder for general corporate purposes, as set forth under “Use of Proceeds,” at an assumed initial public offering price of $    per share, which is the midpoint of the estimated public offering price range set forth on the cover of this prospectus, our pro forma as adjusted net tangible book value as of    , 2025 would have been $     million, or $    per share of common stock. This represents an immediate increase in pro forma as adjusted net tangible book value of $    per share to our existing stockholders and an immediate dilution in pro forma as adjusted net tangible book value of $    per share to investors participating in this offering at the assumed initial public offering price. The following table illustrates this per share dilution:

 

Assumed initial public offering price per share of common stock

      $        

Historical net tangible book value (deficit) per share as of     , 2025

   $       

Increase per share attributable to the pro forma adjustments described above

     

Pro forma net tangible book value per share as of     , 2025

     

Increase (decrease) in pro forma net tangible book value (deficit) per share attributable to this offering

   $           
  

 

 

    

Pro forma as adjusted net tangible book value (deficit) per share after giving effect to this offering

      $        
     

 

 

 

Dilution in pro forma as adjusted net tangible book value per share to new investors in this offering

      $        
     

 

 

 

 

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A $1.00 increase (decrease) in the assumed initial public offering price of $    per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase (decrease) our pro forma as adjusted net tangible book value (deficit) per share after this offering by $     million and dilution per share to new investors purchasing common stock in this offering by $    , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses by us. An increase (decrease) of shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase (decrease) our pro forma as adjusted net tangible book value after this offering by $     million and $    per share and decrease (increase) the dilution per share to new investors purchasing common stock in this offering by $    , assuming no change in the assumed initial public offering price per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses by us.

If the underwriters exercise in full their option to purchase additional shares of common stock in this offering, our pro forma as adjusted net tangible book value (deficit) per share after this offering would be $     and the dilution in pro forma as adjusted net tangible book value (deficit) per share to new investors purchasing common stock in this offering would be $    , assuming no change in the initial public offering price per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The following table summarizes, on a pro forma as adjusted basis as of    , 2025, the differences between the number of shares of common stock purchased from us, the total consideration paid (in thousands) and the average price per share paid by existing stockholders (including shares of our preferred stock assuming the conversion of such shares into common stock upon close of this offering) and to be paid by the new investors purchasing shares of common stock in this offering, at an assumed initial public offering price of $    per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, before deducting the underwriting discounts and commissions and estimated offering expenses payable by us in connection with this offering.

 

     Shared Purchased     Total Consideration     Average
Price Per
Share
 
     Number      Percent     Amount      Percent  

Existing investors

           %    $                 %    $        

New investors in this offering

                    %            %   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

           %    $                 %    $        
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

A $1.00 increase (decrease) in the assumed initial public offering price of $    per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase (decrease) the total consideration paid by new investors in this offering by $    million and, in the case of an increase, would increase the percentage of total consideration paid by new investors by percentage points and, in the case of a decrease, would decrease the percentage of total consideration paid by new investors by percentage points, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and before deducting the underwriting discounts and commissions and estimated offering expenses payable by us in connection with this offering. An increase (decrease) of shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the total consideration paid by new investors by $    million and, in the case of an increase, would increase the percentage of total consideration paid by new investors by percentage points and, in the case of a decrease, would decrease the percentage of total consideration paid by new investors by percentage points, assuming no change in the assumed initial public offering price per share and before deducting the underwriting discounts and commissions and estimated offering expenses payable by us in connection with this offering.

The table above assumes no exercise of the underwriters’ option to purchase additional shares in this offering. If the underwriters’ option to purchase additional shares is fully exercised, the number of shares of our

 

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common stock held by existing stockholders would be reduced to    % of the total number of shares of our common stock outstanding after this offering, and the number of shares of common stock held by new investors purchasing common stock in this offering would be increased to    % of the total number of shares of our common stock outstanding after this offering.

The discussion and tables above exclude shares of our common stock reserved for future issuance under our Equity Incentive Plan, as well as any future increases, including annual automatic increases, in the number of shares of common stock reserved for issuance thereunder.

We expect to require additional capital to fund our current and future operating plans. To the extent additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders. See “Risk Factors—Risks Related to This Offering and Ownership of Our Common Stock—Future issuances of our common stock could result in significant dilution to our stockholders, dilute the voting power of our common stock and depress the market price of our common stock.”

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion and analysis of our financial condition and results of operations as of, and for, the periods presented. You should read the following discussion and analysis of the Company’s financial condition and results of operations together with the sections entitled “Prospectus Summary—Summary Consolidated Financial Data,” “Risk Factors,” “Special Note Regarding Forward-Looking Statements,” and our unaudited condensed consolidated and audited consolidated financial statements and related notes included elsewhere in this prospectus. This discussion and analysis contains forward-looking statements, including statements regarding our expectations for the future of our business and our liquidity and capital resources as well as other non-historical statements. These statements are based upon our current plans, expectations, and beliefs, and are subject to numerous risks and uncertainties, including but not limited to the risks and uncertainties described in “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by these forward-looking statements.

Overview

Our Company is a market leading space and defense technology company providing comprehensive mission solutions to national security, government, and commercial customers with an established track record of success. Our mission is to enable responsive and reliable launch, transit, and operations in space for our national security and commercial customers across the globe. Backed by our world-class team and proven technology, we have designed, developed, and deployed our class leading launch vehicles and dynamic spacecraft solutions, to support critical customer missions across the space domain. As a leader of responsive mission solutions and the only commercial company to achieve a fully successful Moon landing, we are a partner of choice for national security, government, and commercial customers for their critical space missions. As a U.S.-based company, our purpose-built family of products aligns with the ongoing paradigm shift in government missions and procurement processes, where speed, dependability, efficiency, and economics drive customer decision-making.

We operate as a single reportable segment and serve this critical domain through our differentiated and scalable platform of Launch and Spacecraft Solutions. Our offerings include:

Launch: Our launch vehicles provide dedicated and responsive launch for national security, government, and commercial customers. We are the only U.S. company with a liquid-powered orbital launch vehicle in the 1,000 kilograms payload class.

Our Alpha launch vehicle employs a distinct combination of technologies designed to ensure high performance and efficiency at low cost. It uses a unique lightweight, rigid, and thermally insulated carbon composite technology for both the primary rocket structure as well as the propellant tanks, which ensures more of the usable mass goes to the mission payload. Alpha is also powered by our patented tap-off cycle engine technology, which is more efficient than legacy systems and provides greater reliability by employing fewer parts than those in traditional rocket engines. We have utilized this proprietary technology to develop all our rocket engines in-house. Alpha has five engines, four first stage Reaver engines, and one second stage Lightning engine. In addition to its track record of successful, dedicated, and responsive launch, Alpha is also designed to support testing of hypersonic payloads, providing significant growth opportunities for hypersonic deterrents, reconnaissance, and future national security needs. We are also expanding our pad operations from Vandenberg Space Force Base to add Wallops, VA and Kiruna, Sweden to support more missions, customers, and additional launch cadence opportunities. The Sweden pad is designed to expand Alpha production and operations to strategic international locations to service the European, UK, Japan, South Korea, Middle East, and Australia regions, which we expect will provide the foundation for a future business model to service the global market.

Eclipse is powered by seven Miranda engines, each of which produces 230,000 pounds-force of thrust. The Miranda engine is built using the same engine architecture and patented tap-off cycle as the Reaver engine,

 

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which produces 45,000 pounds-force of thrust. These common technologies are facilitating fast, cost-efficient, and reliable development of Eclipse. Eclipse is being built to serve national security, commercial, and international launch markets at competitive pricing. Eclipse’s Stage 1 is designed to be reusable, lowering production costs and improving cycle times for this launch platform. We are planning to construct a refurbishment facility that will facilitate this reusability. The first launch of Eclipse is expected to take place from Virginia’s Mid-Atlantic Regional Spaceport on Wallops Island and Eclipse is designed to be compatible with additional launch ranges on the East and West Coasts of the United States.

Spacecraft Solutions: Firefly is the only company to achieve a fully successful Moon landing, completing all 17 objectives set out before launch. We expect our Blue Ghost lander to fly annual missions to the Moon, with payload services customized to the technology and exploration goals of our customers. Offering ride-share opportunities and dedicated missions, Blue Ghost is built to host and deliver payloads nearly anywhere on the lunar surface. Blue Ghost Mission 2 will land on the far side of the Moon and conduct at least 10 days of lunar surface operations with the Blue Ghost lander, with an Elytra Dark spacecraft supporting as a communications relay. Elytra Dark is one of three Elytra configurations supporting on-orbit servicing missions. This Elytra Dark spacecraft is expected to remain operational in lunar orbit for up to five years. Mission 2 is fully manifested with both NASA and commercial payloads, including a commercial rover and a ride-sharing international satellite. Blue Ghost Mission 3, already under contract from NASA, has selected Blue Origin as the partner to deliver their rover to the lunar surface. Additionally, we have been selected by a proprietary commercial customer for a separate dedicated Blue Ghost lander mission.

Elytra is a dynamic spacecraft that is highly maneuverable and extensible to perform hundreds of Rendezvous Proximity Operations in support of Space Domain Awareness and Warfighting missions, long-range communications relay missions, on-orbit edge processing missions, and advanced Space Exploration missions. Blue Ghost and Elytra are highly complementary and compatible technologies that share a common core. Most of Elytra’s core hardware and software were proven at a variety of orbits through Blue Ghost’s successful Mission 1. As part of our end-to-end space services, Elytra offers robust on-orbit solutions and responsive defense capabilities when and where customers need them. As of April 2025, Elytra is contracted to perform a responsive on-orbit mission in support of the DoD’s DIU Sinequone Project. During this mission, Elytra will serve as a space maneuver vehicle to perform a series of on-orbit tasks including space domain awareness in LEO. Available to launch on Alpha and Eclipse, our Elytra vehicles are positioned to service the entire lifecycle of government and commercial missions. This unique interoperability makes Firefly a one-stop shop and partner of choice for national security, government, and commercial customers requiring these capabilities.

Our track record of success and our reputation as a trusted provider for our customers results in a highly attractive, diversified business model defined by significant backlog and cash flow visibility. Strong customer demand backs our financial profile with approximately $1.1 billion in backlog as of March 31, 2025 and multi-launch agreements across our product lines. Underpinning our financial profile is the combination of efficient contract structure and milestone-based billing. Before launch, we typically have collected approximately 90% of the total contract value, which is highly advantageous as production ramps. We are also differentiated in our ability to successfully execute on fixed firm price contracts. We are ahead of the curve as the industry shifts in favor of fixed firm price contracts and are well-positioned to capitalize on this change.

As the space market continues to grow and evolve, we are well-positioned to serve our customers’ most complex missions with rapid response times and purpose-built solutions. Our collaborations with leading national security agencies and aerospace companies, such as Lockheed Martin Corporation, Northrop Grumman, L3Harris, Space Force, SDA, NRO, and NASA demonstrate the value and criticality of our new space defense and technology leadership in this market.

We strategically deployed capital to build state-of-the-art infrastructure to design, produce, test, and manufacture our products to the highest standard at a regular cadence. Our three primary facilities – corporate headquarters, Hive spacecraft facility, and Rocket Ranch manufacturing and testing site–are only 25 miles apart,

 

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providing unique proximity between design, manufacturing, and production. The proximity of our core facilities enables agile and rapid vehicle development and production at lower cost versus competitors.

Our purpose-built R&D, manufacturing, and testing footprint is the product of significant investments and the backbone of our manufacturing process. We designed our advanced manufacturing process through years of optimization that now allow us to replicate our additional facilities with significantly less capital outlay. Each of our launch sites were chosen intentionally to enhance flexibility for our customers. Our early investment in cutting-edge technology and best-in-class facilities is a competitive advantage, creating a platform primed for continued growth. As we scale, we have and expect to continue to replicate our proprietary manufacturing and testing processes, resulting in reduced cycle times and further capital efficiency.

Additionally, we have deep, long-term relationships with our key suppliers. By maintaining a vertically integrated manufacturing process, we are less reliant on the timelines of outside suppliers and reduce risk within our supply chain. Our suppliers, who are also well diversified, do not include individual suppliers accounting for more than 20% of our total vendor costs for the year ended December 31, 2024 and the three months ended March 31, 2025.

Our full suite of manufacturing capabilities is supplemented by four launch sites, which will continue to enhance flexibility and responsiveness for our missions. We can arrange ongoing launch rockets from the Vandenberg Space Force Base launch site in California. Additional launch sites are under construction at Virginia’s Mid-Atlantic Regional Spaceport on Wallops Island and the Esrange Space Center in Sweden, and future launch pad capacity will be unlocked from expansion at Cape Canaveral SFS in Florida. Our significant scale and unique blueprint are strategically planned to support our increasing launch cadence as we grow.

Backlog

We view growth in backlog as a key measure of our business growth. Backlog represents our estimate of the revenue we expect to realize in future periods as a result of performing work on contracts that have been awarded to us (net of any revenue already recognized as of the backlog date). We include the aggregate expected revenue of awarded contracts in our backlog upon the execution of a legally binding agreement, even though our contracts include certain termination rights exercisable by our customers with advance notice. Deferred revenue recognized on our condensed consolidated balance sheet consists of payments and billings that we have received in excess of revenue that we have recognized. Because cash receipts from these contracts have not been recognized into revenue, they are included in our backlog calculation.

We view growth in backlog as a key measure of our future business prospects. We monitor our backlog because we believe it is a forward-looking indicator of potential sales which can be helpful to investors in evaluating the performance of our business and identifying trends over time. Although backlog reflects business associated with contracts that are considered to be firm, terminations, amendments, or contract cancellations may occur, which could result in a reduction in our total backlog and potential future revenue that never gets recognized.

 

     As of March 31,      As of December 31,  
     2025      2024      2024      2023  
($ in thousands)                            

Backlog

   $ 1,116,487      $ 559,366      $ 1,098,793      $ 560,339  

The increase in backlog in 2024 was primarily due to entering into three multi-launch agreements for Alpha and an additional contract for Blue Ghost. The increase in backlog from December 31, 2024 to March 31, 2025 was primarily due to two new contracts for Alpha and two new contracts for engineering services.

 

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The following amounts relate to executed multi-launch agreements where the missions have not yet been scheduled as of the backlog date. These amounts are included as part of total backlog.

 

     As of March 31,      As of December 31,  
     2025      2024      2024      2023  
($ in thousands)                            

Multi-launch agreement backlog

   $ 344,800      $ —       $ 344,800      $ —   

Trends and Key Factors Affecting Performance

Macroeconomic Pressures

In recent years, geopolitical instability, including wars and conflicts, as well as impacts from other global events, have resulted in opportunities for companies in the space and defense technology market. However, certain disruptions to the global economy, including market disruptions, monetary, and fiscal policy uncertainty, supply chain challenges, high interest rates and inflationary pressures have contributed to an inflationary environment that has adversely affected, and may continue to adversely affect, the price and availability of certain products and services necessary for our operations, which in turn may adversely impact our business and operating results. In addition, the global trade environment is uncertain and rapidly evolving. Tariffs imposed by the U.S. presidential administration or retaliatory tariffs announced by other countries could result in a trade war. The impact of tariffs on our business and results of operations will depend on their timing, duration, and magnitude.

Government Environment and Regulations

Our industry is affected by government budget and spending levels, changes in demand, changes in policy positions or priorities, the domestic and global political and economic environment, and the evolving nature of the space and defense sectors. In particular, the expansion of adversarial budgets to fund the development of hypersonics poses a direct threat to the U.S., fueling this market momentum. Total state-sponsored defense spending is projected to grow from $66 billion in 2023 to $180 billion in 2035 according to the World Economic Forum and McKinsey. Any changes in budget and spending levels, policies, or priorities, including the current emphasis by the U.S. presidential administration on access to space, may have an adverse impact on our business and operating results. In addition, U.S. government procurement regulations impose various operational requirements on government contractors. Non-compliance with any of these regulations could materially adversely affect our operating results.

Pace of Government Expenditures and Private Enterprise Investment in the Space Economy

Our future growth is largely dependent on our ability to continue to capitalize on increased government spending and private investment in the space economy. Government expenditures and private enterprise investment have fueled our growth in recent years and have resulted in our continued ability to secure increasingly valuable contracts for products and services as well as the ability to continue financing the growth and development of our business. We expect the continued availability and growth of government expenditures and private investment in the space economy will be an important contributor to increased purchases of our products and services; however, any delays or reductions in appropriations for our programs and changes in U.S. government priorities and spending levels more broadly may negatively impact our business.

Ability to Continue the Expansion of Launch and Spacecraft Mission Operations

The launch market is rapidly expanding, with significant demand for launch and spacecraft solution and services. Our success and ability to generate higher revenue will depend in large part on our ability to expand our Launch and Spacecraft Solutions offerings and to continue the deployment and development of our launch vehicles.

 

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We expect to continue to ramp up our launch cadence as we increase our production rate on Alpha rockets, and complete development of Eclipse. We successfully completed our first lunar landing on March 2, 2025, with additional Blue Ghost missions planned in 2026 and 2028. Empowered by our successful Blue Ghost mission and common technologies across spacecraft, we believe we are well positioned to unlock adjacent markets and contracts via our multi-mission orbital vehicle, Elytra. Any delays in commencing our missions, including due to delays or cost overruns in obtaining licenses or other regulatory approvals, or entering into future agreements with additional customers could adversely impact our results and growth plans. We have approximately $1.1 billion in backlog, as of March 31, 2025, and we are in active discussions with numerous potential customers, including government agencies and private companies, to potentially add to our backlog.

Ability to Improve Profit Margins and Scale our Business

The growth of our business is dependent on our ability to improve our profit margins over time while successfully scaling our business, including through continued investment in initiatives to improve our operating leverage. We believe continued reduction in costs and an increase in production and service volumes will enable a reduction of the cost of launch vehicles and an improvement of our gross margins. As we increase our launch cadence, we expect to be able to continue to improve our cost structure as fixed and overhead costs are amortized over a greater number of launches. Revenue, net income, and the timing of our cash flows also depend on our ability to perform on our contracts, and profitability can fluctuate depending on the mix of contracts awarded. To manage these fluctuations, we have implemented several strategies, such as closely monitoring project and related services timelines to anticipate cash flow needs. Despite these measures, the inherent variability in milestone achievements means that quarter-to-quarter comparisons of our results of operations may not necessarily be indicative of future performance.

Ability to Continue to Innovate and Expand our Service Offerings

To continue gaining market share and attracting customers, we plan to continue to make substantial investments in R&D for the continued enhancements of our Launch and Spacecraft Solutions. Our growth opportunity is dependent on our continued ability to expand our addressable launch market, win lunar and orbital missions and expand our portfolio of services related to those offerings. For instance, building on our launch, lander, transit, and operations success with Alpha and Blue Ghost, we are on track for our spacecraft offerings to facilitate payload hosting services, transport services, utility services, and data services in LEO, MEO, and GEO. We plan to continue to forge strategic partnerships with industry leaders to enhance our technological capabilities and market reach.

Components of Results of Operations

Revenue – Substantially all of our revenue is derived from long-term contracts to provide launch and integration services for payloads requiring transportation into orbit via launch vehicles and to provide end-to-end services for the transportation of payloads.

Launch revenue includes revenues from contracts with commercial and government entities to provide launch and integration services for payloads requiring transportation into orbit via launch vehicles. These contracts may include milestone payments and deposits. We consider the performance obligation to be the initiation of the launch and recognize revenue at that point in time. We also enter into contracts with our customers to provide engineering services, related components, and develop and provide licenses to intellectual property. In these cases, our service obligation is satisfied over time since the tasks are performed according to the customer’s specifications, which creates an asset with no alternative use to us and we have an enforceable right to payment for performance completed to date.

Spacecraft Solutions revenue includes revenue from contracts with commercial and government entities to provide end-to-end services to transport payloads to the Moon. These contracts include milestone payments and

 

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deposits. We consider the performance obligation to be the end-to-end commercial payload services. These contracts typically require that the customer make milestone payments as specific conditions and tasks are performed. Our payload services obligation is satisfied over time since the tasks are performed according to the customer’s specifications, which creates an asset with no alternative use to the Company and the Company has an enforceable right to payment for performance completed to date.

For all revenue streams, we consider milestone payments that are contingent on the success of a mission to be variable consideration. We assess the likelihood of success of a mission at inception and may defer the recognition of some or all of the variable consideration until success of the mission is assured.

We perform work under contracts that broadly consist of fixed-price, cost-reimbursable, time-and-materials arrangements, or a combination of the three. Pricing is contractually based on specific negotiations with each customer. Advanced payments and billings for milestones in excess of revenues recognized are recorded as current and non-current deferred revenue in our consolidated balance sheets and recognized into revenue as the Company satisfies the underlying performance obligations.

For fixed-price contracts satisfied over time, progress is measured using a cost-to-cost method, which accurately reflects the transfer of control to the customer. This method assesses the extent of progress based on the ratio of costs incurred to date against the total estimated costs to complete the performance obligation. Estimating total costs to complete requires us to make informed estimates regarding subcontractor performance, material costs and availability, labor costs and productivity, as well as overhead expenses. Frequently, the period of performance of a contract extends over a long period of time and, as such, revenue recognition and our profitability from a particular contract may be affected to the extent that estimated costs to complete are revised, delivery schedules are delayed, performance-based milestones are not achieved, or progress under a contract is otherwise impeded. Accordingly, our recorded revenues and operating profit from period to period can fluctuate significantly depending on when contractual obligations are achieved.

Should the estimated total costs to be incurred on a contract surpass the anticipated total revenue, we recognize a provision for the entire loss on the contract in the period when the loss is identified. For further discussion of the critical judgments and estimates related to our revenue recognition policies, see the section titled “Critical Accounting Estimates.”

Cost of Sales – primarily consists of raw materials, salaries and benefits, depreciation and amortization, and other costs directly attributable to fulfilling our obligations under customer contracts. Costs of sales are expensed as incurred. We expect our cost of sales to increase in absolute dollars in future periods as we sell more services. As we grow and execute additional cost-optimization initiatives, we expect our cost of sales as a percentage of revenue to decrease over time.

Research and Development – includes employee and contractor compensation, supplies and materials for new service development, depreciation and amortization, and regulatory compliance costs. R&D is expensed as incurred. We expect to continue investing in R&D and, accordingly, expect our R&D expenses to increase and vary as we continue developing and improving our services.

Selling, General, and Administrative – includes personnel-related expenses, depreciation and amortization, and facilities-related costs primarily for our executive, marketing, finance, accounting, legal, and human resources functions. Selling, general, and administrative expenses also include expenses related to advertising, insurance, sales commission and fees for professional services principally consisting of legal, audit, and tax, as well as executive management expenses. Selling, general, and administrative expenses are expensed as incurred. We expect to incur additional selling, general, and administrative expenses as a result of operating as a public company, including expenses related to compliance with public company reporting obligations, and increased costs for insurance, investor relations, and professional services. As a result, we expect that our selling, general, and administrative expenses will increase in future periods and vary from period to period as a percentage of revenue.

 

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Loss (Gain) on Disposal of Fixed Assets – reflects the gains and losses associated with the disposal of property and equipment outside the normal course of business operations.

Interest Expense, net – consists primarily of interest expense incurred on borrowings under our Credit Facility and interest income earned on cash and cash equivalents.

Other (Expense) Income, net – reflects miscellaneous income and expense unrelated to our core business activities.

Provision for Income Taxes – consists of an estimate for federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We maintain a valuation allowance to offset all federal and state net deferred tax assets, as realization of such assets does not meet the more-likely-than-not threshold required under ASC 740, Income Taxes.

Results of Operations

Comparison of the Three Months Ended 2025 to the Three Months Ended 2024

The following table sets forth a summary of our condensed consolidated results of operations for the years indicated, and the changes between periods.

 

    For the three months
ended March 31,
       
($ in thousands)   2025     2024     $ Change     % Change  

Revenue

  $ 55,855     $ 8,317     $ 47,538          572%  

Cost of sales

    53,635       10,240       43,395       424%  
 

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit (loss)

    2,220       (1,923 )      4,143       215%  

Operating expenses

       

Research and development

    48,012       37,635       10,377       28%  

Selling, general, and administrative

    12,752       9,580       3,172       33%  

Loss on disposal of fixed assets

    —        3       *       *  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

    60,764       47,218       13,546       29%  
 

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

    (58,544 )      (49,141 )      (9,403 )      (19% ) 

Other (expense) income

       

Interest expense, net

    (5,164 )      (3,753 )      (1,411 )      (38% ) 

Other income, net

    3,615       123       3,492       2,839%  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total other (expense) income, net

    (1,549 )      (3,630 )      2,081       57%  
 

 

 

   

 

 

   

 

 

   

 

 

 

Loss before provision for income taxes

    (60,093 )      (52,771 )      (7,322 )      (14% ) 
 

 

 

   

 

 

   

 

 

   

 

 

 

Provision for income taxes

    —        —        —     
 

 

 

   

 

 

   

 

 

   

 

 

 

Net loss and comprehensive loss

  $ (60,093 )    $ (52,771 )    $ (7,322 )      (14% ) 
 

 

 

   

 

 

   

 

 

   

 

 

 
 
*

not meaningful

 

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Revenue

The following table sets forth a summary of our consolidated revenue by type for the periods indicated, and the changes between comparative periods.

 

     For the three months
ended March 31,
        
($ in thousands)    2025      2024      $ Change      % Change  

Launch revenue

   $ 5,170      $ 1,302      $ 3,868        297%  

Spacecraft Solutions revenue

     50,685        7,015        43,670           623%  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

   $ 55,855      $ 8,317      $ 47,538        572%  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue increased by $47.6 million, or 572%, to $55.9 million during the three months ended March 31, 2025 from $8.3 million during the three months ended March 31, 2024, primarily driven by the factors discussed below.

Launch Revenue

Launch revenue increased by $3.9 million, or 297%, to $5.2 million during the three months ended March 31, 2025 from $1.3 million during the three months ended March 31, 2024. The increase is primarily driven by $3.8 million in revenue recognized from the Eclipse supply agreement with a strategic partner and $0.1 million of revenue for engineering services.

Spacecraft Solutions Revenue

Spacecraft Solutions revenue increased by $43.7 million, or 623%, to $50.7 million during the three months ended March 31, 2025 from $7.0 million during the three months ended March 31, 2024. The increase is primarily driven by a $46.5 million increase in Blue Ghost revenue through the continued success of meeting customer milestones offset by a $2.8 million decrease due to the successful completion of a mission only taking place in 2024.

Cost of Sales

Cost of sales increased by $43.4 million, or 424%, to $53.6 million during the three months ended March 31, 2025 from $10.2 million during the three months ended March 31, 2024 aligning with the increase in revenue. The primary driver was increased spending related to the ramp up of costs associated with the launch and execution of Blue Ghost Mission 1.

Research and Development

R&D increased by $10.4 million, or 28%, to $48.0 million during the three months ended March 31, 2025 from $37.6 million during the three months ended March 31, 2024, primarily driven by increases of $3.5 million in additional R&D materials and launch site expenses related to the ramp up of the Alpha program, $3.0 million in payroll and contractor expenses due to the expansion of production activity, $1.3 million in depreciation expense from assets being placed in service, and $2.6 million in insurance expenses and other incremental costs related to R&D activities.

Selling, General, and Administrative

Selling, general, and administrative expenses increased by $3.2 million, or 33%, to $12.8 million during the three months ended March 31, 2025 from $9.6 million during the three months ended March 31, 2024, primarily driven by increases of $3.5 million in finance and legal expenses primarily related to the IPO, and $1.0 million in

 

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payroll-related expenses due to the expansion of operations. There was also an increase of $0.5 million in information technology infrastructure costs. This was offset by a decrease of $1.9 million in lease expense due to the settlement of a lease connected to the Company’s business combination in June 2023.

Interest Expense, net

Interest expense, net increased by $1.4 million, or 38%, to $5.2 million during the three months ended March 31, 2025 from $3.8 million during the three months ended March 31, 2024, comprised of an increase of $2.9 million in interest expense, partially offset by a decrease in the amortization of debt issuance costs of $1.5 million driven by the Company’s Tranche 2 refinancing which resulted in the immediate expensing of debt issuance costs during the three months ended March 31, 2024.

Provision for Income Taxes

Our provision for income taxes consists of an estimate for federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We maintain a valuation allowance to offset all federal and state net deferred tax assets, as realization of such assets does not meet the more-likely-than-not threshold required under ASC 740, Income Taxes.

Comparison of the Year Ended 2024 to the Year Ended 2023

The following table sets forth a summary of our consolidated results of operations for the years indicated, and the changes between periods.

 

    For the year ended
December 31,
             
($ in thousands)   2024     2023     $ Change     % Change  

Revenue

  $ 60,792       55,235     $ 5,557       10%  

Cost of sales

    72,157       28,635       43,522       152%  
 

 

 

   

 

 

   

 

 

   

 

 

 

Gross (loss) profit

    (11,365 )      26,600       (37,965 )      (143% ) 

Operating expenses

       

Research and development

    149,498       117,871       31,627       27%  

Selling, general, and administrative

    46,848       40,605       6,243       15%  

Loss (gain) on disposal of fixed assets

    1,742       (1 )      1,743       *  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

    198,088       158,475       39,613       25%  
 

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

    (209,453 )      (131,875 )      (77,578 )      (59% ) 

Other expense

       

Interest expense, net

    (20,373 )      (3,963 )      (16,410 )      (414% ) 

Other (expense) income, net

    (1,307 )      381       (1,688 )      (443% ) 
 

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense, net

    (21,680 )      (3,582 )      (18,098 )      (505% ) 
 

 

 

   

 

 

   

 

 

   

 

 

 

Loss before provision for income taxes

    (231,133 )      (135,457 )      (95,676 )      (71% ) 
 

 

 

   

 

 

   

 

 

   

 

 

 

Provision for income taxes

    —        —        —        —   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net loss and comprehensive loss

  $ (231,133 )    $ (135,457 )    $ (95,676 )      (71% ) 
 

 

 

   

 

 

   

 

 

   

 

 

 
 
*

not meaningful

 

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The following table sets forth a summary of our consolidated revenue by type for the periods indicated, and the changes between comparative periods.

 

     For the year ended
December 31,
               
($ in thousands)    2024      2023      $ Change      % Change  

Launch revenue

   $ 22,631      $ 33,017      $ (10,386 )       (31)%  

Spacecraft Solutions revenue

     38,161        20,912        17,249        82%  

Other revenue

     —         1,306        (1,306 )       *  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

   $ 60,792      $ 55,235      $ 5,557        10%  
  

 

 

    

 

 

    

 

 

    

 

 

 
 
*

Not meaningful

Total revenue increased by $5.6 million in 2024, or 10%, to $60.8 million in 2024 from $55.2 million in 2023, driven primarily by the factors discussed below.

Launch Revenue

Launch revenue decreased by $10.4 million in 2024, or 31%, to $22.6 million in 2024 from $33.0 million in 2023, primarily driven by a decrease of $20.2 million in revenue from the Alpha program as launches decreased from two in 2023 to one in 2024. This was partially offset by an increase in revenue of $9.8 million from the Eclipse program based on additional progress on an existing contract as the program approaches its first delivery.

Spacecraft Solutions Revenue

Spacecraft Solutions revenue increased by $17.3 million in 2024, or 82%, to $38.2 million in 2024 from

$20.9 million in 2023, primarily driven by a $12.3 million increase in Blue Ghost revenue through the completion of multiple customer milestones and a $6.8 million increase due to completion of the launch for the Korea Advanced Institute of Science and Technology.

Cost of Sales

Cost of sales increased by $43.5 million in 2024, or 152%, to $72.2 million in 2024 from $28.6 million in

2023, primarily driven by increases of $10.7 million in Launch costs and increases of $33.8 million in Spacecraft Solutions costs. The increase in Launch costs was primarily due to progress on the element of the Eclipse program that has been successfully commercialized. The increase in Spacecraft Solutions costs was primarily due to increased spending related to Blue Ghost. This was partially offset by a decrease of $1.0 million in cost of sales related to the sale of a Reaver engine in 2023 that did not reoccur in 2024.

Research and Development

R&D increased by $31.6 million in 2024, or 27%, to $149.5 million in 2024 from $117.9 million from 2023,

primarily driven by increases of $13.8 million in payroll and compensation costs and $1.7 million in contractors and outside services due to headcount increases to support continued development of Eclipse and Elytra. There were also increases of $9.7 million in material and supplies costs primarily due to the element of the Eclipse

program still under development, increases of $4.5 million in depreciation and amortization related to the

completion of test stands and manufacturing facilities that were placed in service during the year to support R&D activities, and increases of $1.4 million in buildings and utilities due to increased electricity used in construction projects.

Selling, General, and Administrative

Selling, general, and administrative increased by $6.2 million in 2024, or 15%, to $46.8 million in 2024

from $40.6 million in 2023, primarily driven by increases of $1.6 million in management fees to our private equity sponsor and $2.2 million in additional financial and legal costs related to our Series D financing, net of

 

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issuance costs. Depreciation and amortization increased $1.4 million related to construction projects that were completed and placed in service. Additionally, building and utilities costs increased by $2.9 million, training costs increased by $0.6 million, and non-income taxes increased by $0.4 million due to the overall expansion of our operations. These increases were partially offset by a decrease in compensation costs of $2.9 million due to lower bonus expenses in 2024 relative to 2023.

Loss (Gain) on Disposal of Fixed Assets

Loss on disposal of fixed assets was $1.7 million in 2024, driven by the loss on the disposal of fixed assets and the write off of property and equipment related to an exited contract. There was no similar activity in 2023.

Interest Expense, net

Interest expense, net increased by $16.4 million in 2024, or 414%, to $20.4 million in 2024 from

$4.0 million in 2023, driven by increases of $8.4 million in the amortization of debt issuance costs and increases of $7.7 million in interest expense, which were due to a full year of interest expenses incurred on the debt issued in July and December 2023. There was also a decrease in interest income of $0.3 million from 2023 to 2024 due to a decrease in interest rates.

Provision for Income Taxes

Our provision for income taxes consists of an estimate for federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We maintain a valuation allowance to offset all federal and state net deferred tax assets, as realization of such assets does not meet the more-likely-than-not threshold required under ASC 740, Income Taxes.

Non-GAAP Financial Measures

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure. We define Adjusted EBITDA as net loss adjusted for interest expense, net, provision for income taxes, depreciation and amortization, stock-based compensation expense, the change in fair value of warrant liabilities, loss (gain) on disposal of fixed assets, transaction costs, and other expenses. In addition to net loss, we use Adjusted EBITDA to evaluate our business, measure its performance, and make strategic decisions.

We believe that Adjusted EBITDA provides useful information to management, investors, and analysts in assessing our financial performance and results of operations across reporting periods by excluding items we do not believe are indicative of our core operating performance. Net loss is the U.S. GAAP measure most directly comparable to Adjusted EBITDA. Adjusted EBITDA should not be considered as an alternative to net loss.

Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

 

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The table below presents our Adjusted EBITDA, reconciled to our net loss for the periods indicated:

 

     For the three months
ended March 31,
     For the year ended
December 31,
 
($ in thousands)    2025      2024      2024      2023  

Net loss

   $ (60,093 )     $ (52,771 )     $ (231,133 )     $ (135,457 ) 

Adjusted for:

           

Interest expense, net

     5,164        3,753        20,373        3,963  

Depreciation and amortization

     3,996        1,496        12,545        4,707  

Share-based compensation expense

     431        409        1,841        1,612  

Change in fair value of warrant liabilities

     916        —         3,079        147  

Loss (gain) on disposal of fixed assets

     —         3        1,742        (1 ) 

One-time costs related to the IPO(1)

     2,453        —         —         —   

Other(2)

     —         (26 )       985        1,087  
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ (47,133 )     $ (47,136 )     $ (190,568 )     $ (123,942 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 
 
(1)

Represents costs incurred related to the IPO that do not meet the direct and incremental criteria per SEC Staff Accounting Bulletin Topic 5.A to be charged against the gross proceeds of the transaction but are not expected to recur in the future.

(2)

Other includes loss on foreign exchange, executive severance, and fees in connection with acquisitions, which are required to be expensed as incurred.

Free Cash Flow

Free Cash Flow is a non-GAAP financial measure. We define Free Cash Flow as net cash used in operating activities, less purchases of property and equipment. We believe that Free Cash Flow is a meaningful indicator of liquidity that provides information to management and investors about the amount of cash generated from or used in operations that, after purchases of property and equipment, can be used for strategic initiatives, including continuous investment in our business and strengthening our balance sheet.

Free Cash Flow has limitations as a liquidity measure, and you should not consider it in isolation or as a substitute for analysis of our cash flows as reported under U.S. GAAP. Free Cash Flow may be affected in the near to medium term by the timing of capital investments, fluctuations in our growth and the effect of such fluctuations on working capital, and changes in our cash conversion cycle.

The following table presents a reconciliation of net cash (used in) provided by operating activities, the most directly comparable financial measure presented in accordance with U.S. GAAP, to free cash flow:

 

     For the three months
ended March 31,
     For the year ended
December 31,
 
     2025      2024      2024      2023  
($ in thousands)                            

Net cash used in operating activities

   $ (56,537 )       (60,583 )     $ (157,650 )     $ (93,434 ) 

Purchases of property and equipment

     (2,654 )       (4,503 )       (32,697 )       (77,248 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 

Free Cash Flow

   $ (59,191 )       (65,086 )     $ (190,347 )     $ (170,682 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 

There can be no assurance that we will not modify the presentation of the previously presented non-GAAP financial measures in the future, and any such modification may be material. Non-GAAP financial measures have important limitations as analytical tools and you should not consider non-GAAP financial measures in isolation or as a substitute for analyses of our operating results or cash flows as reported under U.S. GAAP. Non-GAAP financial measures may be defined differently by other companies in our industry and may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

 

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Liquidity and Capital Resources

We measure liquidity in terms of our ability to fund the cash requirements of our business operations, including working capital needs, capital expenditures, contractual obligations, debt service, acquisitions, and other commitments with cash flows from operations and other sources of funding. Our principal sources of liquidity to date have included amounts raised through issuances of equity capital and borrowings under our financing agreements.

Our expected primary uses of cash on a short and long-term basis are for working capital requirements, capital expenditures, R&D, debt service requirements, and other general corporate purposes. Our primary working capital requirements are for project execution activities including purchases of materials, subcontracted services and payroll, which fluctuate during the year, driven primarily by the timing and extent of activities required on new and existing projects.

As of March 31, 2025, our working capital position is in a surplus, in which our current assets exceed our current liabilities. We often make advanced payments to suppliers for services that have not yet been received that are recorded as current or non-current assets depending on whether they are expected to be settled within a year. Additionally, as of March 31, 2025, our current deferred revenue totalled $82.7 million. This is primarily due to the timing and nature of our deferred revenue where advanced payments and billings in excess of revenues recognized are recorded as deferred revenue and recognized into revenue as the Company satisfies the underlying performance obligation. Due to the nature of our supplier and customer contracts as well as the timing of payments, we expect to continue to fluctuate between a surplus and deficit of net working capital.

Our ability to generate sufficient liquidity from our ongoing operations and capital markets transactions in order to meet our obligations and operating needs will enable us to continue our business operations. If we require additional capital and are unsuccessful in raising that capital, we may not be able to continue our business operations and/or may be unable to advance growth initiatives, either of which could adversely impact our business, financial condition, and results of operations.

As of March 31, 2025, our cash and cash equivalents amounted to $176.9 million, and our financial debt amounted to $147.7 million. We have a limited history of operations and have incurred negative cash flows from operating activities and losses from operations in the past as reflected in the accumulated deficit of $838.7 million as of March 31, 2025. We believe that our cash will be adequate to meet our liquidity requirements for at least the 12 months following the date of this prospectus. Our future long-term capital requirements will depend on several factors, including our ability to raise additional capital and, over time, our ability to generate positive cash flows from operations. Accordingly, we plan to try to raise additional capital, whether in the public or private markets, and are currently examining different alternatives. If the financing is not available, or if the terms of financing are less desirable than we expect, we may be forced to decrease our level of investment in service development or scale back our operations, which could have a material adverse impact on our business and financial prospects, seek protection under insolvency laws, or cease our operations altogether.

Debt

On July 17, 2023, we entered into a credit agreement (the “Original Credit Agreement”) among the Company and various lenders and U.S. Bank Trust Company, N.A. in its capacity as collateral agent for the lenders. The Original Credit Agreement provided term loan commitments in an aggregate principal amount of $106.3 million. The Original Credit Agreement consisted of a term loan commitment of $82.5 million (“Term A Loans”) and a term loan commitment of $23.8 million (“Term B Loans” and, together with the Term A Loans, the “Term Loan Facility”). On December 6, 2023, we amended and restated the Original Credit Agreement (the “First A&R Credit Agreement”) with the primary purpose of increasing the total commitments under the Term Loan Facility in the aggregate principal amount of $15.9 million. Term A Loans commitments increased by $8.5 million and Term B Loan commitments increased by $7.4 million. On May 20, 2024, we amended and

 

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restated the First A&R Credit Agreement (the “Second A&R Credit Agreement”) to increase the total commitments under the Term Loan Facility in the aggregate principal amount of $13.9 million. Term A Loan commitments increased by $12.5 million and Term B Loan commitments increased by $1.4 million. On August 13, 2024, we entered into the first amendment to and waiver under the Second A&R Credit Agreement to waiver certain specified events of default and effecting certain amendments thereto (such agreement, as further amended, modified, supplemented, extended, refinanced, or replaced from time to time, the “Credit Agreement”). Borrowings under the Term Loan Facility currently bear interest at a fixed rate on the unpaid principal amount thereof of 13.875%. Borrowings under the additional commitments bear interest at the same fixed rate of interest. The additional commitments will mature on July 17, 2028. The Credit Agreement is secured by first priority liens on substantially all assets, subject to customary exceptions, of the Company and the Credit Agreement Guarantors. All obligations under the Credit Agreement are guaranteed by the Company and certain subsidiaries of the Company comprised of all domestic subsidiaries of the Company except certain excluded subsidiaries and are secured by substantially all the Company’s assets. The Term Loan Facility also mature on July 17, 2028.

As of March 31, 2025, there are approximately $136.1 million in principal borrowings outstanding on the Term Loan Facility, consisting of $103.5 million outstanding on Term Loan A and $32.6 million outstanding on Term B Loans.

The Credit Agreement includes covenants that limit our ability to, among other things, incur additional indebtedness, grant liens, enter into certain transactions with affiliates, and enter into certain investments or other arrangements with affiliates and/or subsidiaries. We defaulted in May 2024 due to not having a deposit account control agreement in place with one of our financial institutions, which resulted in increased interest expense which was not significant to our operations. In the fourth quarter of 2024, we missed a payment for our insurance reserve with a bank escrow account, however, all events of default have been remediated and we were in compliance with all covenants as of March 31, 2025.

We intend to use net proceeds received by us from this offering to repay all of our borrowings under the Credit Agreement and to pay any accrued and unpaid dividends on our outstanding Series C and Series D Preferred Stock that accrue following the declaration of the Preferred Stock Dividend, with any remaining proceeds being used for general corporate and working capital purposes. See “Use of Proceeds”.

We currently anticipate entering into the Revolving Credit Facility substantially concurrently with the closing of this offering. The maturity, interest rates, and other terms of the Revolving Credit Facility are in the process of being negotiated with prospective lenders; however, we expect that the initial aggregate principal amount of the revolving commitments available under the Revolving Credit Facility will be approximately $125.0 million. The Revolving Credit Facility will be a senior secured revolving credit facility that will be guaranteed by certain of our subsidiaries and secured by substantially all of our assets and the assets of certain of our subsidiaries, in each case, subject to customary exceptions. The Revolving Credit Facility is anticipated to contain representations and warranties, affirmative, negative and financial covenants, and events of default customary for secured financings of this type.

Borrowings under the Revolving Credit Facility may vary significantly from time to time depending on our cash needs at any given time. We cannot assure you that we will obtain binding commitments for the Revolving Credit Facility on favorable terms or at all. See “Prospectus Summary—Recent Developments—New Revolving Credit Facility” and “Description of Certain Indebtedness” for additional information.

Convertible Preferred Stock

We have historically sourced a significant portion of our liquidity through preferred stock issuances. We have had multiple issuances that have raised $ 808.5 million, net of issuance costs, since inception.

In October 2024, we approved the filing of our Tenth Amended and Restated Certificate of Incorporation to, among other things, create a new series of preferred stock and increase the number of authorized shares of

 

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preferred stock to approximately 166.1 million shares of $0.0001 par value convertible preferred stock. In March 2025, we approved the filing of our Eleventh Amended and Restated Certificate of Incorporation to, among other things, create a new series of preferred stock and further increase the number of authorized shares of preferred stock to a total of approximately 212.9 million shares of $0.0001 par value convertible preferred stock. All series of preferred stock are convertible, at the option of the holder, at any time at a conversion price equal to the original issue price of such series of preferred stock (subject to certain adjustments). Upon completion of our public offering with gross proceeds of at least $500.0 million and an offering price per share greater than approximately $10.4, all series of preferred stock will be automatically converted into our common stock.

We also issued warrants exercisable for shares of Series J Preferred Stock on July 17, 2023, December 27, 2023 and May 20, 2024. Series J Preferred Stock Warrants are exercisable into preferred stock, which is convertible into common stock upon a public offering.

Cash Flows

The following table summarizes our cash flows, for the periods indicated:

 

     For the three months
ended March 31,
 
     2025      2024  
($ in thousands)              

Net cash used in operating activities

   $ (56,537 )     $ (60,583 ) 

Net cash used in investing activities

   $ (2,654 )     $ (4,503 ) 

Net cash provided by financing activities

   $ 113,907      $ 21,877  

Net Cash Used in Operating Activities

Net cash used in operating activities decreased by $4.1 million, or 7%, to $56.5 million during the three months ended March 31, 2025 compared to $60.6 million during three months ended March 31, 2024, primarily due to a year over year increase in net loss of $7.3 million, offset by a net increase in cash related to changes in operating assets and liabilities of $7.8 million and a net increase in non-cash expenses of $3.6 million.

Changes in operating assets and liabilities including accounts receivable, advanced payments, other assets, accounts payable, accrued expenses, other liabilities, and deferred revenue between the three months ended March 31, 2025 and the three months ended March 31, 2024 were ($10.9 million), $52.8 million, ($2.3 million), $2.9 million, $12.5 million, ($27.2 million), and ($18.7 million), respectively. The increase in the source of cash of $7.8 million was primarily attributable to the timing of cash receipts and cash payments. We actively manage our accounts receivable and contract liabilities, along with the related aging and collection efforts.

The increase in non-cash expenses between the three months ended March 31, 2025 and the three months ended March 31, 2024 was primarily driven by an increase in depreciation and amortization of $2.5 million due to additional construction projects being placed into service, an increase in non-cash expense related to the change in fair value of warrant liability of $0.9 million, and an increase in non-cash interest expenses of $0.4 million.

Net Cash Used in Investing Activities

Net cash used in investing activities decreased by $1.8 million, or 41%, to $2.7 million during the three months ended March 31, 2025 compared to $4.5 million during the three months ended March 31, 2024, reflecting a decrease in cash purchases of property and equipment of $1.8 million.

Cash Provided by Financing Activities

Net cash provided by financing activities increased by $92.0 million, or 421%, to $113.9 million in 2025 compared to $21.9 million in 2024.

 

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During the three months ended March 31, 2025, net cash provided by financing activities primarily consisted of $115.3 million of proceeds from the issuance of convertible preferred stock. Additionally, $0.5 million was raised from the issuance of notes payable. We also received $0.4 million from the repayment of employee notes and $0.4 million from the exercise of stock options. These increases were offset by payments on notes payable of $2.2 million and principal payments on finance leases of $0.5 million.

During the three months ended March 31, 2024, net cash provided by financing activities primarily consisted of $22.1 million of proceeds from the issuance of convertible preferred stock. We also received $0.1 million from the repayment of employee notes and $0.1 million from the exercise of stock options. These increases were offset payments on notes payable of $0.2 million and principal payments on finance leases of $0.2 million.

The following table summarizes our cash flows, for the periods indicated:

 

     For the year ended
December 31,
 
     2024      2023  
($ in thousands)              

Net cash used in operating activities

   $ (157,650 )     $ (93,434 ) 

Net cash used in investing activities

   $ (32,697 )     $ (69,994 ) 

Net cash provided by financing activities

   $ 232,759      $ 240,731  

Net Cash Used in Operating Activities

Net cash used in operating activities increased by $64.3 million, or 69%, to $157.7 million used in 2024 compared to $93.4 million in 2023, primarily due to a year over year increase in net loss of $95.7 million and a net increase in cash related to changes in operating assets and liabilities of $12.2 million, offset by a year over year increase in non-cash expenses of $19.2 million.

Changes in operating assets and liabilities including accounts receivable, advanced payments, accrued expenses, other liabilities, right-of-use assets, lease liabilities, and deferred revenue between 2024 and 2023 were of $2.7 million, $5.0 million, ($6.0 million), $35.7 million, $4.2 million, ($3.3 million), and ($22.4 million), respectively. The increase in the source of cash of $12.2 million was primarily attributable to the timing of cash receipts and cash payments. We actively manage our accounts receivable and contract liabilities, along with the related aging and collection efforts.

The increase in non-cash expenses between 2024 and 2023 was primarily due to an increase in depreciation and amortization of $7.8 million due to additional construction projects being placed into service, an increase in loss on disposal of fixed assets of $1.7 million from a disposal in 2024 that did not occur in 2023, and an increase in non-cash expense related to the change in fair value of warrant liability of $2.9 million between 2024 and 2023.

Net Cash Used in Investing Activities

Net cash used in investing activities decreased by $37.3 million, or 53%, to $32.7 million in 2024 compared to $70.0 million in 2023, reflecting a decrease in cash purchases of property and equipment of $44.6 million in 2024 compared to 2023. Additionally, in 2023, there was a positive cash inflow of $7.3 million from the acquisition of cash in a business combination, which was financed through the issuance of convertible preferred stock.

Net Cash Provided by Financing Activities

Net cash provided by financing activities decreased by $7.9 million, or 3%, to $232.8 million in 2024 compared to $240.7 million in 2023.

 

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During 2024, net cash provided by financing activities primarily consisted of $189.0 million of proceeds from the issuance of convertible preferred stock. Additionally, $49.0 million was raised from the issuance of notes payable. We also received $0.3 million from the repayment of employee notes and $0.6 million from the exercise of stock options. These increases were offset by payments of debt issuance costs of $2.3 million, payments on notes payable of $3.7 million and principal payments on finance leases of $0.1 million.

During 2023, net cash provided by financing activities primarily consisted of $149.8 million of proceeds from the issuance of convertible preferred stock. Additionally, $101.7 million was raised from the issuance of notes payable and $21.1 million was raised from the issuance of notes payable to related parties. We also received $0.3 million from the repayment of employee notes and $0.6 million from the exercise of stock options. These increases were offset by payments of debt issuance costs of $24.7 million and payments of debt issuance costs on related party notes payable of $5.4 million. In addition, payments on notes payable of $1.0 million, payments on mortgage principal of $0.2 million, and principal payments on finance leases of $1.5 million further offset cash provided by financing activities.

Contractual Obligations and Commitments

Lease Commitments

We lease buildings, launch sites, office facilities, machineries, and computer equipment. These leases are classified as operating or financing leases with various expiration dates through 2042. Our total remaining lease obligation as of March 31, 2025 is $19.4 million, with $1.4 million due in less than one year. See Note 8 to our unaudited condensed consolidated financial statements included elsewhere in this prospectus for more information regarding our lease commitments.

Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet activities or have any arrangements or relationships with unconsolidated entities, such as variable interest, special purpose, and structured finance entities.

Critical Accounting Estimates

Our consolidated financial statements have been prepared in accordance with U.S. GAAP. Preparation of the financial statements requires our management to make judgments, estimates, and assumptions that impact the reported amount of net sales and expenses, assets and liabilities, and the disclosure of contingent assets and liabilities. We consider an accounting judgment, estimate, or assumption to be critical when the estimate or assumption is complex in nature or requires a high degree of judgment and the use of different judgments, estimates, and assumptions could have a material impact on our consolidated financial statements. We periodically review our estimates and make adjustments when facts and circumstances dictate. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations will be affected.

Revenue Recognition

We enter into contracts with our customers to provide payload services, engineering services, related components, and licenses to intellectual property. Our performance obligation is satisfied over time since the tasks are performed according to the customer’s specifications, which creates an asset with no alternative use to us and we have an enforceable right to payment for performance completed to date. The measure of progress over time is based upon an input method using a cost-to-cost measure which best depicts the transfer of control to the customer. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Estimating the total costs at completion of a performance obligation requires management to make

 

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estimates related to items such as subcontractor performance, material costs and availability, labor costs and productivity, and the costs of overhead. If estimates of total costs to be incurred on a contract exceed total estimates of revenue to be earned, a provision for the entire loss on the contract is recognized in the period the loss is incurred, based on the excess of management’s estimates of total costs to be incurred over revenue to be earned.

Management’s estimates of total costs to be incurred and variable revenue to be earned are highly subjective and dependent on its past experience and operations. Given the Company’s limited history of operations, its rapid development and commercialization of new products, as well as its continued focus on improving and refining its manufacturing processes, these estimates are inherently subject to a high degree of estimation uncertainty and may fluctuate significantly from period to period.

Warrants

The Company’s common and preferred stock warrants are liability classified on the consolidated balance sheet and, therefore, are recorded to fair value at each reporting period. The Level 3 significant unobservable inputs used in the fair value measurement of the Company’s common and preferred stock warrant liabilities are volatility, term, discount for lack of marketability and probability weighting based on different scenarios including change of control, initial public offering, and default. The fair value of the warrants may fluctuate primarily based on the implied volatility which varies based on future market and industry condition.

Impairment of Long-Lived Assets

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows which the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. We have not identified any such impairment losses to date.

Using a discounted cash flow method involves significant judgment and requires us to make significant estimates and assumptions, including long-term projections of cash flows, market conditions, and appropriate discount rates. Judgments are based on historical experience, current market trends, consultations with external valuation specialists, and other information. If facts and circumstances change, the use of different estimates and assumptions could result in a materially different outcome. We generally develop these forecasts based on recent sales data for existing services, acquisitions, and estimated future growth of the market in which we operate.

Recently Issued and Adopted Accounting Standards

Newly adopted accounting standards are described in Note 2 to our audited consolidated financial statements included elsewhere in this prospectus.

Emerging Growth Company Accounting Election

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable. We are an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended, and have elected to take advantage of the benefits of this extended transition period, which means that when a standard is issued or revised and has different application dates for public or private companies, we, as an emerging growth

 

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company, may adopt the new or revised standard at the time private companies are required to adopt the new or revised standard. We are expected to remain an emerging growth company at least through the end of the fiscal year ended December 31, 2025 and are expected to continue to take advantage of the benefits of the extended transition period. This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions for emerging growth companies because of the potential differences in accounting standards used.

Quantitative and Qualitative Disclosures About Market Risk

We have operations within the United States and as such we are exposed to market risks in the ordinary course of our business, including the effects of interest rate changes and credit risk. Information related to quantitative and qualitative disclosure about this market risk is set forth below.

Interest Rate Risk

We are exposed to market risk for changes in interest rates applicable to our cash and cash equivalents and debt. We have cash and cash equivalents totaling $176.9 million and $123.4 million as of March 31, 2025 and December 31, 2024, respectively. Our cash and cash equivalents were invested in interest bearing demand deposit accounts and high-quality money market funds. We have outstanding fixed-rate debt totaling $136.1 million as of March 31, 2025. A hypothetical 100-basis point increase in interest rates would decrease the fair value of our fixed-rate debt by approximately $1.4 million, while a hypothetical 100-basis-point decrease in interest rates would increase the fair value of our fixed-rate debt by approximately $1.4 million. The impact of market risk rate fluctuations on our debt does not affect our results of operations or financial conditions.

Credit Risk

Credit risk arises primarily from receivables from our customers. Credit risk is managed through ongoing credit evaluations of its customers’ financial condition, taking into account the financial condition, current economic trends, analysis of historical bad debts, and aging of accounts receivables. The maximum exposure to credit risk at the reporting date is primarily from accounts receivables which amounted to $14.9 million and $1.0 million, respectively as of March 31, 2025 and December 31, 2024.

 

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BUSINESS

Overview

Firefly Aerospace is a market leading space and defense technology company with an established track record of success providing comprehensive mission solutions to national security, government, and commercial customers. Our mission is to enable responsive, regular, and reliable launch, transit, and operations in space for our customers across the globe. Backed by our world-class team and proven technology, we have designed, developed, and deployed our class-leading launch vehicles and dynamic spacecraft solutions to support critical customer missions across the space domain. As a leader of responsive mission solutions and the only commercial company to achieve a fully successful Moon landing, we are a partner of choice for national security, government, and commercial customers for their critical space missions. As a U.S.-based company, our purpose-built family of products aligns with the ongoing paradigm shift in government missions and procurement processes, where speed, dependability, efficiency, and economics drive customer decision-making.

We have a differentiated and scalable platform of Launch and Spacecraft Solutions with flight heritage. Within Launch, we have two offerings built on common technologies: Alpha and Eclipse. Our operational launch vehicle, Alpha, is the first and only U.S.-based orbital rocket in the 1,000 kilograms class to successfully reach orbit, with four launches completed successfully. These successful launches include responsive space missions, which are a significant differentiator for Firefly and a critical national defense solution. Eclipse, a reusable and scaled up version of Alpha, is in final development in partnership with Northrop Grumman and is expected to deliver 16,000-kilogram payloads to LEO and can access MEO, GEO, HEO and TLI. We expect that Eclipse will first launch from Wallops Island, Virginia, as early as 2026 and it will be able to support space station resupply, commercial spacecraft, critical national security missions, and scientific payloads for the domestic and international markets.

Our Spacecraft Solutions—our Blue Ghost and Elytra offerings—highlight the heritage of common technologies from our launch vehicles. Blue Ghost Lander and Elytra are highly maneuverable spacecraft enabled by high performance rocket engine technology. Our Blue Ghost lander is the only commercial vehicle to ever achieve a fully successful Moon landing and the first U.S.-based lander to successfully complete a lunar surface mission since NASA’s Apollo 17 in 1972. We have a flight proven spacecraft that has operated in LEO, MEO, GEO, and Cislunar orbits. Elytra is our high thrust spacecraft platform creating new categories for space domain awareness and warfighting, long-range communications relays, on-orbit edge processing, and advanced space exploration. Elytra is capable of a wide-range of spacecraft missions across multiple orbits, including satellite delivery, on-orbit transfers, hosted payloads, communications relay, and more–which positions us to help establish a dominant U.S. and allied national security position in space. Elytra will support near-term Blue Ghost missions, highlighting both space-readiness and scalability of the underlying technology. Elytra will also support a responsive on-orbit mission for the DoD’s DIU and perform multiple RPO and space domain awareness operations on-demand. These foundational capabilities and underlying technologies form the basis of our responsive, dedicated, and scalable solutions that are evolving alongside the rapidly shifting defense technology and space landscape.

We operate in a highly attractive and growing industry. According to McKinsey’s report from 2024, the global space economy is projected to reach $1.8 trillion in value by 2035 driven by accelerating national security and commercial demand. In recent years, record demand for satellites caused a supply shortage of orbital launch vehicles. In 2024, nearly 2,800 satellites launched to orbit, representing more than a 500% increase in demand for launch services compared to just five years prior, according to a 2025 report by BryceTech. The scarcity of launch capacity and increasing government and commercial demand has led these customers to seek out defense technology companies with cost-efficient and proven production systems for increasing capacity.

In the 21st century, space evolved from frontier exploration into a critical domain for global infrastructure and contested dominance. From 2024 – 2029, the DoD’s average proposed space budget has increased 82% from

 

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2018 – 2023 averages. Governments from militarily competitive and adversarial countries continue to make significant investments in space and develop their capabilities, which we believe makes our unique mission solutions a crucial resource for the United States’ national defense strategy. Space is the critical backbone of national security communications, intelligence gathering, and support for terrestrial military operations. As one of the only U.S.-based commercial companies currently equipped to provide reliable access to launch, transit, and operations in space, we are leading the way in end-to-end services for the rapidly expanding defense, space exploration, and commercial space markets.

Our products are designed to address our customers’ space and defense technology needs. Within Launch, we provide satellite customers with reliable, regular, and rapid access to space. Including its inaugural launch in 2021, Alpha has conducted six launches and has more than 30 planned launches under contract as of March 2025. The successful FLTA002 mission using Alpha made us the first U.S. company to achieve orbit on the second attempt. Our leading launch offerings are tailored to support the demands of our customers in the national security space. The VICTUS NOX mission using Alpha set a new responsive launch record for Space Force, with a turnaround time from notification to launch in approximately 24 hours, shattering the previous industry record of 21 days. The mission established a responsive launch defense capability that previously did not exist, which provides critical warfighting advantages to the United States. As a result of the success of VICTUS NOX, we have won additional responsive launch contracts for Alpha, including the VICTUS SOL and VICTUS HAZE missions.

Alpha is an attractive platform for providing hypersonic flight test capabilities to the DoD and other federal agencies. Alpha is contracted to be utilized for MACH-TB, the DoD’s Multi-Service Advanced Capability Hypersonics Test Bed, to carry and deploy payloads into hypersonic trajectories, a crucial testing step for national security customers in the development of next generation weapon systems. Our Alpha platform allows us to provide cost effective hypersonic test capabilities, making us a partner of choice for defense companies looking to advance in the arena of hypersonics.

The Eclipse rocket is a next-generation vehicle designed to fill a gap in the current launch market. Building on the scalable technological foundation of our Alpha launch vehicle, we are developing Eclipse in partnership with Northrop Grumman to be reusable and deliver upwards of 16 times the mass to orbit compared to Alpha. Eclipse leverages key technologies and expertise from Alpha, including a carbon composite structure and patented tap-off cycle engine technology. In February 2024, we used an automated fiber placement machine to build the first carbon composite barrel for Eclipse development testing. Additionally, Alpha laid the foundation for our production systems and test stands that are being used for rapid production of Eclipse. For example, the first stage propellant tank for Eclipse was placed on a test stand and became eligible for development testing starting in August 2024. Shortly thereafter, in October 2024, Eclipse completed a successful Miranda engine test campaign at 100% power. In March 2025, the Eclipse Stage 1 first flight build of the liquid oxygen and RP-1 tank components were assembled. Assembly continues for this first flight tank assembly build. Build completion is anticipated in September 2025. Testing of the flight tank assembly will then be performed on the Eclipse Structural Test Stand. The test stand performs structural loading simulating dynamics forces encountered during flight. These design features and foundation enable enhanced performance, flexible launch schedules, and competitive pricing.

To complement our Launch platform, we offer customizable Spacecraft that are versatile and launch vehicle agnostic: our proven Blue Ghost Lander and our multi mission orbital spacecraft line, Elytra, which is being built using the Blue Ghost technological framework. This pair of spacecraft product lines leverages common technologies including flight software, thrusters, batteries, avionics, and composite structures. Our spacecraft are flexible and can be launched individually or together to enable lander and on-orbit missions.

On March 2, 2025, we became the first private company to successfully land and operate on the Moon with Blue Ghost Mission 1. The achievement marked the first fully successful U.S. lunar surface landing since the Apollo era over 50 years ago. Historically, only five countries—the United States, China, Russia, Japan, and

 

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India—have achieved the feat of a lunar soft-landing, putting Firefly’s capability in the realm of global superpowers. Blue Ghost Mission 1 carried 10 NASA payloads to the Moon for a total contract value of $102.1 million and completed all NASA missions for 14 days on the surface and five hours into the lunar night, while successfully meeting mission expectations. The success of our Blue Ghost lander delivered 120 GB of valuable data and positions us to push forward rapidly with additional lunar missions, as well as future interplanetary expeditions.

During Blue Ghost Mission 1, we also proved our common Elytra spacecraft technology by operating through LEO, MEO, GEO, and Cislunar space prior to landing. Elytra will directly support Blue Ghost Mission 2 in 2026, providing data relay services from lunar orbit. Elytra is also contracted to conduct an on-orbit mission that supports the NRO, and is onboarded to perform technology missions to support the Proliferated Warfighter Space Architecture of Tracking and Transport layer constellations for the SDA. Elytra has also been placed on contract for a Space Maneuver Vehicle to support the DoD’s DIU with high delta-v to perform hundreds of RPO maneuvers to perform Space Domain Awareness to deter rival space threats.

Firefly’s state-of-the-art facilities support our Launch and Spacecraft product lines. Our R&D, iterative testing, and scalable manufacturing processes are vertically integrated and streamlined. Our corporate headquarters, the Rocket Ranch, and the Hive are located just north of Austin, Texas. The Rocket Ranch, our 200-acre, state-of-the-art manufacturing and testing facility, is strategically located within 25 miles of our Austin facilities. The Rocket Ranch has approximately 200,000 square feet of production capacity, six test stands, and advanced manufacturing equipment which leverages automation through robotics. The Hive houses our spacecraft, software, and avionics teams, in addition to a state-of-the-art clean room and mission control room that supports launch, land, and orbit missions. We perform assembly and testing in-house and are co-located with design and manufacturing, enabling fast and high-quality development cycles and efficient use of working capital.

Our full suite of manufacturing capabilities is supplemented by four launch sites, which will continue to enhance flexibility and responsiveness for our missions. We can arrange ongoing launch rockets from the Vandenberg Space Force Base launch site in California. Additional launch sites are under construction at Virginia’s Mid-Atlantic Regional Spaceport on Wallops Island on Wallops Island and the Esrange Space Center in Sweden, and future launch pad capacity will be unlocked from expansion at Cape Canaveral SFS in Florida. Our significant scale and unique blueprint are strategically planned to support our increasing launch cadence as we grow.

Firefly’s Key Highlights

 

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We began operations in 2017 and successfully reached orbit with Alpha in October 2022, after extensive research, development, and testing. This achievement made us the first and only U.S. commercial company with a rocket ready to fulfill critical space missions in the 1,000 kilograms payload class.

 

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Alpha set a new responsive launch record with the VICTUS NOX mission in September 2023, when we flew a rocket for Space Force with a turnaround time from notification to launch in approximately 24 hours, shattering the previous industry record of 21 days. The mission established a responsive launch defense capability that provides new critical warfighting advantages to the United States.

 

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The Blue Ghost mission landed on the Moon on March 2, 2025, marking the first fully successful lunar landing by a commercial company.

 

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We are developing a new, reusable launch vehicle called Eclipse, in a first-of-its-kind partnership with Northrop Grumman. Announced in August 2022, our teams joined to create an American-built rocket to replace a critical gap in the U.S. market, while also delivering a new long-term capability for serving national security, government, and commercial launch customers.

 

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  •  

Our team developed four engines in rapid succession, with investments in cutting-edge advanced technology, such as our patented tap-off cycle that unlocks critical weight and component savings for our launch vehicles. Firefly designed, built, tested, and flew a suite of in-house developed propulsion systems– including the Reaver, Lightning, and Spectre engines. Additionally, in less than 23 months, our new Miranda engine went from clean sheet design to 71 test fires and counting. Firefly’s scaled architecture across engines allows for fast and reliable development.

Our Mission Solutions

We provide full cycle, dedicated, and responsive launch and spacecraft solutions, and continue to redefine space access by delivering complementary platforms for mission success. Our common technologies, components, and know-how are woven across our launch vehicles and spacecraft solutions.

Launch: Firefly’s launch vehicles provide dedicated and responsive launch for national security, government, and commercial customers. We are the only U.S. company with a liquid-powered orbital launch vehicle in the 1,000 kilograms payload class. Our Alpha launch vehicle employs a distinct combination of technologies designed to ensure high performance and efficiency at low cost. It uses a unique lightweight, rigid, and thermally insulated carbon composite technology for both the primary rocket structure as well as the propellant tanks, which ensures more of the usable mass goes to the mission payload. Alpha is also powered by our patented tap-off cycle engine technology which is more efficient than legacy systems and provides greater reliability by employing fewer parts than traditional rocket engines. We have utilized this proprietary technology to develop all our rocket engines in-house. Alpha has five engines: four first stage Reaver engines, and one second stage Lightning engine. In addition to its track record of successful, dedicated, and responsive launch, Alpha is also designed to support testing of hypersonic payloads, providing significant growth opportunities for hypersonic deterrents, reconnaissance, and future national security needs. We are also expanding our pad operations from Vandenberg Space Force Base to add Wallops, VA and Kiruna, Sweden to support more missions, customers, and additional launch cadence opportunities. The Sweden pad is designed to expand Alpha production and operations to strategic international locations to service the European, UK, Japan, South Korea, Middle East, and Australia regions, which we expect will provide the foundation for a future business model to service the global market.

Eclipse is powered by seven Miranda engines, each of which produces 230,000 pounds-force of thrust. The Miranda engine is built using the same engine architecture and patented tap-off cycle as the Reaver engine, which produces 45,000 pounds-force of thrust. These common technologies are facilitating fast, cost-efficient, and reliable development of Eclipse. Eclipse is being built to serve national security, commercial, and international launch markets at competitive pricing. Eclipse’s Stage 1 is designed to be reusable, lowering production costs and improving cycle times for this launch platform. We are planning to construct a refurbishment facility that will facilitate this reusability. The first launch of Eclipse is expected to take place from Virginia’s Mid-Atlantic Regional Spaceport on Wallops Island, and Eclipse is designed to be compatible with additional launch ranges on the East and West Coasts of the United States.

Spacecraft Solutions: Firefly is the only company to achieve a fully successful Moon landing, completing all 17 objectives set out before launch. We expect our Blue Ghost lander to fly annual missions to the Moon, with payload services customized to the technology and exploration goals of our customers. Offering ride-share opportunities and dedicated missions, Blue Ghost is built to host and deliver payloads nearly anywhere on the lunar surface. Blue Ghost Mission 2 is expected to land on the far side of the Moon and conduct at least 10 days of lunar surface operations with the Blue Ghost lander, with an Elytra Dark spacecraft supporting as a communications relay. Elytra Dark is one of three Elytra configurations supporting on-orbit servicing missions. This Elytra Dark spacecraft is expected to remain operational in lunar orbit for up to five years. Mission 2 is fully manifested with both NASA and commercial payloads, including a commercial rover and a ride-sharing international satellite. Blue Ghost Mission 3 is already under contract with NASA and we selected Blue Origin as a partner to deliver their rover to the lunar surface. Additionally, we were selected by a proprietary commercial customer for a future dedicated Blue Ghost lander mission.

 

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Elytra is a dynamic spacecraft that is highly maneuverable and extensible to perform hundreds of Rendezvous Proximity Operations in support of Space Domain Awareness and Warfighting missions, long-range communications relay missions, on-orbit edge processing missions, and advanced Space Exploration missions. A constellation of 44 Elytra spacecraft is expected to power a long-haul communications relay. Blue Ghost and Elytra are highly complementary and compatible technologies that share a common core. Most of Elytra’s core hardware and software were proven at a variety of orbits through Blue Ghost’s successful Mission 1. As part of our end-to-end space services, Elytra offers robust on-orbit solutions and responsive defense capabilities when and where customers need them. As of April 2025, Elytra is contracted to perform a responsive on-orbit mission in support of the DoD’s DIU Sinequone Project. During this mission, Elytra will serve as a space maneuver vehicle to perform a series of on-orbit tasks including space domain awareness in LEO. Available to launch on Alpha and Eclipse, our Elytra vehicles are positioned to service the entire lifecycle of government and commercial missions. This unique interoperability makes Firefly a one-stop shop and partner of choice for national security, government, and commercial customers requiring these capabilities.

Our Industry and Addressable Markets

Firefly’s business operates in the critical launch and spacecraft sectors with a focus on national security within the large and expanding space economy. The space economy includes launch, spacecraft, satellite constellations, and on-orbit and in-space services. We believe our main sources of competition fall into the following categories: companies providing dedicated and rideshare launch vehicles across payload classes, companies providing spacecraft and satellite constellations, and companies providing launch and spacecraft solutions that enable on-orbit and in-space services. According to McKinsey’s report from 2024, the global space economy is projected to reach $1.8 trillion in value by 2035 driven by accelerating national security and commercial demand. National security and advancements in space-based technologies are core focuses of the U.S. government on a bi-partisan basis and closely align with the key messages from the current administration regarding space. Given the critical role of space across the defense, national security, and commercial sectors, customers seek out trusted providers with proven, flexible, and responsive capabilities to deliver critical missions. As one of the only U.S.-based commercial companies currently equipped to provide reliable access to launch, transit, and operations in space, we are poised to grow in this attractive market.

Small and Medium Launch Market: Alpha is the only provider of small size launch that has achieved orbit and addresses a critical gap in the market in the 1,000 kilograms category. Eclipse, with its greater payload capacity and customizable five-meter payload fairing, will serve commercial customers and is also expected to launch large dedicated national security satellites or constellations of smaller national security satellites for the NSSL program.

Additionally, in the past decade the global market right-sized toward satellites between 200 kilograms to 1,200 kilograms, according to analysis by BryceTech in 2025. While Starlink represents a significant number of these satellites, 64% of the satellites launched since 2015 fit within this range. The global satellite market is projected to grow to over $600 billion in 2032, at an 8% compound annual growth rate from 2023, according to Allied Market Research. Small launch vehicles such as Alpha offer dedicated launches, flexibility, and cost-effectiveness in delivering the majority of these payloads to specific orbits. These dynamics are favorable for Alpha as the only U.S. launch vehicle in its class. In comparison, heavy lift launch vehicles do not provide dedicated access to specific orbits, and micro launch players lack the capacity to carry multiple payloads, leading to unfavorable unit economics.

There is scarcity in the market for providers with proven launch platforms and differentiated capabilities, and customers place a premium value on dedicated, reliable, and rapid response. With the successful development of Eclipse, we will be able to operate in the Medium Launch space, which is similarly underserved and benefits from ongoing sector tailwinds related to the demand for launch from national security and commercial customers. With growing national security and governmental requirements, defense spend,

 

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increasing demand for commercial launch, and the introduction of new space applications, our total addressable launch market is expected to grow to $32 billion by 2035 according to the World Economic Forum and McKinsey.

In particular, we believe the expansion of adversarial budgets to fund the development of space warfighting and intelligence, surveillance, reconnaissance satellites, and hypersonic vehicles will create additional demand from governmental national security customers for our solutions. According to the World Economic Forum and McKinsey, total state-sponsored defense spending is projected to grow from $66 billion in 2023 to $180 billion in 2035, and key adversaries are a major part of that. In 2025, China announced that it will increase its defense budget by 7.2% year over year, with a significant focus on space spending. This momentum in adversarial spending poses a direct threat to the U.S. and has further fueled the demand for launch. Our launch vehicles are well-positioned to deploy hypersonic payloads, driven by their ability to accelerate these payloads to high velocities. Our rapid response and hypersonics enablement capabilities position us to be a partner of choice as space-based defense becomes a more contested domain in the coming years.

Spacecraft Market: Our Spacecraft Solutions, Blue Ghost and Elytra, address the $7 billion spacecraft market as of 2024 according to Research and Markets. We are one of the few providers of lunar lander services with multiple planned launches under contracts and a multi-capability offering. Our successful Blue Ghost mission this year proves our capability to execute on challenging milestones: enter lunar orbit, measure radiation levels and the magnetic field in transit, land on the Moon, study the surface, and collect the most amount of data ever on the environment. We expect our significant competitive advantage will grow as we continue to execute on our upcoming Blue Ghost missions, with contracts already underway as part of NASA’s $2.6 billion CLPS program.

Our solutions also address critical space needs in applications, including in-space operations, data communications, and threat security capabilities. Our expanding complementary products and services in the defense and space market enable us to capture additional verticals within this ecosystem going forward, which is expected to reach $9 billion in value by 2030 according to Research and Markets. Space Force has been exploring dynamic space operations, which involves allowing satellites to move freely in and out of orbit. Given the ongoing global race to win in “satellite dogfighting,” Space Force is increasingly focused on ensuring space superiority by defending satellites with on-orbit solutions. As near peer threats rise in space and the U.S. government examines proactive orbital deterrence systems, we expect our Elytra spacecraft solution will become an essential part of the U.S. and allied nations’ security posture.

Competitive Strengths

Pioneering a Flywheel of Space and Defense Technology Mission Solutions

Our family of products and mission solutions provide us with the ability to serve the entire space domain and fuel our complementary technologies and comprehensive missions for national security, government, and commercial customers. Our heritage and proven technology are resetting the standard for success in launch, lander, and space markets. Our Alpha launch vehicle is the only orbit-ready U.S. rocket in the 1,000 kilograms payload vehicle class. We are a leader in tactically responsive space missions, having completed a record-breaking launch with an approximately 24-hour turnaround for VICTUS NOX. This mission showcased our ability to deliver payloads to orbit on short notice, which is a critical capability for national security operations. The success of this mission has resulted in multiple subsequent contract awards. We are a partner of choice for our customers’ most complex missions and assignments, with rapid response capabilities to address critical threats. With these proven launch capabilities and innovative technologies, we are a crucial partner for large national defense primes who need access to space.

In addition to our launch vehicles, we offer launch platform agnostic spacecraft solutions to address customers’ various in-space mission requirements. As the only company to have successfully landed and completed NASA missions on the Moon, we set the standard for landers. Our first Blue Ghost mission was

 

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launched in January 2025 and successfully completed a 60-day operation, making it the longest commercial lunar surface mission to date. Our multi-mission orbital vehicle, Elytra, is poised to serve numerous strategic and defense-related functions within orbit, including carrying payloads into and out of orbit, performing long-haul communications missions, fostering space domain awareness, and other responsive space capabilities.

Firefly’s launch and spacecraft services differentiate the company by providing a one-stop shop solution for customers. Our services work agnostically with partners and are additive to our own systems as well—for example, we can deliver payloads to the Moon using our Blue Ghost in tandem with another organization’s launch vehicle or pair our platforms together, such as a mission launched on our Alpha rocket that uses an Elytra spacecraft. Therefore, we are able to benefit from demand for our family of products, which we expect to continue to grow as our finalized intercoastal launch pads facilitate increased launch cadence. This flywheel streamlines our development, reduces costs, and expands our total addressable market, all while differentiating Firefly from competitors.

Innovative Patented Technology and Unmatched Technical Expertise

We have taken a reliability-first approach to building our launch vehicles, landers, and spacecraft. We successfully built the world’s largest all-composite launch vehicle, our Alpha rocket. Our rockets are built using lightweight and strong carbon fiber, leveraging automated fiber placement technology to ensure unified production methodology across all of our product lines. We produce the only launch vehicles with liner-less carbon fiber liquid oxygen tanks that are manufactured through proprietary bonding operations. This technology allows us to keep liquid oxygen at -300F, saving significant weight versus certain of our competitors’ vehicles.

Our propulsion systems represent another patented technology, with highly efficient tap-off cycle engines. We are unique in developing and scaling this technology, having built and successfully flown the highest thrust tap-off cycle technology in the world. Additionally, our advanced propulsion and avionics systems are designed and tested in-house to facilitate high performance in tough environments. Our launch vehicles are readily scalable, with the Reaver and Lightning engines in our Alpha vehicle providing the patented technology for the Miranda and Vira engines in Eclipse. In addition to the launch vehicle engines, we have also developed proprietary Spectre thrusters utilized on both Blue Ghost and Elytra.

As of June 22, 2025, we have a team that consists of 296 engineers and 173 skilled technicians that bring deep subject matter expertise and discipline from across the defense sector. We have progressed development at an exceptional pace, as evidenced by the fact that in less than 20 months we have developed from a clean design and tested our patented Miranda engine based on a scaled design of the Reaver engine. This success has been built on leading intellectual property, world-class infrastructure, and the strength of our technical team. These factors collectively support our competitive moat. Our technology portfolio and expertise are based on years of testing and operating.

Purpose-Built Infrastructure Creates High Barriers to Entry

We strategically deployed capital to build state-of-the-art infrastructure to design, produce, test, and manufacture our products to the highest standard at a regular cadence. Our three primary facilities—our corporate headquarters, the Hive spacecraft facility, and our Rocket Ranch manufacturing and testing site—are only 25 miles apart, providing unique proximity between design, manufacturing, and production. The proximity of our core facilities enables agile and rapid vehicle development and production at lower cost versus competitors. By maintaining a vertically integrated manufacturing process, we are less reliant on the timelines of outside suppliers and reduce risk within our supply chain.

Our purpose-built R&D, manufacturing, and testing footprint is the product of significant investments and the backbone of our manufacturing process. We designed our advanced manufacturing process through years of optimization that now allows us to replicate our additional facilities with significantly less capital. Our early

 

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investment in cutting-edge technology and best-in-class facilities is a competitive advantage, creating a platform primed for continued growth.

Strong Customer Relationships and Market Leading Strategic Partnerships

As the space market continues to grow and evolve, we are well-positioned to serve our customers’ most complex missions with rapid response times and purpose-built solutions. Our collaborations with leading national security agencies and aerospace companies, such as Lockheed Martin Corporation, Northrop Grumman, L3Harris, Space Force, SDA, NRO, and NASA demonstrate the value and criticality of our new space defense and technology leadership in this market.

 

  •  

Lockheed Martin: We have a multi-launch agreement with Lockheed Martin that includes up to 25 missions over the next five years. Under this agreement, we plan to routinely launch a variety of future Lockheed Martin spacecraft, including new payload technologies, into LEO from our launch facilities on the West and East Coasts of the United States.

 

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Northrop Grumman: We have an exclusive partnership with Northrop Grumman on our development of Eclipse. This platform combines leading flight-proven technologies and mission experience from both companies to fill a void in the underserved medium-lift market. Supported by a $50 million equity investment from Northrop Grumman, Eclipse builds on our Alpha rocket technology and Northrop Grumman’s Antares rocket, combining our technologies and expertise with the first partnership of its kind between the best of legacy and new space.

 

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L3Harris: We have a multi-launch agreement with L3Harris for up to 20 launches on our Alpha rocket, including two to four missions per year from 2027 to 2031 depending on customer needs. The new agreement is in addition to our existing multi-launch agreement with L3Harris for three Alpha missions in 2026.

 

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Space Force: We set a responsive launch record by launching the VICTUS NOX mission for Space Force within an approximately 24-hour window. As a result, we are the leading tactically responsive launch provider, and Space Force is leveraging our responsive launch capabilities on two additional upcoming missions, VICTUS HAZE and VICTUS SOL.

 

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Space Development Agency: Firefly has been onboarded as a selected vendor for the SDA’s HALO program. Using our Elytra orbital vehicles, we will support end-to-end demonstration missions for the SDA’s military satellite constellation, including launch, on-orbit transit, and tracking services.

 

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National Reconnaissance Office: We have been selected to serve as a launch provider to the NRO, with our Alpha rocket as part of their SLIC. Our rapid response capabilities are essential to the NRO’s defensive missions, providing them with a launch vehicle with leading capabilities and proven flight heritage. In addition to this, Elytra is contracted to support an on-orbit mission for the NRO. Elytra is designed to perform a rapid payload reconfiguration, deploy commercial rideshare payloads, execute an on-orbit maneuver, and stand ready to deploy U.S. government payloads on demand.

 

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NASA: NASA contracts us for spacecraft and launch missions. We are the only company to successfully land, operate, and complete NASA missions on the Moon. We won the largest active NASA CLPS contract in December 2024 at $179 million. We are a prime contractor on three missions and four CLPS task orders to the Moon through contracts with a total potential value of $411.7 million with additional commercial payloads. NASA also contracts us for launch services, including a VADR contract for a dedicated Alpha launch. This Alpha launch will deliver the agency’s INCUS mission from NASA’s Wallops Flight Facility.

 

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Blue Origin: We have recently selected Honeybee Robotics, a Blue Origin company, to provide a rover to accompany our Blue Ghost lander in an upcoming task order from NASA to explore the Gruithuisen Domes on the Moon. The rover will be transported by Elytra Dark and deployed by Blue Ghost to help study the composition of the domes using instruments provided by NASA. We successfully collaborated with Honeybee on two prior payloads during Blue Ghost’s first mission.

 

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  •  

Jet Propulsion Laboratory: Firefly partners with JPL for test facilities and technologies licenses. Our Blue Ghost lander was tested thoroughly with vibration, acoustic, thermal vacuum, and electromagnetic interference and compatibility to ensure the vehicle would withstand the rigors of a lunar mission.

 

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SpaceX: We also have a strong strategic partnership with SpaceX for payload processing facilities and launch vehicles. Most recently, our Blue Ghost lander was launched on a SpaceX Falcon 9 rocket, ensuring a smooth start to our groundbreaking lunar mission.

 

  •  

Defense Innovation Unit: We signed an agreement with the DIU to conduct a trade study on our capabilities to rapidly launch our Elytra vehicles and support missions xGEO. Once completed, we will conduct up to two demonstrations to deliver multiple payloads to xGEO orbits aboard our Elytra Dark spacecraft with the first mission completed within 18 months of receiving the approval to proceed. The contract will support the Sinequone Project, the DIU’s mission to develop responsive access to xGEO.

Additionally, we have built a robust portfolio of contracts composed of blue-chip customers across both government and commercial end markets including NASA, Space Force, the DoD’s SDA, the NRO, Northrop Grumman, Lockheed Martin, L3 Harris Technologies, Inc. and True Anomaly, Inc. Our customizable offerings across launch, lander, and spacecraft, and our speed of execution as proven through our existing successes, are well-recognized by our growing list of government and commercial customers.

Differentiated National Security and Defense Technology Capabilities

Firefly’s portfolio of multi-launch agreements and contracts with defense primes, national security agencies, and government partners demonstrates a high degree of trust in our company as a key national security partner. Alpha’s track record of success and repeated demonstrations of rapid response missions make Firefly a leader in tactically responsive space capabilities. With its dedicated and responsive service to preferred orbits, 1,000 kilograms capability, and ability to deliver multiple hypersonic payloads, Alpha provides an unrivaled service. Additionally, Eclipse, with its greater payload capacity, is purpose-designed to support national security space launch and commercial missions. Within our spacecraft solutions, Blue Ghost and Elytra platforms support national security needs by traveling further into space and supporting larger, more advanced on-orbit missions. Blue Ghost has proven our capability to deliver on NASA priorities while harnessing national security benefits related to lunar exploration. Elytra is primed to add to our competitive moat by expanding to on-orbit responsive missions for the DoD. Poised to launch on Alpha and Eclipse, as well as other vehicles, Elytra is intended to provide space maneuver vehicles, long-haul communications relays, edge processing, as well as space exploration capabilities for the entire lifecycle of national security missions.

Our proven, extensive national security capabilities position the Firefly platform for future growth. Critical civil and national security infrastructure on Earth depends on satellite systems in space, and threats from adversaries have been on the rise. Established space nations are expected to increase spending over the next decade on national security, specifically in intelligence capabilities. The DoD has also enhanced its strategy to meet the growing challenges of the space domain. With our diverse space technology offerings, we are well-positioned to benefit from these national security tailwinds in this contested domain.

Established Business Model Backed by Robust Backlog

Our track record of success and our reputation as a trusted provider for our customers results in a highly attractive, diversified business model defined by significant backlog and cash flow visibility. Strong customer demand backs our financial profile with approximately $1.1 billion in backlog as of March 31, 2025 and multi-launch agreements across our product lines. Underpinning our financial profile is the combination of efficient contract structure and milestone-based billing. Before launch, we typically have collected approximately 90% of the total contract value, which is highly advantageous as production ramps. We are also differentiated in our ability to successfully execute on fixed firm price contracts. We are ahead of the curve as the industry shifts in favor of fixed firm price contracts and are well-positioned to capitalize on this change. As we scale, we have and

 

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expect to continue to replicate our proprietary manufacturing and testing processes, resulting in reduced cycle times and further capital efficiency. Our established business model has set us up to capitalize on the growth of the industry and continue to win with customers based on our proven track record.

World-Class Management Team and Employee Base

Our mission-focused leadership team, with decades of experience across advanced engineering and manufacturing sectors, is driven by a commitment to excellence and unified behind the Firefly mission. Our team possesses the leadership, innovational, operational and financial experience necessary to successfully lead Firefly through its continued growth:

 

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Jason Kim, our Chief Executive Officer, has more than two decades of experience in the aerospace and defense sectors, bringing both executive leadership and a highly technical background to Firefly. Most recently, Jason served as CEO of Millennium Space Systems, Inc., where he led the company through a period of significant expansion and technology advancements. At Millennium Space Systems, Inc., he served as a key partner and customer in Firefly’s VICTUS NOX mission for Space Force. His extensive career also includes leadership roles at Raytheon Intelligence & Space, Northrop Grumman Aerospace Systems, and the U.S. Air Force.

 

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Shea Ferring, our Chief Technology Officer, has more than three decades of experience in design, integration, and test of space systems. Shea has held numerous engineering and leadership roles throughout his career including at NASA Launch Services Program, ECAPS, Vencore, and Orbital ATK. Over the years, Shea participated in over 50 space missions spanning numerous launch vehicles, including Minotaur, Atlas V, Delta IV, Pegasus, and Falcon 9.

 

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Darren Ma, our Chief Financial Officer, has more than two decades of finance experience helping scale large-cap, mid-cap, and small-cap public companies, most recently as the CFO and SVP of Spectra7 Microsystems Inc. and as the CFO for GigPeak, Inc. (NYSE: GIG), where he was instrumental in strategically raising capital, driving profitable growth, and selling the company.

 

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Dan Fermon, our Chief Operating Officer, is a seasoned operations leader with decades of experience leading teams in highly technical industries, primarily in aerospace. Prior to Firefly, Dan was a Vice President at AE Industrial Partners, LP in the firm’s Portfolio Strategy and Optimization Group, where he focused on improving the operational performance of its portfolio companies. He also served as the P&L and Operations Leader for GE Aerospace’s Global Component Repair team, driving operational excellence by utilizing technology, lean improvements, and powerful team engagement.

 

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Brigette Oakes, our VP of Engineering, has more than 15 years of experience in the industry from both legacy and new space companies, with robust experience spanning propulsion design, modeling, and test in addition to guidance, navigation, and control software, performance analysis, and ground support equipment. Prior to Firefly, Brigette held a variety of roles in the space sector at companies including SpaceX, Relativity Space Inc., and Lockheed Martin.

Growth Strategy

Increase Launch Cadence to Meet Growing Market Demand

We are increasing our launch frequency to meet the growing demand for reliable space access. The launch market is rapidly expanding, with significant demand for launch and space services. This demand is reflected in our robust backlog of approximately $1.1 billion as of March 31, 2025 and in the fact that we have over 30 planned launches under contract as of March 2025. We are well-positioned to continue to increase our production rate and launch cadence for our small and medium launch vehicles. Through Space Force’s VICTUS NOX mission, we showcased our ability to deliver critical payloads to orbit on short notice–a crucial asset for national security operations. Our end-to-end mission solutions position us to leverage Alpha’s track record of success and replicate it using the larger Eclipse rocket.

 

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Given our tailored launch capabilities, we have been awarded additional critical defense missions and multi-launch agreements as space increasingly becomes a contested area of focus for national security agencies and commercial customers. To meet this growing demand and accelerate production, we doubled our production facility size to approximately 200,000 square feet and expanded our processes to manufacture one Alpha launch vehicle per month. Firefly designed our launch facility infrastructure to be scalable throughout the U.S. and internationally. We currently launch from Vandenberg Space Force Base in California and have strategically secured space in Virginia, Florida, and Sweden for additional launch facilities as we increase global capacity to address our customers’ needs. We expect to continue to expand our infrastructure in a capital efficient manner to meet anticipated customer demand.

Scale Across Mission Solutions to Enable Profitable Growth Driven by Common Technologies

Following our success with Alpha and Blue Ghost, we are focused on increasing the frequency of launch and spacecraft deployment in a cost-efficient manner. On the demand side, our customers value flexibility, access to preferred orbits, and dedicated launch vehicles–a value proposition that we built our rockets and spacecraft around. Our strong backlog demonstrates the need to scale our launch platform. In parallel, we have additional contracts backing Blue Ghost missions, and our spacecraft pipeline continues to be bolstered by demand stemming from national security missions and commercial space exploration. We are also expanding into the medium payload class with Eclipse and our orbital solutions. Our Elytra spacecraft will enable us to provide constellations of space maneuver vehicles, long-range communications relays, and space exploration orbiters. Alpha, Eclipse, Blue Ghost, and Elytra share common technologies, processes, team expertise, and production lines, enabling capital efficiency as well as first time quality across products. All products utilize the carbon composite primary and tank structures and leverage the automated fiber placement machine, power milling tool, and other test capabilities. Our products also share avionics, software, and rocket engine technology to enable economies of scale, responsive delivery schedules, fungible inventory, and flight proven mission assurance.

With each launch, we expect our cost structure and unit economics to meaningfully improve, as our increased launch cadence will result in fixed cost amortization and operating efficiencies. Additional efficiencies are unlocked by our streamlined development and production processes. Eclipse’s development is progressing rapidly given Alpha and Eclipse share significant carryover from our engineering team and substantial component commonality and supply chain compatibility.

As a provider of choice, we have selected strategic partnerships that enable synergistic development and expansion. Our exclusive partnership with Northrop Grumman combines our companies’ respective technologies to co-develop Eclipse. We believe our strategic partnerships unlock access to additional infrastructure and new customers as we propel our partners with our new space capabilities to develop and deliver purpose-built technology for customers across the space and defense technology sector.

Our intentional common technologies approach to our mission solutions have enabled the evolutionary development of Eclipse from Alpha and Elytra from Blue Ghost, allowing for faster and more reliable production while keeping costs low. As we increase our launch cadence and scale our solutions, we expect to grow our revenue base and improve and stabilize our cost structure. We thoughtfully invest capital to enable scaled production with favorable unit economics while keeping costs and capital expenditure minimized to yield profitable growth.

Deploying Our In-Space Heritage for Advanced Operations and Services

Elytra is designed to support rapid, end-to-end demonstration missions, especially for military satellites. Elytra was recently selected to support the DoD’s DIU Sinequone Project. As part of the mission, Elytra will host a suite of government payloads, including optical visible and infrared cameras, a responsive navigation unit, and a universal electrical bus. Elytra’s configuration will utilize common components, structures, and propulsion systems to enable on-demand mobility, plane changes and maneuvers with high performance capabilities and reliability.

 

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In addition to Elytra’s existing revenue-generating contracts, there are numerous customers interested in using Firefly’s platform for space domain awareness and other heavy lift applications. There are a myriad national security applications for Elytra’s in-orbit technology, such as providing long-haul communications, radio frequency calibration services, and deploying government payloads on demand. Furthermore, the global race to solidify abilities in “satellite dogfighting” have made establishing space domain dominance a priority of Space Force, which Elytra is designed to help address. As space becomes a further contested domain, we believe Elytra’s on-orbit services will be a key avenue for our growth.

Seek Value-Added Acquisitions Complementary to our Existing Offerings

As we expand our offerings, we may choose to strengthen our internal capabilities and accelerate development through acquisitions. We intend to take a disciplined approach to future acquisitions. Our focus is to continue scaling and increasing launch cadence to achieve profitable growth while serving our customers’ critical missions. In pursuing any complementary acquisitions, we expect to target companies that increase our share of the national security market, promote vertical integration, or automate production processes while maintaining quality and enabling further market expansion. As the space industry matures, we believe that there will be additional opportunities to acquire targets which enhance our capabilities and financial profile, and our goal is to position ourselves as the acquirer of choice for space services and technology companies.

Operations

Our research, design, and manufacturing operations are supported by vertical integration at our U.S.-based facilities. We design and manufacture many of the components and subsystems for our launch vehicles, spacecraft, satellites, and landers. To support this level of vertical integration, we have developed extensive supply chain operations and capabilities across the United States and internationally, which are enabled by sophisticated third-party enterprise resource planning systems and tools. These systems and tools are supported by an in-house team of enterprise information systems personnel.

We obtain raw materials, components, subsystems, capital equipment, and other supplies from suppliers that we believe to be reputable and reliable. We have established and follow internal quality control processes to source suppliers, considering engineering validation, quality, cost, delivery, and lead-time factors. We have a quality management team that is responsible for managing and ensuring that supplied components meet quality standards. While we often source raw materials and other inputs and services from multiple sources, in some cases we also purchase various inputs and services from a sole or single source. In these supplier situations, we may attempt to manage sourcing risk by carrying increased buffer stock, particularly on long-lead items, and by seeking opportunities to diversify our supply chain in the future. See “Risk Factors—Risks Related to Our Business—If critical components or raw materials used to manufacture our products or used in our development programs become scarce or unavailable, then we may incur delays in manufacturing and delivery of our products and in completing our development programs, which could damage our business.”

We have integrated manufacturing facilities just north of Austin, Texas. Our current manufacturing capability supports R&D, rapid prototyping, and flight level hardware in an integrated and disciplined manner, applying the correct level of rigor to the appropriate process. We leverage a strong culture of personal accountability to ensure efficiency and world class results across our operations. We are ASC 9100 certified and seek to adhere to the appropriate quality and process controls on a continuous basis.

Competition

We primarily compete with businesses in the following categories:

 

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companies providing dedicated small- and medium-lift launch vehicles to deliver payloads to various preferred orbits;

 

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  •  

companies providing spacecraft such as orbital vehicles and related solutions; and

 

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companies providing lander solutions, including our competitors on the NASA CLPS contract.

The principal competitive factors in our market include:

 

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flight heritage and reliability;

 

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delivery schedule;

 

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ability to customize products to meet specific needs of the customer;

 

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performance and technical features;

 

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price; and

 

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customer experience.

We believe that we compete favorably across these factors.

Intellectual Property

The protection of our technology and intellectual property is an important aspect of our business. We rely upon a combination of patents, trademarks, trade secrets, copyrights, confidentiality procedures, contractual commitments, and other legal rights to establish and protect our intellectual property. We generally enter into confidentiality agreements and invention or work product assignment agreements with our employees and consultants to control access to, and clarify ownership of, our proprietary information.

We are the sole owner of five granted U.S. patents (U.S. Patent Nos. 11,391,247, 11,008,977, 11,384,713, 11,692,515, and 11,746,729) relating to our tap-off cycle liquid rocket engines, including patents related to the cooling channels in the combustion chambers and patents related to the hot gas tap-off power source used in these engines. These five patents each expire in 2039. For our registered and active trademarks, the duration of such intellectual property is unlimited provided that such marks continue to be in use.

Regulatory

We are required to comply with a variety of governmental regulations, which could have a significant impact on our business, including our capital expenditures, earnings, and competitive position. We incur or will incur costs to monitor and take actions to comply with governmental regulations that are or will be applicable to our business, including, among others, federal securities laws and regulations, applicable stock exchange requirements, economic sanctions and trade embargo laws, and restrictions and regulations of the U.S. Department of Transportation, the FAA, the FCC, and other government agencies in the United States and the other countries in which we operate. While our international operations are currently limited and we did not recognize revenue outside of the United States during the year ended December 31, 2024 or the three months ended March 31, 2025, respectively, we anticipate further growth internationally by supporting more international customers from launch sites in the United States and expanding our operations to include international launch sites. For example, we are in the process of expanding our pad operations from Vandenberg Space Force Base in California to add Mid-Atlantic Regional Spaceport on Wallops Island, Virginia and Esrange Space Center in Esrange, Sweden to support more missions, customers, and additional launch cadence opportunities and are considering expansion of our operations to serve additional international markets. As we expand internationally, we will be subject to additional rules and regulations, see “Risk Factors—Risks Related to Our Business—If we continue to expand outside the United States, we will be exposed to a variety of risks associated with international operations that could materially and adversely affect our business.”

Further, our business is subject to, and we must comply with, stringent U.S. import and export control laws, including ITAR and EAR. The ITAR generally restricts the export of hardware, software, technical data and

 

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services that have defense or strategic applications. The EAR similarly regulates the export of hardware, software, and technology that has commercial or “dual-use” applications (i.e., for both military and commercial applications) or that have less sensitive military or space-related applications that are not subject to the ITAR. The regulations exist to advance the national security and foreign policy interests of the United States.

The U.S. government agencies responsible for administering the ITAR and the EAR have significant discretion in the interpretation and enforcement of these regulations. The agencies also have significant discretion in approving, denying, or conditioning authorizations to engage in controlled activities. Such decisions are influenced by the U.S. government’s commitments to multilateral export control regimes, particularly the Missile Technology Control Regime with respect to the spaceflight business. The ITAR generally restricts the export of hardware, software, technical data, and services that have defense or strategic applications. The EAR similarly regulates the export of hardware, software, and technology that has commercial or “dual-use” applications (for both military and commercial applications) or that have less sensitive military or space-related applications that are not subject to the ITAR. The regulations exist to advance the national security and foreign policy interests of the United States.

The U.S. government agencies responsible for administering the ITAR and the EAR have significant discretion in the interpretation and enforcement of these regulations. The agencies also have significant discretion in approving, denying, or conditioning authorizations to engage in controlled activities. Such decisions are influenced by the U.S. government’s commitments to multilateral export control regimes, particularly the Missile Technology Control Regime with respect to the spaceflight business. See “Risk Factors—Risks Related to Our Business” for a discussion of material risks to us, including, to the extent material, to our competitive position, relating to governmental regulations.

While there are no current regulatory matters that we expect to be material to our business, there can be no assurance that existing or future laws, regulations, and standards applicable to our operations will not lead to a material adverse impact on our business, results of operations, prospects, or financial condition. If new and more stringent government regulations are adopted, if industry oversight increases, or if we become subject to new international government regulations as a result of international expansion, we may incur significant expenses to comply with any new regulations or heightened industry oversight that are not addressed by our existing activities. See “Risk Factors—Risks Related to Our Business—Our business is subject to various regulatory risks that could adversely affect our operations.”

Government Contracts

A material portion of our revenue is derived from contracts, directly or indirectly, with the U.S. government that are subject to U.S. government contracting rules and regulations and therefore are subject to the business risks specific to the defense industry, including the ability of the U.S. government to unilaterally: (1) suspend us from receiving new contracts; (2) terminate existing contracts at its convenience and without significant notice; (3) reduce the value of existing contracts; (4) audit our contract-related costs and fees, including allocated indirect costs; and (5) revoke required security clearances. Violations of government procurement laws could result in civil or criminal penalties.

Environmental, Health, and Safety Matters

Our operations and facilities are subject to an extensive regulatory framework of federal, state, local, and foreign environmental, health, and safety laws, and regulations and permits that govern, among other things, employee health and safety, discharges of pollutants into the air and water, the generation, handling, storage and disposal of hazardous materials and wastes, and the investigation and remediation of certain materials, substances, and wastes. Non-compliance with such laws, regulations and permits could result in substantial fines, penalties, and obligations. In addition, such laws and regulations may require us to investigate and remediate the effects of the release or disposal of materials at sites associated with past and present operations, and any obligations to remediate and investigate could be joint and several without regard to fault.

 

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See “Risk Factors—Risks Related to Our Business—Environmental matters, including costs associated with compliance and remediation efforts and government and third-party claims, could have a material adverse effect on our reputation and our business, financial condition, and results of operations.”

Properties

Our principal facilities are located just north of Austin, Texas, including our corporate headquarters and Hive spacecraft facility in Cedar Park, Texas and our Rocket Ranch manufacturing and testing site in Briggs, Texas. We own our facilities in Briggs, Texas and lease our other facilities. We also operate a launch site at Vandenberg Space Force Base in California, and we are building out infrastructure at Virginia’s Mid-Atlantic Regional Spaceport on Wallops Island to facilitate launches of our Alpha and Eclipse launch vehicles and Esrange Space Center in Sweden to enable launches of our Alpha launch vehicle. We also have a lease for a launch site at Cape Canaveral in Florida to support future launch needs. We have contractual rights to access these facilities but do not own these launch sites.

Human Capital

As of June 22, 2025, we had approximately 780 full-time employees and zero part-time employees, none of whom are subject to any collective bargaining agreement. We consider our employee relations to be good. Our success depends, in part, on our continuing ability to identify, hire, attract, train, and develop highly qualified personnel. Experienced and highly skilled employees are in high demand. Competition for these employees can be intense, and there may be concerns regarding new employees’ unauthorized disclosure of competitors’ trade secrets. Generally, each employee is required to sign a confidentiality, non-disclosure, and non-use agreement with us.

Legal Proceedings

In the ordinary course of business, we are involved in various pending and threatened litigation matters. In the future, we may be subject to additional legal proceedings, the scope and severity of which is unknown and could adversely affect our business. In addition, from time to time, we may receive letters or other forms of communication asserting claims against us.

 

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MANAGEMENT

Directors and Executive Officers

The following table sets forth certain information with respect to our directors and executive officers as of the date of this prospectus:

 

Name    Age      Title

Jason Kim

   48      Chief Executive Officer and Director

Darren Ma

   45      Chief Financial Officer

Dan Fermon

   56      Chief Operating Officer

Shea Ferring

   52      Chief Technology Officer

David Wheeler

   57      General Counsel

Kirk Konert

   38      Chairman

Marc Weiser

   52      Director

Christopher Emerson

   52      Director

Thomas Zurbuchen

   56      Director

Pamela Braden

   67      Director Nominee

Kevin McAllister

   62      Director Nominee

Jon Lusczakoski

   35      Director Nominee

Ryan Boland

   42      Director Nominee

Jason Kim has served as our Chief Executive Officer and as a member of our Board since October 2024. He previously served as Chief Executive Officer of Millennium Space Systems from December 2020 to September 2024 and as Vice President of Strategic Planning from September 2009 to December 2019. Mr. Kim has also held positions with Raytheon and Northrop Grumman. Mr. Kim attended the United States Air Force Academy, where he earned a BS in Electrical Engineering, and served in the United States Air Force from 1999 to 2006. Mr. Kim also earned a MS in Electrical Engineering from the U.S. Air Force Institute of Technology and an MBA from UCLA Anderson School of Management. We believe that Mr. Kim is qualified to serve as a director given his deep industry experience and his insight into our business as our Chief Executive Officer.

Darren Ma has served as our Chief Financial Officer since August 2020. Prior to that, Mr. Ma served as Chief Financial Officer and Senior Vice President of Spectra7 Microsystems from November 2017 to July 2020 and as Chief Financial Officer of GigPeak, Inc. from October 2014 to September 2017. Mr. Ma has also previously served as a business unit controller at Semtech (NASDAQ: SMTC) and a finance manager at Intel (NASDAQ: INTC). Mr. Ma received a BS in Managerial Economics from UC Davis and an MBA from the W.P. Carey School of Business at Arizona State University.

Dan Fermon has served as our Chief Operating Officer since October 2022. Prior to that, Mr. Fermon was a Vice President at AE Industrial Partners from September 2021 to November 2022. Previously, Mr. Fermon served in several executive roles, including Senior Executive General Manager and Executive Program Manager, for GE Aerospace (NYSE: GE) from August 2006 to December 2020. Mr. Fermon holds a dual BS in both Aerospace and Mechanical Engineering from the State University of New York at Buffalo.

Shea Ferring has served as our Chief Technology Officer since June 2023. Mr. Ferring has been working at the Company since April 2018 in several roles, including Senior Vice President of Engineering, Senior Vice President of Spacecraft, and Vice President of Mission Assurance. Prior to that, Mr. Ferring was a Co-Founder and Chief Operating Officer of M2S2-Technologies, an engineering services company, from October 2014 to April 2018. Mr. Ferring has a BS in Aerospace Engineering and a Master of Science in Aerospace and Satellite Design, both from Arizona State University.

David Wheeler has served as our General Counsel, Secretary, and a Senior Vice President since June 2022. Prior to that, Mr. Wheeler was Of Counsel at the law firm Squire Patton Boggs from November 2021 to June

 

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2022. Mr. Wheeler served Division General Counsel and Group Chief Compliance Officer at Signature Aviation plc, from August 2015 to May 2022 and Senior Counsel at GE Aerospace (NYSE: GE) from August 2010 to July 2015. Prior to that, Mr. Wheeler was a Principal at Squire, Sanders & Dempsey LLP from March 2003 to February 2010. Mr. Wheeler holds a BS in Business Administration from the University of Vermont and a JD from the University of Cincinnati College of Law and is a Certified Public Accountant (inactive).

Kirk Konert has served as a member of our Board since March 18, 2022. Since December 2023, Mr. Konert has been a Managing Partner at AE Industrial Partners. Prior to that, Mr. Konert was a Partner at AE Industrial Partners from October 2019 to December 2021, and a Principal from August 2014 to October 2019. Mr. Konert currently serves on the board of directors of BigBear.ai (NYSE: BBAI), Calca Solutions, Redwire (NYSE: RDW), ThayerMahan, and York Space Systems. Previously, Mr. Konert was a Senior Associate at Sun Capital Partners from July 2011 to July 2014 and was an analyst with Wells Fargo Securities’ Industrial Group from June 2009 to June 2011. Mr. Konert earned a BA in Economics at Davidson College. We believe that Mr. Konert is qualified to serve as a director given his leadership and transactional experience.

Marc Weiser has served as a member of our Board since October 2024. Mr. Weiser is the Founder and Managing Director of RPM Ventures, a venture capital firm, where he has been investing since May 2000. Mr. Weiser has served on the board of directors of numerous privately held companies during that time. Mr. Weiser earned a BA in Aerospace Engineering and an MBA from the University of Michigan. We believe that Mr. Weiser is qualified to serve as a director given his experience leading corporate strategy discussions at the board level and experience with developing and implementing strategies for growth and optimization, including partnerships, mergers and acquisitions, joint ventures, and divestitures.

Christopher Emerson has served as a member of our Board since September 2022. Since January 2024, Mr. Emerson has been a Senior Partner at AE Industrial Partners and was an Operating Partner from October 2022 to January 2024. Mr. Emerson currently serves as Chairman of the board of ALL.SPACE, Chairman of the board of Spirent Federal Systems, and on the board of directors of Belcan, York Space Systems LLC and The Atlas Group. Previously, Mr. Emerson served on the board of directors at Hidden Level Inc. from May 2022 to October 2024 and HawkEye 360 from September 2019 to November 2021. Mr. Emerson served as Chairman of the board of Airbus U.S. Space & Defense, Inc. (OTCMKTS: EADSY) from October 2021 to February 2022, Chairman of the Board and President of Airbus U.S. Space & Defense, Inc. from July 2019 to October 2021, and President of Airbus Helicopters, Inc. from June 2015 to July 2019. From 2003 to 2015, Mr. Emerson served in various roles at Airbus U.S. Space & Defense, Inc., including as Senior Vice President and Chief Financial Officer. Mr. Emerson earned a BAS in International Economics from the University of Alabama. We believe that Mr. Emerson is qualified to serve as a director given his experience in the aerospace industry and extensive leadership experience.

Thomas Zurbuchen has served as a member of our Board since May 2025. Since June 2023, Mr. Zurbuchen has led the ETH Space initiative at ETH Zürich Space, a public university in Germany. Mr. Zurbuchen currently serves as a member of the board of advisors of Voyager Space, as a member of the board of McKinley Inc., and serves on the board of directors of the Schindler Group. Prior to that, Mr. Zurbuchen was Associate Administrator at the National Aeronautics and Space Association Science Mission Directorate from October 2016 to December 2022. Prior to that, from September 2014 to October 2016, Mr. Zurbuchen worked as a Talent Acquisition Specialist at eLab Ventures. From February 1998 to October 2016, Mr. Zurbuchen held various educational leadership positions at the University of Michigan, including as a Research Scientist from January 1998 to September 2003, as the Director of the Center for Entrepreneurship from October 2007 to August 2009, and as a professor from September 2003 to October 2016. Mr. Zurbuchen earned an MS and a PhD in physics from the University of Bern. We believe Mr. Zurbuchen is qualified to serve as a director given his technical background and extensive leadership experience in private and public institutions.

Pamela Braden will serve as a director upon completion of this offering. Since February 2022, Ms. Braden has been an Operating Partner at AE Industrial Partners. Ms. Braden currently serves on the board of directors of

 

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BigBear.ai (NYSE: BBAI) and REDLattice, and previously served on the board of directors of Belcan. Prior to joining AE Industrial Partners, Ms. Braden was the Chief Executive Officer and Founder of the digital engineering services firm Gryphon Technologies from January 1998 to December 2021. Prior to that, Ms. Braden served as an executive at various government sector-focused startups. Ms. Braden earned a BA in Political Science from the University of Akron. We believe Ms. Braden is qualified to serve as a director given her experience in the defense industry and as an executive for complex technology companies.

Kevin McAllister will serve as a director upon completion of this offering. Since June 2020, Mr. McAllister has been a Senior Operating Partner and Co-Head of the Portfolio Strategy and Optimization Group at AE Industrial Partners. Mr. McAllister currently serves on the board of directors of Embraer S.A. (NYSE: ERJ). Mr. McAllister previously served as the Chairman of the board of directors of Belcan. Prior to joining AE Industrial in June 2020, Mr. McAllister served as President and Chief Executive Officer of Boeing Commercial Airplanes from December 2016 to October 2019. Prior to that, Mr. McAllister worked at GE Aerospace (NYSE: GE) from 1989 to 2016, where he most recently served as President and Chief Executive Officer of GE Aviation Services from 2014 to 2016 and was previously Vice President and General Manager of Global Sales and Marketing from 2008 to 2014. He also held multiple leadership roles at GE Aviation across Global Customer and Product Support, Overhaul & Component Repair Operations, Lean Six Sigma, and Engineering. Mr. McAllister earned a BS in Metallurgical and Materials Engineering from the University of Pittsburgh. We believe Mr. McAllister is qualified to serve as a director given his leadership experience in the aerospace industry.

Jon Lusczakoski will serve as a director upon completion of this offering. Since August 2024, Mr. Lusczakoski has been a Principal at AE Industrial Partners and previously was a Vice President from August 2021 to August 2024, a Senior Associate from October 2020 to August 2021 and an Associate from August 2018 to October 2020. Mr. Lusczakoski currently serves on the board of directors of Calca Solutions and the National Security Space Association. Prior to joining AE Industrial Partners in August 2018, Mr. Lusczakoski was a Lead Engineer in the Program Development group at Williams International from June 2012 to July 2018. Mr. Lusczakoski earned a BS in Mechanical Engineering from Michigan State University and an MBA from the University of Michigan. We believe Mr. Lusczakoski is qualified to serve as a director given his technical background.

Ryan Boland will serve as a director upon completion of this offering. Since January 2024, Mr. Boland has served as Chief Executive Officer of ElementUSA Minerals and has served on their board of directors since April 2022. Mr. Boland has served on the board of directors of Lulu Snacks, Inc. since January 2025. Mr. Boland has served as the Chief Executive Officer of a private family office since December 2016. Prior to that, Mr. Boland worked at J.P Morgan from July 2005 to December 2016 in various executive roles across the Investment Bank and Private Bank departments, most recently as Executive Director of Global Investments, Private Bank. Mr. Boland earned a BS in Accounting from Villanova University. We believe Mr. Boland is qualified to serve as a director given his financial expertise and management credentials.

 

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Board Composition and Risk Management Practices

Board Composition

After the completion of this offering, the authorized number of directors comprising our board of directors shall initially be nine and, thereafter, shall be fixed from time to time by resolution of our board of directors, subject to the terms of our certificate of incorporation and bylaws that will be in effect upon the completion of this offering. Our certificate of incorporation will provide for a board of directors comprised of three classes of directors, with each class serving a three-year term beginning and ending in different years than those of the other two classes. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. Our board of directors will be divided among the three classes as follows:

 

  •  

Our class I directors will be     and      and will serve until the first annual meeting of stockholders following the completion of this offering.

 

  •  

Our class II directors will be     and     and will serve until the second annual meeting of stockholders following the completion of this offering.

 

  •  

Our class III directors will be     and     and will serve until the third annual meeting of stockholders following the completion of this offering.

This classification of our board of directors could make it more difficult for a third party to acquire, or discourage a third party from seeking to acquire, control of us.

Kirk Konert will serve as chairperson of our board of directors.

There are no family relationships between or among any of our directors or executive officers.

Controlled Company Exemption

Upon the completion of this offering, we will be deemed to be a “controlled company” under the Nasdaq rules, and we will qualify for the “controlled company” exemption to the board of directors and committee composition requirements under Nasdaq rules. Pursuant to this exception, we will be exempt from the requirements that (1) our board of directors be comprised of a majority of independent directors, (2) we have a nominating and corporate governance committee composed entirely of independent directors, and (3) our compensation committee be comprised solely of independent directors. The “controlled company” exemption does not modify the independence requirements for the audit committee, and we intend to comply with the requirements of the Sarbanes-Oxley Act and Nasdaq rules, which require that our audit committee be composed of at least three directors, one of whom must be independent upon the listing of our common stock on Nasdaq, a majority of whom must be independent within 90 days of the date of this prospectus and each of whom must be independent within one year from the date of this prospectus. We intend to utilize these exemptions as long as we remain a controlled company. As a result, we will not have a majority of independent directors and our nominating and corporate governance committee and compensation committee will not consist entirely of independent directors. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

If at any time we cease to be a “controlled company” under Nasdaq rules, our board of directors will take all action necessary to comply with such rules within the applicable transition periods, including appointing a majority of independent directors to our board of directors and establishing certain committees composed entirely of independent directors.

Board’s Role in Risk Management

Management is responsible for the day-to-day management of the risks facing our company, while our board of directors, as a whole and through its committees, has responsibility for the oversight of risk

 

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management. Our board of directors regularly reviews information regarding our credit, liquidity, and operations, as well as the risks associated therewith. Effective upon the consummation of this offering, our compensation and governance committee will be responsible for overseeing the management of risks relating to our executive compensation plans and arrangements. Effective upon consummation of this offering, our audit committee will oversee management of financial risks and cybersecurity risks. While each committee will be responsible for evaluating certain risks and overseeing the management of such risks, our full board of directors plans to keep itself regularly informed regarding such risks through committee reports and otherwise.

Director Independence

Pursuant to the corporate governance standards of Nasdaq, a director employed by us cannot be deemed an “independent director,” and each other director will qualify as “independent” only if our board of directors affirmatively determines that he has no material relationship with us, either directly or as a partner, stockholder or officer of an organization that has a relationship with us. The fact that a director may own our capital stock is not, by itself, considered a material relationship. Based on information provided by each director concerning his or her background, employment, and affiliations, we anticipate that, prior to our completion of this offering, our board of directors will determine that each of Pamela Braden, Ryan Boland, Marc Weiser, and Thomas Zurbuchen are independent in accordance with Nasdaq rules.

Board Committees

Upon the completion of this offering, our board of directors will have three standing committees: an audit committee, a compensation committee, and a nominating and corporate governance committee, each of which has the composition and responsibilities described below. From time to time, our board of directors may establish other committees to facilitate the management of our business.

Audit Committee

Upon the completion of this offering, the audit committee will consist of three directors: Ryan Boland (chair of the committee), Kirk Konert, and Pamela Braden. We anticipate that, prior to our completion of this offering, our board of directors will determine that Ryan Boland and Pamela Braden satisfy the independence requirements for audit committee members under the listing standards of Nasdaq and Rule 10A-3 of the Exchange Act. We are relying on the phase-in exemptions provided under Rule 10A-3 of the Exchange Act and the Nasdaq listing rules for newly-public companies with respect to the composition of our audit committee, which will transition to consist solely of independent directors in accordance with the phase-in provisions of the Nasdaq listing rules. Ryan Boland has been determined to be an audit committee “financial expert” as defined under SEC rules. All members of the audit committee are able to read and understand fundamental financial statements, are familiar with finance and accounting practices and principles and are financially literate.

The purpose of the audit committee is to assist our board of directors in overseeing (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) our independent auditors’ qualifications and independence, and (4) the performance of the independent auditors and our internal audit function. The audit committee also prepares the audit committee report as required by the SEC for inclusion in our annual proxy statement.

Our board of directors has adopted a written charter for the audit committee which will take effect upon the completion of this offering, and which satisfies the applicable rules of the SEC and the listing standards of Nasdaq. This charter will be posted on our website upon the completion of this offering.

Compensation Committee

Upon the completion of this offering, the compensation committee will consist of three directors: Kirk Konert (chair of the committee), Marc Weiser, and Jonathan Lusczakoski. We intend to avail ourselves of the “controlled company” exemption under Nasdaq rules which exempts us from the requirement that we have a compensation committee composed entirely of independent directors.

 

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The purpose of the compensation committee is to assist our board of directors in discharging its responsibilities relating to (1) setting our compensation program and compensation of our executive officers and directors, (2) monitoring our incentive and equity-based compensation plans, and (3) preparing the compensation committee report required to be included in our proxy statement under the rules and regulations of the SEC.

Our board of directors has adopted a written charter for the compensation committee which will take effect upon the completion of this offering, and which satisfies the applicable rules of the SEC and the listing standards of Nasdaq. This charter will be posted on our website upon the completion of this offering.

Nominating and Corporate Governance Committee

Upon completion of this offering, the nominating and corporate governance committee will consist of three directors: Kevin McAllister (chair of the committee), Thomas Zurbuchen, and Christopher Emerson. We intend to avail ourselves of the “controlled company” exemption under the Nasdaq rules which exempts us from the requirement that we have a nominating and corporate governance committee composed entirely of independent directors.

The purpose of the nominating and corporate governance committee is to assist our board of directors in discharging its responsibilities relating to (1) identifying individuals qualified to become new board of directors members, consistent with criteria approved by our board of directors, subject to our certificate of incorporation and bylaws, (2) reviewing the qualifications of incumbent directors to determine whether to recommend them for reelection and selecting, or recommending that our board of directors select, the director nominees for the next annual meeting of stockholders, (3) identifying board of directors members qualified to fill vacancies on our board of directors or any board of directors committee and recommending that our board of directors appoint the identified member or members to our board of directors or the applicable committee, subject to our certificate of incorporation and bylaws, (4) reviewing and recommending to our board of directors corporate governance principles applicable to us, (5) overseeing the evaluation of our board of directors and management, (6) overseeing our strategy on corporate social responsibility and sustainability, and (7) handling such other matters that are specifically delegated to the committee by our board of directors from time to time.

Our board of directors has adopted a written charter for the nominating and corporate governance committee which will take effect upon the completion of this offering and which satisfies the applicable rules of the SEC and the listing standards of Nasdaq. This charter will be posted on our website upon the completion of this offering.

Compensation Committee Interlocks and Insider Participation

None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee. None of the members of the compensation committee is, nor has ever been, an officer or employee of our company.

Code of Ethics

Prior to the consummation of this offering, we will adopt a Code of Ethics for Senior Officers applicable to our Chief Executive Officer and senior financial officers. In addition, prior to the consummation of this offering we will adopt a Code of Conduct and Ethics for all officers, directors, and employees. Our Code of Ethics for Senior Officers and Code of Conduct and Ethics will be posted on our website at www.fireflyspace.com on the Corporate Governance page of the Investor Relations section of the website. The information contained on our website is not part of this prospectus. We intend to disclose future amendments to certain provisions of our Code of Ethics for Senior Officers, or waivers of such provisions applicable to any principal executive officer, principal financial officer, principal accounting officer or other persons performing similar functions on our website.

 

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EXECUTIVE COMPENSATION

We are currently considered an “emerging growth company” within the meaning of the Securities Act for purposes of the SEC’s executive compensation disclosure rules. In accordance with such rules, we are required to provide a Summary Compensation Table and an Outstanding Equity Awards at Fiscal Year End Table, as well as limited narrative disclosures regarding executive compensation for our last completed fiscal year. Further, our reporting obligations extend only to our “named executive officers,” who are the individuals who served as our principal executive officer and our next two other most highly compensated officers, in each case, for our fiscal year ended December 31, 2024, Accordingly, our “Named Executive Officers” are:

 

  •  

William Weber, Former Chief Executive Officer;

 

  •  

Peter Schumacher, Interim Chief Executive Officer;

 

  •  

Jason Kim, Chief Executive Officer;

 

  •  

Darren Ma, Senior Vice President and Chief Financial Officer; and

 

  •  

Dan Fermon, Senior Vice President and Chief Operating Officer.

This discussion may contain forward-looking statements that are based on our current plans, considerations, expectations, and determinations regarding future compensation programs. Actual compensation programs that we adopt in the future may differ materially from the currently planned programs summarized in this discussion.

Summary Compensation Table

The following table summarizes the compensation awarded to, earned by, or paid to our Named Executive Officers for the fiscal year ended December 31, 2024.

 

Name and Principal Position

   Fiscal
Year
     Salary
($)
    Bonus
($)
    Option
Awards ($)(1)
    Non-Equity
Incentive Plan
Compensation

($)(2)
     All Other
Compensation

($)(3)
    Total
($)
 

William Weber

     2024        256,154       —        52,367       562,500        780,818 (4)      1,651,839  
Former Chief Executive Officer                 

Peter Schumacher

     2024        —        —        —        —         —        —   
Interim Chief Executive Officer                 

Jason Kim

     2024        115,385       250,000 (5)      1,778,398 (6)      —         100,291 (7)      2,244,074  
Chief Executive Officer                 

Darren Ma

     2024        383,846 (8)      —        16,292       175,000        6,085       581,223  
Chief Financial Officer                 

Dan Fermon

     2024        350,000       —        16,292       175,000        1,152       542,444  
Senior Vice President and Chief Operating Officer                 
 
(1)

The amounts reported in the Option Awards column represent the grant date fair value of the stock options (“Options”) granted to the Named Executive Officers during the fiscal year ended December 31, 2024 as computed in accordance with ASC Topic 718, Compensation–Stock Compensation. The assumptions used in calculating the grant date fair value of the stock options reported in the Option Awards column are set forth in Note 14 to the consolidated financial statements included in this prospectus. See “—Equity Incentive Compensation” below for additional details on these awards.

(2)

The amounts reported in the “Non-Equity Incentive Plan Compensation” column reflect bonuses paid to the Named Executive Officers under the Annual Bonus Plan (as defined below) with respect to the fiscal year ended December 31, 2024. See “—Annual Bonus Plan” below for additional details.

 

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(3)

Amounts in this column include a matching 401(k) contribution of 100% of elective deferrals up to a maximum per participant per calendar year equal to 4% of the participant’s eligible compensation ($13,800 for Mr. Weber, $5,385 for Mr. Ma, and $538 for Mr. Fermon) and Company paid life insurance premiums ($460 for Mr. Weber, $219 for Mr. Kim, $701 for Mr. Ma, and $613 for Mr. Fermon).

(4)

Amounts reflected in “All Other Compensation” for Mr. Weber also consist of certain payments provided to Mr. Weber in connection with his separation from employment, which was effective as of July 17, 2024, including: a severance payment of $450,000, a payment of $25,681 representing twelve months of COBRA premiums payable by Mr. Weber, and a payment of $305,137 representing a pro-rated annual bonus for the fiscal year ended December 31, 2024.

(5)

Represents the guaranteed portion of Mr. Kim’s annual incentive bonus for the fiscal year ended December 31, 2024 per the terms of his employment agreement, which will be paid in cash in April 2025 at the same time as the Company’s other 2024 bonuses are paid. Mr. Kim will receive an additional $250,000 of his annual incentive bonus for the fiscal year ended December 31, 2024 in the form an Option grant to be made in April 2025 at the same time the Company makes its other Option grants

(6)

The value shown for Mr. Kim’s Options assumes the highest level of performance achievement possible.

(7)

Amounts reflected in “All Other Compensation” for Mr. Kim also consist of $100,000 for reimbursement of costs and expenses incurred by Mr. Kim in connection with his relocation to the vicinity of our Cedar Park, Texas location.

(8)

Mr. Ma received a raise to his base salary on November 25, 2024 such that his new annual base salary rate is $400,000.

Narrative Disclosure to Summary Compensation Table

Employment Agreements

With the exception of Mr. Schumacher, each of our Named Executive Officers is (or was) a party to an employment agreement with the Company. The employment agreements generally provide for each executive’s base salary, target bonus opportunity, an initial grant of non-qualified stock options, reimbursement of reasonable business expenses and eligibility to participate in our benefit plans. The material terms of the employment agreements are summarized below. These summaries are qualified by reference to the actual text of the agreements, which are filed as exhibits to the registration statement of which this prospectus forms a part. In addition to the key terms summarized below, each employment agreement provides for certain severance benefits upon a resignation by the applicable Named Executive Officer for “Good Reason” or upon a termination by the Company without “Cause.” See “—Potential Payments Upon Termination or Change in Control” below for more details regarding the severance benefits provided to our Named Executive Officers under the employment agreements. See “—Equity Incentive Compensation” below for more details regarding the equity incentives provided to our Named Executive Officers.

With the exception of Mr. Schumacher, each of our Named Executive Officers entered into an Employee Proprietary Information Agreement (the “Proprietary Information Agreement”) with the Company in connection with their employment, which contain customary confidentiality, non-competition, non-solicitation, non-interference, assignment of inventions and conflict of interest covenants. The employment agreements provide that the period of each restrictive covenant that applies to our Named Executive Officers shall be the longer of the period set forth in the Proprietary Information Agreement or the severance period provided in the Named Executive Officer’s employment agreement.

Kim Agreement

On August 25, 2024, the Company entered into an employment agreement with Jason Kim (the “Kim Agreement”) to serve as the Chief Executive Officer of the Company, effective as of October 1, 2024. The Kim Agreement provides for an annual base salary of $500,000, eligibility for Mr. Kim to earn an annual incentive bonus based on a target bonus opportunity equal to 100% of his base salary (as described below in the “Annual

 

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Bonus Plan” section), an initial grant of stock options and eligibility to receive annual grants of stock options (as described below in the “Equity Incentive Compensation” section), reimbursement for up to $100,000 for costs and expenses incurred by Mr. Kim in connection with his relocation to the vicinity of our Cedar Park, Texas location, reimbursement of up to $2,500 for Mr. Kim’s legal fees incurred in connection with the negotiation of his employment agreement with us, and participation in standard benefit plans. The Kim Agreement also provided that Mr. Kim’s annual bonus for the fiscal year ended December 31, 2024 would be fully guaranteed, with 50% payable in cash and the remaining 50% payable in equity to be granted in March or April of 2025.

Ma Agreement

On May 17, 2024, the Company entered into an employment agreement with Darren Ma (the “Ma Agreement”) to serve as the SVP & Chief Financial Officer of the Company, effective as of May 17, 2024. The Ma Agreement provides for an annual base salary of $350,000, eligibility for Mr. Ma to earn an annual incentive bonus based on a target bonus opportunity equal to 50% of his base salary (as described below in the “Annual Bonus Plan” section), eligibility to receive annual grants of stock options (as described below in the “Equity Incentive Compensation” section), eligibility for reimbursement of up to $2,500 for Mr. Ma’s legal fees incurred in connection with the negotiation of his employment agreement with us, and participation in standard benefit plans. On March 13, 2025, the Company entered into an updated employment agreement with Mr. Ma that provides for the same foregoing terms but an updated annual base salary of $420,000 and target bonus opportunity of 60% of base salary.

Fermon Agreement

On May 17, 2024, the Company entered into an employment agreement with Dan Fermon (the “Fermon Agreement”) to serve as the SVP & Chief Operating Officer of the Company, effective as of May 17, 2024. The Fermon Agreement provides for an annual base salary of $350,000, eligibility for Mr. Fermon to earn an annual incentive bonus based on a target bonus opportunity equal to 50% of his base salary (as described below in the “Annual Bonus Plan” section), eligibility to receive annual grants of stock options (as described below in the “Equity Incentive Compensation” section), eligibility for reimbursement of up to $2,500 for Mr. Fermon’s legal fees incurred in connection with the negotiation of his employment agreement with us, and participation in standard benefit plans. On March 13, 2025, the Company entered into an updated employment agreement with Mr. Fermon that provides for the same foregoing terms but an updated annual base salary of $400,000.

Peter Schumacher

Mr. Schumacher served as the Company’s Interim Chief Executive Officer from July 17, 2024 to September 30, 2024. Mr. Schumacher did not receive compensation from the Company in any capacity for the fiscal year ended December 31, 2024.

Weber Employment Agreement

On August 13, 2022, the Company entered into an employment agreement with William Weber (the “Weber Agreement”) to serve as the Chief Executive Officer of the Company, effective as of September 1, 2022. The Weber Agreement provided for an annual base salary of $450,000, eligibility for Mr. Weber to earn an annual incentive bonus based on a target bonus opportunity equal to 125% of his base salary (as described below in the “Annual Bonus Plan” section), a grant of stock options (as described below in the “Equity Incentive Compensation” section), reimbursement for up to $200,000 for costs and expenses incurred by Mr. Weber in connection with his relocation to the vicinity of our Cedar Park, Texas location, reimbursement of Mr. Weber’s legal fees incurred in connection with the negotiation of his employment agreement with us, and participation in standard benefit plans.

On July 17, 2024, Mr. Weber’s employment with the Company terminated and Mr. Weber entered into a Separation Agreement and Release of Claims (“Separation Agreement”) with the Company. Pursuant to the

 

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Separation Agreement, in exchange for executing and not revoking a general release of claims in favor of the Company and Mr. Weber’s compliance with the terms and obligations of the Separation Agreement (including continued compliance with his Proprietary Information Agreement (as described above)), Mr. Weber received the following severance payments and benefits: (i) a gross amount of $450,000 representing 12 months of Mr. Weber’s base salary; (ii) a gross amount of $25,681 representing 12 months of the employee portion of Mr. Weber’s COBRA premiums; (iii) a cash payment of $305,137 representing a pro-rated cash bonus for the fiscal year ended December 31, 2024; and (iv) certain unvested Options remained eligible to vest pursuant to the terms of the applicable stock option agreements and Amended and Restated Firefly Aerospace, Inc. 2017 Stock Plan (“2017 Stock Plan”) as described below in the “Equity Incentive Compensation” section. The Separation Agreement provides that Mr. Weber’s vested Options shall remain outstanding and eligible to be exercised through July 16, 2027 (unless earlier cancelled in connection with a Change in Control (as defined in the 2017 Stock Plan)), and Mr. Weber shall be eligible to exercise such stock options via Net-Exercise (as defined below in the section entitled “Equity Incentive Compensation”).

Base Salary

The base salaries of our Named Executive Officers are set forth in their respective employment agreements. Mr. Kim’s base salary is subject to review by our board of directors for increase, but not decrease, no less frequently than annually. For fiscal year ended December 31, 2024, Mr. Kim’s base salary was $500,000 and Mr. Fermon’s base salary was $350,000. Mr. Ma received an increase to his base salary to an annual rate of $400,000 effective as of November 25, 2024.

Annual Bonus Plan

With respect to the fiscal year ended December 31, 2024, our Named Executive Officers (other than Messrs. Weber and Schumacher) were eligible to receive an annual cash bonus short-term incentive that pays out based upon the Company meeting predetermined corporate performance objectives and the Named Executive Officer achieving individual performance goals, in each case, pursuant to our Firefly Aerospace, Inc. Performance-Based, Incentive Compensation Plan (“Annual Bonus Plan”). For the fiscal year ended December 31, 2024, the target short-term incentive amount, expressed as a percentage of the Named Executive Officer’s base salary, for each of Messrs. Kim, Ma, and Fermon were 100%, 50%, and 50%, respectively. Achievement of short-term incentive for the fiscal year ended December 31, 2024 was based on the attainment of certain performance goals as determined by our board of directors and the compensation committee. The performance goals for the fiscal year ended December 31, 2024 set forth in the Annual Bonus Plan related to, among other metrics, a balance sheet cash target, aggregate value of customer contract bookings and execution of certain specified operational goals.

Equity Incentive Compensation

Under the 2017 Stock Plan, our board of directors or a committee thereof (the “Administrator”) may grant awards to our employees, consultants, and directors in the form of non-qualified stock options, incentive stock options, restricted stock awards and restricted stock units. The Administrator has broad discretion to determine individuals eligible for awards, the individuals to whom awards will be granted, and to determine the specific terms and conditions of each award. A stock option granted as an incentive stock option will, to the extent it fails to qualify as an incentive stock option, be treated as a non-qualified stock option. The Administrator will, with regard to each stock option, determine the number of shares subject to the option, the manner and time of the option’s exercise and vesting, and the exercise price of the option. The exercise price will not be less than 100%, or, with respect to any participant who owns more than 10% of the voting power of all classes of our outstanding stock, not less than 110%, of the Fair Market Value (as defined in the 2017 Stock Plan), of the common stock on the date the stock option is granted. The exercise price may be paid by our Named Executive Officers (i) in cash, check or cash equivalent, (ii) if permitted by the Company, by the delivery of shares of common stock then owned by the participant, by the withholding of shares of common stock for which a stock option is exercisable

 

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(“Net-Exercise”), or (iii) by a combination of these methods. In the discretion of the Administrator, payment for the exercise price of our Named Executive Officers may also be made by delivering a properly executed exercise notice to the Company together with a copy of irrevocable instructions to a broker to deliver promptly to us the amount of sale or loan proceeds to pay the exercise price. No stock option is exercisable later than 10, or, with respect to any participant who owns more than 10% of the voting power of all classes of our outstanding stock, later than five, years after the date it is granted. Our board of directors has determined not to make any further awards under the 2017 Stock Plan following the completion of this offering.

Each of Messrs. Kim, Ma, and Fermon received grants of stock options in 2024 pursuant to the 2017 Stock Plan and applicable stock option agreements. Each of the Named Executive Officers that are party to an employment agreement are entitled to “Net-Exercise” their stock options, as provide in the employment agreement.

Outstanding Equity Awards at Fiscal Year End

The following table presents information regarding outstanding equity awards held by each of the Named Executive Officers as of December 31, 2024.

 

Name

   Grant Date      Number of
Securities
Underlying
Unexercised
Options
Exercisable (#)
     Number of
Securities
Underlying
Unexercised
Options
Unexercisable (#)
     Option
Exercise
Price ($)
     Option
Expiration
Date
 

William Weber

     08/31/2022        402,246        5,575,399        0.27        09/01/2032 (1) 
     06/20/2024        —         241,071        0.25        06/19/2034 (2) 

Peter Schumacher

     —         —         —         —         —   

Jason Kim

     10/24/2024        —         7,291,374        0.28        10/23/2034 (3) 

Darren Ma

     10/28/2020        173,333        26,667        0.13        08/25/2030 (4) 
     01/08/2021        121,670        —         0.15        01/07/2031 (5) 
     07/21/2021        174,405        24,916        0.31        07/20/2031 (6) 
     07/21/2021        239,166        110,834        0.31        07/20/2031 (7) 
     02/17/2022        150,000        —         0.31        02/16/2032 (8) 
     06/17/2022        84,561        69,188        0.27        06/16/2032 (9) 
     06/17/2022        250,000        250,000        0.27        06/16/2032 (10) 
     06/20/2024        —         75,000        0.25        06/19/2034 (11) 

Dan Fermon

     10/24/2022        200,000        300,000        0.27        10/23/2032 (12) 
     06/20/2024        —         75,000        0.25        06/19/2034 (11) 
 
(1)

179,328 of the Options vested on September 1, 2023 and 179,328 Options vested on September 1, 2024. An additional 43,590 Options accelerated and vested as of August 20, 2024 per the terms of the Separation Agreement. The remaining unvested Options are outstanding and eligible to vest until July 16, 2025 in accordance with the following schedule: 15% of the Options vest on each of the first five anniversaries of September 1, 2022; 15% of the Options vest upon a Weber Liquidity Event (as defined below) in which the Company meets or exceeds a $1.1 billion valuation; an additional 30% of the Options vest upon a Weber Liquidity Event in which the Company meets or exceeds a $3.0 billion valuation; and an additional 40% of the Options vest upon a Weber Liquidity Event in which the Company meets or exceeds a $5.0 billion valuation. “Weber Liquidity Event” has the same meaning as Liquidity Event provided below in the Section entitled “Potential Payments Upon Termination or Change in Control”; provided, however, that a Weber Liquidity Event also includes a secondary sale or similar transaction in which funds affiliated with AE Industrial Partner, LP divests 50% or more of its director or indirect interests in the Company as of the Grant Date.

(2)

80,348 of the Options vest on May 27, 2025, and the remainder vest ratably on a quarterly basis for two years thereafter.

 

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(3)

Options vest as follows, subject to Mr. Kim’s continued employment through each such date: 15% of the Options vest on each of the first five anniversaries of October 1, 2024; 15% of the Options vest upon a Liquidity Event in which the Company meets or exceeds a $1.5 billion valuation; an additional 30% of the Options vests upon a Liquidity Event in which the Company meets or exceeds a $3.0 billion valuation; and an additional 40% of the Options vests upon a Liquidity Event in which the Company meets or exceeds a $5.0 billion valuation. Upon a Liquidity Event that occurs while Mr. Kim is employment by the Company, each stock option grant held by Mr. Kim that vest solely on the passage of time will accelerate and vest as of such Liquidity Event; provided, that, any Restricted Shares (as defined below) that Mr. Kim holds as a result of early exercising any Option, shall be subject to clawback as further above in the section titled “Equity Incentive Compensation”. “Liquidity Event” means (i) Change of Control (as defined in the 2017 Stock Plan), or (ii) an initial public offering (including via a merger with a special purpose acquisition company or similar).

(4)

Options vest ratably on a monthly basis over 60 months from October 24, 2020. The Options will accelerate and vest upon a Liquidity Event where the Named Executive Officer is still employed.

(5)

Options vested ratably on a monthly basis and were fully vested on November 23, 2023.

(6)

Options vest ratably on a quarterly basis over four years from May 1, 2021. The Options will accelerate and vest upon a Liquidity Event where the Named Executive Officer is still employed.

(7)

Options vest ratably on a monthly basis over 60 months from July 21, 2021. The Options will accelerate and vest upon a Liquidity Event where the Named Executive Officer is still employed.

(8)

Options vested ratably on a quarterly basis and were fully vested on December 31, 2022.

(9)

Options vest ratably on a monthly basis over 60 months from March 25, 2022. The Options will accelerate and vest upon a Liquidity Event where the Named Executive Officer is still employed.

(10)

Options vest ratably on a quarterly basis over 60 months from June 17, 2022. The Options will accelerate and vest upon a Liquidity Event where the Named Executive Officer is still employed.

(11)

One-third of the Options vest on May 27, 2025, and the remainder vest ratably on a quarterly basis for two years thereafter. The Options will accelerate and vest upon a Liquidity Event where the Named Executive Officer is still employed.

(12)

One-fifth of the Options vested on October 24, 2023, and the remainder vest ratably on a quarterly basis for four years thereafter. The Options will accelerate and vest upon a Liquidity Event where the Named Executive Officer is still employed.

Additional Narrative Disclosure

Retirement Plans

We currently provide broad-based health and welfare benefits that are available to our full-time employees, including our Named Executive Officers, including health, life, vision, and dental insurance. In addition, we currently make available a retirement plan intended to provide benefits under Section 401(k) of the Code, pursuant to which employees (including our Named Executive Officers) may elect to defer a portion of their compensation on a pre-tax basis and have it contributed to the plan. Pre-tax contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. We match 100% of elective deferrals up to a maximum per participant per calendar year equal to 4% of the participant’s eligible compensation. Matching contributions to our 401(k) plan are 100% vested. All contributions under our 401(k) plan are subject to certain annual dollar limitations in accordance with applicable laws, which are periodically adjusted for changes in the cost of living. Other than the 401(k) plan, we do not provide any qualified or non-qualified retirement or deferred compensation benefits to our employees, including our Named Executive Officers.

Potential Payments Upon Termination or Change in Control

Each of our current Named Executive Officers is entitled to certain severance payments and benefits pursuant to their respective employment agreements in the event the Company terminates the Named Executive

 

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Officer without Cause or the Named Executive Officer resigns with Good Reason, consisting of the following severance: (i) nine months (for Messrs. Ma and Fermon) or 12 months (for Mr. Kim) of the Named Executive Officer’s then-current base salary, (ii) an amount equal to the cost of nine months (for Messrs. Ma and Fermon) or 12 months (for Mr. Kim) of the employee portion of associated COBRA premiums, (iii) a pro-rated Annual Bonus for the year of termination if such termination occurred in the second half of the fiscal year, based on actual performance through the date of termination, and (iv) any then-outstanding stock options subject to time-based vesting will remain outstanding and have the opportunity to vest for nine months (for Messrs. Ma and Fermon) or 12 months (for Mr. Kim) following such termination of employment. To the extent unpaid as of the date of termination of employment, the Named Executive Officer will also be entitled to the prior year Annual Bonus. Such severance shall be paid in a lump sum within 10 days following the applicable Named Executive Officer’s termination of employment.

Each of the Named Executive Officers’ employment agreements also provide that, upon a Liquidity Event where the Named Executive Officer is employed, any Options subject solely to time-based vesting shall become fully vested and exercisable, provided, that, any shares issued in respect of such accelerated Options shall be “Restricted Shares”. If the Named Executive Officer does not elect a method of exercise in connection with such Liquidity Event, he will be deemed to have selected the Net-Exercise method. The clawback on the Restricted Shares generally lapses with respect to 50% of the Restricted Shares on the six-month anniversary of the Liquidity Event, 25% of the Restricted Shares on the nine-month anniversary of the Liquidity Event, and 25% of the Restricted Shares in equal monthly amounts (8.34% per month) at the end of each tenth-, eleventh,- and twelfth-month anniversaries of the Liquidity Event. Any Restricted Shares still subject to clawback in the event the Named Executive Officer terminates his employment other than for Good Reason any time during the 12-month period following the Liquidity Event shall be forfeited. For purposes of the employment agreements, “Liquidity Event” means (i) Change of Control (as defined in the 2017 Stock Plan), or (ii) an initial public offering (including via a merger with a special purpose acquisition company or similar).

“Cause” generally means a Named Executive Officer’s (i) conduct amounting to fraud against the Company or any subsidiary or affiliate of the Company; (ii) intentional misconduct, repeated refusal to follow the reasonable and lawful directions of the Company or material breach of the employment agreement or any document referenced therein, provided the Company notifies the Named Executive Officer of the acts deemed to constitute such intentional misconduct, repeated refusal or material breach in writing and he fails to correct such acts (or begin such action as may be necessary to correct such acts and thereafter fails to diligently pursue the completion thereof) within ten business days after written notice has been given; (iii) violation of a material Company policy that causes or has demonstrated a substantial likelihood to cause material financial or reputational harm to the Company; or (iv) conviction or plea of guilty or nolo contendere to a felony (other than one arising from the operation of a motor vehicle or resulting from actions taken (or not taken) by the Named Executive Officer in reasonable, good faith in his capacity as an employee or officer of the Company).

“Good Reason” generally means (i) a material diminution in the roles, duties, responsibilities, or the individuals to whom the Named Executive Officer reports; (ii) a material reduction of base salary or the target amount of Annual Bonus; (iii) a requirement to relocate the Named Executive Officer’s primary place of business more than 25 miles away from the primary place of business as of the effective date of the applicable employment agreement; or (iv) a material breach by the Company of any provision of the employment agreement or any document referenced therein. A Named Executive Officer must notify the Company in writing of his intent to terminate his employment for Good Reason, specifying the event and describing the circumstances constituting Good Reason, within 30 days after he first becomes aware of the event that he believes constitutes Good Reason. The Company will have a period of 30 days after receipt of such notice to cure the Good Reason. If the Good Reason is cured within that period, the Named Executive Officer will not be entitled to the severance and accelerated option vesting described above. If the Company waives its right to cure or does not cure within the 30-day period, the Named Executive Officer may terminate his employment for Good Reason within 30 days following the later of (i) the date on which the Company waived its right to cure or (ii) the end of the cure period and collect the severance and receive the accelerated option vesting described above.

 

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Actions Taken in Connection With This Offering

2025 Omnibus Incentive Plan

In connection with this offering, we anticipate that our Board will adopt, and our stockholders will approve, the Firefly Aerospace Inc. 2025 Omnibus Incentive Plan (the “2025 Stock Plan”), pursuant to which employees, consultants and directors of our company and our affiliates performing services for us, including our executive officers, will be eligible to receive awards. If adopted, the 2025 Stock Plan will provide for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, other stock-based awards, other cash-based awards, substitute awards, and performance awards intended to align the interests of participants with those of our stockholders. The following description of the 2025 Stock Plan is based on the form that will be adopted, but since the 2025 Stock Plan has not yet been adopted, the provisions remain subject to change. As a result, the following description is qualified in its entirety by reference to the form of the 2025 Stock Plan, a copy of which in substantially final form has been filed as an exhibit to the registration statement of which this prospectus is a part.

Securities to Be Offered

The aggregate number of shares of common stock that may be issued or used for reference purposes or with respect to which awards may be granted under the 2025 Stock Plan shall not exceed a number of shares of our common stock equal to  % of the fully diluted shares of our common stock outstanding at the closing of this offering (subject to adjustment in the event of certain transactions or changes of capitalization in accordance with the 2025 Stock Plan) (the “Initial Share Reserve”). The number of shares of common stock available for issuance under the 2025 Stock Plan will be subject to an annual increase on the first day of each calendar year beginning January 1, 2026, and ending and including January 1, 2035, equal to the lesser of (i) 3% of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (ii) any such smaller number of shares as is determined by the Board. The aggregate number of shares that may be issued or used under the 2025 Stock Plan pursuant to incentive stock options (“ISOs”) shall not exceed an amount equal to the Initial Share Reserve. Shares of common stock subject to an award that expires or is canceled, forfeited or otherwise terminated without delivery of shares, shares tendered in payment of an option, shares covered by a stock-settled stock appreciation right (“SAR”) or other award that were not issued upon settlement, and shares delivered or withheld to satisfy any tax withholding obligations will again be available for delivery pursuant to other awards under the 2025 Stock Plan. The number of shares of common stock available for issuance under the 2025 Stock Plan will not be reduced by shares issued pursuant to awards issued or assumed in connection with a merger or acquisition as contemplated by applicable stock exchange rules.

Administration

The 2025 Stock Plan will be administered by a committee of the Board that has been authorized to administer the 2025 Stock Plan, except if no such committee is authorized by the Board, the Board will administer the 2025 Stock Plan (as applicable, the “Committee”). The Committee will have broad discretion to administer the 2025 Stock Plan, including the power to determine the eligible individuals to whom awards will be granted, the number and type of awards to be granted, and the terms and conditions of awards. The Committee may also accelerate the vesting or exercise of any award and make all other determinations and take all other actions necessary or advisable for the administration of the 2025 Stock Plan. To the extent the Committee is not the Board, the Board will still retain the authority to take all actions permitted by the Committee under the 2025 Stock Plan.

Eligibility

Employees, consultants and non-employee directors of our Company and its affiliates will be eligible to receive awards under the 2025 Stock Plan. As stated above, the basis for participation in the 2025 Stock Plan is the Committee’s decision to select, in its sole discretion, participants from among those eligible.

 

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Non-Employee Director Compensation Limits

In each calendar year, a non-employee director may not receive awards under the 2025 Stock Plan for such individual’s service on the Board that, taken together with any cash fees paid to such non-employee director during such calendar year for such individual’s service on the Board, have a value in excess of $750,000 (based on the grant date fair value of such awards) or, solely in the case of a lead director or non-executive chair of the Board, $1,000,000 (based on the grant date fair value of such awards); provided that (a) the Committee may make exceptions to this limit, except that the non-employee director receiving such additional compensation may not participate in the decision to award such compensation and (b) for any calendar year in which a non-employee director first commences service on the Board, such limit shall be increased to $1,500,000.

Types of Awards

Options. The 2025 Stock Plan provides for the grant of both ISOs intended to qualify under Section 422 of the Code and nonstatutory stock options. We may grant options to eligible persons, except that ISOs may only be granted to persons who are our employees or employees of one of our parents or subsidiaries, in accordance with Section 422 of the Code. The exercise price of an option cannot be less than 100% of the fair market value of a share of common stock on the date on which the option is granted and the option must not be exercisable for longer than ten years following the date of grant. However, in the case of an ISO granted to an individual who owns (or is deemed to own) at least 10% of the total combined voting power of all classes of our equity securities, the exercise price of the option must be at least 110% of the fair market value of a share of common stock on the date of grant and the option must not be exercisable more than five years from the date of grant.

Options granted under the 2025 Stock Plan generally must be exercised by the optionee before the earlier of the expiration of such option or at such time or times as shall be determined by the Committee at the time of grant. Each option award agreement will set forth the extent to which the optionee will have the right to exercise the option following the termination of the optionee’s service with us, and the right to exercise the option of any executors or administrators of the optionee’s estate or any person who has acquired such options directly from the optionee by bequest or inheritance.

Payment of the exercise price may be made in a manner approved by the Committee, which may include (a) immediately available funds in U.S. dollars, (b) delivery of common stock having a value equal to the exercise price, (c) a broker-assisted, cashless exercise, or (d) any other means approved by the Committee.

SARs. A SAR is the right to receive an amount equal to the excess of the fair market value of one share of common stock on the date of exercise over the grant price of the SAR. The grant price of a SAR cannot be less than 100% of the fair market value of a share of common stock on the date on which the SAR is granted. The term of a SAR may not exceed ten years. The Committee has the discretion to determine other terms and conditions of a SAR award.

Restricted Stock Awards. A restricted stock award is a grant of shares of common stock subject to the restrictions on transferability and risk of forfeiture imposed by the Committee. Unless otherwise determined by the Committee and specified in the applicable award agreement, the holder of a restricted stock award has rights as a stockholder, including the right to vote the shares of common stock subject to the restricted stock award or to receive dividends on the shares of common stock subject to the restricted stock award during the restriction period. In the discretion of the Committee, dividends distributed prior to vesting may be subject to the same restrictions and risk of forfeiture as the restricted shares with respect to which the distribution was made.

Restricted Stock Units. A restricted stock unit (“RSU”) is a right to receive cash, shares of common stock, or a combination of cash and shares of common stock at the end of a specified period equal to the fair market value of one share of common stock on the date of vesting. RSUs may be subject to the restrictions, including a risk of forfeiture, imposed by the Committee. The Committee may determine that a grant of RSUs will provide a

 

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participant a right to receive dividend equivalents, which entitles the participant to receive the equivalent value (in cash or shares of common stock) of dividends paid on the underlying shares of common stock. Dividend equivalent rights may be paid currently or credited to an account, settled in cash or shares, and may be subject to the same restrictions as the RSUs with respect to which the dividend equivalent rights are granted.

Performance Awards. A performance award is an award that vests and/or becomes exercisable or distributable subject to the achievement of certain performance goals during a specified performance period, as established by the Committee. Performance awards may be granted alone or in addition to other awards under the 2025 Stock Plan and may be paid in cash, shares of common stock, other property, or any combination thereof, as determined in the sole discretion of the Committee.

Other Stock-Based Awards. Other stock-based awards are awards denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, the value of shares of common stock.

Cash Awards. Cash awards may be granted on a free-standing basis or as an element of, a supplement to, or in lieu of any other award.

Substitute Awards. Awards may be granted under the 2025 Stock Plan in substitution for similar awards held for individuals who become participants as a result of a merger, consolidation, or acquisition of another entity by or with the Company or one of its affiliates.

Certain Transactions

If any change is made to our capitalization, such as a stock split, stock combination, stock dividend, exchange of stock, or other recapitalization, merger, or otherwise, which results in an increase or decrease in the number of outstanding shares of common stock, appropriate adjustments will be made by the Committee in the shares subject to an award under the 2025 Stock Plan. The Committee will also have the discretion to make certain adjustments to awards in the event of a change in control of the Company, such as the assumption or substitution of outstanding awards, the purchase of any outstanding awards in cash based on the applicable change in control price, the ability for participants to exercise any outstanding stock options, SARs, or other stock-based awards upon the change in control (and, if not exercised, such awards will be terminated) and the acceleration of vesting or exercisability of any outstanding awards.

Clawback

All awards granted under the 2025 Stock Plan are subject to reduction, cancellation, or recoupment under any written clawback policy that we are required to adopt pursuant to listing standards or as is otherwise required under applicable law, including the final rule issued by the SEC implementing the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act relating to recoupment of incentive-based compensation.

Plan Amendment and Termination

The Committee may amend or terminate any award, award agreement, or the 2025 Stock Plan at any time, provided that the rights of a participant granted an award prior to such amendment or termination may not be impaired without such participant’s consent. In addition, stockholder approval will be required for any amendment to the extent necessary to comply with applicable law or exchange listing standards. The Committee will not have the authority, without the approval of stockholders, to amend any outstanding option or SAR to reduce its exercise price per share. The 2025 Stock Plan will remain in effect for a period of ten years (unless earlier terminated by the Board or Committee, as applicable).

2025 Employee Stock Purchase Plan

In order to incentivize employees of the Company, its designated affiliates and subsidiaries (the “Designated Subsidiaries”), we anticipate that our Board will adopt, and our shareholders will approve, the 2025 Employee

 

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Stock Purchase Plan (the “ESPP”), the material terms of which are summarized below, prior to the completion of this offering. The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code and will be administered, interpreted and construed in a manner consistent with the requirements of Section 423 of the Code. Although not yet adopted, we expect that our ESPP will have the features described below.

Shares Available for Awards; Administration

A total of      shares of our common stock will initially be reserved for issuance under the ESPP. In addition, the number of shares available for issuance under the ESPP will be increased annually on January 1 of each fiscal year beginning in 2026 by an amount equal to the lesser of (i) 1.0% of the shares outstanding on the last day of the immediately preceding fiscal year or (ii) a lesser amount determined by our Board; provided, however, that no more than      shares may be issued per year in total under the ESPP. Our Committee or other individuals to which authority has been delegated under the ESPP will administer and will have authority to interpret the terms of the ESPP and determine eligibility of participants.

Eligibility

We expect that all of our employees and employees of any Designated Subsidiary will be eligible to participate in the ESPP, with certain exclusions as determined by the ESPP administrator. However, an employee may not be granted rights to purchase stock under our ESPP if the employee, immediately after the grant, would own (directly or through attribution) stock possessing 5% or more of the total combined voting power of all classes of our stock.

Grant of Rights

Under the ESPP, participants will be offered the option to purchase shares of our common stock at a discount during one or more offering periods, which may be successive or overlapping and will be selected by the Board or Committee in its sole discretion with respect to which options will be granted to participants. The Board or Committee will designate the terms and conditions of each offering in writing, including the offering period, and may change the duration and timing of offering periods in its discretion. However, in no event may an offering period be longer than 27 months in length.

Option Price

The option purchase price will be designated by the ESPP administrator, but will not be less than 85% of the fair market value of a share of our common stock on the applicable enrollment date or the applicable exercise date, whichever is lower.

Limitations on Purchase

As required by the Code, no eligible employee may purchase stock under the ESPP at a rate which, when aggregated with his or her other rights to purchase our common stock, exceeds $25,000 in fair market value per year. Unless the administrator of the ESPP determines otherwise, employees are also limited in making elections under the ESPP to contributing no more than 15% of their “Compensation” (as defined in the ESPP) to the ESPP.

ESPP Amendment and Termination

The Board may, in its sole discretion, amend, suspend, or terminate the ESPP at any time. However, shareholder approval will be required for any amendment that (i) increases the maximum number of shares subject to the ESPP, (ii) changes the designation or class of eligible employees or (iii) would cause the ESPP to

 

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no longer be an “employee stock purchase plan” within the meaning of Section 423 of the Code. In the event that the administrator of the ESPP determines that the ongoing operation of the ESPP may result in unfavorable financial accounting consequences, the administrator may modify or amend the plan to reduce or eliminate those consequences. Upon termination of the ESPP, the balance in each participant’s plan account will be refunded as soon as practicable.

Director Compensation Table

The following table presents the total compensation to our non-employee directors for the fiscal year ended December 31, 2024.

 

Name

   Fees earned or paid
in cash ($)
     Option Awards
($)(6)(7)
     Total
($)
 

Kirk Konert

     —         —         —   

Peter Schumacher(1)

     —         —         —   

Pamela Braden(2)

     50,000        —         50,000  

Peter Cannito(3)

     50,000        —         50,000  

Chris Emerson

     50,000        —         50,000  

Jed McCaleb

     —         —         —   

Thomas Markusic

     —         —         —   

William Weber(4)

     —         —         —   

Jason Kim(5)

        

Marc Weiser

        
 
(1)

Mr. Schumacher resigned from our board of directors on October 31, 2024.

(2)

Ms. Braden resigned from our board of directors on October 31, 2024.

(3)

Mr. Cannito resigned from our board of directors on October 31, 2024.

(4)

Mr. Weber received no additional compensation for his service as a director, and resigned from our board of directors effective as of July 13, 2024 in connection with the termination of his employment as of Chief Executive Officer. Compensation for Mr. Weber is described above, including in the Summary Compensation Table.

(5)

Mr. Kim received no additional compensation for his service as a director. Compensation for Mr. Kim is described above, including in the Summary Compensation Table.

(6)

As of December 31, 2024, the aggregate number of stock options outstanding for each of the directors listed below were as follows:

 

Name    Option Awards Outstanding
as of December 31, 2024
 

Pamela Braden

     50,000  

Peter Cannito

     50,000  

Chris Emerson

     50,000  

Thomas Markusic

     16,300,311  

 

(7)

Pamela Braden exercised her 50,000 stock options on May 6, 2025.

Narrative Disclosure to Director Compensation Table

The fees for non-employee directors Pamela Braden, Peter Cannito, and Chris Emerson in 2024 consisted of an annual cash retainer equal to $50,000. Certain of our directors also received grants of stock options, which vest in full on the first anniversary of the vesting commencement date.

Non-Employee Director Compensation Program

Following the completion of this offering, we anticipate that each of our non-employee directors will receive an annual director fee, fees for attending meetings of the board of directors as well as committee

 

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meetings and equity awards in connection with their services. In addition, each director will be reimbursed for out-of-pocket expenses in connection with his or her services. As of the time of this offering, we are evaluating the specific terms of our director compensation program.

 

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PRINCIPAL STOCKHOLDERS

The following table sets forth the beneficial ownership of our common stock (i) as of     , 2025 and (ii) immediately following this offering, as adjusted to reflect the sale of shares of common stock by us, in each case, by the following individuals or groups:

 

  •  

each of our directors;

 

  •  

each of our Named Executive Officers;

 

  •  

all of our directors and executive officers as a group; and

 

  •  

each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our common stock.

The percentage ownership information shown in the table prior to this offering is based upon shares of common stock outstanding as of     , 2025. The percentage ownership information shown in the table after this offering is based upon shares of common stock outstanding as of     , 2025 after giving effect to (i) the Preferred Stock Dividend which occured on     , 2025, (ii) the effectiveness of our amended and restated certificate of incorporation, (iii) the sale of shares of common stock by us in this offering upon the closing of this offering, and (iv) the conversion of      shares of our preferred stock outstanding as of     , 2025, into an aggregate of      shares of common stock and (ii) the automatic net exercise of warrants to purchase      shares of common stock outstanding as of     , 2025, at an exercise price of $     per share, in each case upon close of this offering, and does not include (i)      shares of common stock reserved for future issuance under our Equity Incentive Plan, or (ii)      shares reserved for issuance upon exercise of warrants to purchase preferred stock outstanding as of     , 2025, and assuming no exercise of the underwriters’ option to purchase additional shares of our common stock.

We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities, or have the right to acquire such powers within 60 days. Under these rules, more than one person may be deemed beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest. In addition, the rules include shares of common stock issuable pursuant to the exercise of stock options or warrants that are either immediately exercisable or exercisable on or before    , 2025, which is 60 days after    , 2025. These shares are deemed to be outstanding and beneficially owned by the person holding those options or warrants for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. The information contained in the following table is not necessarily indicative of beneficial ownership for any other purpose, and the inclusion of any shares in the table does not constitute an admission of beneficial ownership of those shares. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.

 

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Except as otherwise noted below, the address for persons listed in the table is c/o Firefly Aerospace, 1320 Arrow Point Drive #109, Cedar Park, TX 78613.

 

Name of Beneficial Owner   

Shares Beneficially

Owned Prior to this
Offering

     % of
Total
Voting
Power
     Shares Beneficially
Owned Following this
Offering
     % of
Total
Voting
Power
 
   Common Stock      Common Stock  
   Share      %      Shares      %  

Directors and Named Executive Officers:

                 

William Weber

                 

Peter Schumacher

                 

Jason Kim(1)

                 

Darren Ma(2)

                 

Dan Fermon(3)

                 

Kirk Konert

                 

Marc Weiser

                 

Christopher Emerson

                 

Thomas Zurbuchen

                 

Kevin McAllister

                 

Pamela Braden

                 

Jon Lusczakoski

                 

Ryan Boland

                 

Directors and executive officers as a group (  individuals)

                 

5% or Greater Stockholders:

                 

Entities affiliated with AE Industrial Partners(4)(5)

                 

Astera Institute(6)

                 

Thomas Markusic(7)

                 
 
*

Represents beneficial ownership of less than 1%.

(1)

Consists of      shares of common stock issuable pursuant to an option held directly by Mr. Kim exercisable within 60 days of     , 2025.

(2)

Consists of (i)      shares of common stock issuable pursuant to an option held directly by Mr. Ma exercisable within 60 days of     , 2025 and (ii)      shares of common stock held directly by Mr. Ma.

(3)

Consists of (i)      shares of common stock issuable pursuant to an option held directly by Mr. Fermon exercisable within 60 days of     , 2025 and (ii)      shares of common stock held directly by Mr. Fermon.

(4)

Consists of (i)      shares of common stock issuable upon the conversion of Series Seed Preferred Stock and      shares of common stock issuable upon the conversion of Series Seed-1 Preferred Stock held by Glow NS Holdings, LLC, (ii)      shares of common stock issuable upon the conversion of Series B Preferred Stock held by Glow B Holdings, LLC, (iii)      shares of common stock issuable upon the conversion of Series C Preferred Stock held by Glow C Holdings, LLC, (iv)      shares of common stock issuable upon the conversion of Series D-1 Preferred Stock and      shares of common stock issuable upon the exercise of warrants held by Glow D Holdings, LLC, (v)      shares of common stock issuable upon the conversion of Series D-1 Preferred Stock and      shares of common stock issuable upon the exercise of warrants held by AE Co-Investment Partners Fund III-F, LP, and (vi)      shares of common stock issuable upon the exercise of warrants held by AE Industrial Partners Structured Solutions I, LP.

(5)

Glow NS Holdings, LLC is controlled by Glow NS Intermediate Holdings, LLC, its sole member. Glow B Holdings, LLC and Glow NS Intermediate Holdings LLC are controlled by Glow Aggregator, LLC as each entity’s sole member. Glow Aggregator, LLC is controlled by AE Industrial Partners Fund II, L.P. as managing member. AE Industrial Partners Fund II, L.P. is controlled by AE Industrial Partners Fund II GP,

 

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  LP (“AE Fund II GP”), its general partner. Glow C Holdings, LLC, and Glow D Holdings, LLC are controlled by AE Industrial Partners Fund III, LP. as managing member. AE Co-Investment Partners Fund III-F, LP and AE Industrial Partners Fund III, LP. are controlled by AE Industrial Partners Fund III GP, LP (“AE Fund III GP”), as each entity’s general partner. AE Industrial Partners Structured Solutions I, LP is controlled by AE Industrial Partners Structured Solutions I GP, LP (“AE Solutions GP”), its general partner. AE Fund II GP, AE Fund III GP, and AE Solutions GP are each managed by each entity’s respective general partner, AeroEquity GP, LLC. AeroEquity GP, LLC is controlled by its managing members, Michael Greene and David Rowe. Messrs. Greene and Rowe make all voting and investment decisions with respect to the securities held by AE Industrial Partners. Each of the entities and individuals named above disclaims beneficial ownership of the securities held by AE Industrial Partners, except to the extent of its pecuniary interest therein. The business address of each of the foregoing entities and persons is 6700 Broken Sound Pkwy NW, Boca Raton, FL 33487.
(6)

Consists of (i)      shares of common stock issuable upon the conversion of Series Seed Preferred Stock and (ii)      shares of common stock issuable upon the conversion of Series A Preferred Stock.

(7)

Consists of (i)      shares of common stock issuable pursuant to an option held directly by Mr. Markusic exercisable within 60 days of     , 2025 and (ii)      shares of common stock and      shares of common stock issuable upon the conversion of Series Seed Preferred Stock held directly by Mr. Markusic.

 

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Related Party Transactions

Other than compensation arrangements for our directors and Named Executive Officers, including those discussed in the sections titled “Management” and “Executive Compensation,” the following is a description of each transaction since January 1, 2022 to which we were a participant or will be a participant, in which:

 

  •  

the amounts involved exceeded or will exceed $120,000; and

 

  •  

any of our directors, executive officers, or holders of more than 5% of our capital stock, or any member of the immediate family of, or person sharing the household with, the foregoing persons, had or will have a direct or indirect material interest.

Equity Financings

Series B Preferred Stock Financing

Between March 2022 and August 2022, we sold an aggregate of 19,100,007 shares of our Series B Preferred Stock at a purchase price of $3.9267 for an aggregate purchase price of $75.0 million. The following table summarizes purchases of our Series B Preferred Stock by entities affiliated with AE Industrial Partners:

 

Stockholder

   Shares of Series B
Preferred Stock
     Total Purchase
Price
 

Glow B Holdings, LLC (March 22, 2022)

     12,733,338      $ 50,000,000  

Glow B Holdings, LLC (July 7, 2022)

     1,324,267      $ 5,200,000  

Glow B Holdings, LLC (August 1, 2022)

     1,146,000      $ 4,500,000  

Glow B Holdings, LLC (August 19, 2022)

     76,400      $ 300,000  

Series C Preferred Stock Financing

Between February 2023 and January 2024, we sold an aggregate of 36,315,993 shares of our Series C Preferred Stock at a purchase price of $4.9361 per share for an aggregate purchase price of $179.3 million. The following table summarizes purchases of our Series C Preferred Stock by entities affiliated with AE Industrial Partners:

 

Stockholder

   Shares of Series C
Preferred Stock
     Total Purchase
Price
 

Glow C Holdings, LLC (February 2, 2023)

     5,064,727      $ 25,000,000  

Glow C Holdings, LLC (March 27, 2023)

     11,182,917      $ 55,200,000  

Glow C Holdings, LLC (June 13, 2023)

     5,064,727      $ 25,000,000  

The following table summarizes purchases of our Series C Preferred Stock by entities affiliated with Ryan Boland, a member of our board of directors:

 

Stockholder

   Shares of Series C
Preferred Stock
     Total Purchase
Price
 

Ares Technology I LLC (February 2, 2023)

     607,767      $ 3,000,000  

Ares Technology I LLC (March 27, 2023)

     833,654      $ 4,115,000  

 

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Warrants for Series J Preferred Stock

Between July 2023 and August 2024, we issued Series J Preferred Stock Warrants to purchase an aggregate of 2,103,853 shares of our Series J Preferred Stock at an exercise price of $6.5058 per share. The following table summarizes issuances of Series J Preferred Stock Warrants to entities affiliated with AE Industrial Partners:

 

Stockholder

   Shares of Series J
Preferred Stock
     Aggregate
Exercise Price
 

AE Industrial Partners Structured Solutions I, LP (July 17, 2023)

     224,680      $ 1,461,723  

AE Industrial Partners Structured Solutions I, LP (December 27, 2023)

     101,801      $ 662,297  

2024 Convertible Promissory Notes

On August 13, 2024, we issued Subordinated Convertible Promissory Notes in an aggregate principal amount of $25.0 million to AE Co-Investment Partners Fund III and AE Co-Investment Partners Fund III-A, in exchange for our agreement to issue the investors shares of our capital stock upon the occurrence of certain events described therein. The Subordinated Convertible Promissory Notes automatically converted into an aggregate of 4,962,279 shares of the Company’s Series D-1 Preferred Stock in October 2024 at a price per share of $5.1995.

Series D Preferred Stock Financing

Between October 2024 and July 2025, we sold an aggregate of 67,857,254 shares of our Series D-1 Preferred Stock at a purchase price of $5.1995 per share for an aggregate purchase price of $352.8 million, 1,793,014 shares of our Series D-3 Preferred Stock at a purchase price of $5.5772 per share for an aggregate purchase price of $10.0 million, and 9,148,331 shares of our Series D-4 Preferred Stock at a purchase price of $6.4190 per share for an aggregate purchase price of $58.7 million. Purchasers of our Series D-1 Preferred Stock participating in the initial closing of our Series D Preferred Stock Financing on October 31, 2024 (the “Series D Initial Closing”) were issued Common Stock Warrants equal to ten percent of the shares of Series D-1 Preferred Stock purchased by such purchaser at the Series D Initial Closing, pursuant to which we issued Common Stock Warrants to purchase an aggregate of 3,399,896 shares of our Common Stock at an exercise price of $0.28 per share. The following table summarizes purchases of our Series D-1 Preferred Stock at a purchase price by entities affiliated with AE Industrial Partners:

 

Stockholder

   Shares of Series D-1
Preferred Stock
     Total Purchase
Price
 

Glow D Holdings, LLC (October 31, 2024)

     15,193,768      $ 79,000,000  

AE Co-Investment Partners Fund III-F, LP (October 31, 2024)

     961,630      $ 5,000,000  

AE Co-Investment Partners Fund III-F, LP (January 31, 2025)

     961,630      $ 5,000,000  

The following table summarizes purchases of our Series D-1 Preferred Stock by entities affiliated with Ryan Boland, a member of our board of directors:

 

Stockholder

   Shares of Series D-1
Preferred Stock
     Total Purchase
Price
 

Mars Technology Holdings LLC (October 31, 2024)

     1,355,899      $ 7,050,000  

Mars Technology Holdings LLC (January 31, 2025)

     216,366      $ 1,125,000  

Mars Technology Holdings LLC (February 21, 2025)

     548,129      $ 2,850,000  

 

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The following table summarizes purchases of our Series D-1 Preferred Stock by entities affiliated with Marc Weiser, a member of our board of directors:

 

Stockholder

   Shares of Series D-1
Preferred Stock
     Total Purchase
Price
 

RPM Ventures IV, L.P. (October 31, 2024)

     3,365,708      $ 17,500,000  

BGW Ventures IV, LP (October 31, 2024)

     5,047,892      $ 26,246,515  

BGW Ventures IV, LP (February 27, 2025)

     3,244,291      $ 16,868,691  

Registration Rights

In connection with the completion of this offering, we expect to enter into a Registration Rights Agreement with certain holders of our common stock to amend and restate in its entirety, the Sixth Amended and Restated Investors’ Rights Agreement, dated October 31, 2024, pursuant to which, among other things, certain holders of our common stock will be entitled to rights with respect to the registration of their shares described below. The registration of shares of our common stock pursuant to the exercise of registration rights would enable holders to sell these shares without restriction under the Securities Act when the registration statement is declared effective. With the exception of underwriting discounts, commissions, and certain other expenses, we will pay all expenses related to any demand or piggyback registration described below, subject to reasonable fees and disbursements of one counsel for the selling holders.

The registration rights described below will expire upon the earliest to occur of: (i) three years after the completion of this offering or (ii) as to a given holder of registration rights, the date after the completion of this offering when such holder of registration rights can sell all of such holder’s registrable securities during any three-month period pursuant to Rule 144 promulgated under the Securities Act or upon such holder becoming subject to certain sanctions.

Following this offering, holders of an aggregate of    shares of our common stock will be entitled to the registration rights described below.

Demand Registration Rights

The holders of registrable securities are entitled to certain demand registration rights. At any time after we receive a request (i) from the Sponsor Investors (as defined in the Registration Rights Agreement) with respect to outstanding registrable securities of such holder with an anticipated aggregate offering price, net of selling expenses, of at least $15 million or (ii) 270 days following the effective date of the registration statement of which this prospectus forms a part, Astera (as defined in the Registration Rights Agreement) requests that we prepare and file a registration statement on Form S-1 under the Securities Act covering the registration of the registrable securities, so long as the anticipated aggregate offering price to the public, net of underwriters’ discounts, selling commissions, and certain taxes and other fees, is at least $15 million, we shall, as soon as practicable, and in any event within 60 days, after the date such request is given by the initiating holders, file a Form S-1 registration statement under the Securities Act covering all registrable securities that the initiating holders requested to be registered and any additional registrable securities requested to be included in such registration by any other holders.

We are not obligated to effect, or to take any action to effect, any registration statement on Form S-1 pursuant to a demand request in any of the following circumstances: (i) if it is determined by the Company, subject to certain conditions set forth in the Registration Rights Agreement, that such registration would be materially detrimental to the Company and its stockholders and filing should be deferred, (ii) after we have effected two registration statements on Form S-1 pursuant to demand requests or (iii) if the holders initiating the demand registration propose to dispose of registrable securities that may be immediately registered on Form S-3 pursuant to a demand registration, unless otherwise requested by the Sponsor Investors or Astera, as applicable.

 

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At any time after we are eligible to file a registration statement on Form S-3 under the Securities Act, and subject to the limitations and conditions set forth in the Registration Rights Agreement, Sponsor Investors or Astera may make a request that we prepare and file a registration statement on Form S-3 covering their shares, so long as the anticipated aggregate price to the public, net of the underwriters’ discounts, selling commissions and certain taxes and other fees, is at least $5,000,000. We will prepare and file the Form S-3 registration statement as requested, unless, as determined by the Company and subject to certain conditions set forth in the Registration Rights Agreement, such registration would be materially detrimental to the Company and its stockholders and filing should be deferred. We may defer only once in any 12-month period, and such deferral shall not exceed 90 days after receipt of the request for the demand registration.

Further, we are not obligated to effect, or to take any action to effect, any registration statement on Form S-3 pursuant to a demand request during the period that is 60 days before our good faith estimate of the date of filing of, and ending on a date that is 180 days after the effective date of, a Company-initiated registration, subject to certain conditions.

Piggyback Registration Rights

Subject to certain specified exceptions, if we propose to register any of our securities under the Securities Act either for our own account or for the account of other stockholders, the holders of shares having registration rights are entitled to notice and certain “piggyback” registration rights allowing them to include their shares in our registration statement. These registration rights are subject to specified conditions and limitations, including the right of the underwriters, in their sole discretion, to limit the number of shares included in any such offering under certain circumstances.

Agreements with our Significant Stockholders

Relationship with AE Operating and Affiliates of AE Industrial Partners

On March 22, 2022, we and AE Industrial Operating Partners, LLC (“AE Operating”), an affiliate of AE Industrial Partners, entered into an agreement for consulting services provided related to our operations. Pursuant to this agreement and certain work orders between the Company and each of Redwire Space, Inc. and Belcan LLC, each an affiliate of AE Industrial Partners, we have (a) utilized AE Operating, the operating and consulting arm of AE Industrial Partners, for consulting services and executive recruitment, (b) reimbursed AE Industrial Partners for expenses related to participation by our employees in AE Industrial Partners sponsored events, (c) paid to AE Industrial Partners and AE Operating related fees and expenses, and (d) paid certain companies controlled by AE Industrial Partners for goods and services provided to the Company. We paid (i) $2.3 million and $0 for the 2024 and 2023 fiscal years, respectively, in connection with services provided by AE Industrial Partners, AE and AE Operating and (ii) $1.1 million and $2.7 million for the 2024 and 2023 fiscal years, respectively, in connection with payment for goods and services provided by AE Industrial Partners’ portfolio companies. In connection with the completion of this offering, we expect to enter into an amended and restated consulting services agreement with AE Operating, pursuant to which the Company will pay AE Operating an annual fee of approximately $     for consulting and advisory services until the earlier of: (i) two years following the completion of our initial public offering or (ii) the time AE Industrial Partners beneficially owns less than 10% of our outstanding common stock.

Director Nomination Agreement

In connection with this offering, we will enter into a director nomination agreement (the “Director Nomination Agreement”) with the Investor Group that provides AE Industrial Partners, as representative of the Investor Group, with the right to designate nominees to our board of directors, subject to certain conditions. The Director Nomination Agreement will provide the Investor Group the right to designate (i)     nominees for election to our board of directors for so long as the Investor Group beneficially owns, in the aggregate,

 

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    % or more of the total number of shares of our common stock beneficially owned by the Investor Group upon completion of this offering, as adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split or similar changes in our capitalization (the “Original Amount”); (ii)     nominees for election to our board of directors for so long as the Investor Group beneficially owns at least     % and less than     % of the Original Amount; (iii)     nominees for election to our board of directors for so long as the Investor Group beneficially owns at least     % and less than     % of the Original Amount; and (iv) no right to nominate a director pursuant to the Director Nomination Agreement in the event the Investor Group owns less than     % of the Original Amount. In each case, any applicable nominee nominated pursuant to the Director Nomination Agreement must comply with applicable law and stock exchange rules.

Term Loan Facility

In connection with our entry into the Credit Agreement, AE Industrial Partners acquired approximately $21.1 million of our Term Loan Facility through an affiliated entity, and as of December 31, 2024, AE Industrial Partners collectively held $21.1 million of our Term Loan Facility. During the year ended December 31, 2024, the largest principal amount of debt under the Term Loan Facility held by AE Industrial Partners was $21.1 million. During the year ended December 31, 2024, AE Industrial Partners was not paid any principal. During the year ended December 31, 2024, AE Industrial Partners was paid $3.0 million in interest on the portion of the Term Loan Facility held by them. For a description of our Term Loan Facility, see “Description of Certain Indebtedness.”

Assuming an initial public offering price of $     per share (the midpoint of the estimated price range set forth on the cover page of this prospectus), we expect to use approximately $     million of our net proceeds from this offering to repay a portion of our Term Loan Facility. As a result, we expect that AE Industrial Partners will receive $     million of net proceeds in connection with such repayment.

Thomas Markusic Stock Option Loan

In April 2021, we entered into two stock option loan agreements (together, the “Markusic Option Loans”), with Thomas Markusic, pursuant to which we loaned to Mr. Markusic an aggregate of $1,458,299, due by the date of Mr. Markusic’s separation from the Company. The Markusic Option Loans were entered into in connection with the exercise of stock options for the purchase an aggregate of 10,396,003 shares of common stock of the Company. As of March 31, 2025, an aggregate of $214,577 remains outstanding under Markusic Option Loans.

Indemnification of Officers and Directors and Insurance

Following completion of this offering, our certificate of incorporation and bylaws will provide that we will indemnify each of our directors and officers to the fullest extent permitted by Delaware law. In addition, we have entered, or will enter, into indemnification agreements with each of our directors and executive officers. See “Description of Capital Stock—Limitations of Liability, Indemnification and Advancement” below for more details. We also have purchased directors’ and officers’ liability insurance.

Related Persons Transaction Policy

Prior to completion of this offering, we intend to adopt formal written procedures for the review, approval, or ratification of transactions with related persons, or the Related Persons Transaction Policy. The Related Persons Transaction Policy will provide that the audit committee of our board of directors will be charged with reviewing for approval or ratification all transactions with “related persons” (as defined in paragraph (a) of Item 404 of Regulation S-K) that are brought to the audit committee’s attention. This policy is expected to take effect upon the effectiveness of our certificate of incorporation in connection with this offering. We also maintain certain compensation agreements and other arrangements with certain of our executive officers, which are described under “Executive Compensation” elsewhere in this prospectus.

 

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DESCRIPTION OF CERTAIN INDEBTEDNESS

The following is a summary of the material provisions relating to our material indebtedness. The following summary does not purport to be complete and is subject to, and qualified in its entirety by reference to, the provisions of the corresponding agreement or instrument, including the definitions of certain terms therein that are not otherwise defined in this prospectus. You should refer to the relevant agreement or instrument for additional information, copies of which are filed as exhibits to the registration statement of which this prospectus is a part.

On July 17, 2023, we entered into a credit agreement (the “Original Credit Agreement”) among the Company and various lenders and U.S. Bank Trust Company, N.A. in its capacity as collateral agent for the lenders. The Original Credit Agreement provided term loan commitments in the aggregate principal amount of $106.3 million. The Original Credit Agreement consisted of a term loan commitment of $82.5 million (“Term A Loans”) and a term loan commitment of $23.8 million (“Term B Loans” and, together with the Term A Loans, the “Term Loan Facility”). On December 6, 2023, we amended and restated the Original Credit Agreement (the “First A&R Credit Agreement”) with the primary purpose of increasing the total commitments under the Term Loan Facility in the aggregate principal amount of $15.9 million. Term A Loan commitments increased by $8.5 million and Term B Loan commitments increased by $7.4 million. On May 20, 2024, we amended and restated the First A&R Credit Agreement (the “Second A&R Credit Agreement”) to increase the total commitments under the Term Loan Facility in the aggregate principal amount of $13.9 million. Term A Loan commitments increased by $12.5 million and Term B Loan commitments increased by $1.4 million. On August 13, 2024, we entered into the first amendment to and waiver under the Second A&R Credit Agreement to waiver certain specified events of default and effecting certain amendments thereto (such agreement, as further amended from time to time, the “Credit Agreement”). Borrowings under the Term Loan Facility bear interest at a fixed rate on the unpaid principal amount thereof of 13.875% provided that the fixed rate for Term Loan B Fixed Rate will increase to 19.135% in July 2026. All obligations under the Credit Agreement are guaranteed by the Company and certain subsidiaries of the Company comprised of all domestic subsidiaries of the Company except certain excluded subsidiaries and are secured by substantially all the Company’s assets. The Term Loan Facility will mature on July 17, 2028.

The Credit Agreement contains customary mandatory prepayments, including with respect to asset sale proceeds and proceeds from certain incurrences of indebtedness. The principal amount owed under the Credit Agreement shall be due and payable on the maturity date. The Credit Agreement contains customary affirmative covenants and negative covenants. The Credit Agreement contains a minimum cash financial covenant that requires us to maintain a minimum amount of qualified cash of at least $10,000,000 at any time and $17,500,000 on the last day of any fiscal month. The Credit Agreement also includes equity cure provisions that permits us to cure any financial covenant defaults.

The obligations under the Credit Agreement (collectively, “Credit Agreement Obligations”) are guaranteed (the “Credit Agreement Guarantees”) by the Company’s existing and future direct and indirect material subsidiaries, subject to customary exceptions (in such capacity, the “Credit Agreement Guarantors”). The Credit Agreement Obligations are secured by first priority liens on substantially all assets, subject to customary exceptions, of the Company and the Credit Agreement Guarantors.

In connection with the Credit Agreement, we transferred our intellectual property into an indirect subsidiary that is a special purpose vehicle, Firefly IP CO, LLC (“IPCo”). IPCo leases the intellectual property to the Company and its subsidiaries. The Credit Agreement also requires that IPCo remains a bankruptcy remote entity and continue to hold the intellectual property.

The lenders under the Credit Agreement obtained an insurance policy from various insurers that will payout in the event of specified claim actions set forth in the policy. In connection with such insurance policy, we are required to maintain an insurance premium reserve account to make insurance premium payments that are

 

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required under such insurance policy. We are also required to maintain an interest reserve account, which was funded by the Company, that will be distributed upon the Company’s failure to pay cash interest when due and payable under the Credit Agreement.

In connection with the completion of this offering, we intend to repay all of our outstanding borrowings under the Credit Agreement. See “Use of Proceeds.”

We currently anticipate entering into the Revolving Credit Facility substantially concurrently with the closing of this offering. The maturity, interest rates, and other terms of the Revolving Credit Facility are in the process of being negotiated with prospective lenders; however, we expect that the initial aggregate principal amount of the revolving commitments available under the Revolving Credit Facility will be approximately $125.0 million. The Revolving Credit Facility will be a senior secured revolving credit facility that will be guaranteed by certain of our subsidiaries and secured by substantially all of our assets and the assets of certain of our subsidiaries, in each case, subject to customary exceptions. The Revolving Credit Facility is anticipated to contain representations and warranties, affirmative, negative and financial covenants, and events of default customary for secured financings of this type.

Borrowings under the Revolving Credit Facility may vary significantly from time to time depending on our cash needs at any given time. We cannot assure you that we will obtain binding commitments for the Revolving Credit Facility on favorable terms or at all. Please see “Prospectus Summary—Recent Developments—New Revolving Credit Facility” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt” for additional information.

 

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DESCRIPTION OF CAPITAL STOCK

The following descriptions are summaries of our capital stock, certain provisions of our certificate of incorporation and bylaws, as each will be in effect upon the completion of this offering, and certain provisions of Delaware law. Please note that these summaries are not intended to be exhaustive. For further information, you should also refer to the full versions of our certificate of incorporation and the bylaws, which are filed as exhibits to the registration statement of which this prospectus is a part.

General

Upon the completion of this offering, our certificate of incorporation will provide for one class of common stock. In addition, our certificate of incorporation will authorize shares of undesignated preferred stock, the rights, preferences, and privileges of which may be designated from time to time by our board of directors.

Upon the completion of this offering, our authorized capital stock will consist of      shares of capital stock, all with a par value of $0.001 per share, of which      shares will be designated as common stock and      shares will be designated as preferred stock.

As of      2025, and after giving effect to (i) the Preferred Stock Dividend which occurred on     , 2025, (ii) the effectiveness of our amended and restated certificate of incorporation, (iii) the conversion of      shares of our preferred stock outstanding as of     , 2025, into an aggregate of      shares of common stock, and (iv) the automatic net exercise of warrants to purchase      shares of common stock outstanding as of     , 2025, there were      shares of our common stock outstanding, held of record by stockholders. Upon completion of this offering, no shares of our preferred stock will be designated, issued or outstanding.

Common Stock

Voting Rights

Each share of our common stock entitles its holder to one vote per share on all matters to be voted upon by the stockholders. There is no cumulative voting, which means that a holder or group of holders of more than 50% of the shares of our common stock can elect all of our directors.

Dividend Rights

The holders of our common stock are entitled to receive, and will share ratably in, dividends when and as declared by our board of directors from legally available sources, subject to the prior rights of the holders of our preferred stock, if any. See “Dividend Policy.”

Preemptive or Similar Rights

Our common stock is not entitled to preemptive rights. The rights of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock that our board of directors may designate and issue in the future.

Liquidation Rights

Upon our liquidation, dissolution or winding-up, the assets legally available for distribution to our stockholders would be distributable ratably among the holders of our common stock and any participating preferred stock outstanding at that time after payment of liquidation preferences, if any, on any outstanding shares of preferred stock and payment of claims of creditors.

 

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Conversion or Redemption Rights

Our common stock will be neither convertible nor redeemable.

Preferred Stock

Our board of directors will be authorized to issue up to     shares of our preferred stock in one or more series, to establish from time to time the number of shares to be included in each series, to fix the designation, powers, preferences, and rights of the shares of each series and any qualifications, limitations, or restrictions thereof, in each case without further action by our stockholders. Subject to the terms of any series of preferred stock so designated, our board of directors is also authorized to increase or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding. Our board of directors may authorize the issuance of preferred stock with voting or conversion or other rights that could adversely affect the voting power or other rights of the holders of our common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring, or preventing a change in our control and could adversely affect the market price of our common stock and the voting and other rights of the holders of our common stock.

Anti-Takeover Provisions

Below are brief summaries of various anti-takeover provisions which will be contained primarily in our organizational documents. We believe the benefits of these provisions, including increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure our company, outweigh the disadvantages of discouraging takeover proposals, because negotiation of takeover proposals could result in an improvement of their terms.

Anti-Takeover Statute

Our certificate of incorporation will provide that we are not governed by Section 203 of the DGCL which, in the absence of such provisions, would have imposed additional requirements regarding mergers and other business combinations.

However, our certificate of incorporation, which will become effective on the consummation of this offering, will include a provision that restricts us from engaging in any business combination with an interested stockholder for three years following the date that person becomes an interested stockholder. These restrictions will not apply to any business combination involving AE Industrial Partners or any affiliate of AE Industrial Partners or their respective direct and indirect transferees, on the one hand, and us, on the other.

Additionally, we would be able to enter into a business combination with an interested stockholder if:

 

  •  

before that person became an interested stockholder, our board of directors approved the transaction in which the interested stockholder became an interested stockholder or approved the business combination;

 

  •  

upon consummation of the transaction that resulted in the interested stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) stock held by directors who are also officers of our Company and by employee stock plans that do not provide employees with the right to determine confidentially whether shares held under the plan will be tendered in a tender or exchange offer; or

 

  •  

following the transaction in which that person became an interested stockholder, the business combination is approved by our board of directors and authorized at a meeting of stockholders by the

 

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affirmative vote of the holders of at least 66 2/3% of our outstanding voting stock not owned by the interested stockholder.

In general, a “business combination” is defined to include mergers, asset sales, and other transactions resulting in financial benefit to a stockholder and an “interested stockholder” is any person who, together with affiliates and associates, is the owner of 15% or more of our outstanding voting stock or is our affiliate or associate and was the owner of 15% or more of our outstanding voting stock at any time within the three-year period immediately before the date of determination. Under our certificate of incorporation, an “interested stockholder” generally will not include AE Industrial Partners or any affiliate of AE Industrial Partners or their respective direct and indirect transferees.

This provision of our certificate of incorporation could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may discourage attempts to acquire us even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above the prevailing market price.

Anti-Takeover Effects of Certain Provisions of Our Certificate of Incorporation and Bylaws to Be in Effect Upon the Completion of This Offering Undesignated Preferred Stock

As discussed above, our board of directors will have the ability to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire control of us. These and other provisions may have the effect of deterring hostile takeovers or delaying changes in control or management.

Board Classification

Our certificate of incorporation, which will be in effect upon the completion of this offering, will provide for a board of directors comprised of three classes of directors, with each class serving a three-year term beginning and ending in different years than those of the other two classes. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three- year terms. The classification of our board of directors and the limitations on the ability of our stockholders to remove directors without cause following the time when AE Industrial Partners ceases to beneficially own at least 40% of the shares of our outstanding common stock (the “Trigger Date”) could make it more difficult for a third party to acquire, or discourage a third party from seeking to acquire, control of us.

Action by Written Consent; Special Meetings of Stockholders

Our certificate of incorporation will provide that, from and after the Trigger Date, our stockholders may not act by written consent, which may lengthen the amount of time required to take stockholder actions. As a result, following the Trigger Date, a holder controlling a majority of our common stock would not be able to amend our bylaws or remove directors without holding a meeting of our stockholders called in accordance with our bylaws. In addition, our certificate of incorporation will provide that, from and after the Trigger Date, special meetings of the stockholders may be called only by the chairperson of our board of directors, our Chief Executive Officer, or our board of directors. Following the Trigger Date, stockholders may not call a special meeting of stockholders, which may delay the ability of our stockholders to force consideration of a proposal or for holders controlling a majority of our common stock to take any action, including the removal of directors.

Advance Notice Procedures

Our bylaws will establish advance notice procedures with respect to stockholder proposals and stockholder nomination of candidates for election as directors provided, however, at any time when AE Industrial Partners beneficially owns, in the aggregate, at least 20% in voting power of the stock of the Company entitled to vote generally in the election of directors, such advance notice procedure will not apply to AE Industrial Partners. These

 

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provisions may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.

Removal of Directors; Vacancies

Our certificate of incorporation will provide that, from and after the Trigger Date, directors may only be removed for cause by the affirmative vote of at least two thirds of the voting power of our outstanding common stock. Prior to the Trigger Date, directors may be removed with or without cause by the affirmative vote of at least a majority of the voting power of our outstanding common stock. Except in the case of a vacancy arising with respect to a director designated by AE Industrial Partners where AE Industrial Partners continues to have a right of designation, our board of directors has the sole power to fill any vacancy on our board of directors, whether such vacancy occurs as a result of an increase in the number of directors or otherwise.

No Cumulative Voting

Because our stockholders will not have cumulative voting rights, stockholders holding a majority of the voting power of the common stock outstanding will be able to elect all of our directors. The absence of cumulative voting makes it more difficult for a minority stockholder to nominate and elect a director to our board of directors in order to influence our board of directors’ decision regarding a takeover or otherwise.

Amendment of Charter and Bylaw Provisions

Our certificate of incorporation will provide that, following the Trigger Date, the amendment of certain of the provisions of our certificate of incorporation described in this prospectus will require approval by holders of at least two-thirds of the voting power of our outstanding common stock. Our certificate of incorporation will provide that our board of directors may from time to time adopt, amend, alter, or repeal our bylaws without stockholder approval. The stockholders may adopt, amend, alter, or repeal our bylaws by the affirmative vote of a majority of the voting power of our outstanding common stock (other than certain specified bylaws which, following the Trigger Date, will require the affirmative vote of two-thirds of our outstanding common stock).

The combination of these provisions will make it more difficult for another party to obtain control of us by replacing our board of directors. Because our board of directors has the power to retain and discharge our officers, these provisions could also make it more difficult for another party to effect a change in management.

These provisions are intended to enhance the likelihood of continued stability in the composition of our board of directors and its policies and to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to reduce our vulnerability to hostile takeovers and to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and may have the effect of delaying changes in our control or management.

Corporate Opportunity

Section 122(17) of the DGCL permits a corporation to renounce, in advance, in its certificate of incorporation or by action of its board of directors, any interest or expectancy of a corporation in certain classes or categories of business opportunities. Where business opportunities are so renounced, certain of our officers and directors will not be obligated to present any such business opportunities to us. Upon the completion of this offering, our certificate of incorporation will provide that, to the fullest extent permitted by law, no officer or director of ours who is also an officer, director, employee, managing director, or other affiliate of AE Industrial Partners will be liable to us or our stockholders for breach of any fiduciary duty by reason of the fact that any such individual directs a corporate opportunity to AE Industrial Partners, as applicable, instead of us, or does not

 

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communicate information regarding a corporate opportunity to us that the officer, director, employee, managing director, or other affiliate has directed to AE Industrial Partners, as applicable. This provision may not be modified without the written consent of AE Industrial Partners until such time as AE Industrial Partners does not own any of our outstanding shares of common stock.

Choice of Forum

Upon the completion of this offering, our certificate of incorporation will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for: (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a breach of fiduciary duty; (iii) any action asserting a claim against us arising under the DGCL; (iv) any action regarding our certificate of incorporation or our bylaws; or (v) any action asserting a claim against us that is governed by the internal affairs doctrine. This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction. These provisions will provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, subject to and contingent upon a final adjudication in the State of Delaware of the enforceability of such exclusive-forum provision. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of, and consented to, the forum provisions in our certificate of incorporation. However, it is possible that a court could find our forum selection provisions to be inapplicable or unenforceable.

Limitations on Liability and Indemnification of Officers and Directors

The DGCL authorizes corporations to limit or eliminate the personal liability of directors or officers to corporations and their stockholders for monetary damages for breaches of directors’ or officers’ fiduciary duties, subject to certain exceptions. Our certificate of incorporation will include a provision that eliminates the personal liability of directors and officers for monetary damages for any breach of fiduciary duty as a director or officer, respectively, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL. The effect of these provisions will be to eliminate the rights of us and our stockholders, through stockholders’ derivative suits on our behalf, to recover monetary damages from a director or officer for breach of fiduciary duty as a director or officer, respectively, including breaches resulting from grossly negligent behavior. However, exculpation will not apply to any director or officer if the director or officer has acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends or redemptions, or derived an improper benefit from his or her actions as a director or officer.

Our bylaws will provide that we must indemnify and advance expenses to our directors and officers to the fullest extent authorized by the DGCL. We also will be expressly authorized to carry directors’ and officers’ liability insurance providing indemnification for our directors, officers, and certain employees for some liabilities. We believe that these indemnification and advancement provisions and insurance will be useful to attract and retain qualified directors and officers.

The limitation of liability, indemnification, and advancement provisions that will be included in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breaches of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

There is currently no pending material litigation or proceeding involving any of our directors, officers, or employees for which indemnification is sought.

 

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Transfer Agent and Registrar

The transfer agent and registrar for our common stock is Equiniti Trust Company, LLC. The transfer agent’s address is 6201 15th Avenue, Brooklyn, NY 11219 and its phone number is 651-328-4405.

Listing

We have applied for the listing of our common stock approved for listing on Nasdaq under the symbol “FLY.”

 

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, no public market existed for our capital stock. Future sales of substantial amounts of common stock in the public market, the availability of shares for future sale, or the perception that such sales may occur, could adversely affect the market price of our common stock and/or impair our ability to raise equity capital.

Upon the completion of this offering,     shares of our common stock will be outstanding, or    shares of our common stock if the underwriters exercise their option to purchase additional shares from us in full.

All of the shares of common stock sold in this offering will be freely tradable without restrictions or further registration under the Securities Act, except for any shares sold to our “affiliates,” as defined in Rule 144 under the Securities Act. The outstanding shares of our common stock held by existing stockholders are “restricted securities,” as defined in Rule 144. Restricted securities may be sold in the public market only if the offer and sale is registered under the Securities Act or if the offer and sale of those securities qualifies for exemption from registration, including exemptions provided by Rule 144 or Rule 701 under the Securities Act.

We intend to file with the SEC a registration statement on Form S-8 covering the shares of common stock reserved for issuance under our 2025 Stock Plan. Such registration statement is expected to be filed and become effective as soon as practicable after completion of this offering. Upon effectiveness, the shares of common stock covered by the registration statement of which this prospectus forms a part will generally be eligible for sale in the public market, subject to vesting restrictions, any applicable lock-up agreements described below and Rule 144 limitations applicable to affiliates.

As a result of lock-up agreements described below and the provisions of Rules 144 and 701, shares of our common stock will be available for sale in the public market as follows:

 

  •  

    shares of our common stock will be eligible for immediate sale upon the completion of this offering; and

 

  •  

approximately      shares of our common stock will be eligible for sale upon expiration of lock-up agreements described below, beginning 181 days after the date of this prospectus, subject in certain circumstances to the volume, manner of sale and other limitations under Rules 144 and 701.

We may issue shares of our capital stock from time to time for a variety of corporate purposes, including in capital-raising activities through future public offerings or private placements, in connection with the exercise of stock options and warrants, vesting of RSUs and other issuances relating to our employee benefit plans and as consideration for future acquisitions, investments, or other purposes. The number of shares of our capital stock that we may issue may be significant, depending on the events surrounding such issuances. In some cases, the shares we issue may be freely tradable without restriction or further registration under the Securities Act; in other cases, we may grant registration rights covering the shares issued in connection with these issuances, in which case the holders of the shares will have the right, under certain circumstances, to cause us to register any resale of such shares to the public.

Rule 144

In general, persons who have beneficially owned restricted shares of our common stock for at least six months, and, subject to certain restrictions, described below, any affiliate of ours who owns either restricted or unrestricted shares of our common stock, are entitled to sell their securities without registration with the SEC under an exemption from registration provided by Rule 144.

 

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Non-Affiliates

Any person who is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale may sell an unlimited number of restricted securities under Rule 144 if:

 

  •  

the restricted securities have been held for at least six months, including the holding period of any prior owner other than one of our affiliates;

 

  •  

we have been subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale; and

 

  •  

we are current in our Exchange Act reporting at the time of sale.

Any person who is not deemed to have been an affiliate of ours at the time of, or at any time during the three months preceding, a sale and has held the restricted securities for at least one year, including the holding period of any prior owner other than one of our affiliates, will be entitled to sell an unlimited number of restricted securities without regard to the length of time we have been subject to Exchange Act periodic reporting or whether we are current in our Exchange Act reporting.

Affiliates

Persons seeking to sell restricted securities who are our affiliates at the time of, or any time during the three months preceding, a sale would be subject to the restrictions described above. Sales of restricted or unrestricted shares of our common stock by affiliates are also subject to additional restrictions, by which such person would be required to comply with the manner of sale and notice provisions of Rule 144 and would be entitled to sell within any three-month period only that number of securities that does not exceed the greater of either of the following:

 

  •  

1% of the number of shares of our common stock then outstanding, which will equal approximately shares immediately following the completion of this offering (or shares if the underwriters exercise their option to purchase additional shares in full); or

 

  •  

the average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

Rule 701

In general, under Rule 701, a person who purchased shares of our common stock pursuant to a written compensatory plan or contract and who is not deemed to have been one of our affiliates during the immediately preceding 90 days may sell these shares in reliance upon Rule 144, but without being required to comply with the holding period, notice, manner of sale, public information requirements or volume limitation provisions of Rule 144. Rule 701 also permits affiliates to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required to wait until 90 days after the date of this prospectus before selling such shares pursuant to Rule 701, subject to the expiration of the lock-up agreements described below.

Lock-Up Agreements

In connection with this offering, we and our officers, directors, and holders of substantially all of our common stock and securities convertible into or exercisable for our common stock, including AE Industrial Partners, have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of     . See “Underwriting.”

 

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The agreements do not contain any pre-established conditions to the waiver by      on behalf of the underwriters of any terms of the lock-up agreements. Any determination to release shares subject to the lock-up agreements would be based on a number of factors at the time of determination, including but not necessarily limited to the market price of the common stock, the liquidity of the trading market for the common stock, general market conditions, the number of shares proposed to be sold and the timing, purpose, and terms of the proposed sale.

Registration Rights

After the completion of this offering, the holders of up to      shares of our common stock will be entitled to certain rights with respect to the registration of such shares under the Securities Act. The registration of these shares of our common stock under the Securities Act would result in these shares becoming eligible for sale in the public market without restriction under the Securities Act immediately upon the effectiveness of such registration, subject to the Rule 144 limitations applicable to affiliates. See “Certain Relationships and Related Party Transactions—Registration Rights” for a description of these registration rights.

 

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS

The following discussion is a summary of certain material U.S. federal income tax consequences to Non-U.S. Holders (as defined below) of the purchase, ownership, and disposition of our common stock issued pursuant to this offering but does not purport to be a complete analysis of all potential tax considerations relating thereto. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local, or non-U.S. tax laws are not discussed. This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations promulgated or proposed thereunder (the “Treasury Regulations”), judicial decisions and published rulings, and administrative pronouncements of the U.S. Internal Revenue Service (the “IRS”), in each case as in effect as of the date hereof. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect a Non-U.S. Holder of our common stock. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance the IRS or a court will not take a contrary position to those discussed below regarding the tax consequences of the purchase, ownership, and disposition of our common stock.

This discussion is limited to Non-U.S. Holders who purchase our common stock pursuant to this offering and who hold our common stock as a “capital asset” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to a Non-U.S. Holder’s particular circumstances. In addition, it does not address consequences relevant to Non-U.S. Holders subject to special rules, including, without limitation:

 

  •  

U.S. expatriates and former citizens or long-term residents of the United States;

 

  •  

persons subject to the alternative minimum tax;

 

  •  

persons holding our common stock as part of a hedge, straddle, or other risk reduction strategy or as part of a conversion transaction or other integrated investment;

 

  •  

banks, insurance companies, and other financial institutions (except to the extent specifically set forth below);

 

  •  

real estate investment trusts or regulated investment companies;

 

  •  

brokers, dealers, or traders in securities, commodities, or currencies;

 

  •  

persons that elect to use a mark-to-market method of accounting for their holdings in our common stock;

 

  •  

“controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax;

 

  •  

pass-through entities other than partnerships (and investors therein);

 

  •  

tax-exempt organizations or governmental organizations;

 

  •  

persons deemed to sell our common stock under the constructive sale provisions of the Code;

 

  •  

persons who hold or receive our common stock pursuant to the exercise of any employee stock options or otherwise as compensation;

 

  •  

persons that own or have owned (actually or constructively) more than five percent of our capital stock (except to the extent specifically set forth below);

 

  •  

persons subject to special tax accounting rules as a result of any item of gross income with respect to our common stock being taken in account in an “applicable financial statement” (as defined in Section 451(b)(3) of the Code);

 

  •  

“qualified foreign pension funds” (within the meaning of Section 897(1)(2)) of the Code and entities, all of the interests of which are held by qualified foreign pension funds; and

 

  •  

tax-qualified retirement plans.

 

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In addition, this discussion does not address the tax treatment of partnerships (or entities or arrangements that are treated as partnerships for U.S. federal income tax purposes) or persons that hold our common stock through such partnerships. If any entity or arrangement classified as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of a partner in the partnership will depend on the status of the partner, the activities of the partnership, and certain determinations made at the partner level. Accordingly, partnerships holding our common stock and partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them of the purchase, ownership, and disposition of our common stock.

THIS DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TAX ADVICE. INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP, AND DISPOSITION OF OUR COMMON STOCK ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL, OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.

Definition of a Non-U.S. Holder

For purposes of this discussion, a “Non-U.S. Holder” is any beneficial owner of our common stock that is neither a “United States person” nor an entity or arrangement treated as a partnership for U.S. federal income tax purposes. A United States person is any person that, for U.S. federal income tax purposes, is or is treated as any of the following:

 

  •  

an individual who is a citizen or resident of the United States;

 

  •  

a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States, any state thereof, or the District of Columbia;

 

  •  

an estate the income of which is subject to U.S. federal income tax regardless of its source; or

 

  •  

a trust that (1) is subject to the primary supervision of a U.S. court and all substantial decisions of which are under the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code) or (2) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes.

Distributions

As described in the section titled “Dividend Policy,” we do not anticipate declaring or paying dividends to holders of our common stock in the foreseeable future. However, if we do make distributions of cash or property on our common stock, such distributions generally will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S. federal income tax purposes generally will constitute a non-taxable return of capital and first be applied against and reduce a Non-U.S. Holder’s adjusted tax basis in its common stock, but not below zero. Any excess amounts generally will be treated as capital gain and will be treated as described below under “Sale or Other Taxable Disposition.”

Subject to the discussion below on effectively connected income, backup withholding, and Sections 1471 to 1474 of the Code (such Sections commonly referred to as the Foreign Account Tax Compliance Act (“FATCA”)), dividends paid to a Non-U.S. Holder of our common stock will be subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the dividends or such lower rate specified by an applicable income tax treaty, provided that the Non-U.S. Holder furnishes to the applicable withholding agent prior to the payment of the dividends a valid IRS Form W-8BEN or W-8BEN-E (or other applicable documentation or successor form) certifying qualification for the lower treaty rate. The Non-U.S. Holder will be

 

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required to update such forms and certifications, as applicable, from time to time as required by law. A Non-U.S. Holder that does not timely furnish the required documentation, but that qualifies for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. Non-U.S. Holders should consult their tax advisors regarding their entitlement to benefits under any applicable income tax treaty.

If dividends paid to a Non-U.S. Holder are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment or fixed base in the United States to which such dividends are attributable), the Non-U.S. Holder will be exempt from the U.S. federal withholding tax described above if the Non-U.S. Holder satisfies applicable certification and disclosure requirements. To claim the exemption, the Non-U.S. Holder must furnish to the applicable withholding agent a valid IRS Form W-8ECI (or a successor form), certifying that the dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States. The Non-U.S. Holder will be required to update such forms and certifications, as applicable, from time to time as required by law. Non-U.S. Holders should consult their tax advisors regarding any applicable tax treaties that may provide for different treatment.

Any such effectively connected dividends will generally be subject to U.S. federal income tax on a net income basis at the regular rates generally applicable to “United States persons” (as defined in the Code). A Non-U.S. Holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on its effectively connected earnings and profits (as adjusted for certain items), which will include such effectively connected dividends. Non-U.S. Holders should consult their tax advisors regarding any applicable tax treaties that may provide for different treatment.

Sale or Other Taxable Disposition

Subject to the discussion below on backup withholding and FATCA, a Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain realized upon the sale or other taxable disposition of our common stock unless:

 

  •  

the gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment or fixed base in the United States to which such gain is attributable);

 

  •  

the Non-U.S. Holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met; or

 

  •  

our common stock constitutes a U.S. real property interest (a “USRPI”), by reason of our status as a U.S. real property holding corporation (a “USRPHC”), for U.S. federal income tax purposes.

Gain described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at the regular rates generally applicable to United States persons. A Non-U.S. Holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on its effectively connected earnings and profits (as adjusted for certain items), which will include such effectively connected gain.

A Non-U.S. Holder described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on any gain derived from the sale or other taxable disposition, which may generally be offset by U.S. source capital losses of the Non-U.S. Holder for the applicable taxable year (even though the individual is not considered a resident of the United States), provided the Non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses.

With respect to the third bullet point above, we believe we currently are not, and do not anticipate becoming, a USRPHC. Because the determination of whether we are a USRPHC depends, however, on the fair

 

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market value of our USRPIs relative to the fair market value of our non-U.S. real property interests and our other business assets, there can be no assurance that we currently are not a USRPHC or will not become one in the future. Even if we are or were to become a USRPHC, gain arising from the sale or other taxable disposition by a Non-U.S. Holder of our common stock will not be subject to U.S. federal income tax if our common stock is “regularly traded,” as defined by applicable Treasury Regulations, on an established securities market during the calendar year in which the taxable disposition occurs, and such Non-U.S. Holder owned, actually and constructively, five percent or less of our common stock throughout the shorter of (1) the five-year period ending on the date of the sale or other taxable disposition or (2) the Non-U.S. Holder’s holding period. No assurance can be provided that our common stock will be regularly traded on an established securities market at all times for purposes of the rules described above. If we were to become a USRPHC and our common stock were not considered to be “regularly traded” on an established securities market during the calendar year in which the relevant disposition by a Non-U.S. Holder occurs, such Non-U.S. Holder (regardless of the percentage of stock owned) would be subject to U.S. federal income tax on a sale or other taxable disposition of our common stock and a 15% withholding tax would apply to the gross proceeds from such disposition. No assurance can be provided that our common stock will continue to be regularly traded on an established securities market for purposes of the rules described above.

Non-U.S. Holders should consult their tax advisors regarding potentially applicable income tax treaties that may provide for different treatment.

Information Reporting and Backup Withholding

Payments of distributions on our common stock generally will not be subject to backup withholding, provided the applicable withholding agent does not have actual knowledge or reason to know the Non-U.S. Holder is a United States person and the Non-U.S. Holder either certifies its non-U.S. status, such as by furnishing a valid IRS Form W-8BEN, W-8BEN-E, or W-8ECI (or other applicable or successor form), or otherwise establishes an exemption. However, information returns are required to be filed with the IRS in connection with any distributions on our common stock paid to the Non-U.S. Holder, regardless of whether any tax was actually withheld. In addition, proceeds of the sale or other taxable disposition of our common stock within the United States or conducted through certain U.S.-related brokers by a Non-U.S. Holder generally will not be subject to backup withholding or information reporting if the applicable withholding agent receives the certification described above and does not have actual knowledge or reason to know that such Non-U.S. Holder is a United States person or the Non-U.S. Holder otherwise establishes an exemption. If a Non-U.S. Holder does not provide the certification described above or the applicable withholding agent has actual knowledge or reason to know that such Non-U.S. Holder is a United States person, payments of distributions or of proceeds of the sale or other taxable disposition of our common stock may be subject to backup withholding at a rate currently equal to 24% of the gross proceeds of such distribution, sale, or taxable disposition. Proceeds of a sale or other taxable disposition of our common stock conducted through a non-U.S. office of a non-U.S. broker generally will not be subject to backup withholding or information reporting.

Copies of information returns that are filed with the IRS may also be made available under the provisions of an applicable treaty or agreement to the tax authorities of the country in which the Non-U.S. Holder resides or is established.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a Non-U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.

Non-U.S. Holders should consult their tax advisors regarding information reporting and backup withholding.

 

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Additional Withholding Tax on Payments Made to Foreign Accounts

Withholding taxes may be imposed under FATCA and other administrative guidance issued thereunder, on certain types of payments made to non-U.S. financial institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends on, or (subject to the discussion of certain proposed Treasury Regulations below) gross proceeds from the sale or other disposition of, our common stock paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined in the Code) (including, in some cases, when such foreign financial institution or non-financial foreign entity is acting as an intermediary), unless (1) the foreign financial institution undertakes certain diligence and reporting obligations, (2) if the foreign entity is not a “foreign financial entity,” the non-financial foreign entity either certifies it does not have any “substantial United States owners” (as defined in the Code) or furnishes identifying information regarding each direct and indirect substantial United States owner, or (3) the foreign financial institution or non-financial foreign entity otherwise establishes that it qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in (1) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain “specified United States persons” or “United States-owned foreign entities” (each as defined in the Code), annually report certain information about such accounts, and withhold 30% on certain payments to noncompliant foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules.

Under the Code, applicable Treasury Regulations, and administrative guidance, withholding under FATCA generally applies to payments of dividends on our common stock. On December 13, 2018, the U.S. Department of the Treasury released proposed regulations (which may be relied upon by taxpayers until final regulations are issued), which eliminate FATCA withholding on the gross proceeds from a sale or other disposition of our common stock. We will not pay additional amounts or “gross up” payments to Non-U.S. Holders as a result of any withholding or deduction for taxes imposed under FATCA. Under certain circumstances, certain Non-U.S. Holders might be eligible for refunds or credits of such taxes. Prospective investors should consult their tax advisors regarding the potential application of withholding under FATCA to their investment in our common stock.

 

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UNDERWRITING

The company and the underwriters named below have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Jefferies LLC and Wells Fargo Securities, LLC are the representatives of the underwriters.

 

Underwriters

  

Number of Shares

 

Goldman Sachs & Co. LLC

  

J.P. Morgan Securities LLC

  

Jefferies LLC

  

Wells Fargo Securities, LLC

  

Morgan Stanley & Co. LLC

  

Deutsche Bank Securities Inc.

  

Cantor Fitzgerald & Co.

  

Roth Capital Partners, LLC

  

Academy Securities, Inc.

  
  

 

 

 

Total

           
  

 

 

 

The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.

The underwriters have an option to buy up to an additional      shares of common stock from the company to cover sales by the underwriters of a greater number of shares than the total number set forth in the table above. They may exercise that option for 30 days from the date of this prospectus. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

The following tables show the per share and total underwriting discounts and commissions to be paid to the underwriters by the company. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase      additional shares.

 

Paid by the Company

  

No Exercise

    

Full Exercise

 

Per Share

   $           $       
  

 

 

    

 

 

 

Total

   $        $    
  

 

 

    

 

 

 

Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $    per share from the initial public offering price. After the initial offering of the shares, the representatives may change the offering price and the other selling terms. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.

We have agreed that, for a period of 180 days after the date of this prospectus (the “restricted period”) we will not (i) offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise transfer or dispose of, directly or indirectly, or file with or confidentially submit to the SEC a registration statement under the Securities Act relating to, any of our securities that are substantially similar to the shares, including but not limited to any options or warrants to purchase shares or any securities that are convertible into or exchangeable for, or that represent the right to receive, shares or any such substantially similar securities, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, or (ii) enter into, or publicly disclose the intention to enter into, any swap or other agreement that transfers, in whole or in part, any of the

 

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economic consequences of ownership of the shares or any such other securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of shares or such other securities, in cash or otherwise, without the prior written consent of           ; provided, however, that the restrictions described above shall not apply to (A) the offer, issuance, sale and disposition of the shares in this offering; (B) the issuance of shares pursuant to employee stock option plans existing on, or upon the conversion or exchange of convertible or exchangeable securities outstanding as of, the date of this prospectus; (C) grants of stock options, stock awards, restricted stock, RSUs, or other equity awards and the issuance of the shares or securities convertible into or exercisable or exchangeable for the shares (whether upon the exercise of stock options or otherwise) to our employees, officers, directors, advisors or consultants pursuant to the terms of an equity compensation plan described herein; (D) the issuance, offer or entry into an agreement providing for the issuance of up to 10% of the total number of shares outstanding immediately following the offering of the shares contemplated by this prospectus in acquisitions or other strategic transactions, provided that such recipients enter into a lock-up agreement with the underwriters; (E) the filing of any registration statement on Form S-8 relating to securities granted or to be granted pursuant to any plan in effect on the date the shares are delivered and described in this prospectus or any assumed benefit plan pursuant to an acquisition or similar strategic transaction contemplated by clause (D); or (F) the submission of a confidential registration statement in connection with the exercise of any registration rights described in this prospectus and any preparations related thereto, provided that such submission or preparations do not require or result in the public filing of a registration statement with the SEC or any other public announcement of such proposed registration by the Company or any third party during the restricted period (and no such filing, public announcement, or activity shall be voluntarily made or taken by the Company or any third party during the restricted period), and provided further that the Company shall notify the representatives prior to making any such submission; and provided, further, that in the case of clauses (B) and (C), we shall (a) cause each recipient of such securities that is a member of our board of directors, an executive officer or a beneficial holder of 1% of our fully-diluted capital stock to execute and deliver to           , prior to or substantially concurrently with the issuance of such securities, a lock-up agreement (which, for the avoidance of doubt, shall not extend the restricted period beyond 180 days after the date of this prospectus) to the extent not already executed and delivered by such recipients as of the date hereof and (b) enter stop transfer instructions with our transfer agent and registrar on such securities with respect to all recipients of such securities, which we agrees we will not waive or amend without prior written consent of           .

Our directors, executive officers, and the holders of substantially all of our common stock (such persons, the “lock-up parties”) have entered into lock-up agreements with the underwriters prior to the commencement of this offering pursuant to which each lock-up party, for the duration of the restricted period, may not (and may not cause any of their direct or indirect affiliates to), without the prior written consent of           :

(i) offer, sell, contract to sell, pledge, grant any option, right or warrant to purchase, purchase any option or contract to sell, lend or otherwise transfer or dispose of any shares, or any options or warrants to purchase any shares, or any securities convertible into, exchangeable for or that represent the right to receive shares (such shares, options, rights, warrants or other securities, collectively, “Lock-Up Securities”), including without limitation any such Lock-Up Securities now owned or hereafter acquired by a lock-up party, (ii) engage in any hedging or other transaction or arrangement (including, without limitation, any short sale or the purchase or sale of, or entry into, any put or call option, or combination thereof, forward, swap or any other derivative transaction or instrument, however described or defined) which is designed to or which reasonably could be expected to lead to or result in a sale, loan, pledge or other disposition (whether by the lock-up party or someone other than the lock-up party), or transfer of any of the economic consequences of ownership, in whole or in part, directly or indirectly, of any Lock-Up Securities, whether any such transaction or arrangement (or instrument provided for thereunder) would be settled by delivery of shares or other securities, in cash or otherwise (any such sale, loan, pledge or other disposition, or transfer of economic consequences, a “Transfer”), (iii) make any demand for or exercise any right with respect to the registration of any Lock-Up Securities or (iv) otherwise publicly announce any intention to engage in or cause any action, activity, transaction or arrangement described in clause (i), (ii) or (iii) above.

 

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Notwithstanding the foregoing, the lock-up parties may:

(a) transfer the Lock-Up Securities

(i) as one or more bona fide gifts or charitable contributions, or for bona fide estate planning purposes,

(ii) upon death by will, testamentary document or intestate succession,

(iii) if the lock-up party is a natural person, to any member of the lock-up party’s immediate family (for purposes of the lock-up agreement, “immediate family” shall mean any relationship by blood, current or former marriage, domestic partnership or adoption, not more remote than first cousin) or to any trust for the direct or indirect benefit of the lock-up party or the immediate family of the lock-up party or, if the lock-up party is a trust, to a trustor or beneficiary of the trust or the estate of a beneficiary of such trust,

(iv) to a partnership, limited liability company or other entity of which the lock-up party and the immediate family of the lock-up party are the legal and beneficial owner of all of the outstanding equity securities or similar interests,

(v) to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under clauses (a)(i) through (iv) above,

(vi) if the lock-up party is a corporation, partnership, limited liability company, trust or other business entity, (A) to another corporation, partnership, limited liability company or other business entity that is an affiliate (as defined in Rule 405 under the Securities Act of 1933, as amended) of the lock-up party, or to any investment fund or other entity which fund or entity is controlled or managed by the lock-up party or affiliates of the lock-up party, or (B) as part of a distribution by the lock-up party to its stockholders, current or former partners, members or other equityholders or to the estate of any such stockholders, partners, members or other equityholders,

(vii) by operation of law, such as pursuant to a qualified domestic order, divorce settlement, divorce decree or separation agreement or other order of a court or regulatory authority,

(viii) to us from an employee upon death, disability or termination of employment, in each case, of such employee,

(ix) if the lock-up party is not an officer or director of the Company or a stockholder holding 10% or more of the Company’s common stock, in connection with a sale or transfer of the lock-up party’s shares of common stock acquired (A) from the underwriters in this offering or (B) in open market transactions after the closing date of this offering,

(x) to us in connection with the vesting, settlement or exercise of restricted stock units, options, warrants or other rights to purchase shares (including, in each case, by way of “net” or “cashless” exercise) that are scheduled to expire or automatically vest during the restricted period, including any transfer to us for the payment of tax withholdings or remittance payments due as a result of the vesting, settlement or exercise of such restricted stock units, options, warrants or other rights, or in connection with the conversion of convertible securities, in all such cases pursuant to equity awards granted under a stock incentive plan or other equity award plan, or pursuant to the terms of convertible securities, each as described in the registration statement, the preliminary prospectus relating to the shares included in the registration statement immediately prior to the time the underwriting agreement is executed and the prospectus, provided that any securities received upon such vesting, settlement, exercise or conversion shall be subject to the terms of the lock-up agreement,

(xi) in “sell to cover” or similar open market transactions during the restricted period to satisfy any exercise price or tax withholding obligations as a result of the exercise, vesting and/or settlement of equity awards (including options and restricted stock units) held by the lock-up party and issued pursuant to a plan or arrangement described in this prospectus, provided that, any such shares of

 

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retained by the lock-up party after giving effect to this provision shall be subject to the terms of the lock-up agreement,

(xii) in connection with the conversion, exchange or reclassification of any of our outstanding securities into shares, or any conversion, exchange or reclassification of the shares, provided that any such shares received upon such conversion, exchange or reclassification shall be subject to the terms of the lock-up agreement, or

(xiii) with the prior written consent of           ;

provided that (A) in the case of clauses (a)(i), (ii), (iii), (iv), (v), (vi) and (xii) above, such transfer or distribution shall not involve a disposition for value, (B) in the case of clauses (a)(i), (ii), (iii), (iv), (v), (vi) and (vii) above, it shall be a condition to the transfer or distribution that the donee, devisee, transferee or distributee, as the case may be, shall sign and deliver a lock-up agreement in the form of the lock-up agreement, (C) in the case of clauses (a) (ii), (iii), (iv), (v) and (vi) above, no filing by any party (including, without limitation, any donor, donee, devisee, transferor, transferee, distributor or distributee) under Section 16(a) of the Exchange Act, or other public filing, report or announcement reporting a reduction in beneficial ownership of Lock-Up Securities shall be required or shall be voluntarily made in connection with such transfer or distribution, and (D) in the case of clauses (a)(i), (vii), (viii), (ix), (x), (xi) and (xii) above, no filing under the Exchange Act or other public filing, report or announcement shall be voluntarily made, and if any such filing, report or announcement shall be legally required during the restricted period, such filing, report or announcement shall clearly indicate in the footnotes thereto (A) the circumstances of such transfer or distribution and (B) in the case of a transfer or distribution pursuant to clauses (a)(i) or (vii) above, that the donee, devisee, transferee or distributee has agreed to be bound by a lock-up agreement in the form of the lock-up agreement;

(b) enter into a written plan meeting the requirements of Rule 10b5-1 under the Exchange Act relating to the transfer, sale or other disposition of the lock-up party’s Lock-Up Securities, if then permitted by us, provided that none of the securities subject to such plan may be transferred, sold or otherwise disposed of until after the expiration of the restricted period and no public announcement, report or filing under the Exchange Act, or any other public filing, report or announcement, shall be voluntarily made regarding the establishment of such plan during the restricted period, and if such filing, report or announcement shall be legally required during the restricted period, such filing, report or announcement shall clearly indicate that none of the securities subject to such plan may be transferred, sold or otherwise disposed of pursuant to such plan until after the expiration of the restricted period;

(c) transfer the lock-up party’s Lock-Up Securities pursuant to a bona fide third-party tender offer, merger, consolidation or other similar transaction that is approved by our board and made to all holders of our capital stock involving a change of control; provided that in the event that such tender offer, merger, consolidation or other similar transaction is not completed, the lock-up party’s Lock-Up Securities shall remain subject to the provisions of the lock-up agreement; and

(d) to the extent the lock-up party has demand and/or piggyback registration rights under any registration rights agreement described in this prospectus, the lock-up party may notify the Company privately that the lock-up party is or will be exercising his, her or its demand and/or piggyback registration rights under any such registration rights agreement following the expiration of the restricted period and undertake preparations related thereto; provided that the foregoing notification and/or preparations do not request, require or result in the public filing of a registration statement with the SEC or any other public announcement of such proposed registration by the undersigned, the Company or any third party during the restricted period (and no such filing, public announcement or activity shall be voluntarily made or taken by the undersigned, the Company or any third party during the restricted period); provided further that the Company shall notify the representatives upon receipt of such notice.

Prior to the offering, there has been no public market for the shares. The initial public offering price has been negotiated among the company and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be the company’s

 

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historical performance, estimates of the business potential and earnings prospects of the company, an assessment of the company’s management and the consideration of the above factors in relation to market valuation of companies in related businesses.

We have applied for the listing of our common stock on Nasdaq under the symbol “FLY.”

In connection with the offering, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, stabilizing transactions, and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering, and a short position represents the amount of such sales that have not been covered by subsequent purchases. A “covered short position” is a short position that is not greater than the amount of additional shares for which the underwriters’ option described above may be exercised. The underwriters may cover any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to cover the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option described above. “Naked” short sales are any short sales that create a short position greater than the amount of additional shares for which the option described above may be exercised. The underwriters must cover any such naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for, or purchases of common stock made by the underwriters in the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of the company’s stock, and together with the imposition of the penalty bid, may stabilize, maintain, or otherwise affect the market price of the common stock. As a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. The underwriters are not required to engage in these activities and may end any of these activities at any time. These transactions may be effected on the    , in the over-the-counter market or otherwise.

The company estimate that its share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $    . The company also agreed to reimburse the underwriters for certain Financial Industry Regulatory Authority (“FINRA”)-related expenses incurred by them in connection with the offering in an amount up to $    .

The company has agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act.

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market-making, brokerage, and other financial and non-financial activities and services. Certain of the underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to the company and to persons and entities with relationships with the company, for which they received or will receive customary fees and expenses. In particular, an affiliate of Jefferies LLC was a lender under the Credit Agreement and has received fees in connection therewith and, after securitizing such loan, currently holds a portion of the notes secured by such loan.

 

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In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps, and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities, and/or instruments of the company (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the company. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities, and instruments.

Selling Restrictions

European Economic Area

In relation to each Member State of the European Economic Area (each a “Member State”), no common shares (the “Shares”) have been offered or will be offered pursuant to the offering to the public in that Member State prior to the publication of a prospectus in relation to the Shares which has been approved by the competent authority in that Member State or, where appropriate, approved in another Member State and notified to the competent authority in that Member State, all in accordance with the Prospectus Regulation), except that offers of Shares may be made to the public in that Member State at any time under the following exemptions under the Prospectus Regulation:

 

  (a)

to any legal entity which is a qualified investor as defined under the Prospectus Regulation;

 

  (b)

to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus Regulation), subject to obtaining the prior consent of the underwriters for any such offer; or

 

  (c)

in any other circumstances falling within Article 1(4) of the Prospectus Regulation,

provided that no such offer of Shares shall require the Issuer or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.

For the purposes of this provision, the expression an “offer to the public” in relation to any Shares in any Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Shares to be offered so as to enable an investor to decide to purchase or subscribe for any Shares, and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129.

United Kingdom

In relation to the UK, no shares have been offered or will be offered pursuant to this offering to the public in the UK prior to the publication of a prospectus in relation to the shares that either (i) has been approved by the Financial Conduct Authority, or (ii) is to be treated as if it had been approved by the Financial Conduct Authority in accordance with the transitional provision in Regulation 74 of the Prospectus (Amendment etc.) (EU Exit) Regulations 2019, except that offers of shares may be made to the public in the UK at any time under the following exemptions under the UK Prospectus Regulation:

 

  (a)

to any legal entity which is a qualified investor as defined in Article 2 of the UK Prospectus Regulation;

 

  (b)

to fewer than 150 natural or legal persons (other than qualified investors as defined in Article 2 of the UK Prospectus Regulation), subject to obtaining the prior consent of the Representatives for any such offer; or

 

  (c)

in any other circumstances falling within section 86 of the Financial Services and Markets Act 2000, as amended, or the FSMA,

 

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provided that no such offer of units shall require the issuer or any underwriter to publish a prospectus pursuant to section 85 of the FSMA or supplement a prospectus pursuant to Article 23 of the UK Prospectus Regulation.

For the purposes of this provision, the expression an “offer to the public” in relation to any units in the UK means the communication in any form and by any means of sufficient information on the terms of the offer and any units to be offered so as to enable an investor to decide to purchase or subscribe for any units, and the expression “UK Prospectus Regulation” means Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018.

Switzerland

The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This prospectus has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland.

Neither this prospectus nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland. Neither this prospectus nor any other offering or marketing material relating to the offering, the Company, the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this prospectus will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA (FINMA), and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (“CISA”). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares.

Canada

The securities may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions, and Ongoing Registrant Obligations. Any resale of the securities must be made in accordance with an exemption form, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment hereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

Hong Kong

The shares may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong Kong), or the Companies (Winding Up and Miscellaneous Provisions) Ordinance, or which do not constitute an invitation to the public within the

 

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meaning of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong), or the Securities and Futures Ordinance, or (ii) to “professional investors” as defined in the Securities and Futures Ordinance and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance, and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” in Hong Kong as defined in the Securities and Futures Ordinance and any rules made thereunder.

Singapore

This prospectus has not been and will not be registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor (as defined under Section 4A of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA) under Section 274 of the SFA, or (ii) to an accredited investor as defined in Section 4A of the SFA pursuant to and in accordance with the conditions specified in Section 275 of the SFA.

Singapore Securities and Futures Act Product Classification—Solely for the purposes of our obligations pursuant to Section 309B(1)(a) and 309B(1)(c) of the SFA, we have determined, and hereby notify all relevant persons (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018, or the CMP Regulations) that the shares are “prescribed capital markets products” (as defined in the CMP Regulations) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products). Any reference to any term as defined in the SFA, or any provision in the SFA is a reference to that term as modified or amended from time to time including by such of its subsidiary legislation as may be applicable at the relevant time.

Japan

The securities have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended), or the FIEA. The securities may not be offered or sold, directly or indirectly, in Japan or to or for the benefit of any resident of Japan (including any person resident in Japan or any corporation or other entity organized under the laws of Japan) or to others for reoffering or resale, directly or indirectly, in Japan or to or for the benefit of any resident of Japan, except pursuant to an exemption from the registration requirements of the FIEA and otherwise in compliance with any relevant laws and regulations of Japan.

Australia

No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission (“ASIC”), in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001 (the “Corporations Act”), and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.

Any offer in Australia of the shares may only be made to persons (the “Exempt Investors”) who are “sophisticated investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act.

 

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The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe such Australian on-sale restrictions.

This prospectus contains general information only and does not take account of the investment objectives, financial situation, or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives, and circumstances, and, if necessary, seek expert advice on those matters.

Brazil

The offer and sale of the securities have not been and will not be registered with the Brazilian Securities Commission (Comissão de Valores Mobiliários, or “CVM”) and, therefore, will not be carried out by any means that would constitute a public offering in Brazil under CVM Resolution no 160, dated 13 July 2022, as amended (“CVM resolution 160”) or unauthorized distribution under Brazilian laws and regulations. The securities may only be offered to Brazilian professional investors (as defined by applicable CVM regulation), who may only acquire the securities through a non-Brazilian account, with settlement outside Brazil in non-Brazilian currency. the trading of these securities on regulated securities markets in Brazil is prohibited.

Israel

This document does not constitute a prospectus under the Israeli Securities Law, 5728-1968, or the Securities Law, and has not been filed with or approved by the Israel Securities Authority. In Israel, this prospectus is being distributed only to, and is directed only at, and any offer of the shares is directed only at, (i) a limited number of persons in accordance with the Israeli Securities Law and (ii) investors listed in the first addendum, or the Addendum, to the Israeli Securities Law, consisting primarily of joint investment in trust funds, provident funds, insurance companies, banks, portfolio managers, investment advisors, members of the Tel Aviv Stock Exchange, underwriters, venture capital funds, entities with equity in excess of NIS 50 million and “qualified individuals,” each as defined in the Addendum (as it may be amended from time to time), collectively referred to as qualified investors (in each case, purchasing for their own account or, where permitted under the Addendum, for the accounts of their clients who are investors listed in the Addendum). Qualified investors are required to submit written confirmation that they fall within the scope of the Addendum, are aware of the meaning of same and agree to it.

 

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LEGAL MATTERS

The validity of the shares of common stock being offered by this prospectus will be passed upon for us by Kirkland & Ellis LLP, Chicago, Illinois. Certain legal matters in connection with this offering will be passed upon for the underwriters by Davis Polk & Wardwell LLP, New York, New York.

 

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EXPERTS

The audited consolidated financial statements included in this prospectus and elsewhere in the registration statement have been so included in reliance upon the report of Grant Thornton LLP, independent registered public accountants, upon the authority of said firm as experts in accounting and auditing.

 

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WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all the information set forth in the registration statement, some of which is contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and our common stock, we refer you to the registration statement, including the exhibits filed as a part thereof. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, please see the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. The SEC maintains an internet website that contains reports and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov.

Upon the completion of this offering, we will be subject to the information reporting requirements of the Exchange Act, and we will file reports, proxy statements, and other information with the SEC. These reports, proxy statements, and other information will be available on the website of the SEC referred to above.

We also maintain a website at www.fireflyspace.com, at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Information contained on, or that can be accessed through, our website is not incorporated by reference in this prospectus, and you should not consider information on our website to be part of this prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only.

 

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

     Page  

Unaudited Condensed Consolidated Financial Statements

  

Condensed Consolidated Balance Sheets (Unaudited)

     F-2  

Condensed Consolidated Statements of Net Loss and Comprehensive Loss (Unaudited)

     F-4  

Condensed Consolidated Statements of Cash Flows (Unaudited)

     F-5  

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) (Unaudited)

     F-6  

Notes to Condensed Consolidated Financial Statements (Unaudited)

     F-8  

Audited Consolidated Financial Statements

  

Report of Independent Registered Public Accounting Firm

     F-32  

Consolidated Balance Sheets

     F-33  

Consolidated Statements of Net Loss and Comprehensive Loss

     F-35  

Consolidated Statements of Cash Flows

     F-36  

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

     F-38  

Notes to Consolidated Financial Statements

     F-39  

 

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Table of Contents

Firefly Aerospace, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(Dollars and shares in thousands, except per share amounts)

 

     March 31,
2025
     December 31,
2024
 

Assets

     

Current assets

     

Cash and cash equivalents

   $  176,879      $ 123,431  

Restricted cash, current

     829        424  

Accounts receivable, net

     14,904        1,004  

Advanced payments, current

     10,744        52,404  

Other current assets

     6,246        3,454  
  

 

 

    

 

 

 

Total current assets

     209,602        180,717  

Advanced payments, less current portion

     41,770        41,770  

Property and equipment, net

     136,677        135,575  

Restricted cash, less current portion

     14,566        13,703  

Right-of-use assets - operating leases

     14,486        14,604  

Right-of-use assets - finance leases

     4,836        3,708  

Goodwill

     17,097        17,097  

Other noncurrent assets

     132        158  
  

 

 

    

 

 

 

Total assets

   $ 439,166      $ 407,332  
  

 

 

    

 

 

 

Liabilities, temporary equity, and stockholders’ deficit

     

Current liabilities

     

Accounts payable

   $ 36,582      $ 37,633  

Accounts payable - related parties

     299        86  

Accrued expenses

     20,072        14,419  

Operating lease liability, current

     304        1,128  

Finance lease liability, current

     1,064        856  

Deferred revenue, current

     82,745        108,069  

Notes payable, current

     6,633        6,349  

Other current liabilities

     3,339        10,837  
  

 

 

    

 

 

 

Total current liabilities

     151,038        179,377  

Operating lease liability, less current portion

     15,297        16,466  

Finance lease liability, less current portion

     2,784        1,996  

Deferred revenue, less current portion

     50,053        45,904  

Notes payable, less current portion

     123,322        124,079  

Notes payable, less current portion—related parties

     17,746        17,524  

Warrant liability

     4,986        4,070  

Other liabilities, less current portion

     25,590        25,956  
  

 

 

    

 

 

 

Total liabilities

   $ 390,816      $ 415,372  
  

 

 

    

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

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Firefly Aerospace, Inc.

Condensed Consolidated Balance Sheets (Unaudited) – (Continued)

(Dollars and shares in thousands, except per share amounts)

 

     March 31,
2025
    December 31,
2024
 

Commitments and contingencies (See Note 10)

    

Temporary equity

    

Redeemable convertible preferred stock, $0.0001 par value; 212,863 and 166,084 shares authorized as of March 31, 2025 and December 31, 2024, respectively; 157,665 and 135,346 issued and outstanding as of March 31, 2025 and December 31, 2024, respectively; $1,459,250 and $1,227,158 liquidation preference as of March 31, 2025 and December 31, 2024, respectively

     887,074       759,582  

Stockholders’ deficit

    

Common stock, $0.0001 par value, 549,250 and 502,471 shares authorized as of March 31, 2025 and December 31, 2024, respectively; 44,733 and 43,091 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

     5       4  

Additional paid-in capital, net of issuance costs

     —        —   

Accumulated deficit

     (838,729 )      (767,626 ) 
  

 

 

   

 

 

 

Total stockholders’ deficit

     (838,724 )      (767,622 ) 
  

 

 

   

 

 

 

Total liabilities, temporary equity, and stockholders’ deficit

   $ 439,166     $ 407,332  
  

 

 

   

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

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Firefly Aerospace, Inc.

Condensed Consolidated Statements of Net Loss and Comprehensive Loss (Unaudited)

(Dollars and shares in thousands, except per share amounts)

 

     For the three months ended
March 31,
 
     2025     2024  

Revenue

   $ 55,855     $ 8,317  

Cost of sales

     53,635       10,240  
  

 

 

   

 

 

 

Gross profit (loss)

     2,220       (1,923 ) 

Operating expenses

    

Research and development

     48,012       37,635  

Selling, general, and administrative

     12,752       9,580  

Loss on disposal of fixed assets

     —        3  
  

 

 

   

 

 

 

Total operating expenses

     60,764       47,218  
  

 

 

   

 

 

 

Loss from operations

     (58,544 )      (49,141 ) 

Other (expense) income

    

Interest expense, net

     (5,164 )      (3,753 ) 

Other income, net

     3,615       123  
  

 

 

   

 

 

 

Total other expense, net

     (1,549 )      (3,630 ) 
  

 

 

   

 

 

 

Loss before provision for income taxes

   $ (60,093 )    $ (52,771 ) 
  

 

 

   

 

 

 

Provision for income taxes

     —        —   
  

 

 

   

 

 

 

Net loss and comprehensive loss

   $ (60,093 )    $ (52,771 ) 

Less: Accretion of dividends of Series C Preferred Shares

     (5,579 )      (5,219 ) 

Less: Accretion of dividends of Series D-1 Preferred Shares

     (6,609 )      —  
  

 

 

   

 

 

 

Net loss available to common stock

   $ (72,281 )    $ (57,990 ) 
  

 

 

   

 

 

 

Net loss per common stock

    

Basic and diluted

   $ (1.65 )    $ (1.43 ) 

Weighted-average common stock outstanding

    

Basic and diluted

     43,746       40,662  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

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Firefly Aerospace, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

 

     For the three months
ended March 31,
 
     2025     2024  

Cash flows from operating activities

    

Net loss

   $ (60,093 )    $ (52,771 ) 

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation and amortization

     3,996       1,496  

Stock-based compensation

     431       409  

Change in fair value of warrant liability

     916       —   

Non-cash interest expense

     615       176  

Non-cash inventory write-off

     —        247  

Changes in operating assets and liabilities:

    

Accounts receivable

     (13,900 )      (2,953 ) 

Advanced payments

     41,660       (11,154 ) 

Other assets

     (2,766 )      (470 ) 

Accounts payable

     (2,627 )      (5,536 ) 

Accounts payable - related parties

     213       (601 ) 

Accrued expenses

     5,653       (6,797 ) 

Other liabilities

     (7,889 )      19,334  

Right-of-use assets

     422       1,084  

Lease liabilities

     (1,993 )      (582 ) 

Deferred revenue

     (21,175 )      (2,465 ) 
  

 

 

   

 

 

 

Net cash used in operating activities

   $ (56,537 )    $ (60,583 ) 

Cash flows from investing activities

    

Purchases of property and equipment

     (2,654 )      (4,503 ) 
  

 

 

   

 

 

 

Net cash used in investing activities

   $ (2,654 )    $ (4,503 ) 

Cash flows from financing activities

    

Proceeds from issuance of preferred stock

     115,304       22,090  

Principal payments on finance lease

     (443 )      (190 ) 

Proceeds from notes payable

     468       —   

Payments on notes payable

     (2,170 )      (247 ) 

Proceeds from repayment of employee note

     359       83  

Proceeds from exercise of stock options

     389       141  
  

 

 

   

 

 

 

Net cash provided by financing activities

   $ 113,907     $ 21,877  

Net increase (decrease) in cash and cash equivalents and restricted cash

   $ 54,716     $ (43,209 ) 

Cash and cash equivalents and restricted cash

    

Cash and cash equivalents and restricted cash, beginning of period

     137,558       95,146  
  

 

 

   

 

 

 

Cash and cash equivalents and restricted cash, end of period

   $ 192,274     $ 51,937  
  

 

 

   

 

 

 

Reconciliation of cash and cash equivalents and restricted cash

    

Cash and cash equivalents

   $ 176,879     $ 38,723  

Restricted cash, current

     829       2,458  

Restricted cash, less current portion

     14,566       10,756  
  

 

 

   

 

 

 

Total cash and cash equivalents and restricted cash at the end of the period

   $ 192,274     $ 51,937  
  

 

 

   

 

 

 

Supplemental disclosures of cash flow information

    

Cash paid for interest

   $ 5,565     $ 4,630  

Non-cash investing and financing activities:

    

Property and equipment additions in accounts payable

     1,576       5,723  

Capitalized interests (paid in kind)

     800       2,704  

ROU asset acquired in exchange for finance lease liabilities

     1,432       142  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

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Firefly Aerospace, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) (Unaudited)

(Dollars and shares in thousands)

 

    Redeemable
Convertible Preferred
Stock*
   

For the three months ended March 31, 2025

 

 
    Common Stock     Additional
Paid-In
Capital, Net
    Accumulated
Deficit
    Total
Stockholders’
Deficit
 
    Shares     Amount     Shares     Amount  

Balance as of December 31, 2024

    135,346     $ 759,582       43,091     $ 4     $ —      $ (767,626 )    $ (767,622 ) 

Issuance of common stock under equity plan

    —        —        1,592       1       747       —        748  

Stock-based compensation

    —        —        50       —        431       —        431  

Issuance of Series D-1 Preferred Stock

    22,319       115,304       —        —        —        —        —   

Accretion of redeemable convertible preferred stock

    —        12,188       —        —        (1,178 )      (11,010 )      (12,188 ) 

Net loss

    —        —        —        —        —        (60,093 )      (60,093 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of March 31, 2025

    157,665     $ 887,074       44,733     $ 5     $ —      $ (838,729 )    $ (838,724 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Firefly Aerospace, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) (Unaudited) - (Continued)

(Dollars and shares in thousands)

 

                For the three months ended March 31, 2024  
    Redeemable
Convertible Preferred
Stock
    Common Stock     Additional
Paid-In
Capital, Net

Amount
    Accumulated
Deficit

Amount
    Total
Stockholders’
Deficit

Amount
 
    Shares     Amount     Shares     Amount  

Balance as of December 31, 2023

    96,852     $ 535,864       40,386     $ 4     $ —      $ (504,489 )    $ (504,485 ) 

Issuance of common stock under equity plan

    —        —        582       —        224       —        224  

Stock-based compensation

    —        —        —        —        409       —        409  

Issuance of Series C Preferred Stock, net of issuance costs

    4,254       21,000       —        —        —        —        —   

Issuance of Series M Preferred Stock, net of issuance costs

    221       1,090       —        —        —        —        —   

Accretion of redeemable convertible preferred stock

    —        5,219       —        —        (633 )      (4,586 )      (5,219 ) 

Net loss

    —        —        —        —        —        (52,771 )      (52,771 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of March 31, 2024

    101,327     $ 563,173       40,968     $ 4     $ —      $ (561,846 )    $ (561,842 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

*

Refer to Note 11 for details of the class of preferred shares and movement therein.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

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Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars and shares in thousands, except per share amounts)

1. The Company, Liquidity, and Basis of Presentation

Firefly Aerospace Inc., together with its wholly owned subsidiaries Firefly IP Holdings, LLC and Spaceflight, Inc. (collectively, “Firefly” or the “Company”), is a privately held company based in Cedar Park, Texas, that was incorporated under the laws of the State of Delaware on January 27, 2017, and commenced operations on May 1, 2017.

The Company is a market-leading space and defense technology company providing comprehensive mission solutions to national security, government and commercial customers with an established track record of mission success. The Company’s mission is to enable responsive and reliable launch, transit, and operations in space for its national security and commercial customers globally. The Company is a leading provider of fully integrated launch and space services technology, committed to enabling launch, transit and operations in space through responsive, reliable and affordable solutions – anywhere, anytime. The Company’s vertically integrated approach encompasses the design, manufacturing and operation of small to medium launch vehicles, landers, and spacecraft allowing it to service the entire lifecycle of government and commercial missions from Low Earth Orbit to the Moon and to deep space. Its purpose-built family of products aligns with the ongoing paradigm shift in government missions and procurement processes, where speed, efficiency, and economics drive customer decision making. Through its offerings across launch, lander and spacecraft, its vertically integrated product line, and its infrastructure, Firefly serves as a critical provider for commercial and government customers.

Since Firefly’s formation, it has established itself as a category leader across a diverse range of products and services that takes a comprehensive approach to providing a family of solutions to its customers’ space-based opportunities.

As an early-stage company with a limited commercial operating history, Firefly is subject to all the risks and expenses associated with a start-up company. The Company must, among other things, respond to competitive developments, attract, retain, and motivate qualified personnel, and support the expense of marketing new products based on innovative technology. The Company expects to transition to a manufacturing company, capable of producing and selling products at scale, at the date the technological feasibility of the Alpha rocket is confirmed. The Company defines technological feasibility as satisfying three specific conditions: (i) reaching product qualification, (ii) achieving production readiness, and (iii) having successfully deployed a customer’s payload into its specific orbit and final destination. The Company has successfully deployed customer payloads into their specific orbits or destinations as of March 31, 2025. The Company’s executive leadership comprised of at least the Chief Operating Officer and the Chief Technology Officer shall determine at what point the Company’s products have been fully qualified to reach technological feasibility and full rate production. Until this determination is made, the Company has not recorded any inventory amounts and all costs incurred are expensed.

Liquidity

The unaudited condensed consolidated financial statements of the Company have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business. From inception, the Company has incurred an accumulated deficit totaling $838.7 million and $767.6 million as of March 31, 2025 and December 31, 2024, respectively, and has incurred $56.5 million and $60.6 million in negative cash flows from operations during the three months ended March 31, 2025 and 2024, respectively.

In the three months ended March 31, 2025, the Company raised $116.0 million through its Series D funding. Firefly plans to manage expenses and obtain additional funds as needed through the issuance of additional equity

 

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Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

and debt. Future capital requirements will depend on many factors, including the rate of revenue growth, the selling price of the Company’s products, the expansion of sales and marketing activities, and the timing and extent of spending on research and development activities. If the Company is unable to obtain adequate financing on satisfactory terms when required, the ability to grow or support the business and to respond to business challenges could be significantly limited.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Certain information and disclosures normally included in the Company’s annual financial statements have been condensed or omitted pursuant to such rules and regulations. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2024.

In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which are necessary for the fair statement of the unaudited condensed consolidated balance sheets, statements of net loss and comprehensive loss, statements of cash flows, and statements of convertible preferred stock and stockholders’ equity (deficit) for these interim periods. The results for the interim period are not necessarily indicative of the results that may be expected for a full year. All intercompany balances and transactions have been eliminated.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates.

Concentration of Credit Risk

Major customers are defined as those individually comprising more than 10% of the Company’s total revenue. The major customers during the three months ended March 31, 2025 and 2024 were as follows:

 

     For the three months ended
March 31,
 
     2025     2024  

Customer 1

     90.7 %      50.9 % 

Customer 2

     —        15.7 % 

Customer 3

     —        33.5 % 

Recently Issued Accounting Standards

ASU 2023-06

In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

Update and Simplification Initiative, which incorporates certain SEC disclosure requirements into the FASB Accounting Standards Codification (“ASC”). The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of ASC topics, allow investors to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the ASC with the SEC’s regulations. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The amendments in this ASU should be applied prospectively. The Company does not expect ASU 2023-06 will have a material impact on its consolidated financial statements.

ASU 2023-09

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the transparency and decision-usefulness of income tax disclosures, particularly in the rate reconciliation table and disclosures about income taxes paid. The ASU’s amendments are effective for annual periods beginning after December 15, 2025 on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2023-09.

ASU 2024-03

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03.

3. Revenue

The following table presents revenue disaggregated by type for the three months ended March 31:

 

     2025      2024  

Launch revenue

   $ 5,170      $ 1,302  

Spacecraft Solutions revenue

     50,685        7,015  
  

 

 

    

 

 

 

Total revenue

   $ 55,855      $ 8,317  
  

 

 

    

 

 

 

The work performed by the Company in fulfilling Launch and Spacecraft Solutions performance obligations is not expected to create an asset for the customer since the launch vehicles and spacecraft, which are built to deliver the customer’s payload into orbit, will not be owned by the customer, nor will the propulsion systems and other related systems be controlled by the customer.

Launch Revenue

The Company has contracts with commercial and government entities to provide launch and integration services for payloads requiring transportation into orbit via launch vehicles. These contracts may include milestone payments and deposits. The Company considers the performance obligation to be the initiation of the launch and recognizes revenue at that point in time. When the contract contains multiple performance obligations, stand-alone selling prices are established for each performance obligation in the contract based on cost plus margin or market prices for similar goods and services.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

The Company also enters into contracts with its customers to provide engineering services and related components, and to develop and provide licenses to intellectual property. In these cases, the Company’s service obligation is satisfied over time since the tasks are performed according to the customer’s specifications, which creates an asset with no alternative use to the Company where the Company has an enforceable right to payment for performance completed to date. The measure of progress over time is based upon an input method using a cost-to-cost measure which best depicts the transfer of control to the customer. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Estimating the total costs at completion of a performance obligation requires management to make estimates related to items such as subcontractor performance, material costs and availability, labor costs and productivity, and the costs of overhead. If estimates of total costs to be incurred on a contract exceed total estimates of revenue to be earned, a provision for the entire loss on the contract is recognized in the period the loss is incurred. Engineering services billed hourly are recognized over time.

Spacecraft Solutions Revenue

The Company contracts with commercial and government entities to provide end-to-end services for the transportation of payloads. These contracts include milestone payments and deposits. The Company considers the performance obligation to be the end-to-end commercial payload services. These contracts typically require that the customer make milestone payments as specific conditions and tasks are performed. The Company’s payload services obligation is satisfied over time since the tasks are performed according to the customer’s specifications which creates an asset with no alternative use to the Company where the Company has an enforceable right to payment for performance completed to date. The measure of progress over time is based upon an input method using a cost-to-cost measure which best depicts the transfer of control to the customer. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Estimating the total costs at completion of a performance obligation requires management to make estimates related to items such as subcontractor performance, material costs and availability, labor costs and productivity, and the costs of overhead. If estimates of total costs to be incurred on a contract exceed total estimates of revenue to be earned, a provision for the entire loss on the contract is recognized in the period the loss is incurred.

For all revenue streams, the Company considers milestone payments that are contingent on the success of a mission to be variable consideration. The Company assesses the likelihood of success of a mission at inception and may defer the recognition of some or all of the variable consideration until success of the mission is assured.

The Company’s contracts may provide customers with termination for convenience clauses, which may or may not include termination penalties. In some contracts, the size of the contractual termination penalty increases closer to the scheduled launch date. At the inception of each contract, the Company evaluates the contract’s termination provisions and the impact on the accounting contract term (i.e., the period in which the Company has enforceable rights and obligations). This includes evaluating whether there are termination penalties and if so, whether they are considered substantive. The Company applies judgment in determining whether the termination penalties are substantive.

The Company has elected the following practical expedients for Launch revenue and Spacecraft Solutions revenue: (1) the Company does not account for significant financing components if the period between revenue recognition and when the customer pays for the product or service will be one year or less, and (2) the Company does not account for shipping and handling activities as a separate performance obligation, but rather as an activity performed to transfer the promised good or service.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

The Company includes in its computation of remaining performance obligations customer orders for which it has accepted signed sales orders. As of March 31, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was $538.4 million. The Company expects to recognize approximately 15.4% of its remaining performance obligations as revenue within the next 12 months. The remaining performance obligations are expected to recognize over the next five years.

Contract Balances

Contract assets and liabilities reflect timing differences between the receipt of consideration and the fulfillment of performance obligations under a contract with a customer. Contract assets reflect performance obligations satisfied and revenue recognized in advance of customer billings. Contract liabilities reflect consideration received in advance of the satisfaction of a performance obligation under a contract with a customer. Contract assets become trade receivables once the Company’s rights to consideration become unconditional. Such rights are considered unconditional if only the passage of time is required before payment of that consideration is due. Contract costs are those costs directly related to fulfillment of specified customer contracts. The Company did not have any contract asset balances as of March 31, 2025 and December 31, 2024, respectively. Contract liabilities are recorded within deferred revenue on the unaudited condensed consolidated balance sheets.

The Company had deferred revenue of $69.0 million and $65.4 million as of March 31, 2025 and December 31, 2024, respectively, for Launch and $57.5 million and $87.3 million as of March 31, 2025 and December 31, 2024, respectively, for Spacecraft Solutions. The Company had other deferred revenue of $6.5 million and $1.3 million as of March 31, 2025 and December 31, 2024, respectively. During the three months ended March 31, 2025 and 2024, the Company recognized $44.9 million and $5.5 million, respectively, of revenue that was included in the contract liabilities balance at the beginning of each period.

Loss Contracts

The Company recognizes a contract loss when the current estimate of the consideration expected to be received is less than the current estimate of total estimated costs to complete the contract. For purposes of determining the existence of or amount of a contract loss, the Company considers total contract consideration, including any variable consideration constrained for revenue recognition purposes. The Company may experience favorable or unfavorable changes to contract losses from time to time due to changes in estimated contract costs and modifications that result in changes to contract prices. The Company did not recognize any new material loss provisions during the three months ended March 31, 2025 and 2024, respectively.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

4. Property and Equipment, Net

Property and equipment, net consisted of the following as of March 31, 2025 and December 31, 2024:

 

     March 31,
2025
     December 31,
2024
 

Machinery and equipment

   $ 44,323      $ 42,040  

Test stands

     40,800        37,209  

Buildings

     48,854        48,830  

Land and land improvements

     3,690        3,505  

Construction in progress

     16,279        17,551  

Furniture and fixtures

     1,200        1,200  

Computer equipment

     2,238        2,156  

Software

     1,137        1,122  

Vehicles

     418        421  

Leasehold improvements

     7,476        7,283  
  

 

 

    

 

 

 

Total

   $ 166,415      $ 161,317  

Less: Accumulated depreciation

     (29,738 )       (25,742 ) 
  

 

 

    

 

 

 

Property and equipment, net

   $ 136,677      $ 135,575  
  

 

 

    

 

 

 

Depreciation expense was $4.0 million and $1.5 million for the three months ended March 31, 2025 and 2024, respectively.

5. Accrued Expenses

Accrued expenses consisted of the following as of March 31, 2025 and December 31, 2024:

 

     March 31,
2025
     December 31,
2024
 

Payroll-related expenses

   $ 8,315      $ 5,918  

Other accrued expenses

     11,757        8,501  
  

 

 

    

 

 

 

Accrued expenses

   $ 20,072      $ 14,419  
  

 

 

    

 

 

 

6. Goodwill

The Company completed its annual goodwill impairment assessment as of October 1, 2024 and determined that no adjustments to the carrying value of goodwill were necessary. Goodwill is allocated to the Company’s single reporting unit which is both its sole operating segment and only reportable segment. The carrying amount of the Company’s goodwill is $17.1 million at both March 31, 2025 and December 31, 2024, respectively.

7. Fair Value Measurement

The Company measures its financial assets and liabilities at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

The Company uses the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

The carrying amounts of Company’s financial instruments, which include cash equivalents, accounts receivable, prepaid expenses, other current assets, accounts payable, accrued liabilities and certain other current liabilities approximate fair value because of their short-term maturities.

The Company issued warrants to purchase Series J Preferred Stock (the “Series J Warrants”) in connection with the Company’s entrance into the Term Loans (as defined in Note 9. Notes Payable and Warrants) and issued warrants to purchase common stock (the “Common Warrants”, together with the “Series J Warrants”, the “Warrants”) and two tranche obligations: (1) the RPM Call Option and (2) the Majority Sponsor Top-Up (both as defined in Note 11. Stockholders’ Deficit and Redeemable Convertible Preferred Stock) in connection with the Company’s issuance of the Series D-1 Preferred Stock. The Company determined that the Warrants and Tranche Obligations should be classified as either liabilities or assets on the consolidated balance sheets depending on valuation and are recorded at fair value both initially and subsequently with changes in fair value recorded through earnings. The Warrants are recorded within warrant liability, the RPM Call Option is recorded within other current liabilities, and the Majority Sponsor Top-Up is recorded within other current assets on the consolidated balance sheet as of December 31, 2024. In March 2025, the Majority Sponsor Top-Up expired unexercised when the total amount of Series D Preferred Stock purchased by investors exceeded $250.0 million. On March 24, 2025, the RPM Call Option was terminated via amendment of the Series D stock purchase agreement. As a result, the $0.2 million Majority Sponsor Top-Up and $4.2 million RPM Call Option were derecognized from the consolidated balance sheet as of March 31, 2025, and recognized in other income, net in the consolidated statement of net loss and comprehensive loss for the three months ended March 31, 2025.

The Company uses a Monte Carlo simulation model and probability weighted valuations based on different scenarios including change of control, initial public offering (“IPO”) and default scenarios to value the Warrants. The value per Warrant under the change of control scenario is the average value per unit under 50,000 Monte Carlo simulations, the value per Warrant under the IPO scenario is based on the number of common stock equivalent shares (including the Warrants) and total estimated equity value of the Company, and the value per Warrant under the default scenario is assumed to be zero.

The following table presents the key inputs applied in the valuations of the Series J Warrants as of March 31, 2025 and December 31, 2024:

 

     March 31, 2025  
     Change of
Control
Scenario
    IPO
Scenario
    Default
Scenario
 

Average value per Series J Warrant

   $ 2.13     $ 1.10     $ —   

Event weighting

     55 %      25 %      20 % 

Weighted average value per Series J Warrant

   $ 1.17     $ 0.28     $ —   
  

 

 

   

 

 

   

 

 

 

Total probability weighted average value per Series J Warrant

       $ 1.45  
      

 

 

 

 

F-14


Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

     December 31, 2024  
     Change of
Control
Scenario
    IPO
Scenario
    Default
Scenario
 

Average value per Series J Warrant

   $ 2.59     $ 0.88     $ —   

Event weighting

     55 %      15 %      30 % 

Weighted average value per Series J Warrant

   $ 1.42     $ 0.13     $ —   
  

 

 

   

 

 

   

 

 

 

Total probability weighted average value per Series J Warrant

       $ 1.55  
      

 

 

 

The following table presents the key inputs applied in the valuations of the Common Warrants as of March 31, 2025 and December 31, 2024:

 

     March 31, 2025  
     Change of
Control
Scenario
    IPO
Scenario
    Default
Scenario
 

Value per Common Warrant on a marketable basis

   $ 0.28     $ 2.39     $ —   

Discount for lack of marketability

     40 %      20 %      n/a  

Value per Common Warrant on a non-marketable basis

   $ 0.17     $ 1.91     $ —   

Event weighting

     55 %      25 %      20 % 

Weighted value per Common Warrant

   $ 0.09     $ 0.48     $ —   
  

 

 

   

 

 

   

 

 

 

Total probability weighted value per Common Warrant

       $ 0.57  
      

 

 

 

 

     December 31, 2024  
     Change of
Control
Scenario
    IPO
Scenario
    Default
Scenario
 

Value per Common Warrant on a marketable basis

   $ 0.30     $ 2.16     $ —   

Discount for lack of marketability

     40 %      20 %      n/a  

Value per Common Warrant on a non-marketable basis

   $ 0.18     $ 1.73     $ —   

Event weighting

     55 %      15 %      30 % 

Weighted value per Common Warrant

   $ 0.10     $ 0.26     $ —   
  

 

 

   

 

 

   

 

 

 

Total probability weighted value per Common Warrant

       $ 0.36  
      

 

 

 

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

The Company uses the Black-Scholes option-pricing valuation model to value the RPM Call Option. The following table presents the key inputs applied in the valuations of the RPM Call Option as of December 31, 2024:

 

     December 31,
2024
 

Weighted average Series D Preferred Stock Price

   $ 5.08  

Exercise price for the RPM Option

   $ 5.20  

Risk-free rate

     4.27 % 

Volatility

     60 % 

Term (years)

     0.36  

Black-Scholes value (per share)

   $ 0.70  

Number of units

     5,922  

Value of RPM Option

   $ 4,159  

The Company uses the forward pricing valuation model to value the Majority Sponsor Top-Up. The following table presents the key inputs applied in the valuations of the Majority Sponsor Top-Up as of December 31, 2024:

 

     December 31,
2024
 

Amount subject to the Majority Sponsor Top-Up

   $ 20,198  

Contractual purchase price for Series D Preferred Stock (per share)

   $ 5.20  

Weighted average Series D Preferred Stock price

   $ 5.08  

Risk-free rate

     4.27 % 

Term (years)

     0.36  

Discount factor

     0.9849  

Value of forward obligation (per share)

   $ (0.04 ) 

Number of units subject to purchase by majority sponsor

     3,885  

Value of Majority Sponsor Top-Up

   $ (170 ) 

During the three months ended March 31, 2025, no warrants were issued. The fair value remeasurement of warrant liabilities resulted in an increase in fair value of $0.9 million and $0.1 million as of March 31, 2025 and December 31, 2024, respectively. No warrants were exercised during the three months ended March 31, 2025 and March 31, 2024.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

As of March 31, 2025, the fair value of the Series J Warrants and Common Warrants were $3.0 million and $1.9 million, respectively. As of March 31, 2025, the carrying value of the Term Loan Facility approximates its estimated fair value.

 

     March 31, 2025  

Description

   Level 1      Level 2      Level 3      Total  

Assets

           

Cash

   $ 138,037      $ —       $ —       $ 138,037  

Restricted cash

     15,395        —         —         15,395  

Money market account

     —         38,842        —         38,842  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

   $ 153,432      $ 38,842      $ —       $ 192,274  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

           

Series J Warrants

     —         —         3,045        3,045  

Common Warrants

     —         —         1,941        1,941  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

   $ —       $ —       $ 4,986      $ 4,986  
  

 

 

    

 

 

    

 

 

    

 

 

 

As of December 31, 2024, the fair value of the Series J Warrants, Common Warrants, and Tranche Obligations are $2.9 million, $1.2 million and $4.0 million, respectively. As of December 31, 2024, the carrying value of the Term Loan Facility approximates its estimated fair value.

 

     December 31, 2024  

Description

   Level 1      Level 2      Level 3      Total  

Assets

           

Cash

   $ 81,847      $ —       $ —       $ 81,847  

Restricted cash

     14,127        —         —         14,127  

Money market account

     —         41,584        —         41,584  

Majority Sponsor Top-Up

     —         —         170        170  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

   $ 95,974      $ 41,584      $ 170      $ 137,728  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

           

Series J Warrants

     —         —         2,850        2,850  

Common Warrants

     —         —         1,220        1,220  

RPM Call Option

     —         —         4,159        4,159  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

   $ —       $ —       $ 8,229      $ 8,229  
  

 

 

    

 

 

    

 

 

    

 

 

 

There were no transfers between levels within the fair value hierarchy during the three months ended March 31, 2025 and 2024.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

8. Leases

The following table presents lease expense recognized during the three months ended March 31, 2025 and 2024, respectively:

 

       For the three months ended
March 31
 
       2025      2024  

Lease expense

       

Finance lease expense:

       

Amortization of ROU assets

     $ 305      $ 231  

Interest on lease liabilities

       127        120  

Operating lease expense

       408        685  
    

 

 

    

 

 

 

Total lease expense

     $ 840      $ 1,036  
    

 

 

    

 

 

 

The operating lease for the primary office location expired on March 31, 2024. The Company is currently on a month-to-month lease and in negotiations with the existing landlord to renew the lease.

Operating and finance lease ROU assets and liabilities as of March 31, 2025 and December 31, 2024, respectively, were as follows:

 

     March 31,
2025
     December 31,
2024
 

Assets

     

Operating lease ROU assets

   $ 14,486      $ 14,604  

Finance lease ROU assets

   $ 4,836      $ 3,708  

Liabilities

     

Current

     

Operating lease liabilities

   $ 304      $ 1,128  

Finance lease liabilities

   $ 1,064      $ 856  

Noncurrent

     

Operating lease liabilities

   $ 15,297      $ 16,466  

Finance lease liabilities

   $ 2,784      $ 1,996  

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on information available at the commencement date in determining the present value of lease payments.

Failed Sale and Leaseback

The Company leases various equipment through purchase and leaseback agreements with terms between five and seven years. The purchase and leaseback agreements provide an option to the Company to purchase the equipment for nominal consideration that the Company is reasonably certain to exercise. The purchase and leaseback agreements were evaluated under the sale and leaseback guidance in ASC 842-40, Leases – Sale and Leaseback Transactions. Due to the purchase option present, the transactions were accounted for as failed sales and leasebacks, and the Company has accounted for the purchase and leaseback agreements as financings.

As a result, the Company continues to reflect the manufacturing equipment on its unaudited condensed consolidated balance sheets in property and equipment, net as if we were the legal owner, and continues to

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

recognize depreciation expense over its estimated useful life. In 2024, the Company recorded an initial financing liability of $34.7 million, net of transaction costs. As of March 31, 2025, the Company recognized $5.6 million and $25.6 million in notes payable, current portion and notes payable, less current portion, respectively, in the consolidated balance sheets. As of December 31, 2024, the Company recognized $5.5 million and $27.1 million in notes payable, current portion and notes payable, less current portion, respectively, in the consolidated balance sheets. The Company does not recognize rent expense related to the purchase and leaseback agreements. Instead, periodic lease payments are recognized as interest expense and reductions of the principal balance of the finance liability.

For the three months ended March 31, 2025, payments of $1.3 million were made under the financing, including interest expense of $0.6 million.

As part of the purchase and leaseback agreements, the Company is required to maintain a minimum cash balance of $22.5 million throughout the term of the financing.

9. Notes Payable and Warrants

Financing Agreement

On July 17, 2023, the Company entered into a financing agreement (as amended from time to time and last amended August 13, 2024, the “Financing Agreement”) among the Company, as the Borrower, certain subsidiaries of the Company (collectively, “Guarantors”), lenders (the “Lenders”) and U.S. Bank Trust Company, N.A., as administrative agent and collateral agent (“Agent”). The Financing Agreement provided term loans in the aggregate principal amount of $136.1 million as of March 31, 2025, comprised of $103.5 million principal amount of term A loans (the “Term A Loans”) and $32.6 million principal amount of term B loans (the “Term B Loans,” and together with the Term A Loans, and along with the incremental term loans from subsequent amendments from time to time, the “Term Loans”). The Term Loans mature on July 17, 2028 (the “Term Loan Maturity Date”).

All obligations under the Financing Agreement are guaranteed by the Company and Guarantors, comprised of all wholly owned domestic subsidiaries of the Company other than certain excluded subsidiaries, and are secured by substantially all of the Company’s assets.

An AON Insurance Policy was issued to the Agent on behalf of the Lenders, which will indemnify the Lenders up to $103.5 million of the Term A Loans for any loss incurred if the Company fails to pay the Term Loans when due. As of March 31, 2025, the Company paid the insurance premium of $15.0 million using the proceeds from the Term Loans. The Company is required to pay the second premium for the following 12 months within 30 days after the third anniversary of the initial closing date, and the final premium for the following 12 months within 30 days after the fourth anniversary of the initial closing date.

The Financing Agreement requires the Company to fund certain collateral accounts, consisting of interest reserve accounts and an insurance premium reserve account. Cash interest due but not paid in full from available unrestricted cash shall be paid out of the interest reserve accounts and funds deposited in the insurance premium account shall be used to pay the subsequent insurance premiums when due. As of March 31, 2025, $12.0 million and $2.6 million were deposited into and held in the interest reserve accounts and insurance premium reserve account, respectively. The Company is also required to pay the insurer an exit fee equal to the 0.75% of the principal amount of the Term A Loans on the Term Loan Maturity Date or when the loans are prepaid.

The Company paid $18.7 million in debt issuance costs, including both lender fees and third-party costs, using the proceeds of the Term Loans.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

The Term Loans bear fixed interest rates. The interest rate for the Term A Loans is 13.875% per annum. The interest rate for the Term B Loans is 13.875% per annum from the initial closing date to the third anniversary of the initial closing date and 19.135% per annum thereafter until the Term Loan Maturity Date. Interest is computed on the basis of a 360-day year for the actual number of days elapsed and payable monthly in cash and in arrears on the last business day of each calendar month.

Mandatory prepayments are required to be made upon the occurrence of certain events. Voluntary prepayments are permitted in whole or in part at any time. All prepayments are subject to a specified premium that applies for the first 32 months following the initial closing date, calculated as the present value of the sum of the amounts of each unpaid interest payment due during the specified premium period computed using a discount rate equal to the treasury rate on the date one business day prior to the date of prepayment plus 0.5%.

The Financing Agreement contains certain covenants including a requirement for a minimum cash balance, financial covenants, and negative covenants customary for transactions of this type, including a specific covenant to the interest reserve accounts to maintain a minimum interest reserve amount equal to 7.9% of the aggregate balance of the Term Loans.

The initial debt issuance costs, including the insurance premium paid, estimated second premium and final premium, exit fee and discount created by allocating proceeds to the fair value of the Series J Warrants issued in connection with the issuance of the Term Loans (see below “Warrants to Purchase Series J Preferred Stock” for details), are deferred and amortized to interest expense over the contractual term of the Term Loans using effective interest method.

The subsequent amendments of the Financing Agreement following the initial closing date did not result in a troubled debt restructuring and were all accounted for as debt modifications. As a result, the third-party costs incurred were expensed and newly incurred lender fees, along with the previously deferred and unamortized issuance costs of the Term Loans prior to the amendments, were deferred and amortized over the remaining contractual term of the Term Loans. The effective interest rate of the Term Loans was 23.8% as of March 31, 2025.

Term Loans

The following table presents the net carrying amount of the Term Loans as of March 31, 2025:

 

     Principal
Amount
Outstanding
     Unamortized
Debt Issuance Costs
     Net Carrying
Amount
 

Term A Loans

   $ 103,500      $ 16,521      $ 86,979  

Term B Loans

     32,617        5,207        27,410  
  

 

 

    

 

 

    

 

 

 

Total

   $ 136,117      $ 21,728      $ 114,389  
  

 

 

    

 

 

    

 

 

 

Interest expense recognized related to the Term Loans was as follows for the three months ended March 31, 2025:

 

Contractual interest expense

   $ 4,756  

Amortization of debt issuance costs

     1,415  
  

 

 

 

Total interest expense

   $ 6,171  
  

 

 

 

 

F-20


Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

The following table presents the net carrying amount of the Term Loans as of December 31, 2024:

 

     Principal
Amount
Outstanding
     Unamortized
Debt Issuance
Costs
     Net Carrying
Amount
 

Term A Loans

   $ 103,500      $ 17,611      $ 85,889  

Term B Loans

     32,617        5,550        27,067  
  

 

 

    

 

 

    

 

 

 

Total

   $ 136,117      $ 23,161      $ 112,956  
  

 

 

    

 

 

    

 

 

 

Interest expense recognized related to the Term Loans was as follows for the three months ended March 31, 2024:

 

Contractual interest expense

   $ 4,287  

Amortization of debt issuance costs

     2,881  
  

 

 

 

Total interest expense

   $ 7,168  
  

 

 

 

The following table summarizes the principal payments required for the Term Loans in each of the next five years and thereafter:

 

2025

   $ —   

2026

     —   

2027

     —   

2028

     136,117  

2029

     —   

Thereafter

     —   
  

 

 

 

Total

   $ 136,117  
  

 

 

 

Warrants to Purchase Series J Preferred Stock

In connection with the execution of the Financing Agreement and issuance of the Term Loans, the Company issued to the Lenders detachable Series J Warrants to purchase an aggregate of 2.1 million shares of Series J Preferred Stock with a 10-year term and exercise price of $6.5058 per share (subject to adjustments). The Series J Warrants are classified as liabilities as they embody an obligation to repurchase the Company’s equity given the underlying Series J Preferred Stock can be redeemed based on events not within the Company’s control. The Series J Warrants are measured at fair value both initially and subsequently with changes in fair value recognized through earnings.

Convertible Notes

On August 13, 2024, the Company issued $25.0 million in subordinated convertible promissory notes (the “Convertible Notes”) to AE Industrial as the lender. The Convertible Notes accrued 15% interest per annum payable at maturity or upon early prepayment and had an original maturity date of August 18, 2028. The Convertible Notes were subordinated to all other senior indebtedness of the Company.

Pursuant to the terms of the Convertible Notes, the outstanding principal and accrued interest of the Convertible Notes would automatically share settle into the same preferred stock issued to investors at the closing of a

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

qualified financing event, at a settlement price equal to the price of such preferred stock being offered in such financing event. A qualified financing event is a transaction in which the Company sells and issues new preferred shares including to investors other than AE Industrial or its Affiliates.

In the event of a consolidation, or merger of the Company where there is a change of control or a sale, lease or other disposition of all or substantially all of the assets of the Company (“Sale”) prior to a qualified financing event, the Company was required to redeem the Convertible Notes for cash equal to the greater of the outstanding principal plus accrued interest and the amount the lender would have received if the entire outstanding principal amount and all accrued and unpaid interest on the Convertible Notes had been converted into Series C-1 Preferred Stock shares of the Company at the Series C-1 Conversion Price immediately prior to, but contingent upon, the closing of such event.

If neither a qualified financing event or a Sale event occurred prior to the maturity date, the outstanding principal and accrued interest of the Convertible Notes would automatically convert into Series C-1 Preferred Stock of the Company at a conversion price equal to the original issue price of the Series C Preferred Stock (subject to certain adjustments). Series C-1 Preferred Stock would have the same terms as to the Series C Preferred Stock. The outstanding principal and accrued interest of the Convertible Notes could be accelerated by the lender upon the occurrence and continuation of an event of default.

The redemption upon a Sale event feature required bifurcation as an embedded derivative. However, such embedded derivative only had de minimis value given that the probability of the triggering event was considered remote.

The Company did not incur material debt issuance costs. As a result, the effective interest rate of the Convertible Notes is equal to the contractual interest rate of 15% per annum.

The outstanding principal of $25.0 million and accrued interest of $0.8 million of the Convertible Notes automatically share settled into 5.0 million shares of Series D-1 Preferred Stock when the Company closed on the Series D Preferred Stock financing on October 31, 2024. Such settlement was accounted for as a debt extinguishment transaction with no gain or loss being recognized given that the settlement price was at par amount and there was no unamortized debt issuance cost at the time of settlement. Refer to Note 11. Stockholders’ Deficit and Redeemable Convertible Preferred Stock for further detail on the Series D-1 Preferred Stock.

10. Commitments and Contingencies

Contingencies

The Company recognized $19.5 million in contingent liabilities related to Spaceflight contracts at both March 31, 2025 and December 31, 2024, respectively, which is included in other liabilities, less current portion in the unaudited condensed consolidated balance sheet.

11. Stockholders’ Deficit and Redeemable Convertible Preferred Stock

Redeemable Convertible Preferred Stock

On January 12, 2024, the Company sold 4.3 million shares of Series C Preferred Stock at Series C Per Share Price for aggregate gross proceeds of $21.0 million, including cash proceeds of $20.0 million and a prepaid purchase credit of $1.0 million to offset future payments for the Company’s purchase of hardware from one of the Company’s suppliers.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

On February 15, 2024, the Company issued 0.2 million shares of Series M Preferred Stock at $4.9361 per share to one of the Company’s service providers in exchange for the settlement for $1.1 million of existing payables owed by the Company to the service provider. On March 11, 2024, the Company issued 19.5 million shares of Series M Preferred Stock at $4.9361 per share to another of the Company’s service providers in exchange for the settlement of $0.1 million of existing payables owed by the Company to the service provider.

On October 31, 2024, the Company entered into the Series D Purchase Agreement and on the same date sold 34.0 million shares of Series D-1 Preferred Stock at a purchase price of $5.1995 per share (the “Series D Per Share Price”) for aggregate gross proceeds of $175.5 million (the “Series D Initial Closing”), including $25.8 million principal and accrued interest from the conversion of the Convertible Notes. On November 15, 2024, the Company completed a subsequent closing (the “Series D Second Closing”) and sold an additional 0.2 million shares of Series D-1 Preferred Stock at the Series D Per Share Price for aggregate gross proceeds of $1.3 million.

Between January 31, 2025 and March 31, 2025, the Company completed a series of additional closings and sold 22.3 million shares of Series D-1 Preferred Stock at the Series D Per Share Price for aggregate cash proceeds of $116.0 million. Of this amount, AE Industrial purchased 1.0 million shares for aggregate cash proceeds of $5.0 million.

On March 25, 2025, the Company amended its Amended and Restated Certificate of Incorporation and Series D Purchase Agreement. The amendment increased the number of authorized shares of Series D-1 Preferred Stock to 86.5 million shares and authorized the issuance of up to 17.9 million shares of Series D-3 Preferred Stock. The Series D-3 Preferred Stock will be issued at a purchase price of $5.5772 per share and have the same economic characteristics and preferences as the Series D-1 Preferred Stock.

As of March 31, 2025 and December 31, 2024, the Company’s redeemable convertible preferred stock (collectively, the “Preferred Stock”) consisted of the following:

 

     Par Value      March 31, 2025  
     Authorized
Shares
     Shares
Issued and
Outstanding
     Carrying
Amount
 

Series Seed Preferred Stock

   $ 0.0001        6,583        6,583      $ 2,950  

Series Seed-1 Preferred Stock

   $ 0.0001        10,651        10,651        204,454  

Series A Preferred Stock

   $ 0.0001        19,544        19,544        74,913  

Series B Preferred Stock

   $ 0.0001        19,100        19,100        72,096  

Series C Preferred Stock

   $ 0.0001        36,316        36,316        219,450  

Series M Preferred Stock

   $ 0.0001        9,153        9,153        10,990  

Series J Preferred Stock

   $ 0.0001        3,000        —         —   

Series D-1 Preferred Stock

   $ 0.0001        86,547        56,318        302,221  

Series D-2 Preferred Stock

   $ 0.0001        4,039        —         —   

Series D-3 Preferred Stock

   $ 0.0001        17,930        —         —   
     

 

 

    

 

 

    

 

 

 

Total

      $ 212,863        157,665      $ 887,074  
     

 

 

    

 

 

    

 

 

 

 

F-23


Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

     Par Value      December 31, 2024  
     Authorized
Shares
     Shares
Issued and
Outstanding
     Carrying
Amount
 

Series Seed Preferred Stock

   $ 0.0001        6,583        6,583      $ 2,950  

Series Seed-1 Preferred Stock

   $ 0.0001        10,651        10,651        204,454  

Series A Preferred Stock

   $ 0.0001        19,544        19,544        74,913  

Series B Preferred Stock

   $ 0.0001        19,100        19,100        72,096  

Series C Preferred Stock

   $ 0.0001        36,316        36,316        213,871  

Series M Preferred Stock

   $ 0.0001        9,153        9,153        10,990  

Series J Preferred Stock

   $ 0.0001        3,000        —         —   

Series D-1 Preferred Stock

   $ 0.0001        57,698        33,999        180,308  

Series D-2 Preferred Stock

   $ 0.0001        4,039        —         —   
     

 

 

    

 

 

    

 

 

 

Total

      $ 166,084        135,346      $ 759,582  
     

 

 

    

 

 

    

 

 

 

Significant rights, preferences, and privileges of the Preferred Stock prior to conversion into common stock are as follows:

Liquidation Preference

Upon a liquidation, dissolution or winding up of the Company or any deemed liquidation event, out of the funds and assets of the Company available for distribution to its stockholders and in the order of the Series D-1 Preferred Stock, Series D-2 Preferred Stock, and Series D-3 Preferred Stock, followed by the Series C Preferred Stock, Series J Preferred Stock, Series B Preferred Stock, Series A Preferred Stock, Series Seed-1 Preferred Stock, Series Seed Preferred Stock and Series M Preferred Stock, each holder of the Series D-1 Preferred Stock, Series D-2 Preferred Stock, Series D-3 Preferred Stock, Series C Preferred Stock and Series B Preferred Stock will be entitled to receive an amount in cash equal to two times the original issue price for such shares plus accrued but unpaid dividends; each holder of the Series A Preferred Stock will be entitled to receive an amount in cash equal to one and a half times the original issue price for such shares plus any declared but unpaid dividends; each holder of the Series Seed Preferred Stock and Series Seed-1 Preferred Stock will be entitled to receive an amount in cash equal to the deemed issue price for such shares plus accrued but unpaid dividends; and each holder of the Series J Preferred Stock and Series M Preferred Stock will be entitled to receive an amount in cash equal to the original issue price for such shares plus accrued but unpaid dividends:

The deemed issue prices of the Series Seed Preferred Stock and Series Seed-1 Preferred Stock are $0.448318 per share and $19.196004 per share, respectively. The original issue prices of the Series Seed Preferred Stock, Series Seed-1 Preferred Stock, Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D-1 Preferred Stock, Series D-2 Preferred Stock, Series D-3 Preferred Stock, Series M Preferred Stock, and Series J Preferred Stock are $0.03935 per share, $1.9196004 per share, $3.8375 per share, $3.9267 per share, $4.9361 per share, $5.1995 per share, $5.1995 per share, $5.5772 per share, $4.9361 per share, and $4.9361 per share, respectively.

As of March 31, 2025, the aggregate liquidation preferences of the Series Seed Preferred Stock, Series Seed-1 Preferred Stock, Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D-1 Preferred Stock, Series D-2 Preferred Stock, Series D-3 Preferred Stock, Series M Preferred Stock, and Series J Preferred Stock is $3.0 million, $204.5 million, $112.5 million, $150 million, $358.5 million, $585.6 million, $0, $0, $45.2 million, and $0, respectively.

 

F-24


Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

Dividends

Out of assets of the Company legally available for dividends and in the same order as the order of the liquidation preference of each series of the Preferred Stock, except that the Series Seed-1 Preferred Stock and Series Seed Preferred Stock shall have the same priority in any dividend distribution, each holder of the Series D Preferred Stock and Series C Preferred Stock is entitled to receive dividends accruing on a daily basis, whether or not declared by the Company, at the annual non-compounding rate of 12% of the original issue price per share; each holder of the Series Seed-1 Preferred Stock and Series Seed Preferred Stock is entitled to receive, when, if and as declared by the Company’s board of directors, non-cumulative and non-accruing dividends at the annual 8% of the applicable deemed issue price per share; and each holder of the remaining series of the Preferred Stock is entitled to receive non-cumulative and non-accruing dividends at the annual 8% of the applicable original issue price per share.

The Preferred Stock dividends are payable when and if declared by the Company. After payment of the Preferred Stock dividends, any additional dividends would be distributed among all holders of the Preferred Stock and common stock according to the number of shares of common stock that would be held by each holder of the Preferred Stock if all their shares were converted into common stock at the then applicable conversion rate. No dividends have been declared or paid by the Company on the Preferred Stock as of March 31, 2025.

Voting Rights

Each holder of the Preferred Stock, except for the holder of the Series D-2 Preferred Stock, is entitled to the number of votes equal to the number of whole shares of common stock into which the shares of the Preferred Stock held by such holder could be converted as of the record date on any matter presented to the Company’s stockholders for their action or consideration at any meeting. Additionally, if the Glow Investors, an affiliate of AE Industrial and its permitted transferees, hold less than 50.1% of the votes represented by all outstanding shares of the Company’s equity as a result of certain stock options, the number of votes then held by the Glow Investors shall be automatically adjusted such that the Glow Investors hold in the aggregate 50.1% of the votes represented by all outstanding shares of the Company’s equity.

Conversion Rights

Optional Conversion

The Series Seed Preferred Stock and Series Seed-1 Preferred Stock is convertible into the number of shares of common stock determined by dividing the deemed issue price by the conversion price in effect. All other series of the Preferred Stock are convertible, at the option of the holder thereof, at any time after the date of issuance and from time to time, into such number of fully paid and nonassessable shares of Common Stock determined by, for the Preferred Stock other than the Series Seed Preferred Stock and Series Seed-1 Preferred Stock, into the number of shares of common stock determined by dividing the original issue price for the relevant series of the Preferred Stock by the conversion price in effect for such series of the Preferred Stock. Each share of the Series D-2 Preferred Stock is convertible into one share of the Series D-1 Preferred Stock. As of March 31, 2025, none of the Preferred Stock has been converted into common stock.

Mandatory Conversion

Upon the closing of a Qualified IPO or a SPAC Transaction (each as defined in the Company’s Amended and Restated Certificate of Incorporation) or (1) a majority vote of the holders of the outstanding shares of the

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

Preferred Stock on an as-converted basis, (2) a majority vote of the holders of the outstanding shares of the Series C Preferred Stock, and (3) the Requisite Series D Preferred Approval (as defined in the Company’s Amended and Restated Certificate of Incorporation), all outstanding shares of the Preferred Stock will automatically convert into shares of common stock at the then-effective conversion rate for such share. The conversion prices and rates for each series of the Preferred Stock are the same in the event of a mandatory conversion as they would be in the event of an optional conversion.

Redemption

On or after the fifth anniversary of their issuance, shares of the Series D Preferred Stock become redeemable at a price equal to the original issue price per share plus all unpaid dividends thereon, in three annual installments commencing not more than one-hundred eighty days after the Requisite Series D Preferred Approval (the “Series D Redemption Right”).

Subject to the prior satisfaction of the Series D Redemption Right, shares of the Series C Preferred Stock are entitled to the same redemption right on or after the fifth annual anniversary of the original issue date of the Series D Preferred Stock.

The Preferred Stock is classified as mezzanine (or temporary) equity, as the Preferred Stock is redeemable in the event of a deemed liquidation event. This event is not within the Company’s control as the Company’s Board is controlled by the holders of the Preferred Stock and the Series D Preferred Stock and Series C Preferred Stock are also redeemable at the holder’s option after the fifth anniversary of the original issuance of the Series D Preferred Stock.

The Company accretes the Series D Preferred Stock and Series C Preferred Stock to their redemption value at each reporting date, which equals to their original issue price plus the accrued but unpaid dividends, as they are probable of becoming redeemable under the redemption option at the holder’s option. The Company recognizes the changes in redemption in the redemption value immediately as they occur and adjusts the carrying value to equal to the current maximum redemption value at the end of each reporting period. During the three months ended March 31, 2025, the Company recorded accretion of $6.6 million and $5.6 million, respectively, related to the Series D Preferred Stock and Series C Preferred Stock, respectively. During the three months ended March 31, 2024, the Company recorded accretion of $5.2 million related to the Series C Preferred Stock, respectively. The accretion was recorded as adjustments to the additional paid-in capital in the condensed consolidated balance sheets as of each year end. The Company recognized all other series of the Preferred Stock at their issuance price, net of issuance costs, and is not currently remeasuring these Preferred Stock as they are neither currently redeemable nor probable of becoming redeemable.

Warrants to Purchase Common Stock

In connection with the issuance of the Series D-1 Preferred Stock, the Company issued investors detachable warrants (the “Common Warrants”) to purchase an aggregate of 3.4 million shares of common stock with a ten-year term and exercise price of $0.28 per share (subject to certain adjustments). The Common Warrants are classified as derivative liabilities as they contain a change of control provision that may result in the holders receiving a settlement amount exceeding the fair value of the Common Warrants at the time of settlement and such provision may also result in the Common Warrants being redeemed outside of the Company’s control. The Common Warrants are measured at fair value both initially and subsequently with changes in fair value recognized through earnings. The fair value of the Common Warrants was $1.3 million upon issuance, which

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

created a discount on the Series D-1 Preferred Stock that discount was accreted to the redemption value of the Series D-1 Preferred Stock as part of the subsequent remeasurement of the Series D-1 Preferred Stock. The fair value of the Common Warrants is $1.9 million as of March 31, 2025.

Tranche Obligations

At the time of the Series D Initial Closing, the Company granted the RPM Investor (an investor in the Series D-1 Preferred Stock) the option but not obligation to purchase up to 5.9 million shares of Series D-1 Preferred Stock at the Series D Per Share Price (the “RPM Call Option”) at the final closing of the Series D Preferred Stock. On November 15, 2024, in connection with the Series D Second Closing, the number of the shares under the RPM Call Option was amended to 6.0 million shares.

In addition, at the time of the Series D Initial Closing, the Company and the Majority Sponsor, an affiliate of AE Industrial, agreed that, if the total amount of the Series D Preferred Stock purchased was less than $250.0 million within six months of the Series D Initial Closing, the Majority Sponsor would purchase additional Series D Preferred Stock to make their total investment equal to $125.0 million (the “Majority Sponsor Top-Up,” and together with the RPM Call Option, the “Tranche Obligations”).

The Tranche Obligations are classified as liabilities. The RPM Call Option represents an unconditional obligation to issue Series D-1 Preferred Stock, and the Majority Sponsor Top-Up represents a conditional obligation to issue Series D Preferred Stock. Because the Series D Preferred Stock may be redeemed upon events not within the Company’s control, the Tranche Obligations embody a conditional obligation for the Company to transfer assets to repurchase its equity under such a scenario.

The Tranche Obligations are measured at fair value both initially and subsequently with changes in fair value recognized through earnings. Upon issuance, the aggregate value of these Tranche Obligations created a discount on the Series D-1 Preferred Stock and this discount was accreted to the redemption value of the Series D-1 Preferred Stock as part of the subsequent remeasurement of the Series D-1 Preferred Stock. In March 2025, the Majority Sponsor Top-Up expired unexercised when the total amount of Series D Preferred Stock purchased by investors exceeded $250.0 million. On March 24, 2025, the RPM Call Option was terminated via amendment of the Series D stock purchase agreement. As a result, the Majority Sponsor Top-Up and RPM Call Option were derecognized from the unaudited condensed consolidated balance sheet as of March 31, 2025.

12. Income Taxes

The Company computes its provision for income taxes by applying the estimated annual effective tax rate to year-to-date income from recurring operations and adjusts the provision for discrete tax items recorded in the period.

The Company had no income tax expense for the three months ended March 31, 2025, and for the three months ended March 31, 2024, respectively, primarily driven by the valuation allowance established against U.S. federal and state deferred income tax assets.

13. Related Party Transactions

Investments and Debts

The following transactions are with the Company’s private equity sponsor, AE Industrial, who acquired the Company during 2022 and is a 43.27% stakeholder in the Company as of March 31, 2025. Even though the Company is part of AE Industrial’s portfolio of companies, it is not a part of AE Industrial’s a consolidated tax return and files its tax returns independently.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

During the three months ended March 31, 2025, AE Industrial purchased 1.0 million shares of the Series D-1 Preferred Stock for an aggregate purchase price of $5.0 million, Refer to Note 11. Stockholders’ Deficit and Redeemable Convertible Preferred Stock for further detail.

Accounts Payable and Expenses

Redwire Corporation and Belcan, LLC are related parties of the Company as both entities are part of AE Industrial’s portfolio and share a common board of directors. Belcan, LLC remained a related party until August 31, 2024.

A summary of the Company’s related party transactions related to accounts payable and research and development and selling, general, and administrative expenses as of March 31, 2025 and December 31, 2024 and for the three months ended March 31, 2025 and December 31, 2024 is presented below:

 

     March 31,
2025
     December 31,
2024
 

Accounts payable:

     

AE Industrial

   $ 196      $ 46  

Redwire Corporation

     103        40  

Belcan, LLC

     —         —   
  

 

 

    

 

 

 
   $ 299      $ 86  
  

 

 

    

 

 

 

 

     For the three
months ended
March 31,
 
     2025      2024  

Expenses:

     

AE Industrial

     150        150  

Redwire Corporation

     103        695  

Belcan, LLC

     —         110  
  

 

 

    

 

 

 
   $ 253      $ 955  
  

 

 

    

 

 

 

In the normal course of business, the Company participates in related party transactions with certain vendors and customers where AE Industrial maintains a significant ownership interest and/or can exhibit significant influence on the operations of such parties. For the three months ended March 31, 2025 and 2024, respectively, transactions with other companies in AE Industrial’s investment portfolio, not separately disclosed, did not have a material impact on the Company’s condensed consolidated financial statements.

14. Net Loss Per Share

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of common stock outstanding during each period.

Diluted net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of fully dilutive common stock outstanding for the period using the treasury-stock method, the if-converted method, or two-class method for participating securities, whichever is more dilutive. Potentially dilutive shares are comprised of common stock warrants, restricted stock units, convertible notes and stock

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

options. For the three months ended March 31, 2025, and 2024, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss and potentially dilutive shares being anti-dilutive. The Company has determined that all classes of the Preferred Stock are participating securities under the two-class method, however, holders of the Preferred Stock are not required to fund losses. Dividends have been accumulated for all Series C and Series D-1 Preferred Stock (refer to Note 11. Stockholders’ Deficit and Redeemable Convertible Preferred Stock for further detail).

The following table summarizes the computation of basic and diluted net loss per share attributable to common stockholders of the Company for the three months ended March 31, 2025 and 2024:

 

       For the three months ended
March 31,
 
       2025      2024  

Numerator:

       

Consolidated net loss

     $ (60,093 )     $ (52,771 ) 

Less: Accretion of dividends of Series C Preferred Stock

       (5,579 )       (5,219 ) 

Less: Accretion of dividends of Series D-1 Preferred Stock

       (6,609 )       —   

Net loss available to common stock

     $ (72,281 )     $ (57,990 ) 

Denominator:

       

Weighted average common stock outstanding – basic and diluted

       43,746        40,662  

Net loss per share attributable to common stockholders – basic and diluted

     $ (1.65 )     $ (1.43 ) 

A summary of the total number of securities excluded from diluted net loss per share that could be potentially dilutive in the future is as follows:

 

     March 31,
2025
     March 31,
2024
 

Convertible Series Seed Preferred Stock

     6,583        6,583  

Convertible Series Seed-1 Preferred Stock

     10,651        10,651  

Convertible Series A Preferred Stock

     19,544        19,544  

Convertible Series B Preferred Stock

     19,100        19,100  

Convertible Series C Preferred Stock

     36,316        36,316  

Convertible Series D-1 Preferred Stock

     56,318        —   

Convertible Series M Preferred Stock

     9,153        9,133  

Warrants for Series J Preferred Stock

     2,104        1,883  

Common Stock Warrants

     3,400        —   

Stock options

     49,550        46,142  
  

 

 

    

 

 

 

Total

     212,719        149,352  
  

 

 

    

 

 

 

15. Segment and Geographical Information

The Company has determined that it operates in one operating segment and as a result, manages its operations and allocates resources as a single operating segment. The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources. The

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

CODM uses net income or loss to evaluate the return on assets and to determine investment opportunities related to product development, platform enhancements, and new technologies. The CODM also uses net income or loss to monitor budget versus actual results. The following table includes the significant expense categories and amounts that are regularly provided to the CODM:

 

     For the three months ended
March 31,
 
     2025      2024  

Revenue

   $ 55,855      $ 8,317  

Less:

     

Cost of sales

     (53,635 )       (10,240 ) 

Compensation (1)

     (22,703 )       (19,697 ) 

Materials and consumables (1)

     (19,361 )       (17,278 ) 

Contractors and outside services (1)

     (3,147 )       (2,015 ) 

Other segment items (2)

     (17,102 )       (11,858 ) 
  

 

 

    

 

 

 

Net loss and comprehensive loss

   $ (60,093 )     $ (52,771 ) 
  

 

 

    

 

 

 

 

(1)

Compensation, materials and consumables, and contractors and outside services expenses presented in the above table are related to operating expenses and exclude amounts included in the cost of sales.

(2)

Other segment items included primarily related to interest expense, building and utilities, software licenses and computer services, professional and consulting services fees, depreciation, loss on disposal of fixed assets, other income, and provision for income taxes.

The measure of segment assets, including goodwill, is reported on the unaudited condensed consolidated balance sheets as total consolidated assets. Assets provided to the CODM are consistent with those reported on the unaudited condensed consolidated balance sheets with particular emphasis on the Company’s available liquidity, including its cash, cash equivalents and restricted cash, and there are no other significant segment assets that would require disclosure or are regularly provided to the CODM.

The Company does not recognize revenue or hold property and equipment outside of the United States as of March 31, 2025 and December 31, 2024, respectively.

16. Subsequent Events

The company evaluated its March 31, 2025 financial statements for subsequent events through July 11, 2025, the date the financial statements were issued. Please note the following subsequent events:

Series D Financing

Between April 1, 2025 and June 20, 2025, the Company completed a series of subsequent closings and sold 11.5 million shares of Series D-1 Preferred Stock at the Series D Per Share Price for aggregate cash proceeds of $60.0 million.

On April 10, 2025, the Company issued 1.8 million shares of Series D-3 Preferred Stock for aggregate cash proceeds of $10.0 million.

In July 2025, the Company issued 9.1 million shares of Series D-4 Preferred Stock for aggregate cash proceeds of $58.7 million.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Dollars and shares in thousands, except per share amounts)

 

On July 10, 2025, the Company’s board of directors declared a dividend (the “Preferred Stock Dividend”) payable in common stock in respect of all accrued and unpaid dividends of the Company’s outstanding shares of Series C, Series D-1, Series D-2, and Series D-3 Preferred Stock, contingent upon receipt of the required consent of certain third parties. Upon receipt of such consent, and prior to the commencement of this offering, the Company anticipates paying the dividend by issuing approximately 10.6 million shares of common stock to the existing holders of its Series C, Series D-1, Series D-2, and Series D-3 Preferred Stock. The Company currently anticipates that any additional dividends on its outstanding shares of Series C, Series D-1, Series D-2, and Series D-3 Preferred Stock that accrue following the declaration of the Preferred Stock Dividend will be paid in cash, contingent upon the closing of this offering, and repayment in full of the Term Loan Facility.

 

F-31


Table of Contents

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

Firefly Aerospace, Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Firefly Aerospace, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of net loss and comprehensive loss, convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2021.

Austin, Texas

April 16, 2025

 

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Table of Contents

Firefly Aerospace, Inc.

Consolidated Balance Sheets

(Dollars and shares in thousands, except per share amounts)

 

     December 31,  
     2024      2023  

Assets

     

Current assets

     

Cash and cash equivalents

   $ 123,431      $ 81,945  

Restricted cash, current

     424        2,445  

Accounts receivable, net

     1,004        2,704  

Inventories

     —         247  

Advanced payments, current

     52,404        55,523  

Other current assets

     3,454        7,081  
  

 

 

    

 

 

 

Total current assets

     180,717        149,945  

Advanced payments, less current portion

     41,770        4,098  

Property and equipment, net

     135,575        114,061  

Restricted cash, less current portion

     13,703        10,756  

Right-of-use assets - operating leases

     14,604        20,284  

Right-of-use assets - finance leases

     3,708        3,912  

Goodwill

     17,097        17,097  

Other noncurrent assets

     158        1,054  
  

 

 

    

 

 

 

Total assets

   $ 407,332      $ 321,207  
  

 

 

    

 

 

 

Liabilities, temporary equity, and stockholders’ deficit

     

Current liabilities

     

Accounts payable

   $ 37,633      $ 26,218  

Accounts payable - related parties

     86        1,406  

Accrued expenses

     14,419        16,473  

Operating lease liability, current

     1,128        1,159  

Finance lease liability, current

     856        695  

Deferred revenue, current

     108,069        89,404  

Notes payable, current

     6,349        965  

Other current liabilities

     10,837        452  
  

 

 

    

 

 

 

Total current liabilities

     179,377        136,772  

Operating lease liability, less current portion

     16,466        20,275  

Finance lease liability, less current portion

     1,996        2,241  

Deferred revenue, less current portion

     45,904        33,751  

Notes payable, less current portion

     124,079        79,510  

Notes payable, less current portion - related parties

     17,524        16,104  

Warrant liability

     4,070        991  

Other liabilities, less current portion

     25,956        184  
  

 

 

    

 

 

 

Total liabilities

   $ 415,372      $ 289,828  
  

 

 

    

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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Table of Contents

Firefly Aerospace, Inc.

Consolidated Balance Sheets – (Continued)

(Dollars and shares in thousands, except per share amounts)

 

     December 31,  
     2024     2023  

Commitments and contingencies (See Note 12)

    

Temporary equity

    

Redeemable convertible preferred stock, $0.0001 par value; 166,084 and 129,897 shares authorized as of December 31, 2024 and 2023, respectively; 135,346 and 96,852 issued and outstanding as of December 31, 2024 and 2023 respectively; $1,227,158 and $843,873 liquidation preference as of December 31, 2024 and 2023, respectively

     759,582       535,864  

Stockholders’ deficit

    

Common stock, $0.0001 par value, 502,471 and 444,488 shares authorized as of December 31, 2024 and 2023, respectively; 43,091 and 40,386 shares issued and outstanding as of December 31, 2024 and 2023, respectively

     4       4  

Additional paid-in capital, net of issuance costs

     —        —   

Accumulated deficit

     (767,626 )      (504,489 ) 
  

 

 

   

 

 

 

Total stockholders’ deficit

     (767,622 )      (504,485 ) 
  

 

 

   

 

 

 

Total liabilities, temporary equity, and stockholders’ deficit

   $ 407,332     $ 321,207  
  

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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Table of Contents

Firefly Aerospace, Inc.

Consolidated Statements of Net Loss and Comprehensive Loss

(Dollars and shares in thousands, except per share amounts)

 

     For the year ended
December 31,
 
     2024     2023  

Revenue

   $ 60,792     $ 55,235  

Cost of sales

     72,157       28,635  
  

 

 

   

 

 

 

Gross (loss) profit

     (11,365 )      26,600  

Operating expenses

    

Research and development

     149,498       117,871  

Selling, general, and administrative

     46,848       40,605  

Loss (gain) on disposal of fixed assets

     1,742       (1 ) 
  

 

 

   

 

 

 

Total operating expenses

     198,088       158,475  
  

 

 

   

 

 

 

Loss from operations

     (209,453 )      (131,875 ) 

Other (expense) income

    

Interest expense, net

     (20,373 )      (3,963 ) 

Other (expense) income, net

     (1,307 )      381  
  

 

 

   

 

 

 

Total other expense, net

     (21,680 )      (3,582 ) 
  

 

 

   

 

 

 

Loss before provision for income taxes

   $ (231,133 )    $ (135,457 ) 
  

 

 

   

 

 

 

Provision for income taxes

     —        —   
  

 

 

   

 

 

 

Net loss and comprehensive loss

   $ (231,133 )    $ (135,457 ) 

Less: Accretion of dividends of Series C Preferred Shares

     (21,224 )      (20,814 ) 

Less: Accretion of dividends of Series D-1 Preferred Shares

     (13,453 )      —   
  

 

 

   

 

 

 

Net loss available to common stock

   $ (265,810 )    $ (156,271 ) 
  

 

 

   

 

 

 

Net loss per common stock

    

Basic and diluted

   $ (6.37 )    $ (4.01 ) 

Weighted-average common stock outstanding

    

Basic and diluted

     41,719       38,977  

The accompanying notes are an integral part of these consolidated financial statements.

 

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Table of Contents

Firefly Aerospace, Inc.

Consolidated Statements of Cash Flows

(Dollars in thousands)

 

     For the year ended
December 31,
 
     2024     2023  

Cash flows from operating activities

    

Net loss

   $ (231,133 )    $ (135,457 ) 

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation and amortization

     12,545       4,707  

Loss (gain) on disposal of fixed assets

     1,742       (1 ) 

Stock-based compensation

     1,841       1,612  

Change in fair value of warrant liability

     3,079       147  

Non-cash interest expense

     8,402       2,155  

Non-cash inventory write-off

     247       —   

Changes in operating assets and liabilities:

    

Accounts receivable

     1,700       (1,041 ) 

Advanced payments

     (34,553 )      (39,518 ) 

Other assets

     4,523       4,458  

Accounts payable

     8,312       9,748  

Accounts payable - related parties

     (1,320 )      1,025  

Accrued expenses

     (2,054 )      3,925  

Other liabilities

     36,157       452  

Right-of-use assets

     5,884       1,689  

Lease liabilities

     (3,840 )      (578 ) 

Deferred revenue

     30,818       53,243  
  

 

 

   

 

 

 

Net cash used in operating activities

   $ (157,650 )    $ (93,434 ) 

Cash flows from investing activities

    

Purchases of property and equipment

     (32,697 )      (77,248 ) 

Net cash acquired in business combination

     —        7,254  
  

 

 

   

 

 

 

Net cash used in investing activities

   $ (32,697 )    $ (69,994 ) 

Cash flows from financing activities

    

Proceeds from issuance of preferred stock

     189,041       149,833  

Principal payments on finance lease

     (84 )      (1,550 ) 

Proceeds from notes payable

     48,990       101,742  

Proceeds from notes payable - related parties

     —        21,117  

Payments on notes payable

     (3,719 )      (985 ) 

Payments on mortgage principal

     —        (188 ) 

Payments of debt issuance costs

     (2,301 )      (24,719 ) 

Payments of debt issuance costs - related parties

     —        (5,385 ) 

Proceeds from repayment of employee note

     247       307  

Proceeds from exercise of stock options

     585       559  
  

 

 

   

 

 

 

Net cash provided by financing activities

   $ 232,759     $ 240,731  

Net increase in cash and cash equivalents and restricted cash

   $ 42,412     $ 77,303  

Cash and cash equivalents and restricted cash

    

Cash and cash equivalents and restricted cash, beginning of period

     95,146       17,843  
  

 

 

   

 

 

 

Cash and cash equivalents and restricted cash, end of period

   $ 137,558     $ 95,146  
  

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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Table of Contents

Firefly Aerospace, Inc.

Consolidated Statements of Cash Flows – (Continued)

(Dollars in thousands)

 

     For the year ended
December 31,
 
     2024      2023  

Reconciliation of cash and cash equivalents and restricted cash

     

Cash and cash equivalents

   $ 123,431      $ 81,945  

Restricted cash, current

     424        2,445  

Restricted cash, less current portion

     13,703        10,756  
  

 

 

    

 

 

 

Total cash and cash equivalents and restricted cash at the end of the period

   $ 137,558      $ 95,146  
  

 

 

    

 

 

 

Supplemental disclosures of cash flow information

     

Cash paid for interest

   $ 21,129      $ 12,576  

Non-cash investing and financing activities:

     

Equity issued for business combination

     —         9,804  

Initial fair value of warrants at issuance

     107        844  

Property and equipment additions in accounts payable

     3,103        5,880  

Property and equipment acquired through loans

     —         630  

Property and equipment acquired through finance leases

     —         3,900  

ROU asset acquired in exchange for operating lease liabilities

     —         2,911  

ROU asset acquired in exchange for finance lease liabilities

     109        3,900  

The accompanying notes are an integral part of these consolidated financial statements.

 

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Table of Contents

Firefly Aerospace, Inc.

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(Dollars and shares in thousands)

 

    Redeemable Convertible
Preferred Stock*
    Common Stock     Additional
Paid-In
Capital, Net
    Accumulated
Deficit
    Total
Stockholders’
Deficit
 
     Shares       Amount      Shares     Amount  

Balance as of December 31, 2022

    55,878     $ 354,413       37,829     $ 4     $ 4,634     $ (355,340 )    $ (350,702 ) 

Issuance of common stock under equity plan

    —        —        2,557       —        876       —        876  

Stock-based compensation

    —        —        —        —        1,612       —        1,612  

Issuance of Series C Preferred Stock, net of issuance costs

    32,062       150,833       —        —        —        —        —   

Issuance of Series M Preferred Stock, net of issuance costs

    8,912       9,804       —        —        —        —        —   

Accretion of redeemable convertible preferred stock

    —        20,814       —        —        (7,122 )      (13,692 )      (20,814 ) 

Net loss

    —        —        —        —        —        (135,457 )      (135,457 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2023

    96,852     $ 535,864       40,386     $ 4     $ —      $ (504,489 )    $ (504,485 ) 

Issuance of common stock under equity plan

    —        —        2,705       —        831       —        831  

Stock-based compensation

    —        —        —        —        1,842       —        1,842  

Issuance of Series C Preferred Stock, net of issuance costs

    4,254       21,000       —        —        —        —        —   

Issuance of Series D-1 Preferred Stock, net of issuance costs

    33,999       166,855       —        —        —        —        —   

Issuance of Series M Preferred Stock, net of issuance costs

    241       1,186       —        —        —        —        —   

Accretion of redeemable convertible preferred stock

    —        34,677       —        —        (2,673 )      (32,004 )      (34,677 ) 

Net loss

    —        —        —        —        —        (231,133 )      (231,133 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2024

    135,346     $ 759,582       43,091     $ 4     $ —      $ (767,626 )    $ (767,622 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

*

Refer to Note 13 for details of the classes of preferred shares and movement therein.

The accompanying notes are an integral part of these consolidated financial statements.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

1. The Company, Liquidity, and Basis of Presentation

Firefly Aerospace Inc., together with its wholly owned subsidiaries Firefly IP Holdings, LLC and Spaceflight, Inc. (collectively, “Firefly” or the “Company”), is a privately held company based in Cedar Park, Texas, that is incorporated under the laws of the State of Delaware on January 27, 2017, and commenced operations on May 1, 2017.

The Company is a market-leading space and defense technology company providing comprehensive mission solutions to national security, government and commercial customers with an established track record of mission success. The Company’s mission is to enable responsive and reliable launch, transit, and operations in space for its national security and commercial customers globally. The Company is a leading provider of fully integrated launch and space services technology, committed to enabling launch, transit and operations in space through responsive, reliable and affordable solutions – anywhere, anytime. The Company vertically integrated approach encompasses the design, manufacturing and operation of small to medium launch vehicles, landers, and spacecraft allowing us to service the entire lifecycle of government and commercial missions from Low Earth Orbit to the Moon and to deep space. Its purpose-built family of products align with the ongoing paradigm shift in government missions and procurement processes, where speed, efficiency, and economics drive customer decision making. Through its offerings across launch, lander and spacecraft, its vertically integrated product line, and its infrastructure, we serve as a critical provider for commercial and government customers.

Since the Company’s formation, we have established ourselves as a category leader across a diverse range of products and services. We take a comprehensive approach to providing a family of solutions to its customers’ space-based opportunities.

Liquidity

As an early-stage company with limited commercial operating history, the Company is subject to all the risks and expenses associated with a start-up company. The Company must, among other things, respond to competitive developments, attract, retain, and motivate qualified personnel, and support the expense of marketing new products based on innovative technology. The Company expects to transition to a manufacturing company, capable of producing and selling products at scale, once the technological feasibility of the Alpha rocket is confirmed during 2025. The Company defines technological feasibility as satisfying three specific conditions: (i) reaching product qualification, (ii) achieving production readiness, and (iii) having successfully deployed a customer’s payload into its specific orbit and final destination. The Company has successfully deployed customer payloads into their specific orbits or destinations as of December 31, 2024. The Company’s executive leadership comprised of at least the Chief Operating Officer and the Chief Technology Officer shall determine at what point the Company’s products have been fully qualified to reach technological feasibility and full rate production. Until this determination is made, the Company has not recorded any inventory amounts and all costs incurred are expensed.

The consolidated financial statements of the Company have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business. From inception, the Company has incurred an accumulated deficit totaling approximately $767.6 million and $504.5 million as of December 31, 2024 and 2023, respectively, and has incurred approximately $157.7 million and $93.4 million in negative cash flows from operations during the years ended December 31, 2024 and 2023, respectively. The Company funded its operations through the year ended December 31, 2024, through various capital raises and entering into restrictive debt covenant term loans.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

In 2024, the Company raised $21.0 million and $176.8 million through its Series C and Series D funding, respectively. The Series D amount included the conversion of $25.8 million in convertible notes. The Company raised $158.0 million after closing three tranches of its Series C funding during the year ended December 31, 2023.

The Company plans to manage expenses and obtain additional funds as needed through the issuance of equity and debt. Future capital requirements will depend on many factors, including the rate of revenue growth, the selling price of the Company’s products, the expansion of sales and marketing activities, and the timing and extent of spending on research and development activities. If the Company is unable to obtain adequate financing on satisfactory terms when required, the ability to grow or support the business and to respond to business challenges could be significantly limited.

Basis of Presentation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include all adjustments necessary for the fair presentation of the Company’s financial position, results of operations, and cash flows for the periods presented. All intercompany balances and transactions have been eliminated.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company’s cash consists of cash on hand. The Company considers all highly liquid investment securities with remaining maturities at the date of purchase of three months or less to be cash equivalents. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts.

As of December 31, 2024 and 2023, the Company’s cash and cash equivalents consisted of cash deposited in bank accounts and money market accounts and were recorded at face value.

Restricted Cash

The Company is required to maintain restricted cash deposits in the collateral accounts comprised of interest reserve accounts and an insurance premium reserve account in connection with the issuance of the Term Loan Facility financing agreement (refer to Note 11. Notes Payable and Warrants for further detail). Additionally, balances maintained in bank accounts for purposes of minimum liquidity are covered by debt account control agreements. These funds are restricted and have been classified as such on the consolidated balance sheets due to the nature of the restriction. The restricted cash balances were $14.1 million and $13.2 million as of December 31, 2024 and 2023, respectively.

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

Accounts Receivable

Customer accounts receivable are reported at the amount management expects to collect on balances outstanding at year-end.

Allowance for Credit Losses

When the Company records customer receivables and contract assets arising from revenue transactions, an allowance is recorded for credit losses for the current expected credit losses inherent in the asset over its expected life. The allowance for credit losses is a valuation account deducted from the amortized cost basis of the assets to present their net carrying value at the amount expected to be collected. Each period, the allowance for credit losses is adjusted through earnings to reflect expected credit losses over the remaining lives of the assets.

The Company estimates expected credit losses based on relevant information about past events, including historical credit loss experience and current conditions, such as the length of time accounts receivable are past due, customer payment histories, any specific customer collection issues identified, current market conditions which may affect customer financial condition, and reasonable and supportable forecasts of future credit losses. When measuring expected credit losses, we pool assets with similar country risk and credit risk characteristics. Changes in the relevant information may significantly affect the estimates of expected credit losses. The Company writes off accounts receivable that have become uncollectible.

Advanced Payments

Advanced payments consist of supplier prepayments made for services that have not yet been received. These payments are recorded as assets on the consolidated balance sheets until the related services are delivered.

Advanced payments are classified as either current or noncurrent assets depending on whether they are expected to be settled within one year. The Company evaluates the terms of each prepayment arrangement to determine the appropriate classification and ensures that all advanced payments are supported by valid contracts or agreements with suppliers.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation of property and equipment, except for leasehold improvements, is computed using the straight-line method over useful lives ranging from three to 15 years. Depreciation of leasehold improvements is recorded using the straight-line method over the remaining lease term beginning when the improvements are placed in service. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the consolidated balance sheets and the resulting gain or loss is reflected in operations in the period realized. Maintenance and repairs are charged to operations as incurred.

Leases

The Company determines whether a contract is or contains a lease at contract inception by evaluating whether substitution rights exist and whether the Company obtains substantially all of the benefits and directs the use of the identified asset. When the Company determined a lease exists, the Company records a right-of-use (“ROU”) asset and corresponding lease liability in the consolidated balance sheets. ROU assets represent the Company’s

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

right to use an underlying asset for the lease term. Lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are recognized at the commencement date of the lease at the value of the lease liability, adjusted for any prepayments, lease incentives received, and initial direct costs incurred.

Lease liabilities are recognized at the commencement date of the lease based on the present value of remaining lease payments over the lease term. As the discount rate implicit in the lease is not readily determinable in most leases, the Company uses its incremental borrowing rate based on the information available at the commencement date of the lease in determining the present value of lease payments. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

The Company does not record lease contracts with a lease term of 12 months or less on its consolidated balance sheets. Fixed lease expenses associated with these short-term contracts are expensed on a straight-line basis over the lease term.

The Company does not record lease contracts acquired in a business combination with a remaining lease term of 12 months or less on its consolidated balance sheets. Fixed lease expenses associated with these short-term contracts are expensed on a straight-line basis over the lease term.

The Company recognizes lease expense for operating leases on a straight-line basis over the lease term.

The Company has lease agreements with non-lease components that relate to the lease components. The Company accounts for each lease component and any non-lease components associated with that lease component separately with amounts allocated to the lease and non-lease components based on stand-alone prices. For certain equipment leases, the Company accounts for the lease and non-lease components as a single lease.

Some leasing arrangements require variable payments that are dependent on usage, output, or may vary for other reasons, such as insurance and tax payments. These variable lease costs are recognized as incurred over the lease term.

The Company does not include significant restrictions or covenants in lease agreements, and residual value guarantees are generally not included within the Company’s leases. See Note 10. Leases for further detail.

Sale and Leaseback

The Company engages in sale and leaseback transactions, whereby it sells an asset and simultaneously enters into a lease agreement to lease back the same asset. These transactions are accounted for in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers.

When a sale and leaseback transaction results in a sale, the asset is derecognized from the consolidated balance sheets, and any gain or loss on the sale is recognized in the consolidated statements of net loss and comprehensive loss.

When a transaction results in a failed sale, the transaction is accounted for as a financing. The asset is not derecognized and the Company continues to record depreciation expense over the asset’s estimated useful life. Sales proceeds received are recorded as cash and a corresponding financing liability to reflect future lease payments in the consolidated balance sheets.

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

The Company evaluates each sale and leaseback transaction to determine the appropriate accounting treatment, ensuring compliance with the relevant accounting standards and reflecting the economic substance of the transaction.

Goodwill

Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. Goodwill is reviewed annually as of October 1 of each year (or more frequently if impairment indicators arise) for impairment. To review for impairment, the Company first assesses qualitative factors to determine whether events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

The Company’s qualitative assessment of the recoverability of goodwill, whether performed annually or based on specific events or circumstances, considers various macroeconomic, industry-specific and company-specific factors. Those factors include: (i) adverse macroeconomic trends; (ii) adverse industry and market considerations; (iii) increased costs; (iv) current, historical or projected deterioration of the Company’s financial performance; (v) Company-specific changes; (vi) events affecting a reporting unit; and (vii) a sustained decrease in the Company’s market capitalization below its net book value.

After assessing the totality of events and circumstances, if determined that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, no further assessment is performed. If the Company determines that it is more likely than not that the fair value of a reporting units is less than its carrying amount, the Company will calculate the fair value of that reporting unit and compare the fair value to the reporting unit’s net book value. If the fair value of the reporting unit is greater than its net book value, there is no impairment. Otherwise, a goodwill impairment charge will be recorded for the amount by which the carrying value of the reporting unit exceeds its fair value up to the amount of the goodwill. Determining the fair value of a reporting unit involves the use of significant estimates and assumptions. See further discussion in Note 8. Goodwill.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows which the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. The Company has not identified any such impairment losses to date.

Notes Payable

Notes payable represent obligations of the Company to pay a specified amount of money at a future date. These obligations may arise from borrowings from financial institutions, private lenders, or other entities and are classified as either current or non-current liabilities based on their maturity dates.

The Company recognizes notes payable on an amortized cost basis at their principal amount, net of the unamortized debt issuance costs unless fair value option is elected. The debt issuance cost is amortized over the term of the debt using the effective interest method. Interest payments are made in accordance with the terms of the debt, which may include fixed or variable interest rates.

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

Warrant Liabilities

Warrants to purchase shares of the Company’s common stock and Series J Preferred Stock are classified as a liability on the consolidated balance sheets and held at fair value, as the warrants are either exercisable into redeemable preferred shares, or contain certain terms that could result in cash settlement as a result of events outside of the Company’s control. The warrants are subject to remeasurement to fair value at each balance sheet date, and any change in fair value is recognized in the consolidated statements of net loss and comprehensive loss. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the warrants.

Fair Value Measurements

According to ASC 820, Fair Value Measurements and Disclosures, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The fair value hierarchy establishes three tiers, which prioritize the inputs used in measuring fair value as follows:

Level 1 — Observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3 — Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Entities are permitted to choose to measure certain financial instruments and other items at fair value.

Deferred Revenue

Advanced payments and billings in excess of revenues recognized are recorded as current and non-current deferred revenue in the consolidated balance sheets and recognized into revenue as the Company satisfies the underlying performance obligation. Prior to making this determination, the Company ensures that a valid contract is in place that meets the definition of a contract in accordance with ASC 606-10-25-1 and 2.

Business Combination

The results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the date of the acquisition. The Company uses the acquisition method of accounting for business combinations and recognizes assets acquired and liabilities assumed measured at their fair values on the date acquired. Goodwill is measured as of the acquisition date as the excess of consideration transferred over the net acquisition date fair value of the assets acquired and the liabilities assumed. The Company performs valuations of assets acquired and liabilities assumed and allocates the purchase price to its respective assets and liabilities. Determining the fair value of assets acquired and liabilities assumed requires us to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue, costs and cash flows, discount rates and selection of comparable companies. The Company engages the assistance of valuation specialists in concluding on fair value measurements in connection with determining fair values of assets acquired and liabilities assumed in a business combination.

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

Revenue Recognition

ASC 606 provides guidance outlining a single five-step comprehensive revenue model in accounting for revenue from contracts with customers. Under this model the Company: (1) identifies the contract with the customer, (2) identifies its performance obligations in the contract, (3) determines the transaction price for the contract, (4) allocates the transaction price to its performance obligations and (5) recognizes revenue when or as it satisfies its performance obligations.

The Company accounts for a contract when it has approval and commitment from both parties, the fees, payment terms and rights of the parties regarding the products or services to be transferred are identified, the contract has commercial substance, and collectability of substantially all of the consideration expected to be transferred is probable. The Company applies judgment in determining the customer’s ability and intention to pay for services expected to be transferred, which is based on factors including the customer’s payment history, management’s ability to mitigate exposure to credit risk, and experience selling to similarly situated customers. The contractual term with the Company’s customers is generally for multiple years.

Performance obligations within a contract are identified based on the products and services promised to be transferred in the contract. When a contract includes more than one promised product or service, the Company must apply judgment to determine whether the promises represent multiple performance obligations or a single, combined performance obligation. This evaluation requires the Company to determine if the promises are both capable of being distinct, where the customer can benefit from the product or service on its own or together with other resources readily available, and are distinct within the context of the contract, where the transfer of products or services is separately identifiable from other promises in the contract. When both criteria are met, each promised product or service is accounted for as a separate performance obligation. In cases where the promises are distinct, the Company is further required to evaluate if the promises are a series of products and services that are substantially the same and have the same pattern of transfer to the customer (referred to as the “series” guidance). When the Company determines that promises meet the series guidance, they are accounted for as a single, combined performance obligation.

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer for the Company’s contracts and consists of milestone-based fees. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. The Company may constrain a portion of the transaction price based upon its anticipated ability to meet certain contractual requirements.

Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation on a relative basis according to their standalone selling prices. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the Company does not have a history of selling a performance obligation, management applies judgment to estimate the standalone selling price, taking into consideration available information, including market conditions, factors considered to set list prices, pricing of similar products, and internal pricing objectives. The corresponding allocated revenues are recognized when or as the performance obligations are satisfied.

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

Cost of Sales

Cost of sales primarily consists of raw materials, salaries and benefits, depreciation and amortization and other direct costs directly attributable to fulfilling the Company’s obligations under customer contracts.

Concentration of Credit Risk

To reduce risk, the Company’s management performs ongoing credit evaluations of its customers’ financial condition. The Company has not identified any potential credit losses and therefore does not maintain an allowance in its consolidated financial statements.

Cash and cash equivalents are deposited in demand deposit accounts and high-quality money market funds, and at times, such deposits may be in excess of limits federally insured by the Federal Deposit Insurance Corporation up to $250,000. The Company utilizes high quality financial institutions. The Company has not experienced any losses on its deposits of cash and cash equivalents.

Major customers are defined as those individually comprising more than 10% of the Company’s total revenue. The major customers during the years ended December 31, 2024 and 2023 were as follows:

 

     2024     2023  

Customer 1

     58.6 %      30.7 % 

Customer 2

     23.2 %      11.4 % 

Customer 3

     11.2 %      —   

Customer 4

     —        32.9 % 

Customer 5

     —        17.2 % 

Research and Development

Research and development costs include employee and contractor compensation, supplies and materials for new product development, and regulatory compliance. Research and development costs are charged to operations as incurred.

Redeemable Convertible Preferred Stock

The Company’s redeemable convertible preferred stock represents legal form of equity, is not mandatorily redeemable, and does not constitute unconditional obligations that may require issuance of a variable number of the Company’s shares. The redeemable convertible preferred stock is classified mezzanine (or temporary) equity as it contains terms that could force the Company to redeem the shares for cash or other assets upon the occurrence of an event not solely within the Company’s control. Subsequent remeasurement of the carrying value of the redeemable convertible preferred stock is required for Series C Preferred Stock and Series D Preferred Stock as they are probable of becoming redeemable under the redemption option at the holder’s option based on solely passage of time. The Company accretes the redeemable convertible preferred stock to its redemption value and recognizes the changes in the redemption value immediately as they occur and adjusts the carrying value to equal the current maximum redemption value at the end of each reporting period. No subsequent remeasurement of the other series of the Company’s redeemable convertible preferred stock is required as they are neither currently redeemable nor probable of becoming redeemable.

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

The tranched preferred stock issuance obligations issued in connection with the issuance of Series D redeemable convertible preferred stock are considered freestanding financial instruments separated from the Series D Preferred Stock and are classified as an asset or a liability on the consolidated balance sheets and held at fair value, as the tranche obligations are exercisable into redeemable preferred shares that could result in cash settlement as a result of events outside of the Company’s control. The tranche obligations are subject to remeasurement to fair value at each balance sheet date, and any change in fair value is recognized in the consolidated statements of net loss and comprehensive loss. The Company will continue to adjust the fair value of the tranche obligations until the earlier of the exercise or expiration of the tranche obligations.

Stock-Based Compensation

The Company follows the fair value provisions of ASC 718, Compensation — Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based payment awards, including stock options and restricted stock, using a fair value-based method. The fair value of stock options is estimated at the time of grant using an option pricing model, and the fair value of restricted shares is based on the closing price of the Company’s common stock on the date of grant. Compensation cost for service-based awards with graded vesting is recognized on a straight-line basis over the requisite service period. Employee stock-based compensation expense recognized during the years ended December 31, 2024 and 2023 was calculated based on awards ultimately expected to vest.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires the asset and liability approach for financial accounting and reporting of income taxes. Deferred income taxes reflect the recognition of future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. The carrying value of net deferred tax assets reflects that the Company has been unable to generate sufficient taxable income in certain tax jurisdictions. A valuation allowance is provided to reduce the deferred tax asset to an amount that is more likely than not to be realized. The deferred tax assets are still available for the Company to use in the future to offset taxable income, which would result in the recognition of a tax benefit and a reduction in the Company’s effective tax rate.

Actual operating results and the underlying amount and category of income in future years could render the Company’s current assumptions, judgments and estimates of the realizability of deferred tax assets inaccurate, which could have a material impact on its financial position or results of operations.

The Company accounts for uncertain tax positions in accordance with ASC 740, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s consolidated financial statements. It prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Such changes in recognition or measurement might result in the recognition of a tax benefit or an additional charge to the tax provision in the period.

The Company recognizes interest and penalties related to unrecognized tax benefits within the provision for income taxes line in the accompanying consolidated statement of net loss and comprehensive loss. Accrued interest and penalties are included within the related tax liability line in the consolidated balance sheets.

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

Segment Reporting

The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources. The CODM uses net income or loss to evaluate the return on assets and to determine investment opportunities related to product development, platform enhancements, and new technologies. The CODM also uses net income or loss to monitor budget versus actual results. The Company has determined that it operates in one operating segment and as a result, manages its operations and allocates resources as a single operating segment.

Net Loss per Share

Net loss per share is calculated as net loss per common stock attributable to the Company’s common stockholders divided by the Company’s weighted average number of basic or diluted common stock outstanding. Potentially dilutive common stock primarily consist of employee stock options, warrants, convertible notes, and restricted and performance unit awards.

Recently Issued Accounting Standards

ASU 2023-07

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities with a single reportable segment to provide all the disclosures required by this standard and all existing segment disclosures in Topic 280 on an interim and annual basis, including new requirements to disclose significant segment expenses that are regularly provided to the CODM and included within the reported measure(s) of a segment’s profit or loss, the amount and composition of any other segment items, the title and position of the CODM, and how the CODM uses the reported measure(s) of a segment’s profit or loss to assess performance and decide how to allocate resources. The guidance is effective for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024, applied retrospectively with early adoption permitted. Effective January 1, 2024, the Company has adopted ASU 2023-07. The adoption did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Standards not yet Adopted

ASU 2024-03

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03.

ASU 2023-06

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, which incorporates certain U.S.

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

Securities and Exchange Commission (“SEC”) disclosure requirements into the FASB ASC. The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification topics, allow investors to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The amendments in this ASU should be applied prospectively. The Company does not expect ASU 2023-06 will have a material impact to its consolidated financial statements.

ASU 2023-09

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the transparency and decision-usefulness of income tax disclosures, particularly in the rate reconciliation table and disclosures about income taxes paid. The standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The ASU’s amendments are effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2024-09.

3. Revenue

The following table presents revenue disaggregated by type for the years ended December 31:

 

     2024      2023  

Launch revenue

   $ 22,631      $ 33,017  

Spacecraft Solutions revenue

     38,161        20,912  

Other revenue

     —         1,306  
  

 

 

    

 

 

 

Total revenue

   $ 60,792      $ 55,235  
  

 

 

    

 

 

 

The work performed by the Company in fulfilling Launch, Spacecraft Solutions, and Other performance obligations is not expected to create an asset for the customer since the launch vehicles and spacecraft, which are built to deliver the customer’s payload into orbit, will not be owned by the customer, nor will the propulsion systems and other related systems be controlled by the customer.

Launch Revenue

The Company has contracts with commercial and government entities to provide launch and integration services for payloads requiring transportation into orbit via launch vehicles. These contracts may include milestone payments and deposits. The Company considers the performance obligation to be the initiation of the launch and recognizes revenue at that point in time. When the contract contains multiple performance obligations, stand-alone selling prices are established for each performance obligation in the contract based on cost plus margin or market prices for similar goods and services.

The Company also enters into contracts with its customers to provide engineering services and related components, and to develop and provide licenses to intellectual property. In these cases, the Company’s service obligation is satisfied over time since the tasks are performed according to the customer’s specifications which creates an asset with no alternative use to the Company where the Company has an enforceable right to payment

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

for performance completed to date. The measure of progress over time is based upon an input method using a cost-to-cost measure which best depicts the transfer of control to the customer. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Estimating the total costs at completion of a performance obligation requires management to make estimates related to items such as subcontractor performance, material costs and availability, labor costs and productivity, and the costs of overhead. If estimates of total costs to be incurred on a contract exceed total estimates of revenue to be earned, a provision for the entire loss on the contract is recognized in the period the loss is incurred. Engineering services billed hourly are recognized over time.

Spacecraft Solutions Revenue

The Company contracts with commercial and government entities to provide end-to-end services for the transportation of payloads. These contracts include milestone payments and deposits. The Company considers the performance obligation to be the end-to-end commercial payload services. These contracts typically require that the customer make milestone payments as specific conditions and tasks are performed. The Company’s payload services obligation is satisfied over time since the tasks are performed according to the customer’s specifications which creates an asset with no alternative use to the Company where the Company has an enforceable right to payment for performance completed to date. The measure of progress over time is based upon an input method using a cost-to-cost measure which best depicts the transfer of control to the customer. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Estimating the total costs at completion of a performance obligation requires management to make estimates related to items such as subcontractor performance, material costs and availability, labor costs and productivity, and the costs of overhead. If estimates of total costs to be incurred on a contract exceed total estimates of revenue to be earned, a provision for the entire loss on the contract is recognized in the period the loss is incurred.

For all revenue streams, the Company considers milestone payments that are contingent on the success of a mission to be variable consideration. The Company assesses the likelihood of success of a mission at inception and may defer the recognition of some or all of the variable consideration until success of the mission is assured.

The Company’s contracts may provide customers with termination for convenience clauses, which may or may not include termination penalties. In some contracts, the size of the contractual termination penalty increases closer to the scheduled launch date. At inception of each contract, the Company evaluates the contract’s termination provisions and the impact on the accounting contract term (i.e., the period in which the Company has enforceable rights and obligations). This includes evaluating whether there are termination penalties and if so, whether they are considered substantive. The Company applies judgment in determining whether the termination penalties are substantive.

The Company has elected the following practical expedients for Launch revenue and Spacecraft Solutions revenue: (1) the Company does not account for significant financing components if the period between revenue recognition and when the customer pays for the product or service will be one year or less, (2) the Company recognizes revenue equal to the amount it has a right to invoice when the amount corresponds directly with the value to the customer of the Company’s performance to date, and (3) the Company does not account for shipping and handling activities as a separate performance obligation, but rather as an activity performed to transfer the promised good or service.

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

The Company includes in its computation of remaining performance obligations customer orders for which it has accepted signed sales orders. The definition of remaining performance obligations excludes time and materials contracts accounted for under the “right to invoice” practical expedient. As of December 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $574.3 million. The Company expects to recognize approximately 18.7% of its remaining performance obligations as revenue within the next 12 months. The remaining performance obligations are expected to recognized over the next five years.

Other Revenue

The Company recorded $1.3 million in Other Revenue during 2023 related to contracts with an American launch vehicle company.

Contract Balances

Contract assets and liabilities reflect timing differences between the receipt of consideration and the fulfillment of performance obligations under a contract with a customer. Contract assets reflect performance obligations satisfied and revenue recognized in advance of customer billings. Contract liabilities reflect consideration received in advance of the satisfaction of a performance obligation under a contract with a customer. Contract assets become trade receivables once the Company’s rights to consideration become unconditional. Such rights are considered unconditional if only the passage of time is required before payment of that consideration is due. Contract costs are those costs directly related to fulfillment of specified customer contracts. The Company did not have any contract asset balances as of December 31, 2024 and 2023, respectively. Contract liabilities are recorded within deferred revenue on the consolidated balance sheets.

The Company had deferred revenue of $65.4 million and $40.2 million as of December 31, 2024 and 2023, respectively, for Launch, and $87.3 million and $56.5 million as of December 31, 2024 and 2023, respectively, for Spacecraft Solutions. The Company had other deferred revenue of $1.3 million and $26.5 million as of December 31, 2024 and 2023, respectively. During the years ended December 31, 2024 and 2023, the Company recognized $51.9 million and $30.7 million, respectively, of revenue that was included in the contract liabilities balance at the beginning of each period.

Loss Contracts

The Company recognizes a contract loss when the current estimate of the consideration expected to be received is less than the current estimate of total estimated costs to complete the contract. For purposes of determining the existence of or amount of a contract loss, the Company considers total contract consideration, including any variable consideration constrained for revenue recognition purposes. The Company may experience favorable or unfavorable changes to contract losses from time to time due to changes in estimated contract costs and modifications that result in changes to contract prices. The Company recorded losses related to its Spacecraft Solutions revenue contracts of $12.7 million for the year ended December 31, 2024. There were no contract losses recognized for the year ended December 31, 2023.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following as of December 31:

 

     2024      2023  

Prepaid expenses

   $ 1,934      $ 2,016  

Other miscellaneous assets

     1,520        5,065  
  

 

 

    

 

 

 

Prepaids and other current assets

   $ 3,454      $ 7,081  
  

 

 

    

 

 

 

5. Property and Equipment, Net

Property and equipment, net consisted of the following as of December 31:

 

     2024      2023  

Machinery and equipment

   $ 42,040      $ 15,716  

Test stands

     37,209        6,436  

Buildings

     48,830        10,074  

Land and land improvements

     3,505        2,498  

Construction in progress

     17,551        84,974  

Furniture and fixtures

     1,200        1,405  

Computer equipment

     2,156        1,694  

Software

     1,122        1,140  

Vehicles

     421        331  

Leasehold improvements

     7,283        7,282  
  

 

 

    

 

 

 

Total

   $ 161,317      $ 131,550  

Less: accumulated depreciation

     (25,742 )       (17,489 ) 
  

 

 

    

 

 

 

Property and equipment, net

   $ 135,575      $ 114,061  
  

 

 

    

 

 

 

Depreciation expense was $12.5 million and $4.7 million for the years ended December 31, 2024 and 2023, respectively.

Depreciation is computed using the straight-line method over the following estimated useful lives of assets:

 

Asset

  

Estimated useful lives

Machinery and equipment    5 years
Test stands    Determined at the individual asset level
Buildings    15 years
Land and land improvements    N/A
Furniture and fixtures    5 years
Computer equipment    3 years
Software    3 years
Vehicles    5 years
Leasehold improvements    The remaining lease term beginning when the improvement is placed in service

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

6. Acquisitions

On June 8, 2023, the Company completed the acquisition of all of the outstanding capital stock of Spaceflight for total consideration of approximately $9.8 million comprised of 8.9 million of the Company’s Series M Preferred Stock. To determine the fair value of the equity consideration issued as part of the total purchase consideration for the acquisition, the Company utilized the fair market value of its Series M Preferred Stock, determined with the assistance of a third-party valuation specialist, using an option-pricing methodology. Following the completion of the acquisition, Spaceflight is a consolidated subsidiary of the Company.

The acquisition was accounted for as a business combination under ASC 805, Business Combinations, with the Company identified as the acquirer. In accordance with the acquisition method of accounting, the purchase price has been assigned to the assets acquired, and the liabilities assumed, based on their estimated fair value at the acquisition date. In connection with the acquisition, the Company incurred acquisition-related costs of $0.6 million, which were expensed in the consolidated statements of net loss and comprehensive loss for the year ending December 31, 2023.

As of this report date, the Company has completed the analysis to assign fair values to all assets acquired and liabilities assumed and, therefore, the purchase price allocation for the acquisition is final.

The table below sets forth the consideration paid, and the fair value of the assets acquired, and liabilities assumed for the acquisition:

 

     As of
June 8, 2023
 

Consideration paid

  

Equity (Issuance of Series M Preferred Stock)

   $ 9,804  

Assets acquired and liabilities assumed

  

Cash and cash equivalents

   $ 7,253  

Accounts receivable

     1,636  

Inventory

     247  

Prepaid expenses and other current assets

     622  

Deferred project costs

     11,083  

Property and equipment

     2,958  

ROU asset

     2,772  

Goodwill

     17,097  
  

 

 

 

Total assets

   $ 43,668  

Accounts payable

   $ 860  

Accrued expenses

     3,825  

Deferred revenue

     25,983  

Lease liability

     3,012  

Uncertain tax position liability

     184  
  

 

 

 

Total liabilities

   $ 33,864  
  

 

 

 

Total net assets

   $ 9,804  
  

 

 

 

The fair value of the working capital items, including accounts receivable, inventory, prepaid expenses and other current assets, accounts payable and accrued liabilities, approximates their respective carrying values at the date

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

of the acquisition. Effective January 1, 2021, the Company has adopted ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which created an exception to the recognition and measurement principles of ASC 805, for the Company’s contract assets and liabilities, including deferred project costs and deferred revenue, essentially resulting in the carryover of the historical amounts determined in accordance with ASC 606, rather than fair value.

Given the nature of the underlying personal property, the fair value of the property and equipment was determined to be commensurate with their carrying value. No separately identifiable intangible assets were identified in this transaction. The goodwill recognized in the acquisition represents further expansion of the Company’s orbital flight services. As a result of the acquisition, the Company does not expect to have any deductible goodwill for tax purposes.

The results of operations of Spaceflight for the period from June 8, 2023 to December 31, 2023 have been included in the results of operations for the year ended December 31, 2023. The post-acquisition revenue of approximately $4.7 million and net loss of $13.1 million attributable to Firefly are included in the consolidated statements of net loss and comprehensive loss for the period from June 8, 2023 to December 31, 2023.

Unaudited Pro Forma Information

The following unaudited pro forma financial information presents combined results of operations as if Spaceflight had been acquired as of the beginning of fiscal year 2023. The unaudited pro forma results include certain pro forma adjustments to revenue and net loss that were directly attributable to the acquisition including transaction costs. Transactions costs of approximately $1.0 million are assumed to have occurred on January 1, 2023 and are recognized as if incurred in the first quarter of 2023. Of these transaction costs, $0.1 million are incurred by Spaceflight and $1.0 million are incurred by the Company. The unaudited pro forma information presented below is for informational purposes only and is not necessarily indicative of the Company’s consolidated results of operations of the combined business had the acquisition actually occurred at the beginning of fiscal year 2023 or of the results of its future operations of the combined business.

 

     2023
(Unaudited)
 

Pro forma net revenue

   $ 69,092  

Pro forma net loss

     (162,040 ) 

7. Accrued Expenses

Accrued expenses consisted of the following as of December 31:

 

     2024      2023  

Payroll-related expenses

   $ 5,918      $ 5,396  

Accrued legal expenses

     —         171  

Other accrued expenses

     8,501        10,906  
  

 

 

    

 

 

 

Accrued expenses

   $ 14,419      $ 16,473  
  

 

 

    

 

 

 

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

8. Goodwill

The following table presents the changes in the carrying amount of goodwill for the years ended December 31, 2024 and 2023:

 

Balance at December 31, 2022

   $ —   

Spaceflight Acquisition

     17,097  
  

 

 

 

Balance at December 31, 2023

     17,097  

Additions or impairments

     —   
  

 

 

 

Balance at December 31, 2024

   $ 17,097  
  

 

 

 

The Company completed its annual goodwill impairment assessment as of October 1, 2024 and determined that no adjustments to the carrying value of goodwill were necessary. Goodwill is allocated to the Company’s single reporting unit which is both its sole operating segment and only reportable segment.

9. Fair Value Measurement

The Company measures its financial assets and liabilities at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The Company uses the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

The carrying amounts of Company’s financial instruments, which include cash equivalents, accounts receivable, prepaid expenses, other current assets, accounts payable, accrued liabilities and certain other current liabilities approximate fair value because of their short-term maturities.

The Company issued warrants to purchase Series J Preferred Stock (the “Series J Warrants”) in connection with the Company’s issuance of the Term Loan Facility (refer to Note 11. Notes Payable and Warrants for further detail) and issued warrants to purchase common stock (the “Common Warrants”, together with the “Series J Warrants”, the “Warrants”) and two tranche obligations: 1) the RPM Call Option and 2) Majority Sponsor Top-Up (collectively, the “Tranche Obligations”) in connection with the Company’s issuance of the Series D-1 Preferred Stock (refer to Note 13. Stockholders’ Deficit and Redeemable Convertible Preferred Stock for further detail). The Company determined that the Warrants and Tranche Obligations are classified as liabilities or assets depending on valuation on the consolidated balance sheets and are recorded at fair value both initially and subsequently with changes in fair value recorded through earnings. The Warrants are recorded within warrant liability, the RPM Call Option is recorded within other current liabilities, and the Majority Sponsor Top-Up is recorded within other current assets on the consolidated balance sheets.

The Company uses Monte Carlo simulations model and probability weighting valuations based on different scenarios including change of control, initial public offering (“IPO”) and default scenarios to value the Warrants. The value per Warrant under the change of control scenario is the average value per unit under 50,000 Monte Carlo simulations, the value per Warrant under the IPO scenario is based on number of the common stock equivalent number of shares including the Warrants and total estimated equity value of the Company, and the value per Warrant under the default scenario is assumed to be zero.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

The following table presents the key inputs applied in the valuations of the Series J Warrants as of the years ended December 31, 2024 and 2023:

 

     December 31, 2024  
     Change of
Control
Scenario
    IPO
Scenario
    Default
Scenario
 

Average Value per Series J Warrant

   $ 2.59     $ 0.88     $ —   

Event Weighting

     55 %      15 %      30 % 

Weighted Average Value per Series J Warrant

   $ 1.42     $ 0.13     $ —   
  

 

 

   

 

 

   

 

 

 

Total Probability Weighted Average Value per Series J Warrant

       $ 1.55  
      

 

 

 

 

     December 31, 2023  
     Change of
Control
Scenario
    All Other
Scenarios
 

Average Value per Series J Warrant

   $ 1.0664     $ 0.5529  

Discount for Lack of Marketability

     35 %      35 % 

Average Value per Series J Warrant on a Non-Marketable basis

   $ 0.6932     $ 0.3594  

Event Weighting

     50 %      50 % 

Weighted Average Value per Series J Warrant

   $ 0.3466     $ 0.1797  
  

 

 

   

 

 

 

Total Probability Weighted Average Value per Series J Warrant

     $ 0.5263  
    

 

 

 

The following table presents the key inputs applied in the valuations of the Common Warrants as of the year ended December 31, 2024. No Common Warrants were issued in the year ended December 31, 2023.

 

     December 31, 2024  
     Change of
Control
Scenario
    IPO
Scenario
    Default
Scenario
 

Value per Common Warrant on a Marketable Basis

   $ 0.30     $ 2.16     $ —   

Discount for Lack of Marketability

     40 %      20 %      n/a  

Value per Common Warrant on a Non-Marketable Basis

   $ 0.18     $ 1.73     $ —   

Event Weighting

     55 %      15 %      30 % 

Weighted Value per Common Warrant

   $ 0.10     $ 0.26     $ —   
  

 

 

   

 

 

   

 

 

 

Total Probability Weighted Value per Common Warrant

       $ 0.36  
      

 

 

 

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

The Company uses the Black-Scholes option-pricing valuation model to value the RPM Call Option. The following table presents the key inputs applied in the valuations of the RPM Call Option as of the year ended December 31, 2024:

 

     December 31,
2024
 

Weighted Average Series D Preferred Stock Price

   $ 5.08  

Exercise Price for the RPM Option

   $ 5.20  

Risk-free Rate

     4.27 % 

Volatility

     60 % 

Term (years)

     0.36  

Black Scholes Value (per share)

   $ 0.70  

Number of Units per Contractual Terms

     5,922  

Value of RPM Option

   $ 4,159  

The Company uses the forward pricing valuation model to value the Majority Sponsor Top-Up. The following table presents the key inputs applied in the valuations of the Majority Sponsor Top-Up as of the year ended December 31, 2024:

 

     December 31,
2024
 

Amounts subject to Top-Up

   $ 20,198  

Contractual Purchase Price for Series D Preferred Stock (per share)

   $ 5.20  

Weighted Average Series D Preferred Stock Price as of Valuation Date

   $ 5.08  

Risk-free Rate

     4.27 % 

Term (years)

     0.36  

Discount Factor

     0.9849  

Value of Forward Obligation (per share)

   $ (0.04 ) 

Number of Units subject to Purchase by Majority Sponsor

     3,885  

Value of Majority Sponsor Top-Up

   $ (170 ) 

During the year ended December 31, 2024, 0.2 million Warrants were issued. The fair value remeasurement of warrant liabilities resulted in an increase in fair value of $0.1 million and $0.1 million as of December 31, 2024 and 2023, respectively. No Warrants were exercised during the years ended December 31, 2024 and 2023.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

As of December 31, 2024, the fair value of the Series J Warrants, Common Warrants, and Tranche Obligations are $2.9 million, $1.2 million and $4.0 million, respectively. As of December 31, 2024, the carrying value of the Term Loan Facility approximates its estimated fair value.

 

     December 31, 2024  

Description

   Level 1      Level 2      Level 3      Total  

Assets

           

Cash

   $ 81,847      $ —       $ —       $ 81,847  

Restricted Cash

     14,127        —         —         14,127  

Money Market Account

     —         41,584        —         41,584  

Majority Sponsor Top-Up

     —         —         170        170  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

   $ 95,974      $ 41,584      $ 170      $ 137,728  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

           

Series J Warrants

   $ —       $ —       $ 2,850      $ 2,850  

Common Warrants

     —         —         1,220        1,220  

RPM Call Option

     —         —         4,159        4,159  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

   $ —       $ —       $ 8,229      $ 8,229  
  

 

 

    

 

 

    

 

 

    

 

 

 

As of December 31, 2023, the fair value of the Series J Warrants is $0.1 million. There were no Common Warrants or Tranche Obligations outstanding during the year ended December 31, 2023. As of December 31, 2023, the carrying value of the Term Loan Facility approximates its estimated fair value.

 

     December 31, 2023  

Description

   Level 1      Level 2      Level 3      Total  

Assets

           

Cash

   $ 7,948      $ —       $ —       $ 7,948  

Restricted Cash

     13,201        —         —         13,201  

Money Market Account

     —         73,997        —         73,997  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

   $ 21,149      $ 73,997      $ —       $ 95,146  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

           

Series J Warrants

   $ —       $ —       $ 991      $ 991  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

   $ —       $ —       $ 991      $ 991  
  

 

 

    

 

 

    

 

 

    

 

 

 

There were no transfers between levels within the fair value hierarchy during the periods presented.

10. Leases

The Company leases buildings, launch sites, office facilities, machinery, and computer equipment. The Company assesses whether an arrangement qualifies as a lease (i.e., conveys the right to control the use of an identified asset for a period of time in exchange for consideration) at inception and only reassesses its determination if the terms and conditions of the arrangement are changed. The Company recognizes ROU assets and lease liabilities on the balance sheet according to ASC 842, Leases. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets. Lease expense is recognized for these leases on a straight-line basis over the lease term.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 10 years or more. The Company includes renewal options that are reasonably certain to be exercised as part of the lease term. The exercise of lease renewal options is at the Company’s sole discretion. Certain leases also include options to purchase the leased property. The depreciable lives of assets and leasehold improvements are limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise. See Note 2. Summary of Significant Accounting Policies for the Company’s lease accounting policy.

On January 1, 2023, the Company evaluated the options to extend or renew its current operating and finance leases and determined that the Company would elect to exercise the option period for their operating leases resulting in a $10.1 million increase to the ROU asset and liability balances as of January 1, 2023 on a prospective basis in accordance with ASU 842.

The following table presents lease expense recognized during the years ended December 31, 2024 and 2023, respectively:

 

     2024      2023  

Lease expense

     

Finance lease expense:

     

Amortization of ROU assets

   $ 834      $ 560  

Interest on lease liabilities

     442        215  

Operating lease expense

     2,426        2,834  
  

 

 

    

 

 

 

Total lease expense

   $ 3,702      $ 3,609  
  

 

 

    

 

 

 

The operating lease for the primary office location expired on March 31, 2024. The Company is currently on a month-to-month lease and in negotiations with the existing landlord to renew the lease.

Operating and finance lease ROU assets and liabilities as of December 31, 2024 and 2023, respectively, were as follows:

 

     2024      2023  

Assets

     

Finance lease ROU assets

   $ 3,708      $ 3,912  

Operating lease ROU assets

   $ 14,604      $ 20,284  

Liabilities

     

Current

     

Finance lease liabilities

   $ 856      $ 695  

Operating lease liabilities

   $ 1,128      $ 1,159  

Noncurrent

     

Finance lease liabilities

   $ 1,996      $ 2,241  

Operating lease liabilities

   $ 16,466      $ 20,275  

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on information available at the commencement date in determining the present value of lease payments.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

Lease term and discount rate as of December 31, 2024 and 2023, respectively, were as follows:

 

     2024     2023  

Weighted-average remaining lease term (years):

    

Finance leases

     2.59       3.45  

Operating leases

     15.53       15.24  

Weighted-average discount rate:

    

Finance leases

     18.11 %      17.70 % 

Operating leases

     6.90 %      6.90 % 

The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under non-cancelable operating leases with terms of more than one year to the total operating and finance lease liabilities recognized on the consolidated balance sheets at December 31, 2024.

 

     Finance
Leases
     Operating
Leases
 

2025

   $ 1,238      $ 2,297  

2026

     1,084        2,351  

2027

     1,131        1,578  

2028

     82        1,440  

2029

     58        1,468  

Thereafter

     31        20,595  
  

 

 

    

 

 

 

Total lease payments

   $ 3,624      $ 29,729  

Less: Imputed interest

     (772 )       (12,134 ) 
  

 

 

    

 

 

 

Total lease liabilities

   $ 2,852      $ 17,595  
  

 

 

    

 

 

 

Failed Sale and Leaseback

The Company leases various equipment through Purchase/Leaseback Agreements with terms between 5 and 7 years. The Purchase/Leaseback Agreements provide a purchase option to the Company to purchase the equipment for nominal consideration that the Company is reasonably certain to exercise. The Purchase/Leaseback Agreements were evaluated under the sale and leaseback guidance in ASC 842-40. Due to the purchase option present, the transactions were accounted for as a failed sale and leaseback, and the Company has accounted for the Purchase/Leaseback Agreements as a financing.

As a result, the Company continues to reflect the manufacturing equipment on the consolidated balance sheets in property and equipment, net as if we were the legal owner, and we continue to recognize depreciation expense over their estimated useful lives. In 2024, the Company recorded an initial financing liability of $34.7 million, net of transaction costs. As of December 31, 2024, the Company recognized $5.5 million and $27.1 million in notes payable, current portion and notes payable, less current portion, respectively, in the consolidated balance sheets. The Company does not recognize rent expense related to the Purchase/Leaseback Agreements. Instead, periodic lease payments are recognized as interest expense and reduction of the principal balance of the finance liability. For the year ended December 31, 2024, payments of $2.5 million were made under the financing, and interest expense was $1.4 million. Prior to 2024, the Company did not have any financing liabilities recognized as a result of failed sale and leaseback transactions.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

As part of the Purchase/Leaseback Agreements, the Company is required to maintain a minimum cash balance of $22.5 million throughout the term of the financing.

11. Notes Payable and Warrants

Financing Agreement

On July 17, 2023 (the “Initial Closing Date”), the Company entered into a financing agreement (the “Financing Agreement”) among the Company, as the Borrower, certain subsidiaries of the Company (collectively, “Guarantors”), lenders (the “Lenders”) and U.S. Bank Trust Company, N.A. in its capacity as administrative agent and collateral agent for the Lenders (“Administrative Agent” and “Collateral Agent”, collectively, the “Agents”). The Financing Agreement provided term loan commitments (along with the incremental commitments from subsequent amendments from time to time, the “Term Loan Facility” and the term loans issued under the Term Loan Facility, the “Term Loans”) in the aggregate principal amount of $106.3 million, comprising approximately $82.5 million principal amount of Term A Loan (the “Initial Term A Loan”) and approximately $23.8 million principal amount of Term B Loan (the “Initial Term B Loan”, together with the Initial Term A Loan, the “Initial Term Loans”). The Company drew the full commitments of the Term Loan Facility on the Initial Closing Date. The Term Loan Facility matures on July 17, 2028 (the “Term Loan Maturity Date”).

All obligations under the Financing Agreement are guaranteed by the Company and Guarantors, comprised of all wholly owned domestic subsidiaries of the Company other than certain excluded subsidiaries, and are secured by substantially all of the Company’s assets.

As a closing condition of the Financing Agreement, the AON Insurance Policy (the “Policy”) was issued to the Administrative Agent on behalf of the Lenders for the period commencing on the Initial Closing Date to the Term Loan Maturity Date. The Policy will indemnify the Lenders (the “Insured Party”) up to $82.5 million comprised of the Initial Term A Loan for any loss incurred if the Company fails to pay the Term Loans when due. The Company paid the insurance premium for the Policy of approximately $12.5 million on the Initial Closing Date (the “Initial Premium”) using the proceeds from the Initial Term Loans. The Company is required to pay the second premium (the “Second Premium”) for the following 12 months within 30 days after the third anniversary of the Initial Closing Date, and the final premium (the “Final Premium”) for the following 12 months within 30 days after the fourth anniversary of the Initial Closing Date.

The Financing Agreement requires the Company to fund certain collateral accounts (the “Collateral Accounts”), which consist of an interest reserve account for the non-minority lender (the “Non-Minority Lender Interest Reserve Account”) and an interest reserve account for the minority lender (the “Minority Lender Interest Reserve Account”, together with the Non-Minority Lender Interest Reserve Account, the “Interest Reserve Accounts”) and an insurance premium reserve account (the “Insurance Premium Reserve Account”). On the Initial Closing Date, approximately $8.1 million was deposited into and held in the Non-Minority Lender Interest Reserve Account and approximately $1.3 million was deposited into and held in the Minority Lender Interest Reserve Account. Subsequently, the Company is required to ensure that the Interest Reserve Accounts carry an amount equal to at least 7.9% of the aggregate balance of the Term Loan Facility (the “Minimum Interest Reserve Amount”). Cash interests due each period shall be paid from available unrestricted cash when due and if not so paid in full on the interest payment date, the Administrative Agent shall pay such interest out of the Interest Reserve Accounts. Beginning on the first such date following 12-month anniversary of the Initial Closing Date and on the last business day of each fiscal quarter thereafter, an amount equal to $0.7 million (the “Quarterly Insurance Premium Deposit Amount”) shall be deposited by the Company into the Insurance Premium Reserve

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

Account. The Company is required to ensure that the Insurance Premium Reserve Account carries a sufficient balance to pay the Second Premium and Final Premium when due. The Company is also required to pay the insurer an exit fee (the “Exit Fee”) equal to the 0.75% of the principal amount of the Term A Loan on the Term Loan Maturity Date or when the loan is prepaid.

In addition to the Initial Premium paid and cash deposited in the Collateral Accounts, the Company also paid approximately $13.8 million in debt issuance costs, including both lender fees and third-party costs, using the proceeds of the Initial Term Loans.

The Term Loans bear fixed interest rates. The interest rate for the Term A Loan is 13.875% per annum from the Initial Closing Date to the Term Loan Maturity Date. The interest rate for the Term B Loan is 13.875% per annum from the Initial Closing Date to the third anniversary (i.e., July 17, 2026) and 19.135% per annum thereafter until the Term Loan Maturity Date. Interest is computed on the basis of a 360-day year for the actual number of days elapsed. Interest is payable monthly in cash and in arrears on the last business day of each calendar month commencing on the first such date to occur after the Initial Closing Date and continuing through the Term Loan Maturity Date (the “Interest Payment Date”). The Term Loans shall bear a default interest rate of 2% in excess of the applicable fixed rates upon the occurrence and during the continuance of an event of default.

Mandatory prepayments are required to be made upon the occurrence of certain events, including, without limitation, (i) certain asset sales, (ii) the net proceeds from the issuance of certain indebtedness, and (iii) the net proceeds from the extraordinary receipts. Voluntary prepayments are permitted in whole or in part at any time. All prepayments are subject to a specified premium (the “Specified Premium”) that applies for the first 24 months following the Initial Closing Date. The Specified Premium is calculated as the present value of the sum of the amounts of each interest payment due on the prepaid portion of such Term Loans on each Interest Payment Date during the period from the date such prepayment or repayment becomes due through and including the date that is 24 months following the Initial Closing Date computed using a discount rate equal to the treasury rate on the date one business day prior to the date of prepayment plus 0.5%.

The Financing Agreement contains certain covenants including a requirement for a minimum cash balance, financial covenants, and negative covenants customary for transactions of this type, including limitations with respect to indebtedness, liens, no further negative pledges, restricted junior payments and distributions, investments, dividends, disposition of assets, fundamental changes, sales and lease backs, transactions with affiliates, change to certain agreements and organizational document, deposit accounts and securities accounts, prepayments of certain indebtedness and specific negative covenant to the Interest Reserve Accounts to maintain the Minimum Interest Reserve Amount.

The debt issuance costs, including the Initial Premium paid, estimated Second Premium and Final Premium, Exit Fee and discount created by allocating proceeds to the fair value of the Series J Warrants issued in connection with the issuance of the Initial Term Loans (see below “Warrants to purchase Series J Preferred Stock” for details), are deferred and amortized to interest expense over the contractual term of the Term Loans using effective interest method. The effective interest rate upon the issuance of the Initial Term Loans was approximately 24.1%.

First Amended and Restated Financing Agreement

On December 6, 2023 (the “Second Closing Date”), the Company entered into the first amended and restated financing agreement (the “First Amendment”) with the Guarantors, Lenders, and Agents. The First Amendment

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

provided incremental term loan commitments in the aggregate principal amount of $15.9 million, comprising of approximately $8.5 million principal amount of Term A Loan (the “Second Term A Loan”) and $7.4 million principal amount of Term B Loan (the “Second Term B Loan”, together with the Second Term A Loan, the “Second Term Loans”). The Company drew the full commitments of the Second Term Loans on the Second Closing Date. The First Amendment did not modify any terms of the Term Loan Facility.

All obligations under the First Amendment continued to be guaranteed by the Company and Guarantors and are secured by substantially all of the Company’s assets. The Policy was amended and restated in connection with the First Amendment (the “First Amended Policy”) to provide indemnification to the Lenders up to the $91.0 million comprised of the Term A Loan for any loss incurred if the Company fails to pay the Term Loans when due. The Company paid an additional insurance premium of approximately $1.2 million on the Second Closing Date (the “First Amendment Additional Initial Premium”) for the incremental coverage provided by the First Amended Policy using the proceeds of the Second Term Loans.

On the Second Closing Date, approximately $0.8 million was deposited into and held in the Non-Minority Lender Interest Reserve Account (as an addition to the $8.1 million deposited on the Initial Closing Date) and $0.6 million was deposited into and held in the Minority Lender Interest Reserve Account (as an addition to the approximately $1.3 million deposited on the Initial Closing Date) corresponding to the Second Term Loans provided. The Quarterly Insurance Premium Deposit Amount was increased to approximately $0.8 million each quarter in line with the increased insurance coverage under the First Amended Policy.

In addition to the First Amendment Additional Initial Premium paid and additional cash deposited in the Interest Reserve Accounts, the Company also paid approximately $2.8 million of debt issuance costs, including both lender fees and third-party costs, using the proceeds of the Second Term Loans.

The Company concluded that the First Amendment did not result in a troubled debt restructuring and should be accounted for as a debt modification. As a result, the third-party costs incurred are expensed immediately. The newly incurred lender fees, including the First Amendment Additional Initial Premium paid, additional estimated Second Premium and Final Premium, and additional Exit Fee and the discount created by allocation of proceeds to fair value of the Series J Warrants issued in connection with the issuance of the Second Term Loans (see below “Warrants to purchase Series J Preferred Stock” for details), along with the previously deferred and unamortized issuance costs of the Term Loans prior to the First Amendment, are deferred and amortized them over the remaining contractual term of the Term Loans using the effective interest method. The effective interest rate upon the issuance of the Second Term Loans was approximately 23.6%.

Second Amended and Restated Financing Agreement

On May 20, 2024 (the “Third Closing Date”), the Company entered into a second amended and restated financing agreement (the “Second Amendment”) with the Guarantors, Lenders, and Agents. The Second Amendment provided incremental term loan commitments in the aggregate principal amount of $13.9 million, comprising approximately $12.5 million principal amount of Term A Loan (the “Third Term A Loan”) and $1.4 million principal amount of Term B Loan (the “Third Term B Loan”, together with the Third Term A Loan, the “Third Term Loans”) and modified the existing terms of the Term Loan Facility to extend the period of the application of the Specified Premium from 24 months following the Initial Closing Date to 30 months following the Initial Closing Date and added a new mandatory prepayment feature, which would be triggered by a certain sale and leaseback transaction. The Second Amendment did not modify the Term Loan Maturity Date, interest rate, Interest Payment Date, default interest and financial and negative covenants of the Term Loan Facility.

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

All obligations under the Second Amendment continued to be guaranteed by the Company and Guarantors and are secured by substantially all of the Company’s assets. The Policy was amended and restated with the Second Amendment (the “Second Amended Policy”) to provide indemnification to the Lenders up to the $103.5 million comprised of the Term A Loan for any loss incurred if the Company fails to pay the Term Loans when due. The Company paid an additional insurance premium of approximately $1.2 million on the Third Closing Date (the “Second Amendment Additional Initial Premium”) for the incremental coverage provided by the Second Amended Policy using the proceeds of the Third Term Loans.

On the Third Closing Date, approximately $1.2 million was deposited into and held in the Non-Minority Lender Interest Reserve Account (as an addition to the $8.1 million deposited on the Initial Closing Date and $0.8 million deposited on the Second Closing Date) corresponding to the Third Term Loans provided. The Quarterly Insurance Premium Deposit Amount was increased to $0.9 million each quarter in line with the increased insurance coverage under the Second Amended Policy.

In addition to the Second Amendment Additional Initial Premium paid and additional cash deposited in the Collateral Accounts, the Company also paid approximately $1.7 million of debt issuance costs, including lender fees of approximately $0.2 million and third-party costs of approximately $1.5 million, using the proceeds of the Third Term Loans. The remaining proceeds are for working capital and general corporate purposes.

The Company concluded that the Second Amendment did not result in a troubled debt restructuring and should be accounted for as a debt modification. As a result, the third-party costs incurred were expensed immediately. The newly incurred lender fees, including the Second Amendment Additional Initial Premium paid, additional estimated Second Premium and Final Premium, and additional Exit Fee and the discount created by allocation of proceeds to fair value of the Series J Warrants issued in connection with the issuance of the Third Term Loans (see below “Warrants to purchase Series J Preferred Stock” for details), along with the previously deferred and unamortized issuance costs of the Term Loans prior to the Second Amendment, were deferred and will be amortized over the remaining contractual term of the Term Loans using the effective interest method. The effective interest rate upon the issuance of the Third Term Loans was approximately 23.5%.

Waiver and Amendment to the Second Amended and Restated Financing Agreement

On May 31, 2024 (the “Third Amendment Effective Date”), the Company entered into the first amendment and waiver under the second amended and restated financing agreement (the “Third Amendment”) with the Guarantors, Lenders, and Agents. The third amendment was entered into in connection with the occurrence of an event of default as a result of the Company’s failure to satisfy a covenant under the Second Amendment to maintain a minimum cash balance in certain qualified deposit accounts beginning on May 31, 2024, to put in place of certain control agreement and to deliver a certificate describing the nature of events of default occurred. The Third Amendment was entered into for the Lenders to waive the event of default and make certain amendments to the existing terms of the Term Loans under the Second Amendment.

The Third Amendment did not provide any incremental term loan commitment and did not modify the Term Loan Maturity Date, interest rate, Interest Payment Date of the Term Loan. All obligations under the Second Amendment continued to be guaranteed by the Company and Guarantors and are secured by substantially all of the Company’s assets.

The Third Amendment modified the existing terms of the Term Loans to extend the period of the application of the Specified Premium from 30 months following the Initial Closing Date to 32 months following the Initial

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

Closing Date and removed a mandatory prepayment event trigger, a certain sale and leaseback transaction. The Third Amendment also modified certain covenants of the Financing Agreement.

The Third Amendment required the Company to pay in cash all unpaid interest accruing at the default interest rate on the Term Loans incurred since May 31, 2024, due to the event of default. In addition, the Third Amendment required the Company to pay Jefferies an amendment payment of $1.2 million (the “Amendment Lender Fee”), 50% of which shall be due and payable upon the Company’s completion of a successful capital raise in an aggregate amount of $250.0 million and the remaining 50% of which shall be due and payable on the Term Loan Maturity Date. The Amendment Lender Fee shall accrue interest at the same rate as the Term B Loan and the interests accrued are payable upon the same terms as the interest with respect to the Term B Loan. The Company paid the first 50% of the Amendment Lender Fee and associated accrued interest on March 7, 2025.

In addition to the Amendment Lender Fee, the Company also paid third-party costs of approximately $0.4 million in relation to the Third Amendment.

The Company concluded that the Third Amendment did not result in a troubled debt restructuring and should be accounted for as a debt modification. As a result, the third-party costs incurred are expensed immediately. The newly incurred lender fees, including the Amendment Lender Fee, along with the previously deferred and unamortized issuance costs of the Term Loans prior to the Third Amendment, are deferred and amortized over the remaining contractual term of the Term Loans using the effective interest method. The effective interest rate upon the execution of the Third Amendment on August 13, 2024 through December 31, 2024 was approximately 23.8%.

Term Loans

The following table presents the net carrying amount of the Term Loans as of December 31, 2024:

 

     Principal
Amount
Outstanding
     Unamortized
Debt Issuance
Costs
     Net Carrying
Amount
 

Term A Loan

   $ 103,500      $ 17,611      $ 85,889  

Term B Loan

     32,617        5,550        27,067  
  

 

 

    

 

 

    

 

 

 

Total

   $ 136,117      $ 23,161      $ 112,956  
  

 

 

    

 

 

    

 

 

 

Interest expense recognized related to the Term Loans was as follows for the year ended December 31, 2024:

 

Contractual interest expense

   $ 19,068  

Amortization of debt issuance costs

     6,173  
  

 

 

 

Total interest expense

   $ 25,241  
  

 

 

 

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

The following table presents the net carrying amount of the Term Loans as of December 31, 2023:

 

     Principal
Amount
Outstanding
     Unamortized
Debt Issuance
Costs
     Net Carrying
Amount
 

Term A Loan

   $ 91,000      $ 21,602      $ 69,399  

Term B Loan

     31,228        7,413        23,815  
  

 

 

    

 

 

    

 

 

 

Total

   $ 122,228      $ 29,015      $ 93,214  
  

 

 

    

 

 

    

 

 

 

Interest expense recognized related to the Term Loans was as follows for the year ended December 31, 2023:

 

Contractual interest expense

   $ 6,995  

Amortization of debt issuance costs

     2,155  
  

 

 

 

Total interest expense

   $ 9,150  
  

 

 

 

The following table summarizes the principal payments required for the Term Loans in each of the next five years and thereafter:

 

2025

   $ —   

2026

     —   

2027

     —   

2028

     136,117  

2029

     —   

Thereafter

     —   
  

 

 

 

Total

   $ 136,117  
  

 

 

 

Warrants to Purchase Series J Preferred Stock

On July 17, 2023, in connection with the execution of the Financing Agreement and issuance of the Initial Term Loans, the Company issued to the Lenders detachable Series J Warrants to purchase 1.6 million shares of Series J Preferred Stock with a ten-year term and exercise price of $6.5058 per share (subject to adjustment). The Series J Warrants are classified as liabilities as they embody an obligation to repurchase the Company’s equity given the underlying Series J Preferred Stock could be redeemed based on events not within the Company’s control. The Series J Warrants are measured at fair value both initially and subsequently with changes in fair value recognized through earnings. The fair value of the Series J Warrants issued on the Initial Closing Date was approximately $0.8 million upon issuance, which created a debt discount on the Initial Term Loans to be amortized over the contractual term of the Term Loans using the effective interest method.

On December 27, 2023, in connection with the execution of the First Amendment and the issuance of the Second Term Loans, the Company issued additional detachable Series J Warrants, which have identical terms as the Series J Warrants issued on the Initial Closing Date, to purchase 0.2 million shares of Series J Preferred Stock. The fair value of the Series J Warrants issued on the Second Closing Date was approximately $0.2 million upon issuance. The accounting for the Series J Warrants issued on the Second Closing Date is consistent with the Series J Warrants issued on the Initial Closing Date.

On May 20, 2024, concurrently with the execution of the Second Amendment and the issuance of the Third Term Loans, the Company issued additional detachable Series J Warrants, which have identical terms as the Series J

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

Warrants issued on the Initial Closing Date and Second Closing Date, to purchase 0.2 million shares of Series J Preferred Stock. The fair value of the Series J Warrants issued on the Third Closing Date is approximately $0.1 million upon issuance. The accounting for the Series J Warrants issued on the Third Closing Date is consistent with the Series J Warrants issued on the Initial Closing Date and Second Closing Date.

The fair value of the Series J Warrants, in an aggregate, is approximately $2.9 million and $1.0 million as of December 31, 2024 and 2023, respectively.

Convertible Notes

On August 13, 2024, the Company issued $25.0 million subordinated convertible promissory notes (“Convertible Notes”) to AE Industrial as the lender. The Convertible Notes accrued 15% interest per annum payable at maturity or upon early prepayment and had an original maturity date of August 18, 2028. The Convertible Notes were subordinated to all other senior indebtedness of the Company.

Pursuant to the terms of the Convertible Notes, the outstanding principal and accrued interest of the Convertible Notes will automatically share settle into the same preferred stock that is issued to investors at the closing of a qualified financing event at the same price that is issued to investors. A qualified financing event is a transaction in which the Company sells and issues new preferred shares to investors other than AE Industrial or its Affiliates.

In the event that there is a consolidation, or merger of the Company where there is a change of control or a sale, lease or other disposition of all or substantially all of the assets of the Company (“Sale”) prior to a qualified financing event, the Company will be required to redeem the Convertible Notes for cash equal to the greater of the outstanding principal plus accrued interest or the amount the lender would have received if the entire outstanding principal amount and all accrued and unpaid interest on the Convertible Notes had been converted into Series C-1 Preferred Stock at the Series C-1 Conversion Price immediately prior to, but contingent upon, the closing of such event.

If neither a qualified financing event or a Sale event occurs prior to the maturity date, the outstanding principal and accrued interest of the Convertible Notes will automatically convert into approximately 8.1 million shares of the Series C-1 Preferred Stock at a conversion price equal to the original issue price of the Series C Preferred Stock ($4.9361 per share, subject to adjustments). Series C-1 Preferred Stock will have the same terms as the Series C Preferred Stock. The outstanding principal and accrued interest of the Convertible Notes may be accelerated by the lender upon the occurrence and continuation of an event of default as defined in the Convertible Notes agreement.

The Company elected the fair value option to account for the Convertible Notes. As a result, the Convertible Notes were initially measured at fair value, which is determined to be equal to the issuance proceeds. The Company expensed incurred debt issuance costs.

Pursuant to the terms of the Convertible Notes, the outstanding principal and accrued interest of the Convertible Notes were automatically share settled when the Company closed on the Series D Preferred Stock financing on October 31, 2024, which was considered a qualified financing event and therefore, the entire outstanding principal of $25.0 million and accrued interest of approximately $0.8 million contractually converted into approximately 5.0 million shares of Series D-1 Preferred Stock. The fair value of the Convertible Notes at settlement was equal to the fair value of the Series D-1 Preferred Stock issued and such fair value was equal to the principal and accrued unpaid interest on the Convertible Notes. Therefore, there was no fair value adjustment

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

needed for the Convertible Notes at settlement. Such settlement was accounted for as a debt extinguishment transaction with no gain or loss being recognized as the reacquisition price is equal to the carrying amount of the Convertible Notes. Refer to Note 13. Stockholders’ Deficit and Redeemable Convertible Preferred Stock for further detail on the Series D-1 Preferred Stock.

12. Commitments and Contingencies

Contingencies

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business activities. The Company will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of a possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred.

The Company does not believe that any such matters, individually or in the aggregate, will have a materially adverse effect on the Company’s consolidated financial condition, results of operations, or cash flows.

The Company recognized approximately $19.5 million in contingent liabilities related to Spaceflight contracts as of December 31, 2024, which is included in other liabilities, less current portion in the consolidated balance sheet.

13. Stockholders’ Deficit and Redeemable Convertible Preferred Stock

Common Stock

In October 2024, the Company amended its Amended and Restated Certificate of Incorporation to increase the number of authorized shares to approximately 502.5 million shares of $0.0001 par value common stock.

The holders of common stock are entitled to dividends when and if declared by the Board. There have been no dividends declared to date. The holder of each common stock is entitled to one vote.

Redeemable Convertible Preferred Stock

On February 2, 2023, the Company entered into the Series C Purchase Agreement and on the same date, issued approximately 6.1 million shares of Series C Preferred Stock at $4.9361 per share (the “Series C Per Share Price”) for aggregate gross proceeds of approximately $30.2 million (the “Series C Initial Closing”). On March 27, 2023, the Company completed a subsequent closing (the “Series C Second Closing”) and sold an additional approximate 13.4 million shares of Series C Preferred Stock at the Series C Per Share Price for aggregate gross proceeds of approximately $66.1 million, including cash proceeds of approximately $65.3 million and a prepaid purchase credit of approximately $0.8 million to offset future payments for the Company’s purchase of hardware from one of the Company’s suppliers. On June 13, 2023, the Company completed another subsequent closing (the “Series C Third Closing”) and sold an additional approximate 12.5 million shares of Series C Preferred Stock at the Series C Per Share Price for aggregate gross proceeds of approximately $61.9 million.

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

On June 8, 2023, in connection with the Company’s acquisition of Spaceflight, the Company issued approximately 8.9 million shares of Series M Preferred Stock. Refer to Note 6. Acquisitions for further detail.

On June 14, 2023, the Company authorized the issuance of 2.1 million shares of the Series J Preferred Stock in connection with the execution of the Financing Agreement and issuance of the Series J Warrants. Refer to Note 11. Notes Payable and Warrants for further detail. There was no Series J Preferred Stock issued and outstanding as of the years ended December 31, 2024 and December 31, 2023.

On January 12, 2024, the Company completed a subsequent closing (the “Series C Fourth Closing”) and sold an additional approximate 4.3 million shares of Series C Preferred Stock at Series C Per Share Price for aggregate gross proceeds of $21.0 million, including cash proceeds of $20.0 million and a prepaid purchase credit of $1.0 million to offset future payments for the Company’s purchase of hardware from one of the Company’s suppliers.

On February 15, 2024, the Company issued 0.2 million shares of Series M Preferred Stock at $4.9361 per share to one of the Company’s service providers as settlement for approximately $1.1 million of existing payables owed by the Company to the service provider. On March 11, 2024, the Company issued 19.5 shares of Series M Preferred Stock at $4.9361 per share to another one of the Company’s service providers as settlement for approximately $0.1 million of existing payables owed by the Company to the service provider.

On October 31, 2024, the Company entered into the Series D Purchase Agreement and on the same date issued approximately 34.0 million shares of Series D-1 Preferred Stock at a purchase price of $5.1995 per share (the “Series D Per Share Price”) for aggregate gross proceeds of approximately $175.5 million (the “Series D Initial Closing”), including $25.8 million principal and accrued interests from the conversion of the Convertible Notes (refer to Note 11. Notes Payable and Warrants for further detail). On November 15, 2024, the Company completed a subsequent closing (the “Series D Second Closing”) and sold an additional approximate 0.2 million shares of Series D-1 Preferred Stock at the Series D Per Share Price for aggregate gross proceeds of $1.3 million.

As of December 31, 2024 and 2023, the Company’s redeemable convertible preferred stock (collectively, the “Preferred Stock”) consisted of the following :

 

            2024  
     Par Value      Authorized
Shares
     Shares
Issued and
Outstanding
     Carrying
Amount
 

Series Seed Preferred Stock

   $ 0.0001        6,583        6,583      $ 2,950  

Series Seed-1 Preferred Stock

   $ 0.0001        10,651        10,651        204,454  

Series A Preferred Stock

   $ 0.0001        19,544        19,544        74,913  

Series B Preferred Stock

   $ 0.0001        19,100        19,100        72,096  

Series C Preferred Stock

   $ 0.0001        36,316        36,316        213,871  

Series M Preferred Stock

   $ 0.0001        9,153        9,153        10,990  

Series J Preferred Stock

   $ 0.0001        3,000        —         —   

Series D-1 Preferred Stock

   $ 0.0001        57,698        33,999        180,308  

Series D-2 Preferred Stock

   $ 0.0001        4,039        —         —   
     

 

 

    

 

 

    

 

 

 

Total authorized

        166,084        135,346      $ 759,582  
     

 

 

    

 

 

    

 

 

 

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

            2023  
     Par Value      Authorized
Shares
     Shares
Issued and
Outstanding
     Carrying
Amount
 

Series Seed Preferred Stock

   $ 0.0001        6,583        6,583      $ 2,950  

Series Seed-1 Preferred Stock

   $ 0.0001        10,651        10,651        204,454  

Series A Preferred Stock

   $ 0.0001        19,544        19,544        74,913  

Series B Preferred Stock

   $ 0.0001        19,100        19,100        72,096  

Series C Preferred Stock

   $ 0.0001        60,777        32,062        171,647  

Series M Preferred Stock

   $ 0.0001        11,142        8,912        9,804  

Series J Preferred Stock

   $ 0.0001        2,100        —         —   
     

 

 

    

 

 

    

 

 

 

Total authorized

        129,897        96,852      $ 535,864  
     

 

 

    

 

 

    

 

 

 

Significant rights, preference, and privileges of the Preferred Stock prior to its conversion into Common Stock are as follows:

Liquidation Preference

Upon a liquidation, dissolution or winding up of the Company or any deemed liquidation event, out of the funds and assets of the Company available for distribution to its stockholders and in the order of the Series D Preferred Stock, Series C Preferred Stock, Series J Preferred Stock, Series B Preferred Stock, Series A Preferred Stock, Series Seed-1 Preferred Stock, Series Seed Preferred Stock and Series M Preferred Stock, each holder of the Series D Preferred Stock, Series C Preferred Stock and Series B Preferred Stock will be entitled to receive an amount in cash equal to two times the original issue price for such shares plus accrued but unpaid dividends; each holder of the Series A Preferred Stock will be entitled to receive an amount in cash equal to one and a half times the original issue price for such shares plus any declared but unpaid dividends; each holder of the Series Seed Preferred Stock and Series Seed-1 Preferred Stock will be entitled to receive an amount in cash equal to the deemed issue price for such shares plus accrued but unpaid dividends; and each holder of the Series J Preferred Stock and Series M Preferred Stock will be entitled to receive an amount in cash equal to the original issue price for such shares plus accrued but unpaid dividends. The deemed issue price of the Series Seed Preferred Stock and Series Seed-1 Preferred Stock is $0.448318 per share and $19.196004 per share, respectively. The original issue price of the Series Seed Preferred Stock, Series Seed-1 Preferred Stock, Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series M Preferred Stock, and Series J Preferred Stock is $0.03935 per share, $1.9196004 per share, $3.8375 per share, $3.9267 per share, $4.9361 per share, $5.1995 per share, $4.9361 per share, and $4.9361 per share, respectively. As of December 31, 2024, the liquidation preference of the Series Seed Preferred Stock, Series Seed-1 Preferred Stock, Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series M Preferred Stock, and Series J Preferred Stock is $3.0 million, $204.5 million, $112.5 million, $150.0 million, $358.4 million, $353.6 million, $45.2 million, $0.0 million, respectively.

Dividends

Out of assets of the Company legally available for dividends and in the same order as the order of the liquidation preference of each series of the Preferred Stock, except that the Series Seed-1 Preferred Stock and Series Seed Preferred Stock shall have the same priority in any dividend distribution, each holder of the Series D Preferred Stock and Series C Preferred Stock is entitled to receive dividends accruing on a daily basis, whether or not declared by the Company, at the annual non-compounding rate of 12% of the original issue price per share; each

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

holder of the Series Seed-1 Preferred Stock and Series Seed Preferred Stock is entitled to receive non-cumulative and non-accruing dividends at the annual 8% of the applicable deemed issue price per share; and each holder of the remaining series of the Preferred Stock is entitled to receive non-cumulative and non-accruing dividends at the annual 8% of the applicable original issue price per share. The dividends for Preferred Stock are payable when and if declared by the Company. After payment of the above dividends, any additional dividends would be distributed among all holders of the Preferred Stock and Common Stock according to the number of Common Stock that would be held by each holder of the Preferred Stock if all their shares were converted into Common Stock at the then applicable conversion rate. No dividends have been declared or paid by the Company on the Preferred Stock as of December 31, 2024.

Voting Rights

Each holder of the Preferred Stock, except for the holder of the Series D-1 Preferred Stock, is entitled to the number of votes equal to the number of whole shares of Common Stock into which the shares of the Preferred Stock held by such holder could be converted as of the record date on any matter presented to the Company’s stockholders for their action or consideration at any meeting. Additionally, if the Glow Investors, an affiliate of AE Industrial and its permitted transferees, hold less than 50.1% of the votes represented by all outstanding shares of the Company’s equity as a result of certain stock options, the number of votes then held by the Glow Investors shall be automatically adjusted such that the Glow Investors hold in the aggregate 50.1% of the votes represented by all outstanding shares of the Company’s equity.

Conversion Rights

Optional Conversion

Each share of the Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance and from time to time, into such number of fully paid and nonassessable shares of Common Stock determined by, for the Preferred Stock other than the Series Seed Preferred Stock and Series Seed-1 Preferred Stock, dividing the original issue price for the relevant series of the Preferred Stock by the conversion price in effect for such series of the Preferred Stock, and for the Series Seed Preferred Stock and Series Seed-1 Preferred Stock, dividing the deemed issue price by the conversion price in effect. The conversion price of each series of the Preferred Stock is initially equal to the original issue price of such series of the Preferred Stock (subject to adjustments). Each share of the Series D-2 Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance and from time to time, into one share of the Series D-1 Preferred Stock. As of December 31, 2024, none of the Preferred Stock have been converted into Common Stock.

Mandatory Conversion

Upon either (a) the closing of the sale of shares of Common Stock to the public in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $500.0 million of gross proceeds to the Company and such offering results in an offering price per share equal to at least two times the original issue price of the Series D preferred stock (a “Qualified IPO”), (b) an acquisition, merger or other business combination between the Company and (1) a special purpose acquisition company, (2) a blank check company, (3) any similar development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company, or (4) any subsidiary or affiliate of any of the entities identified in

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

clauses (1)-(3), resulting in at least $500.0 million of gross proceeds to the Company and such transaction implies a valuation per share of at least two times the original issue price for shares of the Series D Preferred Stock (a “SPAC transaction”), or (c) the date and time, or the occurrence of an event, specified by vote or written consent of the (i) holders of at least a majority of the outstanding shares of the Preferred Stock at the time of such vote or consent, voting as a single class on an as-converted basis, (ii) the holders of at least a majority of the outstanding shares of the Series C preferred stock at the time of such vote or consent, and (iii) the holders of at least a majority of the outstanding shares of the Series D preferred stock at the time of such vote or consent including the affirmative vote of the RPM Investor so long as the RPM Investor continues to own beneficially and of record an aggregate of at least 75% of the shares of the Series D Preferred Stock (the “Requisite Series D Preferred Approval”), then all outstanding shares of the Preferred Stock will automatically convert into fully-paid, non-assessable shares of Common Stock at the then-effective conversion rate for such share. The conversion prices and rates for each series of the Preferred Stock are the same in the event of a mandatory conversion as they would be in the event of an optional conversion.

Redemption

Shares of the Series D Preferred Stock shall be redeemed by the Company at a price equal to one times the original issue price of such Series D Preferred Stock per share plus all the accrued but unpaid dividends thereon and any other declared but unpaid dividends thereon (the “Series D Redemption Price”), in each case, in three annual installments commencing not more than one-hundred eighty days after receipt by the Company at any time on or after the fifth annual anniversary of the original issue date of the Series D Preferred Stock from the Requisite Series D Preferred Approval with respect to the Series D Redemption Right of written notice requesting redemption of all shares of the Series D Preferred Stock (the “Series D Redemption Right”). On each redemption date, the Company shall redeem pro rata in accordance with the number of shares of Series D Preferred Stock owned by each holder, that number of outstanding shares of Series D Preferred Stock determined by dividing (i) the total number of shares of Series D Preferred Stock outstanding immediately prior to such redemption date by (ii) the number of remaining redemption dates (including the redemption date to which such calculation applies). Subject to the prior satisfaction of any Series D Redemption Right as applicable, shares of the Series C Preferred Stock shall be entitled to the same redemption right (Series C Redemption Right”) as the Series D Preferred Stock at any time on or after the fifth annual anniversary of the original issue date of the Series D Preferred Stock.

The Preferred Stock is classified as mezzanine (or temporary) equity as the Preferred Stock is redeemable in the event of a deemed liquidation event, which is not within the Company’s control as the Company’s Board is controlled by the holders of the Preferred Stock and the Series D Preferred Stock and Series C Preferred Stock are also redeemable at the holder’s option after the fifth anniversary of the original issuance of the Series D Preferred Stock.

The Company accretes the Series D Preferred Stock and Series C Preferred Stock to their redemption value at each reporting date, which equals to their original issue price plus the accrued but unpaid dividends, as they are probable of becoming redeemable under the redemption option at the holder’s option. The Company recognizes the changes in redemption in the redemption value immediately as they occur and adjusts the carrying value to equal to the current maximum redemption value at the end of each reporting period. During the year ended December 31, 2024, the Company recorded accretion of $13.5 million and $21.2 million related to the Series D Preferred Stock and Series C Preferred Stock, respectively. During the year ended December 31, 2023, the Company recorded accretion of $20.8 million related to the Series C Preferred Stock. The accretion was recorded as adjustments to the additional paid-in capital in the consolidated balance sheets as of each year end. The

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

Company recognized all other series of the Preferred Stock at their issuance price, net of issuance costs, and is not currently remeasuring these Preferred Stock as they are neither currently redeemable nor probable of becoming redeemable.

Warrants to purchase Common Stock

In connection with the issuance of the Series D-1 Preferred Stock, the Company issued investors detachable Common Warrants to purchase an aggregate of approximately 3.4 million shares of Common Stock with a ten-year term and exercise price of $0.28 per share (subject to adjustment). The Common Warrants are classified as derivative liabilities as they contain a change of control provision that may result in the holders receiving a settlement amount exceeding the fair value of the Common Warrants at the time of settlement and such provision may also result in the Common Warrants being redeemed outside of the Company’s control. The Common Warrants are measured at fair value both initially and subsequently with changes in fair value recognized through earnings. The fair value of the Common Warrants was approximately $1.3 million upon issuances, which created a discount on the Series D-1 Preferred Stock and this discount was accreted to the redemption value of the Series D-1 Preferred Stock as part of the subsequent remeasurement of the Series D-1 Preferred Stock. The fair value of the Common Warrants is approximately $1.2 million as of December 31, 2024.

Tranche Obligations

At the time of the Series D Initial Closing, the Company and the RPM Investor, one of the investors of the Series D-1 Preferred Stock and its affiliates, agreed that, at the final closing of the Series D Preferred Stock no later than May 8, 2025, the RPM Investor shall have the option but not obligation to purchase up to approximately 5.9 million shares of Series D-1 Preferred Stock at the Series D Per Share Price (the “RPM Call Option”). On November 15, 2024, in connection with the Series D Second Closing, the number of the shares under the RPM Call Option was amended to approximately 6.0 million shares. In addition, at the time of the Series D Initial Closing, the Company and Majority Sponsor, an affiliate of AE Industrial and its permitted transferees or affiliates, agreed that, if the total amount of the Series D Preferred Stock purchased is less than $250.0 million within six months of the Series D Initial Closing, the Majority Sponsor will purchase additional Series D Preferred Stock to make their total investment equal to $125.0 million (the “Majority Sponsor Top-Up”). The Tranche Obligations are classified as assets and liabilities as they embody an obligation to repurchase the Company’s equity given the underlying Series D-1 Preferred Stock could be redeemed based on events not within the Company’s control. The Tranche Obligations are measured at fair value both initially and subsequently with changes in fair value recognized through earnings. The fair value of the RPM Call Option and the Majority Sponsor Top-Up was approximately $4.2 million and $(0.2) million, respectively, as of December 31, 2024. Upon issuance, the aggregate value of these Tranche Obligations created a discount on the Series D-1 Preferred Stock and this discount was accreted to the redemption value of the Series D-1 Preferred Stock as part of the subsequent remeasurement of the Series D-1 Preferred Stock.

14. Stock-Based Compensation

Stock-Based Compensation

In October 2017, the Company adopted and approved the 2017 Stock Plan (the “Plan”) under which 10.0 million shares of the Company’s common stock were originally reserved for issuance to employees, directors, and consultants. Since inception of the Plan, the Company has periodically amended the Plan to increase the number of reserved shares. In 2023, the Company twice amended the Plan to increase the number of reserved shares to a total of approximately 87.0 million shares. In 2024, the Company twice amended the Plan to increase the number

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

of reserved shares by an additional total 36.9 million shares for a total of approximately 123.9 million shares. Under the Plan, the Company may grant stock options, restricted stock awards, and restricted stock units. Options granted under the Plan may be either incentive stock options (“ISOs”) or non-qualified stock options (“NSOs”). ISOs may be granted only to Company employees (including officers and directors). Awards granted under the Plan generally vest based on service over various periods ranging from immediately to five years. Certain performance-based awards vest upon the occurrence of a qualified liquidity event (including a change in control or IPO), while some awards may accelerate vesting upon such an event. Options expire as determined by the Board but not more than ten years after the date of grant, unless the holder of an ISO owns more than 10% of the voting power in the Company, in which case the term cannot exceed five years. The Company had approximately 31.4 million and 3.0 million shares of common stock available for issuance under the Plan, as of December 31, 2024 and 2023, respectively.

In 2024, the Company established a Performance-Based Incentive Compensation Plan (the “Incentive Plan”) that allows for the issuance of stock options, restricted stock awards, restricted stock units, and cash incentives to employees, directors, and consultants. The stock based awards granted under the Incentive Plan are governed in accordance with the Plan. The Incentive Plan also includes cash incentive opportunities tied to the achievement of specific performance goals.

Stock Options

Activity under the Plan is set forth below:

 

     Outstanding Options  
     Shares
Available for
Grant
     Number of
Shares
Outstanding
     Weighted-
Average
Exercise Price
     Weighted-
Average
Remaining
Contractual
Term
 

Balance, January 1, 2024

     3,049        46,195      $ 0.28        8.10  

2017 Options Plan Pool amended

     36,910        —         —         —   

Options granted

     (12,542 )       12,542        0.27        —   

Options exercised

     —         (2,705 )       0.22        —   

Options cancelled

     3,963        (3,963 )       0.26        —   
  

 

 

    

 

 

       

Balance, December 31, 2024

     31,380        52,069        0.28        7.60  
  

 

 

    

 

 

       

Vested and expected to vest

     —         40,789        0.28        7.25  

Exercisable

     —         24,945        0.29        6.62  

Compensation cost for employee stock-based awards is based on the estimated grant date fair value and is recognized over the vesting period of the applicable award on a straight-line basis for service-based awards with graded vesting. Included in the options granted during 2024 are 7.3 million options where, assuming continued employment of the grantee, a portion of the vesting is accelerated in the event of both a liquidity event and the achievement of certain market criteria, as defined by the option agreement. For performance-based stock options with a vesting schedule based entirely on the attainment of both performance and market conditions, stock-based compensation expense is recognized for each pair of performance and market conditions over the longer of the expected achievement period of the performance and market conditions, beginning at the point in time that the relevant performance condition is considered probable of achievement. The Company records compensation cost for these options under a lattice model considering the market condition and the imputed service period for these awards, however the expense for the current period was immaterial.

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

The Company uses the Black-Scholes option pricing model to determine the fair value of stock options. The determination of the fair value of stock-based payment awards on the date of grant is affected by the stock price as well as assumptions regarding several complex and subjective variables. These variables include expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rates, and expected dividends. As the Company’s common stock has not been publicly traded, the estimated the fair value of the Company’s common stock was determined considering several objective and subjective factors, including contemporaneous valuations of its common stock periodically prepared by an independent valuation firm. The Company assessed the potential impact of material nonpublic information on the share price or expected volatility, as applicable, at the time of grant, and determined no awards required a fair value adjustment.

Expected Term

The expected term represents the period that the stock-based awards are expected to be outstanding. The option grants qualify to be “plain vanilla”, and the Company used the simplified method to determine the expected term. The simplified method calculates the expected term as the average of the time-to-vesting and contractual life of the option.

Volatility

Since the Company is a private entity with no historical data regarding the volatility of its common stock, the expected volatility used is based on volatility of similar entities, referred to as “guideline” companies. In evaluating similarity, the Company considered factors such as industry, stage of life cycle and size.

Risk-Free Interest Rate

The risk-free rate is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options.

Dividend Yield

The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and, therefore, used an expected dividend yield of zero in the valuation model.

Forfeitures

Employee stock-based compensation expense recognized during the years ended December 31, 2024 and 2023 was calculated based on awards ultimately expected to vest and was reduced for estimated forfeitures. Forfeitures are estimated based on actual historical forfeitures.

The following weighted average assumptions were used in the estimated grant date fair value calculations for options granted as follows during the years ended December 31:

 

     2024     2023  

Expected term (in years)

     8.2       2.0  

Expected volatility

     93.7 %      75.0 % 

Risk-free interest rate

     4.2 %      4.9 % 

Dividend yield

     0.0 %      0.0 % 

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

Total stock-based compensation expense related to options was allocated to research and development and general and administrative expense as follows during the years ended December 31:

 

     2024      2023  

Research and development

   $ 506      $ 536  

Selling, general, and administrative

     1,335        1,076  
  

 

 

    

 

 

 
   $ 1,841      $ 1,612  
  

 

 

    

 

 

 

The weighted-average grant date fair value of employee stock options granted was $0.23 and $0.20 per share during the years ended December 31, 2024 and 2023, respectively. Unrecognized compensation expense, related to non-vested stock options, which are expected to be recognized over a weighted-average period of 3.2 years and 2.89 years, was $3.4 million and $3.9 million as of December 31, 2024 and 2023, respectively. The aggregate intrinsic value of the options outstanding was $0.7 million and $0.5 million for the years ended December 31, 2024 and 2023, respectively. The aggregate intrinsic value of the options exercisable was $0.4 million and $0.3 million for the years ended December 31, 2024 and 2023, respectively. The Company received cash proceeds of $0.6 million and $0.6 million from the exercise of stock options during the years ended December 31, 2024, and 2023, respectively.

In 2021, the Company implemented a lending program to allow directors and employees to take out loans with the Company to exercise their stock options. The lending program was discontinued in 2022 when AE Industrial purchased Firefly. As such, no new loans were entered into after 2022. The non-recourse loans are accounted for as in-substance stock options under ASC 718 such that the non-recourse loans are not recorded as notes receivable on the consolidated balance sheets, and interest earned on the loans is not recognized in the consolidated statements of net loss and comprehensive loss. Instead, the non-refundable principal and interest payments received are recorded in additional paid-in capital. The in-substance stock options will be considered substantively exercised at the time the loan is repaid. As of December 31, 2024, and 2023, the Company recognized $0.8 million and $1.0 million, respectively, in non-recourse employee loans within additional paid-in capital.

In 2023 and 2024, the Company entered into three separate arrangements involving stock-based payments to non-employees whereby fully vested preferred stock was issued in exchange for certain goods and previously rendered services. The non-employee stock-based awards were classified as equity instruments, and the related cost was recognized in the same period and manner as if the Company had paid cash for the goods or services. As of December 31, 2024 and 2023, $1.0 million and $0.8 million, respectively, was capitalized as a prepaid asset. Separately, in 2024, a total of $1.2 million was recognized as a reduction to accounts payable.

15. Income Taxes

The components of income before taxes are as follows for the years ended December 31:

 

     2024      2023  

United States

   $ (231,133 )     $ (135,457 ) 

International

     —         —   
  

 

 

    

 

 

 

Loss before income taxes

   $ (231,133 )     $ (135,457 ) 
  

 

 

    

 

 

 

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

The provision for income tax using statutory U.S. federal tax rate of 21% is reconciled to the Company’s effective tax rate as follows as of December 31:

 

     2024      2023  

Income tax provision at statutory rate

     21.0%        21.0%  

State income taxes

     3.3%        4.5%  

Tax rate change

     (0.9% )       —     

Other

     0.0%        (1.4% ) 

Prior year true-ups

     0.6%        —     

Permanent items

     (0.2% )       (0.5% ) 

Change in valuation allowance

     (23.8% )       (23.6% ) 
  

 

 

    

 

 

 

Effective income tax rate

     0.0%        0.0%  
  

 

 

    

 

 

 

Temporary differences and carryforwards that gave rise to significant portions of deferred taxes were as follows as of December 31:

 

     2024      2023  

Deferred tax assets:

     

Net operating loss

   $ 120,090      $ 85,484  

Credits

     2,875        2,691  

Capitalized research costs

     56,007        34,865  

Intangibles

     3,912        4,500  

Stock-based compensation

     586        148  

Deferred lease liability

     4,267        6,223  

Accruals and reserves

     3,944        1,652  

Fixed assets

     —         —   

Deferred revenue

     7,865        10,412  

Other

     3,212        1,406  
  

 

 

    

 

 

 

Gross deferred tax assets

     202,758        147,381  

Valuation allowance

     (194,556 )       (139,700 ) 
  

 

 

    

 

 

 

Total deferred tax assets

   $ 8,202      $ 7,681  
  

 

 

    

 

 

 

Deferred tax liabilities:

     

ROU asset

   $ (3,543 )     $ (6,178 ) 

Fixed asset

     (4,659 )       (1,503 ) 
  

 

 

    

 

 

 

Total deferred tax liabilities

   $ (8,202 )     $ (7,681 ) 
  

 

 

    

 

 

 

Net deferred tax assets

   $ —       $ —   
  

 

 

    

 

 

 

For the year ended December 31, 2024, the Company had no income tax expense. The difference between the Company’s effective tax rate and the statutory rate is primarily driven by the valuation allowance established against U.S. federal and state deferred income tax assets.

ASC 740 requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is more likely than not. Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the

 

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Table of Contents

Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

carryforward period. Because of the Company’s recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided for a full net valuation allowance.

Management regularly assesses the ability to realize deferred tax assets recorded based upon the weight of available evidence, including such factors as recent earnings history and expected future taxable income on a jurisdiction-by-jurisdiction basis. In the event that the Company changes its determination as to the amount of realizable deferred tax assets, the Company will adjust its valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made. The Company’s management believes that, based on a number of factors, it is more likely than not, that all or some portion of the deferred tax assets will not be realized; and accordingly, for the year ended December 31, 2024, the Company has provided a valuation allowance against the Company’s U.S. net deferred tax assets. The net change in the valuation allowance for the year ended December 31, 2024 was an increase of $54.9 million.

As of December 31, 2024, the Company had net operating loss carryforwards for U.S federal income tax purposes of $511.6 million, all of which have an indefinite carryforward period except for $5.2 million that will expire in 2037. Further, the Company has state net operating loss carryforwards of $188.6 million that expire on various dates starting 2039.

As of December 31, 2024, the Company had federal research credit carryforwards of approximately $4.8 million. The federal research credit carryforwards will begin to expire in 2037.

The Internal Revenue Code of 1986, as amended, imposes restrictions on the utilization of net operating losses in the event of an “ownership change” of a corporation. Accordingly, the Company’s ability to use net operating losses may be limited as prescribed under Internal Revenue Code Section 382 (“IRC Section 382”). Events which may cause limitations in the amount of the net operating losses that the Company may use in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. Utilization of the federal and state net operating losses may be subject to substantial annual limitation due to the ownership change limitations provided by the IRC Section 382 and similar state provisions.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

 

     2024      2023  

Balance at January 1

   $ 2,100      $ 2,100  

Additions based on tax positions related to the current year

     —         —   

Changes for tax positions of prior years

     —         —   

Reductions as a result of a lapse of applicable statute of limitations

     —         —   

Settlements

     —         —   
  

 

 

    

 

 

 

Balance at December 31

   $ 2,100      $ 2,100  
  

 

 

    

 

 

 

The total amount of gross unrecognized tax benefits was $2.1 million as of both December 31, 2024 and 2023. There were no interest and penalties as of both December 31, 2024 and 2023. As of December 31, 2024, $0.2 million of the total unrecognized tax benefits, if recognized, would have an impact on the Company’s effective tax rate. The Company estimates that there will be no material changes in its uncertain tax positions in the next 12 months.

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.

The Company files income tax returns in the U.S. federal, various state, and foreign jurisdictions with varying statutes of limitations. The Company is generally no longer subject to tax examinations for years prior to 2021 for federal purposes and 2020 for state purposes, except in certain limited circumstances.

16. Related Party Transactions

Investments and Debts

The following transactions are with the Company’s private equity sponsor, AE Industrial, who acquired the Company during 2022 and is a 45.29% stakeholder in the Company as of December 31, 2024. As the Company is part of AE Industrial’s portfolio of companies, the Company is not a part of a consolidated tax return and files its tax returns independently.

During the year ended December 31, 2023, AE Industrial purchased approximately 21.3 million shares of the Series C Preferred Stock for an aggregate purchase price of $105.2 million. During the year ended December 31, 2024, AE Industrial purchased approximately 21.1 million shares of the Series D-1 Preferred Stock for an aggregate purchase price of approximately $109.8 million, including $25.8 million of principal and accrued interest of the Convertible Notes issued on August 13, 2024 and settled in the shares of the Series D-1 Preferred Stock on October 31, 2024. In connection with the issuance of the Series D-1 Preferred Stock, the Company issued AE Industrial the Common Warrants to purchase an aggregate of approximately 2.1 million shares of the common stock. Refer to Note 11. Notes Payable and Warrants and Note 13. Stockholders’ Equity and Redeemable Convertible Preferred Stock for further detail.

On July 17, 2023, AE Industrial provided the $14.6 million principal amount of the Initial Term B Loan upon the execution of the Financing Agreement and was issued the Series J Warrants to purchase approximately 0.2 million shares of Series J Preferred Stock. On December 6, 2023, AE Industrial provided an additional $6.5 million principal amount of the Second Term B Loan upon the execution of the First Amendment and was issued the Series J Warrants to purchase approximately 0.1 million shares of Series J Preferred Stock. Refer to Note 11. Notes Payable and Warrants for further detail.

Accounts Payable and Expenses

Redwire Corporation and Belcan, LLC are related parties of the Company as both entities are part of AE Industrial’s portfolio and share a common board of directors. Belcan, LLC remained a related party until August 31, 2024.

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

A summary of the Company’s related party transactions related to accounts payable and research and development and selling, general, and administrative expenses as of and for the years ended December 31, 2024 and 2023 is presented below:

 

     2024      2023  

Accounts payable:

     

AE Industrial

   $ 46      $ 946  

Redwire Corporation

     40        30  

Belcan, LLC

     —         430  
  

 

 

    

 

 

 
   $ 86      $ 1,406  
  

 

 

    

 

 

 

 

     2024      2023  

Expenses:

     

AE Industrial

   $ 2,301      $ 645  

Redwire Corporation

     572        1,781  

Belcan, LLC

     543        933  
  

 

 

    

 

 

 
   $ 3,416      $ 3,359  
  

 

 

    

 

 

 

In the normal course of business, the Company participates in related party transactions with certain vendors and customers where AE Industrial maintains a significant ownership interest and/or can exhibit significant influence on the operations of such parties. For the years ended December 31, 2024 and 2023, respectively, transactions with other companies in AE Industrial’s investment portfolio, not separately disclosed, did not have a material impact on the Company’s consolidated financial statements.

17. Net Loss Per Share

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of common stock outstanding during each period.

Diluted net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of fully dilutive common stock outstanding for the period using the treasury-stock method, the if-converted method, or two-class method for participating securities, whichever is more dilutive. Potentially dilutive shares are comprised of common stock warrants, restricted stock units, convertible notes and stock options. For the years ended December 31, 2024, and 2023, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss and potentially dilutive shares being anti-dilutive. The Company has determined that all preferred stock are participating securities under the two-class method, however, the preferred stockholders are not required to fund losses. Dividends have been accumulated for all Series C and Series D-1 preferred stock (refer to Note 13. Stockholders’ Equity and Redeemable Convertible Preferred Stock for further detail).

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

The following table summarizes the computation of basic and diluted net loss per share attributable to common stockholders of the Company for the years ended December 31, 2024, and 2023:

 

     2024      2023  

Numerator:

     

Consolidated net loss

   $ (231,133 )     $ (135,457 ) 

Less: Accretion of dividends of Series C Preferred Shares

     (21,224 )       (20,814 ) 

Less: Accretion of dividends of Series D-1 Preferred Shares

     (13,453 )       —   
  

 

 

    

 

 

 

Net loss available to common stock

   $ (265,810 )     $ (156,271 ) 
  

 

 

    

 

 

 

Denominator:

     

Weighted average common stock outstanding – basic and diluted

     41,719        38,977  

Net loss per share attributable to common stockholders – basic and diluted

   $ (6.37 )     $ (4.01 ) 

A summary of the total number of securities excluded from diluted net loss per share that could be potentially dilutive in the future is as follows:

 

     2024      2023  

Convertible Series Seed Preferred Stock

     6,583        6,583  

Convertible Series Seed-1 Preferred Stock

     10,651        10,651  

Convertible Series A Preferred Stock

     19,544        19,544  

Convertible Series B Preferred Stock

     19,100        19,100  

Convertible Series C Preferred Stock

     36,316        32,062  

Convertible Series D-1 Preferred Stock

     33,999        —   

Convertible Series M Preferred Stock

     9,153        8,912  

Warrants for Series J Preferred Stock

     2,104        1,883  

Common Stock Warrants

     3,400        —   

Stock Options

     52,069        46,195  

Subordinated Convertible Promissory Note

     225        —   
  

 

 

    

 

 

 

Total

     193,144        144,930  
  

 

 

    

 

 

 

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

18. Segment and Geographical Information

The following table includes the significant expense categories and amounts that are regularly provided to the CODM:

 

     2024      2023  

Revenue

   $ 60,792      $ 55,235  

Less:

     

Cost of sales

     (72,157 )       (28,635 ) 

Compensation (1)

     (82,628 )       (71,656 ) 

Materials and consumables (1)

     (58,021 )       (48,283 ) 

Contractors and outside services (1)

     (10,568 )       (8,886 ) 

Other segment items (2)

     (68,551 )       (33,232 ) 
  

 

 

    

 

 

 

Consolidated net loss

   $ (231,133 )     $ (135,457 ) 
  

 

 

    

 

 

 

 

(1)

Compensation, materials and consumables, and contractors and outside services expenses presented in the above table are related to operating expenses and exclude amounts included in the cost of sales.

(2)

Other segment items included are primarily related to interest expense, building and utilities, software licenses and computer services, professional and consulting services fees, loss/gain on disposal of fixed assets, other income/expenses, and provision for income taxes.

The measure of segment assets, including goodwill, is reported on the consolidated balance sheets as total consolidated assets. Assets provided to the CODM are consistent with those reported on the consolidated balance sheets with particular emphasis on the Company’s available liquidity, including its cash, cash equivalents restricted cash, and there are no other significant segment assets that would require disclosure or are regularly provided to the CODM.

The Company does not recognize revenue or hold property and equipment outside of the United States as of December 31, 2024.

19. Subsequent Events

The company evaluated its December 31, 2024 financial statements for subsequent events through April 16, 2025, the date the financial statements were issued. Please note the following subsequent events:

Series D Financing

On January 31, 2025, the Company completed a subsequent closing and sold approximately 1.4 million shares of Series D-1 Preferred Stock at the Series D Per Share Price for aggregate cash proceeds of approximately $7.1 million. Of this amount, AE Industrial purchased approximately 1.0 million shares for aggregate cash proceeds of $5.0 million.

Between February 21, 2025 and April 15, 2025, the Company completed a series of additional closings and sold approximately 32.5 million shares of Series D-1 Preferred Stock at the Series D Per Share Price for aggregate cash proceeds of approximately $168.9 million. The total amount of the Series D Preferred Stock purchased by the investors (including the principal of the Convertible Notes converted) exceeded $250.0 million as of March 7, 2025, and therefore the Majority Sponsor Top-Up expired unexercised.

 

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Firefly Aerospace, Inc.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023

(Dollars and shares in thousands, except per share amounts)

 

On March 25, 2025, the Company amended its Amended and Restated Certificate of Incorporation and Series D Purchase Agreement. The amendment increased the number of authorized shares of Series D-1 Preferred Stock to 86.5 million shares and authorized the issuance of up to 17.9 million shares of a new series of Preferred Stock, the Series D-3 Preferred Stock. The Series D-3 Preferred Stock will be issued at a purchase price of $5.5772 per share and have the same economic characteristics and preferences as the Series D-1 Preferred Stock. In addition, the amendment also terminated the RPM Call Option.

On April 10, 2025, the Company issued approximately 1.8 million shares of Series D-3 Preferred Stock for aggregate cash proceeds of approximately $10.0 million.

 

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    Shares

 

 

LOGO

Common Stock

 

 

Prospectus

 

 

Goldman Sachs & Co. LLC

J.P. Morgan

Jefferies

Wells Fargo Securities

Morgan Stanley

Deutsche Bank Securities

Cantor

Co-Managers

Roth Capital Partners

Academy Securities

 

 

    , 2025

 

 
 


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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

 

Item 13.

Other Expenses of Issuance and Distribution.

The following table sets forth all costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the offer and sale of the common stock being registered. All amounts shown are estimates except for the SEC registration fee, the FINRA filing fee and the exchange listing fee.

 

     Amount to be Paid  

SEC registration fee

   $    * 

FINRA filing fee

       * 

Initial exchange listing fee

       * 

Printing and engraving expenses

       * 

Legal fees and expenses

       * 

Accounting fees and expenses

       * 

Transfer agent and registrar fees

       * 

Miscellaneous fees and expenses

       * 

Total

   $      * 

 

*

To be provided by amendment.

 

Item 14.

Indemnification of Directors and Officers.

Section 102(b)(7) of the DGCL allows a corporation to provide in its certificate of incorporation that a director of the corporation will not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer, except where the director or officer breached the duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend, or approved a stock repurchase in violation of Delaware corporate law, or obtained an improper personal benefit. Our certificate of incorporation will provide for this limitation of liability.

Section 145 of the DGCL (“Section 145”) provides that a Delaware corporation may indemnify any person who was, is, or is threatened to be made, party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee, or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee, or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit, or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was illegal. A Delaware corporation may indemnify any persons who are, were, or are a party to any threatened, pending, or completed action or suit by or in the right of the corporation by reason of the fact that such person is or was a director, officer, employee, or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests, provided that no indemnification is permitted without judicial approval if the officer, director, employee, or agent is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses which such officer or director has actually and reasonably incurred.

Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the corporation or is or was serving at the request of the

 

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corporation as a director, officer, employee, or agent of another corporation or enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would otherwise have the power to indemnify him under Section 145.

Our bylaws will provide that we will indemnify our directors and officers to the fullest extent authorized by the DGCL and must also pay expenses incurred in defending any such proceeding in advance of its final disposition upon delivery of an undertaking, by or on behalf of an indemnified person, to repay all amounts so advanced if it should be determined ultimately that such person is not entitled to be indemnified under this section or otherwise.

Upon completion of this offering, we intend to enter into indemnification agreements with each of our executive officers and directors. The indemnification agreements will provide the executive officers and directors with contractual rights to indemnification, expense advancement, and reimbursement to the fullest extent permitted under the DGCL.

The indemnification rights set forth above shall not be exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, provision of our certificate of incorporation or bylaws, agreement, vote of stockholders or disinterested directors, or otherwise.

We will maintain standard policies of insurance that provide coverage (1) to our directors and officers against loss arising from claims made by reason of breach of duty or other wrongful act and (2) to us with respect to indemnification payments that we may make to such directors and officers. The proposed form of underwriting agreement to be filed as Exhibit 1.1 to this registration statement provides for indemnification of our directors and officers by the underwriters party thereto against certain liabilities arising under the Securities Act or otherwise.

 

Item 15.

Recent Sales of Unregistered Securities.

The following sets forth information regarding securities sold or issued by us in the three years preceding the date of this registration statement. No underwriters were involved in these sales. There was no general solicitation of investors or advertising, and we did not pay or give, directly or indirectly, any commission or other remuneration, in connection with the offering of these shares. In each of the transactions described below, the recipients of the securities represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions.

In the three years preceding the date of this registration statement, we have made sales of the following unregistered securities:

 

  •  

Between March 2022 and August 2022, we issued and sold an aggregate of 19,100,007 shares of our Series B Preferred Stock at a purchase price of $3.9267 per share to four (4) accredited investors.

 

  •  

Between February 2023 and January 2024, we issued and sold an aggregate of 36,315,993 shares of our Series C Preferred Stock at a purchase price of $4.9361 per share to nine (9) accredited investors.

 

  •  

Between July 2023 and August 2024, we issued Series J Preferred Stock Warrants to two (2) accredited investors, to purchase an aggregate of 2,103,853 shares of our Series J Preferred Stock at an exercise price of $6.5058.

 

  •  

In February 2024, we issued and sold an aggregate of 220,822 shares of our Series M Preferred Stock at a purchase price of $4.9361 per share to one (1) accredited investor in exchange for a credit on the Company’s customer account with the purchaser in the amount of $1,090,000.

 

  •  

In March 2024, we issued and sold an aggregate of 19,499 shares of our Series M Preferred Stock at a purchase price of $4.9361 per share to one (1) accredited investor in exchange for services rendered to the Company in the amount of $96,250.

 

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  •  

In June 2023, we issued and sold an aggregate of 9,002,481 shares of our Series M Preferred Stock at a purchase price of $4.9361 per share to one (1) accredited investor as part of the consideration for the acquisition of Spaceflight, Inc.

 

  •  

Between October 2024 and April 2025, we issued and sold an aggregate of 67,857,254 shares of our Series D-1 Preferred Stock at a purchase price of $5.1995 per share to forty-two (42) accredited investors.

 

  •  

In April 2025, we issued and sold an aggregate of 1,793,014 shares of our Series D-3 Preferred Stock at a purchase price of $5.5772 per share to one (1) accredited investor.

 

  •  

In July 2025, we issued and sold an aggregate of 9,148,331 shares of our Series D-4 Preferred Stock at a purchase price of $6.4190 per share to thirteen (13) accredited investors.

 

  •  

Between October 2024 and November 2024, we issued Common Stock Warrants to eleven (11) accredited investors, to purchase an aggregate of 3,399,896 shares of Common Stock at an exercise price of $0.28 per share.

 

  •  

From June 2022 through April 2025, we granted stock options to purchase an aggregate of 33,255,320 shares of common stock upon the exercise of options under our 2017 Plan at exercise prices per share ranging from $0.25 to $0.28, for an aggregate exercise price of approximately $8.8 million.

 

  •  

In August 2024, we issued $25 million of subordinated convertible notes to two (2) accredited investors.

The offers, sales, and issuances of our preferred stock and warrants described above were deemed to be exempt from registration in reliance upon Section 4(a)(2) of the Securities Act as transactions by an issuer not involving any public offering within the meaning of Section 4(a)(2) of the Securities Act. The offers, sales, and issuances of stock options described above were deemed to be exempt from registration in reliance on Rule 701 promulgated under Section 3(b) of the Securities Act as transactions pursuant to benefit plans and contracts relating to compensation as provided under Rule 701. The recipients in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof.

 

Item 16.

Exhibits and Financial Statement Schedules.

 

  (a)

Exhibits

The exhibits to this registration statement are listed in the Exhibit Index attached hereto and incorporated by reference herein.

 

  (b)

Financial Statement Schedules

Financial statement schedules are omitted because the required information is not applicable, not required or included in the financial statements or the notes thereto included in the prospectus that forms a part of this registration statement.

 

Item 17.

Undertakings.

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, and controlling persons of the registrant pursuant to the provisions referenced in Item 14 of this registration statement, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of

 

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expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered hereunder, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

 

  (1)

For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective;

 

  (2)

For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof.

 

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EXHIBIT INDEX

 

Exhibit
Number

  

Description of Document

 1.1*    Form of Underwriting Agreement
 3.1    Certificate of Incorporation of Firefly Aerospace Inc., as currently in effect
 3.2    Form of Certificate of Incorporation of Firefly Aerospace Inc. (to be effective upon completion of this offering)
 3.3    Bylaws of Firefly Aerospace Inc., as currently in effect
 3.4    Form of Bylaws of Firefly Aerospace Inc. (to be effective upon completion of this offering)
 4.1*    Form of Registration Rights Agreement
 5.1*    Opinion of Kirkland & Ellis LLP
10.1*    Form of Indemnification Agreement
10.2    Second Amended and Restated Financing Agreement, dated as of May  20, 2024, among Firefly Aerospace Inc., the guarantors party thereto, the lenders party thereto, and U.S. Bank Trust Company, National Association
10.3    First Amendment to Second Amended and Restated Financing Agreement, dated as of August  13, 2024, among Firefly Aerospace Inc., the guarantors party thereto, the lenders party thereto, and U.S. Bank Trust Company, National Association
10.4+    Executive Letter Agreement, dated August 25, 2024, by and between Firefly Aerospace Inc. and Jason Kim
10.5+    Executive Letter Agreement, dated March 13, 2025, by and between Firefly Aerospace Inc. and Dan Fermon
10.6+    Executive Letter Agreement, dated August 13, 2022, by and between Firefly Aerospace Inc. and William Weber
10.7+    Executive Letter Agreement, dated March 13, 2025, by and between Firefly Aerospace Inc. and Darren Ma
10.8+    Separation Agreement and Release of Claims, dated August 13, 2024, by and between Firefly Aerospace Inc. and William J. Weber
10.9+    Amended and Restated Firefly Aerospace Inc. 2017 Stock Plan, as amended through the date hereof
10.10+    Form of Stock Option Agreement pursuant to the Amended and Restated Firefly Aerospace Inc. 2017 Stock Plan
10.11+    Firefly Aerospace Inc. Performance-Based, Incentive Compensation Plan
10.12+    Firefly Aerospace Inc. 2025 Omnibus Incentive Plan
10.13+    Firefly Aerospace Inc. 2025 Employee Stock Purchase Plan
10.14+*    Form of Restricted Stock Unit Award Agreement under the Firefly Aerospace Inc. 2025 Omnibus Incentive Plan
10.15+*    Form of Option Award Agreement under the Firefly Aerospace Inc. 2025 Omnibus Incentive Plan
10.16    Lease Agreement, dated August 3, 2022, by and between Cedar Blue Space, LP and Firefly
10.17*    Form of Director Nomination Agreement
10.18*    Form of Amended and Restated Consulting Agreement between Firefly Aerospace Inc. and AE Industrial Operating Partners, LLC
21.1    Subsidiaries of the Registrant
23.1    Consent of Grant Thornton LLP, independent registered accounting firm


Table of Contents

Exhibit
Number

  

Description of Document

23.2*    Consent of Kirkland & Ellis LLP (included in Exhibit 5.1)
24.1    Power of Attorney (included on signature page)
99.1    Consent of Kevin McAllister to be named as a director nominee
99.2    Consent of Pamela Braden to be named as a director nominee
99.3    Consent of Jon Lusczakoski to be named as a director nominee
99.4    Consent of Ryan Boland to be named as a director nominee
107    Calculation of the Filing Fee Table
 
*

Indicates to be filed by amendment.

+

Indicates a management contract or compensatory plan or agreement.


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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Cedar Park, Texas, on July 11, 2025.

 

Firefly Aerospace Inc.
By:   /s/ Jason Kim
 

Jason Kim

Chief Executive Officer


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POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jason Kim, Darren Ma, and Remington Wu, and each one of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in their name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to sign any registration statement for the same offering covered by this registration statement that is to be effective on filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and all post-effective amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

/s/ Jason Kim

Jason Kim

  

Chief Executive Officer

(Principal Executive Officer)

  July 11, 2025

/s/ Darren Ma

Darren Ma

  

Chief Financial Officer

(Principal Financial Officer)

  July 11, 2025

/s/ Remington Wu

Remington Wu

  

Chief Accounting Officer

(Principal Accounting Officer)

  July 11, 2025

/s/ Kirk Konert

Kirk Konert

  

Director

 

July 11, 2025

/s/ Thomas Markusic

Thomas Markusic

  

Director

 

July 11, 2025

/s/ Marc Weiser

Marc Weiser

  

Director

 

July 11, 2025

/s/ Jed McCaleb

Jed McCaleb

  

Director

 

July 11, 2025

/s/ Thomas Zurbuchen

Thomas Zurbuchen

  

Director

 

July 11, 2025

/s/ Christopher Emerson

Christopher Emerson

  

Director

  July 11, 2025

Exhibit 3.1

FIREFLY AEROSPACE INC.

TWELFTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

(Pursuant to Sections 242 and 245 of the

General Corporation Law of the State of Delaware)

Firefly Aerospace Inc., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “General Corporation Law”), certifies as follows:

1. The name of this corporation is Firefly Aerospace Inc. The Certificate of Incorporation of this corporation was filed with the Secretary of State of the State of Delaware on January 27, 2017, under the name EOS Launcher, Inc., and was amended and restated by the Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on October 23, 2017, and an Amended and Restated Certificate of Incorporation of Firefly Aerospace Inc. was filed with the Secretary of State of the State of Delaware on March 25, 2025.

2. The Board of Directors of this corporation duly adopted resolutions proposing to further amend and restate the Certificate of Incorporation of this corporation, declaring said amendment and restatement to be advisable and in the best interests of this corporation and its stockholders, and authorizing the appropriate officers of this corporation to solicit the consent of the stockholders therefor, which resolution setting forth the proposed amendment and restatement is as follows:

RESOLVED, that the Amended and Restated Certificate of Incorporation of this corporation be further amended and restated in its entirety to read as set forth on Exhibit A attached hereto and incorporated herein by this reference.

3. Exhibit A referred to above is attached hereto as Exhibit A and is hereby incorporated herein by this reference. This Amended and Restated Certificate of Incorporation was approved by the holders of the requisite number of shares of this corporation in accordance with Section 228 of the General Corporation Law.

4. This Twelfth Amended and Restated Certificate of Incorporation, which restates and integrates and further amends the provisions of this corporation’s Certificate of Incorporation, has been duly adopted in accordance with Sections 242 and 245 of the General Corporation Law.


IN WITNESS WHEREOF, this Twelfth Amended and Restated Certificate of Incorporation has been executed by a duly authorized officer of this corporation on June 24, 2025.

 

By:  

/s/ David Wheeler

Name:   David Wheeler
Title:   Senior Vice President, General Counsel and Secretary

 

2


Exhibit A

FIREFLY AEROSPACE INC.

TWELFTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

ARTICLE I: NAME

The name of this corporation is Firefly Aerospace Inc. (the “Corporation”).

ARTICLE II: REGISTERED OFFICE

The address of the Corporation’s registered office in the State of Delaware is 919 North Market Street, Suite 950, in the City of Wilmington, County of New Castle 19801. The name of its registered agent at such address is InCorp Services, Inc.

ARTICLE III: DEFINITIONS

As used in this Twelfth Amended and Restated Certificate of Incorporation (this “Restated Certificate”), the following terms have the meanings set forth below:

“AE” has the meaning set forth in the Voting Agreement.

“Board” means the Board of Directors of the Corporation.

“CFIUS” means the Committee on Foreign Investment in the United States and each member agency thereof, acting in such capacity.

“Deemed Issue Price” means (i) $0.448318 per share for the Series Seed Preferred Stock, and (ii) $19.196004 per share for the Series Seed-1 Preferred Stock, in each case subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization.

“DPA Triggering Rights” means (i) “control” (as defined in the DPA); (ii) access to any “material non-public technical information” (as defined in the DPA) in the possession of the Corporation; (iii) membership or observer rights on the Board or equivalent governing body of the Corporation or the right to nominate an individual to a position on the Board or equivalent governing body of the Corporation; or (iv) any involvement, other than through the voting of shares, in substantive decision-making of the Corporation regarding (x) the use, development, acquisition or release of any Corporation “critical technology” (as defined in the DPA); (y) the use, development, acquisition, safekeeping, or release of “sensitive personal data” (as defined in the DPA) of U.S. citizens maintained or collected by the Corporation, or (z) the management, operation, manufacture, or supply of “covered investment critical infrastructure” (as defined in the DPA).

“DPA” means Section 721 of the Defense Production Act, as amended, including all implementing regulations thereof.


“Equity Interests” means, with respect to any Person, (a) any capital stock, partnership or membership interest, joint venture interest, limited liability company interest, unit of participation or other similar interest (however designated) in such Person or any security or evidence of indebtedness convertible into or exchangeable therefor and (b) any option, warrant, purchase right, conversion right, exchange right or other contract which would entitle any other Person to acquire any such interest in such Person or otherwise entitle any other Person to share in the equity, profits, earnings, losses or gains of such Person (including stock appreciation, restricted stock unit, phantom stock, profit participation or other similar rights).

“Foreign Person” means either (i) a Person or government that is a “foreign person” within the meaning of the DPA, (ii) a Person through whose investment a “foreign person” within the meaning of the DPA would obtain any DPA Triggering Rights or (iii) a Person that is restricted by CFIUS or any other U.S. regulatory agency or governmental entity from holding Equity Interests, directly or indirectly, in the Corporation (including as a result of a direct or indirect ownership by a Person who is a Foreign Person).

“Glow Investors” has the meaning set forth in the Voting Agreement.

“Original Issue Price” means (i) $0.03935 per share for the Series Seed Preferred Stock, (ii) $1.9196004 per share for the Series Seed-1 Preferred Stock, (iii) $3.8375 per share for the Series A Preferred Stock, (iv) $3.9267 per share for the Series B Preferred Stock, (v) $4.9361 per share for the Series C Preferred Stock, (vi) $4.9361 per share for the Series M Preferred Stock, (vii) $4.9361 per share for the Series J Preferred Stock, (viii) $5.1995 per share for the Series D-1 Preferred Stock and Series D-2 Preferred Stock, (ix) $5.5772 per share for the Series D-3 Preferred Stock and (x) $6.4190 per share for the Series D-4 Preferred Stock, in each case subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization.

“Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

“Preferred Director Majority” means a majority of the Preferred Directors then serving, provided, that upon any Board Change Election (as defined in the Voting Agreement), such approval shall require the approval of a majority of the following then serving: (1) the Series A Director, (2) a Series B Director and (3) the Series D Director.

“Purchase Agreement” means the Series D Preferred Stock Purchase Agreement, dated as of October 31, 2024, as amended on or prior to [●], 2025, by and among the Corporation and the Purchasers (as defined therein) parties thereto.

“RPM Investor” has the meaning set forth in the Voting Agreement.

“Seed Preferred Stock” means, collectively, shares of Series Seed Preferred Stock and Series Seed-1 Preferred Stock.

“SPAC Transaction” means an acquisition, merger or other business combination between the Corporation and (1) a special purpose acquisition company, (2) a blank check company, (3) any similar development stage company that has no specific business plan or


purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company, or (4) any subsidiary or affiliate of any of the entities identified in clauses (1)-(3), resulting in at least Five Hundred Million Dollars ($500,000,000) of net proceeds to the Corporation, (i) with the Common Stock listed for trading on the Nasdaq Stock Market’s National Market or the New York Stock Exchange and (ii) that implies a valuation per share of at least two times (2x) the Original Issue Price of the Series D-1 Preferred Stock. The equity securities of the entity identified in clauses (1)-(3) shall be publicly-listed on a U.S. national securities exchange at the time of the SPAC Transaction.

“Transfer” means any sale, transfer, assignment, pledge, mortgage, exchange, grant of a security interest or other direct or indirect disposition or encumbrance of an interest (legal or beneficial) whether with or without consideration, whether voluntarily or involuntarily or by operation of law or the acts thereof. The terms “Transferee,” “Transferred,” and other forms of the word “Transfer” shall have correlative meaning.

“Voting Agreement” means that certain Seventh Amended and Restated Voting Agreement by and among the Corporation and certain stockholders of the Corporation, as in effect as of the effective date of this Restated Certificate, without giving consideration or effect to any modification thereof after such date.

ARTICLE IV: PURPOSE

The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law.

ARTICLE V: AUTHORIZED SHARES

The total number of shares of all classes of stock that the Corporation has authority to issue is Seven Hundred Ninety-Six Million One Hundred Forty-Six Thousand Eight Hundred Sixty-Five (796,146,865), consisting of (a) Five Hundred Sixty-Seven Million Seven Hundred Five Thousand Eight Hundred Twenty (567,705,820) shares of Common Stock, par value $0.0001 per share (the “Common Stock”), and (b) Two Hundred Twenty-Eight Million Four Hundred Forty-One Thousand Forty-Five (228,441,045) shares of Preferred Stock, par value $0.0001 per share (the “Preferred Stock”). The Preferred Stock may be issued from time to time in one or more series, each of such series to consist of such number of shares and to have such rights, powers privileges and other terms, and the restrictions, qualifications and limitations with respect thereto, as stated or expressed herein. As of the effective date of this Restated Certificate, Six Million Five Hundred Eighty-Two Thousand Nine Hundred Forty-One (6,582,941) shares of the Preferred Stock of the Corporation are hereby designated “Series Seed Preferred Stock”, Ten Million Six Hundred Fifty Thousand Eight Hundred Fifty-Three (10,650,853) shares of the Preferred Stock of the Corporation are hereby designated “Series Seed-1 Preferred Stock”, Nineteen Million Five Hundred Forty-Three Thousand Nine Hundred Seventy-Three (19,543,973) shares of the Preferred Stock of the Corporation are hereby designated as “Series A Preferred Stock”, Nineteen Million One Hundred Thousand Seven (19,100,007) shares of the Preferred Stock of the Corporation are hereby designated as “Series B Preferred Stock”, Thirty-Six Million Three Hundred Fifteen Thousand Nine Hundred Ninety-Three (36,315,993) shares


of the Preferred Stock of the Corporation are hereby designated as “Series C Preferred Stock”, Nine Million One Hundred Fifty-Two Thousand Seven Hundred Sixty (9,152,760) shares of Preferred Stock of the Corporation are hereby designated as “Series M Preferred Stock”, Three Million (3,000,000) shares of Preferred Stock of the Corporation are hereby designated as “Series J Preferred Stock”, Eighty-Six Million Five Hundred Forty-Six Thousand Seven Hundred Eighty-Two (86,546,782) shares of Preferred Stock of the Corporation are hereby designated as “Series D-1 Preferred Stock”, Four Million Thirty-Eight Thousand Eight Hundred Forty-Nine (4,038,849) shares of Preferred Stock of the Corporation are hereby designated as “Series D-2 Preferred Stock”, Seventeen Million Nine Hundred Thirty Thousand One Hundred Thirty-Seven (17,930,137) shares of Preferred Stock of the Corporation are hereby designated as “Series D-3 Preferred Stock” (which, together with Series D-1 Preferred Stock and Series D-2 Preferred Stock, the “Participating Series D Preferred Stock”) and Fifteen Million Five Hundred Seventy-Eight Thousand Seven Hundred Fifty (15,578,750) shares of Preferred Stock of the Corporation are hereby designated as “Series D-4 Preferred Stock” and together with the Participating Series D Preferred Stock, the “Series D Preferred Stock”. “Participating Preferred Stock” means all Preferred Stock other than the Series D-4 Preferred Stock. 

 

A.

COMMON STOCK

The following rights, powers privileges and restrictions, qualifications, and limitations apply to the Common Stock.

1. General. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights, powers and privileges of the holders of the Preferred Stock set forth in this Restated Certificate.

2. Voting. The holders of the Common Stock are entitled to one (1) vote for each share of Common Stock held at all meetings of stockholders (and written actions in lieu of meetings) provided, however, that, except as otherwise required by law, holders of Common Stock, in their capacity as holders of Common Stock, shall not be entitled to vote on any amendment to this Restated Certificate that relates solely to the terms of one (1) or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one (1) or more other such series, to vote thereon pursuant to this Restated Certificate or pursuant to the General Corporation Law. Unless required by law, there shall be no cumulative voting. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by (in addition to any vote of the holders of one or more series of Preferred Stock that may be required by the terms of this Restated Certificate) the affirmative vote of the holders of shares of the Corporation’s capital stock representing a majority of the votes represented by all outstanding shares of the Corporation’s capital stock entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law.


B.

PREFERRED STOCK

The following rights, powers and privileges, and restrictions, qualifications and limitations, shall apply to the Preferred Stock. Unless otherwise stated, references to “Sections” in this Part B of this Article V: refer to sections of this Part B.

1. Liquidation, Dissolution, or Winding Up; Certain Mergers, Consolidations and Asset Sales.

1.1 Payments to Holders of Series D Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation or any Deemed Liquidation Event (as defined below), before any payment shall be made to the holders of Series C Preferred Stock, Series J Preferred Stock, Series B Preferred Stock, Series A Preferred Stock, Series Seed-1 Preferred Stock, Series Seed Preferred Stock, Series M Preferred Stock or Common Stock by reason of their ownership thereof, (a) the holders of shares of Participating Series D Preferred Stock then outstanding must be paid, out of the funds and assets available for distribution to the Corporation’s stockholders, an amount per share equal to (i) two times (2x) the Original Issue Price for such shares of Participating Series D Preferred Stock plus (ii) any accrued but unpaid Series D Accruing Dividends thereon and any other declared but unpaid dividends thereon and (b) the holders of shares of Series D-4 Preferred Stock then outstanding must be paid, out of the funds and assets available for distribution to the Corporation’s stockholders, an amount per share equal to the greater of (i) the Original Issue Price for such shares of Series D-4 Preferred Stock plus any declared but unpaid dividends thereon or (ii) such amount per share as would have been payable had all shares of Series D-4 Preferred Stock been converted into Common Stock pursuant to Section 3 immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event. If upon any such liquidation, dissolution, winding up or Deemed Liquidation Event, the funds and assets available for distribution to the Corporation’s stockholders are insufficient to pay the holders of shares of Series D Preferred Stock the full amount to which they are entitled under this Section 1.1, the holders of shares of Series D Preferred Stock will share ratably in any distribution of the funds and assets available for distribution in proportion to the respective amounts that would otherwise be payable in respect of the shares of Series D Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

1.2 Payments to Holders of Series C Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation or any Deemed Liquidation Event (as defined below), after the payment of all preferential amounts required to be paid to the holders of shares of Series D Preferred Stock as provided in Section 1.1 and before any payment shall be made to the holders of Series J Preferred Stock, Series B Preferred Stock, Series A Preferred Stock, Series Seed-1 Preferred Stock, Series Seed Preferred Stock, Series M Preferred Stock or Common Stock by reason of their ownership thereof, the holders of shares of Series C Preferred Stock then outstanding must be paid, out of the remaining funds and assets available for distribution to the Corporation’s stockholders, an amount per share equal to (a) two times (2x) the Original Issue Price for such shares of Series C Preferred Stock, plus (b) any accrued but unpaid Series C Accruing Dividends thereon and any other declared but unpaid dividends thereon. If upon any such liquidation, dissolution, winding up or Deemed Liquidation Event, the funds and assets available for distribution to the Corporation’s stockholders are insufficient to pay the holders of shares of Series C Preferred Stock the full amount to which they are entitled under this Section 1.2, the holders of shares of Series C Preferred Stock will


share ratably in any distribution of the funds and assets available for distribution in proportion to the respective amounts that would otherwise be payable in respect of the shares of Series C Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

1.3 Payments to Holders of Series J Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation or any Deemed Liquidation Event (as defined below), after the payment of all preferential amounts required to be paid to the holders of shares of Series D Preferred Stock and Series C Preferred Stock as provided in Section 1.1 and Section 1.2, and before any payment shall be made to the holders of Series B Preferred Stock, Series A Preferred Stock, Series Seed-1 Preferred Stock, Series Seed Preferred Stock, Series M Preferred Stock or Common Stock by reason of their ownership thereof, the holders of shares of Series J Preferred Stock then outstanding must be paid, out of the remaining funds and assets available for distribution to the Corporation’s stockholders, an amount per share equal to the Original Issue Price for such shares of Series J Preferred Stock, plus any declared but unpaid dividends thereon. If upon any such liquidation, dissolution, winding up or Deemed Liquidation Event, the funds and assets available for distribution to the Corporation’s stockholders are insufficient to pay the holders of shares of Series J Preferred Stock the full amount to which they are entitled under this Section 1.3, the holders of shares of Series J Preferred Stock will share ratably in any distribution of the funds and assets available for distribution in proportion to the respective amounts that would otherwise be payable in respect of the shares of Series J Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

1.4 Payments to Holders of Series B Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation or any Deemed Liquidation Event (as defined below), after the payment of all preferential amounts required to be paid to the holders of shares of Series D Preferred Stock, Series C Preferred Stock and Series J Preferred Stock as provided in Section 1.1, Section 1.2 and Section 1.3, and before any payment shall be made to the holders of Series A Preferred Stock, Series Seed-1 Preferred Stock, Series Seed Preferred Stock, Series M Preferred Stock or Common Stock by reason of their ownership thereof, the holders of shares of Series B Preferred Stock then outstanding must be paid, out of the remaining funds and assets available for distribution to the Corporation’s stockholders, an amount per share equal to (a) two times (2x) the Original Issue Price for such shares of Series B Preferred Stock, plus (b) any declared but unpaid dividends thereon. If upon any such liquidation, dissolution, winding up or Deemed Liquidation Event, the funds and assets available for distribution to the Corporation’s stockholders are insufficient to pay the holders of shares of Series B Preferred Stock the full amount to which they are entitled under this Section 1.4, the holders of shares of Series B Preferred Stock will share ratably in any distribution of the funds and assets available for distribution in proportion to the respective amounts that would otherwise be payable in respect of the shares of Series B Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

1.5 Payments to Holders of Series A Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation or any Deemed Liquidation Event (as defined below), after the payment of all preferential amounts required to be paid to the holders of shares of Series D Preferred Stock, Series C Preferred Stock, Series J


Preferred Stock and Series B Preferred Stock as provided in Section 1.1, Section 1.2, Section 1.3 and Section 1.4 and before any payment shall be made to the holders of Series Seed-1 Preferred Stock, Series Seed Preferred Stock, Series M Preferred Stock or Common Stock by reason of their ownership thereof, the holders of shares of Series A Preferred Stock then outstanding must be paid, out of the remaining funds and assets available for distribution to the Corporation’s stockholders, an amount per share equal to (a) one and a half times (1.5x) the Original Issue Price for such shares of Series A Preferred Stock, plus (b) any declared but unpaid dividends thereon. If upon any such liquidation, dissolution, winding up or Deemed Liquidation Event, the funds and assets available for distribution to the Corporation’s stockholders are insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they are entitled under this Section 1.5, the holders of shares of Series A Preferred Stock will share ratably in any distribution of the funds and assets available for distribution in proportion to the respective amounts that would otherwise be payable in respect of the shares of Series A Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

1.6 Payments to Holders of Series Seed-1 Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation or any Deemed Liquidation Event (as defined below), after the payment of all preferential amounts required to be paid to the holders of shares of Series D Preferred Stock, Series C Preferred Stock, Series J Preferred Stock, Series B Preferred Stock and Series A Preferred Stock as provided in Section 1.1, Section 1.2, Section 1.3 and Section 1.4 and Section 1.5, respectively, and before any payment shall be made to the holders of Series Seed Preferred Stock, Series M Preferred Stock or Common Stock by reason of their ownership thereof, the holders of shares of Series Seed-1 Preferred Stock then outstanding must be paid, out of the remaining funds and assets available for distribution to the Corporation’s stockholders, an amount per share equal to the Deemed Issue Price for such shares of Series Seed-1 Preferred Stock, plus any declared but unpaid dividends thereon. If upon any such liquidation, dissolution, winding up or Deemed Liquidation Event, the funds and assets available for distribution to the Corporation’s stockholders are insufficient to pay the holders of shares of Series Seed-1 Preferred Stock the full amount to which they are entitled under this Section 1.6, the holders of shares of Series Seed-1 Preferred Stock will share ratably in any distribution of the funds and assets available for distribution in proportion to the respective amounts that would otherwise be payable in respect of the shares of Series Seed-1 Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

1.7 Payments to Holders of Series Seed Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation or any Deemed Liquidation Event (as defined below), after the payment of all preferential amounts required to be paid to the holders of shares of Series D Preferred Stock, Series C Preferred Stock, Series J Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and Series Seed-1 Preferred Stock as provided in Section 1.1, Section 1.2, Section 1.3 Section 1.4, Section 1.5 and Section 1.6, respectively, and before any payment shall be made to the holders of Series M Preferred Stock or Common Stock by reason of their ownership thereof, the holders of shares of Series Seed Preferred Stock then outstanding must be paid, out of the remaining funds and assets available for distribution to the Corporation’s stockholders, an amount per share equal to the Deemed Issue Price for such shares of Series Seed Preferred Stock, as the case may be, plus any


declared but unpaid dividends thereon. If upon any such liquidation, dissolution, winding up or Deemed Liquidation Event, the funds and assets available for distribution to the Corporation’s stockholders are insufficient to pay the holders of shares of Series Seed Preferred Stock the full amount to which they are entitled under this Section 1.7, the holders of shares of Series Seed Preferred Stock will share ratably in any distribution of the funds and assets available for distribution in proportion to the respective amounts that would otherwise be payable in respect of the shares of Series Seed Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

1.8 Payments to Holders of Series M Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation or any Deemed Liquidation Event (as defined below), after the payment of all preferential amounts required to be paid to the holders of shares of Series D Preferred Stock, Series C Preferred Stock, Series J Preferred Stock, Series B Preferred Stock, Series A Preferred Stock, Series Seed-1 Preferred Stock and Series Seed Preferred Stock as provided in Section 1.1, Section 1.2, Section 1.3 Section 1.4, Section 1.5, Section 1.6 and Section 1.7 respectively, and before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, the holders of shares of Series M Preferred Stock then outstanding must be paid, out of the remaining funds and assets available for distribution to the Corporation’s stockholders, an amount per share equal to the Original Issue Price for such shares of Series M Preferred Stock, as the case may be, plus any declared but unpaid dividends thereon. If upon any such liquidation, dissolution, winding up or Deemed Liquidation Event, the funds and assets available for distribution to the Corporation’s stockholders are insufficient to pay the holders of shares of Series M Preferred Stock the full amount to which they are entitled under this Section 1.8, the holders of shares of Series M Preferred Stock will share ratably in any distribution of the funds and assets available for distribution in proportion to the respective amounts that would otherwise be payable in respect of the shares of Series M Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

1.9 Payments to Holders of Common Stock and Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation or any Deemed Liquidation Event (as defined below), after the payment of all preferential amounts required to be paid to the holders of shares of Preferred Stock as provided in Section 1.1, Section 1.2, Section 1.3 Section 1.4, Section 1.5, Section 1.6, Section 1.7 and Section 1.8, the remaining funds and assets available for distribution to the Corporation’s stockholders will be distributed among the holders of shares of Common Stock and Participating Preferred Stock pro rata based on the number of shares of Common Stock and Preferred Stock (with each share of such Preferred Stock treated on as-converted-to Common Stock basis for such purpose) held by each such holder; provided, however, that the aggregate distributions made pursuant to this Section 1.9 and Section 1.5 with respect to each share of Series A Preferred Stock shall not exceed the greater of (i) two times (2x) the Original Issue Price of the Series A Preferred Stock or (ii) such amount per share as would have been payable had all shares of Series A Preferred Stock been converted into Common Stock immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event. In the event that the amount per share that would have been payable had all shares of Series A Preferred Stock been converted into Common Stock immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event exceeds the amount that the holders of Series A Preferred Stock would receive pursuant to Section 1.5 and Section


1.9(i), then the shares of Series A Preferred Stock shall be deemed to have been converted into Common Stock immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event.

1.10 Deemed Liquidation Events.

1.10.1 Definition. Each of the following events is a “Deemed Liquidation Event” unless the holders of at least (i) a majority of the outstanding shares of Preferred Stock, voting as a single class, (ii) a majority of the outstanding shares of Series D Preferred Stock, including the affirmative vote of (a) the RPM Investor so along as the RPM Investor continue to own beneficially and of record an aggregate of at least 75% of the shares of Series D Preferred Stock acquired by the RPM Investor under the Purchase Agreement, after all then-current Closings (as defined in the Purchase Agreement) (or an equivalent amount of Common Stock issued upon conversion thereof, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such shares) and (b) AE (the “Requisite Series D Preferred Approval”), (iii) a majority of the outstanding shares of Series C Preferred Stock, voting as a single class, and (iii) a majority of the outstanding shares of Series B Preferred Stock, voting as a single class (collectively clauses (i)-(iv), the “Requisite Holders”), elect otherwise by written notice received by the Corporation at least five (5) days prior to the effective date of any such event:

(a) A merger or consolidation (other than a SPAC Transaction) in which (i) the Corporation is a constituent party or (ii) a subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger or consolidation, except any such merger or consolidation involving the Corporation or a subsidiary in which the shares of the Corporation’s capital stock outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for equity securities that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the equity securities of the surviving or resulting party or, if the surviving or resulting party is a wholly-owned subsidiary of another party immediately following such merger or consolidation, the ultimate parent of such surviving or resulting party; provided that, for the purpose of this Section 1.10.1, all shares of Common Stock issuable upon exercise of Options outstanding immediately prior to such merger or consolidation or upon conversion of Convertible Securities (as defined below) outstanding immediately prior to such merger or consolidation shall be deemed to be outstanding immediately prior to such merger or consolidation and, if applicable, deemed to be converted or exchanged in such merger or consolidation on the same terms as the actual outstanding shares of Common Stock are converted or exchanged; or

(b) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, or, if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, the sale or disposition (whether by merger or otherwise, and whether in a single transaction or a series of related transactions) of one or more subsidiaries of the Corporation, except where such sale, lease, transfer or other disposition is to the Corporation or one or more wholly-owned subsidiaries of the Corporation or in a SPAC Transaction.


1.10.2 Amount Deemed Paid or Distributed. The funds and assets deemed paid or distributed to the holders of the Corporation’s capital stock upon any such merger, consolidation, sale, lease, transfer, exclusive license, or other disposition described in this Section 1.10 will be the cash or the value of the property, rights or securities paid or distributed to such holders by the Corporation or the acquiring person, firm or other entity. The value of such property, rights or securities shall be determined in good faith by the Board (including the Preferred Director Majority) at the then reasonable fair market value under the circumstances.

1.10.3 Effecting a Deemed Liquidation Event. The Corporation shall not have the power to effect a Deemed Liquidation Event referred to in Section 1.10.1(a) unless the agreement or plan of merger or consolidation for such transaction (the “Merger Agreement”) provides that the consideration payable to the stockholders of the Corporation in such Deemed Liquidation Event shall be allocated among the holders of capital stock of the Corporation in the same manner as “funds and assets available for distribution” in accordance with Section 1.1, Section 1.2, Section 1.3 Section 1.4, Section 1.5, Section 1.6, Section 1.7, Section 1.8 and Section 1.9. In the event of a Deemed Liquidation Event referred to in Section 1.10.1(b) if the Corporation does not effect a dissolution of the Corporation under the General Corporation Law within ninety (90) days after such Deemed Liquidation Event, then (i) the Corporation shall send a written notice to each holder of Preferred Stock no later than the 90th day after the Deemed Liquidation Event advising such holders of their right (and the requirements to be met to secure such right) pursuant to the terms of the following clause (ii) to require the redemption of such shares of Preferred Stock, and (ii) unless the Requisite Holders request otherwise in a written instrument delivered to the Corporation not later than one-hundred twenty (120) days after such Deemed Liquidation Event, the Corporation shall use the consideration received by the Corporation for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board), together with any other assets of the Corporation available for distribution to its stockholders (the “Available Proceeds”), to the extent legally available therefor, on the 150th day after such Deemed Liquidation Event, to redeem all outstanding shares of Preferred Stock in the order of priority set forth in Section 1.1, Section 1.2, Section 1.3 Section 1.4, Section 1.5, Section 1.6, Section 1.7, Section 1.8 and Section 1.9. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem all outstanding shares of Preferred Stock, then the Corporation shall redeem a pro rata portion of each holder’s shares of Preferred Stock to the fullest extent of such Available Proceeds, based on the respective amounts which would otherwise be payable in respect of the shares to be redeemed if the Available Proceeds were sufficient to redeem all such shares, and shall redeem the remaining shares to have been redeemed as soon as practicable after the Corporation has funds legally available therefor. Prior to the distribution or redemption provided for in this Section 1.10.3, the Corporation shall not expend or dissipate the consideration received for such Deemed Liquidation Event, except to discharge expenses incurred in connection with such Deemed Liquidation Event.


1.10.4 Allocation of Escrow and Contingent Consideration. In the event of a Deemed Liquidation Event, if any portion of the consideration payable to the stockholders of the Corporation is placed into escrow and/or is payable to the stockholders of the Corporation subject to contingencies (the “Additional Consideration”), the Merger Agreement shall provide that (a) the portion of such consideration that is not placed in escrow and not subject to any contingencies (the “Initial Consideration”) shall be allocated among the holders of capital stock of the Corporation in the same manner as “funds and assets available for distribution” in accordance with Section 1.1, Section 1.2, Section 1.3 Section 1.4, Section 1.5, Section 1.6, Section 1.7, Section 1.8 and Section 1.9 as if the Initial Consideration were the only consideration payable in connection with such Deemed Liquidation Event, and (b) any Additional Consideration which becomes payable to the stockholders of the Corporation upon release from escrow or satisfaction of contingencies shall be allocated among the holders of capital stock of the Corporation the same manner as “funds and assets available for distribution” in accordance with Section 1.1, Section 1.2, Section 1.3 Section 1.4, Section 1.5, Section 1.6, Section 1.7, Section 1.8 and Section 1.9 after taking into account the previous payment of the Initial Consideration as part of the same transaction.

 

2.

Voting.

2.1 General. On any matter presented to the Corporation’s stockholders for their action or consideration at any meeting of Corporation’s stockholders (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Preferred Stock may cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Preferred Stock held by such stockholder are convertible into as of the record date for determining stockholders entitled to vote on such matter; provided, that, if at any time the Glow Investors hold, in the aggregate, less than 50.1% of the votes represented by all outstanding shares of the Corporation’s capital stock entitled to vote as a result of the exercise of either of the Specified Options (as defined in the Voting Agreement), the number of votes then held by the Glow Investors shall be automatically (and without further action of the stockholders) adjusted, such that the Glow Investors hold, in the aggregate, 50.1% of the votes represented by all outstanding shares of the Corporation’s capital stock entitled to vote. Fractional votes shall not be permitted and any fractional voting rights available on an as converted basis (after aggregating all shares into which shares of Preferred Stock held by each stockholder could be converted) will be rounded to the nearest whole number (with one-half being rounded upward). Except as provided by law or by the other provisions of this Restated Certificate, holders of Preferred Stock shall (x) vote together with the holders of Common Stock as a single class on as converted basis, (y) have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock, and (z) be entitled, notwithstanding any provision of this Restated Certificate, to notice of any stockholder meeting in accordance with the Corporation’s Bylaws (as amended, the “Bylaws”).

2.2 Election of Directors. The holders of record of the outstanding shares of Series D-1 Preferred Stock, exclusively and as a separate class, shall be entitled to elect one (1) director of the Corporation (the “Series D Director”), the holders of record of the outstanding shares of Series B Preferred Stock, exclusively and as a separate class, shall be entitled to elect two (2) directors (or such higher number of directors as are elected by the holders of Series B Preferred Stock from time to time upon notice to the Board but without consent from the Board or any other stockholders of the Corporation in accordance with a Board Change Election (as defined in the Voting Agreement)) of the Corporation (each, a “Series B Director” and collectively, the


“Series B Directors”), the holders of record of the outstanding shares of Series A Preferred Stock, exclusively and as a separate class, shall be entitled to elect one (1) director of the Corporation (the “Series A Director,” and together with the Series D Director and the Series B Directors, the “Preferred Directors”), the holders of record of the shares of Common Stock (other than any Common Stock issued upon conversion of Series D-2 Preferred Stock), exclusively and as a separate class, shall be entitled to elect one (1) director of the Corporation (the “Common Director”). The holders of record of the shares of Common Stock (other than any Common Stock issued upon conversion of Series D-2 Preferred Stock) and the holders of record of the shares of Preferred Stock (other than Series D-2 Preferred Stock), exclusively and voting together as a single class on an as-converted to Common Stock basis, shall be entitled to elect the balance of the total number of directors of the Corporation. For the avoidance of doubt, the holders of Series D-2 Preferred Stock will not have any right to vote in the election of directors. For as long as each of the foregoing parties have the right to appoint the respective directors, any director elected as provided in the preceding sentences of this Section 2.2 may be removed without cause by, and only by, the affirmative vote of the holders of the shares of the class or series of capital stock entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for that purpose or pursuant to a written consent of such stockholders. If the holders of shares of Series D-1 Preferred Stock, Series B Preferred Stock, Series A Preferred Stock, or Common Stock, as the case may be, fail to elect a sufficient number of directors to fill all directorships for which they are entitled to elect directors, voting exclusively and as separate classes, pursuant to the first sentence of this Section 2.2, then any directorship not so filled shall remain vacant until such time as the holders of the Series D-1 Preferred Stock, Series B Preferred Stock, Series A Preferred Stock, or Common Stock, as the case may be, elect a person to fill such directorship by vote or written consent in lieu of a meeting; and no such directorship may be filled by stockholders of the Corporation other than by the stockholders of the Corporation that are entitled to elect a person to fill such directorship, voting exclusively and as a separate class.

2.3 Voting of Directors. The Series B Director appointed as chairman by the Glow Investor has, to the extent disinterested, (i) a required vote for matters subject to approval by the Board and (ii) a casting vote in the event of an even number of directors on the Board. Except for the chairman’s required vote and casting vote, each director shall have one (1) vote on all matters presented to the Board; provided, however, that, so long as the holders of Preferred Stock are entitled to elect Preferred Directors, the affirmative vote of the Preferred Director Majority shall be required for the authorization by the Board of Directors of any of the matters set forth in the Investors’ Rights Agreement, dated on or about the Original Issue Date, by and among the Corporation and the other parties thereto, as such agreement may be amended from time to time, to the extent required by such provision and if the Preferred Directors are then serving.

2.4 Preferred Stock Protective Provisions.

2.4.1 Series D Preferred Stock Protective Provisions. So long as any shares of the Series D Preferred Stock remain outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, reclassification, or otherwise, without (in addition to any other vote required by law or this Restated Certificate) the written consent or affirmative vote of the Requisite Series D Preferred Approval, given in writing or by vote at a meeting, consenting, or voting (as the case may be) separately as a single class, and any such act


or transaction entered into without such consent or vote shall be null and void ab initio, and of no force and effect, take action that (i) amends (or otherwise modifies or waives any provision of) the Corporation’s Restated Certificate or Bylaws in a manner that affects the rights, preferences or privileges of the Series D Preferred Stock materially and disproportionately adverse as compared to any other series of Preferred Stock; provided, that the authorization and issuance of a new series of Preferred Stock shall not, in and of itself, be deemed to adversely affect the Series D Preferred Stock; (ii) amends the Corporation’s Restated Certificate to increase or decrease the number of authorized shares of the Series D Preferred Stock; (iii) purchases or redeems (or permits any Subsidiary to purchase or redeem), or pays or declares any dividend (in each case, other than with respect to the Series D Accruing Dividends, Series C Accruing Dividends, and the redemption rights under Section 5 herein) or make any distribution on, any shares of capital stock of the Corporation other than repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Corporation or any Subsidiary in connection with the cessation of such employment or service at a price no greater than the original purchase price of such shares; (iv) reclassifies, alters or amends any existing security that is junior to or on parity with the Series D Preferred Stock, if such reclassification, alteration or amendment would render such other security senior to or on parity with the Series D Preferred Stock or otherwise decrease the amount distributable to the Series D Preferred in a Deemed Liquidation Event or any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation; (v) enters into any new transaction or agreement after the date hereof (or amend or supplement any existing agreement) with the Majority Sponsor (as defined in the Purchase Agreement, and including, for the avoidance of doubt, its affiliates), or agrees to any new transaction- or event-specific fee or new fee arrangement payable to the Majority Sponsor (pursuant to any new agreement) entered into after the date hereof, without the prior approval of the Board, including a majority of the disinterested directors of the Corporation; (vi) results in the Corporation holding capital stock in any subsidiary of the Corporation that is not a wholly-owned subsidiary of the Corporation; (vii) effects any public offering of shares of capital stock of the Corporation or other transactions that would cause the Corporation (or its successor) to become a reporting Corporation, other than a Qualified IPO or SPAC Transaction; (viii) takes any action that, in the reasonable judgment of the Corporation would subject any holder of Series D Preferred Stock to regulation by any governmental, quasi-governmental or self-regulatory agency; (ix) effects any liquidation, dissolution or wind-up of the business and affairs of the Corporation or any Deemed Liquidation Event, unless the holders of Series D-1 Preferred Stock receive at the closing of such transaction with respect to each share of Series D-1 Preferred Stock at least two (2) times the Original Issue Price of the Series D-1 Preferred Stock plus all accrued but unpaid dividends on such share of Series D-1 Preferred Stock (including the applicable Series D Accruing Dividend); (x) amends or waives Section 1.10.1(ii); or (xi) amends or waives Section 3.11(c) with respect to the Series D Preferred Stock.

2.4.2 Series C Preferred Stock Protective Provisions. So long as any shares of the Series C Preferred Stock remain outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, reclassification, or otherwise (but excluding a Qualified IPO, a SPAC Transaction, or an exercise of drag-along rights pursuant to Section 4 of the Voting Agreement), without (in addition to any other vote required by law or this Restated Certificate) the written consent or affirmative vote of a majority of the outstanding shares of Series C Preferred Stock, given in writing or by vote at a meeting, consenting, or voting (as the case may be) separately as a single class, and any such act or transaction entered into without


such consent or vote shall be null and void ab initio, and of no force and effect, take action that (i) amends (or otherwise modifies or waives any provision of) the Corporation’s Restated Certificate or Bylaws in a manner that affects the rights, preferences or privileges of the Series C Preferred Stock materially and disproportionately adverse as compared to any other series of Preferred Stock; provided that the authorization and issuance of a new series of Preferred Stock shall not, in and of itself, be deemed to adversely affect the Series C Preferred Stock; (ii) amends the Corporation’s Restated Certificate to increase or decrease the number of authorized shares of the Series C Preferred Stock; or (iii) purchases or redeems (or permits any Subsidiary to purchase or redeem) or pays or declares any dividend (in each case, other than with respect to the Series D Accruing Dividends, Series C Accruing Dividends, and the redemption rights under Section 5 herein) or makes any distribution on, any shares of capital stock of the Corporation other than repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Corporation or any Subsidiary in connection with the cessation of such employment or service at a price no greater than the original purchase price of such shares.

2.4.3 Series J Preferred Stock Protective Provisions. So long as any shares of the Series J Preferred Stock remain outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, reclassification, or otherwise, without (in addition to any other vote required by law or this Restated Certificate) the written consent or affirmative vote of a majority of the outstanding shares of Series J Preferred Stock, given in writing or by vote at a meeting, consenting, or voting (as the case may be) separately as a single class, take action that (i) adversely affects the rights, preferences or privileges of the Series J Preferred Stock differently from any other series of Preferred Stock then outstanding; provided, that the authorization and issuance of a new series of preferred stock shall not, in and of itself, be deemed to adversely affect the Series J Preferred Stock; or (ii) amends the Corporation’s Restated Certificate to increase or decrease the number of authorized shares of the Series J Preferred Stock.

2.4.4 Series B Preferred Stock Protective Provisions. So long as any shares of the Series B Preferred Stock remain outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, reclassification, or otherwise, without (in addition to any other vote required by law or this Restated Certificate) the written consent or affirmative vote of a majority of the outstanding shares of Series B Preferred Stock, given in writing or by vote at a meeting, consenting, or voting (as the case may be) separately as a single class, take action that (i) adversely affects the rights, preferences or privileges of the Series B Preferred Stock differently from any other series of Preferred Stock then outstanding; provided, that the authorization and issuance of a new series of Preferred Stock shall not, in and of itself, be deemed to adversely affect the Series B Preferred Stock; or (ii) amends the Corporation’s Restated Certificate to increase or decrease the number of authorized shares of the Series B Preferred Stock.

2.4.5 Series A Preferred Stock Protective Provisions. So long as any shares of the Series A Preferred Stock remain outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, reclassification, or otherwise, without (in addition to any other vote required by law or this Restated Certificate) the written consent or affirmative vote of a majority of the outstanding shares of Series A Preferred Stock, given in


writing or by vote at a meeting, consenting, or voting (as the case may be) separately as a single class, take any action that (i) adversely affects the rights, preferences or privileges of Series A Preferred Stock differently from any other series of Preferred Stock then outstanding; provided that the authorization and issuance of a new series of Preferred Stock shall not, in and of itself, be deemed to adversely affect the Series A Preferred Stock; or (ii) amends the Corporation’s Restated Certificate to increase or decrease the number of authorized shares of the Series A Preferred Stock.

2.4.6 Series Seed-1 Preferred Stock Protective Provisions. So long as any shares of the Series Seed-1 Preferred Stock remain outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, reclassification, or otherwise, without (in addition to any other vote required by law or this Restated Certificate) the written consent or affirmative vote of a majority of the outstanding shares of Series Seed-1 Preferred Stock, given in writing or by vote at a meeting, consenting, or voting (as the case may be) separately as a single class, take any action that (i) adversely affects the rights, preferences or privileges of Series Seed-1 Preferred Stock differently from any other series of Preferred Stock then outstanding; provided that the authorization and issuance of a new series of Preferred Stock shall not, in and of itself, be deemed to adversely affect the Series Seed-1 Preferred Stock; or (ii) amends the Corporation’s Restated Certificate to increase or decrease the number of authorized shares of the Series Seed-1 Preferred Stock.

2.4.7 Series Seed Preferred Stock Protective Provisions. So long as any shares of the Series Seed Preferred Stock remain outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, reclassification, or otherwise, without (in addition to any other vote required by law or this Restated Certificate) the written consent or affirmative vote of a majority of the outstanding shares of Series Seed Preferred Stock, given in writing or by vote at a meeting, consenting, or voting (as the case may be) separately as a single class, take any action that (i) adversely affects the rights, preferences or privileges of Series Seed Preferred Stock differently from any other series of Preferred Stock then outstanding; provided that the authorization and issuance of a new series of Preferred Stock shall not, in and of itself, be deemed to adversely affect the Series Seed Preferred Stock; or (ii) amends the Corporation’s Restated Certificate to increase or decrease the number of authorized shares of the Series Seed Preferred Stock.

2.4.8 Series M Preferred Stock Protective Provisions. So long as any shares of the Series M Preferred Stock remain outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, reclassification, or otherwise, without (in addition to any other vote required by law or this Restated Certificate) the written consent or affirmative vote of a majority of the outstanding shares of Series M Preferred Stock, given in writing or by vote at a meeting, consenting, or voting (as the case may be) separately as a single class, take any action that (i) adversely affects the rights, preferences or privileges of Series M Preferred Stock differently from any other series of Preferred Stock then outstanding; provided that the authorization and issuance of a new series of Preferred Stock shall not, in and of itself, be deemed to adversely affect the Series M Preferred Stock; or (ii) amends the Corporation’s Restated Certificate to increase or decrease the number of authorized shares of the Series M Preferred Stock.


2.4.9 Definition. “Subsidiary” for purposes of this Section 2.4 means a corporation, partnership, limited liability company, joint venture, or other business entity of which a majority of the shares or other equity interests are directly or indirectly owned by the Corporation.

3. Conversion. The holders of the Preferred Stock have the following conversion rights (the “Conversion Rights”):

3.1 Right to Convert.

3.1.1 Conversion Ratio. Each share of Series M Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Original Issue Price by the Series M Conversion Price in effect at the time of conversion. The “Series M Conversion Price” shall initially be equal to the Original Issue Price for the Series M Preferred Stock. Such initial Series M Conversion Price, and the rate at which shares of Series M Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided in this Restated Certificate. Each share of Series Seed-1 Preferred Stock and Series Seed Preferred Stock is convertible, at the option of the holder thereof and without the payment of additional consideration by the holder thereof, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the applicable Deemed Issue Price for the series of Seed Preferred Stock by the applicable Series Seed Conversion Price for that series of Seed Preferred Stock in effect at the time of conversion. The “Series Seed Conversion Price” for each series of Seed Preferred Stock means the Original Issue Price for such series of Seed Preferred Stock, which initial Series Seed Conversion Price, and the rate at which shares of Seed Preferred Stock may be converted into shares of Common Stock, is subject to adjustment as provided in this Restated Certificate. Each share of Series A Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Original Issue Price by the Series A Conversion Price in effect at the time of conversion. The “Series A Conversion Price” shall initially be equal to the Original Issue Price for the Series A Preferred Stock. Such initial Series A Conversion Price, and the rate at which shares of Series A Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided in this Restated Certificate. Each share of Series B Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Original Issue Price by the Series B Conversion Price in effect at the time of conversion. The “Series B Conversion Price” shall initially be equal to the Original Issue Price for the Series B Preferred Stock. Such initial Series B Conversion Price, and the rate at which shares of Series B Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided in this Restated Certificate. Each share of Series J Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Original Issue Price by the Series J Conversion Price in effect at the


time of conversion. The “Series J Conversion Price” shall initially be equal to the Original Issue Price for the Series J Preferred Stock. Such initial Series J Conversion Price, and the rate at which shares of Series J Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided in this Restated Certificate. Each share of Series C Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Original Issue Price by the Series C Conversion Price in effect at the time of conversion. The “Series C Conversion Price” shall initially be equal to the Original Issue Price for the Series C Preferred Stock. Such initial Series C Conversion Price, and the rate at which shares of Series C Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided in this Restated Certificate. Each holder of Series D-2 Preferred Stock shall have the right to convert each share of Series D-2 Preferred Stock into one (1) share of Series D-1 Preferred Stock at any time. Each share of Series D Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Original Issue Price by the Series D Conversion Price in effect at the time of conversion; provided that shares of Series D-2 Preferred Stock held by any holder required to make any filing (the “Antitrust Filing”) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules promulgated thereunder or any other applicable antitrust laws in connection with the acquisition of Series D-1 Preferred Stock shall not be convertible into Series D-1 Preferred Stock until such time as the waiting period with respect to such holder’s Antitrust Filing has expired or been terminated or any approvals with respect to such holder’s Antitrust Filing has been obtained, and such holder delivers written evidence thereof to the Corporation. The “Series D Conversion Price” shall initially be equal to the Original Issue Price for the Series D Preferred Stock. Such initial Series D Conversion Price, and the rate at which shares of Series D Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided in this Restated Certificate. As used hereinafter, the “Conversion Price” shall mean the Series M Conversion Price, the Series Seed Conversion Price, Series A Conversion Price, Series B Conversion Price, Series J Conversion Price, Series C Conversion Price or the Series D Conversion Price, as applicable.

3.1.2 Termination of Conversion Rights. Subject to Section 3.3.1, in the case of a Contingency Event (as defined below), in the event of a liquidation, dissolution, or winding up of the Corporation or a Deemed Liquidation Event, the Conversion Rights will terminate at the close of business on the last full day preceding the date fixed for the first payment of any funds and assets distributable or payable on such event to the holders of Preferred Stock; provided that the foregoing termination of Conversion Rights shall not affect the amount(s) otherwise paid or payable to holders of Preferred Stock in connection with to such liquidation, dissolution or winding up of the Corporation or a Deemed Liquidation Event pursuant to the provisions of Section 1.

3.2 Fractional Shares. No fractional shares of Common Stock will be issued upon conversion of the Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of a share of Common Stock as determined in good faith by the Board. Whether or not fractional shares would be issuable upon such conversion will be determined on the basis of the total number of shares of Preferred Stock the holder has at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.


3.3 Mechanics of Conversion.

3.3.1 Notice of Conversion. To voluntarily convert shares of Preferred Stock into shares of Common Stock, a holder of shares of Preferred Stock shall (i) provide written notice to the Corporation’s transfer agent at the office of the transfer agent for the Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent) that such holder elects to convert all or any number of such holder’s shares of Preferred Stock and, if applicable, any event on which such conversion is contingent and (ii), if such holder’s shares are certificated, surrender the certificate or certificates for the shares of Preferred Stock (or, if such registered holder alleges that any such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate), at the office of the transfer agent for the Preferred Stock (or at the Corporation’s principal office if the Corporation serves as its own transfer agent), together with written notice that the holder elects to convert all or any number of the shares of the Preferred Stock represented by the certificate or certificates and, if applicable, any event on which the conversion is contingent (a “Contingency Event”). The conversion notice must state the holder’s name or the names of the nominees in which such holder wishes the certificate or certificates for shares of Common Stock to be issued. If required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form reasonably satisfactory to the Corporation, duly executed by the registered holder or such holder’s attorney duly authorized in writing. The close of business on the date of receipt by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) of the certificates (or lost certificate affidavit and agreement) and notice (or, if later, the date on which all Contingency Events have occurred) will be the time of conversion (the “Conversion Time”), and the shares of Common Stock issuable upon conversion of the shares represented by such certificate shall be deemed to be outstanding of record as of such time. The Corporation shall, as soon as practicable after the Conversion Time, (a) issue and deliver to the holder, or to the holder’s nominees, a certificate or certificates for the number of full shares of Common Stock issuable upon the conversion in accordance with the provisions of this Restated Certificate and a certificate for the number (if any) of the shares of Preferred Stock represented by the surrendered certificate that were not converted into Common Stock, (b) pay in cash such amount as provided in Section 3.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and (c) pay all declared but unpaid dividends (including any Series D Accruing Dividends or Series C Accruing Dividends, as applicable) on the shares of Preferred Stock converted.

3.3.2 Reservation of Shares. For the purpose of effecting the conversion of the Preferred Stock, the Corporation shall at all times while any share of Preferred Stock is outstanding, reserve and keep available out of its authorized but unissued capital stock, that number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock is not be sufficient to effect the conversion of all then-outstanding shares of the Preferred Stock, the Corporation shall cause such corporate


action to be taken as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, but not limited to, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Restated Certificate. Before taking any action that would cause an adjustment reducing the Conversion Price of a series of Preferred Stock below the then-par value of the shares of Common Stock issuable upon conversion of such series of Preferred Stock, the Corporation shall take any corporate action that may be necessary so that the Corporation may validly and legally issue fully paid and nonassessable shares of Common Stock at such adjusted Conversion Price.

3.3.3 Effect of Conversion. All shares of Preferred Stock that shall have been surrendered for conversion as provided in this Restated Certificate shall no longer be deemed to be outstanding and all rights with respect to such shares will immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor, to receive payment in lieu of any fraction of a share otherwise issuable upon such conversion as provided in Section 3.2, and to receive payment of any declared but unpaid dividends (including any Series D Accruing Dividends or Series C Accruing Dividends, as applicable) thereon. Any shares of Preferred Stock so converted shall be retired and cancelled and may not be reissued and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly.

3.3.4 No Further Adjustment. Upon any conversion of shares of Preferred Stock, no adjustment to the Conversion Price of the applicable series of Preferred Stock will be made with respect to the converted shares for any declared but unpaid dividends on such series of Preferred Stock or on the Common Stock delivered upon conversion.

3.4 Adjustment for Stock Splits and Combinations. If the Corporation at any time or from time to time after the date on which the first share of Series D Preferred Stock is issued by the Corporation (such date referred to herein as the “Original Issue Date”) effects a subdivision of the outstanding Common Stock, the Conversion Price for such series of Preferred Stock in effect immediately before that subdivision shall be proportionately decreased so that the number of shares of Common Stock issuable on conversion of each share of that series will be increased in proportion to the increase in the aggregate number of shares of Common Stock outstanding. If the Corporation at any time or from time to time after the Original Issue Date combines the outstanding shares of Common Stock, the Conversion Price for such series of Preferred Stock in effect immediately before the combination will be proportionately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in the aggregate number of shares of Common Stock outstanding. Any adjustment under this Section 3.4 becomes effective at the close of business on the date the subdivision or combination becomes effective.

3.5 Adjustment for Certain Dividends and Distributions. If the Corporation at any time or from time to time after the Original Issue Date makes or issues, or fixes a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable on the Common Stock in additional shares of Common Stock, then and in each such event the Conversion Price for such series of Preferred Stock in effect immediately


before the event will be decreased as of the time of such issuance or, in the event a record date has been fixed, as of the close of business on such record date, by multiplying such Conversion Price then in effect by a fraction:

(a) the numerator of which is the total number of shares of Common Stock issued and outstanding immediately prior to the time of the issuance or the close of business on the record date, and

(b) the denominator of which is the total number of shares of Common Stock issued and outstanding immediately before the time of such issuance or the close of business on the record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution.

Notwithstanding the foregoing, (i) if such record date has been fixed and the dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, such Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter such Conversion Price shall be adjusted pursuant to this Section 3.5 as of the time of actual payment of such dividends or distributions; and (ii) no such adjustment shall be made if the holders of such series of Preferred Stock simultaneously receive a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock that they would have received if all outstanding shares of such series of Preferred Stock had been converted into Common Stock on the date of the event.

3.6 Adjustments for Other Dividends and Distributions. If the Corporation at any time or from time to time after the Original Issue Date makes or issues, or fixes a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation (other than a distribution of shares of Common Stock in respect of outstanding shares of Common Stock), then and in each such event the Corporation shall make, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution to the holders of such series of Preferred Stock in an amount equal to the amount of securities as the holders would have received if all outstanding shares of such series of Preferred Stock had been converted into Common Stock on the date of such event.

3.7 Adjustment for Reclassification, Exchange and Substitution. If at any time or from time to time after the Original Issue Date the Common Stock issuable upon the conversion of such series of Preferred Stock is changed into the same or a different number of shares of any class or classes of stock of the Corporation, whether by recapitalization, reclassification, or otherwise (other than by a stock split or combination, dividend, distribution, merger or consolidation covered by Sections 3.4, 3.5, 3.6 or 3.8 or by Section 1.10 regarding a Deemed Liquidation Event), then in any such event each holder of such series of Preferred Stock may thereafter convert such stock into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change by holders of the number of shares of Common Stock into which such shares of Preferred Stock could have been converted immediately prior to such recapitalization, reclassification or change.


3.8 Adjustment for Merger or Consolidation. Subject to the provisions of Section 1.10, if any consolidation or merger occurs involving the Corporation in which the Common Stock (but not a series of Preferred Stock) is converted into or exchanged for securities, cash, or other property (other than a transaction covered by Sections 3.4, 3.5, 3.6 or 3.7), then, following any such consolidation or merger, the Corporation shall provide that each share of such series of Preferred Stock will thereafter be convertible, in lieu of the Common Stock into which it was convertible prior to the event, into the kind and amount of securities, cash, or other property which a holder of the number of shares of Common Stock issuable upon conversion of one share of such series of Preferred Stock immediately prior to the consolidation or merger would have been entitled to receive pursuant to the transaction; and, in such case, the Corporation shall make appropriate adjustment (as determined in good faith by the Board) in the application of the provisions in this Section 3 with respect to the rights and interests thereafter of the holders of such series of Preferred Stock, to the end that the provisions set forth in this Section 3 (including provisions with respect to changes in and other adjustments of the Conversion Price of such series of Preferred Stock) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of such series of Preferred Stock.

3.9 Adjustments to Conversion Prices for Dilutive Issuances.

3.9.1 Special Definitions. For purposes of this Section 3.9, the following definitions shall apply:

“Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

“Convertible Securities” shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock, but excluding Options.

“Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, pursuant to Section 3.9.3, deemed to be issued) by the Corporation after the Original Issue Date, other than the following shares of Common Stock and shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities (collectively “Exempted Securities”):

(a) shares of Common Stock, including Options therefor (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such shares), issued to employees or directors of, or consultants or advisors to, the Corporation or any of its subsidiaries pursuant to the Corporation’s employee stock option plan, whether issued before or after the Original Issue Date, provided that such plan has been approved by the Board, including the Preferred Director Majority;

(b) shares issued as consideration for the acquisition by the Corporation of voting control or all or substantially all of the assets of another business entity in a transaction approved by the Board, including the Preferred Director Majority;

(c) shares issued to financial institutions or lessors pursuant to a bona fide extension of credit to the Corporation (including loans, lines of credit, guarantees or other financing arrangements) or pursuant to a bona fide lease of equipment, personal property or real property, in each case for other than equity financing purposes and approved by the Board including the Preferred Director Majority or a Board committee authorized by the foregoing;


(d) shares of Common Stock issued upon the exercise of Options;

(e) shares of Common Stock issued upon conversion of Preferred Stock;

(f) shares issued in connection with a Qualified IPO;

(g) Common Stock issuable upon a stock split, stock dividend, or any subdivision of shares of Common Stock;

(h) shares of Common Stock, Options or Convertible Securities issued by reason of a dividend, stock split, split-up or other distribution on shares of Preferred Stock; and

(i) shares of Preferred Stock or Common Stock issued or issuable pursuant to the Purchase Agreement.

3.9.2 No Adjustment of Conversion Price. No adjustment in the Conversion Price of the Preferred Stock shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from (i) the Requisite Holders and (ii) in the case of the Series M Preferred Stock, a majority of the outstanding shares of Series M Preferred Stock, as applicable, agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock.

3.9.3 Deemed Issue of Additional Shares of Common Stock.

(a) If the Corporation at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities (excluding Options or Convertible Securities which are themselves Exempted Securities) or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability but without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date.

(b) If the terms of any Option or Convertible Security, the issuance of which resulted in an adjustment to the Conversion Price of the Preferred Stock pursuant to the terms of Section 3.9.3(f), are revised as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to antidilution or similar provisions of such Option


or Convertible Security) to provide for either (1) any increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any such Option or Convertible Security or (2) any increase or decrease in the consideration payable to the Corporation upon such exercise, conversion and/or exchange, then, effective upon such increase or decrease becoming effective, the Conversion Price computed upon the original issue of such Option or Convertible Security (or upon the occurrence of a record date with respect thereto) shall be readjusted to such Conversion Price as would have obtained had such revised terms been in effect upon the original date of issuance of such Option or Convertible Security. Notwithstanding the foregoing, no readjustment pursuant to this Section 3.9.3(b) shall have the effect of increasing the Conversion Price to an amount which exceeds the lower of (i) the Conversion Price in effect immediately prior to the original adjustment made as a result of the issuance of such Option or Convertible Security, or (ii) the Conversion Price that would have resulted from any issuances of Additional Shares of Common Stock (other than deemed issuances of Additional Shares of Common Stock as a result of the issuance of such Option or Convertible Security) between the original adjustment date and such readjustment date.

(c) If the terms of any Option or Convertible Security (excluding Options or Convertible Securities which are themselves Exempted Securities), the issuance of which did not result in an adjustment to the Conversion Price pursuant to the terms of Section 3.9.3(f) (either because the consideration per share (determined pursuant to Section 3.9.4) of the Additional Shares of Common Stock subject thereto was equal to or greater than the Conversion Price then in effect, or because such Option or Convertible Security was issued before the Original Issue Date), are revised after the Original Issue Date as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any such Option or Convertible Security or (2) any increase or decrease in the consideration payable to the Corporation upon such exercise, conversion or exchange, then such Option or Convertible Security, as so amended or adjusted, and the Additional Shares of Common Stock subject thereto (determined in the manner provided in Section 3.9.3(a)) shall be deemed to have been issued effective upon such increase or decrease becoming effective.

(d) Upon the expiration or termination of any unexercised Option or unconverted or unexchanged Convertible Security (or portion thereof) which resulted (either upon its original issuance or upon a revision of its terms) in an adjustment to the Conversion Price pursuant to the terms of Section 3.9.3(f), the Conversion Price shall be readjusted to such Conversion Price as would have obtained had such Option or Convertible Security (or portion thereof) never been issued.

(e) If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, is calculable at the time such Option or Convertible Security is issued or amended but is subject to adjustment based upon subsequent events, any adjustment to the Conversion Price provided for in this Section 3.9.3 shall be effected at the time of such issuance or amendment based on such number of shares or amount of consideration without regard to any provisions for subsequent adjustments


(and any subsequent adjustments shall be treated as provided in Section 3.9.3(b) and Section 3.9.3(c). If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, cannot be calculated at all at the time such Option or Convertible Security is issued or amended, any adjustment to the Conversion Price that would result under the terms of this Section 3.9.3 at the time of such issuance or amendment shall instead be effected at the time such number of shares and/or amount of consideration is first calculable (even if subject to subsequent adjustments), assuming for purposes of calculating such adjustment to the Conversion Price that such issuance or amendment took place at the time such calculation can first be made.

(f) Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock.

(i) In the case of any Preferred Stock other than the Participating Series D Preferred Stock, if the Corporation shall at any time after the Original Issue Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 3.9.3), without consideration or for a consideration per share less than the applicable Conversion Price in effect immediately prior to such issue, then the applicable Conversion Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:

CP2 = CP1* (A + B) ÷ (A + C).

For purposes of the foregoing formula, the following definitions shall apply:

“CP2” shall mean the applicable Conversion Price in effect immediately after such issue of Additional Shares of Common Stock;

“CP1” shall mean the applicable Conversion Price in effect immediately prior to such issue of Additional Shares of Common Stock;

“A” shall mean the number of shares of Common Stock outstanding immediately prior to such issue of Additional Shares of Common Stock (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstanding immediately prior to such issue or upon conversion or exchange of Convertible Securities (including the Preferred Stock) outstanding (assuming exercise of any outstanding Options therefor) immediately prior to such issue);

“B” shall mean the number of shares of Common Stock that would have been issued if such Additional Shares of Common Stock had been issued at a price per share equal to CP1 (determined by dividing the aggregate consideration received by the Corporation in respect of such issue by CP1); and

“C” shall mean the number of such Additional Shares of Common Stock issued in such transaction.


(ii) In the case of Participating Series D Preferred Stock , if the Corporation shall at any time after the Original Issue Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 3.9.3) without consideration or for a consideration per share less than the Series D Conversion Price in effect immediately prior to such issue, then the Series D Conversion Price shall be reduced, concurrently with such issuance or deemed issuance, to the consideration per share received by the Corporation for such issue or deemed issue of the Additional Shares of Common Stock; provided that if such issuance or deemed issuance was without consideration, then the Corporation shall be deemed to have received an aggregate of $0.0001 of consideration per share for all such Additional Shares of Common Stock issued or deemed to be issued.

3.9.4 Determination of Consideration. For purposes of this Section 3.9.4, the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows:

(a) Cash and Property. Such consideration shall:

(i) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation, excluding amounts paid or payable for accrued interest;

(ii) insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board, including the Preferred Director Majority; and

(iii) if Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (i) and (ii) above, as determined in good faith by the Board, including the Preferred Director Majority.

(b) Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section 3.9.3, relating to Options and Convertible Securities, shall be determined by dividing:

(i) the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by

(ii) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the


conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.

3.9.5 Multiple Closing Dates. If the Corporation shall issue on more than one date Additional Shares of Common Stock that are a part of one transaction or a series of related transactions and that would result in an adjustment to the Conversion Price pursuant to the terms of Section 3.9.3(f), the Conversion Price shall be readjusted to give effect to all such issuances as if they occurred on the date of the first such issuance (and without giving effect to any additional adjustments as a result of any such subsequent issuances within such period).

3.10 Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price of a series of Preferred Stock pursuant to this Section 3, the Corporation at its expense shall, as promptly as reasonably practicable but in any event not later than fifteen (15) days thereafter, compute such adjustment or readjustment in accordance with the terms of this Restated Certificate and furnish to each holder of such series of Preferred Stock a certificate setting forth the adjustment or readjustment (including the kind and amount of securities, cash, or other property into which such series of Preferred Stock is convertible) and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, as promptly as reasonably practicable after the written request at any time of any holder of any series of Preferred Stock (but in any event not later than ten (10) days thereafter), furnish or cause to be furnished to such holder a certificate setting forth (a) the Conversion Price of such series of Preferred Stock then in effect and (b) the number of shares of Common Stock and the amount, if any, of other securities, cash, or property which then would be received upon the conversion of such series of Preferred Stock.

3.11 Mandatory Conversion. Upon (a) the closing of the sale of shares of Common Stock to the public in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least Five Hundred Million Dollars ($500,000,000) of gross proceeds to the Corporation, and (i) in connection with such offering the Common Stock is listed for trading on the Nasdaq Stock Market’s National Market or the New York Stock Exchange and (ii) such offering results in an offering price per share equal to at least two times (2x) the Original Issue Price of the Series D-1 Preferred Stock (a “Qualified IPO”), (b) a SPAC Transaction, or (c) the date and time, or the occurrence of an event, specified by vote or written consent of the holders of a majority of the then-outstanding shares of Preferred Stock; provided, that the conversion of the Series C Preferred Stock shall require the consent of the holders of at least a majority of the then-outstanding Series C Preferred Stock; provided, further, that conversion of the Series D Preferred Stock shall require the Requisite Series D Preferred Approval (the time of such closing, the “Mandatory Conversion Time”), then (i) all outstanding shares of Preferred Stock will automatically convert into shares of Common Stock, at the applicable ratios described in Section 3.1.1, as the same may be adjusted from time to time in accordance with this Section 3, and (ii) such shares may not be reissued by the Corporation.

3.12 Procedural Requirements. The Corporation shall notify in writing all holders of record of shares of Preferred Stock of the Mandatory Conversion Time and the place designated for mandatory conversion of all such shares of Preferred Stock pursuant to Section 3.11. the


notice shall be sent no less than twenty (20) days in advance of the occurrence of the Mandatory Conversion Time. Upon receipt of the notice, each holder of shares of Preferred Stock shall surrender such holder’s certificate or certificates for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation at the place designated in such notice, and shall thereafter receive certificates for the number of shares of Common Stock to which such holder is entitled pursuant to this Section 3. If so required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form reasonably satisfactory to the Corporation, duly executed by the registered holder or such holder’s attorney duly authorized in writing. All rights with respect to the Preferred Stock converted pursuant to Section 3.11, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate at the Mandatory Conversion Time (notwithstanding the failure of the holder or holders thereof to surrender the certificates at or prior to such time), except only the rights of the holders thereof, upon surrender of their certificate or certificates (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the next sentence of this Section 3.12. As soon as practicable after the Mandatory Conversion Time and the surrender of the certificate or certificates (or lost certificate affidavit and agreement) for Preferred Stock, the Corporation shall issue and deliver to such holder, or to such holder’s nominee(s), a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof, together with cash as provided in Section 3.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and the payment of any declared but unpaid dividends (including any Series D Accruing Dividends or Series C Accruing Dividends, as applicable) on the shares of Preferred Stock converted. Such converted Preferred Stock shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Preferred Stock (and the applicable series thereof) accordingly.

4. Dividends. The holders of the Participating Series D Preferred Stock shall be entitled to receive, out of assets legally available for dividends, accruing dividends (to accrue on a daily basis, whether or not declared by the Corporation) at the annual, non-compounding rate of Twelve Percent (12%) of the Original Issue Price per share of the applicable Participating Series D Preferred Stock (the “Series D Accruing Dividends”), prior and in preference to any declaration or payment of any dividend on the Series C Preferred Stock, Series J Preferred Stock, Series B Preferred Stock, Series A Preferred Stock, Series Seed-1 Preferred Stock, Series Seed Preferred Stock, Series M Preferred Stock and Common Stock (other than dividends on shares of Common Stock payable in shares of Common Stock). Except with respect to a Redemption Request in accordance with Section 5 or in the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation or any Deemed Liquidation Event in accordance with Section 1.1, Series D Accruing Dividends shall be paid when, if, and as declared by the Board. After payment in full of any dividends required to be paid to the holders of the Participating Series D Preferred Stock, the holders of the Series C Preferred Stock shall be entitled to receive, out of assets legally available for dividends, accruing dividends (to accrue on a daily basis, whether or not declared by the Corporation) at the annual, non-compounding rate of Twelve Percent (12%) of the Original Issue Price per share of the Series C Preferred Stock


(the “Series C Accruing Dividends”), prior and in preference to any declaration or payment of any dividend on the Series J Preferred Stock, Series B Preferred Stock, Series D-4 Preferred Stock, Series A Preferred Stock, Series Seed-1 Preferred Stock, Series Seed Preferred Stock, Series M Preferred Stock and Common Stock (other than dividends on shares of Common Stock payable in shares of Common Stock). Except with respect to a Redemption Request in accordance with Section 5 or in the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation or any Deemed Liquidation Event in accordance with Section 1.2, Series C Accruing Dividends shall be paid when, if, and as declared by the Board. After payment in full of any dividends required to be paid to the holders of the Participating Series D Preferred Stock and the Series C Preferred Stock, the holders of shares of Series J Preferred Stock shall be entitled to receive, when, if and as declared by the Board, out of assets legally available for dividends, non-cumulative and non-accruing dividends at the rate of Eight Percent (8%) of the Original Issue Price per share of Series J Preferred Stock, prior and in preference to any declaration or payment of any dividend on the Series B Preferred Stock, Series D-4 Preferred Stock, Series A Preferred Stock, Series Seed-1 Preferred Stock, Series Seed Preferred Stock, Series M Preferred Stock and Common Stock (other than dividends on shares of Common Stock payable in shares of Common Stock). After payment in full of any dividends required to be paid to the holders of the Participating Series D Preferred Stock, the Series C Preferred Stock and Series J Preferred Stock, the holders of shares of Series B Preferred Stock and Series D-4 Preferred Stock shall be entitled to receive, when, if and as declared by the Board, out of assets legally available for dividends, non-cumulative and non-accruing dividends at the rate of Eight Percent (8%) of the applicable Original Issue Price, prior and in preference to any declaration or payment of any dividend on the Series A Preferred Stock, Series Seed-1 Preferred Stock, Series Seed Preferred Stock, Series M Preferred Stock and Common Stock (other than dividends on shares of Common Stock payable in shares of Common Stock). After payment in full of any dividends required to be paid to the holders of the Participating Series D Preferred Stock, the Series C Preferred Stock, the Series J Preferred Stock, the Series B Preferred Stock and the Series D-4 Preferred Stock, the holders of shares of Series A Preferred Stock shall be entitled to receive, when, if and as declared by the Board, out of assets legally available for dividends, non-cumulative and non-accruing dividends at the rate of Eight Percent (8%) of the Original Issue Price per share of the Series A Preferred Stock, prior and in preference to any declaration or payment of any dividend on the Series Seed-1 Preferred Stock, Series Seed Preferred Stock, Series M Preferred Stock and Common Stock (other than dividends on shares of Common Stock payable in shares of Common Stock). After payment in full of any dividends required to be paid to the holders of the Participating Series D Preferred Stock, the Series C Preferred Stock, Series J Preferred Stock, Series B Preferred Stock, Series D-4 Preferred Stock and Series A Preferred Stock, the holders of shares of Series Seed-1 Preferred Stock and Series Seed Preferred Stock shall be entitled to receive, when, if and as declared by the Board, out of assets legally available for dividends, non-cumulative and non-accruing dividends at the rate of Eight Percent (8%) of the applicable Deemed Issue Price per share of the applicable Preferred Stock, prior and in preference to any declaration or payment of any dividend on the Series M Preferred Stock and Common Stock (other than dividends on shares of Common Stock payable in shares of Common Stock). After payment in full of any dividends required to be paid to the holders of the Participating Series D Preferred Stock, the Series C Preferred Stock, Series J Preferred Stock, Series B Preferred Stock, Series D-4 Preferred Stock, Series A Preferred Stock, Series Seed-1 Preferred Stock and Series Seed Preferred Stock, the holders of shares of Series M


Preferred Stock shall be entitled to receive, when, if and as declared by the Board, out of assets legally available for dividends, non-cumulative and non-accruing dividends at the rate of Eight Percent (8%) of the applicable Deemed Issue Price per share of the applicable Preferred Stock, prior and in preference to any declaration or payment of any dividend on the Common Stock (other than dividends on shares of Common Stock payable in shares of Common Stock). Except with respect to the Series D Accruing Dividends and the Series C Accruing Dividends, no right to dividends shall accrue to holders of Preferred Stock by reason of the fact that dividends on said shares are not declared. After payment of dividends to the holders of the Participating Series D Preferred Stock, the Series C Preferred Stock, the Series J Preferred Stock, the Series B Preferred Stock, the Series D-4 Preferred Stock, the Series A Preferred Stock, the Series Seed-1 Preferred Stock, the Series Seed Preferred Stock and the Series M Preferred Stock as set forth herein, the Corporation shall declare any other dividends pro rata on the Common Stock and the Preferred Stock on a pari passu basis according to the number of shares of Common Stock, on an as-converted basis, held by such holders. For this purpose, each holder of shares of Preferred Stock will be treated as holding the greatest whole number of shares of Common Stock then issuable upon conversion of all shares of Preferred Stock held by such holder pursuant to Section 3.

 

5.

Redemption.

5.1 General.

5.1.1 Unless prohibited by Delaware law governing distributions to stockholders, shares of Series D Preferred Stock shall be redeemed by the Corporation at a price equal to one times (1x) the applicable Original Issue Price of the Series D Preferred Stock per share plus (i) with respect to all Participating Series D Preferred Stock, all Series D Accruing Dividends thereon and (ii) with respect to all Series D Preferred Stock, any other declared but unpaid dividends thereon (the “Series D Redemption Price”), in each case, in three (3) annual installments commencing not more than one-hundred eighty (180) days after receipt by the Corporation at any time on or after the fifth (5th) annual anniversary of the Original Issue Date of the Series D Preferred Stock, from the Requisite Series D Preferred Approval with respect to the Series D Redemption Right of written notice requesting redemption of all shares of Series D Preferred Stock (the “Series D Redemption Request”). Upon receipt of a Series D Redemption Request, the Corporation shall apply all of its assets to any such redemption, and to no other corporate purpose, except to the extent prohibited by Delaware law governing distributions to stockholders, provided that in the event the Corporation receives Redemption Requests with respect to both the Series D Preferred Stock and the Series C Preferred Stock, the Corporation shall redeem all outstanding shares of Series D Preferred Stock before any shares of Series C Preferred Stock are redeemed. The date of each such installment provided in the Series D Redemption Notice (as defined below) shall be referred to as a “Series D Redemption Date.” On each Series D Redemption Date, the Corporation shall redeem pro rata in accordance with the number of shares of Series D Preferred Stock owned by each holder, that number of outstanding shares of Series D Preferred Stock determined by dividing (i) the total number of shares of Series D Preferred Stock outstanding immediately prior to such Series D Redemption Date by (ii) the number of remaining Series D Redemption Dates (including the Series D Redemption Date to which such calculation applies); provided, however, that Excluded Shares (as such term is defined in Section 5.2) shall not be redeemed and shall be excluded from the calculations set


forth in this sentence. If on any Series D Redemption Date Delaware law governing distributions to stockholders prevents the Corporation from redeeming all shares of Series D Preferred Stock to be redeemed, the Corporation shall ratably redeem the maximum number of shares that it may redeem consistent with such law, and shall redeem the remaining shares of Series D Preferred Stock as soon as it may lawfully do so under such law.

5.1.2 Unless prohibited by Delaware law governing distributions to stockholders, shares of Series C Preferred Stock shall be redeemed by the Corporation at a price equal to one times (1x) the Original Issue Price of the Series C Preferred Stock per share plus all Series C Accruing Dividends thereon and any other declared but unpaid dividends thereon (the “Series C Redemption Price”), in each case, in three (3) annual installments commencing not more than one-hundred eighty (180) days after receipt by the Corporation at any time on or after the fifth (5th) annual anniversary of the Original Issue Date of the Series D Preferred Stock, from the holders of a majority of the Series C Preferred Stock of written notice requesting redemption of all shares of Series C Preferred Stock (the “Series C Redemption Request”). Upon receipt of a Series C Redemption Request and subject to the prior satisfaction of any Series D Redemption Request (if the Corporation has received a Series D Redemption Request and any shares of Series D Preferred Stock remain outstanding), the Corporation shall apply all of its assets to such Series C Redemption Request, and to no other corporate purpose, except to the extent prohibited by Delaware law governing distributions to stockholders. The date of each such installment provided in the Series C Redemption Notice (as defined below) shall be referred to as a “Series C Redemption Date.” On each Series C Redemption Date, the Corporation shall redeem, pro rata in accordance with the number of shares of Series C Preferred Stock owned by each holder, that number of outstanding shares of Series C Preferred Stock determined by dividing (i) the total number of shares of Series C Preferred Stock outstanding immediately prior to such Series C Redemption Date by (ii) the number of remaining Series C Redemption Dates (including the Series C Redemption Date to which such calculation applies); provided, however, that Excluded Shares (as such term is defined in Section 5.2) shall not be redeemed and shall be excluded from the calculations set forth in this sentence. If on any Redemption Date Delaware law governing distributions to stockholders prevents the Corporation from redeeming all shares of Series C Preferred Stock to be redeemed, the Corporation shall ratably redeem the maximum number of shares that it may redeem consistent with such law and shall redeem the remaining shares as soon as it may lawfully do so under such law.

5.2 Redemption Notice. The Corporation shall send written notice of the mandatory redemption (the “Redemption Notice”) to each holder of record of Series D Preferred Stock or Series C Preferred Stock, as applicable, not more than thirty (30) days after the date of any Series D Redemption Request or Series C Redemption Request. The Redemption Notice shall state:

(i) the aggregate number of shares of Series D Preferred Stock or Series C Preferred Stock, as applicable, held by the holder that the Corporation shall redeem on each Series D Redemption Date or Series C Redemption Date (as applicable, a “Redemption Date”);

(ii) the Redemption Date and the Series D Redemption Price or Series C Redemption Price (as applicable, the Redemption Price”);


(iii) the date upon which the holder’s right to convert such shares terminates (as determined in accordance with Section 3.1); and

(iv) if shares are in certificated form, that the holder is to surrender to the Corporation, in the manner and at the place designated, his, her or its certificate or certificates representing the shares of Series D Preferred Stock or Series C Preferred Stock, as applicable, to be redeemed.

If the Corporation receives, on or prior to the twentieth (20th) day after the date of delivery of the Redemption Notice to a holder of Series D Preferred Stock or Series C Preferred Stock, as applicable, written notice from such holder that such holder elects to be excluded from the redemption provided in this Section 5, then all shares of Series D Preferred Stock or Series C Preferred Stock, as applicable, registered on the books of the Corporation in the name of such holder at the time of the Corporation’s receipt of such notice shall thereafter be “Excluded Shares”. Excluded Shares shall not be redeemed or redeemable pursuant to this Section 5, on any Redemption Date or thereafter; for the avoidance of doubt, Excluded Shares shall include all shares of Series D Preferred Stock or Series C Preferred Stock, as applicable, registered on the books of the Corporation in the name of such holder eligible for redemption under this Section 5 and any written notice to exclude shares of Series D Preferred Stock or Series C Preferred Stock, as applicable, from the redemption shall apply to all such shares held by such holder and shall not be interpreted to apply only to the shares redeemable at each Redemption Date.

5.3 Surrender of Certificates; Payment. On or before the applicable Redemption Date, each holder of shares of Series D Preferred Stock or Series C Preferred Stock, as applicable, to be redeemed on such Redemption Date, unless such holder has exercised his, her or its right to convert such shares as provided in Section 3, shall, if shares are in certificated form, surrender the certificate or certificates representing such shares (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof. In the event less than all of the shares of Series D Preferred Stock or Series C Preferred Stock, as applicable, represented by a certificate are redeemed, a new certificate, instrument, or book entry representing the unredeemed shares of Series D Preferred Stock or Series C Preferred Stock, as applicable, shall promptly be issued to such holder.

5.4 Rights Subsequent to Redemption. If the Redemption Notice shall have been duly given, and if on the applicable Redemption Date the Redemption Price payable upon redemption of the shares of Series D Preferred Stock or Series C Preferred Stock, as applicable, to be redeemed on such Redemption Date is paid or tendered for payment or deposited with an independent payment agent so as to be available therefor in a timely manner, then notwithstanding that any certificates evidencing any of the shares of Series D Preferred Stock or Series C Preferred Stock, as applicable, so called for redemption shall not have been surrendered, dividends with respect to such shares of Series D Preferred Stock or Series C Preferred Stock, as applicable, shall cease to accrue after such Redemption Date and all rights with respect to such


shares shall forthwith after the Redemption Date terminate, except only the right of the holders to receive the Redemption Price without interest upon surrender of any such certificate or certificates therefor.

6. Redeemed Shares. Any shares of Preferred Stock that are redeemed or otherwise acquired by the Corporation or any of its subsidiaries will be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred. Neither the Corporation nor any of its subsidiaries may exercise any voting or other rights granted to the holders of Preferred Stock following redemption, conversion or acquisition.

7. Waiver. Except as otherwise set forth herein, (a) any of the rights, powers, privileges and other terms of the Preferred Stock set forth herein may be waived prospectively or retrospectively on behalf of all holders of Preferred Stock by the affirmative written consent or vote of the Requisite Holders and (b) at any time more than one (1) series of Preferred Stock is issued and outstanding, any of the rights, powers, privileges and other terms of any series of Preferred Stock set forth herein may be waived on behalf of all holders of such series of Preferred Stock by the affirmative written consent or vote of the holders of at least a majority of the shares of such series of Preferred Stock then outstanding; provided, that (for the avoidance of doubt) any waiver of the rights, powers, privileges and other terms of the Series D Preferred Stock shall require the affirmative written consent of the Requisite Series D Preferred Approval.

8. Notice of Record Date. In the event:

(a) the Corporation takes a record of the holders of the Common Stock (or other capital stock or securities at the time issuable upon conversion of the Preferred Stock) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security;

(b) of any capital reorganization of the Corporation, any reclassification of the Common Stock or any Deemed Liquidation Event; or

(c) of the Corporation’s voluntary or involuntary dissolution, liquidation or winding-up, then, and in each such case, the Corporation shall send or cause to be sent to the holders of the Preferred Stock a written notice specifying, as the case may be, (i) the record date for such dividend, distribution, or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation, winding-up or Deemed Liquidation Event is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon the conversion of the Preferred Stock) will be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation, winding-up, or Deemed Liquidation Event and the amount per share and character of such exchange applicable to the Preferred Stock and the Common Stock. The Corporation shall send the notice at least twenty (20) days before the earlier of the record date or effective date for the event specified in the notice.


9. Notices. Except as otherwise provided herein, any notice required or permitted by the provisions of this Article V: to be given to a holder of shares of Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the Corporation’s records or given by electronic communication in compliance with the provisions of the General Corporation Law, and will be deemed sent upon such mailing or electronic transmission.

ARTICLE VI: PREEMPTIVE RIGHTS.

No stockholder of the Corporation has a right to purchase shares of the Corporation’s capital stock sold or issued by the Corporation except to the extent that such a right may from time to time be set forth in a written agreement between the Corporation and such stockholder.

ARTICLE VII: BYLAW PROVISIONS.

A. NUMBER OF DIRECTORS. Subject to any additional vote required by this Restated Certificate, the number of directors of the Corporation will be determined in the manner set forth in the Bylaws. At the filing date of this Restated Certificate, the initial number of directors will be eight (8).

B. BALLOT. Elections of directors need not be by written ballot unless the Bylaws so provide.

C. MEETINGS AND BOOKS. Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The Corporation’s books may be kept outside the State of Delaware at such place or places as may be designated from time to time by the Board or in the Bylaws.

ARTICLE VIII: DIRECTOR LIABILITY.

A. LIMITATION. To the fullest extent permitted by law, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the General Corporation Law or any other law of the State of Delaware is amended after approval by the stockholders of this Article VIII: to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law or such law as so amended. Any repeal or modification of the foregoing provisions of this Article VIII: by the stockholders will not adversely affect any right or protection of a director of the Corporation existing at the time of, or increase the liability of any director of the Corporation with respect to any acts or omissions of such director occurring prior to, such repeal or modification.

B. INDEMNIFICATION. To the fullest extent permitted by applicable law, the Corporation is authorized to provide indemnification of (and advancement of expenses to) directors, officers and agents of the Corporation (and any other persons to which General Corporation Law permits the Corporation to provide indemnification) through Bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the General Corporation Law. Any amendment, repeal, or modification of the foregoing


provisions will not (a) adversely affect any right or protection of any director, officer or other agent of the Corporation existing at the time of such amendment, repeal or modification, or (b) increase the liability of any director of the Corporation with respect to any acts or omissions of such director, officer or agent occurring prior to, such amendment, repeal or modification.

ARTICLE IX: CORPORATE OPPORTUNITIES

The Corporation renounces, to the fullest extent permitted by law, any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, or in being informed about, an Excluded Opportunity. “Excluded Opportunity” means any matter, transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of, (i) any director of the Corporation who is not an employee of the Corporation or any of its subsidiaries, or (ii) any holder of Preferred Stock, or Common Stock issued upon conversion of Preferred Stock, or any affiliate, partner, member, director, stockholder, employee, agent or other related person of any such holder, other than someone who is an employee of the Corporation or any of its subsidiaries (a “Covered Person”), unless such matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of, a Covered Person expressly and solely in such Covered Person’s capacity as a director of the Corporation. Any repeal or modification of this Article IX: will only be prospective and will not affect the rights under this Article IX: in effect at the time of the occurrence of any actions or omissions to act giving rise to liability. Notwithstanding anything to the contrary contained elsewhere in this Restated Certificate, the affirmative vote of the Requisite Holders will be required to amend or repeal, or to adopt any provisions inconsistent with this Article IX:.

ARTICLE X: RESTRICTIONS ON FOREIGN TRANSFERS

Notwithstanding anything in any stockholder agreements of the Corporation to the contrary, no stockholder may, without approval of the Board, directly or indirectly, Transfer any of its Equity Interests of the Corporation, to a Foreign Person or Transfer, directly or indirectly, the Equity Interests of such stockholder to a Foreign Person. Any such Transfer made in contravention of the foregoing shall be void ab initio. The Board shall be notified of any proposed Transfer and prior to any such Transfer, the Board shall be entitled to receive such information, including an opinion of legal counsel, as is reasonably necessary to establish that a proposed Transfer is not to a Foreign Person.

ARTICLE XI: FORUM

Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation, its directors, officers or employees arising pursuant to any provision of the Delaware General Corporation Law, this Restated Certificate or the Bylaws or (iv) any action asserting a claim against the Corporation, its directors, officers or employees governed by the internal affairs


doctrine, except for, as to each of (i) through (iv) above, any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten (10) days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction. If any provision or provisions of this Article XI: shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article XI: (including, but not limited to, each portion of any sentence of this Article XI: containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.

* * * * *

Exhibit 3.2

FIREFLY AEROSPACE INC.

FORM OF

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

(Pursuant to Sections 242 and 245 of the

General Corporation Law of the State of Delaware)

Firefly Aerospace Inc., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “General Corporation Law”), certifies as follows:

1. The name of this corporation is Firefly Aerospace Inc. The Certificate of Incorporation of this corporation was filed with the Secretary of State of the State of Delaware on January 27, 2017, under the name EOS Launcher, Inc., and was amended and restated by the Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on October 23, 2017, and an Amended and Restated Certificate of Incorporation of Firefly Aerospace Inc. was filed with the Secretary of State of the State of Delaware on June 25, 2025.

2. The Board of Directors of this corporation duly adopted resolutions proposing to further amend and restate the Certificate of Incorporation of this corporation, declaring said amendment and restatement to be advisable and in the best interests of this corporation and its stockholders, and authorizing the appropriate officers of this corporation to solicit the consent of the stockholders therefor, which resolution setting forth the proposed amendment and restatement is as follows:

RESOLVED, that the Amended and Restated Certificate of Incorporation of this corporation be further amended and restated in its entirety to read as set forth on Exhibit A attached hereto and incorporated herein by this reference.

3. Exhibit A referred to above is attached hereto as Exhibit A and is hereby incorporated herein by this reference. This Amended and Restated Certificate of Incorporation was approved by the holders of the requisite number of shares of this corporation in accordance with Section 228 of the General Corporation Law.

4. This Amended and Restated Certificate of Incorporation, which restates and integrates and further amends the provisions of this corporation’s Certificate of Incorporation, has been duly adopted in accordance with Sections 242 and 245 of the General Corporation Law.


IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation has been executed by a duly authorized officer of this corporation on     , 2025.

 

By:

 

 

Name:

 

David Wheeler

Title:

 

Senior Vice President, General Counsel and Secretary

 

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FIREFLY AEROSPACE INC.

FORM OF

AMENDED AND RESTATED CERTFICATE OF INCORPORATION

ARTICLE ONE

The name of the corporation is Firefly Aerospace Inc. (the “Corporation”).

ARTICLE TWO

The address of the Corporation’s registered office in the State of Delaware is 651 N. Broad Street, Suite 201, in the Town of Middletown, County of New Castle 19709. The name of its registered agent at such address is LegalInc Corporate Services Inc.

ARTICLE THREE

The nature and purpose of the business of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (“DGCL”).

ARTICLE FOUR

Section 1. Authorized Shares. The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is    shares, consisting of two classes as follows:

 

  (a)

   shares of Preferred Stock, par value $0.0001 per share (the “Preferred Stock”); and

 

  (b)

   shares of Common Stock, par value $0.0001 per share (the “Common Stock”).

The Preferred Stock and the Common Stock shall have the designations, rights, powers, and preferences and the qualifications, restrictions, and limitations thereof, if any, set forth below.

Section 2. Preferred Stock. The Board of Directors of the Corporation (the “Board”) is authorized, subject to limitations prescribed by law, to provide, by resolution or resolutions for the issuance of shares of Preferred Stock in one or more series, and with respect to each series, to establish the number of shares to be included in each such series, and to fix the voting powers (if any), designations, powers, preferences, privileges and relative, participating, optional, or other special rights, if any, of the shares of each such series, and any qualifications, limitations, or restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption, and liquidation preferences, any or all of which may be greater than the rights of the Common Stock. The powers (including voting powers), preferences, and relative, participating, optional, and other special rights of each series of Preferred Stock and the qualifications, limitations, or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. Subject to the rights of the holders of any series of Preferred Stock, the number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then-outstanding) by the approval of the Board and by the affirmative vote of the holders of a majority in voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in an election of directors, without the separate vote of the holders of the Preferred Stock as a class, irrespective of the provisions of Section 242(b)(2) of the DGCL. For the avoidance of doubt, and notwithstanding the foregoing, the Corporation shall be governed by Section 242(d) of the DGCL.

Section 3. Common Stock.

(a) Except as otherwise provided by the DGCL or this Certificate of Incorporation (as it may be amended from time to time, including pursuant to any certificate of designation relating to any series of Preferred Stock, the “Certificate”) and subject to the rights of holders of any series of Preferred Stock then-outstanding, all of

 

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the voting power of the stockholders of the Corporation shall be vested in the holders of the Common Stock. Each share of Common Stock shall entitle the holder thereof to one vote for each share held by such holder on all matters voted upon by the stockholders of the Corporation; provided, however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate (including any certificate of designation relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Certificate (including any certificate of designation relating to any series of Preferred Stock) or pursuant to the DGCL.

(b) Subject to the rights of the holders of any series of Preferred Stock then-outstanding and to the other provisions of applicable law and this Certificate, holders of Common Stock shall be entitled to receive equally, on a per share basis, such dividends in cash, securities, or other property of the Corporation if, as, and when declared thereon by the Board from time to time out of assets of the Corporation legally available therefor.

(c) In the event of any liquidation, dissolution, or winding up of the affairs of the Corporation, whether voluntary or involuntary, after payment or provision for payment of the Corporation’s debts and any other payments required by law and amounts payable upon outstanding shares of Preferred Stock ranking senior to the shares of Common Stock upon such dissolution, liquidation, or winding up, if any, the remaining net assets of the Corporation shall be distributed to the holders of shares of Common Stock and the holders of shares of any other class or series ranking equally with the shares of Common Stock upon such dissolution, liquidation, or winding up, equally on a per share basis. Subject to the rights of the holders of Preferred Stock then-outstanding and the other provisions of this Certificate, a merger or consolidation of the Corporation with or into any other corporation or other entity, or a sale or conveyance of all or any part of the assets of the Corporation (which shall not in fact result in the liquidation of the Corporation and the distribution of assets to its stockholders) shall not be deemed to be a voluntary or involuntary liquidation, dissolution, or winding up of the Corporation within the meaning of this Paragraph (c).

(d) No holder of shares of Common Stock shall be entitled to preemptive or subscription rights. For the avoidance of doubt, the foregoing shall not restrict the Company from entering into an agreement providing for preemptive or subscription rights.

ARTICLE FIVE

Section 1. Board of Directors. Except as otherwise provided in this Certificate or the DGCL, the business and affairs of the Corporation shall be managed by or under the direction of the Board.

Section 2. Number of Directors. Subject to any rights of the holders of any series of Preferred Stock then-outstanding to elect additional directors under specified circumstances or otherwise, the number of directors which shall constitute the Board shall initially be nine and, thereafter, shall be fixed from time to time exclusively by resolution of the Board; provided that, before the Trigger Date, the size of the Board of Directors may also be fixed by the holders of a majority of the voting power present or represented by proxy at a duly convened meeting of stockholders or by a consent of stockholders in lieu of a meeting in accordance with Section 228 of the DGCL.

Section 3. Classes of Directors. The directors of the Corporation, other than those who may be elected by the holders of any series of Preferred Stock, shall be divided into three classes, as nearly equal in number as possible, designated Class I, Class II, and Class III.

Section 4. Election and Term of Office. Subject to the rights of the holders of any series of Preferred Stock then-outstanding, the directors shall be elected by a plurality of the votes cast. The term of office of the initial Class I directors shall expire at the first annual meeting of stockholders following the date the Common Stock is first publicly traded (the “IPO Date”), the term of office of the initial Class II directors shall expire at the second annual meeting of stockholders after the IPO Date, and the term of office of the initial Class III directors shall expire at the third annual meeting of the stockholders after the IPO Date. At each annual meeting of stockholders after the IPO Date, directors elected to replace those of a class whose terms expire at such annual meeting shall be elected to hold office until the third succeeding annual meeting after their election and until their respective successors shall have been duly elected

 

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and qualified. Each such director shall hold office until the annual meeting of stockholders for the year in which such director’s term expires and a successor is duly elected and qualified or until his or her earlier death, resignation, or removal. Nothing in this Certificate shall preclude a director from serving consecutive terms. Elections of directors need not be by written ballot unless the Bylaws of the Corporation (as amended and/or restated, the “Bylaws”) shall so provide.

Section 5. Newly-Created Directorships and Vacancies. Newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board resulting from death, resignation, disqualification, removal from office, or any other cause may be filled only by resolution of a majority of the directors then in office, although less than a quorum, or by a sole remaining director, and may not be filled in any other manner; provided that, before the Trigger Date, vacant and newly created directorships may also be filled by a plurality vote of the stockholders entitled to vote thereon at a duly convened meeting of stockholders or by a consent of a majority in voting power of the stock entitled to vote thereon in accordance with Section 228 of the DGCL. A director elected or appointed to fill a vacancy shall serve for the unexpired term of his or her predecessor in office and until his or her successor is elected and qualified or until his or her earlier death, resignation, or removal. A director elected or appointed to fill a position resulting from an increase in the number of directors shall hold office until the next election of the class for which such director shall have been elected or appointed and until his or her successor is elected and qualified, or until his or her earlier death, resignation, or removal. Notwithstanding the foregoing, before the Trigger Date, a director appointed to a vacant or newly created directorship by directors shall serve for a term expiring at the earlier of (i) first annual meeting following his or her appointment as a director and (ii) a special meeting called for the purposes of enabling the stockholders to elect a successor to the nominee appointed by directors to fill the vacant or new directorship. No decrease in the authorized number of directors shall shorten the term of any incumbent director.

Section 6. Removal and Resignation of Directors. Notwithstanding any other provision of this Certificate, (i) prior to the Trigger Date, directors may be removed with or without cause upon the affirmative vote of stockholders representing at least a majority of the voting power of the then-outstanding shares of stock entitled to vote thereon, voting together as a single class, and (ii) on and after the Trigger Date, directors may only be removed for cause and only upon the affirmative vote of stockholders representing at least 66 2/3% of the voting power of the then-outstanding shares of Voting Stock. Any director may resign at any time upon notice in writing or by electronic transmission to the Corporation.

Section 7. Rights of Holders of Preferred Stock. Notwithstanding the provisions of this ARTICLE FIVE, whenever the holders of one or more series of Preferred Stock shall have the right, voting separately or together by series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies, and other features of such directorship shall be subject to the rights of such series of Preferred Stock. During any period when the holders of any series of Preferred Stock, voting separately as a series or together with one or more series, have the right to elect additional directors, then upon commencement and for the duration of the period during which such right continues (i) the then otherwise total authorized number of directors of the Corporation shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the additional directors so provided for or fixed pursuant to said provisions, and (ii) each such additional director shall serve until such director’s successor shall have been duly elected and qualified, or until such director’s right to hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to his or her earlier death, resignation, disqualification, or removal. Except as otherwise provided by the Board in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation, disqualification, or removal of such additional directors, shall forthwith terminate (in which case each such director thereupon shall cease to be qualified as, and shall cease to be, a director), and the total authorized number of directors of the Corporation shall automatically be reduced accordingly.

Section 8. Advance Notice. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws.

 

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Section 9. Definitions. For purposes of this Certificate:

(a) “AE Industrial Partners” means AE Industrial Partners, LP.

(b) “Affiliated Companies” shall mean (A) in respect of AE Industrial Partners, any entity that controls, is controlled by, or under common control with AE Industrial Partners (other than the Corporation and any company that is controlled by the Corporation) and any investment funds managed or advised by AE Industrial Partners, and (B) in respect of the Corporation, any entity controlled by the Corporation.

(c) “Investor Group” means AE Industrial Partners and its Affiliated Companies, together with each other stockholder of the Corporation party to that certain Director Nomination Agreement, dated as of the date hereof, by and among the Corporation, certain Affiliated Companies of AE Industrial Partners, and the other stockholders party thereto, and the permitted successors and assignees of such stockholders.

(d) “Trigger Date” means the first date on which the Investor Group ceases to beneficially own in the aggregate (directly or indirectly) 40% or more of the voting power of the outstanding shares of Voting Stock.

(e) “Voting Stock” means the capital stock of the Corporation then entitled to vote generally in the election of directors.

ARTICLE SIX

Section 1. Limitation of Liability.

(a) To the fullest extent permitted by the DGCL as it now exists or may hereafter be amended, no director or officer of the Corporation shall be liable to the Corporation or its stockholders for monetary damages arising from a breach of fiduciary duty as a director or officer.

(b) Any amendment, repeal, or modification of the foregoing paragraph shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such amendment, repeal, or modification with respect to any act, omission, or other matter occurring prior to such amendment, repeal, or modification. Solely for purposes of Section 1(a) and 1(b) of this ARTICLE SIX, “officer” has the meaning provided in Section 102(b)(7) of the DGCL.

ARTICLE SEVEN

Section 1. Action by Consent. Prior to the first date (the “Stockholder Consent Trigger Date”) on which the Investor Group ceases to beneficially own in the aggregate (directly or indirectly) at least 35% of the voting power of the then outstanding Voting Stock, any action which is required or permitted to be taken by the Corporation’s stockholders may be taken without a meeting, without prior notice, and without a vote if a consent or consents in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of the Corporation’s stock entitled to vote thereon were present and voted. On and after the Stockholder Consent Trigger Date, any action required or permitted to be taken by the Corporation’s stockholders may be taken only at a duly called annual or special meeting of the Corporation’s stockholders and the power of stockholders to act by consent without a meeting is specifically denied; provided, however, that any action required or permitted to be taken by the holders of Preferred Stock, voting separately as a series or separately as a class with one or more other such series, may be taken without a meeting, without prior notice, and without a vote, to the extent expressly so provided in the resolutions creating such series of Preferred Stock.

Section 2. Special Meetings of Stockholders. Subject to the rights of the holders of any series of Preferred Stock then-outstanding and to the requirements of applicable law, special meetings of stockholders of the Corporation may be called only (i) by or at the direction of the Board or the Chair of the Board pursuant to a written resolution adopted by the affirmative vote of the majority of the total number of directors that the Corporation would have if there were no vacancies, and (ii) prior to the Stockholder Consent Trigger Date, by the Chair of the Board at the request of AE

 

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Industrial Partners in the manner provided for in the Bylaws. Any business transacted at any special meeting of stockholders shall be limited to the purpose or purposes stated in the notice of the meeting.

ARTICLE EIGHT

Section 1. Certain Acknowledgments. It is hereby acknowledged that:

(a) (i) certain of the directors, partners, principals, officers, members, managers, employees, operating partners, and/or contractors of AE Industrial Partners or its Affiliated Companies (as defined below) may serve as directors or officers of the Corporation, (ii) AE Industrial Partners and its Affiliated Companies engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage, and (iii) the Corporation and its Affiliated Companies may engage in material business transactions with AE Industrial Partners and its Affiliated Companies, and the Corporation is expected to benefit therefrom,

(b) the provisions of this ARTICLE EIGHT are set forth to regulate and define the conduct of certain affairs of the Corporation as they may involve AE Industrial Partners and/or its Affiliated Companies and/or their respective directors, partners, principals, officers, members, managers, employees, operating partners, and/or contractors, including any of the foregoing who serve as officers or directors of the Corporation (AE Industrial Partners and/or its Affiliated Companies and all such other persons each an “Exempted Person” and collectively, the “Exempted Persons”);

(c) this ARTICLE EIGHT constitutes the renunciation of corporate opportunities pursuant to Section 122(17) of the DGCL, which authorizes a corporation to renounce specified classes and categories of business opportunities;

(d) the Official Synopsis for the Act of the Delaware General Assembly enacting Section 122(17) states that “the classes or categories of business opportunities may be specified by any manner of defining or delineating business opportunities … including, without limitation, by … identity of the originator of the business opportunity, identity of the party or parties to or having an interest in the business opportunity, and identity of the recipient of the business opportunity”; and

(e) as a result of the renunciations set forth in this ARTICLE EIGHT, (i) each Exempt Person will rely on this Article in declining to communicate or offer a business opportunity to the Company or any of its subsidiaries unless Section 3 of this Article applies to such person; (ii) an Exempt Person will rely on this Article to retain or exploit such business opportunity for itself or for the benefit of persons or entities other than the Corporation and its subsidiaries; and (iii) AE Industrial Partners has approved an initial public offering of the stock of the Corporation in reliance on the adoption of this Article.

Section 2. Renunciation of Corporate Opportunities. To the fullest extent permitted by the DGCL, but subject to Section 3 of this Article, the Corporation hereby renounces any interest or expectancy in, or being offered an opportunity to participate in, any and all business opportunities: (a) originated or acquired by an Exempt Person; (b) in which the Exempt Person has an interest; or (c) that is received from any person or entity by an Exempt Person. The business opportunities renounced under this paragraph include any actual or potential investment or business opportunity or prospective economic advantage in which the Corporation could, but for this paragraph, have an interest or expectancy (including, without limitation, acquisitions, dispositions, business combinations, financings or investment opportunities), whether or not such opportunities are in the same or similar lines of business in which the Corporation is engaged or intends to engage.

Section 3. Excluded Opportunities. Notwithstanding the foregoing provisions of this ARTICLE EIGHT, but subject to Section 4 of this Article, the Corporation does not renounce any business opportunity (a) expressly offered to a person in his or her capacity as a director or officer of the Corporation; (b) offered to, or acquired by, a person while he or she is a full-time employee of the Corporation; or (c) that has been developed using the confidential information of the Corporation or any of its subsidiaries.

 

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Section 4. Certain Matters Deemed Not Corporate Opportunities. In addition to and notwithstanding the foregoing provisions of this ARTICLE EIGHT, a corporate opportunity shall not be deemed to belong to the Corporation if it is a business opportunity the Corporation is not financially able, contractually permitted or legally able to undertake, or that is, from its nature, not in the line of the Corporation’s business or is of no practical advantage to it, or that is one in which the Corporation has no interest or reasonable expectancy.

Section 5. Amendment of this Article. Notwithstanding anything to the contrary elsewhere contained in this Certificate, subject to the rights of the holders of any series of Preferred Stock then-outstanding, and in addition to any vote required by applicable law, the affirmative vote of AE Industrial Partners, so long as AE Industrial Partners and/or its Affiliated Companies continues to beneficially own any outstanding shares of Voting Stock, shall be required to alter, amend, or repeal, or to adopt any provision inconsistent with, this ARTICLE EIGHT; provided, however, that, to the fullest extent permitted by law, neither the alteration, amendment, or repeal of this ARTICLE EIGHT nor the adoption of any provision of this Certificate inconsistent with this ARTICLE EIGHT shall apply to or have any effect on the liability or alleged liability of any Exempted Person for or with respect to any activities or opportunities which such Exempted Person becomes aware of prior to such alteration, amendment, repeal, or adoption.

Section 6. Deemed Notice. Any person or entity purchasing or otherwise acquiring or holding any interest in any shares of the Corporation shall be deemed to have notice of and to have consented to the provisions of this ARTICLE EIGHT.

ARTICLE NINE

Section 1. Section 203 of the DGCL. The Corporation expressly elects not to be subject to the provisions of Section 203 of the DGCL.

Section 2. Business Combinations with Interested Stockholders. Notwithstanding any other provision in this Certificate to the contrary, the Corporation shall not engage in any Business Combination (as defined hereinafter), at any point in time at which the Common Stock is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with any Interested Stockholder (as defined hereinafter) for a period of three years following the time that such stockholder became an Interested Stockholder, unless:

(a) prior to such time the Board approved either the Business Combination or the transaction which resulted in such stockholder becoming an Interested Stockholder;

(b) upon consummation of the transaction which resulted in such stockholder becoming an Interested Stockholder, such stockholder owned at least 85% of the Voting Stock of the Corporation outstanding at the time the transaction commenced, excluding for purposes of determining the Voting Stock outstanding (but not the outstanding Voting Stock owned by such Interested Stockholder) those shares owned (i) by Persons (as defined hereinafter) who are directors and also officers of the Corporation, and (ii) employee stock plans of the Corporation in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

(c) at or subsequent to such time, the Business Combination is approved by the Board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding Voting Stock which is not owned by such Interested Stockholder.

Section 3. Exceptions to Prohibition on Interested Stockholder Transactions. The restrictions contained in this ARTICLE NINE shall not apply if:

(a) a stockholder becomes an Interested Stockholder inadvertently and (i) as soon as practicable divests itself of ownership of sufficient shares so that the stockholder ceases to be an Interested Stockholder, and (ii) would not, at any time within the three-year period immediately prior to a Business Combination between the Corporation and such stockholder, have been an Interested Stockholder but for the inadvertent acquisition of ownership; or

(b) the Business Combination is proposed prior to the consummation or abandonment of and subsequent to the earlier of the public announcement or the notice required hereunder of a proposed transaction which (i)

 

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constitutes one of the transactions described in the second sentence of this Section 3(b) of ARTICLE NINE, (ii) is with or by a Person who either was not an Interested Stockholder during the previous three years or who became an Interested Stockholder with the approval of the Board, and (iii) is approved or not opposed by a majority of the directors then in office (but not less than one) who were directors prior to any Person becoming an Interested Stockholder during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors. The proposed transactions referred to in the preceding sentence are limited to: (x) a merger or consolidation of the Corporation (except for a merger in respect of which, pursuant to Section 251(f) of the DGCL, no vote of the stockholders of the Corporation is required); (y) a sale, lease, exchange, mortgage, pledge, transfer, or other disposition (in one transaction or a series of transactions), whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation (other than to any direct or indirect wholly-owned subsidiary or to the Corporation) having an aggregate market value equal to 50% or more of either that aggregate market value of all of the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding Stock (as defined hereinafter) of the Corporation; or (z) a proposed tender or exchange offer for 50% or more of the outstanding Voting Stock of the Corporation. The Corporation shall give not less than 20 days’ notice to all Interested Stockholders prior to the consummation of any of the transactions described in clause (x) or (y) of the second sentence of this Section 3(b) of ARTICLE TEN.

Section 4. Definitions. As used in this ARTICLE NINE only, and unless otherwise provided by the express terms of this ARTICLE NINE, the following terms shall have the meanings ascribed to them as set forth in this Section 4 and, to the extent such terms are defined elsewhere in this Certificate, such definitions shall not apply to this ARTICLE NINE:

(a) “Affiliate” means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another Person;

(b) “Associate,” when used to indicate a relationship with any Person, means (i) any corporation, partnership, unincorporated association, or other entity of which such Person is a director, officer, or general partner or is, directly or indirectly, the owner of 20% or more of any class of Voting Stock, (ii) any trust or other estate in which such Person has at least a 20% beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity, and (iii) any relative or spouse of such Person, or any relative of such spouse, who has the same residence as such Person;

(c) “Business Combination” means:

(i) any merger or consolidation of the Corporation (other than a merger effected pursuant to Sections 253 or 267 of the DGCL) or any direct or indirect majority-owned subsidiary of the Corporation with (A) the Interested Stockholder, or (B) any other corporation, partnership, unincorporated association, or entity if the merger or consolidation is caused by the Interested Stockholder and as a result of such merger or consolidation Section 2 of this ARTICLE NINE is not applicable to the surviving entity;

(ii) any sale, lease, exchange, mortgage, pledge, transfer, or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with the Interested Stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding Stock of the Corporation;

(iii) any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of any Stock of the Corporation or of such subsidiary to the Interested Stockholder, except (A) pursuant to the exercise, exchange, or conversion of securities exercisable for, exchangeable for, or convertible into Stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the Interested Stockholder became such, (B) pursuant to a merger under Sections 251(g), 253 or 267 of the DGCL, (C) pursuant to a dividend or distribution paid or made, or the exercise, exchange, or conversion of securities exercisable for,

 

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exchangeable for, or convertible into Stock of the Corporation or any such subsidiary which security is distributed, pro rata to all holders of a class or series of Stock of the Corporation subsequent to the time the Interested Stockholder became such, (D) pursuant to an exchange offer by the Corporation to purchase Stock made on the same terms to all holders of such Stock, or (E) any issuance or transfer of Stock by the Corporation; provided, however, that in no case under items (C)-(E) of this Section 4(c)(iii) of ARTICLE NINE shall there be an increase in the Interested Stockholder’s proportionate share of the Stock of any class or series of the Corporation or of the Voting Stock of the Corporation;

(iv) any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of the Stock of any class or series, or securities convertible into the Stock of any class or series, of the Corporation or of any such subsidiary which is owned by the Interested Stockholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of Stock not caused, directly or indirectly, by the Interested Stockholder; or

(v) any receipt by the Interested Stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of the Corporation), of any loans, advances, guarantees, pledges, or other financial benefits (other than those expressly permitted in Sections 4(c)(i)-(iv) of ARTICLE TEN) provided by or through the Corporation or any direct or indirect majority-owned subsidiary of the Corporation;

(d) “control,” including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of Voting Stock, by contract or otherwise. A Person who is the owner of 20% or more of the outstanding Voting Stock of any corporation, partnership, unincorporated association, or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary; notwithstanding the foregoing, a presumption of control shall not apply where such Person holds Voting Stock, in good faith and not for the purpose of circumventing this ARTICLE NINE, as an agent, bank, broker, nominee, custodian, or trustee for one or more owners who do not individually or as a group (as such term is used in Rule 13d-5 under the Exchange Act (“Rule 13d-5”), as such Rule 13d-5 is in effect as of the date of this Certificate) have control of such entity;

(e) “Interested Stockholder” means any Person (other than the Corporation and any direct or indirect majority-owned subsidiary of the Corporation) that (i) is the owner of 15% or more of the outstanding Voting Stock of the Corporation, or (ii) is an Affiliate or Associate of the Corporation and was the owner of 15% or more of the outstanding Voting Stock of the Corporation at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such Person is an Interested Stockholder, and the affiliates and associates of such Person. Notwithstanding anything in this ARTICLE NINE to the contrary, the term “Interested Stockholder” shall not include: (x) AE Industrial Partners or any of its Affiliated Companies, or any other Person with whom any of the foregoing are acting as a group or in concert for the purpose of acquiring, holding, voting, or disposing of shares of Stock of the Corporation; (y) any Person who would otherwise be an Interested Stockholder either in connection with or because of a transfer, sale, assignment, conveyance, hypothecation, encumbrance, or other disposition of 5% or more of the outstanding Voting Stock of the Corporation (in one transaction or a series of transactions) by AE Industrial Partners or any of its affiliates or associates to such Person; provided, however, that such Person was not an Interested Stockholder prior to such transfer, sale, assignment, conveyance, hypothecation, encumbrance, or other disposition; or (z) any Person whose ownership of shares in excess of the 15% limitation set forth herein is the result of action taken solely by the Corporation, provided that, for purposes of this clause (z) only, such Person shall be an Interested Stockholder if thereafter such Person acquires additional shares of Voting Stock of the Corporation, except as a result of further action by the Corporation not caused, directly or indirectly, by such Person; provided, that, for the purpose of determining whether a Person is an Interested Stockholder, the Voting Stock of the Corporation deemed to be outstanding shall include Stock deemed to be owned by the Person through application of this definition of “owned” but shall not include any other unissued Stock of the Corporation which may be issuable pursuant to any agreement, arrangement, or understanding, or upon exercise of conversion rights, warrants, or options, or otherwise;

(f) “owner,” including the terms “own” and “owned,” when used with respect to any Stock, means a Person that individually or with or through any of its Affiliates or Associates beneficially owns such Stock, directly or indirectly; or has (A) the right to acquire such Stock (whether such right is exercisable immediately or only after

 

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the passage of time) pursuant to any agreement, arrangement, or understanding, or upon the exercise of conversion rights, exchange rights, warrants, or options, or otherwise; provided, however, that a Person shall not be deemed the owner of Stock tendered pursuant to a tender or exchange offer made by such Person or any of such Person’s Affiliates or Associates until such tendered Stock is accepted for purchase or exchange, (B) the right to vote such Stock pursuant to any agreement, arrangement, or understanding; provided, however, that a Person shall not be deemed the owner of any Stock because of such Person’s right to vote such Stock if the agreement, arrangement, or understanding to vote such Stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more Persons, or (C) has any agreement, arrangement, or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in (B) of this Section 4(f) of ARTICLE TEN), or disposing of such Stock with any other Person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such Stock;

(g) “Person” means any individual, corporation, partnership, unincorporated association, or other entity;

(h) “Stock” means, with respect to any corporation, any capital stock of such corporation and, with respect to any other entity, any equity interest of such entity; and

(i) “Voting Stock” means, with respect to any corporation, Stock of any class or series entitled to vote generally in the election of directors, and, with respect to any entity that is not a corporation, any equity interest entitled to vote generally in the election of the governing body of such entity. Every reference to a percentage of Voting Stock shall refer to such percentage of the votes of such Voting Stock.

ARTICLE TEN

Section 1. Amendments to the Bylaws. Subject to the rights of holders of any series of Preferred Stock then-outstanding, in furtherance and not in limitation of the powers conferred by law, prior to the Trigger Date, the Bylaws may be amended, altered, or repealed and new bylaws made by (i) the Board, or (ii) in addition to any vote of the holders of any class or series of capital stock of the Corporation required herein (including any certificate of designation relating to any series of Preferred Stock) and any other vote otherwise required by applicable law, the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of Voting Stock, voting together as a single class. On and after the Trigger Date, the Bylaws may be amended, altered, or repealed and new bylaws made by (i) the Board, or (ii) in addition to any vote of the holders of any class or series of capital stock of the Corporation required herein (including any certificate of designation relating to any series of Preferred Stock), the Bylaws or applicable law, the affirmative vote of the holders of at least 66 2/3% of the voting power of the then-outstanding Voting Stock, voting together as a single class.

Section 2. Amendments to this Certificate. Subject to the rights of holders of any series of Preferred Stock then-outstanding, and in addition to any other vote required by law or this Certificate, no provision of ARTICLE FIVE, ARTICLE SIX, ARTICLE SEVEN, ARTICLE EIGHT, ARTICLE TEN, or ARTICLE ELEVEN of this Certificate may be altered, amended, or repealed in any respect, nor may any provision of this Certificate or the Bylaws inconsistent therewith be adopted, unless (i) prior to the Trigger Date, such alteration, amendment, repeal, or adoption is approved by the affirmative vote of the holders of a majority of the voting power of all outstanding shares of Voting Stock, voting together as a single class, and (ii) on and after the Trigger Date, such alteration, amendment, repeal, or adoption is approved by the affirmative vote of holders of at least 66 2/3% of the voting power of all outstanding shares of Voting Stock, voting together as a single class.

ARTICLE ELEVEN

Section 1. Exclusive Forum. Unless this Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the United States District Court for the District of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee, or stockholder of the Corporation to the

 

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Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, the Certificate or the Bylaws, or (iv) any action asserting a claim governed by the internal affairs doctrine; provided that, for the avoidance of doubt, this provision, including for any “derivative action,” will not apply to suits to enforce a duty or liability created by the Securities Act of 1933, as amended (the “Securities Act”), the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction. Unless this Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for resolutions of any complaint asserting a cause of action arising under the Securities Act.

Section 2. Notice. Any Person purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation (including, without limitation, shares of Common Stock) shall be deemed to have notice of and to have consented to the provisions of this ARTICLE ELEVEN.

ARTICLE TWELVE

If any provision or provisions of this Certificate shall be held to be invalid, illegal, or unenforceable as applied to any circumstance for any reason whatsoever, the validity, legality, and enforceability of such provisions in any other circumstance and of the remaining provisions of this Certificate (including, without limitation, each portion of any paragraph of this Certificate containing any such provision held to be invalid, illegal, or unenforceable that is not itself held to be invalid, illegal, or unenforceable) shall not, to the fullest extent permitted by applicable law, in any way be affected or impaired thereby.

For the avoidance of doubt, for purposes of applying this Certificate to any contract authorized by Section 122(18) of the DGCL, a restriction, prohibition, or covenant in any such contract that relates to any specified action shall not be deemed contrary to this Certificate by reason of a provision of the Certificate that authorizes or empowers, or exclusively authorizes or empowers, the Board of Directors (or any 1 or more directors) to take such action.

 

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Exhibit 3.3

FINAL FORM

THIRD AMENDED AND RESTATED BYLAWS OF

FIREFLY AEROSPACE INC.

ARTICLE I

OFFICES

Section 1.01 Offices. The address of the registered office of Firefly Aerospace Inc. (the “Company”) in the State of Delaware shall be set forth in the Company’s Certificate of Incorporation, as amended and restated from time to time (the “Certificate of Incorporation”). The Company may have other offices, both in and outside of the State of Delaware, as the Company’s Board of Directors (the “Board of Directors”) shall determine or the business of the Company may require.

Section 1.02 Books and Records. Any records administered by or on behalf of the Company in the regular course of its business, including its stock ledger, books of account, and minute books, may be maintained on any information storage device, method, or one (1) or more electronic networks or databases (including one (1) or more distributed electronic networks or databases); provided, that the records so kept can be converted into clearly legible paper form within a reasonable time, and, with respect to the stock ledger, the records comply with Section 224 of General Corporation Law of the State of Delaware, as amended (the “DGCL”). The Company shall convert any records upon the request of any person entitled to inspect such records pursuant to applicable law.

ARTICLE II

MEETINGS OF THE STOCKHOLDERS

Section 2.01 Place of Meetings. All meetings of the stockholders shall be held at such place, if any, either in or outside of the State of Delaware, or by means of remote communications, as shall be designated by resolution(s) of the Board of Directors and stated in the notice of meeting.

Section 2.02 Annual Meeting. The annual meeting of the stockholders for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held at such date, time and place, if any, as shall be determined by the Board of Directors and stated in the notice of the meeting.

Section 2.03 Special Meetings. Special meetings of stockholders for any purpose or purposes shall be called pursuant to a resolution approved by the Board of Directors, which shall specify the date, time and place, if any, and may not be called by any other person or entity. The only business which may be conducted at a special meeting shall be the matter or matters set forth in the notice of such meeting.

Section 2.04 Adjournments. Any meeting of the stockholders, annual or special, may be adjourned to reconvene at the same or some other place, if any, and notice need not be given of any such adjourned meeting if the time, place, if any, thereof and the means of remote communication, if any, are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Company may transact any business which might have been transacted at


the original meeting. If the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date is fixed for stockholders entitled to vote at the adjourned meeting, the Board of Directors shall fix a new record date for notice of the adjourned meeting and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at the adjourned meeting as of the record date fixed for notice of the adjourned meeting.

Section 2.05 Notice of Meetings. Notice of stockholder meetings shall be provided in writing or by electronic transmission stating the place, if any, date, hour, record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for stockholders entitled to notice of the meeting) and, in the case of a special meeting the purpose or purposes for which the meeting has been called. The notice shall be given by the Company not less than ten (10) days nor more than sixty (60) days before the meeting (unless a different time is specified by law) to every stockholder entitled to vote at the meeting as of the record date for determining the stockholders entitled to notice of the meeting and shall comply in all respects with the requirements of Section 232 of the DGCL.

Section 2.06 List of Stockholders. The Company shall prepare a complete list of the stockholders entitled to vote at any meeting of stockholders (provided, however, if the record date for determining the stockholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date), arranged in alphabetical order, and showing the address of each stockholder and the number of shares of each class of capital stock of the Company registered in the name of each stockholder at least ten (10) days before any meeting of the stockholders. Such list shall be open to the examination of any stockholder, for any purpose reasonably connected to the meeting, on a reasonably accessible electronic network if the information required to gain access to such list was provided with the notice of the meeting or during ordinary business hours, at the principal place of business of the Company for a period of at least ten (10) days before the meeting. If the meeting is to be held at a place, the list shall also be produced and kept at the time and place of the meeting the whole time thereof and may be inspected by any stockholder who is present. If the meeting is held solely by means of remote communication, the list shall also be open for inspection by any stockholder during the whole time of the meeting as provided by applicable law. Except as provided by applicable law, the Company’s stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger and the list of stockholders, or to vote in person or by proxy at any meeting of stockholders.

Section 2.07 Quorum. Except as otherwise required by law, the Certificate of Incorporation, or these Bylaws, at each meeting of the stockholders, a majority in voting power of the shares of the Company entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power, by the affirmative vote of a majority in voting power thereof, to adjourn the meeting in the manner provided in Section 2.04, until a quorum shall be present or represented; provided, that the presence of Glow B Holdings, LLC shall be required for quorum. A quorum, once established, shall not be broken by the subsequent withdrawal of enough votes to leave less than a quorum. At any such adjourned meeting at which there is a quorum, any business may be transacted that might have been transacted at the meeting originally called.

 

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Section 2.08 Conduct of Meetings. The Board of Directors may adopt by resolution such rules and regulations for the conduct of the meeting of the stockholders as it shall deem appropriate. At every meeting of the stockholders, a Series B Director (as defined in the Certificate of Incorporation), or, in his or her absence or inability to act, the person whom a Series B Director shall appoint, shall act as chairman of, and preside at, the meeting. The Secretary or, in his or her absence or inability to act, the person whom the chairman of the meeting shall appoint secretary of the meeting, shall act as secretary of the meeting and keep the minutes thereof. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of any meeting of the stockholders shall have the right and authority to prescribe such rules, regulations, and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations, or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (a) the establishment of an agenda or order of business for the meeting; (b) the determination of when the polls shall open and close for any given matter to be voted on at the meeting; (c) rules and procedures for maintaining order at the meeting and the safety of those present; (d) limitations on attendance at or participation in the meeting to stockholders of record of the Company, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (e) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (f) limitations on the time allotted to questions or comments by participants.

Section 2.09 Voting; Proxies. Except as otherwise required by law or the Certificate of Incorporation, the election of directors shall be decided by a plurality of the votes cast at a meeting of the stockholders by the holders of stock entitled to vote in the election. Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, any matter, other than the election of directors, brought before any meeting of stockholders shall be decided by the affirmative vote of the majority of the outstanding shares entitled to vote on the matter. Each stockholder entitled to vote at a meeting of stockholders or to express consent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period; provided, however, that a stockholder may not grant a proxy to Noosphere Venture Partners LP or any Affiliate of Noosphere Venture Partners LP. An “Affiliate” means, with respect to a party, any other party who, directly or indirectly, controls, is controlled by or is under common control with such party, including, but not limited to, any general partner, managing member, officer, director or trustee of such party, or any venture capital fund or other investment fund now or hereafter existing that is controlled by one (1) or more general partners, managing members or investment advisers of, or shares the same management company or investment adviser with, such party. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by delivering to the secretary of the Company a revocation of the proxy or a new proxy bearing a later date. Voting at meetings of stockholders need not be by written ballot.

Section 2.10 Inspectors at Meetings of Stockholders. The Board of Directors, in advance of any meeting of stockholders, may, and shall if required by law, appoint one (1) or more inspectors, who may be employees of the Company, to act at the meeting or any adjournment thereof and make a written report thereof. The Board of Directors may designate one (1) or more

 

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persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting, the person presiding at the meeting shall appoint one (1) or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall (a) ascertain the number of shares outstanding and the voting power of each, (b) determine the shares represented at the meeting, the existence of a quorum and the validity of proxies and ballots, (c) count all votes and ballots, (d) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and (e) certify their determination of the number of shares represented at the meeting and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of their duties. Except as otherwise provided by the Board of Directors, the date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting. No ballot, proxies, votes, or any revocation thereof or change thereto, shall be accepted by the inspectors after the closing of the polls unless the Court of Chancery of the State of Delaware upon application by a stockholder shall determine otherwise. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders, the inspectors may consider such information as is permitted by applicable law. No person who is a candidate for office at an election may serve as an inspector at such election.

Section 2.11 Written Consent of Stockholders Without a Meeting. Any action to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action to be so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered (by hand or by certified or registered mail, return receipt requested) to the Company by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the Company having custody of the book in which proceedings of meetings of stockholders are recorded. Every written consent shall bear the date of signature of each stockholder who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated consent delivered in the manner required by this Section, written consents signed by a sufficient number of holders to take action are delivered to the Company as aforesaid. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall, to the extent required by applicable law, be given to those stockholders who have not consented in writing, and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the Company provided that no such notice shall be required if not required by law.

Section 2.12 Fixing the Record Date.

(a) In order that the Company may determine the stockholders entitled to notice of or to vote at any meeting of stockholders, or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record

 

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date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the determination of stockholders entitled to vote at the adjourned meeting and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for the determination of stockholders entitled to vote therewith at the adjourned meeting.

(b) In order that the Company may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting: (i) when no prior action by the Board of Directors is required by law, the record date for such purpose shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Company by delivery (by hand, or by certified or registered mail, return receipt requested) to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Company having custody of the book in which proceedings of meetings of stockholders are recorded, and (ii) if prior action by the Board of Directors is required by law, the record date for such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

(c) In order that the Company may determine the stockholders entitled to receive payment of any dividend, or other distribution or allotment of any rights, or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution(s) relating thereto.

 

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ARTICLE III

BOARD OF DIRECTORS

Section 3.01 General Powers. The business and affairs of the Company shall be managed by or under the direction of the Board of Directors. The Board of Directors may adopt such rules and procedures, not inconsistent with the Certificate of Incorporation, these Bylaws, or applicable law, as it may deem proper for the conduct of its meetings and the management of the Company.

Section 3.02 Number; Term of Office. The Board of Directors shall be appointed as specified in the Seventh Amended and Restated Voting Agreement dated as of the adoption date hereof by and between the Company and the parties thereto (as the same may be amended, restated, or amended and restated, the “Voting Agreement”). The number of directors serving on the Board may be changed from time to time as set forth in the Certificate of Incorporation and Voting Agreement. Each director shall hold office until a successor is duly elected and qualified or until the director’s earlier death, resignation, disqualification, or removal.

Section 3.03 Newly Created Directorships and Vacancies. Any newly created directorships resulting from an increase in the authorized number of directors and any vacancies occurring in the Board of Directors may be filled by the affirmative vote of a majority of the remaining members of the Board of Directors, although less than a quorum, or by a sole remaining director; provided, that the Board of Directors may only fill any such vacancies occurring in the Board of Directors with the designee(s) of the applicable holders of stock entitled to appoint such director(s) pursuant to the Certificate of Incorporation and the Voting Agreement. A director so elected shall be elected to hold office until the earlier of the expiration of the term of office of the director whom he or she has replaced, a successor is duly elected and qualified or the earlier of such director’s death, resignation, or removal. If there are no directors in office, then an election of directors may be held in the manner provided by applicable law.

Section 3.04 Resignation. Any director may resign at any time by notice given orally, in writing, or by electronic transmission to the Company. Such resignation shall take effect at the date of receipt of such notice by the Company or at such later time as is specified.

Section 3.05 Removal. Except as prohibited by applicable law or as otherwise provided in the Certificate of Incorporation, the stockholders entitled to vote in an election of directors may remove any such director from office at any time, with or without cause, by the affirmative vote of a majority in voting power thereof; provided, that, no director may be removed from office unless such removal is directed or approved by the parties originally entitled to designate or approve such director.

Section 3.06 Qualifications for Directors. One (1) director shall be the Company’s Chief Executive Officer. No director shall be, or shall have been, an Affiliate of Noosphere Venture Partners LP.

Section 3.07 Fees and Expenses. Directors shall receive such fees and expenses as the Board of Directors shall prescribe. The Company shall reimburse the Preferred Directors (as defined in the Voting Agreement) for all reasonable, documented and out-of-pocket expenses to attend meetings of the Board of Directors.

 

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Section 3.08 Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such times and at such places as may be determined by the Board of Directors or its chairman.

Section 3.09 Special Meetings. Special meetings of the Board of Directors may be held at such times and at such places as may be determined by the chairman or the president on at least twenty four (24) hours’ notice to each director given by the means specified in Section 3.11 other than by mail or on at least three (3) days’ notice if given by mail. Special meetings shall be called by the chairman or the President in like manner and on like notice on the written request of any two (2) or more directors.

Section 3.10 Telephone Meetings. Board of Directors or Board of Directors’ committee meetings may be held by means of telephone conference or other communications equipment by means of which all persons participating in the meeting can hear each other and be heard. Participation by a director in a meeting pursuant to this Section shall constitute presence in person at such meeting.

Section 3.11 Adjourned Meetings. A majority of the directors present at any meeting of the Board of Directors, including an adjourned meeting, whether or not a quorum is present, may adjourn and reconvene such meeting to another time and place. At least twenty four (24) hours’ notice of any adjourned meeting of the Board of Directors shall be given to each director whether or not present at the time of the adjournment, if such notice shall be given the means specified in Section 3.11 other than by mail, or at least three (3) days’ notice if by mail. Any business may be transacted at an adjourned meeting that might have been transacted at the meeting as originally called.

Section 3.12 Notices. Subject to Section 3.08, Section 3.10 and Section 3.12, whenever notice is required to be given to any director by applicable law, the Certificate of Incorporation, or these Bylaws, such notice shall be deemed given effectively if given in person or by telephone, mail addressed to such director at such director’s address as it appears on the records of the Company, facsimile, email, or by other means of electronic transmission.

Section 3.13 Waiver of Notice. Whenever notice to directors is required by applicable law, the Certificate of Incorporation or these Bylaws, a waiver, in writing signed by, or by electronic transmission by, the director entitled to the notice, whether before or after such notice is required, shall be deemed equivalent to notice. Attendance by a director at a meeting shall constitute a waiver of notice of such meeting except when the director attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting was not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special Board of Directors or committee meeting need be specified in any waiver of notice.

Section 3.14 Organization. At each meeting of the Board of Directors, the chairman or, in his or her absence, another director selected by the Board of Directors shall preside. The

 

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Secretary shall act as secretary at each meeting of the Board of Directors. If the Secretary is absent from any meeting of the Board of Directors, an assistant secretary shall perform the duties of secretary at such meeting; and, in the absence from any such meeting of the Secretary and all assistant secretaries, the person presiding at the meeting may appoint any person to act as secretary of the meeting.

Section 3.15 Quorum of Directors. Except as otherwise required by the Certificate of Incorporation, these Bylaws, or applicable law, the presence of a majority of the Board of Directors shall be necessary and sufficient to constitute a quorum for the transaction of business at any meeting of the Board of Directors, including (a) the Series B Director (as defined in the Certificate of Incorporation) acting as the chairman of the Board of Directors and (b) at least one (1) of the Series A Director and Series D Director (each as defined in the Certificate of Incorporation); provided, however, that if a meeting is adjourned due to the absence of both of the Series A Director and the Series D Director, the Board of Directors may reschedule such meeting and the presence of neither the Series A Director nor the Series D Director shall be required to constitute a quorum at the rescheduled meeting.

Section 3.16 Action by Directors. Except as otherwise expressly required by these Bylaws, the Certificate of Incorporation, the Voting Agreement, the Sixth Amended and Restated Investors’ Rights Agreement dated as of the adoption date hereof by and between the Company and the parties thereto (as the same may be amended, restated, or amended and restated, the “Investors’ Rights Agreement”) or by applicable law, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.

Section 3.17 Action Without Meeting. Except as set forth in the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all the directors or members of such committee, as the case may be, consent thereto in writing or by electronic transmission, and the writings or electronic transmissions are filed with the minutes of proceedings of the Board of Directors or committee in accordance with applicable law.

Section 3.18 Committees of the Board of Directors. The Board of Directors may designate one (1) or more committees (in addition to the Compensation Committee described in Section 3.19), each committee to consist of one (1) or more of the directors of the Company. Except with respect to the Compensation Committee, the Board of Directors may designate one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee; provided, that, (a) all committees shall be required to have at least one (1) Series B Director, (b) the Series B Directors shall hold the majority of any vote of the members of any committee and (c) the Series D Director shall be entitled to participate on any committee. Except with respect to the Compensation Committee, if a member of a committee shall be absent from any meeting, or disqualified from voting thereat, the remaining member or members present at the meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member; provided, that, all committees shall be required to have at least one (1) Series B Director. Any such committee, to the extent permitted by applicable law, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the

 

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Company and may authorize the seal of the Company to be affixed to all papers that may require it to the extent so authorized by the Board of Directors; provided that, notwithstanding anything to the contrary herein, any such exercise of the powers or authority of the Board of Directors by a committee shall be subject to any requisite vote or other requirement applied to such act of the Board of Directors, as specified in these Bylaws, the Certificate of Incorporation, the Voting Agreement, or the Investors’ Rights Agreement. Unless the Board of Directors provides otherwise, at all meetings of such committee, a majority of the then authorized members of the committee (which shall include at least one (1) Series B Director) shall constitute a quorum for the transaction of business, and the vote of a majority of the members of the committee (which shall include at least one (1) Series B Director) present at any meeting at which there is a quorum shall be the act of the committee. Each committee shall keep regular minutes of its meetings. Unless the Board of Directors provides otherwise, each committee designated by the Board of Directors may make, alter, and repeal rules and procedures for the conduct of its business. In the absence of such rules and procedures each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to this Article.

Section 3.19 Compensation Committee. The Board of Directors shall have a compensation committee (the “Compensation Committee”) and such Compensation Committee shall include at least one (1) Series B Director. The Compensation Committee shall have all such other rights and powers as may be lawfully delegated to it by the Board of Directors pursuant to any Compensation Committee Charter, and not in conflict with specific powers conferred by the Board of Directors upon any other board committee.

ARTICLE IV

OFFICERS

Section 4.01 Positions and Election. Except as may be appointed in accordance with Section 4.06, the officers of the Company shall be elected by the Board of Directors and shall include, but not limited to, a chief executive officer, a president, a treasurer, and a secretary. The Board of Directors, in its discretion, may also elect a chairman (who must be a Series B Director), one (1) or more vice chairmen (who must be directors), and one (1) or more vice presidents, assistant treasurers, assistant secretaries, and other officers. Any two (2) or more offices may be held by the same person. All officers of the Company shall respectively have such authority and perform such duties in the management of the business of the Company as may be designated from time to time by the Board of Directors or the stockholders and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board of Directors.

Section 4.02 Term. Each officer of the Company shall hold office until such officer’s successor is elected and qualified or until such officer’s earlier death, resignation, or removal. Any officer elected or appointed by the Board of Directors may be removed by the Board of Directors at any time with or without cause by the majority vote of the members of the Board of Directors then in office. The removal of an officer shall be without prejudice to his or her contract rights, if any. The election or appointment of an officer shall not of itself create contract rights. Any officer of the Company may resign at any time by giving written notice of his or her resignation to the president or the secretary. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt. Except as set forth therein, the acceptance of such resignation shall not be necessary to make it effective. Should any vacancy occur among the officers, the position shall be filled for the unexpired portion of the term by appointment made by the Board of Directors.

 

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Section 4.03 The Chief Executive Officer. The Chief Executive Officer shall have general supervision over the business of the Company and other duties incident to the office of president, and any other duties as may be assigned to the president by the Board of Directors and subject to the control of the Board of Directors in each case.

Section 4.04 The Secretary. The Secretary shall attend all sessions of the Board of Directors, and all meetings of the stockholders, and record all votes and the minutes of all proceedings in a book to be kept for that purpose, and shall perform like duties for committees when required. He or she shall give, or cause to be given, notice of all meetings of the stockholders and meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or the president. The Secretary shall keep in safe custody the seal of the Company and have authority to affix the seal to all documents requiring it and attest to the same.

Section 4.05 The Treasurer. The Treasurer shall have the custody of the corporate funds and securities, except as otherwise provided by the Board of Directors, and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Company and shall deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Company as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the president and the directors, at the regular meetings of the Board of Directors, or whenever they may require it, an account of all his or her transactions as treasurer and of the financial condition of the Company.

Section 4.06 Subordinate Officers. The chief executive officer or, in the absence of a chief executive officer, the president, may appoint, such other officers as the business of the Company may require. Each of such officers shall hold office for such period, have such authority, and perform such duties as provided by the chief executive officer or the president but in no case shall such duties be inconsistent with these bylaws or any limitations the Board of Directors may from time to time determine.

Section 4.07 Duties of Officers May Be Delegated. In case any officer is absent, or for any other reason that the Board of Directors may deem sufficient, the president or the Board of Directors may delegate for the time being the powers or duties of such officer to any other officer or to any director.

Section 4.08 Loans to Officers. Subject to the approval of the Board of Directors, the Company may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the Company or of any its subsidiaries, if any, including any officer or employee who is a director of the Company or any its subsidiaries, if any, whenever, in the judgment of the Board of Directors, such loan, guaranty or assistance may reasonably be expected to benefit the Company. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the Company. Nothing in this Section shall be deemed to deny, limit, or restrict the powers of guaranty or warranty of the Company at common law or under any statute.

 

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Section 4.09 Representation of Interests of Other Entities. The chairman of the Board of Directors, the President, any vice president, the Secretary, or any other person authorized by the Board of Directors or the President, is authorized to vote, represent, and exercise on behalf of the Company all rights incident to any and all shares, equity, or voting interests of any other corporation, limited liability company, or other similar entity, standing in the name of the Company. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by the person having such authority.

ARTICLE V

STOCK CERTIFICATES AND THEIR TRANSFER

Section 5.01 Certificates Representing Shares. The shares of stock of the Company shall be represented by certificates; provided, that (a) the Board of Directors may provide by resolution that some or all of any class or series shall be uncertificated shares that may be evidenced by a book-entry system maintained by the registrar of such stock and (b) the Company and a stockholder may agree that such stockholder’s shares of stock shall be uncertificated shares evidenced by a book-entry system maintained by the registrar of such stock. If shares are represented by certificates, such certificates shall be in the form, other than bearer form, approved by the Company’s authorized officers. Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated stock and the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical. The certificates representing shares of stock of each class shall be signed by, or in the name of, the Company by any two (2) of the Company’s authorized officers. Such signatures may be facsimiles. Although any officer, transfer agent, or registrar whose manual or facsimile signature is affixed to such a certificate ceases to be such officer, transfer agent, or registrar before such certificate has been issued, it may nevertheless be issued by the Company with the same effect as if such officer, transfer agent, or registrar were still such at the date of its issue.

Section 5.02 Transfers of Stock. The stock of the Company shall be transferable in the manner prescribed by law, by these Bylaws, by the Investors’ Rights Agreement, and by the Sixth Amended and Restated Right of First Refusal and Co-Sale Agreement dated as of the adoption date hereof by and between the Company and the parties thereto (as the same may be amended, restated, or amended and restated). Transfers of stock shall be made on the books of the Company only by the holder of record thereof, by such person’s attorney lawfully constituted in writing and, in the case of certificated shares, upon the surrender of the certificate thereof, which shall be cancelled before a new certificate or uncertificated shares shall be issued. No transfer of stock shall be valid as against the Company for any purpose until it shall have been entered in the stock records of the Company by an entry showing from and to whom transferred. To the extent designated by the president, or any vice president, or the treasurer of the Company, the Company may recognize the transfer of fractional uncertificated shares, but shall not otherwise be required to recognize the transfer of fractional shares.

 

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Section 5.03 Restriction on Transfer of Common Stock. No stockholder of shares of Common Stock (as defined in the Certificate of Incorporation) (including in connection with any stock split, stock dividend, recapitalization or reorganization, but excluding shares of Common Stock issued or issuable upon conversion of any shares of Preferred Stock (as defined in the Certificate of Incorporation) or upon exercise of any warrants issued to purchasers of Series D Preferred Stock pursuant to the Series D Preferred Stock Purchase Agreement dated as of the adoption date hereof by and between the Company and the parties thereto (as the same may be amended, restated, or amended and restated) (such shares of Common Stock, the “Transfer Stock”, and such stockholder of Transfer Stock, the “Common Stockholder”) may transfer, assign, pledge, or otherwise dispose of or encumber shares without the approval of the Board of Directors, except for the Exempted Transfers as provided in Section 5.04 below.

Section 5.04 Exempted Transfers.

(a) Exempted Transfers. Notwithstanding the foregoing or anything to the contrary herein, the provisions of Section 5.03 shall not apply (i) in the case of a Common Stockholder that is an entity, upon a transfer by such Common Stockholder to its stockholders, members, partners or other equityholders or other Affiliates, (ii) to a repurchase of Transfer Stock from a Common Stockholder by the Company at a price no greater than that originally paid by such Common Stockholder for such Transfer Stock and pursuant to an agreement containing vesting and/or repurchase provisions approved by the Board of Directors or (iii) in the case of a Common Stockholder that is a natural person, upon a transfer of Transfer Stock by such Common Stockholder made for bona fide estate planning purposes, either during their lifetime or on death by will or intestacy to their Immediate Family Member, or any other relative or Person approved by unanimous consent of the Board of Directors, or any trust, partnership or limited liability company for the benefit of, or the ownership interests of which are owned wholly by such Common Stockholder or any such Immediate Family Members or Board of Directors-approved other relatives or Persons; provided, that in the case of clauses (i) or (iii), the Common Stockholder shall deliver prior written notice to the transferees of such pledge, gift or transfer and such shares of Transfer Stock shall at all times remain subject to the terms and restrictions set forth in these Bylaws and such transferee shall, as a condition to such issuance, deliver an instrument as confirmation that such transferee shall be bound by all the terms and conditions of these Bylaws as a Common Stockholder (but only with respect to the securities so transferred to the transferee), including the obligations of a Common Stockholder with respect to Proposed Common Stockholder Transfers of such Transfer Stock pursuant to Section 5.05.

(b) Exempted Offerings. Notwithstanding the foregoing or anything to the contrary herein, the provisions of Section 5.05 shall not apply to the sale of any Transfer Stock (i) to the public in an offering pursuant to an effective registration statement under the Securities Act; or (ii) pursuant to a Deemed Liquidation Event (as defined in the Restated Certificate).

(c) Prohibited Transferees. Notwithstanding the foregoing, no Common Stockholder shall transfer any Transfer Stock to (a) any entity which, in the Board of Directors’ determination, directly or indirectly competes with the Company; (b) any

 

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customer, distributor or supplier of the Company, if the Board of Directors determines that such transfer would result in such customer, distributor or supplier receiving information that could place the Company at a competitive disadvantage with respect to such customer, distributor or supplier; or (c) any Foreign Person that pursuant to any such transfer would acquire any DPA Triggering Rights, unless otherwise approved by the Board of Directors; provided that Astera Institute shall not be deemed to compete with the Company, either directly or indirectly, or to be a customer, distributor or supplier of the Company, for purposes of this Section 5.04(c).

Section 5.05 Right of First Refusal on Transfer of Common Stock.

(a) Grant. Subject to the terms of Section 5.03 and except for the transfers under Section 5.04, each Common Stockholder hereby unconditionally and irrevocably grants to the Company a Right of First Refusal to purchase all or any portion of Transfer Stock that such Common Stockholder may propose to transfer in a Proposed Common Stockholder Transfer, at the same price and on the same terms and conditions as those offered to the Prospective Transferee.

(b) Notice. Each Common Stockholder proposing to make a Proposed Common Stockholder Transfer must deliver a Proposed Transfer Notice to the Company or its permitted transferees or assigns not later than forty-five (45) days prior to the consummation of such Proposed Common Stockholder Transfer. Such Proposed Transfer Notice shall contain the material terms and conditions (including price and form of consideration) of the Proposed Common Stockholder Transfer, the identity of the Prospective Transferee and the intended date of the Proposed Common Stockholder Transfer. To exercise its Right of First Refusal under this Section 5.05, the Company or its permitted transferees or assigns must deliver a Company Notice to the selling Common Stockholder within fifteen (15) days after delivery of the Proposed Transfer Notice. In the event of a conflict between these Bylaws and any other agreement that may have been entered into by a Common Stockholder with the Company that contains a preexisting right of first refusal, the terms of these Bylaws shall control and the preexisting right of first refusal shall be deemed satisfied by compliance with Section 5.05(a) and this Section 5.05(b).

(c) Consideration; Closing. If the consideration proposed to be paid for the Transfer Stock is in property, services or other non-cash consideration, the fair market value of the consideration shall be as determined in good faith by the Board of Director and as set forth in the Company Notice. The closing of the purchase of Transfer Stock by the Company shall take place, and all payments from the Company shall have been delivered to the selling Common Stockholder, by the later of (i) the date specified in the Proposed Transfer Notice as the intended date of the Proposed Common Stockholder Transfer; and (ii) forty-five (45) days after delivery of the Proposed Transfer Notice.

Section 5.06 Transfer Agents and Registrars. The Board of Directors may appoint, or authorize any officer or officers to appoint, one (1) or more transfer agents and one (1) or more registrars.

 

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Section 5.07 Lost, Stolen or Destroyed Certificates. The Board of Directors may direct a new certificate or uncertificated shares to be issued in place of any certificate theretofore issued by the Company alleged to have been lost, stolen, or destroyed upon the making of an affidavit of that fact by the owner of the allegedly lost, stolen, or destroyed certificate. When authorizing such issue of a new certificate or uncertificated shares, the Board of Directors may, in its discretion and as a condition precedent to the issuance of a new certificate, require the owner of the lost, stolen, or destroyed certificate, or the owner’s legal representative to give the Company a bond sufficient to indemnify it against any claim that may be made against the Company with respect to the certificate alleged to have been lost, stolen, or destroyed or the issuance of such new certificate or uncertificated shares.

Section 5.08 Certain Definitions.

(a) “Company Notice” means written notice from the Company notifying the selling Common Stockholders that the Company intends to exercise its Right of First Refusal as to some or all of the Transfer Stock with respect to any Proposed Common Stockholder Transfer.

(b) “DPA Triggering Right” means (i) “control” (as defined in the DPA); (ii) access to any “material non-public technical information” (as defined in the DPA) in the possession of the Company; (iii) membership or observer rights on the Board of Directors or equivalent governing body of the Company or the right to nominate an individual to a position on the Board of Directors or equivalent governing body of the Company; and (iv) any involvement, other than through the voting of shares, in substantive decision-making of the Company regarding (x) the use, development, acquisition or release of any Company “critical technology” (as defined in the DPA); (y) the use, development, acquisition, safekeeping, or release of “sensitive personal data” (as defined in the DPA) of U.S. citizens maintained or collected by the Company, or (z) the management, operation, manufacture, or supply of “covered investment critical infrastructure” (as defined in the DPA).

(c) “DPA” means Section 721 of the Defense Production Act, as amended, including all implementing regulations thereof.

(d) “Foreign Person” means either (i) a Person or government that is a “foreign person” within the meaning of the DPA or (ii) a Person through whose investment a “foreign person” within the meaning of the DPA would obtain any DPA Triggering Rights.

(e) “Immediate Family Member” means a child (natural or adopted), stepchild, grandchild, parent, stepparent, grandparent, spouse, life partner or similarly statutorily-recognized domestic partner, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including, adoptive relationships of a natural person referred to herein.

(f) “Person” means a natural person or individual, or a firm, corporation, partnership, association, limited liability company, trust or any other entity.

 

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(g) “Proposed Common Stockholder Transfer” means any assignment, sale, offer to sell, pledge, mortgage, hypothecation, encumbrance, disposition of or any other like transfer or encumbering of any Transfer Stock (or any interest therein) proposed by any of the Common Stockholders.

(h) “Proposed Transfer Notice” means written notice from a Common Stockholder setting forth the terms and conditions of a Proposed Common Stockholder Transfer.

(i) “Prospective Transferee” means any Person to whom a Common Stockholder proposes to make a Proposed Common Stockholder Transfer.

(j) “Right of First Refusal” means the right, but not an obligation, of the Company, or its permitted transferees or assigns, to purchase some or all of the Transfer Stock with respect to a Proposed Common Stockholder Transfer, on the terms and conditions specified in the Proposed Transfer Notice.

ARTICLE VI

INDEMNIFICATION AND INSURANCE

Section 6.01 The Company shall have the power to indemnify, to the extent permitted by the DGCL, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative (a “Proceeding”) by reason of the fact that he or she is or was a director, officer, employee, or agent of the Company, or is or was serving at the Company’s request as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, including service with respect to employee benefit plans, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any such Proceeding, and to advance expenses for any Proceeding to the extent permitted by the DGCL. The Company shall have the power to enter into indemnification agreements in furtherance of the general powers granted hereunder. A right to indemnification or to advancement of expenses arising under a provision of the Certificate of Incorporation or these Bylaws shall not be eliminated or impaired by an amendment to the Certificate of Incorporation or these Bylaws after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit, or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.

Section 6.02 Insurance. The Company may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Company would have the power to indemnify him or her against such liability under the provisions of the DGCL.

 

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ARTICLE VII

GENERAL PROVISIONS

Section 7.01 Seal. The seal of the Company shall be in such form as shall be approved by the Board of Directors. The seal may be used by causing it or a facsimile thereof to be impressed, affixed, or reproduced or otherwise, as may be prescribed by law, or custom, or by the Board of Directors.

Section 7.02 Fiscal Year. The fiscal year of the Company shall begin on January 1 and end on December 31 of each year.

Section 7.03 Checks, Notes, Drafts, Etc. All checks, notes, drafts or other orders for the payment of money of the Company shall be signed, endorsed, or accepted in the name of the Company by such officer, officers, person or persons designated by the Board of Directors, or by an officer or officers authorized by the Board of Directors to make such designation.

Section 7.04 Dividends. Subject to applicable law and the Certificate of Incorporation, dividends upon the shares of capital stock of the Company may be declared by the Board of Directors at any regular or special meeting of the Board of Directors. Dividends may be paid in cash, in property, or in shares of the Company’s capital stock, unless otherwise provided by applicable law or the Certificate of Incorporation.

Section 7.05 Conflict with Applicable Law or Certificate of Incorporation. These Bylaws are adopted subject to any applicable law and the Certificate of Incorporation. If these Bylaws conflict with any applicable law or the Certificate of Incorporation, then the provisions of applicable law or the Certificate of Incorporation shall control.

Section 7.06 Electronic Notice. Notice given by electronic transmission shall be deemed given: (a) if by facsimile telecommunication, when directed to a facsimile telecommunication number at which the stockholder or director has consented to receive notice; (b) if by electronic mail, when directed to an electronic mail address at which the stockholder or director has consented to receive notice; (c) if by posting on an electronic network together with separate notice to the stockholder or director of such specific posting, upon the later of (1) such posting and (2) the giving of such separate notice; and (d) if by any other form of electronic transmission, when directed to the stockholder or director.

Section 7.07 Forum. Unless the Company consents in writing to the selection of an alternative forum, the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Company, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, or employee of the Company to the Company or the Company’s stockholders, (c) any action asserting a claim against the Company arising pursuant to any provision of the DGCL, the Certificate of Incorporation, or these Bylaws, or (d) any action asserting a claim against the Company governed by the internal affairs doctrine shall be a state or federal court located within the State of Delaware, in all cases subject to the court having personal jurisdiction over the indispensable parties named as defendants.

 

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ARTICLE VIII

AMENDMENTS

Section 8.01 Amendments. Except when the Certificate of Incorporation requires the consent of a class or series of the Company’s stock, these Bylaws may be amended, altered, terminated, repealed, or waived with the consent of the Board or the consent of the holders of a majority of the Company’s Series B Preferred Stock.

*  *  *

 

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CERTIFICATE OF ADOPTION OF THIRD AMENDED AND RESTATED BYLAWS

OF

FIREFLY AEROSPACE INC.

The undersigned certifies that he is the duly elected, qualified, and acting secretary of Firefly Aerospace Inc., a Delaware corporation (the “Company”), and that the Third Amended and Restated Bylaws were adopted as the Company’s bylaws on October 31, 2024.

 

/s/ David Wheeler

David Wheeler, Secretary

 

Exhibit 3.4

FORM OF BYLAWS

OF

FIREFLY AEROSPACE INC.

A Delaware corporation

(Adopted as of [•], 2025)

ARTICLE I

OFFICES

Section 1. Offices. Firefly Aerospace Inc. (the “Corporation”) may have an office or offices other than its registered office at such place or places, either within or outside the State of Delaware, as the Board of Directors of the Corporation (the “Board”) may from time to time determine or the business of the Corporation may require. The registered office of the Corporation in the State of Delaware shall be as stated in the Corporation’s certificate of incorporation as then in effect (as amended, restated, modified, and/or supplemented from time to time, including any certificate of designation relating to any series of preferred stock, the “Certificate of Incorporation”).

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 1. Place of Meetings. The Board may designate a place, if any, either within or outside the State of Delaware, as the place of meeting for any annual meeting or for any special meeting of stockholders. The Board may, in its sole discretion, determine that meetings of stockholders shall not be held at any place, but may in addition to or instead be held solely by means of remote communication (including virtually) in accordance with Section 211(a)(2) of the General Corporation Law of the State of Delaware (the “DGCL”).

Section 2. Annual Meeting. An annual meeting of the stockholders shall be held at such date and time as is specified by resolution of the Board. At the annual meeting, stockholders shall elect directors to succeed those whose terms expire at such annual meeting and transact such other business as properly may be brought before the annual meeting pursuant to Section 11 of this ARTICLE II of these bylaws (as amended, restated, modified, and/or supplemented from time to time, these “Bylaws”). The Board may postpone, reschedule, or cancel any annual meeting of stockholders previously scheduled by the Board.

Section 3. Special Meetings. Special meetings of the stockholders may only be called in the manner provided in the Certificate of Incorporation and may be held at such place, if any, either within or without the State of Delaware, and at such time and date as the Board or the Chair of the Board (the “Chair”) or the Chief Executive Officer of the Corporation (the “Chief Executive Officer”) shall determine and state in the notice of such meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. The Board may postpone, reschedule, or cancel any special meeting of stockholders previously scheduled by the Board; provided that prior to the Trigger Date (as defined in the Certificate of Incorporation) any special meeting called at the request of the Principal Stockholder or any Principal Stockholder Affiliate may not be postponed, rescheduled, or canceled without the consent of the Principal Stockholder or such Principal Stockholder Affiliate, as the case may be, at whose request the meeting was originally called.


Section 4. Notice of Meetings. Whenever stockholders are required or permitted to take action at a meeting, notice of the meeting, which shall state the place, if any, date, and time of the meeting of the stockholders, the means of remote communications, if any, by which stockholders and proxyholders not physically present may be deemed to be present in person and vote at such meeting, the record date for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders entitled to notice of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given, not less than 10 nor more than 60 days before the date on which the meeting is to be held, to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting, except as otherwise provided herein or required by law (meaning, here and hereinafter, as required from time to time by the DGCL) or the Certificate of Incorporation.

(a) Form of Notice. All such notices shall be delivered in writing or by electronic transmission in the manner provided in Section 232 of the DGCL, or in any other manner permitted by the DGCL. If mailed, such notice shall be deemed given when deposited in the United States mail, postage prepaid, addressed to the stockholder at his, her, or its address as the same appears on the records of the Corporation. If delivered by courier service, notice shall be deemed given at the earlier of when the notice is received or left at such stockholder’s address as the same appears on the records of the Corporation. If given by electronic mail, notice shall be deemed given when directed to such stockholder’s electronic mail address unless the stockholder has notified the Corporation in writing or by electronic transmission of an objection to receiving notice by electronic mail or such notice is prohibited by the DGCL. Notice to stockholders may also be given by other forms of electronic transmission consented to by the stockholder. If given by facsimile telecommunication, such notice shall be deemed given when directed to a number at which the stockholder has consented to receive notice by facsimile. If given by a posting on an electronic network together with separate notice to the stockholder of such specific posting, such notice shall be deemed given upon the later of: (A) such posting; and (B) the giving of such separate notice. If notice is given by any other form of electronic transmission, such notice shall be deemed given when directed to the stockholder. An affidavit of the secretary of the Corporation (the “Secretary”) or an assistant secretary of the Corporation (the “Assistant Secretary”), the transfer agent of the Corporation (the “Transfer Agent”), or any other agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

(b) Waiver of Notice. Whenever notice is required to be given under any provisions of the DGCL, the Certificate of Incorporation, or these Bylaws, a written waiver thereof, signed by the stockholder entitled to notice, or a waiver by electronic transmission given by the stockholder entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Neither the business to be transacted at, nor the purpose of, any meeting of the stockholders of the Corporation need be specified in any waiver of notice of such meeting. Attendance of a stockholder of the Corporation at a meeting of such stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened and does not further participate in the meeting.

 

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Section 5. List of Stockholders. The Corporation shall prepare, at least 10 days before each meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting; provided, however, if the record date for determining the stockholders entitled to vote is less than 10 days before the meeting date, the list shall reflect the stockholders entitled to vote as of the 10th day before the meeting date, arranged in alphabetical order and showing the address of each such stockholder and the number of shares registered in the name of each such stockholder. Nothing contained in this section shall require the Corporation to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of at least 10 days prior to the meeting: (A) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting; or (B) during ordinary business hours, at the principal place of business of the Corporation. In the event the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, the list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. Except as otherwise provided by law, the list shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 5 or to vote in person or by proxy at any meeting of stockholders.

Section 6. Quorum. The holders of a majority in voting power of the outstanding capital stock entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders, except as otherwise provided by law, by the Certificate of Incorporation or these Bylaws. If a quorum is not present, the chair of the meeting or the holders of a majority of the voting power present in person or represented by proxy at the meeting and entitled to vote at the meeting may adjourn the meeting to another time and/or place from time to time until a quorum shall be present in person or represented by proxy. When a specified item of business requires a vote by a class or series (if the Corporation shall then have outstanding shares of more than one class or series) voting as a separate class or series, the holders of a majority in voting power of the outstanding stock of such class or series shall constitute a quorum (as to such class or series) for the transaction of such item of business. A quorum once established at a meeting shall not be broken by the withdrawal of enough votes to leave less than a quorum.

Section 7. Adjourned Meetings. Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place. When a meeting is adjourned to another time or place (including an adjournment taken to address a technical failure to convene or continue a meeting using remote communication), notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are (i) announced at the meeting at which the adjournment is taken, (ii) displayed, during the time scheduled for the meeting, on the same electronic network used to enable stockholders and proxy holders to participate in the meeting by means of remote communication or (iii) set forth in the notice of meeting given in accordance with these Bylaws.

 

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At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix a new record date for notice of such adjourned meeting in accordance with these Bylaws, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting.

Section 8. Vote Required. Subject to the rights of the holders of any series of preferred stock then-outstanding, when a quorum has been established, all matters other than the election of directors shall be determined by the affirmative vote of the majority of voting power of capital stock present in person or represented by proxy at the meeting and entitled to vote on the subject matter, unless by express provisions of the DGCL or other applicable law, the rules of any stock exchange upon which the Corporation’s securities are listed, any regulation applicable to the Corporation or its securities, the Certificate of Incorporation, or these Bylaws a minimum or different vote is required, in which case such minimum or different vote shall be the required vote for such matter. Except as otherwise provided in the Certificate of Incorporation, directors shall be elected by a plurality of the votes cast.

Section 9. Voting Rights. Subject to the rights of the holders of any series of preferred stock then-outstanding, except as otherwise provided by the DGCL or the Certificate of Incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote in person or by proxy for each share of capital stock held by such stockholder which has voting power upon the matter in question. Voting at meetings of stockholders need not be by written ballot.

Section 10. Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express consent to corporate action without a meeting may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally.

Section 11. Advance Notice of Stockholder Business and Director Nominations.

(a) Nominations of Directors and Other Business at Annual Meetings of Stockholders.

(i) Only such business, including nominations of persons for election to the Board, shall be conducted at an annual meeting of the stockholders as shall have been brought before the meeting: (A) as specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board or any duly authorized committee thereof; (B) by or at the direction of the Board or any duly authorized committee thereof; or (C) by any stockholder of the Corporation who

 

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(1) was a stockholder of record at the time of giving of notice provided for in Section 11(a)(iii) of this ARTICLE II, on the record date for determination of stockholders of the Corporation entitled to vote at the meeting, and at the time of the annual meeting, (2) at the time of the meeting, is entitled to vote at the meeting, and (3) complies with the notice procedures set forth in Section 11(a) of this ARTICLE II. For the avoidance of doubt, the foregoing clause (C) of this Section 11(a)(i) of ARTICLE II shall be the exclusive means for a stockholder to make nominations or propose such business (other than business included in the Corporation’s proxy materials pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or nominations or business brought by AE Industrial Partners, LP (the “Principal Stockholder”) and any entity that controls, is controlled by, or under common control with the Principal Stockholder (other than the Corporation and any entity that is controlled by the Corporation), and any investment vehicles or funds managed or controlled, directly or indirectly, by or otherwise affiliated with the Principal Stockholder (the “Principal Stockholder Affiliates”) at any time prior to the Advance Notice Trigger Date (as defined herein)) before an annual meeting of stockholders.

(ii) For nominations or other business (other than nominations or other business brought by the Principal Stockholder and/or Principal Stockholder Affiliates at any time prior to the date when the Principal Stockholder and Principal Stockholder Affiliates cease to beneficially own in the aggregate (directly or indirectly) at least 10% of the voting power of the then-outstanding shares of capital stock of the Corporation then entitled to vote generally in the election of directors (the “Advance Notice Trigger Date”)) to be properly brought before an annual meeting by a stockholder (any such stockholder of record, as required by Sections 11(a)(i) of this ARTICLE II, proposing business or nominating persons for election to the Board at a meeting of stockholders, the “Noticing Stockholder”), the Noticing Stockholder must have given timely notice thereof in proper written form as described in Section 11(a)(iii) of this ARTICLE II to the Secretary; any such proposed business other than nominations of persons for election to the Board must be a proper matter for stockholder action; and the Noticing Stockholder and any other stockholder, if any, on whose behalf the business is being proposed or the nomination is being made (collectively with the Noticing Stockholder, the “Holders” and each a “Holder”) must have acted in accordance with the representations set forth in the Solicitation Statement (as defined in Section 11(a)(iii) of this ARTICLE II) required by these Bylaws and otherwise complied with the requirements with respect to such nominations or business set forth in this ARTICLE II of these Bylaws. To be timely, a stockholder’s notice for such nominations or other business (other than such a notice by the Principal Stockholder and/or Principal Stockholder Affiliates prior to the Advance Notice Trigger Date, which may be delivered at any time prior to the mailing of the definitive proxy statement pursuant to Section 14(a) of the Exchange Act related to the next annual meeting of stockholders) must be delivered by hand and received by the Secretary at the principal executive offices of the Corporation in proper written form not less than 90 days and not more than 120 days prior to the first anniversary of the preceding year’s annual meeting of stockholders (which date shall, for purposes of

 

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the Corporation’s first annual meeting of stockholders after its shares of common stock, par value $0.0001 (“Common Stock”), are first publicly traded, be deemed to have occurred on [•], 2025); provided, however, that if and only if the annual meeting is not scheduled to be held within a period that commences 30 days before such anniversary date and ends 70 days after such anniversary date, or if no annual meeting was held in the preceding year (other than for purposes of the Corporation’s first annual meeting of stockholders after its shares of Common Stock are first publicly traded), such stockholder’s notice must be delivered not earlier than the 120th day prior to the date of such annual meeting and by the later of: (A) the 10th day following the day the Public Announcement (as defined in Section 11(i) of this ARTICLE II) of the date of the annual meeting is first made; or (B) the date which is 90 days prior to the date of the annual meeting. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. Notices delivered pursuant to Section 11(a) of this ARTICLE II will be deemed received on any given day only if received prior to the Close of Business (as defined in Section 11(i) of this ARTICLE II) on such day (and otherwise shall be deemed received on the next succeeding Business Day (as defined in Section 11(i) of this ARTICLE II)).

(iii) To be in proper written form, a Noticing Stockholder’s notice to the Secretary must set forth:

(A) as to any business that the Noticing Stockholder (as defined below) proposes to bring before the meeting:

(1) a brief description of the business desired to be brought before the meeting;

(2) the reasons for conducting such business at the meeting;

(3) a description of any direct or indirect material interest of any Party or Stockholder Associated Person of such Party in such business (whether by holdings of securities, or by virtue of being a creditor or contractual counterparty of the Corporation or of a third party, or otherwise);

(4) the text of the proposal or business (including the specific text of any resolutions or actions proposed for consideration and if such business includes a proposal to amend the Bylaws, the specific language of the proposed amendment), which business must be a proper subject for stockholder action; and

(5) a description of all agreements, arrangements and understandings between each Holder and any Stockholder Associated Person of such Holder and any other person or persons (including their names) in connection with the proposal of such business by the Noticing Stockholder;

 

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(B) as to each Holder:

(1) the name, age, citizenship, and address of the Noticing Stockholder, as they appear on the Corporation’s books, and, if different from the Corporation’s books, the name and address of the Noticing Stockholder;

(2) the name, age, citizenship, and address of such Holder and each Stockholder Associated Person of such Holder;

(3) as of the date of the notice (which information, for the avoidance of doubt, shall be updated and supplemented pursuant to Section 11(d)):

a. the class or series and number of shares of stock of the Corporation which are directly or indirectly held of record or beneficially owned by such Holder and each Stockholder Associated Person of such Holder (provided that, for the purposes of this Section 11(a)(iii)(B)(3), any such person shall in all events be deemed to beneficially own any shares of stock of the Corporation as to which such person has a right to acquire beneficial ownership at any time in the future (whether such right is exercisable immediately or only after the passage of time or the fulfillment of a condition or both)),

b. a description of all agreements, arrangements or understandings between such Holder and each Stockholder Associated Person of such Holder, on the one hand, and any other person or persons (naming such person or persons), on the other hand, in connection with such proposal of business and/or nomination, excluding engagements with financial, legal, strategic or other advisors in the ordinary course of business;

c. a description of any Derivative Instrument (as defined in Section 11(i) of this ARTICLE II) directly or indirectly held or beneficially held by such Holder and any Stockholder Associated Person of such Holder;

d. whether and to the extent to which a Hedging Transaction (as defined in Section 11(i) of this ARTICLE II) has been entered into by or on behalf of such Holder or any Stockholder Associated Person of such Holder;

 

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e. a description of any proxy, contract, arrangement, understanding, or relationship pursuant to which each Holder and any Stockholder Associated Person of such Holder has any right to vote or has granted a right to vote any shares of stock or any other security of the Corporation;

f. a description of any agreement, arrangement or understanding with respect to any rights to dividends or payments in lieu of dividends on the shares of the Corporation owned beneficially by each Holder or any Stockholder Associated Person of such Holder that are separated or separable pursuant to such agreement, arraignment or understanding from the underlying shares of stock or other security of the Corporation;

g. any direct or indirect legal, economic or financial interest (including Short Interest) of each Holder and each Stockholder Associated Person, if any, of such Holder in the outcome of any (x) vote to be taken at any annual or special meeting of stockholders of the Corporation or (y) any meeting of stockholders of any other entity with respect to any matter that is related, directly or indirectly, to any nomination or business proposed by any Holder under these Bylaws; and

h. any material pending or threatened action, suit, or proceeding (whether civil, criminal, investigative, administrative, or otherwise) in which any Holder or any Stockholder Associated Person of such Holder is, or is reasonably expected to be made, a party or material participant involving the Corporation or any of its officers, directors or employees, or any Affiliate of the Corporation, or any officer, director or employee of such Affiliate (the information required by this subclause (3) shall be referred to as the “Specified Information”); provided, however, that the Specified Information shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who otherwise would be required to disclose Specified Information hereunder solely as a result of being the stockholder directed to prepare and submit the notice required by this Section 11(a) on behalf of a beneficial owner;

 

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(4) a representation by the Noticing Stockholder that such stockholder is a stockholder of record of the Corporation entitled to vote at such meeting on the nominations or other business proposed, that the Noticing Stockholder will continue to be a stockholder of record of the Corporation entitled to vote at such meeting on the matter proposed through the date of such meeting and that such Noticing Stockholder intends to appear in person or by proxy at such meeting to make such nominations or propose such business;

(5) all information that would be required to be set forth in a Schedule 13D filed pursuant to Rule 13d-1(a) or an amendment pursuant to Rule 13d-2(a) if such a statement were required to be filed under the Exchange Act and the rules and regulations promulgated thereunder by each Holder and each Stockholder Associated Person, if any, of such Holder;

(6) any other information relating to each Holder and each Stockholder Associated Person, if any, of such Holder that would be required to be disclosed in a proxy statement and form of proxy or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder;

(7) a representation by the Noticing Stockholder as to whether any Holder and/or any Stockholder Associated Person of such Holder intends or is part of a group which intends (A) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to elect the proposed nominee or approve or adopt the other business being proposed and/or (B) otherwise to solicit proxies or votes from stockholders in support of such nomination or other business;

(8) in connection with a nomination for any persons for election as director, a representation by the Noticing Stockholder whether any Holder intends, or is part of a group which intends, (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding shares of capital stock required to approve or adopt the proposal or elect the nominee and/or (y) otherwise to solicit proxies or votes from stockholders in support of such proposal or nomination; and, if applicable, (z) to solicit proxies in support of any proposed nominee in accordance with Rule 14a-19 promulgated under the Exchange Act;

(9) a certification by the Noticing Stockholder that each Holder and any Stockholder Associated Person of such Holder has complied with all applicable federal, state and other legal requirements in connection with its acquisition of shares of capital stock or other securities of the Corporation and/or such person’s acts or omissions as a stockholder of the Corporation;

 

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(10) the information and statement required by Rule 14a-19(b) of the Exchange Act (or any successor provision);

(11) to the extent known after reasonable investigation, the names and addresses of other stockholders (including beneficial owners) known by any Holder or Related Person of such Holder to provide financial or otherwise material support with respect to such proposal(s) or nomination(s) (it being understood that delivery of a revocable proxy with respect to such proposal or nomination shall not in itself require disclosure under this subclause (11)) and, to the extent known, the class and number of all shares of the Corporation’s capital stock owned beneficially or of record by such other stockholder(s) or other beneficial owner(s); and

(12) a representation by the Noticing Stockholder as to the accuracy of the information set forth in the notice.

(C) as to each person whom the Noticing Stockholder proposes to nominate for election or re-election as a director:

(1) the name, age, citizenship and address (business and residential) of such person;

(2) a complete biography and statement of such person’s qualifications, including the principal occupation or employment of such person (at present and for the past five years);

(3) the Specified Information for such person as if such person were a Holder (except that no disclosure will be required hereunder with respect to any Stockholder Associated Person of any proposed nominee unless such Stockholder Associated Person is also a Stockholder Associated Person of any Holder);

(4) a complete and accurate description of all agreements, arrangements and understandings between each Holder and any Stockholder Associated Person of such Holder, on the one hand, and such person, on the other hand, (at present and for the past three years) including, without limitation, a complete and accurate description of all direct and indirect compensation and other monetary agreements, arrangements and understandings at present and for the past three years between the person and such parties (including all biographical, related party transaction and other information that would be required to be disclosed pursuant to the federal and state securities laws, including Rule 404 promulgated under Regulation S-K (“Regulation S-K”) under the Securities Act of 1933, as amended (the “Securities Act”) (or any successor provision), if any Holder or such Stockholder Associated Person were the “registrant” for purposes of such rule and such person were a director or executive officer of such registrant);

 

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(5) any other information relating to such person that would be required to be disclosed in a proxy statement or any other filings required to be made in connection with solicitation of proxies for the election of directors in a contested election or that is otherwise required pursuant to and in accordance with Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder (including such person’s written consent to being named in proxy statements as a proposed nominee of the Noticing Stockholder and to serving as a director if elected); and

(6) a completed and signed questionnaire, representation and agreement and any and all other information required by Section 11(d) of ARTICLE II.

In addition, any Noticing Stockholder who submits a notice pursuant to Section 11(a) of this ARTICLE II is required to update and supplement the information disclosed in such notice, if necessary, in accordance with Section 11(c) of this ARTICLE II.

(iv) Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted or nominations made at an annual meeting except in accordance with the procedures set forth in Section 11(a) of this ARTICLE II.

(v) Notwithstanding anything in Section 11(a)(ii) of this ARTICLE II to the contrary, if the number of directors to be elected to the Board is increased effective after the time period for which nominations would otherwise be due under Section 11(a)(ii) of this ARTICLE II and there is no Public Announcement naming the nominees for additional directorships at least 10 days prior to the last day a stockholder may deliver a notice of nomination in accordance with Section 11(a)(ii) of this ARTICLE II, a stockholder’s notice required by Section 11(a)(ii) of this ARTICLE II shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be received by the Secretary at the principal executive offices of the Corporation not later than the Close of Business on the 10th day following the day on which such Public Announcement is first made by the Corporation.

(b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the notice of meeting. Only persons who are nominated in accordance and compliance with the procedures set forth in this Section 11(b) of ARTICLE II shall be eligible for election to the Board at a special meeting of stockholders at which directors are to be elected. Nominations of persons

 

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for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the notice of meeting only: (i) by or at the direction of the Board, any duly authorized committee thereof, or stockholders (if stockholders are permitted to call a special meeting of stockholders pursuant to Section 2 of ARTICLE EIGHT of the Certificate of Incorporation); or (ii) provided that the Board or stockholders (if stockholders are permitted to call a special meeting of stockholders pursuant to Section 2 of ARTICLE EIGHT of the Certificate of Incorporation) has determined that directors are to be elected at such special meeting, by any stockholder of the Corporation who: (A) was a stockholder of record at the time of giving of notice provided for in this Section 11(b) of ARTICLE II, and at the time of the special meeting; (B) is entitled to vote at the meeting; and (C) complies with the notice procedures provided for in this Section 11(b) of ARTICLE II. For nominations to be properly brought by a stockholder at a special meeting of stockholders, the stockholder must have given timely notice thereof in proper written form as described in this Section 11(b) of ARTICLE II to the Secretary. To be timely, a stockholder’s notice for the nomination of persons for election to the Board (other than such a notice by the Principal Stockholder and/or Principal Stockholder Affiliates prior to the Advance Notice Trigger Date, which may be delivered at any time prior to the mailing of the definitive proxy statement pursuant to Section 14(a) of the Exchange Act related to the special meeting of stockholders) must be received by the Secretary at the principal executive offices of the Corporation not earlier than the 120th day prior to such special meeting and not later than the Close of Business on the later of the 90th day prior to such special meeting or the 10th day following the day on which a Public Announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting. In no event shall any adjournment or postponement of a special meeting or the announcement thereof commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. Notices delivered pursuant to this Section 11(b) of ARTICLE II will be deemed received on any given day if received prior to the Close of Business on such day (and otherwise, on the next succeeding day). To be in proper written form, such stockholder’s notice shall set forth all of the information required by, and otherwise be in compliance with, Section 11(a)(iii) of this ARTICLE II. In addition, any stockholder who submits a notice pursuant to this Section 11(b) of ARTICLE II is required to update and supplement the information disclosed in such notice, if necessary, in accordance with Section 11(c) of this ARTICLE II and shall comply with Section 11(e) of this ARTICLE II. The number of nominees a stockholder may nominate for election at the special meeting (or in the case of a stockholder giving the notice on behalf of a beneficial owner, the number of nominees a stockholder may nominate for election at the special meeting on behalf of such beneficial owner) shall not exceed the number of directors to be elected at such special meeting.

(c) Update and Supplement of Stockholder’s Notice. Any stockholder who submits a notice of proposal for business or nomination for election pursuant to this Section 11 of ARTICLE II is required to update and supplement the information disclosed in such notice, if necessary, so that the information provided or required to be provided in such notice shall be true and correct as of the record date for the meeting of stockholders and as of the date that is 10 Business Days prior to the meeting of stockholders or any adjournment, recess, rescheduling or postponement thereof, and such update and supplement shall be delivered to the Secretary at the principal executive offices of the Corporation not later than five Business Days after the record date for the meeting of stockholders in the case of the update and supplement required to be made as of the record date, and not later than eight Business Days prior to the date for the meeting of

 

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stockholders or any adjournment, recess, rescheduling or postponement thereof in the case of the update and supplement required to be made as of 10 Business Days prior to the meeting of stockholders or any adjournment, recess, rescheduling or postponement thereof. In addition, if the Noticing Stockholder has delivered to the Corporation a notice relating to the nomination of directors, the Noticing Stockholder shall deliver to the Corporation not later than eight Business Days prior to the date of the meeting or any adjournment, recess, rescheduling or postponement thereof (or, if not practicable, on the first practicable date prior to the date to which the annual meeting has been adjourned or postponed) reasonable evidence that it has complied with the requirements of Rule 14a-19 of the Exchange Act (or any successor provision). For the avoidance of doubt, the obligation to update and supplement set forth in this paragraph or any other Section of these Bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any proposal or to submit any new proposal, including by changing or adding nominees, matters, business and/or resolutions proposed to be brought before a meeting of the stockholders.

(d) Submission of Questionnaire, Representation, and Agreement. To be qualified to be a nominee for election or re-election as a director of the Corporation, a person must deliver (in the case of a person nominated by a stockholder in accordance with Sections 11(a) or 11(b) of this ARTICLE II, in accordance with the time periods prescribed for delivery of notice under such sections) to the Secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request of any stockholder of record identified by name within five Business Days of such written request) and a written representation and agreement (in the form provided by the Secretary upon written request of any stockholder of record identified by name within five Business Days of such written request) that such person: (i) is not and will not become a party to: (A) any agreement, arrangement, or understanding (whether written or oral) with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation; or (B) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law; (ii) is not and will not become a party to any agreement, arrangement, or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement, or indemnification in connection with service or action as a director that has not been disclosed to the Corporation; and (iii) would be in compliance, and if elected as a director of the Corporation will comply, with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality, and stock ownership and trading policies and guidelines of the Corporation that are publicly available.

(e) Update and Supplement of Nominee Information. The Corporation may also, as a condition to any such nomination or business being deemed properly brought before an annual meeting of stockholders, require any Holder or any proposed nominee to deliver to the Secretary, within five Business Days of any such request, such other information as may reasonably be requested by the Corporation, including: (i) such other information as may be reasonably required by the Board, in its sole discretion, to determine whether such proposed

 

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nominee is eligible under the Certificate of Incorporation, these Bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or any law or regulation applicable to the Corporation to serve as a director of the Corporation; and (ii) such other information that the Board determines, in its sole discretion, could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such proposed nominee.

(f) Authority of Chair; General Provisions. Except as otherwise provided by applicable law, the Certificate of Incorporation or these Bylaws and subject to the supervision of the Board, the chair of the meeting shall have the power and duty to determine whether any nomination or other business proposed to be brought before the meeting was made or brought in accordance with the procedures set forth in these Bylaws (including whether the stockholder or Stockholder Associated Person, if any, on whose behalf the nomination or proposal is made or solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies or votes in support of such stockholder’s nominee or proposal in compliance with such stockholder’s representation as required by Section 11(a)(iii)(B)(8) of this ARTICLE II) and, if any nomination or other business is not made or brought in compliance with these Bylaws, to declare that such nomination or proposal of other business be disregarded and not acted upon.

(g) Compliance with Exchange Act. Notwithstanding the foregoing provisions of these Bylaws, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules, regulations, and schedules promulgated thereunder with respect to the matters set forth in these Bylaws; provided, however, that any references in these Bylaws to the Exchange Act or the rules, regulations, and schedules promulgated thereunder are not intended to and shall not limit the requirements applicable to any nomination or other business to be considered pursuant to Section 11 of this ARTICLE II.

(h) Effect on Other Rights. Nothing in these Bylaws shall be deemed to: (A) affect any rights of the stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act; (B) confer upon any stockholder a right to have a nominee or any proposed business included in the Corporation’s proxy statement, except as set forth in the Certificate of Incorporation or these Bylaws; (C) affect any rights of the holders of any series of preferred stock to elect directors pursuant to any applicable provisions of the Certificate of Incorporation; or (D) limit the exercise, the method, or timing of the exercise of the rights of any person granted by the Corporation to nominate directors (including pursuant to that Director Nomination Agreement, dated as of on or about [•], 2025 (as amended and/or restated or supplemented from time to time, the “Director Nomination Agreement”)), by and among the Corporation and the investors named therein, which rights may be exercised without compliance with the provisions of Section 11 of this ARTICLE II.

(i) Definitions. For purposes of this Section 11 of ARTICLE II, the term:

(i) “Affiliate” has the meaning attributed to such term in Rule 12b-2 under the Exchange Act;

(ii) “Associate” has the meaning attributed to such term in Rule 12b-2 under the Exchange Act;

 

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(iii) “Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday, and Friday that is not a day on which banking institutions in Cedar Park, TX or New York, NY are authorized or obligated by law or executive order to close;

(iv) “Close of Business” shall mean 5:00 p.m. local time at the principal executive offices of the Corporation, and if an applicable deadline falls on the Close of Business on a day that is not a Business Day, then the applicable deadline shall be deemed to be the Close of Business on the immediately preceding Business Day;

(v) “Derivative Instrument” means any short position, profits interest, option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, or any derivative or synthetic arrangement having the characteristics of a long position in any class or series of shares of the Corporation, or any contract, derivative, swap or other transaction or series of transactions designed to produce economic benefits and risks that correspond substantially to the ownership of any class or series of shares of the Corporation, including due to the fact that the value of such contract, derivative, swap or other transaction or series of transactions is determined by reference to the price, value or volatility of any class or series of shares of the Corporation, whether or not such instrument, contract or right shall be subject to settlement in the underlying class or series of shares of the Corporation, through the delivery of cash or other property, or otherwise, and without regard to whether the stockholder and any Stockholder Related Person may have entered into transactions that hedge or mitigate the economic effect of such instrument, contract or right, or any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation;

(vi) “Hedging Transaction” means, with respect to a stockholder or any Stockholder Associated Person, any hedging or other transaction (such as borrowed or loaned shares) or series of transactions, or any other agreement, arrangement, or understanding, the effect or intent of which is to increase or decrease the voting power or economic or pecuniary interest of such stockholder or any Stockholder Associated Person with respect to the Corporation’s securities;

(vii) “Public Announcement” means disclosure (a) in a press release released by the Corporation, provided such press release is released by the Corporation following its customary procedures, as reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or a comparable news service, or is generally available on internet news sites, or (b) in a document publicly filed by the Corporation with the SEC pursuant to Sections 13, 14 or 15(d) of the Exchange Act;

(viii) “Stockholder Associated Person” means, with respect to any Holder:

 

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(A) any participant (as defined in paragraphs (a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A, or any successor instructions) with such Holder in a solicitation of proxies in respect of any business or director nomination proposed by such stockholder;

(B) any Affiliate or Associate of such Holder; and

(C) any person who is a member of a “group” (as such term is used in Rule 13d-5 under the Exchange Act (or any successor provision)) with such Holder; and

(ix) “Short Interest” means any agreement, arrangement, understanding relationship or otherwise, including any repurchase or similar so-called “stock borrowing” agreement or arrangement, involving any stockholder or any Stockholder Associated Person, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) or any class or series of the shares of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such stockholder or any Stockholder Associated Person with respect to any class or series of the shares or other securities of the Corporation, or which provides, directly or indirectly, the opportunity to profit or share in any profit derived from any decrease in the price or value of any class or series of the shares or other securities of the Corporation; and

(x) For purposes of these Bylaws, the words “include,” “includes” or “including” is deemed to be followed by the words “without limitation.” Where a reference in these Bylaws is made to any statue or regulation, such reference shall be to (1) the statute or regulation as amended from time to time (except as context may otherwise require) and (2) any rules or regulations promulgated thereunder.

Section 12. Requirement to Appear. Notwithstanding anything to the contrary contained in Section 11, if the stockholder that has provided timely notice of a nomination or item of business in accordance with Section 11 (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present such nomination or item of business, such proposed business shall not be transacted and such nomination shall be disregarded, notwithstanding that such proposed business or such nomination is set forth in the notice of meeting or other proxy materials and notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of these Bylaws, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

 

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Section 13. Fixing a Record Date for Stockholder Meetings. In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall not be more than 60 days nor less than 10 days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the day next preceding the day on which notice is first given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting in conformity herewith; and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance with the foregoing provisions of this Section 13 of ARTICLE II at the adjourned meeting.

Section 14. Action by Stockholders Without a Meeting. So long as stockholders of the Corporation have the right to act by written consent in accordance with Section 1 of ARTICLE SEVEN of the Certificate of Incorporation, the following provisions shall apply:

(a) Record Date. For the purpose of determining the stockholders entitled to consent to corporate action without a meeting as may be permitted by the Certificate of Incorporation or the certificate of designation relating to any outstanding class or series of preferred stock, the Board may fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted by the Board, and which record date shall not be more than 10 (or the maximum number permitted by applicable law) days after the date on which the resolution fixing the record date is adopted by the Board. Any stockholder of record seeking to have the stockholders authorize or take action by consent in lieu of a meeting shall, by written notice delivered to the Secretary at the Corporation’s principal place of business during regular business hours, request that the Board fix a record date, which notice shall include the text of any proposed resolutions. Notices delivered pursuant to this Section 14(a) of ARTICLE II will be deemed received on any given day only if received prior to the close of business on such day (and otherwise, shall be deemed received on the next succeeding Business Day). The Board shall promptly, but in all events within 10 days after the date on which such written notice is properly delivered to and deemed received by the Secretary, adopt a resolution fixing the record date (unless a record date has previously been fixed by the Board pursuant to the first sentence of this Section 14(a) of ARTICLE II). If no record date has been fixed by the Board pursuant to this Section 14(a) or otherwise within 10 days of receipt of a valid request by a stockholder, the record date for determining stockholders entitled to consent to corporate action without a meeting, when no prior action by the Board is required pursuant to applicable law, shall be the first date after the expiration of such 10 day time period on which a signed consent setting forth the action taken or proposed to be taken is delivered to the Corporation pursuant to Section 14(b) of this ARTICLE II; provided, however, that if prior action by the Board is required by applicable law, the record date for determining stockholders entitled to consent to corporate action without a meeting shall in such an event be at the close of business on the day on which the Board adopts the resolution taking such prior action.

 

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(b) Generally. No consent shall be effective to take the corporate action referred to therein unless consents signed by a sufficient number of stockholders to take such action are delivered to the Corporation, in the manner required by this Section 14 of ARTICLE II, within 60 (or the maximum number permitted by applicable law) days of the first date on which a consent is delivered to the Corporation in the manner required by applicable law. The validity of any consent executed by a proxy for a stockholder pursuant to an electronic transmission transmitted to such proxy holder by or upon the authorization of the stockholder shall be determined by or at the direction of the Secretary. A written record of the information upon which the person making such determination relied shall be made and kept in the records of the proceedings of the stockholders. Any such consent shall be inserted in the minute book as if it were the minutes of a meeting of stockholders. Prompt notice of the taking of the corporate action without a meeting by less than unanimous consent shall be given by the Corporation (at its expense) to those stockholders who have not consented and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that consents signed by a sufficient number of holders to take the action were delivered to the Corporation.

Section 15. Conduct of Meetings.

(a) Generally. Meetings of stockholders shall be presided over by the Chair, if any, or in the Chair’s absence or disability, by the Chief Executive Officer (the “CEO”), or in the CEO’s absence or disability, by the President of the Corporation (the “President”), or in the President’s absence or disability, by a Vice President of the Corporation (the “Vice President”) (in the order as determined by the Board), or in the absence or disability of the foregoing persons by a director or officer designated by the Board, or in the absence or disability of such person, by a chair chosen at the meeting. The Secretary shall act as secretary of the meeting, but in the Secretary’s absence or disability, the chair of the meeting may appoint any person to act as secretary of the meeting.

(b) Rules, Regulations, and Procedures. The Board may adopt by resolution such rules, regulations, and procedures for the conduct of any meeting of stockholders of the Corporation as it shall deem appropriate including, without limitation, such guidelines and procedures as it may deem appropriate regarding the participation by means of remote communication of stockholders and proxyholders not physically present at a meeting. Except to the extent inconsistent with such rules, regulations, and procedures as adopted by the Board, the chair of any meeting of stockholders shall have the right and authority to prescribe such rules, regulations, and procedures and to do all such acts as, in the judgment of such chair, are appropriate for the proper conduct of the meeting. Such rules, regulations, or procedures, whether adopted by the Board or prescribed by the chair of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies, or such other persons as the chair of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; (v) limitations on the time allotted to questions or comments by participants; and (vi) restrictions on the use of mobile phones, audio or video recording devices, and similar devices at the meeting. The chair of the meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to

 

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the meeting that a nomination or matter or business was not properly brought before the meeting and if such chair should so determine, such chair shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board or the chair of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. The chair of the meeting shall announce at the meeting when the polls for each matter to be voted upon at the meeting will be opened and closed. After the polls close, no ballots, proxies, or votes or any revocations or changes thereto may be accepted. The chair of the meeting shall have the power, right, and authority, for any or no reason, to convene, recess, and/or adjourn any meeting of stockholders.

(c) Inspectors of Elections. The Corporation may, and to the extent required by law shall, in advance of any meeting of stockholders, appoint one or more inspectors of election to act at the meeting and make a written report thereof. One or more other persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the chair of the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by law, inspectors may be officers, employees, or agents of the Corporation. No person who is a candidate for an office at an election may serve as an inspector at such election. Each inspector, before entering upon the discharge of such inspector’s duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspector’s ability. The inspector shall have the duties prescribed by law and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by law.

Section 16. Remote Communication. If authorized by the Board in its sole discretion, and subject to such guidelines and procedures as the Board may adopt, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communication:

(a) participate in a meeting of stockholders; and

(b) be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication;

provided that

(c) the Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder;

(d) the Corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings; and

(e) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation.

 

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ARTICLE III

DIRECTORS

Section 1. General Powers. Except as otherwise provided in this Certificate of Incorporation or the DGCL, the business and affairs of the Corporation shall be managed by or under the direction of the Board.

Section 2. Regular Meetings and Special Meetings. Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by resolution of the Board and publicized among all directors. Special meetings of the Board may be called by: (i) the Chair, if any; (ii) by the Secretary upon the written request of a majority of the directors then in office; or (iii) if the Board then includes a director nominated or designated for nomination by the Principal Stockholder or any Principal Stockholder Affiliate, by any director so nominated or designated, and in each case shall be held at the place, if any, on the date and at the time as he, she, or they shall fix. Any and all business may be transacted at a special meeting of the Board.

Section 3. Notice of Meetings. Notice of regular meetings of the Board need not be given except as otherwise required by law or these Bylaws. Notice of each special meeting of the Board, and of each regular and annual meeting of the Board for which notice is required, shall be given by the Secretary as hereinafter provided in Section 4 of this ARTICLE III. Such notice shall state the date, time, and place, if any, of the meeting. Notice of any special meeting, and of any regular or annual meeting for which notice is required, shall be given to each director at least: (A) 24 hours before the meeting if by telephone or by being personally delivered or sent by overnight courier, telecopy, electronic transmission, email, or similar means; or (B) five days before the meeting if delivered by mail to the director’s residence or usual place of business. Such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage prepaid, or when transmitted if sent by telex, telecopy, electronic transmission, email, or similar means. Neither the business to be transacted at, nor the purpose of, any special meeting of the Board need be specified in the notice or waiver of notice of such meeting.

Section 4. Waiver of Notice. Any director may waive notice of any meeting of directors by a writing signed by the director or by electronic transmission. Any member of the Board or any committee thereof who is present at a meeting shall have waived notice of such meeting except when such member attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened and does not further participate in the meeting. Such member shall be conclusively presumed to have assented to any action taken unless his or her dissent shall be entered in the minutes of the meeting or unless his or her written dissent to such action shall be filed with the person acting as the secretary of the meeting before the adjournment thereof or shall be forwarded by registered mail to the Secretary immediately after the adjournment of the meeting. Such right to dissent shall not apply to any member who voted in favor of such action.

 

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Section 5. Chair of the Board, Quorum, Required Vote, and Adjournment. The Board may elect the Chair. The Chair must be a director and may be an officer of the Corporation. Subject to the provisions of these Bylaws and the direction of the Board, he, she, or they shall perform all duties and have all powers which are commonly incident to the position of Chair or which are delegated to him or her by the Board, preside at all meetings of the stockholders and Board at which he or she is present and have such powers and perform such duties as the Board may from time to time prescribe. If the Chair is not present at a meeting of the Board, the CEO (if the CEO is a director and is not also the Chair) shall preside at such meeting, and, if the CEO is not present at such meeting, a majority of the directors present at such meeting shall elect one of the directors present at the meeting to so preside. At all meetings of the Board, a majority of the directors then in office shall constitute a quorum for the transaction of business, provided, however, that a quorum shall never be less than one-third the total number of directors. Unless by express provision of an applicable law, the Certificate of Incorporation, or these Bylaws a different vote is required, the vote of a majority of directors present at a meeting at which a quorum is present shall be the act of the Board. At any meeting of the Board, business shall be transacted in such order and manner as the Board may from time to time determine. If a quorum shall not be present at any meeting of the Board, the directors present thereat may, to the fullest extent permitted by law, adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 6. Committees.

(a) The Board may designate one or more committees, including an executive committee, consisting of one or more of the directors of the Corporation, and any committees required by the rules and regulations of such exchange as any securities of the Corporation are listed. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Except to the extent restricted by applicable law or the Certificate of Incorporation, each such committee, to the extent provided by the DGCL and in the resolution creating it, shall have and may exercise all the powers and authority of the Board. Each such committee shall serve at the pleasure of the Board. Each committee shall keep regular minutes of its meetings and report the same to the Board upon request.

(b) Each committee of the Board may fix its own rules of procedure and shall hold its meetings as provided by such rules, except as may otherwise be provided by a resolution of the Board designating such committee. Unless otherwise provided in such a resolution, the presence of at least a majority of the members of the committee shall be necessary to constitute a quorum. All matters shall be determined by a majority vote of the members present at a meeting at which a quorum is present. Unless otherwise provided in such a resolution, in the event that a member and that member’s alternate, if alternates are designated by the Board, of such committee is or are absent or disqualified, the member or members present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in place of any such absent or disqualified member.

Section 7. Action by Written Consent. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or such committee, as the case may be, consent thereto in writing or by electronic transmission. After the action is taken, the consent or consents relating thereto shall be filed with the minutes of proceedings of the Board or committee in the same paper form or electronic form as the minutes are maintained.

 

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Section 8. Compensation. The Board shall have the authority to fix the compensation, including fees, reimbursement of expenses, and equity compensation, of directors for services to the Corporation in any capacity, including for attendance of meetings of the Board or participation on any committees. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

Section 9. Reliance on Books and Records. A member of the Board, or a member of any committee designated by the Board, shall, in the performance of such member’s duties, be fully protected in relying in good faith upon records of the Corporation and upon such information, opinions, reports, or statements presented to the Corporation by any of the Corporation’s officers or employees, or committees of the Board, or by any other person as to matters the member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

Section 10. Telephonic and Other Meetings. Unless restricted by the Certificate of Incorporation, any one or more members of the Board or any committee thereof may participate in a meeting of the Board or such committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Participation by such means shall constitute presence in person at a meeting.

ARTICLE IV

OFFICERS

Section 1. Number and Election. Subject to the authority of the CEO to appoint officers as set forth in Section 11 of this ARTICLE IV, the officers of the Corporation shall be elected by the Board and may consist of a CEO, a President, one or more Vice Presidents, a Secretary, a Chief Financial Officer (the “CFO”), a Treasurer (the “Treasurer”), and such other officers and assistant officers as may be deemed necessary or desirable by the Board. Any number of offices may be held by the same person. In its discretion, the Board may choose not to fill any office for any period as it may deem advisable.

Section 2. Term of Office. Each officer shall hold office until a successor is duly elected and qualified or until his or her earlier death, resignation, or removal as hereinafter provided.

Section 3. Removal. Any officer or agent of the Corporation may be removed with or without cause by the Board, a duly authorized committee thereof or by such officers as may be designated by a resolution of the Board, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer appointed by the CEO in accordance with Section 11 of this ARTICLE IV may also be removed by the CEO in his or her sole discretion.

Section 4. Vacancies. Any vacancy occurring in any office because of death, resignation, removal, disqualification, or otherwise may be filled by the Board or the CEO in accordance with Section 11 of this ARTICLE IV.

 

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Section 5. Compensation. Compensation of all executive officers shall be approved by the Board or a duly authorized committee thereof, and no officer shall be prevented from receiving such compensation by virtue of his or her also being a director of the Corporation.

Section 6. Chief Executive Officer. The CEO shall have the powers and perform the duties incident to that position. The CEO shall, in the absence of the Chair, or if a Chair shall not have been elected, preside at each meeting of (a) the Board if the CEO is a director and (b) the stockholders. Subject to the powers of the Board and the Chair, the CEO shall be in general and active charge of the entire business and affairs of the Corporation and shall be its chief policy-making officer. The CEO shall have such other powers and perform such other duties as may be prescribed by the Board or provided in these Bylaws. The CEO is authorized to execute bonds, mortgages, and other contracts requiring a seal under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board to some other officer or agent of the Corporation. Whenever the President is unable to serve, by reason of sickness, absence, or otherwise, the CEO shall perform all the duties and responsibilities and exercise all the powers of the President.

Section 7. President. The President of the Corporation shall, subject to the powers of the Board, the Chair, and the CEO, have general charge of the business, affairs, and property of the Corporation, and, in the absence of the CEO, control over its officers, agents, and employees. The President shall see that all orders and resolutions of the Board are carried into effect. The President is authorized, in the absence of the CEO, to execute bonds, mortgages, and other contracts requiring a seal under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board to some other officer or agent of the Corporation. The President shall, in the absence of the CEO, act with all of the powers and be subject to all of the restrictions of the CEO. The President shall have such other powers and perform such other duties as may be prescribed by the Chair, the CEO, the Board, or as may be provided in these Bylaws or otherwise are incident to the position of President.

Section 8. Vice Presidents. The Vice President, or if there shall be more than one, the Vice Presidents, in the order determined by the Board or the Chair, shall, perform such duties and have such powers as the Board, the Chair, the CEO, the President, or these Bylaws may, from time to time, prescribe or which otherwise are incident to the position of Vice President. The Vice Presidents may also be designated as Executive Vice Presidents or Senior Vice Presidents, as the Board may from time to time prescribe.

Section 9. Secretary and Assistant Secretaries. The Secretary shall attend all meetings of the Board (other than executive sessions thereof) and all meetings of the stockholders and record all the proceedings of the meetings in a book or books to be kept for that purpose or shall ensure that his or her designee attends each such meeting to act in such capacity. Under the Board’s supervision, the Secretary shall give, or cause to be given, all notices required to be given by these Bylaws or by law; shall have such powers and perform such duties as the Board, the Chair, the CEO, the President, or these Bylaws may, from time to time, prescribe or which otherwise are incident to the position of Secretary; and shall have custody of the corporate seal of the Corporation. The Secretary, or an Assistant Secretary, shall have authority to affix the corporate

 

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seal to any instrument requiring it and when so affixed, it may be attested by his or her signature or by the signature of such Assistant Secretary. The Board may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his or her signature. The Assistant Secretary, or if there be more than one, any of the Assistant Secretaries, shall in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board, the Chair, the CEO, the President, or Secretary may, from time to time, prescribe.

Section 10. Chief Financial Officer and Treasurer. The CFO shall have the custody of the corporate funds and securities; shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation as shall be necessary or desirable in accordance with applicable law or generally accepted accounting principles; shall deposit all monies and other valuable effects in the name and to the credit of the Corporation as may be ordered by the Chair or the Board; shall receive, and give receipts for, moneys due and payable to the Corporation from any source whatsoever; shall cause the funds of the Corporation to be disbursed when such disbursements have been duly authorized, taking proper vouchers for such disbursements; and shall render to the Board, at its regular meeting or when the Board so requires, an account of the financial condition and operations of the Corporation; shall have such powers and perform such duties as the Board, the Chair, the CEO, the President, or these Bylaws may, from time to time, prescribe or which otherwise are incident to the position of CFO. The Treasurer shall in the absence or disability of the CFO, perform the duties and exercise the powers of the CFO, subject to the power of the Board. The Treasurer, if any, shall perform such other duties and have such other powers as the Board may, from time to time, prescribe.

Section 11. Appointed Officers. In addition to officers designated by the Board in accordance with this ARTICLE IV, the CEO shall have the authority to appoint other officers below the level of Board appointed Vice President as the CEO may from time to time deem expedient and may designate for such officers titles that appropriately reflect their positions and responsibilities. Such appointed officers shall have such powers and shall perform such duties as may be assigned to them by the CEO or the senior officer to whom they report, consistent with corporate policies. An appointed officer shall serve until the earlier of such officer’s resignation or such officer’s removal by the CEO or the Board at any time, either with or without cause.

Section 12. Other Officers, Assistant Officers, and Agents. Officers, assistant officers, and agents, if any, other than those whose duties are provided for in these Bylaws, shall have such authority and perform such duties as may from time to time be prescribed by resolution of the Board and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.

Section 13. Officers’ Bonds or Other Security. If required by the Board, any officer of the Corporation shall give a bond or other security for the faithful performance of such officer’s duties, in such amount and with such surety as the Board may require.

Section 14. Delegation of Authority. The Board may by resolution delegate the powers and duties of such officer to any other officer or to any director, or to any other person whom it may select.

 

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ARTICLE V

CERTIFICATES OF STOCK

Section 1. Form. The shares of stock of the Corporation shall be represented by certificates, provided that the Board may provide by resolution that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. If shares are represented by certificates, the certificates shall be in such form as required by applicable law and as determined by the Board. Each certificate shall certify the number of shares owned by such holder in the Corporation and shall be signed by, or in the name of the Corporation by two authorized officers of the Corporation including, but not limited to, the Chair (if an officer), the CEO, the President, a Vice President, the CFO, the Treasurer, the Secretary, and an Assistant Secretary. Any or all signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed, or whose facsimile signature or signatures have been used on, any such certificate or certificates shall cease to be such officer, transfer agent, or registrar of the Corporation whether because of death, resignation, or otherwise before such certificate or certificates have been issued by the Corporation, such certificate or certificates may nevertheless be issued as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures have been used thereon had not ceased to be such officer, transfer agent, or registrar of the Corporation at the date of issue. All certificates for shares shall be consecutively numbered or otherwise identified. The Board may appoint a bank or trust company organized under the laws of the United States or any state thereof to act as its transfer agent, registrar, or both in connection with the transfer of any class or series of securities of the Corporation. The Corporation, or its designated transfer agent or other agent, shall keep a book or set of books to be known as the stock transfer books of the Corporation, containing the name of each holder of record, together with such holder’s address and the number and class or series of shares held by such holder and the date of issue. When shares are represented by certificates, the Corporation shall issue and deliver to each holder to whom such shares have been issued or transferred, certificates representing the shares owned by such holder, and shares of stock of the Corporation shall only be transferred on the books of the Corporation by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the Corporation or its designated transfer agent or other agent of the certificate or certificates for such shares endorsed by the appropriate person or persons, with such evidence of the authenticity of such endorsement, transfer, authorization, and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps. In that event, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate or certificates, and record the transaction on its books. When shares are not represented by certificates, shares of stock of the Corporation shall only be transferred on the books of the Corporation by the holder of record thereof or by such holder’s attorney duly authorized in writing, with such evidence of the authenticity of such transfer, authorization, and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps, and within a reasonable time after the issuance or transfer of such shares, the Corporation shall, if required by applicable law, send the holder to whom such shares have been issued or transferred a written statement of the information required by applicable law. Unless otherwise provided by applicable law, the Certificate of Incorporation, Bylaws, or any other instrument, the rights and obligations of the holders of uncertificated stock, and the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical.

 

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Section 2. Lost Certificates. The Corporation may issue or direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates previously issued by the Corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the owner of the lost, stolen, or destroyed certificate. When authorizing such issue of a new certificate or certificates or uncertificated shares, the Corporation may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate or certificates, or his or her legal representative, to give the Corporation a bond in such sum as it may direct, sufficient to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft, or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

Section 3. Registered Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its records as the owner of shares of stock to receive dividends, to vote, to receive notifications, and otherwise to exercise all the rights and powers of an owner, except as otherwise required by applicable law. The Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares of stock on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by applicable law.

Section 4. Fixing a Record Date for Purposes Other Than Stockholder Meetings or Actions by Written Consent. In order that the Corporation may determine the stockholders entitled to receive payment of any dividend, other distribution or allotment, or any rights, or the stockholders entitled to exercise any rights in respect of any change, conversion, or exchange of stock, or for the purposes of any other lawful action (other than stockholder meetings and stockholder consents which are expressly governed by Sections 12, 13, and 14 of ARTICLE II hereof), the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

ARTICLE VI

GENERAL PROVISIONS

Section 1. Dividends. Subject to and in accordance with applicable law, the Certificate of Incorporation and any certificate of designation relating to any series of preferred stock, dividends upon the shares of capital stock of the Corporation may be declared and paid by the Board in accordance with applicable law. Dividends may be paid in cash, in property, or in shares of the Corporation’s capital stock, subject to the provisions of applicable law and the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends a reserve or reserves for any proper purpose. The Board may modify or abolish any such reserves in the manner in which they were created.

Section 2. Checks, Notes, Drafts, Etc. All checks, notes, drafts, or other orders for the payment of money of the Corporation shall be signed, endorsed, or accepted in the name of the Corporation by such officer, officers, person, or persons as from time to time may be designated by the Board, or by an officer or officers authorized by the Board to make such designation.

 

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Section 3. Contracts. In addition to the powers otherwise granted to officers pursuant to ARTICLE IV, the Board may authorize any officer or officers, or any agent or agents, in the name and on behalf of the Corporation to enter into or execute and deliver any and all deeds, bonds, mortgages, contracts, and other obligations or instruments, and such authority may be general or confined to specific instances.

Section 4. Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board.

Section 5. Corporate Seal. The Board may provide a corporate seal which shall be in the form of a circle and shall have inscribed thereon the name of the Corporation and the words “Corporate Seal, Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Notwithstanding the foregoing, no seal shall be required by virtue of Section 5 of this ARTICLE VI.

Section 6. Voting Securities Owned By Corporation. Voting securities in any other corporation or entity held by the Corporation shall be voted by the Chair, CEO, the President, or the CFO, unless the Board specifically confers authority to vote with respect thereto, which authority may be general or confined to specific instances, upon some other person or officer. Any person authorized to vote securities shall have the power to appoint proxies, with general power of substitution.

Section 7. Facsimile/Electronic Signatures. In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, docusign, facsimile, and other forms of electronic signatures of any officer or director of the Corporation may be used to the fullest extent permitted by applicable law.

Section 8. Section Headings. Section headings in these Bylaws are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.

Section 9. Inconsistent Provisions. In the event that any provision (or part thereof) of these Bylaws is or becomes inconsistent with any provision of the Certificate of Incorporation, the DGCL, any other applicable law, or the Director Nomination Agreement, the provision (or part thereof) of these Bylaws shall be construed to be consistent with such other provision or provisions, and to the extent such provision may not be so construed, such provision shall be deemed amended to incorporate such other provision so as to eliminate any such inconsistency and as so amended shall be given full force and effect.

ARTICLE VII

INDEMNIFICATION

Section 1. Right to Indemnification and Advancement. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved (including involvement, without limitation, as a witness) in any actual or threatened action, suit, or proceeding, whether civil, criminal, administrative, or investigative (a “proceeding”), by reason of the fact that he or she is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, manager, officer,

 

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employee, or agent of another corporation or of a partnership, joint venture, trust, or other enterprise, including service with respect to an employee benefit plan (an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director or officer or in any other capacity while serving as a director or officer, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), against all expense, liability, and loss (including attorneys’ fees and related disbursements, judgments, fines, excise taxes, or penalties under the Employee Retirement Income Security Act of 1974, as amended from time to time (“ERISA”) and any other penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith, and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the indemnitee’s heirs, executors, and administrators; provided, however, that, except as provided in Section 2 of this ARTICLE VII with respect to proceedings to enforce rights to indemnification and advance of expenses (as defined herein), the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized in the specific case by the Board of the Corporation. In addition to the right to indemnification conferred herein, an indemnitee shall also have the right, to the fullest extent not prohibited by law, to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition (an “advance of expenses”); provided, however, that if and to the extent that the DGCL requires, an advance of expenses shall be made only upon delivery to the Corporation of an undertaking (an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under Section 1 of this ARTICLE VII or otherwise. The Corporation may also, by action of its Board, provide indemnification and advancement to employees and agents of the Corporation. Any reference to an officer of the Corporation in this ARTICLE VII shall be deemed to refer exclusively to the Chair, CEO, President, CFO, Secretary, and Treasurer appointed pursuant to ARTICLE IV, and to any Vice President, Assistant Secretary, assistant treasurer, or other officer of the Corporation appointed by the Board pursuant to ARTICLE IV of these Bylaws, and any reference to an officer of any other enterprise shall be deemed to refer exclusively to an officer appointed by the Board or equivalent governing body of such other entity pursuant to the certificate of incorporation and bylaws or equivalent organizational documents of such other enterprise. The fact that any person who is or was an employee of the Corporation or an employee of any other enterprise has been given or has used the title of “Vice President” or any other title, including any title granted to such person by the CEO pursuant to Section 11 of ARTICLE IV, that could be construed to suggest or imply that such person is or may be an officer of the Corporation or of such other enterprise shall not result in such person being constituted as, or being deemed to be, an officer of the Corporation or of such other enterprise for purposes of this ARTICLE VII unless such person’s appointment to such office was approved by the Board pursuant to ARTICLE IV.

 

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Section 2. Procedure for Indemnification. Any claim for indemnification or advance of expenses by an indemnitee under Section 2 of this ARTICLE VII shall be made promptly, and in any event within 45 days (or, in the case of an advance of expenses, 20 days, provided that the director or officer has delivered the undertaking contemplated by Section 1 of this ARTICLE VII if required), upon the written request of the indemnitee. If the Corporation denies a written request for indemnification or advance of expenses, in whole or in part, or if payment in full pursuant to such request is not made within 45 days (or, in the case of an advance of expenses, 20 days, provided that the indemnitee has delivered the undertaking contemplated by Section 1 of this ARTICLE VII if required), the right to indemnification or advances as granted by this ARTICLE VII shall be enforceable by the indemnitee in any court of competent jurisdiction. Such person’s costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation to the fullest extent permitted by applicable law. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of expenses where the undertaking required pursuant to Section 1 of this ARTICLE VII, if any, has been tendered to the Corporation) that the claimant has not met the applicable standard of conduct which makes it permissible under the DGCL for the Corporation to indemnify the claimant for the amount claimed, but the burden of proof shall be on the Corporation to the fullest extent permitted by law. Neither the failure of the Corporation (including the Board, a committee thereof, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including the Board, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

Section 3. Insurance. The Corporation may purchase and maintain insurance on its own behalf and on behalf of any person who is or was or has agreed to become a director, officer, employee, or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, partner, member, trustee, administrator, employee, or agent of another corporation, partnership, joint venture, limited liability company, trust, or other enterprise against any expense, liability, or loss asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify such person against such expenses, liability, or loss under the DGCL.

Section 4. Service for Subsidiaries. Any person serving as a director, officer, partner, member, trustee, administrator, employee, or agent of another corporation, partnership, limited liability company, joint venture, trust, or other enterprise, at least 50% of whose equity interests are owned by the Corporation (a “subsidiary” for purposes of this ARTICLE VII) shall be conclusively presumed to be serving in such capacity at the request of the Corporation.

Section 5. Reliance. Persons who after the date of the adoption of this provision become or remain directors or officers of the Corporation or who, while a director or officer of the Corporation, become or remain a director, manager, officer, employee, or agent of a subsidiary, shall be conclusively presumed to have relied on the rights to indemnity, advance of expenses, and other rights contained in this ARTICLE VII in entering into or continuing such service. To the fullest extent permitted by law, the rights to indemnification and to the advance of expenses conferred in this ARTICLE VII shall apply to claims made against an indemnitee arising out of acts or omissions which occurred or occur both prior and subsequent to the adoption hereof. Any amendment, alteration, or repeal of this ARTICLE VII that adversely affects any right of an indemnitee or its successors shall be prospective only and shall not limit, eliminate, or impair any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment or repeal.

 

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Section 6. Non-Exclusivity of Rights; Continuation of Rights of Indemnification. The rights to indemnification and to the advance of expenses conferred in this ARTICLE VII shall not be exclusive of any other right which any person may have or hereafter acquire under the Certificate of Incorporation or under any statute, bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. All rights to indemnification under this ARTICLE VII shall be deemed to be a contract between the Corporation and each director or officer of the Corporation who serves or served in such capacity at any time while this ARTICLE VII is in effect. Any repeal or modification of this ARTICLE VII or repeal or modification of relevant provisions of the DGCL or any other applicable laws shall not in any way diminish any rights to indemnification and advancement of expenses of such director or officer or the obligations of the Corporation arising hereunder with respect to any proceeding arising out of, or relating to, any actions, transactions, or facts occurring prior to the final adoption of such repeal or modification.

Section 7. Merger or Consolidation. For purposes of this ARTICLE VII, references to the “Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee, or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, shall stand in the same position under this ARTICLE VII with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued.

Section 8. Savings Clause. To the fullest extent permitted by law, if this ARTICLE VII or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify and advance expenses to each person entitled to indemnification under Section 1 of this ARTICLE VII as to all expense, liability, and loss (including attorneys’ fees and related disbursements, judgments, fines, ERISA excise taxes and penalties, and any other penalties and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such person and for which indemnification and advancement of expenses is available to such person pursuant to this ARTICLE VII to the fullest extent permitted by any applicable portion of this ARTICLE VII that shall not have been invalidated.

ARTICLE VIII

AMENDMENTS

These Bylaws may be amended, altered, changed, or repealed or new Bylaws adopted only in accordance with Section 1 of ARTICLE ELEVEN of the Certificate of Incorporation.

* * * * *

 

30

Exhibit 10.2

EXECUTION VERSION

$136,117,189.33

SECOND AMENDED AND RESTATED

FINANCING AGREEMENT

dated as of May 20, 2024,

among

FIREFLY AEROSPACE INC.,

as Borrower,

THE PERSONS FROM TIME TO TIME PARTY HERETO,

as Guarantors,

VARIOUS LENDERS FROM TIME TO TIME PARTY HERETO,

and

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,

as Administrative Agent and Collateral Agent


Table of Contents

 

ARTICLE I DEFINITIONS AND INTERPRETATION      2  

Section 1.1.

  Definitions      2  

Section 1.2.

  Accounting and Other Terms      52  

Section 1.3.

  Interpretation, etc.      53  

Section 1.4.

  Time References      54  

Section 1.5.

  [Reserved]      54  

Section 1.6.

  Certifications      54  

Section 1.7.

  Timing of Payment or Performance      54  

Section 1.8.

  References to Agreements, Laws, Etc.      54  
ARTICLE II LOANS      55  

Section 2.1.

  Term Loans      55  

Section 2.2.

  Protective Advances      57  

Section 2.3.

  Pro Rata Shares; Availability of Funds      57  

Section 2.4.

  Use of Proceeds      58  

Section 2.5.

  Evidence of Debt; Register; Lenders’ Books and Records; Notes      58  

Section 2.6.

  Interest      59  

Section 2.7.

  Default Interest      59  

Section 2.8.

  Payments Prior to Maturity      60  

Section 2.9.

  Mandatory Prepayments      62  

Section 2.10.

  Application of Prepayments      64  

Section 2.11.

  General Provisions Regarding Payments      64  

Section 2.12.

  Ratable Sharing      66  

Section 2.13.

  Increased Costs; Capital Adequacy      67  

Section 2.14.

  Taxes; Withholding, etc.      68  

Section 2.15.

  Obligation to Mitigate      73  

Section 2.16.

  Collateral Accounts      74  


ARTICLE III CONDITIONS PRECEDENT      77  

Section 3.1.

  Conditions to Credit Extension on the Closing Date      77  
ARTICLE IV REPRESENTATIONS AND WARRANTIES      81  

Section 4.1.

  Organization; Requisite Power and Authority; Qualification      81  

Section 4.2.

  Capital Stock and Ownership      81  

Section 4.3.

  Due Authorization      81  

Section 4.4.

  No Conflict      81  

Section 4.5.

  Governmental Consents      82  

Section 4.6.

  Binding Obligation      82  

Section 4.7.

  Historical Financial Statements      82  

Section 4.8.

  No Material Adverse Effect      82  

Section 4.9.

  Adverse Proceedings, etc.      82  

Section 4.10.

  Payment of Taxes      83  

Section 4.11.

  Properties      83  

Section 4.12.

  Environmental Matters      83  

Section 4.13.

  No Defaults      84  

Section 4.14.

  Material Contracts      84  

Section 4.15.

  Investment Company Act      85  

Section 4.16.

  Margin Stock      85  

Section 4.17.

  Employee Matters      85  

Section 4.18.

  Employee Benefit Plans      85  

Section 4.19.

  Certain Fees      85  

Section 4.20.

  Compliance with Organizational Documents and Statutes      86  

 

ii


Section 4.21.

  Intellectual Property      86  

Section 4.22.

  Equipment      86  

Section 4.23.

  [Reserved]      86  

Section 4.24.

  Insurance      86  

Section 4.25.

  Common Enterprise      87  

Section 4.26.

  Permits, Etc.      87  

Section 4.27.

  Bank Accounts and Securities Accounts      87  

Section 4.28.

  Security Interests      87  

Section 4.29.

  Anti-Terrorism Laws, Anti-Corruption Laws and Sanctions      88  

Section 4.30.

  Disclosure      88  

Section 4.31.

  Indebtedness      89  

Section 4.32.

  Use of Proceeds      89  

Section 4.33.

  Solvency      89  
ARTICLE V AFFIRMATIVE COVENANTS      89  

Section 5.1.

  Financial Statements and Other Reports      89  

Section 5.2.

  Existence      97  

Section 5.3.

  Payment of Taxes and Claims      98  

Section 5.4.

  Maintenance of Properties      98  

Section 5.5.

  Insurance      98  

Section 5.6.

  Inspections; Books and Records      99  

Section 5.7.

  Private Lenders Meetings and Conference Calls      99  

Section 5.8.

  Compliance with Laws      100  

Section 5.9.

  Environmental      100  

Section 5.10.

  Subsidiaries      101  

Section 5.11.

  Material Real Estate Assets      102  

 

iii


Section 5.12.

  [Reserved]      102  

Section 5.13.

  Further Assurances      102  

Section 5.14.

  Miscellaneous Business Covenants      103  

Section 5.15.

  Post-Closing Matters      105  

Section 5.16.

  AON Insurance Policy      105  

Section 5.17.

  [Reserved]      105  

Section 5.18.

  Changes to Capital Structure      105  

Section 5.19.

  Convertible Notes      105  
ARTICLE VI NEGATIVE COVENANTS      105  

Section 6.1.

  Indebtedness      105  

Section 6.2.

  Liens      105  

Section 6.3.

  [Reserved]      106  

Section 6.4.

  No Further Negative Pledges      106  

Section 6.5.

  Restricted Junior Payments      107  

Section 6.6.

  Restrictions on Subsidiary Distributions      109  

Section 6.7.

  Investments      109  

Section 6.8.

  Interest Reserve Account      109  

Section 6.9.

  Fundamental Changes; Disposition of Assets      110  

Section 6.10.

  [Reserved]      111  

Section 6.11.

  Sales and Lease Backs      111  

Section 6.12.

  Transactions with Affiliates      112  

Section 6.13.

  Conduct of Business      114  

Section 6.14.

  Changes to Certain Agreements and Organizational Documents      115  

Section 6.15.

  Accounting Methods      115  

Section 6.16.

  Deposit Accounts and Securities Accounts      115  

 

iv


Section 6.17.

  Prepayments of Certain Indebtedness      115  

Section 6.18.

  Anti-Terrorism Laws, Anti-Corruption Laws, Sanctions      116  

Section 6.19.

  Bankruptcy Remote      116  

Section 6.20.

  [Reserved]      117  

Section 6.21.

  Financial Covenant      117  
ARTICLE VII GUARANTY      118  

Section 7.1.

  Guaranty of the Obligations      118  

Section 7.2.

  Contribution by Guarantors      118  

Section 7.3.

  Payment by Guarantors      119  

Section 7.4.

  Liability of Guarantors Absolute      119  

Section 7.5.

  Waivers by Guarantors      121  

Section 7.6.

  Guarantors’ Rights of Subrogation, Contribution, etc.      122  

Section 7.7.

  Subordination of Other Obligations      122  

Section 7.8.

  Continuing Guaranty      122  

Section 7.9.

  Authority of Guarantors or Borrower      123  

Section 7.10.

  Financial Condition of Borrower      123  

Section 7.11.

  Bankruptcy, etc.      123  

Section 7.12.

  Discharge of Guaranty upon Sale of Guarantor      124  

Section 7.13.

  Limitation      124  
ARTICLE VIII EVENTS OF DEFAULT      125  

Section 8.1.

  Events of Default      125  
ARTICLE IX AGENTS      129  

Section 9.1.

  Appointment      129  

Section 9.2.

  Nature of Duties; Delegation      130  

Section 9.3.

  Successor Agent      134  

 

v


Section 9.4.

  Nonreliance on Agents; Lender Consent      135  

Section 9.5.

  Collateral Matters      135  

Section 9.6.

  Administrative Agent May File Proofs of Claim      138  

Section 9.7.

  No Third-Party Beneficiaries      138  

Section 9.8.

  Right to Indemnity      138  

Section 9.9.

  Agency for Perfection      140  

Section 9.10.

  Erroneous Payments      140  

Section 9.11.

  Delivery of Notices to Securitization Trustee      143  
ARTICLE X MISCELLANEOUS      143  

Section 10.1.

  Notices      143  

Section 10.2.

  Expenses      144  

Section 10.3.

  Indemnity      146  

Section 10.4.

  Set-Off      147  

Section 10.5.

  Amendments and Waivers      147  

Section 10.6.

  Successors and Assigns; Participations      150  

Section 10.7.

  Independence of Covenants      156  

Section 10.8.

  Survival of Representations, Warranties and Agreements      156  

Section 10.9.

  No Waiver; Remedies Cumulative      156  

Section 10.10.

  Marshalling; Payments Set Aside      156  

Section 10.11.

  Severability      156  

Section 10.12.

  Obligations Several      157  

Section 10.13.

  Headings      157  

Section 10.14.

  APPLICABLE LAW      157  

Section 10.15.

  CONSENT TO JURISDICTION      157  

Section 10.16.

  WAIVER OF JURY TRIAL      158  

 

vi


Section 10.17.

  Confidentiality    158

Section 10.18.

  Usury Savings Clause    160

Section 10.19.

  Counterparts    160

Section 10.20.

  Effectiveness    160

Section 10.21.

  PATRIOT Act Notice    161

Section 10.22.

  Acknowledgement and Consent to Bail-In of EEA Financial Institutions    161

Section 10.23.

  AON Insurance Policy Refund    161

Section 10.24.

  Entire Agreement    161

 

vii


APPENDICES:

   A    Term Loan Commitments

SCHEDULES:

   4.1    Jurisdictions of Organization and Qualification
     4.2    Capital Stock and Ownership
     4.9    Adverse Proceedings
     4.10    Taxes
     4.11    Real Estate Assets
     4.12    Environmental Matters
     4.13    Defaults
     4.14    Material Contracts
     4.14A    Material Contract Estoppels
     4.21    Intellectual Property
     4.22    Equipment
     4.24    Insurance
     4.27    Bank Accounts and Securities Accounts
     5.1(c)    Regional Accounting Firms
     5.14(c)    IP Third Party License Indemnity Terms
     5.15    Certain Post-Closing Matters
     5.20    Lockbox Deposit Categories
     6.1    Certain Indebtedness
     6.2    Certain Liens
     6.7    Certain Investments
     6.9(b)    Certain Dispositions
     6.9    Certain Acquisitions
     6.11    Sales and Lease Backs
     6.12    Certain Affiliate Transactions
     6.19    Co-Owned IP Rights
     9.5    Excluded Assets
     10.1    Notice Addresses

 

viii


EXHIBITS:

   A    Form of Funding Notice
     B    Form of Compliance Certificate
     C    Form of Assignment Agreement
     D    Form of Certificate Regarding Non-Bank Status
     E    Form of Closing Certificate
     F    Form of Counterpart Agreement
     G    Form of Pledge and Security Agreement
     H    [Intentionally omitted]
     I    Form of Note
     J    Form of Solvency Certificate
     K    Form of AON Insurance Policy
     L    Form of Intercompany Subordination Agreement
     M    Form of AON Valuation Questionnaire
     N    Form of Intercreditor Agreement Terms

 

ix


SECOND AMENDED AND RESTATED FINANCING AGREEMENT

This SECOND AMENDED AND RESTATED FINANCING AGREEMENT dated as of May 20, 2024, is entered into by and among FIREFLY AEROSPACE INC., a Delaware corporation (“Borrower”), as borrower, and certain Subsidiaries of Borrower from time to time party hereto (collectively, the “Guarantors” and each, a “Guarantor”), as guarantors, the Lenders from time to time party hereto, and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION and its permitted successors to serve as administrative agent and collateral agent under the Loan Documents (in such capacities, the “Administrative Agent” and the “Collateral Agent”, as applicable, and from time to time referred to herein without differentiation as an “Agent” and, collectively as the “Agents”).

W I T N E S S E T H:

WHEREAS, capitalized terms used in the preamble or these recitals shall have the respective meanings set forth for such terms in Section 1.1 hereof;

WHEREAS, the Borrower and the other Loan Parties previously entered into that certain Financing Agreement, dated as of July 17, 2023 (the “Initial Closing Date”), among the Borrower, the other Loan Parties, the lenders party thereto, and the Administrative Agent (the “Initial Financing Agreement”), which was amended and restated by that certain Amended and Restated Financing Agreement, dated as of December 6, 2023, among the Borrower, the other Loan Parties, the lenders party thereto (the “Existing Lenders”), and the Administrative Agent (as amended and as in effect immediately prior to the date hereof, the “Existing Financing Agreement”), pursuant to which the Existing Lenders agreed to make available to the Borrower certain loans and other financial accommodations;

WHEREAS, in connection with the Initial Financing Agreement and Existing Financing Agreement, the Borrower and the other Loan Parties executed and delivered the Collateral Documents (as defined in the Existing Financing Agreement) in favor of the Administrative Agent to secure the payment and performance of the Obligations (as defined in the Existing Financing Agreement);

WHEREAS, the Borrower, the other Loan Parties, the Lenders and the Administrative Agent wish to amend and restate the Existing Financing Agreement, subject to the terms and conditions set forth herein; and

WHEREAS, (i) the Borrower, the other Loan Parties, the Lenders, and the Administrative Agent intend that (a) this Agreement amend and restate the Existing Financing Agreement in its entirety without causing a substitution, refinancing or novation of the existing obligations thereunder, and (b) the Borrower’s and the Loan Parties’ obligations under the Existing Financing Agreement shall continue to exist under, and to be evidenced by, this Agreement and (ii) each Loan Party (as defined herein) acknowledges and agrees that the security interests and Liens (as defined in the Existing Financing Agreement) granted to the Administrative Agent pursuant to the Existing Financing Agreement and the Collateral Documents (as defined in the Existing Financing Agreement), shall remain outstanding and in full force and effect, without interruption or impairment of any kind, in accordance with the Existing Financing Agreement, and shall continue to secure the Obligations (as defined herein).

 

1


NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the Borrower, the other Loan Parties, the Lenders, and the Administrative Agent agree that the Existing Financing Agreement shall be amended and restated in its entirety as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

Section 1.1. Definitions. The following terms used herein, including in the preamble, recitals, exhibits and schedules hereto, shall have the following meanings:

“Additional Term A Loan” has the meaning specified in Section 2.1(a).

“Additional Term A Loan Commitment” means, relative to any Term A Loan Lender, such Lender’s obligation to make Additional Term A Loans pursuant to Section 2.1(a). The amount of each Lender’s Additional Term A Loan Commitment, if any, is set forth on Appendix A or in the applicable Lender Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Additional Term A Loan Commitments as of the Closing Date equals the Additional Term A Loan Commitment Amount.

“Additional Term A Loan Commitment Amount” means $12,500,000.00.

“Additional Term B Loan” has the meaning specified in Section 2.1(a).

“Additional Term B Loan Commitment” means, relative to any Term B Loan Lender, such Lender’s obligation to make Additional Term B Loans pursuant to Section 2.1(a). The amount of each Lender’s Additional Term B Loan Commitment, if any, is set forth on Appendix A or in the applicable Lender Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Additional Term B Loan Commitments as of the Closing Date equals the Additional Term B Loan Commitment Amount.

“Additional Term B Loan Commitment Amount” means $1,388,888.89.

“Administrative Agent” has the meaning specified in the preamble hereto.

“Administrative Agent’s Account” means an account at a bank designated by Administrative Agent from time to time as the account into which the Loan Parties shall make all payments to Administrative Agent under this Agreement and the other Loan Documents.

 

2


“Adverse Proceeding” means any action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of Borrower or any of its Subsidiaries) at law or in equity, or before or by any Governmental Authority, domestic or foreign (including any Environmental Claims) or other regulatory body or any mediator or arbitrator, whether pending or, to the knowledge of Borrower or any of its Subsidiaries, threatened in writing against Borrower or any of its Subsidiaries or any property of Borrower or any of its Subsidiaries.

“Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power (a) for purposes of Section 6.12, to vote 10% or more of the Securities having ordinary voting power for the election of members of the Board of Directors (or similar governing body or Persons performing similar governing functions) of such Person, or (b) to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting Securities or by contract or otherwise. Notwithstanding anything herein to the contrary, in no event shall any Agent or any Lender or any of their Affiliates or Related Funds be considered an “Affiliate” of any Loan Party. For avoidance of doubt, no Person that would otherwise not be an Affiliate shall be considered an Affiliate hereunder solely by reason of such Person’s direct or indirect interest in the Warrant, or any Capital Stock issued in respect of the Warrant.

“Agent” and “Agents” have the meaning specified in the preamble hereto.

“Agent Fee Letter” means the letter agreement dated as of the Initial Closing Date between Borrower and Agents, as amended, amended and restated, supplemented or otherwise modified from time to time.

“Aggregate Amounts Due” has the meaning specified in Section 2.12(a).

“Aggregate Payments” has the meaning specified in Section 7.2.

“Agreement” means this Financing Agreement and any annexes, exhibits and schedules attached hereto as it may be amended, amended and restated, supplemented or otherwise modified from time to time.

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction concerning or relating to bribery or corruption, including, without limitation, the FCPA.

“Anti-Terrorism Laws” means any Law relating to terrorism financing or money laundering, including, without limitation, (a) the Money Laundering Control Act of 1986 (i.e., 18 U.S.C. §§ 1956 and 1957), (b) the Currency and Foreign Transactions Reporting Act (31 U.S.C. §§ 5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959) (the “Bank Secrecy Act”), (c) the PATRIOT Act, (d) any applicable law prohibiting or directed against terrorist activities or the financing of terrorist activities (e.g., 18 U.S.C. §§ 2339A and 2339B), or (e) any similar laws enacted in the United States, the United Kingdom, the European Union or any other jurisdictions in which the parties to this Agreement operate, as any of the foregoing laws may from time to time be amended, renewed, extended, or replaced, and all other present and future applicable legal requirements of any Governmental Authority governing, addressing, relating to, or attempting to eliminate, terrorist acts and acts of war and any regulations promulgated pursuant thereto.

 

3


“AON Designee” has the meaning set forth in Section 10.6(j).

“AON Insurance Funded Portion” has the meaning set forth in Section 10.6(j).

“AON Insurance Policy” means that certain Second Amended and Restated Collateral Protection Insurance Policy dated as of the Closing Date (as amended, amended and restated, supplemented or otherwise modified from time to time) and issued to Administrative Agent as “insured party” defined therein by the insurers listed on Schedule 2 thereof and substantially in the form attached hereto as Exhibit K.

“AON Insurance Proceeds” has the meaning set forth in Section 10.6(j).

“AON Notice” has the meaning set forth in Section 10.6(j).

“Applicable Parties” has the meaning set forth in Section 5.1.

“Arm’s Length Terms” means, as of any applicable time of determination, terms (taken as a whole) at least as substantially favorable to Borrower and/or any applicable Subsidiary thereof than those terms that would be obtainable in an arm’s length transaction between unaffiliated and disinterested Persons in a transaction in which neither Person is under undue pressure to complete such transaction.

“Asset Sale” means a sale, lease or sublease (as lessor or sublessor), sale and leaseback, assignment, conveyance, transfer, license, sublicense or other disposition to (other than to or with a Loan Party), or any exchange of property with, any Person (other than with a Loan Party), in one transaction or a series of transactions, of all or any part of any Loan Party’s, or of any Subsidiary of a Loan Party’s, assets or properties of any kind, whether real, personal, or mixed and whether tangible or intangible, including specifically, but without limitation, any form of IP Rights, including formulas, trade secrets, know-how, methods or processes, whether now owned or hereafter acquired, including, without limitation, the disposition of Capital Stock of any Loan Party by another Person, and for purposes of clarification, “Asset Sale” shall include (a) the sale or other disposition for value of any contracts, (b) the early termination or modification of any contract resulting in the receipt by any Loan Party of a Cash payment or other consideration in exchange for such event (other than payments in the ordinary course for accrued and unpaid amounts due through the date of termination or modification) and (c) any sale of merchant accounts (or any rights thereto (including, without limitation, any rights to any residual payment stream with respect thereto)) by any Loan Party, in each case other than (the “Asset Sale Exceptions”):

(a) any disposition of:

(i) Cash or Cash Equivalents,

(ii) inventory sold, inventory licensed in the ordinary course of business or inventory leased in the ordinary course of business,

(iii) negligible, obsolete, damaged, aged, immaterial or worn-out property, or surplus property or property no longer used or useful in the business of the Loan Parties and disposed of in the ordinary course of business;

 

4


(iv) improvements made to leased real property to landlords pursuant to customary terms of leases entered into in the ordinary course of business;

(b) the disposition of any assets by the Loan Parties in a manner permitted pursuant to Section 6.9;

(c) any disposition constituting a Restricted Junior Payment that is permitted to be made, and is made, under Section 6.5, a Permitted Investment or an acquisition otherwise permitted under this Agreement;

(d) (i) the lease, assignment or sublease, license or sublicense of any assets or properties (other than IP Rights) of any kind, whether real, personal, or mixed and whether tangible or intangible in the ordinary course of business and (ii) the exercise of termination rights with respect to any such lease, sublease, license or sublicense or other agreement;

(e) foreclosures, condemnation, expropriation, eminent domain or any similar action (including, for the avoidance of doubt, any casualty event) with respect to assets or the granting of Liens not prohibited hereunder;

(f) sales or discounts of accounts receivable, or participations therein, or the disposition of an account receivable in connection with the collection or compromise thereof in the ordinary course of business or consistent with industry practice or in bankruptcy or similar proceedings;

(g) the sale, lease, assignment, license, sublease, write-off or discount of inventory, equipment, accounts receivable, notes receivable or other current assets or the conversion of accounts receivable to notes receivable or other dispositions of accounts receivable in connection with the collection thereof, in each case in the ordinary course of business or consistent with industry practice;

(h) any (i) non-exclusive sublicense in respect of IP Rights granted in connection with a commercial transaction that is entered into in the ordinary course of business (for example, transactions related to engines, launch vehicles, or spacecraft programs) and on Arm’s Length Terms, including those granted by a Loan Party to a third party where such sublicenses are associated with a service or product provided or supplied by the Loan Party in the ordinary course of business on Arm’s Length Terms, and (ii) exclusive sublicense in respect of IP Rights (including that are associated with a service or product either provided or supplied by the Loan Party or received or supplied to the Loan Party), granted in connection with a commercial transaction that is entered into in the ordinary course of business (for example, transactions related to engines, launch vehicles, or spacecraft programs) and on Arm’s Length Terms and that do not interfere in any material respect with the business of the Borrower, including the Loan Party’s use and sublicensing of such exclusively licensed IP Rights for other products and uses (provided that in the case of any exclusive sublicense described in clause (ii) that could reasonably be expected to materially impair the aggregate value of the Collateral taken as a whole (or, to the extent with respect to IP Rights owned by such Loan Party as of the date of the execution of such commercial transaction, with a cumulative term of greater than two (2) years), the Loan Parties shall first provide written notice of such action to the insurers under the AON Insurance Policy, the Administrative Agent and

 

5


the Lenders at least thirty (30) Business Days prior to the grant of such exclusive sublicense and (x) such grant of exclusive sublicense shall not have, within ten (10) Business Days following receipt of such notice, been objected to in writing by insurers holding at least 50.1% of the aggregate risk under the AON Insurance Policy on the terms and conditions set forth in clause (a) of Section IV of the AON Insurance Policy as in effect on the Closing Date without giving effect to any subsequent amendment or modification, and (y) the Required Lenders shall not have, within ten (10) Business Days following receipt of such notice, objected in writing to such transaction, and if no such objection of such insurers and Lenders as described in clauses (x) and (y) above is made, the Loan Parties shall be permitted to proceed with the grant of such exclusive sublicense) (any such sublicense referenced in (i) or (ii), a “Qualified License”);

(i) any surrender or waiver of contract rights or the settlement, release or surrender of contract rights or other litigation claims in the ordinary course of business or consistent with industry practice;

(j) disposition of property to any Borrower or any other Subsidiary; provided that if the transferor of such property is a Loan Party, (i) the transferee thereof must be a Loan Party or (ii) such dispositions to non-Loan Parties do not exceed in the aggregate $5,000,000;

(k) sales, transfers and other dispositions of Investments in joint ventures to the extent required by, or made pursuant to, customary put, drag or tag arrangements (or other provisions of similar effect) between the joint venture parties set forth in joint venture arrangements and similar binding arrangements;

(l) the sale, assignment, conveyances, transfer, sublicense, lapse, abandonment, or other disposition of IP Rights (i) which in the good faith determination of Borrower, are not material to the conduct of the business of the Loan Parties taken as a whole (provided that in the case of any lapse, abandonment or other disposition of any issued patent, registered trademark or registered copyright prior to the lapse, abandonment or other disposition of such asset at the end of its applicable statutory term, the Loan Parties shall first provide written notice of such action to the insurers under the AON Insurance Policy, the Administrative Agent and the Lenders at least thirty (30) Business Days prior to the last opportunity to prevent such lapse, abandonment or other disposition and (x) such lapse, abandonment or other disposition shall not have, within ten (10) Business Days following receipt of such notice, been objected to in writing by insurers holding at least 50.1% of the aggregate risk under the AON Insurance Policy on the terms and conditions set forth in clause (a) of Section IV of the AON Insurance Policy as in effect on the Closing Date without giving effect to any subsequent amendment or modification, and (y) the Required Lenders shall not have, within ten (10) Business Days following receipt of such notice, objected in writing to such transaction, and if no such objection of such insurers and Lenders as described in clauses (x) and (y) above is made, the Loan Parties shall be permitted to proceed with such lapse, abandonment or other disposition), or (ii) to a third party where such IP Rights were developed in connection with any commercial arrangement that is entered into in the ordinary course of business by a Loan Party on Arm’s Length Terms with such third party (including any such co- or joint-development or research agreements) and pursuant to such commercial arrangement (x) the Loan Party and such third party agree (which agreement was made in their respective reasonable business judgment) that such IP Rights will be jointly-owned by the Loan Party and such third party, (y) such IP Rights are related to or an improvement, derivative, or the like of such third party’s or any of its Affiliates’ pre-existing or background IP Rights, or (z) as between such third party and such Loan Party, such IP Rights primarily relate to the business of such third party and its Affiliates (any sublicense referenced in this clause (l) shall be deemed a Qualified License);

 

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(m) the granting of a Permitted Lien or the making of Restricted Junior Payments permitted hereunder;

(n) the disposition of any assets (including Capital Stock) (i) acquired in a transaction permitted hereunder, which assets are not used or useful in the principal business of the Loan Parties or (ii) made in connection with the approval of any applicable antitrust authority or otherwise necessary or advisable in the good faith determination of Borrower to consummate any acquisition permitted hereunder;

(o) dispositions of property to the extent that such property is concurrently exchanged for credit against the purchase price of substantially concurrently acquired similar replacement property;

(p) dispositions of property pursuant to sale-leaseback transaction permitted hereunder;

(q) any swap of assets in exchange for services or other assets in the ordinary course of business of comparable or greater value or usefulness to the business of the Borrower and its Subsidiaries as a whole, as determined in good faith by the Borrower, in an aggregate amount not to exceed $5,000,000;

(r) dispositions of assets not constituting Collateral in an aggregate amount not to exceed $5,000,000 over the course of this Agreement;

(s) dispositions set forth on Schedule 6.9(b); or

(t) the termination of any contract or agreement, including, in respect of agreements governing a Joint Venture.

Notwithstanding any other provision contained herein, for all purposes of this Agreement and the other Loan Documents, (i) all licenses, sublicenses, or other rights granted by Borrower or any of its Subsidiaries prior to the date hereof in connection with any IP Rights (together with any other rights or obligations (including sales, assignments, conveyances, transfers, licenses, sublicenses, or other dispositions) (x) granted in connection with the foregoing prior to the date hereof or (y) required to be granted, or otherwise exercisable in connection with, the foregoing prior to or following the date hereof), including, in each case, any of the foregoing granted or required to be granted in connection with the Northrop Agreements, shall be deemed, as applicable, Asset Sale Exceptions, Permitted Liens, and Qualified Licenses, and (ii) none of the foregoing shall constitute or be deemed an Extraordinary IP Rights Transaction or a Specified Event.

“Assignment Agreement” means an Assignment and Assumption Agreement substantially in the form of Exhibit C.

 

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“Authorized Officer” means, as applied to any Person, any individual holding the position of chairman of the board (if an officer), chief executive officer, chief financial officer, president, one of its vice presidents, controller, secretary or treasurer (in each case, or the equivalent thereof).

“Avoidance Provisions” has the meaning set forth in Section 7.13(b).

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“Bank Secrecy Act” has the meaning specified in the definition of “Anti-Terrorism Laws”.

“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.

“Beneficial Ownership Certification” means, to the extent Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, a certification regarding beneficial ownership in relation to Borrower as required by the Beneficial Ownership Regulation.

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

“Beneficiary” means each Agent and Lender.

“Bertram Sale and Leaseback” means that certain sale and leaseback transaction with respect to (a) the real property located at 281 CR 210 Bertram, Texas 78605 and (b) certain improvements on such real property, which shall be limited to such improvements consisting of test stands, pipes, fuel systems and related, similar equipment located, as of the date hereof, in the case of the foregoing listed in this clause (b), solely on the portion of such real property marked in blue boxes on the map as set forth on Schedule 6.11. For the avoidance of doubt, no other assets of any Loan Party located at 281 CR 210 Bertram, Texas 78605, including, but not limited to, any computers, data servers, monitors, or other electronic equipment shall be included in such sale and leaseback transaction (unless they are part of a test stand and inside a blue box on the map set forth on Schedule 6.11); provided, that, for the avoidance of doubt, any buildings located at 281 CR 210 Bertram, Texas 78605 may be subject to such sale and leaseback transaction.

“Blocked Person” means any Person:

(a) listed in any Sanctions-related list of designated Persons maintained by any Sanctions Authority (including OFAC’s Specially Designated Nationals and Blocked Persons List),

 

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(b) domiciled, organized or resident in a Sanctioned Country,

(c) fifty percent (50%) or more owned or controlled by, or acting for or on behalf of, any Person or Persons described in the foregoing clauses (a) or (b) above or by the government of a Sanctioned Country, or

(d) otherwise the subject of any Sanctions that prohibit or restrict dealings with such Person.

“Board of Directors” means (a) with respect to any corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of and in lieu of such board for all purposes, (b) with respect to a partnership, the board of directors of the general partner of the partnership, (c) with respect to a limited liability company, the sole member, managing member or members or any controlling committee thereof (if member managed) or board of managers or sole manager (if manager managed) of such company, and (d) with respect to any other Person, the board or committee of such Person serving a similar function.

“Borrower” has the meaning specified in the preamble hereto.

“Borrower Materials” has the meaning specified in Section 5.1.

“Business Day” means any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such state are authorized or required by law or other Governmental Act to close.

“Capital Asset” means, with respect to Borrower and its Subsidiaries, any asset that should, in accordance with GAAP, be classified and accounted for as a capital asset on a consolidated balance sheet of Borrower and its Subsidiaries.

“Capital Lease” means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee that, in accordance with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person.

“Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including, without limitation, partnership interests and membership interests, units and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing; provided, that any instrument evidencing Indebtedness convertible or exchangeable for Capital Stock shall not be deemed to be Capital Stock unless and until such instrument is so converted or exchanged.

“Cash” means money, currency or a credit balance in any demand or Deposit Account.

“Cash Equivalents” means, as at any date of determination, (a) marketable securities (i) issued or directly and unconditionally guaranteed as to interest and principal by the United States government, or (ii) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one year after such date, (b) certificates of deposit or bankers’ acceptances

 

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maturing within one year after such date and issued or accepted by any Lender or by any commercial bank organized under the laws of the United States or any state thereof or the District of Columbia that (i) is at least “adequately capitalized” (as defined in the regulations of its primary Federal banking regulator), and (ii) has Tier 1 capital (as defined in such regulations) of not less than $500,000,000, and (c) shares of any money market mutual fund that (i) has substantially all of its assets invested continuously in the types of investments referred to in clauses (a) and (b) above, (ii) has net assets of not less than $500,000,000, and (iii) has the highest rating obtainable from either S&P or Moody’s, and (d) in the case of investments by any Foreign Subsidiary or investments made in a country outside the United States, Cash Equivalents shall also include investments of the type and maturity described in clauses (a) through (c) above of foreign obligors to the extent such investments are necessary or useful for the business of such Person, which investments have ratings, described in such clauses or equivalent ratings from comparable foreign rating agencies.

“Certificate Regarding Non-Bank Status” means a certificate substantially in the form of Exhibit D.

“CFC” shall mean a “controlled foreign corporation” within the meaning of Section 957 of the Internal Revenue Code.

“CFC Holding Company” shall mean a Subsidiary of the Borrower that has no material assets other than (a) the equity interests (including, for this purpose, any debt or other instrument treated as equity for U.S. federal income tax purposes), or equity interests and indebtedness, in one or more Foreign Subsidiaries, each of which is a CFC, and/or one or more CFC Holding Companies and (b) cash, Cash Equivalents and other assets being held incidental to the holding of assets described in clause (a) of this definition (excluding for purposes of this determination any indebtedness of such Foreign Subsidiaries).

“Change of Control” means, at any time, any of the following occurrences:

(a) any combination of Permitted Holders shall fail to own beneficially (within the meaning of Rule 13d-5 of the Exchange Act as in effect on the Closing Date), directly or indirectly, in the aggregate Capital Stock representing at least a majority of the aggregate ordinary voting power represented by the issued and outstanding Capital Stock of Borrower;

(b) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act (but excluding (i) any employee benefit plan and/or Person acting as the trustee, agent or other fiduciary or administrator therefor, (ii) any Permitted Holder and (iii) Jefferies, any affiliate thereof or any successor owner of any Capital Stock of Borrower previously held by Jefferies, in a single transaction or in a related series of transactions, including by way of merger, amalgamation, consolidation or other business combination or purchase, of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of Capital Stock of Borrower representing directly or indirectly more than 40% of the total voting power of all of the outstanding voting stock of Borrower;

 

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(c) Borrower shall cease to beneficially own and control, directly or indirectly, 100% on a fully diluted basis of the economic and voting interest in the Capital Stock of each other Loan Party (other than (x) as a result of any issuance, sale or other disposition of all Capital Stock of a Loan Party permitted under this Agreement, (y) director’s shares or nominal holdings required to be issued by the applicable law of any jurisdiction of formation and (z) as a result of a merger or dissolution permitted by Section 6.9);

(d) the sale, lease or transfer, in a single transaction or in a related series of transactions, of all or substantially all of the assets of any Loan Party, taken as a whole, to any Person, other than any such transaction that is approved by the Board of Directors of the Loan Party in question and is otherwise expressly permitted hereunder, except as set forth in clauses (f) and (g) below;

(e) IPHoldCo shall cease to beneficially own and control, directly or indirectly, 100% on a fully diluted basis of the economic and voting interest in the Capital Stock of IPCo; or

(f) the sale, lease or transfer, in a single transaction or in a related series of transactions, of all or substantially all of the assets of IPCo to any Person,

unless, in the case of clause (a) or clause (b) of this definition of “Change of Control”, the Permitted Holders have, at such time, the right or the ability by voting power, contract, or otherwise to elect or designate for election at least a majority of the board of directors (or analogous governing body) of the Borrower.

“Closing Certificate” means a Closing Certificate substantially in the form of Exhibit E.

“Closing Date” means May 20, 2024.

“Collateral” means, collectively, all of the real, personal and mixed property, whether tangible or intangible (including, without limitation, (x) the Capital Stock issued by any Subsidiary to a Loan Party and (y) other Capital Stock held by a Loan Party, including minority interests), and all interests therein and proceeds thereof now owned or hereafter acquired by any Person upon which a Lien is granted or purported to be granted by such Person pursuant to the Collateral Documents as security for the Obligations; provided that in no event shall any Excluded Assets constitute Collateral.

“Collateral Account Report” has the meaning specified in Section 2.16(c)(iii).

“Collateral Account Report Date” has the meaning specified in Section 2.16(c)(iii).

“Collateral Accounts” means, as applicable, the Non-Minority Lender Interest Reserve Account, the Minority Lender Interest Reserve Account, the Insurance Premium Reserve Account, and any other reserve account established at the Collateral Agent after the Initial Closing Date in accordance with Section 2.16.

“Collateral Agent” has the meaning specified in the preamble hereto.

 

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“Collateral Documents” means the Pledge and Security Agreement, the Reaffirmation Agreement, any Material Contract Estoppels, any Mortgages, any Control Agreements and all other intellectual property security agreements, mortgages, instruments, documents, undertakings and agreements executed (or purported to be executed) and delivered by any Loan Party pursuant to this Agreement or any of the other Loan Documents in order to grant to Collateral Agent, for the benefit of Secured Parties, a Lien on any real, personal or mixed property of that Loan Party as security for the Obligations, in each case, as such Collateral Documents may be amended, amended and restated or otherwise modified from time to time.

“Commitment” means any Term Loan Commitment.

“Communications” has the meaning set forth in Section 5.1.

“Competitor” has the meaning specified in the definition of “Disqualified Institution”.

“Compliance Certificate” means a Compliance Certificate substantially in the form of Exhibit B.

“Contractual Obligation” means, as applied to any Person, any provision of any Security issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.

“Control Agreement” means a control agreement, in form and substance reasonably satisfactory to the Required Lenders and the Collateral Agent, executed and delivered by a Loan Party, Collateral Agent, and the applicable securities intermediary (with respect to a Securities Account) or depositary bank (with respect to a Deposit Account), which, (a) with respect to any Collateral Account, shall provide for “blockage on notice” of the applicable Securities Account or Deposit Account and (b) with respect to any other Deposit Account shall provide for “blockage on notice” of the applicable Securities Account or Deposit Account after the occurrence and during the continuance of an Event of Default.

“Counterpart Agreement” means a Counterpart Agreement substantially in the form of Exhibit F delivered by a Loan Party pursuant to Section 5.10.

“Credit Date” means the date of a Credit Extension.

“Credit Extension” means the making of a Term Loan.

“Debtor Relief Law” means the Bankruptcy Code and any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Law of the United States or other applicable jurisdiction from time to time in effect and affecting the rights of creditors generally.

“Default” means a condition or event that, after notice or lapse of time or both, would constitute an Event of Default.

 

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“Default Rate” means any interest payable pursuant to Section 2.7.

“Deposit Account” means a demand, time, savings, passbook or like account with a bank, savings and loan association or credit union, in each case, which institution must have an investment grade long-term issuer credit rating by Moody’s, other than an account evidenced by a negotiable certificate of deposit; provided, that the Borrower and any Subsidiary may have up to $5,000,000 in Cash in the aggregate held in Deposit Accounts with one or more institutions that do not have an investment grade long-term issuer credit rating by Moody’s.

“Deposit Materials” has the meaning set forth in Section 5.1.

“Disqualified Capital Stock” means any Capital Stock that, by its terms (or by the terms of any security or other Capital Stock into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition, (a) matures or is mandatorily redeemable (other than solely for Qualified Capital Stock), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control, asset sale or similar event so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to, and expressly subordinated to, the prior repayment in full of the Term Loans and all other Obligations (other than contingent obligations not due and owing) that are accrued and payable), (b) is redeemable at the option of the holder thereof (other than solely for Qualified Capital Stock), in whole or in part, (c) provides for the scheduled payments of dividends or distributions in Cash, or (d) is convertible into or exchangeable for (i) Indebtedness or (ii) any other Capital Stock that would constitute Disqualified Capital Stock; provided, that (i) Capital Stock that would not constitute Disqualified Capital Stock but for terms thereof giving holders thereof the right to require such Person to redeem or purchase such Capital Stock upon the occurrence of an “asset sale,” a “change of control” or similar event shall not constitute Disqualified Capital Stock if any such requirement becomes operative only after repayment in full in cash of all the Loans and all other Obligations that are accrued and payable and the termination of the Commitments and (ii) if Capital Stock is issued pursuant to any plan for the benefit of employees of the Borrower or any of the Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased by the Borrower or any of the Subsidiaries in order to satisfy applicable statutory or regulatory obligations of the Borrower or any of its Subsidiaries; provided, further that Capital Stock of the Borrower or any of its Subsidiaries (i) existing as of the Closing Date (“Existing Preferred Equity”) or (ii) on terms consistent with (or otherwise not mandatorily redeemable earlier than) the Existing Preferred Equity shall not be Disqualified Capital Stock.

“Disqualified Institution” means (a) any banks, financial institutions, institutional lenders or any other Person that have been specified to Jefferies by the Borrower in writing at any time prior to the Initial Closing Date, (b) the competitors of the Loan Parties and their Subsidiaries identified in writing by or on behalf of Borrower to Jefferies on or prior to the Initial Closing Date, and (c) controlled Affiliates of any entity described in the preceding clauses (a) and (b) that are reasonably identifiable on the basis of their name or otherwise known or identified to the Administrative Agent (the Persons described in clauses (a), (b), and (c), each a “Competitor”), provided, however, for the avoidance of doubt, that no direct or indirect lender to, investor in or equity holder in, or member of, any of the entities identified above (regardless of the control or percentage held) shall constitute a Disqualified Institution unless specifically identified as a Competitor on the Initial Closing Date in the list above.

 

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“Dollars” and the sign “$” mean the lawful money of the United States.

“Domestic Subsidiary” shall mean any Subsidiary of a Loan Party that is organized and existing under the laws of the United States or any state or commonwealth thereof or under the laws of the District of Columbia.

“Draw” means a request by Borrower for and the funding of a Term Loan advanced by the Lenders on the Closing Date under their respective Term Loan Commitments in an aggregate amount equal to the Draw Amount.

“Draw Amount” means $13,888,888.89.

“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clause (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority, or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“Eligible Assignee” means (a) any Lender (other than a Minority Lender), any Affiliate of any Lender (other than a Minority Lender) and any Related Fund (any two or more Related Funds being treated as a single Eligible Assignee for all purposes hereof), any commercial bank, any insurance company, any investment or mutual fund, any institutional investor, any family office, any private equity investor, any pension fund or any other entity that is an “accredited investor” (as defined in Regulation D under the Securities Act) and which extends credit or buys loans as one of its businesses, (b) any other Person (other than a natural Person) with respect to whom a Lender shall have provided written notice to the Administrative Agent ten (10) Business Days prior to the execution of such proposed assignment and the Administrative Agent shall not have objected to such assignment within such ten (10) Business Days following receipt of such notice, (c) any Securitization Trust and (d) one or more of the insurers that are party to the AON Insurance Policy, or their respective designee(s); provided that (i) no Disqualified Institution shall, in any event, be an Eligible Assignee without the prior written consent of Borrower unless an Event of Default has occurred and is continuing at the time of assignment to a Disqualified Institution in which event no Borrower consent shall be required, (ii) neither Borrower nor any Affiliate of Borrower shall, in any event, be an Eligible Assignee and (iii) no Person owning or controlling (x) any trade debt or Indebtedness of any Loan Party other than (A) the Obligations, (B) obligations arising under the Securitization Trust (in the case of an assignment to the Securitization Trust) or (C) the AON Insurance Policy (in the case of an assignment to the insurers that are party to the AON Insurance Policy or their respective designee(s)) or (y) any Capital Stock of any Loan

 

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Party (in each case under this clause (iii), unless a Lender shall have provided written notice to the Administrative Agent (expressly identifying this clause (iii) and requesting that the Administrative Agent provide such written notice to the Lenders) ten (10) Business Days prior to the execution of such proposed assignment and the Required Lenders shall not have objected to such assignment within such ten (10) Business Days following receipt of such notice) shall, in any event, be an Eligible Assignee and each assignee will so represent in the applicable Assignment Agreement. For avoidance of doubt, no Person that would otherwise be an Eligible Assignee shall be disqualified as an Eligible Assignee solely by reason of such Person’s direct or indirect interest in the Warrant or any Capital Stock issued in respect of the Warrant. As provided in Section 10.6(j), upon payment to the Administrative Agent of the full amount due under the AON Insurance Policy, the principal amount of the applicable Obligations shall automatically be transferred to the insurers under the AON Insurance Policy or their respective designee(s) without any further action by the Lenders or the Administrative Agent.

“Eligible Investments” means any (i) Dollars or (ii) any Dollar investment that is one or more of the following obligations or securities (other than obligations or securities which are zero coupon obligations or securities):

(a) marketable securities issued or directly and unconditionally guaranteed as to interest and principal by the United States government, marketable securities issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, demand and time deposits in, certificates of deposit of and bankers’ acceptances issued by, bank deposit products of or federal funds sold by, any depository institution or trust company incorporated under the laws of the United States of America (including U.S. Bank Trust Company, National Association and its Affiliates) with, in each case, that matures not later than the Business Day immediately preceding the Interest Payment Date immediately following the date of investment therein and subject to supervision and examination by governmental banking authorities so long as the commercial paper and/or the debt obligations of such depository institution or trust company (or, in the case of the principal depository institution in a holding company system, the commercial paper or debt obligations of such holding company) at the time of such investment or contractual commitment have a rating of not less than the applicable Eligible Investments Minimum Rating; and

(b) commercial paper having, at the time of such investment, a credit rating of not less than the applicable Eligible Investments Minimum Rating and that either are bearing interest or are sold at a discount to the face amount thereof and that matures not later than the Business Day immediately preceding the Interest Payment Date immediately following the date of investment therein; and

(c) registered money market funds that (x) have, at all times, credit ratings of “Aaa-mf” by Moody’s or the highest credit rating available for money market funds by Moody’s at such time, (y) themselves invest only in items that constitute obligations or securities described in (a) or (b) above and (z) contain no restriction or penalty with respect to the frequency and/or amount of withdrawals; and

 

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(d) notwithstanding the forgoing, at all times on and prior to the last Business Day of the thirteenth full month following the Initial Closing Date (i) a portion of funds on deposit in each Interest Reserve Account that is sufficient to pay all interest on the Term Loans that will come due on or before the last Business Day of such thirteenth full month shall be invested in (x) Dollars or (y) investment property of the type described in (a), (b) or (c) and be available in Dollars at least one (1) Business Day prior to each Interest Payment Date; (ii) the remaining balance of funds on deposit in each Interest Reserve Account may be invested in (x) Dollars or (y) investment property of the type described in (a) or (c) (so long as such money market funds shall invest only in investment property described in (a)), provided that the stated duration to maturity of such investment property may exceed the duration provided for in (a) so long as all such maturities for such remaining balance comply with (e) below; and

(e) funds invested pursuant to Clause (d)(ii) may be invested in investment property of the type described in clause (a) above having a duration to maturity not to exceed 364 days from date of issuance, provided that the any such maturity shall occur not later than one (1) Business Day prior to the Interest Payment Date occurring during or after the thirteenth full month after the Initial Closing Date; and

(f) which, in each case under clauses (a) or (b) above, (w) excludes extendible commercial paper, (x) provides for payment of a pre-determined fixed amount of principal on maturity that is not subject to change, (y) has a stated maturity no later than permitted above and (z) either (A) has a stated maturity (giving effect to any applicable grace period) no later than the Business Day immediately preceding each of (1) the date provided for in (d) above and (2) the fifth anniversary of the date hereof (unless such Eligible Investments are issued by U.S. Bank Trust Company, National Association and its Affiliates in which event such Eligible Investments may mature on the date specified in clauses (1) and (2)) or (B) in the case of clause (c) above, may be capable of being liquidated on demand without penalty; provided, however, that Eligible Investments shall not (X) include any (a) mortgage backed security, (b) interest only security, (c) security subject to withholding or similar taxes (other than as imposed pursuant to FATCA), unless the obligor thereof is required to make payments of additional amounts (so-called “gross-up payments”), (d) security rated with an “f”” “r,” “p,” “pi,” “q” or “t” subscript by S&P, (e) security purchased at a price in excess of 100% of par, or (f) security whose repayment is subject to substantial non-credit related risk or (Y) be disposed of for a price that is less (on a cost basis) than the price paid by Borrower for such investment property at the time of its acquisition unless Borrower in the exercise of its business judgment believes such investment property has a significant risk of declining in credit quality or price. Eligible Investments may include, without limitation, those investments made with or issued by U.S. Bank Trust Company, National Association and its Affiliates or for which U.S. Bank Trust Company, National Association or its Affiliates act as offeror or provide services and receives compensation.

“Eligible Investments Minimum Rating” means a long-term issuer credit rating by Moody’s of A2 (and not on watch for downgrade) or higher or a short-term issuer credit rating by Moody’s of P-1 (and not on watch for downgrade).

 

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“Employee Benefit Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA (other than any Multiemployer Plan) which is sponsored, maintained or contributed to by, or required to be contributed by, any Loan Party or any of its ERISA Affiliates.

“Environmental Claim” means any Adverse Proceeding, complaint, summons, citation, investigation, notice, directive, notice of violation, order, claim, demand, action, litigation, judicial or administrative proceeding, judgment, letter or other communication from any Governmental Authority or any other Person asserting or alleging liability for or seeking recourse in response to (a) any actual or alleged violation of any Environmental Law, (b) any Hazardous Material or any actual or alleged Hazardous Materials Activity, (c) any injury to the environment, natural resource, any Person (including wrongful death) or property (real or personal) in connection with Hazardous Materials or actual or alleged violations of Environmental Laws, (d) any Environmental Liabilities and Costs or (e) any actual or alleged Releases or threatened Releases of Hazardous Materials that exists or occurs (i) on, at or migrating from any assets, properties or businesses currently or formerly owned or operated by any Loan Party or any of its Subsidiaries or any predecessor in interest, (ii) from adjoining properties or businesses, or (iii) onto any facilities which received Hazardous Materials generated by any Loan Party or any of its Subsidiaries or any predecessor in interest.

“Environmental Laws” means any and all current or future international, foreign, domestic, federal or state (or any subdivision of either of them) Laws, statutes, ordinances, orders, rules, regulations, judgments, decrees, permits, licenses or binding determinations of any Governmental Authorizations, or any other requirements of Governmental Authorities relating to (a) the manufacture, generation, use, storage, transportation, treatment, disposal or Release of, or exposure to, Hazardous Materials; or (b) occupational safety and health, industrial hygiene, land use or the protection of the environment, human, plant or animal health or welfare or natural resources.

“Environmental Liabilities and Costs” means all liabilities, monetary obligations, losses (including monies paid in settlement), damages, punitive damages, natural resource damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants and costs of investigations and feasibility studies), fines, penalties, sanctions and interest in connection with any Remedial Action, any Environmental Claim, or any other Adverse Proceeding, claim or demand by any Governmental Authority or any Person that relates to any actual or alleged violation of Environmental Laws, actual or alleged exposure or threatened exposure to Hazardous Materials, or any actual, alleged or threatened Release of Hazardous Materials.

“Environmental Lien” means any Lien in favor of any Governmental Authority for Environmental Liabilities and Costs.

“Equity Cure” shall have the meaning provided in Section 6.21(b).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor thereto.

 

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“ERISA Affiliate” means, together with the Loan Party, (a) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which the Loan Party is a member; (b) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which the Loan Party is a member; and (c) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code of which the Loan Party, any corporation described in clause (a) above or any trade or business described in clause (b) above is a member.

“ERISA Event” means (a) a “reportable event” within the meaning of Section 4043(c) of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for notice to the PBGC has been waived by regulation); (b) the failure by any Loan Party or any ERISA Affiliate to meet the minimum funding standard of Section 412 of the Internal Revenue Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(c) of the Internal Revenue Code) or the failure by any Loan Party or any ERISA Affiliate to make by its due date a required installment under Section 430(j) of the Internal Revenue Code with respect to any Pension Plan or the failure by any Loan Party or any ERISA Affiliate to make any required contribution to a Multiemployer Plan under Section 412, 431 or 432 of the Internal Revenue Code; (c) the receipt by any Loan Party or any ERISA Affiliate from the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (d) the withdrawal by a Loan Party or any of its ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to any Loan Party or any of its ERISA Affiliates pursuant to Section 4063 or 4064 of ERISA; (e) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which would reasonably be expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (f) the imposition of liability on any Loan Party or any of its ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (g) the withdrawal of any Loan Party or any of its ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any liability therefor, or the receipt by any Loan Party or any of its ERISA Affiliates of notice from any Multiemployer Plan that it is in insolvency pursuant to Section 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; or (h) the imposition of a Lien pursuant to Section 401(a)(29) or 430(k) of the Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.

“Erroneous Payment Subrogation Rights” has the meaning set forth in Section 9.10(d).

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

“Event of Default” means each of the conditions or events set forth in Section 8.1.

 

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“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.

“Excluded Accounts” means (a) payroll, payroll taxes or employee benefit accounts and related trust accounts, (b) other trust accounts, (c) escrow accounts (other than the Collateral Accounts), (d) tax accounts (including, without limitation, sales tax accounts), (e) accounts maintained solely in trust for the benefit of third parties and fiduciary purposes, (f) zero balance or swept accounts, (g) de minimis deposit accounts to the extent the aggregate daily balance in all such accounts does not at any time exceed $100,000, (h) accounts located in jurisdictions outside the United States, (i) accounts containing funds of the types as deposits securing Liens described in clauses (f) and (g) of the definition of “Permitted Liens” or used exclusively to maintain cash collateral subject to a Permitted Lien, provided, that under no circumstances shall the balance at any time in any such Excluded Account described in (g) and (h) (to the extent held by a Loan Party) or the aggregate balance across all such Excluded Accounts described in (g) and (h) (to the extent held by a Loan Party), inclusive, exceed $1,000,000.

“Excluded Assets” means (a) any Real Estate Asset that is not a Material Real Estate Asset and any leasehold interests in real property (it being understood that no action shall be required with respect to creation or perfection of security interests with respect to such leases, including to obtain landlord waivers, estoppels or collateral access letters), (b) motor vehicles and other assets subject to certificates of title to the extent a Lien thereon cannot be perfected by the filing of a UCC financing statement, (c) assets for so long as a pledge thereof or a security interest therein is prohibited by applicable Laws, (d) Excluded Accounts, (e) any lease, license or other agreements, or any property subject to a purchase money security interest, Capital Lease or similar arrangements, in each case in accordance with the Loan Documents, to the extent that a pledge thereof or security interest therein would violate or invalidate such lease, license or agreement, purchase money, Capital Lease or similar arrangement, or create a right of termination in favor of any other party thereto (other than the Loan Parties) after giving effect to the applicable anti-assignment provisions of the UCC and applicable Laws, other than the proceeds and receivables thereof the assignment of which is expressly deemed effective under applicable Laws notwithstanding such prohibition, (f) assets for which the Required Lenders and Borrower have determined in their reasonable judgment and agree in writing that the cost of creating or perfecting such pledges or security interests therein would be excessive in view of the benefits to be obtained by the Lenders therefrom, (g) any intent-to-use trademark application in the United States prior to the filing of a “Statement of Use” or “Amendment to Allege Use” with respect thereto with, and acceptance by, the United States Patent and Trademark Office, to the extent, if any, that, and solely during the period, if any, in which, the grant, attachment, or enforcement of a security interest therein would impair the validity or enforceability of such intent-to-use trademark application under applicable Federal law, (h) proceeds received by the Administrative Agent in respect of a claim under the AON Insurance Policy (which for avoidance of doubt shall not be property of any Loan Party or any Subsidiary thereof), (i) Excluded Capital Stock, (j) the assets set forth on Schedule 9.5 and (k) any property or assets (I) of any Subsidiary of any Loan Party that is a CFC or a Subsidiary of a CFC or CFC Holding Company or (II) for which the creation or perfection of pledges of, or security interests in, could result in adverse tax consequences (other than de minimis tax consequences) or adverse regulatory or accounting consequences to the Borrower or any of its Subsidiaries, each as reasonably determined by the Borrower and the Required Lenders.

 

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“Excluded Capital Stock” means (a) Capital Stock (i) of any captive insurance companies or not-for-profit Subsidiaries, (ii) of any Subsidiary under clause (b)(i) of the definition of “Excluded Subsidiary”, (iii) [reserved], or (iv) of any direct or indirect Subsidiary of Borrower to the extent issued, sold or otherwise disposed in accordance with Section 6.10, (b) solely to the extent the creation or perfection of pledges of, or security interests in, could result in adverse tax consequences (other than de minimis tax consequences) or adverse regulatory or accounting consequences to the Borrower or any of its Subsidiaries, each as reasonably determined by the Borrower and the Required Lenders, equity in excess of 65% of the issued and outstanding voting Capital Stock and 100% of the non-voting Capital Stock of any Subsidiary of any Loan Party that constitutes a CFC or (c) any equity for which the pledge of its Capital Stock is prohibited by applicable Law or, solely in the case of a newly acquired Subsidiary, by Contractual Obligation in existence at the time of acquisition but not entered into in contemplation thereof, or for which governmental (including regulatory) consent, approval, license or authorization would be required unless such consent, approval, license or authorization has been received (it being understood and agreed that there shall be no obligation to seek or obtain such consent, approval, license or authorization), in each case, after giving effect to the applicable anti-assignment provisions of the UCC and other applicable Laws; provided, that any preferred equity owned as of the Initial Closing Date shall not be considered “Excluded Capital Stock”. For the avoidance of doubt, the Capital Stock of IPCo and IPHoldCo will not be Excluded Capital Stock.

“Excluded Subsidiary” means, unless otherwise elected by Borrower, (a) any Subsidiary that is not a wholly-owned Subsidiary of Borrower or a Guarantor and each Joint Venture (unless otherwise elected by the Borrower), (b) any Subsidiary for which guarantees of the Obligations are (i) prohibited by applicable Law, rule or regulation or require consent, approval, license or authorization of a Governmental Authority, unless such consent, approval, license or authorization has been received; provided, that there shall be no obligation to obtain such consent, approval, license or authorization; or (ii) contractually prohibited on the Initial Closing Date or, following the Initial Closing Date, the date of the acquisition thereof, so long as such prohibition exists and so long as such prohibition is not created in contemplation of the Transactions or any such acquisition, (c) any Subsidiary with respect to which, in the reasonable judgment of the Borrower and the Required Lenders, the burden or cost of providing a Guarantee shall be excessive in view of the benefits to be obtained by the Lenders therefrom (giving due consideration to regulatory, accounting and tax consequences), (d) any Subsidiary whose provision of a guarantee could result in adverse tax consequences (other than de minimis tax consequences) as reasonably determined by the Borrower in consultation with the Required Lenders, (e) any direct or indirect Subsidiary of Borrower or a Guarantor that is a Foreign Subsidiary, (f) any Subsidiary that is a direct or indirect Subsidiary of a Subsidiary of Borrower or a Guarantor that is a CFC, in each case that is not a Loan Party, (g) captive insurance Subsidiaries, (h) any Immaterial Subsidiary, (i) any Subsidiary acquired pursuant to a Permitted Acquisition or other Investment permitted under this Agreement and financed with assumed Indebtedness permitted to be incurred pursuant to this Agreement (and not incurred in contemplation of such Permitted Acquisition or Investment), and each Subsidiary acquired in such Permitted Acquisition or other Investment permitted hereunder that guarantees such Indebtedness, in each case to the extent that, and for so long as, the documentation relating to such Indebtedness to which such Subsidiary is a party prohibits such Subsidiary from guaranteeing the Obligations and such prohibition is not created in contemplation of such Permitted Acquisition or other Investment permitted hereunder and (j) Firefly Aerospace Ukraine, LLC. For the avoidance of doubt, IPCo and IPHoldCo will not be Excluded Subsidiaries.

 

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“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be deducted or withheld from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) by the jurisdiction (or any political subdivision thereof) under the laws of which such Recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located or (ii) as the result of any other present or former connection between such Recipient and the jurisdiction imposing such Tax, (b) in the case of a Lender, United States federal withholding Taxes imposed on amounts payable to or for the account of such Lender pursuant to a Law in effect on the date on which such Lender becomes a party hereto or such Lender changes its lending office, except that this clause (b) shall not apply to the extent that the assignment or change in lending office was requested by a Loan Party pursuant to Section 2.15(a) or, pursuant to Section 2.14 amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.14(d) and (d) Taxes imposed under FATCA.

“Existing Lender” means any Lender prior to the receipt of the first funds paid to the Beneficiary under the AON Insurance Policy and its successors and assigns pursuant to Section 10.6(c). For the avoidance of doubt, Existing Lender does not include any Non-Paying Insurer and any assignee pursuant to Section 10.6(j).

“Export Controls” means the export control laws and regulations administered, maintained and enforced by the United States, including, but not limited to, the Export Administration Regulations administered by the Bureau of Industry and Security of the U.S. Department of Commerce and the International Traffic in Arms Regulations administered by the Directorate of Defense Trade Controls of the U.S. Department of State.

“Extended Covered Period” has the meaning specified in Section 5.1(i).

“Extraordinary IP Rights Transaction” means a sale, transfer, assignment or grant of exclusive sublicense of any material IP Rights in whole or in part, with respect to which (a) the majority of such Net Proceeds are fixed in nature and not dependent on the future volume of sales or revenues attributed to the IP Rights so sold, transferred, assigned, or sublicensed and (b) such Net Proceeds shall not be dependent on future performance by such Loan Party or Subsidiary, in each case other than any sale, transfer, assignment or grant of exclusive sublicense of any such IP Rights that (i) is incidental or ancillary to, or is not the primary purpose of, the overall transactions contemplated by the applicable underlying agreement or arrangement and (ii) does not materially impair the aggregate value of the Collateral taken as a whole or result in a Material Adverse Effect.

“Extraordinary Receipts” means any Net Proceeds received by a Loan Party (and not consisting of proceeds described in Section 2.9(a) through (c) hereof) in respect of: (a) foreign, United States, state or local tax refunds (other than VAT, tariff or similar refunds), (b) pension plan reversions, (c) indemnity payments, (d) Net Proceeds of any payment made under an insurance policy or agreement on account of casualty and condemnation, provided that Extraordinary Receipts shall not include proceeds of any claim under the AON Insurance Policy, but shall, subject to the

 

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reinvestment rights in this clause (d), include, without limitation, any other casualty loss proceeds; other than (i) insurance proceeds received in respect of damage to equipment used to effect the repair or replacement of such equipment in the ordinary course of business and (ii) Net Proceeds of any Extraordinary Receipts or payment made under an insurance policy or agreement, in each case, solely to the extent the Borrower or any of its Subsidiaries has, in each case, reinvested such Net Proceeds in assets used in the business of the Borrower or any of its Subsidiaries within 365 days following the date of receipt of such Net Proceeds, as applicable, (e) Net Proceeds of any condemnation or taking by any Governmental Authority and (f) Net Proceeds from an Extraordinary IP Rights Transaction, but in each case excluding any proceeds resulting from an issuance of Capital Stock by any Loan Party or any Subsidiary permitted pursuant to Section 6.9(i) or Section 6.10. Extraordinary Receipts shall not include (i) Cash receipts from proceeds of insurance, condemnation awards or similar payments, or indemnity payments to the extent such funds are received by any Person in respect of any third-party claim against such Person and applied to pay (or reimburse such Person for its prior payment of) such claim plus related costs and expenses, (ii) [reserved], (iii) any purchase price adjustment received in connection with any purchase agreement, or (iv) the Cash proceeds of any grants awarded by a Governmental Authority to any Loan Party related to such Loan Party’s participation in an incentive program ran by such Governmental Authority.

“Fair Market Value” means, as of any applicable time of determination, the price at which a willing seller, under no compulsion to sell, would sell, and a willing buyer, under no compulsion to buy, would buy, the asset or property in question if offered for sale in the open market, with a reasonable time allowed to find such willing buyer.

“Fair Share” has the meaning specified in Section 7.2.

“Fair Share Contribution Amount” has the meaning specified in Section 7.2.

“FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.

“FATCA” means Sections 1471 through 1474 of the Internal Revenue Code, in effect as of the date of this Agreement and any current regulations or official interpretations thereof (or any amended or successor version to the extent substantively comparable and not materially more onerous to comply with), any agreement entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code, and any law, practices, regulation, official interpretation, rule, promulgation or official agreement adopted pursuant to any official government agreement, treaty, convention or intergovernmental agreement with respect to the foregoing.

“FCPA” has the meaning specified in Section 4.29.

“Federal Funds Effective Rate” means for any day, the rate per annum (expressed, as a decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding

 

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Business Day and (b) if no such rate is so published, the Federal Funds Effective Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to U.S. Bank National Association on such day on such transactions as determined by U.S. Bank National Association and provided that U.S. Bank National Association shall have no liability for such determination.

“Fee Letter” means the letter agreement dated as of the date hereof between Borrower and Jefferies, as amended, amended and restated, supplemented or otherwise modified from time to time.

“Financial Officer Certification” means, with respect to the financial statements for which such certification is required, the certification of the chief financial officer or other Authorized Officer of Borrower that such financial statements fairly present, in all material respects, the financial condition of Borrower and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments and the absence of footnotes, as applicable.

“Financial Plan” has the meaning specified in Section 5.1(i).

“First Priority” means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that such Lien is the only Lien to which such Collateral is subject, other than any Permitted Lien.

“Fiscal Quarter” means a fiscal quarter of any Fiscal Year.

“Fiscal Year” means the fiscal year of Borrower and its Subsidiaries ending on December 31 of each calendar year.

“Fixed Rate” means (a) with respect to the Term A Loans, 13.875% and (b) with respect to the Term B Loans, for any day from the Initial Closing Date through and including the date that is the three year anniversary of the Initial Closing Date, a rate per annum equal to 13.875%, and thereafter, 19.135%.

“Flood Hazard Property” means any Real Estate Asset subject to a mortgage in favor of Agents, for the benefit of the Secured Parties, and located in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards.

“Foreign Official” means any officer or employee of a non-U.S. government or any department, agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality, or for or on behalf of any such public international organization.

“Foreign Subsidiary” shall mean any Subsidiary of a Loan Party that does not constitute a Domestic Subsidiary.

“Funding Notice” means a notice substantially in the form of Exhibit A.

 

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“GAAP” means, subject to the limitations on the application thereof set forth in Section 1.2, United States generally accepted accounting principles in effect as of the date of determination thereof.

“Governmental Act” means any act or omission, whether rightful or wrongful, of any Governmental Authority.

“Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government, including any central bank, stock exchange, regulatory body, arbitrator, public sector entity, supra-national entity (including the European Union and the European Central Bank) and any self-regulatory organization.

“Governmental Authorization” means any permit, license, authorization, plan, directive, consent order or consent decree of or from any Governmental Authority.

“Grantor” has the meaning specified in the Pledge and Security Agreement.

“Guaranteed Obligations” has the meaning specified in Section 7.1.

“Guarantor” means each wholly-owned Domestic Subsidiary of Borrower other than an Excluded Subsidiary.

“Guaranty” means (a) the guaranty of each Guarantor set forth in Article VII and (b) each other guaranty, in form and substance reasonably satisfactory to the Required Lenders, made by any other Guarantor for the benefit of the Secured Parties guaranteeing all or part of the Obligations.

“Hazardous Materials” means, regardless of amount or quantity, (a) any material, substance, waste, element, compound or chemical that is defined, listed or otherwise classified as a contaminant, pollutant, toxic pollutant, toxic or hazardous substance, extremely hazardous substance or chemical, hazardous waste, special waste, or solid waste under Environmental Laws or that is reasonably likely to cause harm to or have an adverse effect on, the environment or risk to human health or safety, including, without limitation, any pollutant, contaminant, material, substance, waste, hazardous waste, toxic substance or dangerous good which is defined or identified in any Environmental Law and which is present in the environment in such quantity or state that it contravenes any Environmental Law; (b) petroleum and its refined products; (c) polychlorinated biphenyls; (d) asbestos; (e) per- and polyfluoroalkyl substances; (f) any substance exhibiting a hazardous waste characteristic, including, without limitation, corrosivity, ignitability, toxicity or reactivity as well as any radioactive or explosive materials; (g) any raw materials, building components (including, without limitation, asbestos-containing materials) and manufactured products containing hazardous substances listed or classified as such under Environmental Laws; and (h) any substance or materials that are otherwise regulated under Environmental Law.

 

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“Hazardous Materials Activity” means any past, current, proposed or threatened activity, event or occurrence involving any Hazardous Materials, including the use, manufacture, possession, storage, holding, presence, existence, location, Release, threatened Release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials, and any Remedial Action with respect to any of the foregoing.

“Highest Lawful Rate” means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to any Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum non-usurious interest rate than applicable laws now allow.

“Historical Financial Statements” means as of the Closing Date, the audited consolidated financial statements of Borrower and its Subsidiaries for the Fiscal Year ended December 31, 2021, and the unaudited consolidated financial statements of Borrower and its Subsidiaries for the first three Fiscal Quarters of 2022, consisting of balance sheets and the related consolidated statements of income, stockholders’ equity and cash flows for such Fiscal Year or Fiscal Quarter, as applicable, together with an opinion of a certified public accounting firm that such financial statements for the Fiscal Year ended December 31, 2021, fairly present, in all material respects, the financial condition of Borrower and its consolidated Subsidiaries as at the date indicated and the results of its operations and its cash flows for the period indicated.

“Immaterial Subsidiary” means any Subsidiary that (a) did not, as of the last day of the Fiscal Quarter of the Borrower most recently ended for which financial statements have been (or were required to be) delivered pursuant to Section 5.01(b) or 5.01(c), have assets with a value in excess of 2.50% of the consolidated total assets or EBITDA representing in excess of 2.50% of EBITDA of the Borrower and the Subsidiaries on a consolidated basis as of such date, and (b) taken together with all Immaterial Subsidiaries as of such date, did not have assets with a value in excess of 5.00% of consolidated total assets or EBITDA representing in excess of 5.00% of EBITDA of the Borrower and the Subsidiaries on a consolidated basis as of such date, in each case of clause (a) and (b), determined in accordance with GAAP; provided, that the Borrower may elect in its sole discretion to exclude as an Immaterial Subsidiary any Subsidiary that would otherwise meet the definition thereof.

“Indebtedness” means, as applied to any Person, without duplication: (a) all indebtedness for borrowed money; (b) obligations constituting “principal” with respect to Capital Leases that is properly classified as a liability on a balance sheet in accordance with GAAP; (c) all obligations of such Person evidenced by notes, bonds or similar instruments or upon which interest payments are customarily paid; (d) any obligation owed for all or any part of the deferred purchase price of property or services, including any earn-outs, seller notes or other deferred payment obligations in connection with an acquisition to the extent such earn-outs, seller notes and deferred payment obligations are fixed and non-contingent (excluding (i) any such obligations incurred under ERISA, (ii) trade payables incurred in the ordinary course of business and repayable in accordance with customary trade terms and (iii) any earn-out until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP; (e) all obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person; (f) all indebtedness

 

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described in clauses (a) – (e) above and (g) – (l) below secured by any Lien on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is non-recourse to the credit of that Person, which shall be limited to the lesser of (x) the Fair Market Value of such property or asset and (y) the amount of such indebtedness so secured; (g) the face amount of any letter of credit or letter of guaranty issued, bankers’ acceptances facilities, surety bonds and similar credit transactions issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings; (h) the direct or indirect guaranty, endorsement (otherwise than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of another that would constitute Indebtedness under another clause (other than clause (i)) of this definition; (i) any guaranty of such Person of Indebtedness of another Person under another clause (other than clause (h)) of this definition; (j) [reserved]; (k) the net termination value of all obligations of such Person in respect of any exchange traded or over the counter derivative transaction, including, without limitation, any Interest Rate Agreement, whether entered into for hedging or speculative purposes; and (l) Disqualified Capital Stock. The Indebtedness of any Person shall include the Indebtedness of any partnership or Joint Venture in which such Person is a general partner or joint venturer, unless such Indebtedness is expressly non-recourse to such Person.

For all purposes hereof, the Indebtedness of any Person shall (A) in the case of the Loan Parties, exclude all intercompany Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or extensions of terms) and made in the ordinary course of business and (B) exclude (i) trade accounts and accrued expenses payable in the ordinary course of business, (ii) any earn-out obligation until such obligation is not paid for ten (10) Business Days after becoming due and payable, (iii) accruals for payroll and other liabilities accrued in the ordinary course of business, (iv) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the respective seller provided that reserves established in an equivalent amount, and (v) customary obligations under employment agreements and deferred compensation; provided, further, that Indebtedness of any direct or indirect parent company appearing upon the balance sheet of the Borrower solely by reason of push down accounting under GAAP shall be excluded.

“Indemnified Liabilities” means, collectively, any and all liabilities (including Environmental Liabilities and Costs), obligations, losses, damages (including natural resource damages), penalties, claims (including Environmental Claims), costs (including the costs of any Remedial Action, investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Hazardous Materials Activity), expenses and disbursements of any kind or nature whatsoever (including the reasonable and documented fees and disbursements of counsel to the Agents and a single counsel for all other Indemnitees taken as a whole in connection with any investigative, administrative or judicial proceeding commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing this indemnity), whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that are incurred by any such Indemnitee, in any manner relating to or arising out of any claim, litigation, or other proceeding arising out of (a) this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby (including the

 

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Lenders’ agreement to make Credit Extensions or the use or intended use of the proceeds thereof, or any enforcement of any of the Loan Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty)) or (b) any Environmental Claim or any Hazardous Materials Activity relating to or arising from, directly or indirectly, any past or present activity, operation, land ownership, or practice of Borrower or any of its Subsidiaries.

“Indemnified Taxes” mean (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.

“Indemnitee” has the meaning specified in Section 10.3(a).

“Indemnitee Agent Party” has the meaning specified in Section 9.8.

“Initial Closing Date” has the meaning specified in the recitals hereto.

“Initial Draw” means a request by Borrower for and the funding of one Term Loan advanced by the Lenders on the Initial Closing Date under their respective Term Loan Commitments in an aggregate amount equal to the Initial Draw Amount.

“Initial Draw Amount” means $106,283,856.00.

“Initial Financing Agreement” has the meaning specified in the recitals hereto.

“Initial Funding Account” means the account of the Borrower established at the Bank on or before the Initial Closing Date.

“Initial Term A Loan” has the meaning specified in Section 2.1(a)(i).

“Initial Term B Loan” has the meaning specified in Section 2.1(a)(ii).

“Initial Term A Loan Commitment” means, relative to any Term A Loan Lender, such Lender’s obligation to make Term A Loans on the Initial Closing Date pursuant to Section 2.1(a) of the Initial Financing Agreement. The amount of each Lender’s Initial Term A Loan Commitment, if any, is set forth on Appendix A or in the applicable Lender Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Initial Term A Loan Commitments as of the Initial Closing Date equals the Initial Term A Loan Commitment Amount, which was funded by the Term A Loan Lender on the Initial Closing Date.

“Initial Term B Loan Commitment” means, relative to any Term B Loan Lender, such Lender’s obligation to make Term B Loans on the Initial Closing Date pursuant to Section 2.1(a) of the Initial Financing Agreement. The amount of each Lender’s Initial Term B Loan Commitment, if any, is set forth on Appendix A or in the applicable Lender Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Initial Term B Loan Commitments as of the Initial Closing Date equals the Initial Term B Loan Commitment Amount, which was funded by the Term B Loan Lender on the Initial Closing Date.

 

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“Initial Term A Loan Commitment Amount” means $82,500,000.00, which was funded on the Initial Closing Date. As of the Closing Date, the Initial Term A Loan Commitment Amount is $0.

“Initial Term B Loan Commitment Amount” means $23,783,856.00, which was funded on the Initial Closing Date. As of the Closing Date, the Initial Term B Loan Commitment Amount is $0.

“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of any Debtor Relief Law.

“Insurance Premium Reserve Account” means an account established on or prior to the Initial Closing Date by IPCo with the Collateral Agent as depository, at all times under the sole dominion and control of the Collateral Agent for the benefit of the Lenders and denominated on the books and records of the Collateral Agent as the “Firefly IPCo Insurance Premium Reserve Account.”

“Insurance Premium Reserve Amount” has the meaning specified in Section 2.16(b)(ii).

“Insured Obligations” means, collectively, any and all Obligations with respect to the Term A Loans that are insured pursuant to the AON Insurance Policy.

“Insured Term Loans” means, collectively, any and all Term A Loans.

“Intellectual Property Assignment Agreements” means, collectively those certain Intellectual Property Assignment Agreements dated as of July 17, 2023 pursuant to which each Loan Party transferred its “Intellectual Property” (as defined in the Pledge and Security Agreement) to IPCo, as well as Intellectual Property Assignment Agreements in equivalent form and substance executed by any new or acquired Subsidiaries of any Loan Party and any other new Loan Parties, in each case together with any short form assignments to be filed with any Governmental Authority in respect of such assignments, as described in Section 3.1(r).

“Intercompany License Agreements” means any license or sublicense agreement between IPCo and another Loan Party pursuant to which such Loan Party has made arrangements to exploit certain intellectual property of IPCo, including without limitation any IP Rights, as such agreements may be amended, restated, amended and restated, supplemented or otherwise modified not in contravention of this Agreement.

“Intercompany Subordination Agreement” means that certain Intercompany Subordination Agreement in the form of Exhibit L dated as of the Initial Closing Date, by the Loan Parties and their Subsidiaries in favor of the Agents for the benefit of the Secured Parties in form and substance reasonably satisfactory to the Required Lenders.

 

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“Intercreditor and Subordination Agreement” means an Intercreditor and Subordination Agreement in form and substance reasonably acceptable to the Required Lenders and the Agents entered into by the Agents, the holder or holders of Indebtedness, and the Loan Parties.

“Interest Payment Date” means (i) the last Business Day of each calendar month of each year, commencing on the first such date to occur after the Initial Closing Date and continuing through the Term Loan Maturity Date, (ii) the date upon which the Obligations (other than contingent obligations not due and owing) are paid in full, (iii) the Term Loan Maturity Date, and (iv) following the Term Loan Maturity Date, each Business Day upon demand until the Obligations are paid in full.

“Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement or other similar agreement or arrangement, each of which is (a) for the purpose of hedging the interest rate exposure associated with Borrower’s and its Subsidiaries’ operations and (b) not for speculative purposes.

“Interest Reserve Accounts” means, collectively, the Non-Minority Lender Interest Reserve Account and the Minority Lender Interest Reserve Account.

“Interest Reserve Amount” has the meaning set forth in Section 2.16(b).

“Internal Revenue Code” means the U.S. Internal Revenue Code of 1986, as amended to the date hereof and from time-to-time hereafter, and any successor statute.

“Investment” means, as to any Person, (a) any direct or indirect purchase or other acquisition by such Person of, or of a beneficial interest in, any of the Securities or all or substantially all of the assets of any other Person (or of any division or business line of such other Person), (b) any direct or indirect redemption, retirement, purchase, buyback, tender offer or other acquisition or similar transaction for value, by any such Person from any other Person, of any Capital Stock of such Person, (c) any direct or indirect loan, advance or capital contributions by such Person to any other Person and (d) any direct or indirect guarantee of, provision of surety or credit enhancement in respect of or pledge of collateral to secure any obligations of any other Person. The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write ups, write downs or write offs with respect to such Investment, but shall be reduced by any dividend, distribution, interest payment, return of capital, repayment or other amount received in cash or other assets by such Person in respect of such Investment. Neither intercompany monetary obligations arising between Loan Parties in the ordinary course of business nor intercompany monetary obligations with respect to ordinary course cash management operations between Loan Parties shall constitute an Investment.

“Investors” has the meaning specified in the definition of “Holder” in the Warrant.

“IP Rights” means, collectively or individually, intellectual property rights, including in any or all of the following: patents, patent rights, trademarks, service marks, trade names, copyrights, technology, software, trade secrets know-how, database rights and all other intellectual property or proprietary rights.

 

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“IPCo” means Firefly IP CO, LLC, a Delaware limited liability company.

“IPHoldCo” means Firefly IP Holdings, LLC, a Delaware limited liability company.

“Jefferies” means Jefferies Funding LLC, a Delaware limited liability company.

“Joint Venture” means a joint venture, partnership or other similar arrangement, whether in corporate, partnership or other legal form in which a Loan Party or Subsidiary directly or indirectly owns 50% or less of the Capital Stock issued thereby; provided in no event shall any corporate Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party.

“Laws” means, collectively, all international, foreign, federal, state and local laws (including common law), statutes, treaties, rules, legally enforceable guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities and executive orders, including the legally binding interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, licenses, authorizations and permits of, and agreements with, any Governmental Authority.

“Lender” means a Term A Loan Lender or a Term B Loan Lender, as the context requires, and “Lenders” means all of them.

“Lien” means any lien, mortgage, pledge, collateral assignment, hypothecation, deed of trust, security interest, charge or encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, and any lease in the nature thereof) and any option, trust or other preferential arrangement having the practical effect of any of the foregoing, and in the case of Securities, any purchase option, call or similar right of a third party (in each case, other than warrants with respect to the Securities of Borrower) with respect to such Securities, and in the case of IP Rights, any license with respect to such IP Rights.

“Loan Account” means an account maintained hereunder by Administrative Agent on its books of account and with respect to Borrower, in which they will be charged with all Term Loans made to, and all other Obligations incurred by the Loan Parties in accordance herewith.

“Loan Document” means any of this Agreement, the Notes, if any, the Collateral Documents, the Agent Fee Letter, the Fee Letter, any Guaranty, any Subordination Agreements, any Intercreditor and Subordination Agreements, the Intercompany Subordination Agreement and all other documents, instruments or agreements executed and delivered by a Loan Party for the benefit of any Agent or any Lender in connection herewith.

 

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“Loan Party” means Borrower or any Guarantor.

“Lockbox” has the meaning set forth in Section 5.1.

“Machinery Sale and Leaseback” means any sale and leaseback transaction in connection with one or more of the following pieces of machinery: (a) that certain Automated Fiber Placement Machine having serial number 2N00152, (b) that certain Powermill Robotic having serial number 2N00164, and (c) that certain Giddings & Lewis VTC 2500 vertical turning center having serial number 525-0143-19.

“Margin Stock” has the meaning specified in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time.

“Master Services Agreement” means an agreement between Affiliates of the Borrower or between a Loan Party and any Affiliate pursuant to which one party to the agreement provides operational, managerial, advisory or headquarters services to the other party in consideration of cash compensation at Fair Market Value.

“Material Adverse Effect” means a material adverse effect on and/or material adverse circumstance or condition with respect to (a) the business, operations, results of operations, properties, assets, financial condition or liabilities of the Loan Parties and their Subsidiaries, taken as a whole, (b) the ability of the Loan Parties (taken as a whole) to fully and timely perform their respective payment obligations under any Loan Document to which they are parties, (c) the legality, validity, binding effect, or enforceability against a Loan Party of a Loan Document to which it is a party, (d) a material portion of the Collateral or the validity, perfection or priority of Agents’ Liens on a material portion of the Collateral or (e) the material rights, remedies and benefits available to, or conferred upon, any Agent and any Lender or any other Secured Party under the Loan Documents, taken as a whole.

“Material Contract” means (a) the agreements listed on Schedule 4.14 and any other contract or other arrangement to which any Loan Party or any of its Subsidiaries is a party (other than the Loan Documents) for which breach, non-performance, cancellation or failure to renew would reasonably be expected to have a Material Adverse Effect, and (b) the Development and Supply Framework Agreement dated August 3, 2022, and the Medium Launch Vehicle Development and Commercialization Agreement dated December 30, 2022, in each case, between Northrop Grumman Systems Corporation and the Borrower (collectively, the “Northrop Agreements”).

“Material Contract Estoppel” means an undertaking in form and substance reasonably acceptable to the Borrower and Required Lenders pursuant to which each Person other than a Loan Party that is party a contract set forth on Schedule 4.14A (excluding any agreements, permits or licenses between Borrower and any Subsidiary, on the one hand, and any Governmental Authority, on the other hand) (i) consents to the granting of Liens encumbering the applicable Loan Party’s interest in such Material Contract, (ii) consents to the enforcement of such Lien pursuant to the terms of the Loan Documents, (iii) consents to transfer of the applicable Material Contract to any initial transferee following enforcement of such Lien or a transfer in lieu of such enforcement, and (iv) agrees to continue to perform its obligations under such Material Contract so long as such transferee performs the obligations of the Loan Party thereunder.

 

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“Material Real Estate Asset” means any fee owned Real Estate Asset having a Fair Market Value in excess of $2,500,000 as of the date of the acquisition thereof.

“Material Subsidiary” means a Subsidiary that is not an Immaterial Subsidiary.

“Material Third Party License Agreement” means any Third Party License Agreement that is either a Material Contract or necessary for the operation of the business of each Loan Party and its Subsidiaries, the loss of which would reasonably be expected to result in a Material Adverse Effect.

“Minimum Interest Reserve Amount” means at any time of determination, (a) with respect to the Non-Minority Lender Interest Reserve Account, an amount equal to at least seven and nine-tenths percent (7.90%) of the aggregate balance of Term Loans made by Lenders other than the Minority Lender then outstanding and (b) with respect to the Minority Lender Interest Reserve Account, an amount equal to at least seven and nine-tenths percent (7.90%) of the aggregate balance of Term B Loans made by the Minority Lender then outstanding.

“Minority Lender” means AE Industrial Partners Structured Solutions I, LP, a Delaware limited partnership, in its capacity as a Lender under this Agreement.

“Minority Lender Interest Reserve Account” means an account established in the United States on or prior to the Initial Closing Date by IPCo with the Collateral Agent as depository, at all times under the sole dominion and control of the Collateral Agent for the benefit of the Minority Lender and denominated on the books and records of the Collateral Agent as the “Firefly IPCo Minority Lender Interest Reserve Account”.

“MNPI” has the meaning specified in Section 5.1.

“Moody’s” means Moody’s Investor Services, Inc.

“Moody’s Rating Agency Confirmation” means, for so long as promissory notes issued under the Securitization Trust are outstanding and a Moody’s rating of such promissory notes is in effect, with respect to any specified amendment or waiver of the Loan Documents which would result in a reduction in, or delay of, the principal or interest payments under the promissory notes issued by the Securitization Trust, Moody’s written confirmation (which may take the form of a press release or other written communication) that the occurrence of that amendment or waiver shall not cause Moody’s to downgrade or withdraw its then current rating assigned to such notes.

“Mortgage” means a mortgage, deed of trust or deed to secure debt, in form and substance reasonably satisfactory to the Required Lenders, made by a Loan Party in favor of Collateral Agent for the benefit of the Secured Parties, securing the Obligations and delivered to Collateral Agent.

“Multiemployer Plan” means any “multiemployer plan” as defined in Section 3(37) of ERISA to which any Loan Party or any ERISA Affiliate thereof has within the past six (6) years contributed to or been required to contribute to.

 

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“Narrative Report” means, with respect to Section 5.7(b) for which such narrative report is required, upon reasonable written request by the Required Lenders, an update describing the financial performance of Borrower and its Subsidiaries including (a) customary management’s discussion and analysis of the financial condition and results of operations for the Borrower and its Subsidiaries for the applicable Fiscal Quarter or Fiscal Year with comparison to and variances from corresponding periods of the previous Fiscal Year and Financial Plan, (b) with respect to each ongoing material project for the applicable Fiscal Quarter or Fiscal Year, an update regarding the status of such project completion, and (c) a summary of personnel turnover with respect to any key employees or in excess of historical average turnover for a comparable Fiscal Year period, as applicable.

“Narrative Report Call” has the meaning specified in Section 5.7(b).

“Narrative Report Call Notice” has the meaning specified in Section 5.7(b).

“Net Proceeds” means (a) with respect to any Asset Sale, Bertram Sale and Leaseback or Extraordinary Receipts, an amount equal to: (i) Cash payments received by a Loan Party or any of its Subsidiaries from such Asset Sale, Bertram Sale and Leaseback or in connection with any such Extraordinary Receipts, minus (ii) any bona fide direct costs and expenses incurred in connection with such Asset Sale, Bertram Sale and Leaseback or Extraordinary Receipt to the extent paid or payable, including (A) legal, accounting and investment banking fees, payments made in order to obtain a necessary consent or required by applicable Law, and brokerage and sales commissions, (B) income or gains taxes payable (or reasonably estimated by the Borrower to become payable) by the seller as a result of any gain recognized in connection with such Asset Sale, Bertram Sale and Leaseback or Extraordinary Receipt during the tax period in which the sale occurs (including tax distributions made pursuant to Section 6.5(d)(ii) or (iii) in connection with such Asset Sale, Bertram Sale and Leaseback or Extraordinary Receipt), (C) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Term Loans) that is secured by a Lien on the stock or assets in question and that is required to be repaid under the terms thereof as a result of such Asset Sale or Extraordinary Receipt, (D) a reasonable reserve for any indemnification payments (fixed or contingent) attributable to seller’s indemnities and representations and warranties to purchaser in respect of such Asset Sale, Bertram Sale and Leaseback or Extraordinary Receipt undertaken by a Loan Party or any of its Subsidiaries in connection with such Asset Sale, Bertram Sale and Leaseback or Extraordinary Receipt; provided that upon release of any such reserve, the amount released shall be considered Net Proceeds, (E) any funded escrow established pursuant to the documents evidencing any such sale or disposition to secure any indemnification obligations or adjustments to the purchase price associated with any such sale or disposition (provided that to the extent that any amounts are released from such escrow to the Borrower or a Subsidiary, such amounts net of any related expenses shall constitute Net Proceeds) and (F) in the case of any such event involving an asset of a non-wholly-owned Subsidiary, the pro rata portion of the Net Proceeds (calculated without regard to this clause (F)) distributed to holders of a minority interest in such non-wholly-owned Subsidiary; (b) [reserved], (c) to the extent not an Asset Sale or Extraordinary Receipt, net income determined on a transaction by transaction basis in accordance with GAAP with respect to proceeds of any Extraordinary IP Rights Transaction (minus a reasonable reserve for any contractually obligated claw-back payments that may become due and payable by such Loan Party; provided that upon release of any such reserve, the amount released shall be considered Net Proceeds); and (d) with respect to any insurance, condemnation, taking or other

 

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casualty proceeds, an amount equal to: (i) any Cash payments or proceeds received by a Loan Party or any of its Subsidiaries (A) under any casualty, business interruption or “key man” insurance policies in respect of any covered loss thereunder, or (B) as a result of the condemnation or taking of any assets of a Loan Party or any of its Subsidiaries by any Person pursuant to the power of eminent domain, condemnation or otherwise, or pursuant to a sale of any such assets to a purchaser with such power under threat of such a taking, minus (ii) (A) any actual and costs and expenses incurred by a Loan Party or any of its Subsidiaries in connection with the adjustment or settlement of any claims of such Loan Party or any of its Subsidiaries in respect thereof, (B) any costs and expenses incurred in connection with any condemnation or taking of such assets as referred to in clause (b)(i)(B) above to the extent paid or payable to non-Affiliates, including income taxes payable as a result of any gain recognized in connection therewith, (C) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Term Loans) that is secured by a Permitted Lien having a permitted priority that is senior to the Lien securing the Obligations on the assets in question and that is required to be repaid under the terms thereof as a result of such casualty or condemnation, (D) amounts required to be turned over to landlords (or their mortgagees) in respect of a casualty or condemnation of such leased property pursuant to the terms of any lease to which the Borrower or any of its Subsidiaries is party, (E) Taxes paid or reasonably estimated to be payable (including Taxes that would be payable in connection with the repatriation of any such proceeds, whether or not such repatriation actually occurs) and tax distributions with regard to taxes made pursuant to Section 6.5(d)(iii) in connection with such event and (F) in the case of any such event involving an asset of a non-wholly-owned Subsidiary, the pro rata portion of the Net Proceeds distributed to holders of a minority interest in such non-wholly-owned Subsidiary.

“Non-Minority Lender Interest Reserve Account” means an account established in the United States on or prior to the Initial Closing Date by IPCo with the Collateral Agent as depository, at all times under the sole dominion and control of the Collateral Agent for the benefit of the Lenders (other than the Minority Lender) and denominated on the books and records of the Collateral Agent as the “Firefly IPCo Non-Minority Lender Interest Reserve Account”.

“Non-Paying Insurer” means any insurer under the AON Insurance Policy that has not paid to the Administrative Agent its full ratable share of a claim made by the Administrative Agent under the AON Insurance Policy.

“Non-US Lender” has the meaning specified in Section 2.14(d)(i).

“Note” means a promissory note evidencing the Term Loans which shall be in the form of Exhibit I, attached hereto.

“Obligations” means all obligations of every nature of each Loan Party from time to time owed to the Agents (including former Agents), the Lenders or any of them, under any Loan Document, whether for principal (including Protective Advances made to pay the premiums under the AON Insurance Policy), interest (including paid in kind interest and interest which, but for the filing of a petition in bankruptcy with respect to such Loan Party, would have accrued on any Obligation, whether or not a claim is allowed against such Loan Party for such interest in the related bankruptcy proceeding), fees, unpaid deposits, the Specified Premium, Erroneous Payment Subrogation Rights, expenses, indemnification or otherwise and whether primary, secondary, direct, indirect, contingent, fixed or otherwise (including obligations of performance).

 

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“OFAC” means the Department of the Treasury’s Office of Foreign Assets Control.

“Organizational Documents” means (a) with respect to any corporation, its certificate or articles of incorporation or organization, as amended, and its by-laws, as amended, (b) with respect to any limited partnership, its certificate of limited partnership, as amended, and its partnership agreement, as amended, (c) with respect to any general partnership, its partnership agreement, as amended, and (d) with respect to any limited liability company, its articles of organization, as amended, and its operating agreement, as amended. In the event any term or condition of this Agreement or any other Loan Document requires any Organizational Document to be certified by a secretary of state or similar governmental official, the reference to any such “Organizational Document” shall only be to a document of a type customarily certified by such governmental official.

“Other Connection Taxes” means, with respect to any Recipient, 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” has the meaning specified in Section 2.14(b).

“Participant Register” has the meaning specified in Section 10.6(h)(ii).

“PATRIOT Act” has the meaning specified in Section 4.29.

“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA and which has within the past six (6) years been sponsored, maintained, contributed to or required to be contributed to by any Loan Party or any ERISA Affiliate thereof.

“Perfection Certificate” means a certificate in form and substance satisfactory to the Required Lenders that provides information with respect to the assets of each Loan Party.

“Permitted Acquisition” means any acquisition listed on Schedule 6.9 and any acquisition by any Loan Party or any of their Subsidiaries, whether by purchase, merger or otherwise, of all or substantially all of the assets or all of the Capital Stock of, or a business line or unit or a division of, any such Person that meets each of the requirements set forth below:

(a) immediately prior to, and immediately after giving effect thereto, no Event of Default shall have occurred and be continuing or would result therefrom or be reasonably expected to result therefrom;

 

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(b) all transactions in connection therewith shall be consummated in accordance with all applicable laws, as would not reasonably be expected to result in a Material Adverse Effect;

(c) in the case of the acquisition of Capital Stock, all of the Capital Stock acquired or otherwise issued to a Loan Party by such Person or any newly formed Guarantor in connection with such acquisition shall be owned 100% by a Loan Party (other than (i) joint ventures, (ii) directors’ shares or (iii) other nominal shares required to be held by another Person pursuant to applicable law of the jurisdiction of formation), and Borrower shall have taken, or caused to be taken, if such Person becomes a Subsidiary of Borrower, each of the actions set forth in Section 5.10 and/or Section 5.11, as applicable;

(d) Borrower shall have delivered to Agents and the Lenders at least ten (10) Business Days prior to such proposed acquisition, upon the written request of the Required Lenders, in the case of an acquisition for which the purchase price is greater than $25,000,000, a quality of earnings report with respect to the Persons to be acquired and the acquired assets, (iii) upon the request of the Required Lenders and to the extent the same were issued and available, the most recently available two (2) years of audited financial statements of the Persons to be acquired, (iv) to the extent available to Borrower or any of its Subsidiaries, upon the request of the Required Lenders, financial statements of the Persons to be acquired for the period from the beginning of the then current fiscal year to the end of the most recently completed month, setting forth in comparative form the corresponding figures for the corresponding periods of the previous fiscal year, and (v) a certification from the Borrower that the Loan Parties will be in pro forma compliance with Section 6.21 after giving effect to such acquisition;

(e) upon the request of the Required Lenders, Borrower shall have delivered to Agents and the Lenders at least ten (10) Business Days prior to such proposed acquisition, an executed term sheet and/or commitment letter (setting forth in reasonable detail the terms and conditions of such acquisition), if any. Borrower shall, at the request of the Required Lenders, deliver such other information and documents that such Required Lenders may reasonably request, including, without limitation, executed counterparts of the respective material agreements, instruments or other customary and reasonably available documents pursuant to which such acquisition is to be consummated (including, without limitation, any related management, non-compete, employment, option or other material agreements), any schedules to such agreements, instruments or other documents and all other material ancillary agreements, instruments or other documents to be executed or delivered in connection therewith;

(f) any Person or assets or division as acquired in accordance herewith shall comply with Section 6.13; and

(g) the acquisition shall have been approved by the Board of Directors or other governing body or controlling Person of the Person acquired or the Person from whom such assets or division is acquired.

 

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“Permitted Holders” means each of (i) the Sponsor and (ii) any “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the Closing Date) including any of the foregoing Persons; provided, that (x) any combination of such foregoing Persons referred to in clause (i) shall hold a majority of the aggregate voting interests in the Capital Stock of the Borrower, as the case may be, held by all members of such combination and (y) as of the Closing Date, no other Person (together with its Affiliates) shall have more Capital Stock representing the ordinary voting power than the Sponsor (together with its Affiliates).

“Permitted Indebtedness” means:

(a) the Obligations;

(b) Indebtedness of Borrower or any Subsidiary owing to the Borrower or any Subsidiary, provided (x) if such Indebtedness shall be evidenced by promissory notes then all such notes shall be Collateral subject to a First Priority Lien pursuant to the Pledge and Security Agreement, (y) all such Indebtedness owed by a Loan Party shall be subordinated in right of payment to the payment in full of the Obligations pursuant to the terms of the Intercompany Subordination Agreement, and (z) in the case of Indebtedness of a Subsidiary that is not a Loan Party owing to a Loan Party such Indebtedness is (i) a Permitted Investment or (ii) before the date the Bertram Sale and Leaseback is consummated, in an amount not to exceed $5,000,000 in the aggregate at any time; provided, further that, to the extent not otherwise permitted hereby any Indebtedness incurred pursuant to this clause (ii) shall be repaid on or prior to the consummation of the Bertram Sale and Leaseback;

(c) Indebtedness arising from (i) agreements providing for indemnification or obligations in respect of purchase price (including earn-outs) or other similar adjustments, or (ii) guaranties or letters of credit, surety bonds or performance bonds securing the performance pursuant to such agreements, in each case, in the ordinary course of business;

(d) Indebtedness which may be deemed to exist pursuant to any guaranties, performance, bid, surety, statutory, appeal or similar obligations incurred in the ordinary course of business and Indebtedness constituting guaranties in the ordinary course of business of the obligations of suppliers, customers, franchisees and licensees of the Loan Parties;

(e) Indebtedness incurred in the ordinary course of business in respect of and including credit card, debit card or purchasing cards, netting services, overdraft protections and otherwise in connection with deposit accounts;

(f) Indebtedness described in Schedule 6.1, but not any extensions, renewals or replacements of such Indebtedness except renewals, extensions and replacements are in a principal amount that does not exceed the principal amount so refinanced or replaced plus, accrued interest, any customary premium or other payment required to be paid in connection with such refinancing, the amount of customary fees and expenses of the Borrower or any of its Subsidiaries incurred in connection with such refinancing, any unused commitments and any unutilized commitments thereunder;

(g) Indebtedness incurred in the ordinary course of business with respect to (i) Capital Leases, (ii) construction financing and (iii) purchase money Indebtedness (including any Indebtedness acquired in connection with a Permitted Acquisition or acquisition of equipment); provided that any such Indebtedness shall, as applicable, be secured only by (w) the asset subject to such Capital Lease or by the asset acquired in connection with the incurrence, renewal, extension, restructuring or refinancing of such Indebtedness, in each case together with proceeds, accessions or products of any

 

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disposition thereof and any related security deposits, (x) deposit accounts and reserve accounts solely related to such construction financing, (y) the assets subject to any cross-collateralization of obligations owed to the holder of such Indebtedness with respect to any Capital Leases, construction financing or purchase money Indebtedness and (z) the assets being constructed pursuant to such construction financing; provided that, with respect to any transaction that includes cross-collateralization of obligations owed to any holder of such Indebtedness, any such cross-collateralization shall only include assets that were encumbered by a Capital Lease, construction financing or purchase money indebtedness by such holder as of the Initial Closing Date or assets that were acquired pursuant to a Capital Lease, construction financing or purchase money Indebtedness by such holder after the Initial Closing Date;

(h) Indebtedness of a Person that becomes a Subsidiary hereunder after the Closing Date in connection with a Permitted Acquisition or other permitted Investment, provided that such Indebtedness existed at the time such Person became a Guarantor and was not created or incurred in anticipation or contemplation of such Permitted Acquisition;

(i) customary cash management products, Interest Rate Agreements, foreign currency hedges and direct hedges for the purchase of raw materials or commodities that the Loan Parties project to consume during the ordinary course of business within the subsequent 6 month period, in each case that are entered into by the Loan Parties and their Subsidiaries in the ordinary course of business and not for speculative or investment purposes;

(j) Indebtedness consisting of the financing of insurance premiums arising in the ordinary course of business (including, for the avoidance of doubt, related to insurance required to be maintained pursuant to this Agreement);

(k) guaranties with respect to Indebtedness to the extent the Person obligated with respect to such guaranty would not be prohibited from incurring the primary Indebtedness that is guaranteed thereby;

(l) Indebtedness not otherwise permitted hereunder in an aggregate amount not to exceed (i) before the date the Bertram Sale and Leaseback is consummated, $5,000,000 at any time or (ii) on or after the date the Bertram Sale and Leaseback is consummated, $2,000,000 at any time; provided, that, except to the extent otherwise permitted hereby any Indebtedness incurred pursuant to clause (l)(i) in an aggregate amount that exceeds $2,000,000 shall be repaid on or prior to the consummation of the Bertram Sale and Leaseback;

(m) Indebtedness or other obligations of any type of the Loan Parties at any time arising pursuant to and/or in respect of the Warrant;

(n) guarantee obligations of Borrower or its Subsidiaries in respect of the Indebtedness of the Borrower or its Subsidiaries otherwise permitted to be incurred hereunder; provided that if the Indebtedness being guaranteed is subordinated to the Obligations, such guarantee obligations shall be subordinated to the Guaranty of the Obligations on terms at least as favorable to the Lenders as those contained in the subordination of such Indebtedness;

 

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(o) Indebtedness representing deferred compensation to employees of the Loan Parties incurred in the ordinary course of business;

(p) Indebtedness consisting of obligations under deferred compensation or other similar arrangements incurred in connection with Permitted Investments;

(q) Indebtedness incurred in respect of letters of credit, bank guarantees, bankers’ acceptances, warehouse receipts or similar instruments issued or created in the ordinary course of business, including in respect of workers compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement-type obligations regarding workers compensation claims;

(r) Indebtedness of a Person acquired pursuant to a Permitted Acquisition; provided that such Indebtedness was not undertaken by such Person in connection with, or in contemplation of, such Permitted Acquisition and provided that such Indebtedness shall not be for borrowed money;

(s) Indebtedness arising under letters of credit issued for the account of Borrower or any of its Subsidiaries; provided that the aggregate amount of such Indebtedness in respect of all such letters of credit does not exceed $2,500,000 at any time outstanding;

(t) Subordinated Indebtedness (including, for the avoidance of doubt, any Convertible Notes) in an aggregate amount not to exceed $25,000,000 at any time outstanding;

(u) subject to the consent of the Required Lenders and insurers holding at least 50.1% of the aggregate risk under the AON Insurance Policy on the terms and conditions set forth in clause (a) of Section IV of the AON Insurance Policy as in effect on the Closing Date without giving effect to any subsequent amendment or modification, Indebtedness secured by Liens on the Collateral on a pari passu basis in an aggregate amount not to exceed $117,166,666.67 at any time outstanding; and

(v) Indebtedness of Foreign Subsidiaries not to exceed $25,000,000 in the aggregate at any time outstanding.

“Permitted Investments” means:

(a) Investments in Cash and Investments in assets that were Cash Equivalents when such Investment was made;

(b) Investments by Borrower or any Subsidiaries in Borrower or any Subsidiary thereof (other than Firefly Aerospace Ukraine, LLC); provided that (i) Investments in IPCo by any Loan Party in the form of Indebtedness shall not be permitted and (ii) in the case of Investments by a Loan Party in a Subsidiary that is not a Loan Party such Investment shall not exceed (x) before the date the Bertram Sale and Leaseback is consummated, $5,000,000 in the aggregate at any time, or (y) on or after the date the Bertram Sale and Leaseback is consummated, $2,000,000 in the aggregate at any time; provided, further that, unless otherwise permitted hereunder the Investments made pursuant to this clause (ii) in an aggregate amount shall be reduced to $2,000,000 or less on or prior to the consummation of the Bertram Sale and Leaseback;

 

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(c) Investments constituting (i) Securities received in satisfaction or partial satisfaction thereof from financially troubled account debtors, (ii) deposits, prepayments and other credits to suppliers made in the ordinary course of business and (iii) endorsements for collection or deposit and customary trade arrangements with customers in the ordinary course of business;

(d) intercompany loans to the extent permitted under clause (b) of the definition of “Permitted Indebtedness” and accounts receivable;

(e) loans and advances to employees of the Borrower and any other Subsidiary (i) for reasonable and customary business-related travel, entertainment, relocation and analogous ordinary business purposes in an aggregate principal amount for all such loans outstanding not to exceed $250,000, (ii) constituting notes in an aggregate principal amount for all such loans outstanding accepted as consideration in connection with the sale of restricted stock or as exercise price for options and (iii) for purposes not described in the foregoing clauses (i) or (ii) in an aggregate principal amount for all such loans outstanding not to exceed $1,000,000;

(f) Permitted Acquisitions permitted pursuant to Section 6.9;

(g) Investments described in Schedule 6.7 and any modification, replacement, renewal, reinvestment or extension of any such Investments; provided that the amount of any such Investment is not increased from the amount of such Investment on the Closing Date except pursuant to the terms of such Investment as of the Closing Date or as otherwise would constitute a Permitted Investment (plus any (x) unused commitments, accrued interest, fees and expenses and premiums incurred in connection therewith and (y) amounts permitted to otherwise be incurred under this Section 6.7);

(h) asset purchases (including purchases of inventory, supplies and materials) in the ordinary course of business and the entry into Qualified Licenses of intellectual property pursuant to joint marketing arrangements with other Persons;

(i) Investments consisting of Permitted Indebtedness, fundamental changes, Asset Sales permitted by Section 6.9, Asset Sale Exceptions, or Permitted Liens (other than, in each case, by reference to Permitted Investments);

(j) promissory notes and other non-Cash consideration received in connection with Asset Sales permitted by Section 6.9;

(k) advances of payroll payments to employees in the ordinary course of business in an aggregate principal amount for all such loans outstanding not to exceed $250,000;

(l) Investments to the extent that payment for such Investments is made with Capital Stock (other than Disqualified Capital Stock) or the proceeds thereof or in an amount equal to Net Proceeds from the issuance of Capital Stock (other than Disqualified Capital Stock) or other capital contribution in respect thereof of the Borrower’s direct or indirect parent companies;

 

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(m) Investments made to consummate the Transactions;

(n) any guarantees permitted under the Loan Documents;

(o) other Investments that do not exceed an aggregate amount for all such Investments equal to the sum of (x) $5,000,000 plus (y) $2,000,000 less the amount of any prepayment of Indebtedness made in reliance on clause (x) of the proviso to Section 6.17, at any time outstanding; provided, however, no Investments may be made in Firefly Aerospace Ukraine, LLC pursuant to this clause (o);

(p) Deposit Accounts and investment accounts maintained in the ordinary course of business and in accordance with the terms of the Loan Documents;

(q) Investments in connection with interest rate or foreign currency hedging or swaps, in the ordinary course of business and not for speculative purposes;

(r) Investments consisting of pledges and deposits in the ordinary course of business in connection with real estate leases, supply agreements or other agreements in the ordinary course of business and entered into on Arm’s Length Terms;

(s) Investments held by any Person as of the date such Person is acquired in connection with a Permitted Acquisition; provided, that such Investments were not made, in any case, by such Person in connection with, or in contemplation of, such Permitted Acquisition.

(t) [reserved]; and

(u) Investments made in Excluded Subsidiaries and Joint Ventures in an amount not to exceed $5,000,000 in the aggregate per Fiscal Year (or, following the receipt by Borrower of proceeds of the issuance of Capital Stock or unsecured Subordinated Indebtedness after the Closing Date of not less than $25,000,000, in an amount not to exceed $10,000,000 in the aggregate per Fiscal Year); provided, that, in each case, the Loan Parties shall have a minimum of $25,000,000 in unrestricted Cash or Cash Equivalents immediately after giving effect to such Investment; provided, however, no Investments may be made in Firefly Aerospace Ukraine, LLC pursuant to this clause (u).

“Permitted Liens” means:

(a) Liens in favor of either Agent for the benefit of Secured Parties granted pursuant to any Loan Document;

(b) Liens for Taxes, assessments or governmental charges not required to be paid pursuant to Section 5.3;

(c) Liens of landlords, banks (and rights of set off), of carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens imposed by law (other than any such Lien imposed pursuant to Section 401(a)(29) or 430(k) of the Internal Revenue Code or by ERISA), in each case incurred in the ordinary course of business (i) which secure amounts not overdue for a period of more than 30 days or if more than 30 days overdue, are unfiled (or, if filed, have been discharged or stayed) and no other action has been taken to enforce such Lien, or (ii) which are being contested in good faith by appropriate proceedings promptly instituted and diligently conduced and reserves in accordance have GAAP have been made;

 

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(d) pledges, deposits or Liens incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money or other Indebtedness), so long as no foreclosure, sale or similar proceedings have been commenced with respect to any material portion of the Collateral on account thereof;

(e) all items of record, survey exceptions, easements, rights of way, restrictions, encroachments, and other minor defects or irregularities in title, in each case which do not and will not interfere in any material respect with the ordinary conduct of the business of Borrower or any of its Subsidiaries;

(f) any interest or title of a lessor or sublessor under any lease permitted hereunder and any deposit securing obligations relating to any lease permitted hereunder;

(g) Liens solely on any Cash earnest money deposits made by Borrower or any of its Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder;

(h) purported Liens evidenced by the filing of precautionary UCC financing statements relating solely to operating leases of personal property entered into in the ordinary course of business;

(i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business;

(j) any zoning, municipal ordinances or similar law or right reserved to or vested in any governmental office or agency to control or regulate the use of any real property;

(k) to the extent otherwise permitted pursuant to this Agreement, licenses or sublicenses of patents, trademarks, or other IP Rights granted by Borrower or any of its Subsidiaries, subject, to the extent applicable in each case, to the mandatory prepayment requirement set forth in Section 2.9; provided that, for the avoidance of doubt, any Qualified License or Asset Sale Exceptions shall be deemed Permitted Liens;

(l) Liens described in Schedule 6.2 that secure obligations described in Schedule 6.1, and renewals, extensions and replacements thereof so long as (i) the principal amount of obligations secured thereby does not increase (other than by an amount equal to unused commitments, accrued fees, interest premium and expenses) and (ii) the scheduled maturity date on any existing obligation on Schedule 6.2 is not shortened.

 

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(m) Liens securing purchase money Indebtedness, construction financing or Capital Leases permitted pursuant to clause (g) of the definition of “Permitted Indebtedness” (including any Indebtedness originally incurred by the target acquired in connection with a Permitted Acquisition or acquisition of equipment); provided any such Lien shall encumber only, as applicable, (i) the asset subject to such purchase money Indebtedness, construction financing or Capital Lease or the asset acquired with the proceeds, accessions, or products of such Indebtedness together with the proceeds of any disposition thereof and security deposits, (ii) deposit accounts and reserve accounts solely related to such construction financing, (iii) the assets subject to any cross-collateralization of obligations owed to the holder of such Liens with respect to any Capital Leases, construction financing or purchase money Indebtedness, and (iv) the assets being constructed pursuant to such construction financing; provided further that, with respect to any transaction that includes cross-collateralization of obligations owed to any holder of such Liens, any such cross-collateralization shall only include assets that were encumbered by a Capital Lease, construction financing or purchase money indebtedness by such holder as of the Initial Closing Date or assets that were acquired pursuant to a Capital Lease, construction financing or purchase money Indebtedness by such holder after the Initial Closing Date.

(n) Liens securing judgments (and pledges or Cash deposits made in lieu of, or to secure the performance of appeal or other surety bonds relating to such judgments) not constituting an Event of Default under Section 8.1(h);

(o) bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to Cash and Cash Equivalents on deposit in one or more accounts maintained by Borrower or a Subsidiary, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements;

(p) Liens on insurance policies and the proceeds thereof (excluding any benefits or any rights to receive payment under any insurance policies) and on unearned premiums incurred in connection with the financing in the ordinary course of business of insurance premiums, provided that such Liens shall be limited only to the unused portion of the premiums payable under such insurance policies and the proceeds of such insurance premiums;

(q) Liens on deposit accounts or securities accounts in connection with overdraft protection and netting services;

(r) Liens on assets of any Foreign Subsidiary securing Indebtedness under clause (v) of Permitted Indebtedness not to exceed $12,500,000 in the aggregate at any time outstanding;

(s) Liens existing on property at the time of its acquisition or existing on the property of any Person at the time such Person becomes a Subsidiary of a Loan Party, in each case after the date hereof; provided that (i) such Lien was not created in contemplation of such acquisition or such Person becoming a Subsidiary, (ii) such Lien does not extend to or cover any other assets or property (other than the proceeds or products thereof and other than after-acquired property subjected to a Lien securing Indebtedness and other obligations incurred prior to such time and which Indebtedness

 

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and other obligations are permitted hereunder that require, pursuant to their terms at such time, a pledge of after-acquired property; it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition) and (iii) any Indebtedness secured thereby constitutes Permitted Indebtedness;

(t) Liens on cash collateral securing reimbursement obligations with respect to letters of credit in an amount up to 105% of such letters of credit permitted under clause (s) of “Permitted Indebtedness”;

(u) Liens on cash collateral supporting Indebtedness permitted to be incurred pursuant to clauses (e) and (i) (provided that in the case of clause (i), such Liens shall attach only to assets acquired in the associated Permitted Acquisition) of the defined term “Permitted Indebtedness”;

(v) Any interest or title of a lessor, sublessor, licensor or sublicensor under any lease or license entered into in accordance with this Agreement;

(w) Undetermined inchoate Liens arising or potentially arising under statutory provisions which have not at the time been filed or registered in accordance with applicable law or of which written notice has not been duly given in accordance with applicable law or which, although filed or registered, relate to obligations not due or delinquent;

(x) Liens, if any, arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods entered into by the Loan Parties in the ordinary course of business;

(y) Liens on the property of a Person existing at the time such Person is acquired in connection with a Permitted Acquisition or other permitted Investment; provided, that (i) such Liens were not created in contemplation of such Permitted Acquisition or Investment, and (ii), except as otherwise permitted herein, such Liens do not extend to any assets other than those of such Person and provided further that such Liens do not secure Indebtedness for borrowed money;

(z) Liens securing Subordinated Indebtedness permitted pursuant to clause (t) of the definition of “Permitted Indebtedness” subject to an intercreditor agreement reasonably acceptable to Required Lenders; or

(aa) Liens not otherwise permitted hereunder in an aggregate amount not to exceed (i) before the date the Bertram Sale and Leaseback is consummated, $5,000,000 or (ii) on or after the date the Bertram Sale and Leaseback is consummated, $2,000,000 so long as any such Liens on any Collateral securing Indebtedness for borrowed money and any guaranty thereof are subject to an intercreditor agreement on the terms and conditions set forth on Exhibit N; provided, that, except to the extent otherwise permitted hereby, any Liens incurred pursuant to clause (i) securing obligations in excess of $2,000,000 shall be released on or prior to the consummation of the Bertram Sale and Leaseback.

 

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“Person” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and Governmental Authorities.

“Platform” has the meaning specified in Section 5.1.

“Pledge and Security Agreement” means the Pledge and Security Agreement dated as of the Initial Closing Date and executed by Grantors in favor of Agents for the benefit of the Secured Parties, substantially in the form of Exhibit G, as it may be amended, amended and restated, supplemented or otherwise modified from time to time.

“Principal Office” means, for Administrative Agent, such Person’s “Principal Office” as set forth on Schedule 10.1, or such other office as such Person may from time to time designate in writing to Borrower, Administrative Agent and each Lender; provided that for the purpose of making any payment on the Obligations or any other amount due hereunder or any other Loan Document, the Principal Office of Administrative Agent shall be U.S. Bank Trust Company, National Association, 214 North Tryon Street, 27th Floor, Charlotte, NC 28202-1078, CN-NC-H27Q (or such other location as Administrative Agent may from time to time designate in writing to Borrower and each Lender).

“Private Lender” means Lenders other than Public Lenders who have executed a confidentiality agreement with respect to receipt and confidential treatment of MNPI.

“Pro Rata Share” means with respect to any Lender the percentage obtained by dividing (i) the Term Loan Exposure of that Lender, by (ii) the aggregate Term Loan Exposure of all Lenders.

“Protective Advances” has the meaning specified in Section 2.2.

“Public Lender” has the meaning specified in Section 5.1.

“Qualified Cash” means, as of any date of determination, the amount of unrestricted Cash and Cash Equivalents of the Loan Parties that is in Deposit Accounts subject to a Control Agreement.

“Qualified Capital Stock” means Capital Stock that is not Disqualified Capital Stock.

“Qualified License” has the meaning specified in the definition of “Asset Sale”.

“Reaffirmation Agreement” means the Reaffirmation Agreement dated as of the Closing Date and executed by Grantors in favor of Agents for the benefit of the Secured Parties, as it may be amended, amended and restated, supplemented or otherwise modified from time to time.

“Real Estate Asset” means, at any time of determination, any fee-owned Real Property owned by any Loan Party.

 

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“Real Property” means any real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by any Loan Party.

“Recipient” means (a) any Agent or (b) any Lender.

“Register” has the meaning specified in Section 2.5(b).

“Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“Reinvestment Amount” has the meaning specified in Section 2.9(a).

“Related Fund” means, with respect to any Lender that is an investment fund, any other investment fund that invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

“Release” means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater.

“Remedial Action” means all actions taken to (a) correct or address any actual or threatened non-compliance with Environmental Law, (b) clean up, remove, remediate, contain, treat, monitor, assess, evaluate or in any other way address Hazardous Materials in the indoor or outdoor environment, (c) prevent or minimize a Release or threatened Release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (d) perform pre-remedial studies and investigations and post-remedial operation and maintenance activities or (e) perform any other actions authorized or required by Environmental Law or Governmental Authority.

“Required Lenders” means, collectively, (i) Lenders collectively holding more than 50% of the outstanding Term A Loans, in effect at any time of determination, and (ii) Lenders collectively holding more than 50% of the outstanding Term B Loans in effect at any time of determination; provided that this clause (ii) shall be subject to Section 10.5(a)(ii) below.

“Requirements of Law” means, with respect to any Person, collectively, the common law and all federal, state, provincial, local, foreign, multinational or international laws, statutes, codes, treaties, standards, rules and regulations, guidelines, ordinances, orders, judgments, writs, injunctions, decrees (including administrative or judicial precedents or authorities) and the interpretation or administration thereof by, and other determinations, directives, requirements of, any Governmental Authority, in each case that are applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

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“Restricted Junior Payment” means (a) any dividend or other distribution, direct or indirect on account of any shares of any class of Capital Stock of Borrower now or hereafter outstanding, except a dividend payable solely in shares of Capital Stock to the holders of that class, (b) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of Capital Stock of Borrower or any of its Subsidiaries now or hereafter outstanding, and (c) any payment made to retire, or to obtain the surrender of and, other than during the continuance of an Event of Default hereunder, any payments, prepayments or other transfers on account of the principal amount of any Subordinated Indebtedness in a principal amount in excess of the Threshold Amount, in each case whether or not scheduled, and following the occurrence of and during the continuance of any Event of Default hereunder, any payments, prepayments, or other transfers on account of the principal amount of or interest owed under any Subordinated Indebtedness in each case whether or not scheduled. For the avoidance of doubt, neither (i) cash management transfers or other payments between and among Loan Parties nor (ii) forfeitures of equity securities by any officer or employee of Borrower or any of its Subsidiaries to Borrower made to satisfy tax withholding and/or exercise price obligations in respect of Borrower equity awards to such Person shall constitute Restricted Junior Payments.

“S&P” means Standard & Poor’s Ratings Group, a division of S&P Global.

“Sanctioned Country” means, at any time, a country, region or territory which is the subject or target of comprehensive Sanctions, currently, Cuba, Iran, Syria, North Korea, and the Crimea, so-called People’s Republic of Donetsk (DNR) and so-called People’s Republic of Luhansk (LNR) regions of Ukraine.

“Sanctions” means all economic and financial sanctions administered and enforced by any Sanctions Authority.

“Sanctions Authority” means (a) the United Nations Security Council, (b) the United States government, (c) the United Kingdom government, (d) the European Union, including the government of any member state thereof, and (e) any other relevant Governmental Authority having jurisdiction over the Borrower or any of its Subsidiaries.

“Second Draw” means a request by Borrower for and the funding of one Term Loan advanced by the Lenders on the Second Draw Date under their respective Term Loan Commitments in an aggregate amount equal to the Second Draw Amount.

“Second Draw Amount” $15,944,444.44.

“Second Draw Date” means December 6, 2023.

“Second Term A Loan” has the meaning specified in Section 2.1(a)(i).

“Second Term B Loan” has the meaning specified in Section 2.1(a)(ii).

“Second Term A Loan Commitment” means, relative to any Term A Loan Lender, such Lender’s obligation to make Term A Loans on the Second Draw Date pursuant to Section 2.1(a) of the Existing Financing Agreement. The amount of each Lender’s Second Term A Loan Commitment, if any, is set forth on Appendix A or in the applicable Lender Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Second Term A Loan Commitments as of the Second Draw Date equals the Second Term A Loan Commitment Amount, which was funded by the Term A Loan Lender on the Second Draw Date.

 

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“Second Term B Loan Commitment” means, relative to any Term B Loan Lender, such Lender’s obligation to make Term B Loans on the Second Draw Date pursuant to Section 2.1(a) of the Existing Financing Agreement. The amount of each Lender’s Second Term B Loan Commitment, if any, is set forth on Appendix A or in the applicable Lender Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Second Term B Loan Commitments as of the Second Draw Date equals the Second Term B Loan Commitment Amount, which was funded by the Term B Loan Lenders on the Second Draw Date.

“Second Term A Loan Commitment Amount” means $8,500,000.00, which was funded on the Second Draw Date. As of the Closing Date, the Second Term A Loan Commitment Amount is $0.

“Second Term B Loan Commitment Amount” means $7,444,444.44, which was funded on the Second Draw Date. As of the Closing Date, the Second Term B Loan Commitment Amount is $0.

“Secured Parties” has the meaning assigned to that term in the Pledge and Security Agreement.

“Securities” means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing; provided, however, that notes or other evidences of indebtedness relating to a revolving credit facility, any deferred purchase price of assets acquired in the conduct of the business of any Loan Party, trade payables and similar indebtedness shall not be deemed Securities.

“Securities Account” means a securities account (as defined in the UCC).

“Securities Act” means the Securities Act of 1933, as amended from time to time, and any successor statute.

“Securitization Trust” means a Person to which the aggregate amount of the Term Loan is assigned by the originating Lenders for purposes of facilitating a securitization of the aggregate amount of the Term Loan pursuant to a Note Purchase and Security Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time (including any amendment and restatement in connection with the amendment and restatement of this Agreement), the “Note Purchase Agreement”), among the issuer, the purchasers referred to therein and U.S. Bank Trust Company, National Association, in the capacities as the collateral agent, securities intermediary, information agent and note agent under the Note Purchase Agreement;

 

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provided that, except upon the occurrence and during the continuance of an Event of Default, the originating Lenders shall not be permitted to make any such assignment to a Disqualified Institution. For avoidance of doubt, the assignment of the aggregate amount of the Term Loan to a Securitization Trust shall not require consent of any Loan Party or the Administrative Agent.

“Securitization Trustee” means at any time the collateral agent, securities intermediary, information agent and note agent, engaged in respect of notes sold by the Securitization Trust pursuant to the Note Purchase Agreement.

“Specified Equity Contribution” shall have the meaning provided in Section 6.21(b).

“Specified Event” has the meaning specified in the definition of “Specified Premium”.

“Specified Payment” has the meaning set forth in Section 2.8(b)(i).

“Specified Premium” means, with respect to any Term Loan on any date that a prepayment or repayment becomes due and owing under this Agreement, whether or not paid or any Term Loan that is actually repaid, prepaid, terminated, reduced, paid, redeemed, satisfied, released, distributed, discharged, or accelerated on or prior to the date that is 30 months following the Initial Closing Date (each, a “Specified Event”), the present value of the sum of the amounts of each interest payment due on the repaid, prepaid, terminated, reduced, paid, redeemed, satisfied, released, distributed, discharged, or accelerated portion of such Term Loan on each Interest Payment Date during the period extending from the date such prepayment or repayment becomes due and owing under this Agreement, whether or not paid, through and including the date that is 30 months following the Initial Closing Date (excluding accrued but unpaid interest as of the date of prepayment or repayment, which shall be separately paid in accordance with the terms of Section 2.6, as applicable) computed using a discount rate equal to the Treasury Rate (determined as of the Business Day prior to such date of prepayment) plus 0.50%.

“Sponsor” means (i) AE Industrial Partners, LP and (ii) any successors of a Person set forth in clause (i) and any of their Affiliates, and funds or partnerships managed or advised by any of them or any of their respective Affiliates but not including, however, any portfolio company of any of the foregoing.

“Subordinated Indebtedness” means Indebtedness (including unsecured Indebtedness convertible into or exchangeable or exercisable for any Capital Stock, including, without limitation, Convertible Notes) or Disqualified Capital Stock, in either case of any Loan Party (a) that is subordinated in right of payment and lien priority (as applicable) to the Term Loans pursuant to a Subordination Agreement, (b) with respect to payment subordination, contains subordination provisions that are customary in the good faith determination of Borrower for senior subordinated notes or subordinated notes issued under Rule 144A of the Securities Act (or other corporate issuers in private placements or public offerings of securities), or (c) that contains customary subordination provisions that include, without limitation, the following customary terms (or such other terms as shall have been delivered to the Lenders and the Administrative Agent ten (10) Business Days prior to the execution of such proposed subordination agreement

 

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and the Required Lenders shall not have objected in writing to such proposed subordination agreement within such ten (10) Business Days following receipt of such draft): (i) such Indebtedness shall be unsecured, (ii) interest in cash shall not exceed 5% per annum, which must convert to being payable in kind upon the occurrence and during the continuance of an Event of Default hereunder, (iii) the maturity date of all such Indebtedness shall not be earlier than ninety-one (91) days after the scheduled Term Loan Maturity Date, and (iv) such Indebtedness shall be subordinated in right of payment (with an enforcement standstill and extension of payment due dates under such Indebtedness) to the payment in full of the Obligations.

“Subordination Agreement” means a subordination agreement in form and substance reasonably acceptable to the Required Lenders entered into by any officer or director of, consultant to or direct or indirect shareholder of, any Loan Party, on the one hand, and a Loan Party, on the other hand, with respect to Indebtedness owed by such Loan Party to such Person.

“Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, association, Joint Venture or other business entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; provided, in determining the percentage of ownership interests of any Person controlled by another Person, no ownership interest in the nature of a “qualifying share” of the former Person shall be deemed to be outstanding, provided, further, that any Person in which any Loan Party has acquired Capital Stock pursuant to a Permitted Investment in a Joint Venture shall not constitute a Subsidiary for purposes of this Agreement until such time as a Loan Party or other Subsidiary holds more than 50% of the total voting power of shares of stock or other ownership interests at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, at which time, such entity shall become a Subsidiary.

“Tax” means any present or future tax, levy, impost, duty, assessment, charge, fee, deduction or withholding in the nature of a tax, withheld or assessed by a Governmental Authority and all interest, penalties or additions to tax with respect thereto.

“Tax Group” has the meaning specified in Section 6.5(b).

“Term A Loan” means, as the context may require, Initial Term A Loans, Second Term A Loans or Additional Term A Loans, and “Term A Loans” means all of them.

“Term B Loan” means, as the context may require, Initial Term B Loans, Second Term B Loans, or Additional Term B Loans, and “Term B Loans” means all of them.

“Term Loan” or “Loan” means, as the context may require, Initial Term A Loans, Second Term A Loans, Initial Term B Loans, Second Term B Loans, Additional Term A Loans, or Additional Term B Loans, and “Term Loans” means all of them. The initial holder of all of Term Loans shall be the Lenders identified as holding Term Loans on Appendix A hereto.

 

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“Term A Loan Lender” means a Lender holding any of (i) an Initial Term A Loan Commitment as of the Initial Closing Date, (ii) a Second Term A Loan Commitment as of the Second Draw Date, or (iii) an Additional Term A Loan Commitment as of the Closing Date, in each case, as set forth on Appendix A.

“Term B Loan Lender” means a Lender holding any of (i) an Initial Term B Loan Commitment as of the Initial Closing Date, (ii) a Second Term B Loan Commitment as of the Second Draw Date, or (iii) an Additional Term B Loan Commitments as of the Closing Date, in each case, as set forth on Appendix A.

“Term Loan Commitment” means, as the context may require, an Initial Term A Loan Commitment, a Second Term A Loan Commitment, an Initial Term B Loan Commitment, a Second Term B Loan Commitment, an Additional Term A Loan Commitment, or an Additional Term B Loan Commitment, and “Term Loan Commitments” means such commitments of all Lenders in the aggregate.

“Term Loan Exposure” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Term Loans of such Lender plus, until terminated, the unutilized portion of such Lender’s Term Loan Commitment.

“Term Loan Maturity Date” means July 17, 2028, or such earlier date to which the Term Loan Maturity Date may be advanced pursuant to this Agreement or operation of law. For avoidance of doubt the Term Loan Maturity Date shall apply to all Term Loans regardless of when funded.

“Third Party License Agreement” has the meaning set forth in Section 5.14(c).

“Threshold Amount” means $5,000,000.

“Title Policy” means an ALTA mortgagee title insurance policies or unconditional commitments therefor issued by one or more title companies reasonably satisfactory to the Required Lenders with respect to each Material Real Estate Asset, in the amount which is reasonably satisfactory to Required Lenders, but in no event more than the Fair Market Value of such Material Real Estate Asset, together with a title report issued by a title company with respect thereto, dated not more than 30 days prior to the date of the applicable Mortgage and, upon the request of the Required Lenders, copies of all available recorded documents listed as exceptions to title or otherwise referred to therein, each in form and substance reasonably satisfactory to the Required Lenders together with such available endorsements as are reasonably requested by the Required Lenders, and such surveys, affidavits, certificates, instruments of indemnification, including a so-called “gap” indemnification as shall be reasonably required to induce the title insurance company to issue the Title Policy contemplated above;

“Trade Announcements” has the meaning specified in Section 10.17.

“Transaction Costs” means the fees, costs and expenses payable by Borrower or any of its Subsidiaries on or before the date that is thirty (30) days after the Closing Date in connection with the Transactions.

 

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“Transactions” means, collectively, (a) the amendment and restatement of the AON Insurance Policy to be dated as of the Closing Date, (b) the funding of the Additional Term A Loans and the Additional Term B Loans on the Closing Date, (c) the execution and delivery of the Loan Documents to be executed and delivered on the Closing Date, or pursuant to Section 5.15 and the Warrant, and (d) the payment of Transaction Costs.

“Treasury Rate” means a rate per annum (computed on the basis of actual days elapsed over a year of 360 days) equal to the rate determined by the Administrative Agent on the date one (1) Business Day prior to the date of prepayment, to be the yield expressed as a rate listed in The Wall Street Journal for United States Treasury securities having a term of no greater than the period of remaining months until the first anniversary of the Initial Closing Date.

“UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.

“United States” means the United States of America.

“United States Person” has the meaning of such term as defined in Section 7701(a)(30) of the Code.

“Voluntary Prepayment” has the meaning specified in Section 2.8(a).

“Warrant” means collectively, that certain (a) Warrant to Purchase Series J Preferred Stock, dated July 17, 2023, made by Borrower and Jefferies Funding LLC, (b) Warrant to Purchase Series J Preferred Stock, dated July 17, 2023, made by Borrower and AE Industrial Partners Structured Solutions I, LP, and (c) any additional Warrants to Purchase Series J Preferred Stock made by Borrower to Jefferies Funding LLC and AE Industrial Partners Structured Solutions I, LP after the Closing Date and specified as “Warrants” for purposes of this Agreement therein.

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

Section 1.2. Accounting and Other Terms.

(a) Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with GAAP. Financial statements and other information required to be delivered by Borrower to Lenders pursuant to Section 5.1(b) and 5.1(c) shall be prepared in accordance in all material respects with GAAP as in effect at the time of such preparation (and delivered together with the reconciliation statements provided for in Section 5.1(e), if applicable). Subject to the foregoing, calculations in connection with the definitions, covenants and other provisions hereof shall utilize accounting principles and policies in conformity with those used to prepare the Historical Financial Statements. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Loan Parties shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded. Any calculation to be made on a “pro forma basis” shall be calculated assuming that the specified transactions had occurred on the first day of the applicable period.

 

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(b) All terms used in this Agreement which are defined in Article 8 or Article 9 of the UCC as in effect from time to time in the State of New York and which are not otherwise defined herein shall have the same meanings herein as set forth therein, provided that terms used herein which are defined in the UCC as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as Agents may otherwise determine.

(c) Notwithstanding any other provision contained herein, for all purposes of this Agreement and the other Loan Documents, including negative covenants and component definitions, GAAP will be deemed to treat operating leases and Capital Leases in a manner consistent with the treatment under GAAP as in effect prior to the issuance by the Financial Accounting Standards Board on February 24, 2016 of Accounting Standards Update No. 2016-02.

Section 1.3. Interpretation, etc. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. References herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically provided. The use herein of the word “include” or “including,” when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not no limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any right or interest in or to assets and properties of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. Any reference herein or in any other Loan Document to the satisfaction, repayment, or payment in full of the Obligations or Guaranteed Obligations shall mean (a) the payment or repayment in full in immediately available funds of (i) the principal amount of, and interest accrued and unpaid with respect to, all outstanding Term Loans, together with the payment of any premium applicable to the repayment of the Term Loan, including the Specified Premium, (ii) all costs, expenses, or indemnities payable pursuant to Section 10.2 or 10.3 of this Agreement that have accrued and are unpaid (other than contingent reimbursement or indemnification obligations for which no claim has been asserted), (iii) all fees or charges that have accrued hereunder or under any other Loan Document and are unpaid, (b) the receipt by Agents of cash collateral in order to secure any other contingent Obligations for which a claim or demand for payment has been made on or prior to such time or in respect of matters or circumstances known to an Agent or a Lender at such time that are reasonably expected to result in any loss, cost, damage, or expense (including reasonable attorneys’ fees and legal expenses), such cash collateral to be in such amount as Agents reasonably determine is appropriate to secure such contingent Obligations, (c) the payment or repayment in full in immediately available funds of all other outstanding Obligations, and (d) the termination of all of the Commitments of the Lenders. Notwithstanding anything in this Agreement to the contrary, (A) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (B) all requests, rules, guidelines or directives concerning capital

 

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adequacy promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities shall, in each case, be deemed to be enacted, adopted, issued, phased in or effective after the date of this Agreement regardless of the date enacted, adopted, issued, phased in or effective. All references to “in the ordinary course of business” of the Borrower or any Subsidiary thereof means (i) in the ordinary course of business of, or in furtherance of an objective that is in the ordinary course of business of, the Borrower or such Subsidiary, as applicable, (ii) generally consistent with the past or current practice of the Borrower or such Subsidiary, as applicable, or (iii) customary and usual in the industry or industries of the Borrower and its Subsidiaries in the United States. All references to “knowledge” of any Loan Party or a Subsidiary of Borrower means the actual knowledge of a responsible officer. Any Default or Event of Default cured or waived in writing shall be deemed to be cured or waived, as applicable, and not continuing, it being understood that no such cure or waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.

Section 1.4. Time References. Unless otherwise indicated herein, all references to time of day refer to Eastern Standard Time or Eastern Daylight saving time, as in effect in New York City on such day. For purposes of the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”; provided, however, that with respect to a computation of fees or interest payable to any Agent or any Lender, such period shall in any event consist of at least one full day.

Section 1.5. [Reserved].

Section 1.6. Certifications. All certifications to be made hereunder by an officer or representative of a Loan Party shall be made by such person in his or her capacity solely as an officer or a representative of such Loan Party, on such Loan Party’s behalf and not in such Person’s individual capacity.

Section 1.7. Timing of Payment or Performance. Except as otherwise expressly provided herein, when the payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or performance required on a day which is not a Business Day, the date of such payment (other than as described in the definition of “Interest Period”) or performance shall extend to the immediately succeeding Business Day.

Section 1.8. References to Agreements, Laws, Etc. Unless otherwise expressly provided herein, (a) references to Organizational Documents, agreements (including the Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, renewals, restructurings, extensions, supplements and other modifications thereto, but only to the extent that such amendments, refinancings, restatements, renewals, restructurings, extensions, supplements and other modifications are not prohibited by any Loan Document and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law.

 

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ARTICLE II

LOANS

Section 2.1. Term Loans.

(a) Term Loan Commitments.

(i) Each Term A Loan Lender holding a Second Term A Loan Commitment severally agreed to make, and subject to the terms and conditions of the Existing Financing Agreement, made Term A Loans to the Borrower in an aggregate amount that equaled such Lender’s Second Term A Loan Commitment on the Second Draw Date (its “Second Term A Loans”). Each Term A Loan Lender holding an Initial Term A Loan Commitment severally agreed to make, and subject to the terms and conditions of the Initial Financing Agreement, made Term A Loans to the Borrower in an aggregate amount that equaled such Lender’s Initial Term A Loan Commitment on the Initial Closing Date (its “Initial Term A Loans”).

(ii) Each Term B Loan Lender holding a Second Term B Loan Commitment severally agreed to make, and subject to the terms and conditions of the Existing Financing Agreement, made Term B Loans to the Borrower in an aggregate amount that equaled such Lender’s Second Term B Loan Commitment on the Second Draw Date (its “Second Term B Loans”). Each Term B Loan Lender holding an Initial Term B Loan Commitment severally agreed to make, and subject to the terms and conditions of the Initial Financing Agreement, made Term B Loans to the Borrower in an aggregate amount that equaled such Lender’s Initial Term B Loan Commitment on the Initial Closing Date (its “Initial Term B Loans”).

(iii) Subject to the terms and conditions hereof, each Additional Term A Loan Lender severally agrees to make, on the Closing Date, a Term Loan relative to such Lender (its “Additional Term A Loans”) to the Borrower in an aggregate amount that equals such Lender’s Additional Term A Loan Commitment. The parties hereto agree that the Initial Term A Loans, Second Term A Loans, and the Additional Term A Loans shall be Term A Loans hereunder and shall be the same class of Loans. Subject to the terms and conditions hereof, each Additional Term B Loan Lender severally agrees to make, on the Closing Date, an Additional Term B Loan relative to such Lender (its “Additional Term B Loans”) to the Borrower in an aggregate amount that equals such Lender’s Additional Term B Loan Commitment. The parties hereto agree that the Initial Term B Loans, Second Term B Loans, and Additional Term B Loans shall be Term B Loans hereunder and shall be the same class of Loans.

(iv) Subject to Section 2.8 and Section 2.9, all amounts owed hereunder with respect to the Term Loans and the other Obligations shall be paid in full no later than the Term Loan Maturity Date.

(b) Borrowing Mechanics.

(i) The Lenders advanced Term Loans to the Borrower in an amount equal to the Initial Draw Amount on the Initial Closing Date. The Lenders advanced Term Loans to the Borrower in an amount equal to the Second Draw Amount on the Second Draw Date. Borrowers shall draw the Term Loan Commitment in an amount equal to the Draw Amount on the Closing Date and all Term Loan Commitments not utilized by Borrower on or prior to the Closing Date shall expire and be of no force or effect without need for any action by any Lender.

 

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(ii) Upon satisfaction of the requirements of Section 3.1 (other than those requirements that cannot be met until funding hereunder, provided that such requirements shall be satisfied substantially concurrently with the funding hereunder), or waiver of such requirements by the Required Lenders in accordance with Section 10.5, Borrower shall deliver to Administrative Agent a fully executed Funding Notice (requesting the Administrative Agent to wire all funds into the Initial Funding Account) no later than 1:00 p.m. New York City time one (1) Business Day prior to the Closing Date. Such Funding Notice shall confirm that (A) to the extent not otherwise waived by the Required Lenders in accordance with Section 10.5, all conditions to funding set forth in Section 3.1 are satisfied (other than those requirements that cannot be met until funding hereunder, provided that such requirements shall be satisfied substantially concurrently with the funding hereunder) and (B) after giving effect to the requested advance, the Term Loans made on the Closing Date do not exceed the total amount of Term Loan Commitments as of the Closing Date. Promptly upon receipt by Administrative Agent of such Funding Notice, Administrative Agent shall notify each Lender of Borrower’s request to borrow and such Lender’s Pro Rata Share of the same. To the extent not otherwise waived by the Required Lenders in accordance with Section 10.5, Lenders shall notify Administrative Agent and Borrower as to whether Lenders concur that all conditions to funding set forth in Section 3.1 are satisfied. Administrative Agent and Lenders (A) may act without liability upon the basis of written, facsimile or electronic notice believed by Administrative Agent in good faith to be from Borrower (or from any Authorized Officer thereof designated in writing purportedly from Borrower to Administrative Agent), (B) shall be entitled to rely conclusively on any Authorized Officer’s authority to request Term Loans on behalf of Borrower until Administrative Agent receives written notice to the contrary and (C) shall have no duty to verify the authenticity of the signature appearing on any written Funding Notice.

(iii) If Required Lenders have not notified the Administrative Agent and Borrower that any conditions to funding set forth in Sections 3.1 are not satisfied or waived in accordance with Section 10.5, prior to 11:00 a.m. New York City time on the requested funding date, each Lender will make available its Pro Rata Share of Term Loan Commitment to the Administrative Agent prior to 12:00 p.m. New York City time on the requested funding date. All such amounts will be made available in Dollars and in immediately available funds at the Principal Office, and, upon receipt of all requested funds, after verifying Borrower’s wire instructions via telephone, the Administrative Agent will make available to Borrower on the requested funding date at the Principal Office the applicable amount so made available by the Lenders. In the event of pre-funding on behalf of a Lender by Administrative Agent, if such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent shall promptly notify Borrower and Borrower shall within one (1) Business Day after receiving such notice promptly repay such corresponding amount to the Administrative Agent together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the Fixed Rate.

 

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(c) Promise to Pay. Borrower hereby promises to pay to the Administrative Agent or order for the ratable benefit of the Lenders all Term Loans made to Borrower hereunder, all interest due thereon pursuant hereto and all other Obligations owing to an Agent or any Lender, in each case in accordance with the terms of this Agreement. Subject to Section 2.8 and Section 2.9, all amounts owed hereunder, including without limitation, all principal and interest due in respect of the Term Loans, shall be paid by Borrower in full no later than the Term Loan Maturity Date.

Section 2.2. Protective Advances. Subject to the limitations set forth below, and if an Event of Default shall have occurred and be continuing, each Agent is authorized by Borrower and the Lenders, from time to time at the written direction of the Required Lenders in their sole discretion, to make disbursements or advances to Borrower, which the Required Lenders in their sole discretion deem necessary or desirable (a) to preserve or protect the Collateral, or any portion thereof, (b) to enhance the likelihood of, or maximize the amount of, repayment of the Term Loans and other Obligations, or (c) to pay any other amount chargeable to or required to be paid by Borrower pursuant to the terms of this Agreement and the other Loan Documents, including, without limitation, payments of principal, interest, fees and reimbursable expenses (any of such loans are referred to as “Protective Advances”). The interest rate on all Protective Advances shall be at the Fixed Rate. Each Protective Advance shall be secured by the Liens in favor of Agents for the benefit of the Secured Parties in and to the Collateral and shall constitute Obligations hereunder. The Protective Advances shall constitute Obligations hereunder which may be charged to the Loan Account in accordance with Section 2.11(e). Borrower shall pay the unpaid principal amount and all unpaid and accrued interest of each Protective Advance on the earlier of the Term Loan Maturity Date and the date on which demand for payment is made by the applicable Agent. The applicable Agent shall notify each Lender and Borrower in writing of each such Protective Advance, which notice shall include a description of the purpose of such Protective Advance. Without limitation to its obligations pursuant to Section 9.8, each Lender agrees that it shall make available to the applicable Agent, upon such Agent’s demand, in Dollars in immediately available funds, the amount equal to such Lender’s Pro Rata Share of each such Protective Advance. If such funds are not made available to the applicable Agent by such Lender, such Agent shall be entitled to recover such funds on demand from such Lender, together with interest thereon for each day from the date such payment was due until the date such amount is paid to the applicable Agent, at the Federal Funds Effective Rate for three (3) Business Days and thereafter at the Fixed Rate. All Protective Advances shall be funded only by, and shall be repayable only to, Lenders holding Term Loans according to their holdings of Term Loans.

Section 2.3. Pro Rata Shares; Availability of Funds.

(a) Pro Rata Shares. All Term Loans shall be made by Lenders simultaneously and proportionately to their respective Pro Rata Shares, it being understood that no Lender shall be responsible for any default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder nor shall any Term Loan Commitment of any Lender be increased or decreased as a result of a default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder. Protective Advance fundings shall be ratably allocated to each Lender holding Term Loans according to their holdings of Term Loans.

(b) Availability of Funds. Unless Administrative Agent shall have been notified by any Lender prior to the applicable Credit Date that such Lender does not intend to make available to Administrative Agent the amount of such Lender’s Loan requested on such Credit Date, Administrative Agent may assume that such Lender has made such amount available to Administrative Agent on such Credit Date and Administrative Agent may, in its

 

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sole discretion, but shall not be obligated to, make available to Borrower a corresponding amount on such Credit Date. If such corresponding amount is not in fact made available to Administrative Agent by such Lender, Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the customary rate set by Administrative Agent for the correction of errors among banks for three Business Days and thereafter at the Fixed Rate. In the event of pre-funding on behalf of a Lender by Administrative Agent, if such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent shall promptly notify Borrower and Borrower shall within one (1) Business Day after receiving such notice promptly repay such corresponding amount to the Administrative Agent together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the Fixed Rate. Nothing in this Section 2.3(b) shall be deemed to relieve any Lender from its obligation to fulfill its Term Loan Commitments hereunder or to prejudice any rights that Borrower may have against any Lender as a result of any default by such Lender hereunder.

Section 2.4. Use of Proceeds. The proceeds of Term Loan advances made on the Closing Date shall be applied by Borrower (a) to pay Transaction Costs, (b) to fund the Interest Reserve Amount, (c) to pay premiums (including the premium on or around the Closing Date), taxes, fronting fees, underwriting fees and any other amounts due to any Person in respect of the issuance of the AON Insurance Policy, and (d) for working capital and general corporate purposes of Borrower and its Subsidiaries, including capital expenditures, Permitted Acquisitions, research and development and general and administrative expenses. No portion of the proceeds of the Credit Extension shall be used in any manner that would reasonably be expected to cause such Credit Extension or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation thereof or to violate the Exchange Act.

Section 2.5. Evidence of Debt; Register; Lenders’ Books and Records; Notes.

(a) Lenders’ Evidence of Debt. Each Lender shall maintain on its internal records an account or accounts evidencing the Obligations of Borrower to such Lender, including the amounts of the Term Loans made by it and each repayment and prepayment in respect thereof. Any such recordation shall be conclusive and binding on Borrower, absent manifest error; provided that the failure to make any such recordation, or any error in such recordation, shall not affect Borrower’s Obligations in respect of any Term Loans; and provided further, in the event of any inconsistency between the Register and any Lender’s records, the recordations in the Register shall govern.

(b) Register. Administrative Agent shall maintain at its Principal Office a register for the recordation of the names and addresses of Lenders and the principal amount of the Term Loans (and stated interest thereon) of each Lender from time to time (the “Register”). The Register shall be available for inspection by Borrower or Agents at any reasonable time and from time to time upon reasonable prior notice. Administrative Agent shall record in the Register the Term Loans, any assignment or transfer of Term Loans and each repayment or prepayment in respect of the principal amount of the Term Loans, and any such recordation shall be conclusive and binding on Borrower and each Lender, absent manifest error, and Borrower,

 

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Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender for all purposes of this Agreement; provided that failure to make any such recordation, or any error in such recordation, shall not affect Borrower’s Obligations in respect of any Loan. Borrower hereby designates the entity serving as Administrative Agent to serve as Borrower’s non-fiduciary agent solely for purposes of maintaining the Register as provided in this Section 2.5, and Borrower hereby agrees that, to the extent such entity serves in such capacity, the entity serving as Administrative Agent and its officers, directors, employees, agents and affiliates shall constitute “Indemnitees.” The parties intend that the Loans are at all times maintained in “registered form” within the meaning of Section 163(f), 165(j), 871(h)(2) and 881(c)(2), and 4701 of the Code and any related Treasury regulations (or any other relevant or successor provisions of the Code or of such Treasury regulations).

(c) Notes. If so requested by any Lender by written notice to Borrower (with a copy to Administrative Agent) at least two (2) Business Days prior to the Closing Date, or at any time thereafter, Borrower shall execute and deliver to such Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of such Lender pursuant to Section 10.6) on the Closing Date (or, if such notice is delivered after the Closing Date, promptly after Borrower’s receipt of such notice) a Note or Notes.

Section 2.6. Interest.

(a) Except as otherwise set forth herein, each Term Loan shall bear interest at the Fixed Rate on the unpaid principal amount thereof from the date made through the date of repayment (whether by acceleration or otherwise) thereof.

(b) Except as otherwise set forth herein, interest on each Loan shall be payable in Cash and in arrears (i) on and to each Interest Payment Date applicable to that Loan, (ii) upon any prepayment of that Loan, whether voluntary or mandatory, to the extent accrued on the amount being prepaid, (iii) at maturity, including final maturity and (iv) upon the occurrence and during the continuance of an Event of Default, including the failure to repay Obligations on the Term Loan Maturity Date, upon written demand.

(c) Interest payable pursuant to this Section 2.6 shall be computed on the basis of a 360-day year, in each case for the actual number of days elapsed in the period during which it accrues. In computing interest on any Term Loan, the date of the making of such Term Loan shall be included, and the date of payment of such Term Loan shall be excluded; provided, if a Term Loan is repaid on the same day on which it is made, one day’s interest shall be paid on that Loan.

Section 2.7. Default Interest. Upon the occurrence and during the continuance of an Event of Default, the principal amount of all Term Loans outstanding and, to the extent permitted by applicable law, any interest payments on the Term Loans or any fees or other amounts owed hereunder (including any Specified Premium), shall thereafter bear interest (including post petition interest in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws) payable on demand at a rate that is two (2) percentage points per annum in excess of the interest rate otherwise payable hereunder with respect to the applicable Term Loans (or, in the case of any such fees and other amounts, at a rate which is two (2) percentage points per

 

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annum in excess of the Fixed Rate). Payment or acceptance of the increased rates of interest provided for in this Section 2.7 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 any Agent or any Lender.

Section 2.8. Payments Prior to Maturity.

(a) Mechanics.

(i) Subject to clause (b) below, Borrower may prepay Term Loans on any Business Day in whole or in part, in an aggregate minimum amount of $1,000,000 (each such payment, a “Voluntary Prepayment”).

(ii) All such Voluntary Prepayments shall be made, together with the Specified Premium, and all interest then due on the principal amount being so prepaid, upon not less than one (1) Business Day’s irrevocable prior written notice given to Administrative Agent by 1:00 p.m. (New York City time) on the date required (and Administrative Agent will promptly notify each Lender of each such prepayment notice). Upon the giving of any such notice, the principal amount of the Term Loans specified in such notice shall become irrevocably due and payable on the prepayment date specified therein. Any such Voluntary Prepayment shall be applied as specified in Section 2.10. Notwithstanding the foregoing, such written notice may be conditioned on the effectiveness of an agreement or, the occurrence of an event or transaction.

(b) Call Protection.

(i) Except as provided in this Section 2.8(b)(i), each Voluntary Prepayment, each mandatory prepayment that becomes due pursuant to Section 2.9, and each payment that becomes due as a result of acceleration of the Term Loan Maturity Date pursuant to Section 8.1 or otherwise (including, for the avoidance of doubt and without limitation, as a result of Section 8.1(f) or (g) or as a result of applicable law), in each case on or prior to the date that is thirty (30) months following the Initial Closing Date (each, a “Specified Payment”) shall be accompanied by the Specified Premium in respect of such Specified Payment.

(ii) Borrower hereby agrees to pay the Specified Premium to Administrative Agent for the ratable benefit of the Lenders with respect to (x) each Specified Payment of the Term Loan made under Section 2.8 or Section 2.9, (y) any other acceleration of the Term Loan pursuant to Section 8.1 or otherwise (including, for the avoidance of doubt and without limitation, as a result of Section 8.1(f) or (g) or as a result of applicable law)) or (z) the occurrence of any other Specified Event, in each case, with respect to the amount of the Specified Payment of the Term Loan repaid, prepaid, terminated, reduced, paid, redeemed, satisfied, released, distributed, discharged or accelerated (whether or not paid), concurrently with such repayment, prepayment, redemption, satisfaction, discharge or acceleration (whether or not paid).

(iii) Any Specified Premium payable pursuant to this Section 2.8(b) constitutes liquidated damages sustained by each Lender as the result of the early repayment, prepayment, distribution, termination, reduction, payment, redemption, release, satisfaction, discharge or acceleration (whether or not paid) of its Term Loan and Borrower agrees that it is reasonable under the circumstances in view of the impracticability and extreme

 

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difficulty of ascertaining actual damages and by mutual agreement of the parties as to a reasonable calculation of each Lender’s losses as a result thereof. Any prepayment, repayment, payment, satisfaction (whether in whole or in part), distribution, termination, release, reduction or discharge of the Term Loan (including, without limitation, by foreclosure (whether by power of sale or judicial proceeding) or by any other means), irrespective of whether such prepayment, repayment, payment, satisfaction, distribution, release, discharge, termination or reduction occurs following any earlier maturity of the Term Loan, including, without limitation, pursuant to any voluntary or involuntary acceleration of the Term Loan pursuant to Section 8.1 or otherwise (including, for the avoidance of doubt and without limitation, as a result of Section 8.1(f) or (g) or as a result of applicable law), or the commencement of any Insolvency Proceeding or other proceeding pursuant to any Debtor Relief Laws, or pursuant to a plan of reorganization, and including, without limitation, any prepayment, repayment, payment, termination, reduction, release, satisfaction, distribution or discharge of the Term Loan (a) pursuant to this Section 2.8 or Section 2.9, (b) after acceleration thereof, including, without limitation, pursuant to Section 8.1 (including, for the avoidance of doubt and without limitation, as a result of Section 8.1(f) or (g) or as a result of applicable law) or such amount otherwise becoming or being declared immediately due and payable pursuant to the terms hereof and (c) whether before or after any acceleration of the Term Loan pursuant to Section 8.1 (including, for the avoidance of doubt and without limitation, as a result of Section 8.1(f) or (g) or as a result of applicable law), shall, in each case be accompanied by, and there shall become due and payable automatically on the date of any of the foregoing, the Specified Premium, payable in Cash on the principal amount so prepaid or on the principal amount that has become or is declared to be immediately due and payable pursuant to Section 8.1 or otherwise (including, for the avoidance of doubt and without limitation, as a result of Section 8.1(f) or (g) or as a result of applicable law), or in respect of which such claim in any bankruptcy, insolvency, reorganization, liquidation, judicial management or similar proceeding has arisen, or otherwise constituting the principal amount of the Term Loan prepaid, repaid, paid, satisfied, distributed, discharged, terminated, reduced or accelerated, as applicable.

(iv) Borrower acknowledges that Lender would not have extended the Term Loan without the inducement of the payment of the Specified Premium. BORROWER EXPRESSLY WAIVES (TO THE FULLEST EXTENT IT MAY LAWFULLY DO SO) THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE SPECIFIED PREMIUM. Borrower expressly agrees (to the fullest extent it may lawfully do so) that: (A) the Specified Premium is the product of a transaction on Arm’s Length Terms between sophisticated business people, ably represented by counsel; (B) the Specified Premium shall be payable notwithstanding the then prevailing market rates at the time payment is made; (C) there has been a course of conduct between Lenders and Borrower giving specific consideration in the transactions contemplated by the Loan Documents for such agreement to pay the Specified Premium; and (D) Borrower shall be estopped hereafter from claiming differently than as agreed to herein, including in this Section 2.8(b).

(v) If the Obligations are accelerated for any reason, including, without limitation, because of default, sale, transfer or encumbrance that results in an Event of Default hereunder (including that by operation of law or otherwise, and including, for the avoidance of doubt and without limitation, as a result of Section 8.1(f) or (g) or as a result of applicable law), the Specified Premium on Term Loan will also automatically and concurrently with such acceleration become due and payable as though said indebtedness was voluntarily prepaid and shall constitute part of the

 

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Obligations. The Specified Premium on the Term Loan shall also be payable in the event the Obligations (and/or this Agreement or the Notes (if any) evidencing the Obligations) are satisfied or released by foreclosure (whether by power of judicial proceeding), deed in lieu of foreclosure or by any other means. TO THE EXTENT LEGALLY PERMISSIBLE, BORROWER EXPRESSLY WAIVES THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW WHICH PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING SPECIFIED PREMIUM ON THE TERM LOAN IN CONNECTION WITH ANY SUCH ACCELERATION.

Section 2.9. Mandatory Prepayments.

(a) Asset Sales and Bertram Sale and Leaseback.

(i) No later than ten (10) Business Days following the date of receipt by any Loan Party of any Net Proceeds from Asset Sales in excess of $1,000,000 in the aggregate in any Fiscal Year (it being agreed only amounts in excess of $1,000,000 shall be subject to this Section 2.9(a)), Borrower shall prepay the Term Loans as set forth in Section 2.11(a) in an aggregate amount equal to such Net Proceeds; provided, that if Borrower intends to reinvest the Net Proceeds in the business of the Loan Parties and their Subsidiaries, including capital expenditures (together, a “Reinvestment”), the Loan Parties shall have the option to apply such Reinvestment Amounts to a Reinvestment within 365 days after the initial receipt of such Reinvestment Amounts (the “Reinvestment Period”); provided, further that if any such Reinvestment Amounts are no longer intended to be or cannot be so Reinvested during the applicable Reinvestment Period, an amount equal to any such Reinvestment Amounts shall be applied to the prepayment of the Term Loans within ten (10) Business Days after the Borrower reasonably determines that such Reinvestment Amounts are no longer intended to be or cannot be so Reinvested, and in no event later than the end of the applicable Reinvestment Period as set forth in Section 2.10. Each mandatory prepayment due hereunder made on account of the Obligations shall be accompanied by the applicable Specified Premium pursuant to Section 2.8(b). For avoidance of doubt, Net Proceeds of any Extraordinary IP Rights Transaction shall not be considered an “Asset Sale” for the purposes of this Section 2.9(a), but shall be the subject of a mandatory prepayment pursuant to Section 2.9(c) and not this Section 2.9(a).

(ii) No later than ten (10) Business Days following the date of receipt by any Loan Party of any Net Proceeds from the Bertram Sale and Leaseback, Borrower shall prepay the Term Loans as set forth in Section 2.11(a) in an aggregate amount equal to the lesser of such Net Proceeds and $4,000,000. Each mandatory prepayment due hereunder made on account of the Obligations shall be accompanied by the applicable Specified Premium pursuant to Section 2.8(b).

(b) Issuance of Indebtedness. On the date of receipt by a Loan Party of any Cash proceeds from the incurrence or issuance of any Indebtedness (including Disqualified Capital Stock) of a Loan Party (other than with respect to any Indebtedness (other than Disqualified Capital Stock) permitted to be incurred pursuant to Section 6.1), Borrower shall prepay the Term Loans as set forth in Section 2.11(a) in an aggregate amount equal to 100% of such proceeds, net of underwriting discounts and reasonable costs, fees and expenses associated therewith, in each case, paid to non-Affiliates, including reasonable legal fees and expenses. Each mandatory prepayment due hereunder made on account of the Obligations shall be accompanied by the applicable Specified Premium pursuant to Section 2.8(b).

 

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(c) Extraordinary Receipts. Within ten (10) Business Days following the date of receipt by a Loan Party or any of its Subsidiaries of any Extraordinary Receipts in excess of $1,000,000 in the aggregate in any Fiscal Year (it being agreed only amounts in excess of $1,000,000 shall be subject to this Section 2.9(c)), not otherwise used to make a prepayment under this Section 2.9, Borrower shall prepay the Term Loans as set forth in Section 2.11(a) in an aggregate amount equal to 100% of the Net Proceeds of such Extraordinary Receipts; provided, that if Borrower intends to make a Reinvestment, the Loan Parties shall have the option to apply such Reinvestment Amounts to a Reinvestment within the Reinvestment Period; provided, further that if any such Reinvestment Amounts are no longer intended to be or cannot be so Reinvested during the applicable Reinvestment Period, an amount equal to any such Reinvestment Amounts shall be applied to the prepayment of the Term Loans within ten (10) Business Days after the Borrower reasonably determines that such Reinvestment Amounts are no longer intended to be or cannot be so Reinvested, and in no event later than the end of the applicable Reinvestment Period as set forth in Section 2.10. For avoidance of doubt, no proceeds received by the Administrative Agent in respect of a claim under the AON Insurance Policy shall be applied to prepay the outstanding principal balance of any Term Loan, but shall be treated solely in the manner set forth in the AON Insurance Policy. Each mandatory prepayment due hereunder shall be accompanied by the applicable Specified Premium pursuant to Section 2.8(b). For avoidance of doubt, any mandatory prepayment in respect of Net Proceeds of any Extraordinary IP Rights Transaction shall not be required under Section 2.9(a), but shall be required pursuant to this Section 2.9(c).

(d) Prepayment Certificate. Concurrently with any prepayment of the Term Loans pursuant to clauses (a) through (c) above, Borrower shall deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the calculation of the amount of the applicable Net Proceeds and compensation owing to Lenders hereunder, if any. In the event that Borrower shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, Borrower shall promptly make an additional prepayment of the Term Loans, and Borrower shall concurrently therewith deliver to Agents a certificate of an Authorized Officer demonstrating the derivation of such excess. Each mandatory prepayment due pursuant to this Section 2.9 made on account of the Obligations shall be accompanied by the applicable Specified Premium pursuant to Section 2.8(b).

(e) No Specified Premium for Repayment at the Original Maturity. For avoidance of doubt, upon payment of all or any part of the Obligations in full in Cash in Dollars on, or after the date that is twenty-four (24) months following the Initial Closing Date, no Specified Premium shall be due in respect of that repayment unless the Term Loan Maturity Date has previously been accelerated by election of Lenders or operation of law (in which event a Specified Premium became due upon such acceleration and shall remain payable regardless of when the Obligations are paid).

 

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Section 2.10. Application of Prepayments. So long as no Event of Default has occurred and is continuing, any voluntary prepayment of the Term Loans pursuant to Section 2.8 or mandatory prepayment of the Term Loans pursuant to Section 2.9 shall be applied to the principal of the Term Loans until paid in full in Cash in Dollars. At any time that an Event of Default has occurred and is continuing, all payments shall be applied pursuant to Section 2.11(g). Nothing contained herein shall modify the provisions of Section 2.8(b) or Section 2.11(b) regarding the requirement that all prepayments be accompanied by accrued interest and fees on the principal amount being prepaid to the date of such prepayment and the Specified Premium, if any, or any requirement otherwise contained herein to pay all other amounts as the same become due and payable.

Section 2.11. General Provisions Regarding Payments.

(a) All payments by Borrower of principal, interest, fees and other Obligations shall be made in Dollars in immediately available funds, without defense, recoupment, setoff or counterclaim, free of any restriction or condition, and delivered to Administrative Agent, for the account of Lenders, not later than 1:00 p.m. (New York City time) to Administrative Agent’s Account; funds received by Administrative Agent after that time on such due date may, in Administrative Agent’s reasonable discretion, be deemed to have been paid by Borrower on the next Business Day and any applicable interest or fee shall continue to accrue.

(b) All payments in respect of the principal amount of any Loan shall be accompanied by payment of accrued interest on the principal amount being repaid or prepaid, any Specified Premium, and other amounts payable with respect to the principal amount being repaid or prepaid.

(c) Administrative Agent shall promptly distribute to each Lender at such address as such Lender shall indicate in writing, such Lender’s applicable Pro Rata Share of all payments and prepayments of principal and interest due hereunder, together with all other amounts due with respect thereto, including, without limitation, any Specified Premium and all fees payable with respect thereto, to the extent received by Administrative Agent.

(d) Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder.

(e) Borrower hereby authorizes Administrative Agent to charge Borrower’s accounts with Administrative Agent or any of its Affiliates in order to cause timely payment to be made to Administrative Agent of all principal, interest, fees and expenses due and payable hereunder. The Lenders and Borrower also hereby authorize Administrative Agent to, and Administrative Agent may, from time to time, charge the Loan Account with any amount due and payable by Borrower under any Loan Document. Each of the Lenders and Borrower agrees that Administrative Agent shall have the right to make such charges whether or not any Default or Event of Default shall have occurred and be continuing, in each case in accordance with this Section 2.9(e). Any amount properly charged to the Loan Account shall be deemed an Obligation hereunder. The Lenders and Borrower confirm that any charges which Administrative Agent may so make to the Loan Account as herein provided will be made as an accommodation to Borrower and solely at Administrative Agent’s discretion, provided that Administrative Agent shall from time to time upon the request of Agents, charge the Loan Account of Borrower with any amount due and payable under any Loan Document.

 

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(f) Administrative Agent may, in its reasonable discretion, deem any payment by or on behalf of Borrower hereunder that is not made in same day funds prior to 1:00 p.m. (New York City time) to be a non-conforming payment. Any such payment shall not be deemed to have been received by Administrative Agent until the later of (i) the time such funds become available funds, and (ii) the next Business Day. Administrative Agent shall give prompt written notice (which may be by email) to Borrower and each applicable Lender if any payment is non-conforming. Any non-conforming payment may constitute or become a Default or Event of Default in accordance with the terms of Section 8.1(a). Interest shall continue to accrue on any principal as to which a non-conforming payment is made until such funds become available funds (but in no event less than the period from the date of such payment to the next succeeding Business Day) at the Default Rate determined pursuant to Section 2.7 from the date such amount was due and payable until the date such amount is paid in full.

(g) At any time an Event of Default has occurred and is continuing, or the maturity of the Obligations shall have been accelerated pursuant to Section 8.1, all payments or proceeds received by any Agent hereunder or under any Collateral Document (other than the proceeds of the Interest Reserve Accounts, which in all events shall be applied only to Term Loan interest until the Term Loans have been repaid in full) in respect of any of the Obligations, including, but not limited to all proceeds received by any Agent in respect of any sale, any collection from, or other realization upon all or any part of the Collateral, shall be applied in full or in part, subject to the provisions of this Agreement and any Intercreditor and Subordination Agreement, as follows:

first, ratably to pay the Obligations in respect of any fees (other than any Specified Premium), expense reimbursements, indemnities and other amounts then due and payable (including, without limitation, the fees, charges and disbursements of counsel payable or reimbursable hereunder or under the other Loan Documents) to the Agents and the Bank until paid in full;

second, ratably to pay interest then due and payable in respect of Protective Advances until paid in full;

third, ratably to pay principal of Protective Advances then due and payable until paid in full;

fourth, ratably to pay the Obligations (other than principal and interest) in respect of any fees (other than any Specified Premium) expense reimbursements, indemnities and other amounts then due and payable (including, without limitation, the fees, charges and disbursements of counsel reimbursable hereunder) then due and payable to the Lenders until paid in full;

fifth, interest then due and payable in respect of the Term Loan until paid in full, provided that the proceeds of the Interest Reserve Accounts shall be applied only to Term Loan interest;

sixth, ratably to pay principal of the Term Loan until paid in full in Cash in Dollars;

 

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seventh, ratably to pay the Obligations in respect of any Specified Premium then due and payable to the Lenders until paid in full in Cash in Dollars;

eighth, to the ratable payment of all other Obligations then due and payable until paid in full in Cash in Dollars; and

last, the balance, if any, after all of the Obligations (other than inchoate indemnity obligations) have been paid in full, to Borrower or as otherwise required by Law as directed by a court of competent jurisdiction.

For avoidance of doubt, the proceeds of the Interest Reserve Accounts in all events shall be applied only to timely payment Term Loan interest until the Term Loans have been repaid in full, and following such repayment in full of the Term Loans, and any remaining proceeds of either Interest Reserve Account shall be applied as set forth in this clause (g) above.

(h) For purposes of clause (g) above (other than clause eighth), “paid in full” means payment in Cash in Dollars of all amounts owing under the Loan Documents according to the terms thereof, including any Specified Premium, loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, whether or not same would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding, except to the extent that default or overdue interest (but not any other interest) and loan fees, each arising from or related to a default, are disallowed in any Insolvency Proceeding; provided that for the purposes of clause eighth of clause (g) above, “paid in full” means payment in Cash in Dollars of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, whether or not the same would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding.

(i) In the event of a direct conflict between the priority provisions of clause (g) above and other provisions contained in any other Loan Document, it is the intention of the parties hereto that both such priority provisions in such documents shall be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of clause (g) above shall control and govern.

Section 2.12. Ratable Sharing.

(a) Lenders hereby agree among themselves that, except as otherwise provided in the Collateral Documents with respect to amounts realized from the exercise of rights with respect to Liens on the Collateral and, if any of them shall, whether by voluntary payment (other than a voluntary prepayment of Term Loans made and applied in accordance with the terms hereof), through the exercise of any right of set off or banker’s lien, by counterclaim or cross action or by the enforcement of any right under the Loan Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal, interest, fees and other amounts then due and owing to such Lender hereunder or under the other Loan Documents (collectively, the “Aggregate Amounts Due” to

 

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such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (a) notify Administrative Agent and each other Lender of the receipt of such payment and (b) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided that if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of Borrower or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest.

(b) Borrower expressly consents to the foregoing arrangements set forth in Section 2.12(a) and agrees that any holder of a participation so purchased may exercise any and all rights of banker’s lien, set off or counterclaim with respect to any and all monies owing by Borrower to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder.

Section 2.13. Increased Costs; Capital Adequacy.

(a) Compensation for Increased Costs and Taxes. Subject to the provisions of Section 2.14 (which shall be controlling with respect to the matters covered thereby), in the event that any Lender shall reasonably determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or Governmental Authority, in each case that becomes effective after the date hereof, or compliance by such Lender with any guideline, request or directive issued or made after the date hereof by any central bank or other Governmental Authority or quasi-Governmental Authority (whether or not having the force of law): (i) subjects such Lender (or its applicable lending office) to any additional Tax (other than Indemnified Taxes and Excluded Taxes) with respect to this Agreement or any of the other Loan Documents or any of its obligations hereunder or thereunder or any payments to such Lender (or its applicable lending office) of principal, interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, Federal Deposit Insurance Corporation insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender; or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder; and the result of any of the foregoing is to materially increase the cost to such Lender of agreeing to make, making or maintaining Term Loans hereunder or to materially reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, Borrower shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the

 

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form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender for any such material increased cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to Borrower (with a copy to Administrative Agent) a written statement, setting forth in reasonable and specific detail the basis for calculating the additional amounts owed to such Lender under this clause (a), which statement shall be conclusive and binding upon all parties hereto absent manifest error.

(b) Capital Adequacy Adjustment. In the event that any Lender shall have determined that the adoption, effectiveness, phase in or applicability after the Initial Closing Date of any law, rule or regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its applicable lending office) with any guideline, request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of materially reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lender’s Term Loans or other obligations hereunder with respect to the Term Loans to a level below that which such Lender or such controlling corporation could have achieved but for such adoption, effectiveness, phase in, applicability, change or compliance (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy), then from time to time, within fifteen (15) Business Days after receipt by Borrower from such Lender of the statement referred to in the next sentence, Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such controlling corporation on an after tax basis for such reduction. Such Lender shall deliver to Borrower (with a copy to Administrative Agent) a written statement, setting forth in reasonable and specific detail the basis for calculating the additional amounts owed to Lender under this Section 2.13(b), which statement shall be conclusive and binding upon all parties hereto absent manifest error.

Section 2.14. Taxes; Withholding, etc.

(a) Withholding of Taxes. All sums payable by any Loan Party hereunder and under the other Loan Documents shall (except to the extent required by Law) be paid free and clear of, and without any deduction or withholding on account of, any Tax. If any Loan Party or any other Person is required by law to make any deduction or withholding on account of any Tax from any sum paid or payable by any Loan Party to any Agent, any Lender or any other Recipient under any of the Loan Documents: (1) Borrower shall use reasonable efforts to promptly notify Administrative Agent of any such requirement or any change in any such requirement; (2) such Loan Party or other Person shall be entitled to make such deduction or withholding and endeavor to pay such Tax before the date on which penalties attach thereto; (3) if such Tax is an Indemnified Tax, then the sum payable by such Loan Party shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment (including such deductions, withholdings or payments with respect to additional amounts payable pursuant to this Section 2.14), such Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made; and

 

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(4) as soon as practicable after paying any such Taxes, Borrower shall deliver to Administrative Agent the original or a certified copy of a receipt issued by the applicable Governmental Authority evidencing such payment, or other evidence reasonably satisfactory to Administrative Agent of such deduction, withholding or payment and of the remittance thereof to the relevant Governmental Authorities.

(b) Other Taxes. Without duplication of any obligation under Section 2.14(a), the Loan Parties shall pay to the relevant Governmental Authorities in accordance with applicable law any present or future stamp or documentary Taxes, intangible, recording, filing or similar Taxes, or any excise or property Taxes that arise from any payment made hereunder or from the execution, delivery, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, this Agreement or any other Loan Document except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.15(b)) (“Other Taxes”). As soon as practicable after paying any such Other Taxes, the applicable Loan Party shall deliver to Administrative Agent the original or a certified copy of a receipt issued by the applicable Governmental Authority evidencing such payment, or other evidence reasonably satisfactory to Administrative Agent that such Other Taxes have been paid to the relevant Governmental Authority.

(c) Tax Indemnification. Without duplication of any obligation under Section 2.14(a) or (b), the Loan Parties hereby jointly and severally indemnify and agree to hold each Agent and Lender harmless from and against all Indemnified Taxes (including, without limitation, Indemnified Taxes and Other Taxes imposed on any amounts payable under this Section 2.14) and any reasonable expenses arising therefrom and with respect thereto paid by such Person. Such indemnification shall be paid within ten days from the date on which any Agent or Lender makes written demand therefor specifying in reasonable detail the nature and amount of such Indemnified Taxes. A certificate as to the amount of such payment or liability delivered to the Loan Parties by a Lender or Agent (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or Agent, shall be conclusive absent manifest error.

(d) Evidence of Exemption from U.S. Withholding Tax.

(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to Borrower and Administrative Agent, at the time or times reasonably requested by the Borrower or Administrative Agent, such properly completed and executed documentation reasonably requested by Borrower or Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by Borrower or Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by Borrower or Administrative Agent as will enable Borrower or Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.

 

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(ii) Without limiting the generality of Section 2.14(d)(i), each Lender that is not a United States Person for United States federal income tax purposes (a “Non-US Lender”) shall deliver to Administrative Agent and to Borrower, on or prior to the Closing Date (in the case of each Lender listed on the signature pages hereof on the Closing Date) or on or prior to the date such Person becomes a Lender hereunder, and at such other times as may be necessary in the determination of Administrative Agent or Borrower (each in its reasonable exercise of its discretion), (i) two executed copies of Internal Revenue Service Form W-8IMY (with appropriate, properly completed and duly executed attachments satisfactory to the Administrative Agent and Borrower), W-8BEN, W-8BEN-E, or W-8ECI (or any successor forms), as applicable, properly completed and duly executed by such Lender and, to the extent such Lender is eligible, such form shall note that such Lender is not subject to deduction or withholding, or is subject to a reduced deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Loan Documents, and (ii) if such Lender is claiming exemption from United States federal income tax under Section 871(h) or 881(c) of the Code, an applicable Certificate Regarding Non-Bank Status, properly completed and duly executed by such Lender. In addition, each Lender, if reasonably requested by Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Law or reasonably requested by Borrower or the Administrative Agent as will enable Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.

(iii) If a payment made to a Recipient under any Loan Document would be subject to United States federal withholding Tax imposed by FATCA if such Recipient were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Recipient shall deliver to Borrower and Administrative Agent at the time or times prescribed by Requirements of Law and at such time or times reasonably requested by Borrower or Administrative Agent such documentation prescribed by applicable Requirements of Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower or Administrative Agent as may be necessary for Borrower and Administrative Agent to comply with their obligations under FATCA and to determine that such Recipient has complied with such Recipient’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this subclause (ii), FATCA shall include any amendments made to FATCA after the date of this Agreement.

(iv) Without limiting the generality of Section 2.14(d)(i), each Lender that is a United States Person for United States federal income tax purposes shall deliver to Administrative Agent (for transmission to Borrower), on or prior to the Closing Date (in the case of each such Lender listed on the signature pages hereof on the Closing Date) or on or prior to the date such Person becomes a Lender hereunder, and at such other times as may be necessary in the determination of Administrative Agent (in its reasonable exercise of its discretion), two executed copies of Internal Revenue Service Form W-9 (or any successor forms) properly completed and duly executed by such Lender to establish that such Lender is not subject to United States backup withholding taxes with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Loan Documents.

(v) If Administrative Agent is a United States Person, it shall deliver to Borrower on or prior to the date on which it becomes an Agent under this Agreement with two duly completed copies of Form W-9. If Administrative Agent is not a United States Person, it shall provide to Borrower on or prior to the date on which it becomes an Agent under this Agreement (and from time to time thereafter upon the reasonable request of

 

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Borrower): (A) two executed copies of Form W-8ECI with respect to any amounts payable to Administrative Agent for its own account, and (B) two executed copies of Form W-8IMY with respect to any amounts payable to Administrative Agent for the account of others, certifying that it is a “U.S. branch” and that the payments it receives for the account of others are not effectively connected with the conduct of its trade or business within the United States and that it is using such form as evidence of its agreement with Borrower to be treated as a United States Person with respect to such payments (and Borrower and Administrative Agent agree to so treat Administrative Agent as a United States Person with respect to such payments as contemplated by Section 1.1441-1(b)(2)(iv) of the United States Treasury Regulations).

Each Recipient required to deliver any forms or certificates with respect to United States federal income tax withholding matters pursuant to this clause (d) hereby agrees, from time to time after the initial delivery by such Recipient of such forms or certificates, whenever a lapse in time or change in circumstances renders such forms or certificates obsolete or inaccurate in any material respect, that such Lender shall deliver to Administrative Agent (for transmission to Borrower) two updated executed copies of such forms or certificates, properly completed and duly executed by such Lender, or promptly notify Administrative Agent and Borrower in writing of its legal inability to deliver any such forms or certificates.

(e) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.14 (including by the payment of additional amounts pursuant to this Section 2.14), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.14 with respect to the Taxes giving rise to such refund), net of all reasonable out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this clause (f) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this clause (e), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this clause (f) the payment of which would place the indemnified party in a less favorable net after-tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(f) Investment Unit. The Loan Parties and the Lenders acknowledge and agree that for U.S. federal income tax purposes, the Term Loan funded on the Initial Closing Date, the Second Draw Date, and the Closing Date, as applicable, is part of an “investment unit” (within the meaning of Treasury Regulations Section 1.1273-2(h)), consisting of such Term Loan and the applicable Warrant. For purposes of allocating the aggregate issue price of the unit between the respective fair market values of the Term Loans and the applicable Warrant, the Loan Parties and the Lenders agree that the

 

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fair market value and purchase price of the applicable Warrant, in each case, is $0.00. The Loan Parties and the Lenders shall file all income tax returns consistent with the foregoing tax treatment, including the issue price and purchase price as agreed upon pursuant to the preceding sentence.

(g) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.6(h) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this clause (i).

(h) Survival. Each party’s obligations under this Section 2.14 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

(i) Borrower Notification. With respect to any Lender’s claim for compensation for any amounts under Section 2.13 or this Section 2.14, the Borrower shall not be required to compensate such Lender for the interest and penalties with respect to such amounts if such Lender notifies the Borrower of the event that gives rise to such claim more than 180 days after such event (to the extent that such interest and penalties accrue more than 180 days after such event).

(j) Insurance Premium Tax Treatment. The Loan Parties, Lenders, Administrative Agent, and any other Person that becomes a party to this Agreement shall treat all Premium (as defined in the AON Insurance Policy) paid or payable with respect to the AON Insurance Policy (including the Premium paid on or around the Initial Closing Date, the Second Draw Date, and the Closing Date, as applicable, pursuant to Section VII of the AON Insurance Policy) as paid by and properly deductible by the Borrower for U.S. federal income tax and applicable state and local income tax purposes, and no portion of any Premium paid or payable with respect to the AON Insurance Policy shall be treated as “original issue discount” within the meaning of Section 1273 of the Code. All parties to this Agreement shall file all applicable tax returns consistent with the foregoing treatment except as otherwise required due to a “determination” within the meaning of Section 1313 of the Code.

 

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Section 2.15. Obligation to Mitigate.

(a) Each Lender agrees that, as promptly as practicable after the officer of such Lender responsible for administering its Term Loans becomes aware of the occurrence of an event or the existence of a condition that would entitle such Lender to receive payments under Section 2.13 or 2.14, it will, to the extent in violation of the internal policies of such Lender and any applicable legal or regulatory restrictions, use reasonable efforts to (a) make, issue, fund or maintain its Credit Extensions through another office of such Lender, or (b) take such other measures as such Lender may deem reasonable, if as a result thereof the circumstances which would cause the additional amounts which would otherwise be required to be paid to such Lender pursuant to Section 2.13 or 2.14 would be reduced and if, as determined by such Lender in its sole discretion, the making, issuing, funding or maintaining of such Term Loans through such other office or in accordance with such other measures, as the case may be, would not otherwise adversely affect such Term Loans or the interests of such Lender; provided such Lender will not be obligated to utilize such other office pursuant to this Section 2.15 unless Borrower agrees to pay all reasonable incremental expenses incurred by such Lender as a result of utilizing such other office as described above. A certificate as to the amount of any such expenses payable by Borrower pursuant to this Section 2.15 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender to Borrower (with a copy to Administrative Agent) shall be conclusive absent manifest error.

(b) Replacement of Lenders. If any Lender requests compensation under Section 2.13, or if Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.14 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with paragraph (a) of this Section 2.15, then Borrower may, at its sole expense, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.6), all of its interests, rights (other than its existing rights to payments pursuant to Section 2.13 or Section 2.14) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:

(i) Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 10.6;

(ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents from the assignee (to the extent of such outstanding principal and accrued interest and fees) or Borrower (in the case of all other amounts);

(iii) in the case of any such assignment resulting from a claim for compensation under Section 2.13 or payments required to be made pursuant to Section 2.14, such assignment will result in a reduction in such compensation or payments thereafter; and

(iv) such assignment does not conflict with applicable law.

 

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A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling Borrower to require such assignment and delegation cease to apply.

(c) Notwithstanding anything in Section 2.15(b) to the contrary, the Lender that acts as the Administrative Agent may not be replaced hereunder except in accordance with the terms of Section 9.3.

Section 2.16. Collateral Accounts.

(a) Establishment; Grant of Security Interest. Each of Borrower and IPCo, as applicable, hereby authorizes and directs Collateral Agent to establish the Collateral Accounts at U.S. Bank National Association (the “Bank”), if it is a federally insured bank that regularly accepts deposits in the ordinary course of business, or if Collateral Agent or the Bank does not so take deposits, with a federally insured bank that is acceptable to Borrower and the Required Lenders, provided that Borrower and IPCo, as applicable, and the Required Lenders’ acceptance shall not be required if such bank is an affiliate, agent or sub-custodian of the Collateral Agent, and that regularly accepts deposits in the ordinary course of business and that executes and delivers a Control Agreement, including the Bank. Each of Borrower and IPCo, as applicable, hereby grants to (and subjects to the control of) the Collateral Agent, for the benefit of itself, the Administrative Agent and the Lenders, and agrees to maintain, a First Priority Lien and security interest in the Collateral Accounts and all such cash, deposit accounts and all balances therein, all as security for the Obligations. Borrower and IPCo, as applicable, agree that Borrower and IPCo, as applicable, shall not have any right to at any time direct the disposition or investment of the Collateral Accounts or the amounts on deposit therein, other than as expressly provided in this Agreement, and, that the Liens and security interests of the Collateral Agent in the Collateral Accounts and the amounts on deposit therein are perfected by control pursuant to Section 9-104 of the UCC or Section 8-106 of the UCC, as applicable. If at any time the Administrative Agent reasonably determines that amounts on deposit in any Collateral Account are subject to any right or claim of any Person prior to the right or claim of the Collateral Agent or the Lenders as herein provided (other than a Permitted Lien), Borrower will, promptly following written demand by the Administrative Agent, pay or provide to the Administrative Agent additional cash collateral in an amount that is sufficient to cause such Collateral Account to have the minimum balance on deposit therein required under this Agreement. Borrower and IPCo, as applicable, shall pay promptly following written demand therefor from time to time all customary account opening, activity and other administrative fees and charges in connection with the maintenance and disbursement of cash collateral in accordance with the account agreement governing such deposit account. Borrower, IPCo and Collateral Agent acknowledge and agree that the Collateral Accounts have been established in the name of and are property of IPCo, subject to the Liens granted therein by IPCo to Collateral Agent. Amounts deposited into Collateral Accounts pursuant to this Section 2.16 may be held in such Collateral Accounts as Dollars or invested in Eligible Investments, as directed by the Borrower; provided that, in the event that all or any portion of such investment no longer qualifies as an Eligible Investment, the Borrower shall or shall direct such investment to be moved to an Eligible Investment within five (5) Business Days of such investment losing its status as an Eligible Investment. Such investments shall be subject to availability and the Collateral Agent’s transaction charges generally charged to its customers (which shall be at the Borrower’s expense); provided, further that at any time that an Event of Default has occurred and is continuing, all new deposits into

 

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Collateral Accounts shall be made only in Dollars, and all Eligible Investments that mature during such period shall be reinvested only in Dollars. The Collateral Agent shall have no liability for any loss incurred on any non-Cash investment. Absent receipt of such written instruction from the Borrower, the Collateral Agent shall have no obligation to invest (or otherwise pay interest on) amounts on deposit in Collateral Accounts. In no instance will the Collateral Agent have any obligation to provide investment advice to the Borrower. Any earnings from such investment of amounts held in the Collateral Accounts from time to time shall be redeposited in the respective Collateral Accounts. The Collateral Agent shall have no liability for any losses on any investments made as described herein. The Borrower acknowledges that cash deposited or invested with any bank (including the bank acting as Collateral Agent) may make a margin or generate banking income for which such bank shall not be required to account to the Borrower. For avoidance of doubt, neither the Collateral Agent nor the Administrative Agent shall be under any duty or obligation to determine whether any investment constitutes an Eligible Investment under this Agreement. The Collateral Agent shall notify Moody’s at the address listed on Schedule 10.1 of any changes to the depository bank for the Collateral Accounts. Upon the irrevocable payment in full in cash of the Obligations (other than contingent obligations not due and owing) and the termination of the Commitments hereunder, the Collateral Agent shall so notify the Bank and direct the Bank to release the funds (if any) that remain in any Collateral Account to the Borrower in accordance with instructions thereafter provided to the Bank by the Borrower, or as otherwise required by Law as directed by a court of competent jurisdiction.

(b) Funding of Collateral Accounts.

(i) Interest Reserve Accounts. On the Second Draw Date, an amount equal to $831,111.111 was deposited into and held in the Non-Minority Lender Interest Reserve Account (which amount is in addition to the $8,066,666.70 which was deposited on the Initial Closing Date in the Non-Minority Lender Interest Reserve Account). On the Second Draw Date an amount equal to $572,000.00 was deposited into and held in the Minority Lender Interest Reserve Account (which amount is in addition to the $1,286,312.63 which was deposited into and held in the Minority Lender Interest Reserve Account on the Initial Closing Date). On the Closing Date, an amount equal to $1,222,222.22 shall be deposited into and held in the Non-Minority Lender Interest Reserve Account (which amount is in addition to the amounts described above in this section) (such amounts in this clause (i) collectively, the “Interest Reserve Amount”). As provided in Section 6.8, the Loan Parties shall cause each Interest Reserve Account to at all times after the Initial Closing Date contain Dollars and Eligible Investments having a mark-to-market aggregate value as of the close of business of the immediately preceding Business Day equal to the applicable Minimum Interest Reserve Amount. The Interest Reserve Amount shall be reduced and re-funded as it is applied in the manner described below.

(ii) Insurance Premium Reserve Account.

(A) Beginning on the first such date following the twelve (12) month anniversary of the Initial Closing Date and on the last Business Day of each Fiscal Quarter thereafter an amount equal to $862,500.00 shall be deposited by the Borrower into the Insurance Premium Reserve Account.

 

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(B) On or before the last Business Day prior to the date on which each of the second insurance premium and the third insurance premium is due in respect of the AON Insurance Policy, the Borrower (i) shall deliver to Administrative Agent and the Lenders a certificate of an Authorized Officer specifying the amount of such insurance premium due on account of the AON Insurance Policy and (ii) (x) shall deliver to Administrative Agent and the Lenders evidence of payment of such insurance premium or (y) shall have deposited into the Insurance Premium Reserve Account the amount that equals the amount due as the second or third insurance premium, as the case may be, in respect of the AON Insurance Policy (such amount, the “Insurance Premium Reserve Amount”).

(C) Borrower shall, concurrently with the acceleration of the Term Loan Maturity Date at any time as a result of an Event of Default and without requirement for any notice whatsoever, deposit into the Insurance Premium Reserve Account an amount that is equal to the remainder of (a) the unpaid premiums due or expected to become due between the first day of the then-current premium period and the Term Loan Maturity Date in effect immediately prior to its acceleration in respect of the Insurance Premium Reserve Amount minus (b) the amount then on deposit in the Insurance Premium Reserve Account. This deposit shall constitute additional Collateral for the Obligations and shall be used by the Administrative Agent solely to pay premiums due on the AON Insurance Policy without need for notice to or consent of the Loan Parties.

(iii) [Intentionally omitted].

(iv) Borrower acknowledges that any failure to satisfy its obligation to make any deposit required by this Section 2.16 shall constitute an Event of Default under Section 8.1(a) and the unpaid amount thereof shall constitute an Obligation and bear interest as provided in Section 2.7.

(c) Use of the Collateral Accounts.

(i) Cash interest on Term Loans shall be paid by (A) the Borrower from available unrestricted Cash on each Interest Payment Date when due, or (B) if not so paid in full by 12:00 p.m. New York City time on any Interest Payment Date, the Administrative Agent shall pay such Cash interest to (x) the Term A Loan Lenders and Term B Loan Lenders (other than the Minority Lender) out of the Non-Minority Lender Interest Reserve Account and (y) the Minority Lender out of the Minority Lender Interest Reserve Account, in each case, without need for any action by Borrower. To avoid doubt, no Default or Event of Default shall be deemed to have occurred under Section 8.1(a) if any payment of interest is not made under clause (c)(i)(A) provided it is made under clause (c)(i)(B).

(ii) Any income or gain on Eligible Investments that are permitted by Section 2.16(a) shall remain in such Collateral Account and shall be considered income or gain of the Borrower. All amounts on deposit in a Collateral Account shall be applied as provided for herein with respect to such Collateral Account prior to any other application of such property as may otherwise be provided for herein.

 

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(iii) At least eight calendar days prior to each Interest Payment Date (the “Collateral Account Report Date”), Borrower shall compile and provide to the Collateral Agent, the Administrative Agent and the Lenders a distribution report showing all debit and credit transactions in such Collateral Account determined as of the close of business on the 15th day of the month in which such Collateral Account Report Date occurs (the “Collateral Account Report”). To the extent Borrower fails to timely deliver a Collateral Account Report or a Lender disagrees with the information in such report, any Lender may, within two Business Days after Borrower’s non-delivery or delivery of such disputed draft Collateral Account Report to such Lender, notify in writing the Collateral Agent, Borrower and the other Lenders of such disagreement. The Required Lenders shall (in consultation with Borrower) within one (1) Business Day of such notification or non-delivery provide direction to the Collateral Agent necessary to resolve any such discrepancy, and the Collateral Agent shall follow such direction, absent manifest error. If by 1:00 p.m. New York City time on any Interest Payment Date (i) Borrower fails to pay Cash interest when due on such Interest Payment Date and (ii) no Lender has notified the Collateral Agent and Borrower in writing of any discrepancy within such two Business Day time period, then such Collateral Account Report shall be deemed approved by the Lenders and the Collateral Agent shall proceed to make such distributions out of the Interest Reserve Accounts to the Administrative Agent, to be further distributed to the Lenders as provided in the Collateral Account Report, provided that if no Collateral Account Report is received, then the Collateral Agent shall release to the Administrative Agent the amount necessary to pay interest as indicated on the Administrative Agent’s account for the Term Loan. Nothing herein shall impose or imply any duty or obligation on the part of the Collateral Agent or the Administrative Agent to verify, investigate or audit any such information or data, or to determine or monitor on an independent basis whether Borrower has transferred amounts into the Collateral Accounts in accordance with its obligations hereunder, including this Section 2.16.

ARTICLE III

CONDITIONS PRECEDENT

Section 3.1. Conditions to Credit Extension on the Closing Date. The effectiveness of the Loan Documents and obligation of each Lender to make any Term Loan on the Closing Date, is subject to the satisfaction, or waiver by the Required Lenders in accordance with Section 10.5, of the following conditions precedent:

(a) Loan Documents. Agents shall have received copies of each Loan Document, executed and delivered by each applicable Loan Party and each other Person party thereto.

(b) [Reserved].

(c) Governmental Authorizations and Consents. Each Loan Party shall have obtained all Governmental Authorizations, in each case, that are necessary in connection with the transactions contemplated by the Loan Documents and each of the foregoing shall be in full force and effect and in form and substance reasonably satisfactory to the Required Lenders. All applicable waiting periods shall have expired without any action being taken or threatened in writing by any competent authority which would restrain, prevent or otherwise impose adverse conditions on the transactions contemplated by the Loan Documents and no action, request for stay, petition for review or rehearing, reconsideration, or appeal with respect to any of the foregoing shall be pending, and the time for any applicable agency to take action to set aside its consent on its own motion shall have expired.

 

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(d) [Reserved].

(e) [Reserved].

(f) Bank Regulations. Administrative Agent shall have received all documentation and other information with respect to Borrower reasonably requested prior to the Closing Date that is required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the PATRIOT Act and the Beneficial Ownership Regulation, and all such documentation and other information shall be in form and substance reasonably satisfactory to the Administrative Agent, which shall include, for the avoidance of doubt, a duly executed Internal Revenue Service Form W-9. As of the Closing Date, the information included in the Beneficial Ownership Certification with respect to any beneficial owner of Borrower is true and correct in all material respects.

(g) Organizational Documents; Incumbency. Lenders shall have received: (i) copies of each Organizational Document of each Loan Party, certified as of a recent date by the appropriate governmental official; (ii) signature and incumbency certificates of the officers of such Person executing the Loan Documents to which it is a party; (iii) resolutions of the Board of Directors or other governing body of each Loan Party approving and authorizing the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party or by which it or its assets may be bound as of the Closing Date, certified on or prior to the Closing Date by its secretary or an assistant secretary as being in full force and effect without modification or amendment; and (iv) a good standing certificate or its equivalent from the applicable Governmental Authority of each Loan Party’s jurisdiction of incorporation, organization or formation (to the extent such certificate may be obtained in such jurisdiction) and in each jurisdiction in which the failure to be in good standing could reasonably be expected to result in a Material Adverse Effect, each dated a recent date prior to the Closing Date.

(h) Funding Notice. Administrative Agent shall have received a fully executed and delivered Funding Notice requesting Administrative Agent to wire all funds into the Initial Funding Account.

(i) Representations and Warranties. As of the Closing Date, the representations and warranties contained herein and in each other Loan Document, certificate or other writing delivered by any Loan Party to any Agent or any Lender pursuant hereto or thereto on or prior to the Closing Date shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of that Closing Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such earlier date.

 

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(j) Compliance with law. The making of such Credit Extension on the Closing Date shall not contravene any law, rule or regulation applicable to any Agent or any Lender.

(k) Payment of Fees. The Loan Parties shall have paid all fees, costs and expenses then payable by the Loan Parties pursuant to this Agreement and the other Loan Documents, including, without limitation, the Agent Fee Letter, the Fee Letter and Section 10.2 to the extent Borrower has been notified in writing of the amount of such fees, costs and expenses at least one Business Day prior to the making of such Credit Extension.

(l) No Default. As of such Closing Date, no event shall have occurred and be continuing or would result from the making of a Term Loan on the Closing Date that would constitute an Event of Default or a Default.

(m) [Reserved].

(n) [Reserved].

(o) Closing Certificate. Borrower shall deliver to the Agents an originally executed Closing Certificate in the form of Exhibit E.

(p) Sources and Uses. On or prior to the Closing Date, Borrower shall have delivered to Lenders (with a copy to Agents) the updated sources and uses of the proceeds of the Term Loans borrowed on the Closing Date.

(q) [Reserved].

(r) [Reserved].

(s) [Reserved].

(t) Opinions of Counsel to Loan Parties. Lenders and their respective counsel shall have received executed copies of customary written opinions of counsel for the Loan Parties dated as of the Closing Date (and each Loan Party hereby instructs such counsel to deliver such opinions to the Agents and the Lenders). Opinions will include (a) customary third-party closing opinions with respect to, among other customary items, due authorization and execution of Loan Documents, enforceability of Loan Documents under applicable law and attachment and perfection of liens and (b) customary Delaware opinions with respect to enforcement of bankruptcy remote provisions for each of IPCo and IPHoldCo, including vertical and horizontal non-consolidation opinions.

(u) [Reserved].

 

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(v) Warrants. The additional Warrants shall be in full force and effect and shall have been delivered to the Investors.

(w) Establishment of Collateral Accounts. Each of the Collateral Accounts shall be open with the Bank as depository, ready to receive deposits and subject to a perfected lien in favor of the Collateral Agent pursuant to a Control Agreement.

(x) AON Insurance Policy. The AON Insurance Policy issued, or a binding commitment of the insurers thereunder to amend and restate the AON Insurance Policy substantially in the form attached as Exhibit K, shall be acceptable to the Lenders holding Term A Loan Commitments and shall in either case have been issued to the Administrative Agent, together with enforceability and other opinions with respect thereto and an amount equal to $1,571,353.54, which represents the increased costs associated with the AON Insurance Policy with respect to the Term A Loans (which such amount is in addition to the costs associated with the AON Insurance Policy issued on the Initial Closing Date in the amount of $12,499,068.68 and the costs associated with the amendment and restatement of the Aon Insurance Policy on the Second Draw Date in the amount of $1,230,082.54), and associated costs therefor, shall be paid by the Administrative Agent on the Closing Date using proceeds of the Term Loan.

(y) [reserved].

(z) Solvency Certificate. Lenders shall have received a Solvency Certificate of Borrower substantially in form of Exhibit J attached hereto.

(aa) Moody’s Rating Agency Confirmation. Moody’s shall provide a credit rating confirmation (and Borrower shall use its best efforts to facilitate such issuance) with respect to this Agreement.

Any Agent or Required Lenders shall be entitled, but not obligated, to request and receive, prior to the making of any Credit Extension, additional information reasonably satisfactory to the requesting party confirming the satisfaction of any of the foregoing if, in the good faith judgment of such Agent or Required Lender, such request is warranted under the circumstances. Any Funding Notice shall be executed by an Authorized Officer of Borrower in a writing delivered to Administrative Agent and may be transmitted by email. Neither Administrative Agent nor any Lender shall incur any liability to Borrower in acting upon any telephonic notice referred to above that Administrative Agent believes in good faith to have been given by a duly Authorized Officer or other person authorized on behalf of Borrower or for otherwise acting in good faith.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES

In order to induce Agents and Lenders to enter into this Agreement and to make the Credit Extension to be made thereby, each Loan Party represents and warrants to each Agent and Lender on the Closing Date, that the following statements are true and correct:

Section 4.1. Organization; Requisite Power and Authority; Qualification. Each Loan Party (a) is duly incorporated, organized or formed, and validly existing and, where applicable, in good standing under the Laws of its jurisdiction of incorporation or organization as identified in Schedule 4.1, (b) has all requisite power and authority to (i) own and operate its properties, to carry on its business as now conducted and as proposed to be conducted and (ii) to enter into the Loan Documents to which it is a party and to carry out the transactions contemplated thereby and, in the case of Borrower, to make the borrowings hereunder, and (c) is qualified to do business and, where applicable, in good standing in every jurisdiction wherever necessary to carry out its business and operations, except in each case referred to in clause (a) (other than with respect to Borrower), (b)(i) or (c), to the extent that failure to do so would not be reasonably expected to have a Material Adverse Effect. No Loan Party is an EEA Financial Institution.

Section 4.2. Capital Stock and Ownership. Except as set forth on Schedule 4.2, the Capital Stock of Borrower and its Subsidiaries has been duly authorized and validly issued and is fully paid and in the case of Capital Stock representing corporate interests, non-assessable (if applicable). Except for the Warrant and as set forth on Schedule 4.2, as of the date hereof, there is no existing option, warrant, call, right, commitment or other agreement to which Borrower or any of its Subsidiaries is a party requiring, and there is no Capital Stock of Borrower or any of its Subsidiaries outstanding which upon conversion or exchange would require, the issuance by Borrower or any of its Subsidiaries of any additional Capital Stock of Borrower or any of its Subsidiaries or other Securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase, Capital Stock of Borrower or any of its Subsidiaries. Schedule 4.2 correctly sets forth the ownership interest of Borrower and each of its Subsidiaries in their respective Subsidiaries as of the Closing Date. Except for Liens that have been subordinated pursuant to a Subordination Agreement or otherwise as reasonably acceptable to the Required Lenders, no Capital Stock owned by a Loan Party is subject to a Lien other than (i) the Liens in favor of Collateral Agent under the Collateral Documents and (ii) Permitted Liens.

Section 4.3. Due Authorization. The execution, delivery and performance of the Loan Documents have been duly authorized by all necessary corporate or other organizational action on the part of each Loan Party that is a party thereto.

Section 4.4. No Conflict. The execution, delivery and performance by the Loan Parties of the Loan Documents to which they are parties and the consummation of the Transactions do not and will not (a) violate (i) any provision of any material law or any material governmental rule or regulation applicable to any Loan Party or any of its Subsidiaries, (ii) any of the Organizational Documents of any Loan Party or any of its Subsidiaries, or (iii) any material order, judgment or decree of any court or other agency of government binding on any Loan Party or any of its Subsidiaries, except (in the case of clauses (a)(i) and (a)(ii), to the extent that such violation could not reasonably be expected to have a Material Adverse Effect, (b) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Material Contract of any Loan Party, including, without limitation, the Intercompany License Agreements or any Third Party License Agreements that are Material Contracts except to the extent that such violation would not reasonably be expected to have a Material Adverse Effect, (c) result in or require the creation or imposition of any Lien upon any of the properties or assets of any Loan Party or any of its Subsidiaries (other than any Liens created under any of the Loan Documents in favor of Agents, on behalf of Secured Parties, or Permitted Liens), (d) result in any default, non-compliance, suspension revocation, impairment, forfeiture or non-renewal of any material permit, license, authorization or approval applicable to the material operations or any of the material

 

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properties of the Loan Parties, taken as a whole, except to the extent that such violation would not reasonably be expected to have a Material Adverse Effect, or (e) require any approval of stockholders, members or partners or any approval or consent of any Person under any Material Contract of any Loan Party, except for (i) such approvals or consents which will be obtained on or before the Closing Date, (ii) those approvals and consents, the failure of which to obtain could not reasonably be expected to have a Material Adverse Effect.

Section 4.5. Governmental Consents. The execution, delivery and performance by the Loan Parties of the Loan Documents to which they are parties and the consummation of the transactions contemplated by the Loan Documents do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental Authority and except for (i) consents approvals, notices, filings, recordings and other actions with respect to the Collateral to be made, or otherwise delivered to Agents for filing and/or recordation, as of or following the Closing Date, (ii) consents, approvals, notices, filings, recordings and other actions made or filed on or prior to the Closing Date and (iii) those registrations, consents, approvals, notices or other actions the failure of which to obtain or make could not reasonably be expected to have a Material Adverse Effect.

Section 4.6. Binding Obligation. Each Loan Document has been duly executed and delivered by each Loan Party that is a party thereto and is the legal, valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its respective terms, except (i) as may be limited by Debtor Relief Laws or by equitable principles relating to enforceability, (ii) the need for filings and registrations necessary to create or perfect the Liens on the Collateral granted by the Loan Parties in favor of the Secured Parties and (iii) the effect of foreign laws, rules and regulations as they relate to pledges of Capital Stock in or Indebtedness owed by Foreign Subsidiaries (clauses (i) and (iii), the “Enforcement Qualifications”).

Section 4.7. Historical Financial Statements. The Historical Financial Statements were prepared in accordance in all material respects with GAAP and fairly present, in all material respects, the financial position, on a consolidated basis, of the Persons described in such financial statements as at the respective dates thereof.

Section 4.8. No Material Adverse Effect. Since December 31, 2022, no event, circumstance or change has occurred that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect.

Section 4.9. Adverse Proceedings, etc. Except as set forth on Schedule 4.9, there are no Adverse Proceedings, individually or in the aggregate, that (a) relate to any Loan Document or (b) have a reasonable likelihood of adverse determination and such determination would reasonably be expected to have a Material Adverse Effect. Neither Borrower nor any of its Subsidiaries (i) is in violation of any applicable laws that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, or (ii) is subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

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Section 4.10. Payment of Taxes. Except as otherwise permitted under Section 5.3 or otherwise disclosed on Schedule 4.10, all U.S. federal and material state and local income Tax returns and other material Tax returns and reports of the Loan Parties and their respective Subsidiaries required to be filed by any of them have been timely filed, and all material Taxes due and payable and all assessments, fees and other governmental charges upon the Loan Parties and their respective Subsidiaries and upon their respective properties, assets, income, businesses and franchises which are due and payable have been paid when due and payable except Taxes that are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves are being maintained in accordance with GAAP. Neither any Loan Party nor any of its Subsidiaries are currently the subject of any audit relating to Taxes and there are no proposed in writing tax assessments against any Loan Party or any of its Subsidiaries which is not being actively contested by such Loan Party or such Subsidiary in good faith and by appropriate proceedings; provided such reserves or other appropriate provisions, if any, as shall be required in accordance with GAAP shall have been made or provided therefor.

Section 4.11. Properties.

(a) Title. Each Loan Party and its Subsidiaries has (i) good, sufficient, marketable and legal title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the case of leasehold interests in real or personal property), or (iii) good and valid title to, license or other rights to use (in the case of all other personal property), all of their respective properties and assets reflected in their respective Historical Financial Statements referred to in Section 4.7 and in the most recent financial statements delivered pursuant to Section 5.1, in each case, except for (i) assets disposed of since the date of such financial statements in the ordinary course of business or as otherwise permitted under Section 6.9, (ii) minor defects in title that do not materially interfere with its ability to conduct its business or to utilize such properties or assets for their intended purposes, (iii) Permitted Liens (iv) any Liens and privileges arising mandatorily by Law, or (v) except where the failure to have such title or other interest would not reasonably be expected to have a Material Adverse Effect.

(b) Real Estate. As of the Closing Date, Schedule 4.11 contains a true, accurate and complete list of (i) all Material Real Estate Assets and (ii) all leases, subleases or assignments of leases (together with all amendments, modifications, supplements, renewals or extensions of any thereof) affecting each Real Estate Asset of any Loan Party, in cases where such Loan Party is the landlord (whether directly or as an assignee or successor in interest) under such lease, sublease or assignment. Each material lease agreement pursuant to which a Loan Party is a tenant or lessee is in full force and effect and no Loan Party has knowledge of any material default that has occurred and is continuing thereunder with respect to any leased location that is material to the business of the Borrower and its Subsidiaries, taken as a whole, and each such agreement constitutes the legally valid and binding obligation of each applicable Loan Party, enforceable against such Loan Party in accordance with its terms, except as enforcement may be limited by Debtor Relief Laws or by equitable principles.

Section 4.12. Environmental Matters. Except as set forth on Schedule 4.12:

(a) No material Environmental Claim has been asserted against any Loan Party nor has any Loan Party received written notice of any pending or, to the knowledge of Borrower, threatened Environmental Claim against any Loan Party, except to the extent such claim or notice would not reasonably be expected to result in a Material Adverse Effect.

 

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(b) There has been no material Release of Hazardous Materials and there are no Hazardous Materials present in violation of Environmental Law at any of the properties currently or formerly owned or operated by any Loan Party, or to the knowledge of any Loan Party, at any disposal or treatment facility which received Hazardous Materials generated by any Loan Party except to the extent such Release or presence would not reasonably be expected to result in a Material Adverse Effect.

(c) The operation of the business of, and each of the properties owned or operated by, each Loan Party is in compliance with all Environmental Laws, except to the extent such failure to comply would not reasonably be expected to result in a Material Adverse Effect.

(d) Each Loan Party holds and is in compliance with Governmental Authorizations required under any Environmental Laws in connection with the operations carried on by it and the properties owned or operated by it except to the extent any failure to comply would not reasonably be expected to have a Material Adverse Effect.

(e) No event or condition has occurred or is occurring with respect to any Environmental Law, any Release of Hazardous Materials, or any Hazardous Materials Activity which could reasonably be expected to form the basis of a material Environmental Claim against any Loan Party, that would result in a Material Adverse Effect.

(f) No Loan Party has received any written notification pursuant to any Environmental Laws that (i) any material work, repairs, construction or capital expenditures are required to be made in respect as a condition of continued compliance with any Environmental Laws, or any license, permit or approval issued pursuant thereto or (ii) any material Governmental Authorizations required under any Environmental Laws by any Loan Party is about to be reviewed, made, subject to limitations or conditions, revoked, withdrawn or terminated, except to the extent the subject matter of such notification would not reasonably be expected to result in a Material Adverse Effect.

Section 4.13. No Defaults. Except as set forth on Schedule 4.13, neither any Loan Party nor any of its Subsidiaries is in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Material Contract, and no condition exists which, with the giving of notice or the lapse of time or both, would reasonably be expected to result in an Event of Default.

Section 4.14. Material Contracts. Schedule 4.14 contains a true, correct and complete list of all the Material Contracts in effect on the Closing Date and, together with any updates provided pursuant to Section 5.1(l), all such Material Contracts are in full force and effect unless terminated in the ordinary course of business (including by passage of time) and no material defaults currently exist thereunder. For avoidance of doubt, the items listed on Schedule 4.14 are so included by virtue of the contractually agreed definition of Material Contract among the parties hereto that is contained in this Agreement, and shall not be deemed to be material for any other purpose.

 

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Section 4.15. Investment Company Act. Neither any Loan Party nor any of its Subsidiaries is an “investment company” under the Investment Company Act of 1940, as amended.

Section 4.16. Margin Stock. Neither any Loan Party nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. No part of the proceeds of the Terms Loans made to such Loan Party will be used to purchase or carry any such Margin Stock or to extend credit to others for the purpose of purchasing or carrying any such Margin Stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System.

Section 4.17. Employee Matters. Except as would not reasonably be expected to have a Material Adverse Effect, there is (a) no unfair labor practice complaint pending against any Loan Party or any of its Subsidiaries, or to the best knowledge of Borrower, threatened in writing against any of them before the National Labor Relations Board and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement that is so pending against any Loan Party or any of its Subsidiaries or to the best knowledge of Borrower, threatened in writing against any of them and (b) no strike or work stoppage in existence or to the best knowledge of Borrower, threatened in writing involving Borrower or any of its Subsidiaries.

Section 4.18. Employee Benefit Plans. Except, in each case, as would not reasonably be expected to have a Material Adverse Effect: (a) no liability to the PBGC (other than required premium payments) or the Internal Revenue Service (other than taxes due in the ordinary course), has been or is expected to be incurred by any Loan Party, any of its Subsidiaries or any of their ERISA Affiliates, (b) no ERISA Event has occurred or is reasonably expected to occur, (c) except to the extent required under Section 4980B of the Internal Revenue Code or similar state laws, no Employee Benefit Plan provides employer-paid, health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of any Loan Party or any of its Subsidiaries, (d) the present value of the aggregate benefit liabilities under each Pension Plan sponsored, maintained or contributed to by any Loan Party or any of its ERISA Affiliates (determined as of the end of the most recent plan year on the basis of the actuarial assumptions specified for funding purposes in the most recent actuarial valuation for such Pension Plan), did not exceed the aggregate current value of the assets of such Pension Plan, (e) as of the most recent valuation date for each Multiemployer Plan to which any Loan Party or any of its ERISA Affiliates contributes or has an obligation to contribute, the potential liability of any Loan Party and its ERISA Affiliates for a complete withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when aggregated with such potential liability for a complete withdrawal from all Multiemployer Plans, does not exceed nil and (h) each Loan Party and each of its ERISA Affiliates has complied, in all material respects, with the requirements of Section 515 of ERISA with respect to each Multiemployer Plan and are not in material “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan.

Section 4.19. Certain Fees. Unless disclosed to the Administrative Agent in writing prior to the Closing Date, or as otherwise set forth in the Loan Documents, no broker’s or finder’s fee or commission will be payable with respect hereto or any of the transactions contemplated hereby.

 

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Section 4.20. Compliance with Organizational Documents and Statutes. Each Loan Party and its Subsidiaries is in compliance with (i) its Organizational Documents and (ii) all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities, in respect of the conduct of its business and the ownership of its property (including (a) compliance with all applicable Environmental Laws with respect to any Real Estate Asset or governing its business and the requirements of any Governmental Authorizations issued under such Environmental Laws with respect to any such Real Estate Asset or the operations of any Loan Party or any of its Subsidiaries and (b) as set forth in the Pledge and Security Agreement), except such noncompliance that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

Section 4.21. Intellectual Property. Each Loan Party and each of its Subsidiaries owns, or holds valid licenses to use, all IP Rights that are necessary to the conduct of its business as currently conducted, except as would not be material to the business of the Loan Party and its Subsidiaries taken as a whole. Attached hereto as Schedule 4.21 is a true, correct, and complete listing of all (i) issued, registered, or applied-for patents, trademarks and copyrights as to which a Loan Party or one of its Subsidiaries is the owner or, to the extent specifically identified in the applicable license agreement, an exclusive licensee; provided that Borrower may amend Schedule 4.21 to add additional IP Rights required to be scheduled pursuant to this sentence so long as such amendment occurs by written notice to Agents concurrently with delivery of the Compliance Certificate pursuant to Section 5.1(d). Subject to the filing of the Collateral Documents, Agents possess, to the extent permitted by applicable law, a First Priority security interest with respect to each Loan Party’s rights (excluding any Excluded Assets) under, to the extent constituting Collateral, its owned IP Rights and each inbound license of IP Rights that is a Material Contract and that is not generally commercially available, and no such inbound license of IP Rights that is a Material Contract requires any futher consent from the applicable licensor for the Loan Parties to grant to Agents a security interest with respect thereto.

Section 4.22. Equipment. The material equipment (other than (i) vehicles or equipment out for repair or restoration, (ii) in possession of customers or employees or (iii) valued at less than $2,500,000) of Borrower and its Subsidiaries are not stored with a bailee, warehouseman, or similar party and are located only at, or in-transit between or to, the locations identified on Schedule 4.22.

Section 4.23. [Reserved].

Section 4.24. Insurance. Each Loan Party keeps its property adequately insured (including as set forth in the Pledge and Security Agreement) and maintains (a) insurance to such extent and against such risks, including fire, as is customary with companies in the same or similar businesses in the same or similar locations, (b) workmen’s compensation insurance in the amount required by applicable law, (c) public liability insurance, which shall include product liability insurance, in the amount customary with companies in the same or similar business against claims for personal injury or death on properties owned, occupied or controlled by it, and (d) such other insurance as may be required by law in any jursidiction in which a Loan Party does business. Schedule 4.24 sets forth a list of all insurance maintained by each Loan Party on the Closing Date.

 

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Section 4.25. Common Enterprise. The successful operation and condition of each of the Loan Parties is dependent on the continued successful performance of the functions of the group of the Loan Parties as a whole and the successful operation of each of the Loan Parties is dependent on the successful performance and operation of each other Loan Party. Each Loan Party expects to derive benefit (and its Board of Directors or other governing body has determined that it may reasonably be expected to derive benefit), directly and indirectly, from (a) successful operations of each of the other Loan Parties and (b) the credit extended by the Lenders to the Loan Parties hereunder, both in their separate capacities and as members of the group of companies. Each Loan Party has determined that execution, delivery, and performance of this Agreement and any other Loan Documents to be executed by such Loan Party is within its purpose, will be of direct and indirect benefit to such Loan Party, and is in its best interest.

Section 4.26. Permits, Etc. Each Loan Party and each of its Subsidiaries has, and is in compliance with, all permits, licenses, authorizations, approvals, entitlements and accreditations required for such Person lawfully to own, lease, manage or operate, or to acquire, each business currently owned, leased, managed or operated, or to be acquired, by such Person, which, if not obtained, could not reasonably be expected to have a Material Adverse Effect. No condition exists or event has occurred which, in itself or with the giving of notice or lapse of time or both, would result in the suspension, revocation, impairment, forfeiture or non-renewal of any such permit, license, authorization, approval, entitlement or accreditation, and there is no claim that any thereof is not in full force and effect, except, to the extent any such condition, event or claim could not be reasonably be expected to have a Material Adverse Effect.

Section 4.27. Bank Accounts and Securities Accounts. Schedule 4.27 sets forth a complete and accurate list as of the Closing Date of all deposit, checking and other bank accounts, all securities and other accounts maintained with any broker dealer and all other similar accounts maintained by each Loan Party, together with a description thereof (i.e., the bank or broker dealer at which such deposit or other account is maintained and the account number and the purpose thereof) including as to whether such account is an Excluded Account.

Section 4.28. Security Interests. The Pledge and Security Agreement upon its execution and delivery on the Initial Closing Date created in favor of Collateral Agent, for the benefit of Secured Parties, a legal, valid and enforceable security interest in the Collateral secured thereby (subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors’ rights generally and to general principals of equity). Upon the filing of the UCC-1 financing statements made with respect to any assets or property of any Loan Party in the jurisdictions specified in the Perfection Certificate, the recording of security interests in the United States Patent and Trademark Office and the United States Copyright Office, and the recordation of appropriate evidence of the security interest in the appropriate foreign registry with respect to all foreign registered or applied-for IP Rights, as applicable, the delivery of any possessory collateral as required by the Collateral Documents and the execution of Control Agreements, such security interests in and Liens on the Collateral granted thereby shall be perfected (to the extent perfection of such security interests is required by the Collateral Documents) first priority security interests (subject to inchoate or non-consensual Liens that are Permitted Liens and Liens permitted pursuant to clauses (d), (e), (l), (m), (n), (o), (p), (s), (t), and (y) of the definition of “Permitted Liens”).

 

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Notwithstanding anything herein to the contrary contained in this Agreement or any other Loan Document, the Loan Parties and their Affiliates shall not be required, nor shall the Collateral Agent be authorized, and no representation, warranty, or covenant shall be considered to be breached by any failure, (i) to perfect any Lien with respect to IP Rights by any means other than by (A) filings pursuant to the Uniform Commercial Code in the office of the secretary of state (or equivalent filing office of any relevant State), or (B) intellectual property security interest filings in the United States Patent and Trademark Office or United States Copyright Office as expressly required herein and under the other Loan Documents, (ii) (a) to take any action in any non-U.S. jurisdiction or pursuant to the requirements of the laws of any non-U.S. jurisdiction in order to create any security interests with respect to IP Rights or (b) to perfect any security interests in IP Rights located outside of (or governed by or arising or existing under, pursuant to or by virtue of any Laws outside of) the United States, including with respect to any intellectual property registered outside of the United States (it being understood that there shall be no security agreements with respect to IP Rights governed by the laws of any non-U.S. jurisdiction), or (iii) to enter into any source code escrow arrangement (except as may be required pursuant to Section 5.1) (or be obligated to register or apply to register any IP Rights).

Section 4.29. Anti-Terrorism Laws, Anti-Corruption Laws and Sanctions. Neither the Loan Parties nor any of their officers, directors, employees or agents acting on the Loan Parties’ behalf shall use the proceeds of the Term Loans to make any payments, directly or to the knowledge of the Loan Parties, indirectly, to any Foreign Official in violation of the United States Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), or any other applicable Anti-Corruption Law. None of the Loan Parties nor, to the knowledge of the Loan Parties, any officers, directors, employees or agents acting on the Loan Parties’ behalf, is in violation of the Bank Secrecy Act, as amended by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act) of 2001 (the “PATRIOT Act”) or any other applicable Anti-Terrorism Law, Anti-Corruption Law or Sanctions, or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any applicable Anti-Terrorism Laws, Anti-Corruption Laws or Sanctions. None of the Loan Parties or any officers, directors, employees or agents acting on the Loan Parties’ behalf, or their respective agents acting or benefiting in any capacity in connection with the Term Loans or other transactions hereunder, is a Blocked Person. None of the Loan Parties, nor, to the knowledge of the Loan Parties, any of their agents acting in any capacity in connection with the Term Loans or other transactions hereunder (A) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person in violation of applicable Sanctions, or (B) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to any applicable Sanctions in violation of applicable Sanctions.

Section 4.30. Disclosure. No representation or warranty of any Loan Party contained in any Loan Document or in any other documents, certificates or written statements (in each case other than in respect of forward looking statements, budgets, estimates, projections, general market or industry data) furnished to Lenders by or on behalf of any Loan Party or any of its Subsidiaries pursuant to the terms herein, when taken as a whole when furnished contains any untrue statement of a material fact or omits to state a material fact (known to Borrower, in the case of any document not furnished by it) necessary in order to make the statements contained herein or therein not materially misleading in light of the circumstances in which the same were made (giving effect to all supplements and updates thereto); provided, that, to the extent such representation or warranty relates to any

 

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projections, such projections shall only be required to be based upon good faith estimates and assumptions believed by Borrower to be reasonable at the time made, it being recognized by Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material.

Section 4.31. Indebtedness. Set forth on Schedule 6.1 is a true and complete list of all Indebtedness for borrowed money of each Loan Party outstanding or contemplated immediately prior to the Closing Date that is to remain outstanding immediately after giving effect to the closing hereunder on the Closing Date and such Schedule 6.1 accurately sets forth the aggregate outstanding principal amount of such Indebtedness as of the Closing Date.

Section 4.32. Use of Proceeds. The proceeds of the Term Loans shall be used by the Loan Parties as described in Section 2.4. No portion of the proceeds of any Credit Extension shall be used in any manner that causes or would reasonably be expected to cause such Credit Extension or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation thereof or to violate the Exchange Act.

Section 4.33. Solvency. Immediately following the making of the Term Loans on the Closing Date and after giving effect to the application of the proceeds of the Term Loans on the Closing Date, as of the Closing Date (a) the present fair saleable value of the property (on a going concern basis) of the Loan Parties on a consolidated basis, will be greater than the amount that will be required to pay their debts and other liabilities, (b) the Loan Parties on a consolidated basis will be able to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured in the ordinary course of business and (c) the Loan Parties on a consolidated basis will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such business is now conducted and is proposed to be conducted following the Closing Date; provided that in each case, the amount of contingent liabilities at any time shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. Such foregoing determination has been made by the chief financial officer or other Authorized Officer of Borrower after having conducted a diligent inquiry on a good faith basis.

ARTICLE V

AFFIRMATIVE COVENANTS

Each Loan Party covenants and agrees that so long as any Commitment is in effect and until payment in full of all Obligations (other than contingent obligations not due and owing), each Loan Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Article V.

Section 5.1. Financial Statements and Other Reports. Unless otherwise provided below, Borrower will deliver to Agents (for distribution to the Lenders):

(a) [Reserved].

 

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(b) Quarterly Financial Statements. Within 60 days after the end of each Fiscal Quarter (provided that if Borrower files quarterly reports with the Securities and Exchange Commission, then delivery of quarterly financial statements hereunder shall be deemed timely if delivered no later than the last date for timely delivery of Borrower’s Form 10-Q filing to the Securities and Exchange Commission for such Fiscal Quarter) of each Fiscal Year (including the fourth Fiscal Quarter), the unaudited consolidated balance sheet of Borrower and its Subsidiaries, as at the end of such Fiscal Quarter and the related unaudited consolidated statements of income, stockholders’ equity and cash flows of Borrower and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, setting forth in comparative form the corresponding figures, with respect to the balance sheet, statements of income and statements of cash flows, for the corresponding periods of the previous Fiscal Year to the extent such period ended following the Closing Date and with respect to statements of income, the corresponding figures from the Financial Plan for the current Fiscal Year, all in reasonable detail, together with a Financial Officer Certification.

(c) Annual Financial Statements. Within 120 days after the end of each Fiscal Year (or, in the case of the fiscal year ending December 31, 2023, 150 days) (provided that if Borrower shall request additional time to deliver such annual financial statements in writing to the Adminstrative Agent at least ten (10) Business Days prior to the due date of such annual financial statements, and the Required Lenders do not, within ten (10) Business Days following receipt of such notice, object to providing such additional time, Borrower shall be provided the requested additional time to deliver such annual financial statements, and, provided that if Borrower files annual reports with the Securities and Exchange Commission, then delivery of annual financial statements hereunder shall be deemed timely if delivered no later than the last date for timely delivery of Borrower’s Form 10-K filing to the Securities and Exchange Commission for such Fiscal Year), (i) the consolidated balance sheet of Borrower and its Subsidiaries, as at the end of such Fiscal Year and the related consolidated statements of income, stockholders’ equity and cash flows of Borrower and its Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year to the extent such Fiscal Year ended following the Closing Date and the corresponding figures from the Financial Plan for the Fiscal Year covered by such financial statements, in reasonable detail, together with a Financial Officer Certification, (ii) with respect to such consolidated financial statements, an audit report thereon of an independent certified public accounting firm of recognized national standing selected by Borrower or regional as listed on Schedule 5.1(c) (which report shall be unqualified as and contain going concern qualification (other than (y) with respect to, or resulting from, the impending maturity of the Term Loans and any other indebtedness hereunder or (z) any potential or actual breach of any financial maintenance covenant contained in this Agreement) and scope of audit, and shall state that such consolidated financial statements fairly present, in all material respects, the consolidated financial position of Borrower and its Subsidiaries, as at the dates indicated and the results of their operations and their cash flows for the periods indicated in accordance with GAAP applied on a basis consistent with prior years (except as otherwise disclosed in such financial statements) and that the audit by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards);

 

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(d) Compliance Certificate. Within three (e) Business Days of each delivery of financial statements of Borrower and its Subsidiaries, pursuant to Section 5.1(b), or Section 5.1(c), a duly executed and completed Compliance Certificate which shall, among other things, (i) report in reasonable detail on compliance with Sections 5.10, 5.12, 5.20, 6.8 and 6.21 and (ii) include a list of any newly entered Material Contracts;

(e) Statements of Reconciliation after Change in Accounting Principles. If, as a result of any change in accounting principles and policies (to the extent any change in policies would result in such change being noted in the audit delivered pursuant to Section 5.1(c)) from those used in the preparation of the Historical Financial Statements, the consolidated financial statements of Borrower and its Subsidiaries delivered pursuant to Section 5.1(b) or Section 5.1(c) will differ in any material respect from the consolidated financial statements that would have been delivered pursuant to such subdivisions had no such change in accounting principles and policies (to the extent any change in policies would result in such change being noted in the audit delivered pursuant to Section 5.1(c)) been made, then together with the first delivery of such financial statements after such change, one or more statements of reconciliation (including any changes that would affect any calculations relating to the financial covenants) for previous comparative period financial statements in form and substance reasonably satisfactory to the Required Lenders;

(f) Notice of Default. Promptly (but in any event within five (5) Business Days) upon any officer of Borrower or any other Loan Party obtaining knowledge (i) of any condition or event that constitutes a Default or an Event of Default or that written notice has been given to Borrower with respect thereto, (ii) that any Person has given any written notice to any Loan Party or any of its Subsidiaries or taken any other action with respect to any event or condition set forth in Section 8.1(b) or (iii) of the occurrence of any event or change that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect, a certificate of its Authorized Officers specifying the nature and period of existence of such condition, event or change, or specifying the notice given and action taken by any such Person and the nature of such claimed Event of Default, Default, default, event or condition, and what action Borrower has taken, is taking and proposes to take with respect thereto;

(g) Notice of Litigation. Promptly (but in any event within five (5) Business Days) upon any officer of Borrower or any other Loan Party obtaining knowledge of (i) the institution of, or non-frivolous written threat of, any Adverse Proceeding not previously disclosed in writing by Borrower to Lenders, or (ii) any material development in any Adverse Proceeding that, in the case of either clause (i) or (ii) has a reasonable likelihood of adverse determination, and such determination would be reasonably expected to have a Material Adverse Effect, or seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby, written notice thereof together with such other information as may be reasonably available to such Loan Party to enable Lenders and their counsel to evaluate such matters (subject to the limitations set forth in the last paragraph of this Section 5.1);

 

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(h) ERISA. (i) Promptly (but in any event within five (5) Business Days) after Borrower or any other Loan Party obtains knowledge of the occurrence of or forthcoming occurrence of any ERISA Event that would reasonably be expected to result in a Material Adverse Effect, a written notice specifying the nature thereof, what action any Loan Party or any of its ERISA Affiliates has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; and (ii) with reasonable promptness, copies of (A) each Schedule SB (Actuarial Information) to the annual report (Form 5500 Series) filed by any Loan Party or any of its ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan as the Required Lenders shall reasonably request, (B) all notices received by any Loan Party or any of their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event that would reasonably be expected to result in a Material Adverse Effect and (C) copies of such other documents or governmental reports or filings relating to any Employee Benefit Plan as the Required Lenders shall reasonably request;

(i) Financial Plan. As soon as practicable and in any event no later than 90 days after the beginning of each Fiscal Year, a consolidated plan and financial forecast of the Borrower that has been approved by its Board of Directors (a “Financial Plan”) for such Fiscal Year (the “Extended Covered Period”), including (i) a forecasted consolidated balance sheet and forecasted consolidated statements of income and cash flows of Borrower and its Subsidiaries for such Fiscal Year or Fiscal Quarter, as applicable or, if applicable, each such Fiscal Year or Fiscal Quarter in the Extended Covered Period, and an explanation of the assumptions on which such forecasts are based and (ii) forecasted consolidated statements of income and cash flows of Borrower and its Subsidiaries for each financial quarter of such Fiscal Year or, if applicable, each such Fiscal Year in the Extended Covered Period, together, in each case, with an explanation of the assumptions on which such forecasts are based; provided that any Financial Plan provided pursuant to this Section 5.1(i) shall be marked “PRIVATE”. Borrower will also deliver, within 10 Business Days of the date the Financial Plan is delivered to the Board of Directors, an outlook for subsequent Fiscal Years, which for the avoidance of doubt, do not have to be approved by its Board of Directors. For the avoidance of doubt, any Financial Plan provided hereunder shall not be provided to the Public Lenders;

(j) Insurance Report. At the earlier of the actual time of delivery of the annual financial statements required to be delivered pursuant to Section 5.1(c), or if such annual financial statements are not timely delivered in any Fiscal Year, at the time that such annual financial statements otherwise were required to be delivered pursuant to Section 5.1(c) in respect of such Fiscal Year, a report outlining all material insurance coverage maintained as of the date of such report by Borrower and its Subsidiaries;

(k) Notice of Change in Board of Directors. Promptly (but in any event within five (5) Business Days), written notice of any change in the Board of Directors (or similar governing body) of any Loan Party or any of its Subsidiaries.

(l) Notice Regarding Material Contracts.

(i) (x) at the end of each Fiscal Month, a report of any Material Contract of a Loan Party terminated other than due to an expiration of the term, or amended in a manner that is materially adverse to any Loan Party or any such Subsidiary, as the case may be, or (y) at the end of each Fiscal Quarter, any new Material Contract entered into, a written statement describing such event, with copies of such material amendments or new contracts, delivered to Agents, and an explanation of any actions being taken with respect thereto; and

 

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(ii) each Loan Party shall deliver promptly to the Administrative Agent a copy of each material demand, material notice or material document received by it under any Material Contract.

(m) Environmental Reports and Audits. Within five (5) Business Days following the receipt thereof, copies of all environmental audits and reports with respect to any environmental matter which has resulted in or is reasonably likely to result in a Material Adverse Effect;

(n) Information Regarding Collateral. Borrower will furnish to Agents prior five (5) days’ written notice of any change (i) in any Loan Party’s corporate name, (ii) in any Loan Party’s identity or corporate structure or (iii) in any Loan Party’s federal taxpayer identification number. Each Loan Party agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the UCC or otherwise that are required in order for Agents to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral and for the Collateral at all times following such change to have a valid, legal and perfected security interest as contemplated in the Collateral Documents. Each Loan Party also agrees promptly to notify Agents if any material portion of the Collateral is damaged or destroyed;

(o) Tax Returns. As soon as practicable and in any event within thirty (30) days following the filing thereof, copies of each federal income tax return filed by or on behalf of any Loan Party;

(p) AON Insurance Policy and License Agreements. (i) As soon as practicable and in any event within five (5) Business Days following the receipt or delivery thereof, copies of all non-operational written notices sent by or to any Loan Party or its Subsidiaries under or in respect of the AON Insurance Policy, any Intercompany License Agreement or any material Third Party License Agreement (including, for the avoidance of doubt, notices relating to any terminations of or material amendments to the AON Insurance Policy, any Intercompany License Agreements, or any material Third Party License Agreements); provided that notice of any event giving rise to a termination right under any Intercompany License Agreement or any material Third Party License Agreement shall be delivered promptly and in any event within five (5) Business Days of any Loan Party’s knowledge of such event and (ii) together with each delivery of financial statements of Borrower and its Subsidiaries pursuant to Section 5.1(b) or Section 5.1(c), a true, complete and correct copy of any Master Services Agreement not previously provided, together with all amendments thereto through the date of such delivery;

(q) Extraordinary Receipts. Promptly (but in any event within ten (10) Business Days) after receipt by Borrower or any of its Subsidiaries of any Extraordinary Receipt, a written statement describing the amount and source of such Extraordinary Receipt, and the Net Proceeds thereof;

 

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(r) Information Regarding Location of Equipment. Together with each delivery of financial statements of Borrower and its Subsidiaries pursuant to Section 5.1(b), updates to Schedule 4.22, if any, which updates shall describe new locations to which equipment having a value in excess of $2,500,000, singly or $5,000,000 in the aggregate has been moved during the preceding quarter (other than as permitted pursuant to Section 5.12);

(s) IP Rights Transactions. Concurrently with the delivery of each Compliance Certificate pursuant to Section 5.1(d), with respect to any disposition (including, without limitation, any licensing or sublicensing, other than non-exclusive licensing or non-exclusive sublicensing that is (i) incidental or ancillary to, or not the primary purpose of, the sale or licensing of a product or service of the Borrower or its Subsidiaries, as applicable, that is sold or otherwise provided in the ordinary course of business, or (ii) otherwise incidental or ancillary to the commercial arrangement) of any IP Rights by Borrower or any of its Subsidiaries to a Person that is not a Loan Party or a Subsidiary of a Loan Party, Borrower shall deliver to the Collateral Agent and Lenders a notice identifying such disposition with reasonable particularity and shall identify such disposition as either a Qualified License, Asset Sale Exception, or an Extraordinary IP Rights Transaction;

(t) Changes to IP Portfolio. Concurrently with the delivery of each Compliance Certificate pursuant to Section 5.1(d), Borrower shall deliver to the Collateral Agent, Lenders, and the lead insurer under the AON Insurance Policy a reasonably detailed report providing the information set forth on Exhibit M describing, among other things, changes to the portfolio of registered and applied-for IP Rights owned by the Loan Parties, including, without limitation, addition of such IP Rights, and disposition of such IP Rights which the Borrower has knowledge and, in each case, occurring during the period reported upon by the concurrently delivered Compliance Certificate and Borrower will, upon the reasonable request of the lead insurer under the AON Insurance Policy following review of such report, participate in a meeting by conference call at such time as may be agreed to by Borrower and such lead insurer to discuss any material changes to the portfolio of registered and applied-for IP Rights owned by the Loan Parties; and

(u) Other Information. (i) Promptly upon becoming available, copies of (A) all financial statements, material reports, material notices and proxy statements sent or made available generally by any Loan Party to its security holders generally acting in such capacity and (B) all regular and periodic reports and all registration statements and prospectuses, if any, filed by any Loan Party or any of its Subsidiaries with the Securities and Exchange Commission or any governmental or private regulatory authority, in each case to the extent not duplicative of information already provided to the Agents or the Lenders, (ii) promptly after submission to any Governmental Authority, all documents and information furnished to such Governmental Authority in connection with any investigation of any Loan Party (other than any investigation which would not reasonably be expected to result in a Material Adverse Effect or Event of Default), provided, that the disclosure of such information is legally permissible, and provided, further, that to the extent such information has not been otherwise publicly disclosed by the Borrower, such disclosure shall not be made available to the Public Lenders, (iii) promptly upon receipt thereof, copies of all financial reports (including, without limitation, management letters) submitted to any Loan Party by its auditors in connection with any annual interim audit of the books thereof subject to confidentiality and reliance restrictions and (iv) such other information and data with respect to Borrower or any of its Subsidiaries as from time to time may be reasonably requested by the Required Lenders. Information provided upon request of the Required Lenders shall also be delivered to the Administrative Agent for posting to all Lenders.

 

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Documents required to be delivered pursuant to Section 5.1 may be delivered electronically and if so delivered, shall be deemed to have been delivered on the earlier of the date (A) on which any Loan Party posts such documents, or provides a link thereto, on such Loan Party’s or one of its Affiliates’ website on the Internet or (B) on which such documents are posted on such Loan Party’s behalf on IntraLinks/IntraAgency or another website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that Borrower shall notify the Administrative Agent (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents.

Each Loan Party hereby acknowledges that (a) the Administrative Agent shall make available to the Lenders materials and/or information provided by or on behalf of the Loan Parties hereunder (collectively, “Borrower Materials”) by posting Borrower Materials on IntraLinks, DebtDomain, SyndTrak, ClearPar or another similar electronic system chosen by the Administrative Agent and the Required Lenders to be the electronic transmission system or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may not, or may have personnel who do not, wish to receive information regarding any material non-public information with respect to the Loan Parties or their Affiliates, or the respective securities of any of the foregoing (collectively, “MNPI”), and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Loan Parties hereby agree that they will identify that portion of Borrower Materials that may be distributed to the Public Lenders and that (i) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof, (ii) by marking Borrower Materials “PUBLIC,” the Loan Parties shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Borrower Materials as only containing either publicly available information, or information concerning the Borrower, its Subsidiaries and Affiliates, or its or their respective securities that (in the good faith judgment of the Borrower) is not material information (although it may be sensitive and proprietary) with respect to the Borrower or any of its Subsidiaries or Affiliates or its or their respective securities for purposes of United States federal and state securities laws, (iii) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information” and (iv) the Administrative Agent and the Lenders shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.” It being agreed that the Borrower and its Subsidiaries are under no obligation to mark any document “PUBLIC” and to the extent not designated “PUBLIC” it shall be deemed private.

Although the Platform and its primary web portal are secured with generally-applicable security procedures and policies implemented or modified by the Administrative Agent with the approval of the Required Lenders from time to time (including, as of the Closing Date, a user ID/password authorization system) and the Platform is secured through a per-deal authorization method whereby each user may access the Platform only on a deal-by-deal basis, each of the Lenders and the Loan Parties acknowledges and agrees that the distribution of material through an electronic

 

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medium is not necessarily secure, that the Administrative Agent is not responsible for approving or vetting the representatives or contacts of any Lender that are added to the Platform, and that there may be confidentiality and other risks associated with such distribution. Each of the Lenders and the Loan Parties hereby approves distribution of the Communications through the Platform and understands and assumes the risks of such distribution.

THE PLATFORM AND THE COMMUNICATIONS ARE PROVIDED “AS IS” AND “AS AVAILABLE”. THE APPLICABLE PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE PLATFORM AND THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE APPLICABLE PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF THEIR RESPECTIVE RELATED PARTIES (COLLECTIVELY, “APPLICABLE PARTIES”) HAVE ANY LIABILITY TO ANY LOAN PARTY, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY LOAN PARTY’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET OR THE PLATFORM; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL ANY PERSON HAVE ANY LIABILITY TO ANY OTHER PERSON HEREUNDER FOR INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES); PROVIDED THAT, FOR THE AVOIDANCE OF DOUBT, THE IMMEDIATELY PRECEDING CLAUSE SHALL NOT LIMIT THE LOAN PARTIES’ INDEMNITY OBLIGATIONS TO THE EXTENT OTHERWISE SET FORTH HEREIN IN RESPECT OF ANY SUCH TYPES OF DAMAGES DESCRIBED ABOVE WHICH ARE SUCCESSFULLY ASSERTED AGAINST THE APPLICABLE PARTIES. “Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Loan Party pursuant to any Loan Document or the transactions contemplated therein which is distributed by the Administrative Agent or any Lender by means of electronic communications pursuant to this Section 5.1, including through the Platform.

Each Lender agrees that notice to it (as provided in the next sentence) specifying that Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender agrees (i) to notify the Administrative Agent in writing (which could be in the form of electronic communication) from time to time of such Lender’s email address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such email address.

 

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The Administrative Agent shall store the Communications on the Platform in accordance with the Administrative Agent’s generally applicable document retention procedures and policies.

Nothing herein shall prejudice the right of the Administrative Agent, any Lender or Loan Party to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.

Anything to the contrary notwithstanding, nothing in this Agreement will require any Loan Party to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter, or provide information (i) that constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure is prohibited by Law or binding agreement or (iii) that is subject to attorney-client or similar privilege or constitutes attorney work product; provided that (a) the Loan Parties and their Subsidiaries will at all times use commercially reasonable efforts to document in writing all of their trade secrets, know-how, formulas, processes, or other specifications, and other confidential or proprietary information (including software source code) (collectively, the “Deposit Materials”) in the manner consistent with, or not less restrictive than, the Loan Parties’ policies and/or procedures existing as of the date of this Agreement; (b) the Loan Parties and their Subsidiaries shall (x) maintain all Deposit Materials in an internal electronic lockbox or backup (the “Lockbox”), (y) within ninety (90) days from the Initial Closing Date, use commercially reasonable efforts to enter into an arrangement pursuant to which copies of all Deposit Materials are stored in the form of the Loan Parties’ backup tapes in an “offsite tape vault” (the “Vault”) service maintained by Iron Mountain, Inc. or any of its affiliates (or such other third party acceptable to the Loan Parties, Required Lenders and the insurers holding at least 50.1% of the aggregate risk under the AON Insurance Policy, as custodian (such entity in such capacity, the “Custodian”), which arrangement is in the form of a tri-party arrangement to be entered into by and among IPCo, the Custodian and such other entity acceptable to the Required Lenders and the insurers holding at least 50.1% of the aggregate risk under the AON Insurance Policy that permits the Custodian to so store such Deposit Materials and designates such other entity acceptable to the Required Lenders and the insurers holding at least 50.1% of the aggregate risk under the AON Insurance Policy as beneficiary for the benefit of the Secured Parties, substantially in the form of the Custodian’s standard form(s) for such arrangement with the release condition provided in clause (c) of this paragraph, and (z) fully update the Deposit Materials deposited into the Lockbox and the Vault (or, in the case of the Vault, provide or deliver such fully updated Deposit Materials to the Custodian), in each case on or promptly before the last Business Day of each Fiscal Quarter; and (c) following acceleration of the Obligations, the Loan Parties shall be required to promptly provide the password for, and/or otherwise grant access to, the Lockbox and the Vault to the Agents.

Section 5.2. Existence. Except as otherwise permitted under Section 6.9, each Loan Party will, and will cause each of its Subsidiaries to, at all times preserve and keep in full force and effect its existence and all rights and Governmental Authorizations, qualifications, franchises, licenses and permits and to conduct its business in each jurisdiction in which its business is conducted in each case except to the extent failure to keep in full force and effect such rights, Authorizations, qualifications, franchises, licenses and permits would not result in a Material Adverse Effect; provided that any Subsidiary of Borrower may consummate any transaction permitted by Article VI.

 

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Section 5.3. Payment of Taxes and Claims. Except as set forth on Schedule 4.10 and except to the extent that a failure to do so would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each Loan Party will pay all Taxes imposed upon it or upon its income or profits or upon any of its property that have become due and payable and that by law have or may become a Lien upon any of its properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided that no Loan Party shall be required to pay any such Tax or claim, the payment of which is subject to a valid extension or being contested in good faith and by proper proceedings if a reserve is maintained with respect thereto in accordance with GAAP and to the extent required by GAAP.

Section 5.4. Maintenance of Properties. Except if the failure to do so would not reasonably be expected to have a Material Adverse Effect, each Loan Party will, and will cause each of its Subsidiaries to (a) maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted and casualty and condemnation excepted, all material properties used or useful in the business of the Loan Parties and their respective Subsidiaries and from time to time will make or cause to be made all necessary repairs, renewals and replacements thereof and (b) comply at all times with the provisions of all material leases to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder.

Section 5.5. Insurance.

(a) The Loan Parties will maintain or cause to be maintained, with financially sound and reputable insurers, casualty insurance, business interruption insurance, such public liability insurance, third party property damage insurance or such other insurance with respect to liabilities, losses or damage in respect of the assets, properties and businesses of the Loan Parties and their respective Subsidiaries as may customarily be carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses, in each case in such amounts (giving effect to self-insurance), with such deductibles, covering such risks and otherwise on such terms and conditions as shall be customary for such Persons (including as set forth in the Pledge and Security Agreement). Without limiting the generality of the foregoing, the Loan Parties and their respective Subsidiaries will maintain or cause to be maintained (i) flood insurance with respect to each Flood Hazard Property that is located in a community that participates in the National Flood Insurance Program, in each case in compliance with any applicable regulations of the Board of Governors of the Federal Reserve System, and (ii) casualty insurance on the Collateral under such policies of insurance, with such insurance companies, in such amounts, with such deductibles, and covering such risks as are at all times carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses in similar locations. If any Loan Party or any of its Subsidiaries fails to maintain such insurance, Agents (acting at the direction of Required Lenders) upon five (5) Business Days prior written notice to the Borrower may arrange for such insurance, but at Borrower’s expense and without any responsibility on Agents’ part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims. Upon the occurrence and during the continuance of an Event of Default, Agents shall have the sole right

 

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(without obligation), in the name of the Lenders, any Loan Party and its Subsidiaries, to file claims under any insurance policies, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies.

(b) Each of the insurance policies required to be maintained under this Section 5.5 shall provide for at least thirty (30) days’ prior written notice to Agents of the cancellation thereof, in each case, or, if less, the maximum amount of prior written notice that the applicable insurance provider will provide. Receipt of such notice shall entitle Agents (but Agents shall not be obligated) to renew any such policies, cause the coverages and amounts thereof to be maintained at levels required pursuant to this Section 5.5 or otherwise to obtain similar insurance in place of such policies, in each case at the expense of the Loan Parties.

Section 5.6. Inspections; Books and Records. Each Loan Party will, and will cause each of its Subsidiaries to, (a) keep adequate books of record and account in which entries that are full, true and correct in all material respects are made of all material dealings and transactions in relation to its business and activities and (b) permit any representatives designated by any Agent (including employees of any Agent, any Lender or any consultants, auditors, accountants, lawyers and appraisers retained by an Agent) to visit and inspect any of the properties of any Loan Party and any of its respective Subsidiaries, to (subject to the last paragraph of Section 5.1) inspect, copy and take extracts from its and their financial and accounting records, and to discuss its and their affairs, finances and accounts with its and their officers and independent accountants and auditors, all upon reasonable notice and at such times during normal business hours, provided, that if no Event of Default has occurred and is continuing, such audits and inspections shall take place no more than once annually. Subject to Section 10.2, the Loan Parties agree to pay the reasonable and documented out-of-pocket costs and expenses of the Agents incurred in connection with one such visit and inspection per calendar year (provided that such limit shall not apply during the continuance of an Event of Default). The Loan Parties acknowledge that any Agent, after exercising its rights of inspection, may prepare and distribute to the Lenders certain reports pertaining to the Loan Parties’ assets for internal use by Agents and the Lenders, in each case subject to the terms of Section 10.17.

Section 5.7. Private Lenders Meetings and Conference Calls.

(a) Borrower will, upon the reasonable request of Required Lenders, participate in a meeting of Agents, the insurers under the AON Insurance Policy, and Private Lenders to be held no more frequently than once every Fiscal Quarter to be held at Borrower’s corporate offices or by conference call (or at such other location as may be agreed to by Borrower, the Required Lenders and Agents) at such time as may be agreed to by Borrower, the Required Lenders and Agents.

(b) No later than thirty days after the end of each Fiscal Quarter Borrower shall prepare and deliver to Agents, a majority of the insurers under the AON Insurance Policy, and Private Lenders a Narrative Report relating to such immediately preceding Fiscal Quarter. No later than five (5) Business Days after delivery of the Narrative Report, Required Lenders may request by written notice to Borrower (the “Narrative Report Call Notice”) that Borrower cause its chief financial officer or other Authorized Officer to participate in a conference call with Agents, a majority of the

 

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insurers under the AON Insurance Policy, and all Private Lenders, in each case, who choose to participate in such conference call during which conference call the chief financial officer or other Authorized Officer shall review the Narrative Report, and such other matters as any Agent or any Private Lender may reasonably request that has been set forth in the Narrative Report Call Notice (the “Narrative Report Call”). If a Narrative Report Call Notice is timely delivered to Borrower, Borrower shall hold the Narrative Report Call no later than five (5) Business Days after receipt of the Narrative Report Call Notice.

Section 5.8. Compliance with Laws. Each Loan Party will comply, and shall cause each of its Subsidiaries to comply and shall use its commercially reasonable efforts to cause all other Persons, if any, on or occupying any Material Real Estate Assets to comply, with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority (including Environmental Laws, ERISA, Sanctions, Anti-Corruption Laws, Anti-Terrorism Laws, the PATRIOT Act, and Export Controls), non-compliance with which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect (including as set forth in the Pledge and Security Agreement).

Section 5.9. Environmental.

(a) Each Loan Party shall (i) keep all of its Real Property free of any Environmental Liens (other than Permitted Liens), other than Environmental Liens that could not reasonably be expected to result in a Material Adverse Effect, (ii) comply, and take all commercially reasonable steps to cause all tenants and other Persons who may come upon any property owned or operated by it to comply, with all Environmental Laws in all material respects and provide to Agents any documentation of such compliance which the Required Lenders may reasonably request, except for such noncompliance that could not reasonably be expected to result in a Material Adverse Effect, (iii) maintain and comply in all material respects with all Governmental Authorizations required under applicable Environmental Laws, except where the failure to maintain or comply could not reasonably be expected to result in a Material Adverse Effect, (iv) take commercially reasonable steps to prevent any Release of Hazardous Materials from any property owned or operated by any Loan Party, except to the extent such Release would not reasonably be expected to result in a Material Adverse Effect, (v) ensure that there are no Hazardous Materials present on or at or migrating from any property owned or operated by any Loan Party, except to the extent that any such presence or migration would not reasonably be expected to result in a Material Adverse Effect, (vi) undertake or cause to be undertaken any and all Remedial Actions in response to any Environmental Claim, Release of Hazardous Materials or violation of Environmental Law that could reasonably be expected to result in a Material Adverse Effect, to the extent required by Environmental Law or any Governmental Authority, (vii) to repair and remedy any impairment to the Real Property consistent with its current use and, upon request of the Required Lenders, that could reasonably be expected to result in a Material Adverse Effect, to the extent required by Environmental Law or any Governmental Authority, and (viii) provide Agents all data, information and reports generated in connection with any of the foregoing matters (in each case subject to the limitations set forth in Section 5.1).

 

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(b) The Loan Parties shall promptly (but in any event within five (5) Business Days) (i) notify Agents in writing after obtaining knowledge of (A) a material Release in excess of any reportable quantity or material violation of Environmental Laws in, at, on, under or from any part of the Real Property or any improvements constructed thereon, (B) any material Environmental Claims asserted against or Environmental Liabilities and Costs of any Loan Party or predecessor in interest or concerning any Real Property, (C) any failure to comply with Environmental Law in all material respects at any Real Property or that is reasonably likely to result in an Environmental Claim asserted against any Loan Party, (D) any condition on any real property adjoining or in the vicinity of any Real Property that could reasonably be expected to cause such Real Property or any part thereof to be subject to any material restrictions on the ownership, occupancy, transferability or use thereof under any Environmental Laws, and (E) any notice of Environmental Lien filed against any Real Property, in each case (A) through (E), that could reasonably be expected to result in a Material Adverse Effect, and (ii) provide such other documents and information as reasonably requested by Required Lenders in relation to any of the foregoing matters set forth in Section 5.9(b)(i).

Section 5.10. Subsidiaries.

(a) In the event that after the Closing Date any Person becomes a wholly-owned Domestic Subsidiary of a Loan Party (other than an Excluded Subsidiary), then within ninety (90) days of such Person becoming a Domestic Subsidiary, the applicable Loan Party shall (a) cause such Domestic Subsidiary to become a Guarantor hereunder and a Grantor under and as defined in the Pledge and Security Agreement by executing and delivering to each Agent a Counterpart Agreement, and (b) subject to the limitations and requirements of the Loan Documents take all such actions and execute and deliver, or cause to be executed and delivered, all such documents, instruments, agreements, and certificates that Required Lenders shall reasonably request to perfect the security interest in the assets of such Subsidiary constituting Collateral. With respect to each such Domestic Subsidiary, Borrower shall promptly send to Agents written notice setting forth with respect to such Person (i) the date on which such Person became a Subsidiary of a Loan Party, and (ii) all of the data required to be set forth in the Schedules hereto with respect to such joining Subsidiary, and such written notice shall be deemed to supplement the applicable Schedules for all purposes hereof. For avoidance of doubt, each future wholly-owned Domestic Subsidiary of Borrower that is not an Excluded Subsidiary, whether formed or acquired, shall become a Guarantor in accordance with the foregoing within ninety (90) days of formation or acquisition.

(b) The Loan Documents shall not contain any requirements as to, the creation or perfection of pledges of, security interests in, Mortgages on, or the obtaining of title insurance, surveys, abstracts or appraisals or taking other actions with respect to any Excluded Assets and the Liens required to be granted from time to time pursuant hereto shall be subject to exceptions and limitations set forth in this Agreement and the Collateral Documents.

(c) [Reserved].

(d) Notwithstanding anything herein to the contrary Borrower and the Guarantors shall not be required, nor shall the Collateral Agent be authorized (unless otherwise approved by the Borrower), (i) to perfect the above-described pledges, security interests and mortgages by any means other than by (A) filings pursuant to the Uniform Commercial Code in the office of the secretary of state (or equivalent filing office of the relevant State of the respective jurisdiction of organization of the Borrower or any Guarantor), (B) filings in United States or foreign government offices with respect to

 

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intellectual property as expressly required herein and under the other Loan Documents, (C) delivery to the Collateral Agent, for its possession and control, of all Collateral consisting of intercompany notes, instruments, chattel paper and all stock (or similar) certificates of the Borrower and its Subsidiaries to the extent required herein and under the other Loan Documents, or (D) Mortgages required to be delivered pursuant Section 5.11 and fixture filings relating to Material Real Estate Assets, (ii) [reserved], (iii) other than a Foreign Subsidiary that becomes a Borrower or a Guarantor pursuant to this Section 5.10, to take any action in any non-U.S. jurisdiction or pursuant to the requirements of the laws of any non-U.S. jurisdiction in order to create any security interests (for the avoidance of doubt, other than the execution of documents by individuals located outside of the U.S.) or to perfect any security interests in assets located outside of the United States, including with respect to any intellectual property registered outside of the United States, (iv) except as expressly provided above, to take any other action with respect to any Collateral to perfect through control agreements or to otherwise perfect by “control”, (v) to provide any notice or to obtain the consent of governmental authorities under the Federal Assignment of Claims Act (or any state equivalent thereof) or (vi) to enter into any source code escrow arrangement (or be obligated to register intellectual property); provided that, for the avoidance of doubt, the Borrower may elect to perform any of the foregoing in its sole discretion.

Section 5.11. Material Real Estate Assets. In the event that any Loan Party acquires a Material Real Estate Asset and such interest has not otherwise been made subject to the Lien of the Collateral Documents in favor of Agents, for the benefit of Secured Parties, then such Loan Party shall within one hundred and twenty (120) days after acquiring such Material Real Estate Asset, take all such actions and execute and deliver, or cause to be executed and delivered, all such Mortgages, documents, instruments, agreements, opinions, surveys, Title Policies, “life of loan” flood hazard determinations with executed notices to Borrower thereto, if applicable, evidence of flood insurance, if applicable, and other certificates, documents and other information as are reasonably requested by the Required Lenders and necessary to grant and perfect a First Priority Lien on such Material Real Estate Asset in favor of the Collateral Agent, for the benefit of the Secured Parties, all in form and substance reasonably satisfactory to the Required Lenders. In addition to the foregoing, Borrower shall, at the request of Required Lenders, deliver, from time to time, to Agents such appraisals as are required by law or regulation of Material Real Estate Assets with respect to which Collateral Agent has been granted a Lien.

Section 5.12. [Reserved].

Section 5.13. Further Assurances.

(a) Subject to the limitations, terms and conditions of the Loan Documents, at any time or from time to time upon the reasonable request of any Agent, each Loan Party will, at its expense, promptly execute, acknowledge and deliver such further documents and do such other acts and things as such Agent or the Lenders may reasonably request in order to effect fully the purposes of the Loan Documents, including providing Lenders with any information reasonably requested pursuant to Section 10.21. In furtherance and not in limitation of the foregoing, each Loan Party shall take such actions as are reasonably necessary or as any Agent or Lenders may reasonably request from time to time to ensure that the Obligations are guaranteed by the Guarantors and are secured by the Collateral of each Loan Party in the manners set forth in the Loan Documents. The Loan Parties shall take all

 

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reasonable steps necessary to provide that at all times, the Liens granted pursuant to the Collateral Documents shall be First Priority Liens to the extent required herein.

(b) If any Loan Party shall create or assume any Lien upon any of its properties or assets, whether now owned or hereafter acquired, other than Permitted Liens, it shall make or cause to be made effective provisions whereby the Obligations will be secured by such Lien equally and ratably with any and all other Indebtedness secured thereby as long as any such Indebtedness shall be so secured; provided that, notwithstanding the foregoing, this covenant shall not be construed as a consent by Agents or Required Lenders to the creation or assumption of any such Lien not otherwise permitted hereby.

(c) Any Capital Stock (other than Excluded Capital Stock) issued by an Excluded Subsidiary or Joint Venture to a Loan Party shall be subject to a First Priority Lien granted to the Collateral Agent by such Loan Party.

(d) Each Foreign Subsidiary must be wholly-owned directly or indirectly by a CFC Holding Company or a special purpose vehicle, and the Capital Stock (other than Excluded Capital Stock) in such Foreign Subsidiary shall be subject to a First Priority Lien granted to Collateral Agent by such CFC Holding Company or special purpose vehicle.

Section 5.14. Miscellaneous Business Covenants. Unless otherwise consented to by the Required Lenders:

(a) Non-Consolidation. IPHoldCo will and will cause each of its Subsidiaries to: (i) maintain entity records and books of account separate from those of any other entity which is an Affiliate of such entity (other than IPHoldCo or any of its Subsidiaries); (ii) not commingle its funds or assets with those of any other entity which is an Affiliate of such entity except pursuant to a cash management system permitted pursuant to the below clause (b); (iii) provide that its Board of Directors or other analogous governing body will hold all appropriate meetings to authorize and approve such entity’s actions, which meetings will be separate from those of any other entities (other than IPHoldCo or any of its Subsidiaries); and (iv) otherwise comply with the requirements of its Organizational Documents and comply in all material respects with the requirements of the Loan Documents.

(b) Cash Management Systems. Borrower will and will cause each of its Subsidiaries to establish and maintain cash management systems reasonably acceptable to the Required Lenders, including, without limitation, with respect to sweep and pledged account arrangements, with the cash management systems in place on the Closing Date being deemed to be reasonably acceptable to the Required Lenders.

(c) License Agreements and Third-Party License Agreements.

 

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(i) Unless waived in writing in whole or in part pursuant to this Agreement, the Loan Parties shall, subject to their reasonable business judgment, request that each future license agreement in respect of IP Rights or other intellectual property entered into by a Loan Party as sublicensor with a person other than a Loan Party (a “Third Party License Agreement”) to include indemnification provisions having terms at least as favorable to the Loan Parties as those set forth on Schedule 5.14(c). If (i) an Event of Default under this Agreement shall have occurred and be continuing, and (ii) (x) a written notice of termination or notice of material default (or similar such notification) shall have been delivered under any Third Party License Agreement and the event giving rise to such notice has not been cured by the Loan Parties fifteen (15) days prior to the expiration of the applicable cure period with respect thereto, or (y) any event giving rise to an immediate termination right under any Third Party License Agreement shall have occurred, each Loan Party agrees that the Agents shall have the right, but not the obligation, upon five (5) Business Days prior written notice, to perform or cause the relevant Loan Party to perform any of its obligations under any such Third Party License Agreement or deliver any performance required by such Third Party License Agreement. Each Loan Party agrees that any reasonable out-of-pocket payments by the Lender providing such performance shall be reimbursable pursuant to Section 10.2, and to the extent not reimbursed upon demand, shall constitute a Protective Advance by such Lender under Section 2.2 for all purposes.

(ii) If (i) an Event of Default under this Agreement shall have occurred and be continuing, and (ii) (x) a written notice of termination or notice of material default (or similar such notification) shall have been delivered under any material Third Party License Agreement and the event giving rise to such notice has not been cured by the Loan Parties fifteen (15) days prior to the expiration of the applicable cure period with respect thereto, or (y) any event giving rise to an immediate termination right under any material Third Party License Agreement shall have occurred, each Loan Party agrees that any Agent shall have the right, but not the obligation, upon five (5) Business Days prior written notice to perform or cause the relevant Loan Party to perform any of its obligations under any such Third Party License Agreement or deliver any performance required by such Third Party License Agreement. Each Loan Party agrees that any reasonable out-of-pocket payments by the Lender providing such performance shall be reimbursable pursuant to Section 10.2, and to the extent not reimbursed upon demand, shall constitute a Protective Advance by such Lender under Section 2.2 for all purposes.

(iii) If (i) an Event of Default under this Agreement shall have occurred and be continuing, or (ii) a written notice of termination or notice of material default (or similar such notification) shall have been delivered under any Intercompany License Agreement and the event giving rise to such notice has not been cured by the Loan Parties fifteen (15) days prior to the expiration of the applicable cure period with respect thereto, or (iii) any event giving rise to an immediate termination right under any Intercompany License Agreement shall have occurred, each Loan Party agrees that any Lender shall have the right, but not the obligation, to perform or cause the relevant Loan Party to perform any of its obligations under any such Intercompany License Agreement or deliver any performance required by such Intercompany License Agreement. Each Loan Party agrees that any out-of-pocket payments by the Lender providing such performance shall be reimbursable pursuant to Section 10.2, and to the extent not reimbursed upon demand, shall constitute a Protective Advance by such Lender under Section 2.2 for all purposes.

(iv) Nothing set forth herein shall prevent or limit the Borrower or any of its Affiliates from entering into or maintaining Third-Party License Agreements in respect of IP Rights so long as such agreements are on Arm’s Length Terms and comply with Section 6.9 and, in each case to the extent applicable, the requirements of this Agreement in respect of Extraordinary IP Rights Transactions and Section 6.12.

 

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Section 5.15. Post-Closing Matters. Borrower shall, and shall cause each of the Loan Parties to, satisfy the requirements set forth on Schedule 5.15 on or before the date specified for such requirement or such later date to be determined by the Required Lenders.

Section 5.16. AON Insurance Policy. Borrower acknowledges and agrees that no proceeds received by the Collateral Agent in respect of a claim under the AON Insurance Policy shall be applied to prepay the outstanding principal balance of any Term Loan nor shall such proceeds constitute Collateral. Lenders hereby authorize Borrower to, and Borrower agrees to, promptly deliver or cause any written notices or other written information relating to the AON Insurance Policy to be delivered to the Administrative Agent.

Section 5.17. [Reserved].

Section 5.18. Changes to Capital Structure. If the Borrower undergoes any material changes to its capital structure (whether by way of additional funding rounds, issuances of Capital Stock, or otherwise), then Borrower shall deliver to Lender an updated capitilization table concurrently with the delivery of any Quarterly Financial Statement described in Section 5.1(b).

Section 5.19. Convertible Notes. Any Convertible Notes shall at all times (i) satisfy the requirements of and constitute Subordinated Indebtedness and (ii) be subject to an executed and delivered Convertible Notes Subordination Agreement to the extent required herein. Any new note purchase agreement entered into after the Initial Closing Date for the sale of Convertible Notes and any Convertible Notes issued thereunder shall be on terms and conditions previously presented to the Required Lenders and not objected to thereby. Any Convertible Notes or refinancings of Convertible Notes shall not mature, require any scheduled amortization or otherwise require payment of principal prior to ninety-one days after the scheduled Term Loan Maturity Date.

ARTICLE VI

NEGATIVE COVENANTS

Each Loan Party covenants and agrees that, so long as any Commitment is in effect and until payment in full of all Obligations (other than contingent obligations not due and owing), such Loan Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Article VI (provided, that any Subsidiary that has been acquired pursuant to a Permitted Acquisition or other Investment permitted by Section 6.7) shall have a period of forty-five (45) days following the date of such Permitted Acquisition or Investment to perform or comply with, as applicable, the covenants in this Article VI).

Section 6.1. Indebtedness. No Loan Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or indirectly liable with respect to any Indebtedness, except Permitted Indebtedness.

Section 6.2. Liens. No Loan Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind (including any document or instrument in respect of goods or accounts receivable) of any Loan Party or any of its Subsidiaries, whether now owned or hereafter acquired, or any income or profits therefrom, or file or permit the filing of, or permit to remain in effect any financing statement or other similar notice of any Lien with respect to any such property, asset, income or profits under the UCC of any State or under any similar recording or notice statute, except Permitted Liens.

 

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Section 6.3. [Reserved]

Section 6.4. No Further Negative Pledges. Except (a) with respect to any specific property encumbered to secure payment of particular Indebtedness or to be sold pursuant to an executed agreement with respect to an Asset Sale permitted under Section 6.9, (b) with respect to restrictions by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses and other agreements (provided that such restrictions are limited to the property or assets secured by such Liens or the property or assets subject to such leases, licenses or similar agreements, as the case may be), (c) as provided in the AON Insurance Policy and any related documentation, (d) are customary restrictions (as reasonably determined by Borrower) that arise in connection with any disposition permitted hereby and relate solely to the assets or Person subject to such disposition, (e) are customary provisions in joint venture agreements or arrangements and other similar agreements applicable to joint ventures permitted by clause (t) under the definition “Permitted Investments” and applicable solely to such joint venture and its equity entered into in the ordinary course of business, (f) arise in connection with cash or other deposits permitted under Sections 6.2 and 6.9 and limited to such cash or deposit, (g) are restrictions on cash or other deposits imposed by customers under contracts entered into in the ordinary course of business, (h) are restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business, (i) comprise restrictions imposed by any agreement governing Indebtedness entered into on or after the Closing Date and permitted under Section 6.1 that are, taken as a whole, in the good faith judgment of Borrower, no more restrictive with respect to Borrower or any Subsidiary than customary market terms for Indebtedness of such type (and, in any event, taken as a whole, are not more restrictive than the restrictions contained in this Agreement), so long as Borrower shall have determined in good faith that such restrictions will not affect in any material respect its obligation or ability to make any payments required hereunder, (j) are binding on a Subsidiary at the time such Subsidiary first becomes a Subsidiary of Borrower, so long as such contractual obligations were not entered into in contemplation of such Person becoming a Subsidiary of the Borrower, (j) (x) exist on the Closing Date and (to the extent not otherwise permitted by this Section 6.4) are listed on Schedule 6.4 and (y) to the extent agreements permitted by clause (x) are set forth in an agreement evidencing Indebtedness, are set forth in any agreement evidencing any permitted modification, replacement, renewal, extension or refinancing of such Indebtedness so long as such modification, replacement, renewal, extension or refinancing (taken as a whole) does not materially expand the scope of such contractual obligation (as reasonably determined by Borrower), (k) represent Indebtedness of a Subsidiary of a Loan Party which is not a Loan Party which is permitted by clause (b) under the definition “Permitted Indebtedness” and which does not apply to any Loan Party, (l) any encumbrances or restrictions of the type above imposed by any amendments, modifications, restatements, renewals, increases, extensions, supplements, refundings, replacements, restructurings or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (m); provided that such amendments, modifications, restatements, renewals, increases, extensions, supplements, refundings, replacements, restructurings or refinancings (x) are, in the good faith judgment of Borrower, not materially more restrictive with respect to

 

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such encumbrance and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, extension, supplement, refunding, replacement, restructuring or refinancing or (y) do not materially impair the Borrower’s ability to pay their obligations under the Loan Documents as and when due (as determined in good faith by Borrower) and (m) as otherwise permitted under the Loan Documents, no Loan Party shall enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties or assets to secure the Obligations, whether now owned or hereafter acquired.

Section 6.5. Restricted Junior Payments. No Loan Party shall, nor shall it permit any of its Subsidiaries to declare, order, pay, make or set apart, any Restricted Junior Payment, except:

(a) Restricted Junior Payments to pay for the repurchase, retirement or other acquisition or retirement for value of Capital Stock (other than Disqualified Capital Stock) of Borrower (or any of its direct or indirect parent companies) held by any future, present or former employee, director, officer, member of management or consultant of any Loan Party (or any direct or indirect parent company) pursuant to any management equity plan or stock option plan or any other management, service provider or employee benefit plan or agreement, or any equity subscription or equity holder agreement (including, for the avoidance of doubt, any principal and interest payable on any notes issued by Borrower in connection with any such repurchase, retirement or other acquisition) in an amount not to exceed $1,000,000 in any Fiscal Year, with unused amounts in any Fiscal Year carrying over to the next succeeding Fiscal Years;

(b) for any taxable period for which the Loan Parties are members of a consolidated, combined, unitary or similar income tax group for U.S. federal or applicable foreign, state or local income tax purposes (or disregarded entities directly owned by a member of such a group) of which a direct or indirect owner of Borrower is the common parent (a “Tax Group”), any Loan Party may declare and pay dividends or distributions directly or indirectly to, or make loans or advances to the common parent of such Tax Group to allow it to pay the portion of any U.S. federal, foreign, state and local income taxes of such Tax Group for such taxable period that are attributable to the taxable income of the Loan Parties (net of any payments of such taxes made or withheld for the relevant period by the Loan Parties); provided that for each taxable period, the amount of such payments made in respect of such taxable period in the aggregate will not exceed the amount that the Loan Parties, would have been required to pay as a stand-alone Tax Group; provided, further, that losses or credits of a Subsidiary shall only be taken into account to the extent that such Subsidiary is actually a part of the applicable Tax Group and such losses or credits are actually utilized in the relevant period; provided further that any Restricted Junior Payments pursuant to this Section 6.5(b) in respect of taxes attributable to the income of Excluded Subsidiaries shall be permitted only to the extent that cash distributions were made by the Excluded Subsidiaries to any non-Excluded Subsidiary for that purpose;

(c) any Restricted Junior Payment made in connection with the Transactions and the fees and expenses related thereto or owed to any Affiliate;

(d) [reserved];

 

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(e) cash payments, or loans, advances, dividends or distributions to Borrower to make payments, in lieu of issuing fractional shares in connection with share dividends, share splits, reverse share splits, mergers, consolidations, amalgamations or other business combinations and in connection with the exercise of warrants, options or other securities convertible or exchangeable for Capital Stock of any Loan Party;

(f) to the extent constituting a Restricted Junior Payment, the Loan Parties and their Subsidiaries may enter into and consummate transactions expressly permitted (other than by reference to this Section 6.5(f)) by Section 6.1, Section 6.9 or Section 6.12 to be consummated as, or acknowledged therein to be, a Restricted Junior Payment;

(g) (x) Restricted Junior Payments by any Subsidiary to any Loan Party or any other Subsidiary ratably with respect to their Capital Stock, (y) Restricted Junior Payments by any Subsidiary that is not a Loan Party to any Subsidiary that is not a Loan Party, and (z) Restricted Junior Payments among IPHoldCo and each of its Subsidiaries;

(h) Borrower or any of its Subsidiaries may make Restricted Junior Payments in respect of customary working capital adjustments or customary purchase price adjustments pursuant to any Permitted Acquisition or other Permitted Investments;

(i) [reserved];

(j) Restricted Junior Payments on account of any customary earn-outs in an amount not to exceed $10,000,000; provided, that (i) no Event of Default shall exist and be continuing or would result from the making of such Restricted Junior Payment and (ii) the Borrower will be in pro forma compliance with Section 6.21 after giving effect to such Restricted Junior Payment;

(k) the refinancing of any Permitted Indebtedness;

(l) the conversion or exchange of any Indebtedness to Capital Stock of the Borrower or any direct or indirect parent entity thereof;

(m) the prepayment, redemption, purchase, defeasement or satisfaction of Indebtedness of the Borrower or any Subsidiary of the Borrower;

(n) the payment of any Restricted Junior Payment within 60 days after the date of declaration thereof, if at the date of declaration or the giving of such notice such payment would have complied with the provisions of this Section 6.5; provided that the declaration of such Restricted Junior Payment will reduce capacity for Restricted Junior Payments pursuant to such other provision when so declared;

(o) [reserved];

(p) the declaration and payment of Restricted Junior Payments by the Borrower or any other Subsidiaries of the Borrower to any direct or indirect parent of the Borrower or any other Subsidiaries of the Borrower in amounts required for any such direct or indirect parent (or such parent’s direct or indirect equity owners) to pay:

 

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(i) to the extent constituting Restricted Junior Payments, amounts that would be permitted to be paid directly by the Borrower or such Subsidiaries under Section 6.12; and

(ii) [reserved];

(q) the Borrower or any of the Subsidiaries of the Borrower may pay cash in lieu of fractional Capital Stock in connection with any dividend, split or combination thereof or any Permitted Acquisition.

For the avoidance of doubt, if Borrower has any preferred equity outstanding, the Borrower shall not make any distributions on account of such preferred equity prior to the payment of all Obligations in full in Cash in Dollars.

Section 6.6. Restrictions on Subsidiary Distributions. Except as provided herein, no Loan Party shall, nor shall it permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Subsidiary of a Loan Party to (a) pay dividends or make any other distributions on any of such Subsidiary’s Capital Stock owned by a Loan Party or any other Subsidiary of a Loan Party, (b) repay or prepay any Indebtedness owed by such Subsidiary to a Loan Party or any other Subsidiary of a Loan Party, (c) make loans or advances to a Loan Party or any other Subsidiary of a Loan Party, (d) [reserved] or (e) transfer any of its property or assets to a Loan Party or any other Subsidiary of a Loan Party other than, in each case, restrictions (i) in the Loan Documents and in agreements evidencing purchase money Indebtedness or Capital Leases permitted by clause (g) of the definition of “Permitted Indebtedness” that impose restrictions on the property so acquired, (ii) by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses, joint venture agreements and similar agreements entered into in the ordinary course of business, (iii) that are or were created by virtue of any transfer of, agreement to transfer or option or right with respect to any property, assets or Capital Stock not otherwise prohibited under this Agreement, (iv) restrictions imposed by applicable Law and (v) permitted restrictions described in Section 6.4.

Section 6.7. Investments. No Loan Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, make or own any Investment in any Person, including without limitation any Joint Venture, except Permitted Investments and the contribution to the applicable Subsidiary of proceeds of a transfer of its Capital Stock as provided in this Agreement. Notwithstanding the foregoing, in no event shall any Loan Party make any Investment of Cash, Dollars or Cash Equivalents in any Person that was directly or indirectly acquired in a Permitted Acquisition when such Person has on its balance sheet at the time of acquisition Indebtedness for borrowed money or Liens securing Indebtedness for borrowed money.

Section 6.8. Interest Reserve Accounts. The Loan Parties shall not at any time after the Closing Date suffer or permit the available balance of Dollars and Eligible Investments in either Interest Reserve Account to have a mark-to-market aggregate value as of the close of business of the immediately preceding Business Day that is less than the applicable Minimum Interest Reserve Amount.

 

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Section 6.9. Fundamental Changes; Disposition of Assets. No Loan Party shall, nor shall it permit any of its Subsidiaries to, merge or consolidate, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or consummate any Asset Sale, except:

(a) any Subsidiary of Borrower (other than IPHoldCo or any of its Subsidiaries) may be merged with or into Borrower or any Subsidiary (other than IPHoldCo or any of its Subsidiaries), or be liquidated, wound up or dissolved, or all or any part of its business, property or assets may be conveyed, sold, leased (including leases of equipment), transferred or otherwise disposed of, in one transaction or a series of transactions, to Borrower or any Subsidiary (other than IPHoldCo or any of its Subsidiaries); provided that in the case of such a merger with Borrower or any Guarantor, (i) Borrower or such Guarantor, as applicable, shall be the continuing or surviving Person, (ii) any Liens in favor of any Person other than Lenders that encumber the assets of the Person so merged shall not attach to any assets of the surviving Person, other than Permitted Liens and (iii) any Liens in favor of Lenders that encumber the assets of the surviving Person shall attach to any assets of the person so merged on a First Priority basis;

(b) (i) Asset Sales (excluding, for the avoidance of doubt, Extraordinary IP Rights Transactions), the collective proceeds of which are less than $2,500,000 in the aggregate in any Fiscal Year and (ii) Extraordinary IP Rights Transactions; in each case, provided that (A) the consideration received for such assets shall be in an amount at least equal to the Fair Market Value thereof (determined in good faith by the Board of Directors of Borrower or the applicable Subsidiary (or similar governing body), (B) no less than 75% of the consideration shall be paid in Cash including deferred payment obligations payable in Cash), (C) [reserved], and (D) Borrower shall make a mandatory prepayment pursuant to Section 2.9(a), Section 2.9(b) or Section 2.9(d), as applicable;

(c) Asset Sales permitted (other than by reference to this Section 6.9(c)) by Section 6.5 and pursuant to the definition of Permitted Liens;

(d) [reserved];

(e) (x) acquisitions listed on Schedule 6.9, (y) Permitted Acquisitions funded with the proceeds of the issuance of Capital Stock of Borrower that occurs within nine (9) months prior to such acquisition or Subordinated Indebtedness otherwise permitted hereunder issued substantially concurrently with such acquisition, and (z) other Permitted Acquisitions with an amount of cash consideration valued in accordance with GAAP not to exceed $10,000,000 in the aggregate in any fiscal year of the Borrower plus any earn-outs, seller notes or other deferred payment obligations in connection with such acquisition, in the case of each of clauses (y) and (z), so long as the requirements enumerated in the definition of Permitted Acquisition are satisfied in the sole discretion of the Required Lenders or provided that such Permitted Acquisition requirements may be modified by delivery of a written request for such modification to the Lenders and the Administrative Agent ten (10) Business Days prior to the consummation of such Permitted Acquisition and the Required Lenders shall not have objected to such modification within such ten (10) Business Days following receipt of such written request, or otherwise waived by the Required Lenders in their sole discretion pursuant to Section 10.5;

(f) other Permitted Investments;

 

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(g) performance of Indebtedness and other obligations of any type by any Loan Party and/or any of its Subsidiaries at any time arising pursuant to and in respect of the Warrant;

(h) transactions permitted pursuant to Section 6.10;

(i) any Subsidiary of Borrower (other than IPHoldCo and its Subsidiaries including IPCo) may dissolve or liquidate, so long as the assets thereof are distributed to another Loan Party (other than IPHoldCo or any of its Subsidiaries including IPCo); and

(j) Borrower may issue additional Capital Stock.

To the extent any Collateral is sold, transferred or otherwise disposed of as expressly permitted by this Agreement or in connection with a transaction approved by the Required Lenders, in each case to a Person other than a Loan Party, such Collateral shall, except as set forth in this Agreement, be sold, transferred or otherwise disposed of free and clear of the Liens created by the Collateral Documents, and so long as the Loan Parties shall have previously provided to the Collateral Agent and the Administrative Agent such certifications or documents as the Required Lenders, the Collateral Agent or the Administrative Agent shall reasonably request in order to demonstrate compliance with this Agreement and the other Loan Documents, including this Section 6.9, Collateral Agent shall take all actions appropriate or reasonably requested by Borrower in order to effect the foregoing at the sole cost and expense of Borrower and without recourse or warranty by Collateral Agent (including the execution and delivery of appropriate UCC termination statements and such other instruments and releases provided to it and requested by the Loan Parties as may be necessary and appropriate to effect such release). To the extent any such permitted sale, transfer or other disposition results in a Guarantor no longer constituting a Subsidiary of Borrower, the Obligations of such Guarantor and all obligations of such Guarantor under the Credit Documents shall terminate and be of no further force and effect, and each of Administrative Agent and Collateral Agent shall take such actions, at the sole expense of Borrower, as are requested by Borrower in connection with such termination.

Section 6.10. [Reserved].

Section 6.11. Sales and Leasebacks. No Loan Party shall, nor shall it permit any of its Subsidiaries to become or remain liable as lessee or as a guarantor or other surety with respect to any lease of any property (whether real, personal or mixed), whether now owned or hereafter acquired, which such Loan Party has sold or transferred to any other Person (other than any Loan Party or any of its Subsidiaries), except for:

(a) the Bertram Sale and Leaseback, provided that such transaction is on Arm’s Length Terms (as determined by the Borrower in good faith; provided, that any such terms that materially deviate, in a manner that is materially adverse to the Lenders, from the letter of intent to purchase governing the Bertram Sale and Leaseback dated February 22, 2024, shall have been delivered to the Lenders at least ten (10) Business Days prior to the execution of the definitive documentation regarding the Bertram Sale and Leaseback and the Required Lenders shall not have objected in writing to such terms within ten (10) Business Days following receipt of such draft) and the Loan Parties receive aggregate consideration of not more than $51,500,000.00; and

 

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(b) (i) any Machinery Sale and Leaseback, provided that any such transaction is on Arm’s Length Terms (as determined by the Borrower in good faith; provided, that such terms shall have been delivered to the Lenders at least ten (10) Business Days prior to the execution of the definitive documentation regarding such Machinery Sale and Leaseback and the Required Lenders shall not have objected in writing to such proposed terms within ten (10) Business Days following receipt of such draft) and the Loan Parties receive aggregate consideration for all such Machinery Sale and Leaseback transactions of not more than $12,000,000.00 and (ii) (x) that certain Okuma MCR-A5C-II 30 CNC double column machining center having serial number 28B.250521, and (y) that certain Okuma Multus U4000/2SW/1500 CNC machining center having serial number 5R6.249955.

Section 6.12. Transactions with Affiliates. No Loan Party shall, nor shall it permit any of its Subsidiaries to, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with Affiliate in an amount not to exceed $2,500,000, in each case whether or not in the ordinary course of business; provided further that the foregoing restrictions shall not apply to any of the following:

(a) any transaction by and among the Loan Parties and their Subsidiaries, joint ventures or any entity that becomes a Subsidiary of a Loan Party as a result of such transaction;

(b) transactions for Fair Market Value on Arm’s Length Terms;

(c) the Transactions and the payment of Transaction Costs;

(d) equity issuances, repurchases, redemptions, retirements or other acquisitions of Capital Stock by the Loan Parties and their Subsidiaries permitted under Section 6.5;

(e) loans and other transactions to the extent permitted under this Article VI;

(f) customary fees and reasonable out-of-pocket expenses paid to, and indemnities provided on behalf of, members of the Board of Directors (or similar governing body) of the Loan Parties and their Subsidiaries who are not officers or employees of any Loan Party or Subsidiary thereof so long as such fees are paid to individuals (or such individual’s personal service company);

(g) compensation arrangements for consultants, directors, officers and other employees of the Loan Parties and their respective Subsidiaries entered into in the ordinary course of business and transactions pursuant to stock incentive plans, employee stock purchase plans employee benefit plans and similar arrangements;

(h) the issuance of Subordinated Indebtedness or equity issuances, repurchases, redemptions, retirements or other acquisitions of Capital Stock by the Borrower to the Sponsor to the extent permitted under the Warrant;

 

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(i) transactions described in Schedule 6.12 or any amendment, extension, renewal, modification or replacement of any such arrangement or agreement (so long as any such amendment, extension, renewal, modification or replacement is not materially adverse to the Lenders in the good faith judgment of the Borrower when taken as a whole);

(j) the issuance of Capital Stock of (x) the Borrower (or any direct or indirect parent thereof) or (y) any other Subsidiary of the Borrower (or any direct or indirect parent thereof) constituting directors’ qualifying shares or other shares required by applicable Law, in each case, to any manager, officer, director, consultant or employee of the Borrower or any of its Subsidiaries;

(k) (i) so long as no Event of Default under Section 8.1(a), (f) or (g) has occurred and is continuing, the payment of management, monitoring, oversight, consulting, advisory and other fees (including refinancing, transaction and termination and exit fees) pursuant to the Management Agreement as in effect on the Closing Date; provided that, upon the occurrence and during the continuance of an Event of Default under Sections 8.1(a), (f) or (g) such amounts described in this clause (i) may accrue, but not be payable in cash during such period, but all such accrued amounts may be payable in cash upon the cure or waiver of such Event of Default; (ii) indemnifications and reimbursement expenses, in each case, pursuant to the Management Agreement and (iii) the payment of indemnities and reasonable expenses of the Sponsor related to the Borrower and its Subsidiaries;

(l) employment, consulting and severance arrangements between the Borrower (or any direct or indirect parent) and the other Subsidiaries of the Borrower and their respective officers and employees in the ordinary course of business (including loans and advances in connection therewith) and transactions pursuant to stock option plans and employee benefit plans and arrangements in the ordinary course of business;

(m) so long as no Event of Default has occurred and is continuing, customary payments (whether direct or indirect) by the Borrower and any of the other Subsidiaries of the Borrower to the Sponsors made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities (including in connection with acquisitions or divestitures) which payments are made pursuant to the Management Agreement;

(n) [reserved];

(o) the issuance or transfer of Capital Stock of the Borrower to any Permitted Holder or to any former, current or future manager, officer, director, consultant or employee (or any spouses, former spouses, successors, executors, administrators, heirs, legatees, distributees or Affiliates of any of the foregoing) of the Borrower, any of its Subsidiaries or any direct or indirect parent) or any one of its Subsidiaries to the extent not otherwise prohibited by the Loan Documents;

(p) [reserved];

(q) the payment of reasonable out-of-pocket costs and expenses and indemnities pursuant to the stockholder’s agreement or the registration and participation rights agreement entered into on the Closing Date in connection therewith;

 

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(r) payments to or from, and transactions with, joint ventures (to the extent any such joint venture is only an Affiliate as a result of Investments by the Borrower and its Subsidiaries in such joint venture) in the ordinary course of business to the extent otherwise permitted under Section 6.7; and

(s) non-exclusive sublicenses of IP Rights which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the value of said properties or materially impair their use in the operation of the business as currently conducted or as contemplated to be conducted.

Borrower at the end of each Fiscal Month disclose in writing each transaction (other than any transaction described in clause (a) through (s) above) with an Affiliate.

Section 6.13. Conduct of Business.

(a) From and after the Closing Date, no Loan Party shall, nor shall it permit any of its Subsidiaries to, engage in any material business other than (x) any business that is the same as, similar to, reasonably related, incidental, synergistic, corollary, ancillary, complementary to, or a reasonable extension of, the businesses engaged in by such Loan Party or such Subsidiary on the Initial Closing Date, (y) non-core incidental businesses acquired in connection with any Permitted Acquisition or Permitted Investment and (z) such other lines of business as may be consented to by the Required Lenders (and without limiting the foregoing, neither IPCo nor IPHoldCo shall conduct their respective businesses in contravention of Section 6.19).

(b) [reserved].

(c) Any license or sublicense of IP Rights to any Excluded Subsidiary (i) shall be (A) non-exclusive in all respects, (B) non-assignable by such Excluded Subsidiary, except that such Excluded Subsidiary may grant non-exclusive sublicenses to a third party in the ordinary course of business and on Arm’s Length Terms at Fair Market Value and that do not interfere with the ordinary conduct of business of Borrower, or impair the value of any Collateral, in any material respect, including those sublicenses that are implied or incidental with respect to a service or product provided or supplied to the Excluded Subsidiary by a Loan Party, and (C) cancellable (together with any sublicenses granted to a third party, except those that are implied or incidental with respect to service or product that the Excluded Subsidiary has supplied or provided to a third party prior to such cancellation) on account of a material breach of such license, which breach has not been cured by the breaching party within the applicable cure period, if any, under such license or sublicense, (ii) shall include a provision for compensation at Fair Market Value to the licensor Loan Party and (iii) shall be made on Arm’s Length Terms. Any license or sublicense of IP Rights to an Excluded Subsidiary that does not comply in all respects with the prior sentence shall constitute an Extraordinary IP Rights Transaction for all purposes under this Agreement and shall include, or be deemed to include, provision for cash compensation at Fair Market Value to Borrower on Arm’s Length Terms.

 

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Section 6.14. Changes to Certain Agreements and Organizational Documents.

(a) No Loan Party shall (i) amend, waive, modify, restate, supplement or replace, or suffer or permit any waiver, amendments, modifications, restatements, supplements or replacements to any Loan Party’s Organizational Documents if such waiver, amendment, modification, restatement, supplement or replacement would be materially adverse to the interests of Agents or the Lenders, (ii) amend, waive, modify, restate, supplement or replace, or suffer or permit any amendments, modifications, restatements, supplements or replacements to, or terminate or waive any provision of, any Material Contract (including, for avoidance of doubt any Material Contact listed on Schedule 4.14) if such amendment, modification, restatement, supplement or replacement, termination, or waiver would result in a Material Adverse Effect, or (iii) amend, waive, modify, restate, supplement or replace, or suffer or permit any waiver, amendments, modifications, restatements, supplements or replacements to, or terminate or waive any provision of, any Intercompany License Agreement, any material Third Party License Agreement or any Organizational Documents of either IPCo or IPHoldCo if such amendment, modification, restatement, supplement or replacement, termination, or waiver would be materially adverse to the interests of Agents or the Lenders.

(b) No Loan Party shall, nor shall it permit any of its Subsidiaries to, amend or otherwise change the terms of any Subordinated Indebtedness, except in accordance with the applicable subordination and/or intercreditor arrangements.

Section 6.15. Accounting Methods. The Loan Parties will not and will not permit any of their Subsidiaries to modify or change its fiscal year or or to change or materially modify its method of accounting (other than as may be required to conform to GAAP).

Section 6.16. Deposit Accounts and Securities Accounts. No Loan Party shall establish or maintain a Deposit Account or a Securities Account (other than an Excluded Account) that is not subject to a Control Agreement; provided, that such Loan Party shall have 90 days after the Initial Closing Date to put in place a Control Agreement in respect of such deposit accounts.

Section 6.17. Prepayments of Certain Indebtedness. No Loan Party shall, directly or indirectly, voluntarily purchase, redeem, defease or prepay any principal of, premium, if any, interest or other amount payable in respect of any Indebtedness, in an aggregate amount that does exceed $1,000,000, prior to its scheduled maturity, other than (a) the Obligations, (b) Indebtedness secured by a Permitted Lien if the asset securing such Indebtedness has been sold or otherwise disposed of in accordance with Section 6.9, (c) intercompany Indebtedness to the extent permitted pursuant to the Intercompany Subordination Agreement and (d) to the extent permitted pursuant to the applicable Subordination Agreement, Intercompany Subordination Agreement, Intercreditor and Subordination Agreement or other subordination agreement to which an Agent is a party with respect to such Indebtedness; provided, that the Loan Parties may prepay Indebtedness (x) in an amount not to exceed an amount equal to (1) $2,000,000 in the aggregate less (2) the amount of any Investment made in reliance on clause (y) of paragraph (o) of the definition of “Permitted Investments” or (y) with Capital Stock or with the proceeds of a sale or issuance of Capital Stock of any Loan Party or any Subsidiary or other capital contribution in respect thereof of the Borrower’s direct or indirect parent companies.

 

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Section 6.18. Anti-Terrorism Laws, Anti-Corruption Laws, Sanctions. None of the Loan Parties, nor any of their controlled Affiliates representatives or agents shall:

(a) conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving of any contribution of funds, goods or services to or for the benefit of any Blocked Person, in violation of applicable Sanctions,

(b) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to any Sanctions, in violation of applicable Sanctions,

(c) violate, engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any applicable Anti-Terrorism Laws, Anti-Corruption Laws or Sanctions,

(d) use the proceeds of any Loan, directly or indirectly, to fund, finance or facilitate any activities, business or transaction of or with any Blocked Person, or in any Sanctioned Country, or in any manner that would otherwise result in the violation of any Sanctions applicable to any party hereto, or

(e) fund all or part of any payment under this Agreement (i) out of proceeds derived from transactions that violate Sanctions or (ii) with or from property of any Blocked Person to the extent that such funding would result in the violation of any Sanctions applicable to any party thereto.

Borrower shall deliver to the Lenders any certification reasonably requested from time to time by any Lender in its sole discretion within a reasonable period of time following such request, confirming Borrower’s compliance with this Section 6.18 and will cooperate in good faith with reasonable requests for information made by Lenders in order to diligence such certifications within a reasonable period of time following such request.

Section 6.19. Bankruptcy Remote. Neither IPCo nor IPHoldCo shall at any time fail to be organized as a bankruptcy-remote entity having bylaws or an operating agreement, as applicable, in form and substance reasonably acceptable to the Required Lenders (with the Organizational Documents in effect on the Initial Closing Date being deemed to be reasonably acceptable), which bylaws or operating agreement, as applicable, shall contain usual and customary provisions for (i) appointment of an independent director whose affirmative vote shall be required to commence an insolvency proceeding and (ii) separateness representations and covenants. IPCo shall not at any time fail to solely and exclusively own the entire right and title (except pursuant to the Intercompany License Agreements) in and to the patents and other IP Rights of any form, including formulas, trade secrets, know-how, methods or processes, whether or not registered, which it owns except for (A) those rights which are not material to the business of the Loan Parties and their Subsidiaries, (B) the share or portion of any IP Rights co-owned with a third party pursuant to a Contractual Obligation entered into by any Loan Party in the ordinary course of business and on Arm’s Length Terms expressly granting co-ownership in and to such IP Rights to such third party, and (C) any IP Rights sold, assigned, conveyed, or transferred as an Asset Sale Exception (excluding, for the avoidance of doubt, any licenses or sublicenses). Without limiting the generality of the foregoing, the parties hereto aknowledge and agree that Schedule

 

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6.19 sets forth a nonexclusive list of (1) registered or applied for IP Rights, or (2) unregistered IP Rights of which the Loan Parties are aware, in each case co-owned, as of the date of this Agreement, by the Loan Parties and a third party, fitting within the exception set forth in the immediately preceding sentence. Each of IPCo and IPHoldCo shall have the following limitations on business activity: (i) IPCo’s sole business shall be the ownership, licensing, and maintenance of the IP Rights and being a Guarantor hereunder; (ii) IPCo shall grant no Liens except under the Loan Documents and Permitted Liens under clauses (b) and (k) of the definition thereof and shall have no creditors except the Lenders and professional service providers (including, without limitation, attorneys, tax advisors, auditors and intellectual property service firms); (iii) IPHoldCo’s sole business shall be owning 100% of the Capital Stock of IPCo and being a Guarantor hereunder; and (iv) other than Permitted Liens and the creditors with respect thereto, IPHoldCo shall not grant Liens except under the Loan Documents and shall have no creditors except the Lenders. IPHoldCo shall be a wholly owned direct Subsidiary of Meredian Holdings Group, Inc. or such other Loan Party as the parties may agree. In addition, the Loan Parties shall cause IPCo to comply with all of IPCo’s obligations, including IPCo’s obligations to maintain its special purpose vehicle separateness and bankruptcy remote structure, and the Loan Parties shall not amend any such provisions without the prior written consent of the Required Lenders.

Section 6.20. Firefly Aerospace Ukraine, LLC. Without the approval of the Collateral Agent (acting at the direction of the Required Lenders), the Borrower shall not create or suffer to exist any Lien upon the Capital Stock of Firefly Aerospace Ukraine, LLC, or otherwise cause Firefly Aerospace Ukraine, LLC to not consent to any Lien upon any of its assets.

Section 6.21. Financial Covenant.

(a) Minimum Cash. So long as any principal of or interest on any Loan or other Obligation (whether or not due) shall remain unpaid, the Loan Parties, collectively, shall not permit the amount of Qualified Cash to be:

(i) before the date the Bertram Sale and Leaseback is consummated, less than (x) $5,000,000 at any time, or (y) $15,000,000 on the last day of any fiscal month; and

(ii) on and after the date the Bertram Sale and Leaseback is consummated, less than (x) $10,000,000 at any time, or (y) $17,500,000 on the last day of any fiscal month.

(b) Equity Cure. For purposes of determining compliance with clause (a) of this Section 6.21, any cash equity contribution (which equity shall be common equity or other equity on terms reasonably acceptable to the Administrative Agent) made to the Borrower on or prior to the day that is ten (10) Business Days after the day on which financial statements are required to be delivered for a fiscal quarter pursuant to Section 5.1 hereof (the “Cure Expiration Date”) and designated on the date of such contribution as a “Specified Equity Contribution” (each such designation, an “Equity Cure”) will, at the request of the Borrower, be included in the calculation of minimum Cash for such fiscal month, as applicable, for the purposes of determining compliance with clause (a) of this Section at the end of such fiscal month or applicable subsequent periods including such fiscal month (any such equity contribution, a “Specified Equity Contribution”), provided that (i) no more than one Specified Equity Contribution may be made

 

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in any period of four consecutive fiscal quarters, (ii) no more than four Specified Equity Contributions may be made during the term of this Agreement, (iii) the amount of any Specified Equity Contribution shall be no greater than 100% of the amount required to cause the Borrower to be in compliance with clause (a) of this Section 6.21, (iv) all Specified Equity Contributions shall be disregarded for all other purposes herein other than determining compliance with the covenants in clause (a) of this Section 6.21 and shall not result in any pro forma reduction of Indebtedness with respect to the fiscal quarter with respect to which such Specified Equity Contribution was made, and (v) no Lender shall be required to make any extension of credit hereunder if an Event of Default under the covenants set forth in Section 6.12(a) has occurred and is continuing during the ten (10) Business Day period during which the Borrower may exercise an Equity Cure unless and until the Specified Equity Contribution is actually received. No Default, Event of Default or potential Event of Default shall exist with respect to a breach of Section 6.21(a) until and unless the Cure Expiration Date has occurred without the Cure Amount having been received.

ARTICLE VII

GUARANTY

Section 7.1. Guaranty of the Obligations. Subject to the provisions of Section 7.2, Guarantors jointly and severally hereby irrevocably and unconditionally guaranty for the ratable benefit of the Beneficiaries the due and punctual payment in full of all Obligations, including without limitation Specified Premium, when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)) (collectively, the “Guaranteed Obligations”).

Section 7.2. Contribution by Guarantors. All Guarantors desire to allocate among themselves, in a fair and equitable manner, their obligations arising under this Guaranty. Accordingly, in the event any payment or distribution is made on any date by a Guarantor under this Guaranty such that its Aggregate Payments exceeds its Fair Share as of such date, such Guarantor shall be entitled to a contribution from each of the other Guarantors in an amount sufficient to cause each Guarantor’s Aggregate Payments to equal its Fair Share as of such date. “Fair Share” means, with respect to any Guarantor as of any date of determination, an amount equal to (a) the ratio of (i) the Fair Share Contribution Amount with respect to such Guarantor, to (ii) the aggregate of the Fair Share Contribution Amounts with respect to all Guarantors multiplied by, (b) the aggregate amount paid or distributed on or before such date by all Guarantors under this Guaranty in respect of the Guaranteed Obligations. “Fair Share Contribution Amount” means, with respect to any Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Guarantor under this Guaranty that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any comparable applicable provisions of state law; provided solely for purposes of calculating the “Fair Share Contribution Amount” with respect to any Guarantor for purposes of this Section 7.2, any assets or liabilities of such Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder shall not be considered as assets or liabilities of such Guarantor. “Aggregate Payments” means, with respect to any Guarantor as of any date of determination, an

 

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amount equal to (A) the aggregate amount of all payments and distributions made on or before such date by such Guarantor in respect of this Guaranty (including, without limitation, in respect of this Section 7.2), minus (B) the aggregate amount of all payments received on or before such date by such Guarantor from the other Guarantors as contributions under this Section 7.2. The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Guarantor. The allocation among Guarantors of their obligations as set forth in this Section 7.2 shall not be construed in any way to limit the liability of any Guarantor hereunder. Each Guarantor is a third party beneficiary to the contribution agreement set forth in this Section 7.2.

Section 7.3. Payment by Guarantors. Subject to Section 7.2, Guarantors hereby jointly and severally agree, in furtherance of the foregoing and not in limitation of any other right which any Beneficiary may have at law or in equity against any Guarantor by virtue hereof, that upon the failure of Borrower to pay any of the Guaranteed Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)), Guarantors will upon written demand pay, or cause to be paid, in Cash in Dollars, to Administrative Agent for the ratable benefit of Beneficiaries, an amount equal to the sum of the unpaid principal amount of all Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including interest which, but for Borrower becoming the subject of a case under the Bankruptcy Code, would have accrued on such Guaranteed Obligations, whether or not a claim is allowed against Borrower for such interest in the related bankruptcy case) and all other Guaranteed Obligations then owed to Beneficiaries as aforesaid.

Section 7.4. Liability of Guarantors Absolute. Each Guarantor agrees that its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment in full of the Guaranteed Obligations. In furtherance of the foregoing and without limiting the generality thereof, each Guarantor agrees as follows:

(a) this Guaranty is a guaranty of payment when due and not of collectability. This Guaranty is a primary obligation of each Guarantor and not merely a contract of surety;

(b) any Agent may enforce this Guaranty upon the occurrence and, during the continuance, of an Event of Default notwithstanding the existence of any dispute between Borrower and any Beneficiary with respect to the existence of such Event of Default;

(c) the obligations of each Guarantor hereunder are independent of the obligations of Borrower and the obligations of any other guarantor (including any other Guarantor) of the obligations of Borrower, and a separate action or actions may be brought and prosecuted against such Guarantor whether or not any action is brought against Borrower or any of such other guarantors and whether or not Borrower is joined in any such action or actions;

 

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(d) payment by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect, modify or abridge any Guarantor’s liability for any portion of the Guaranteed Obligations which has not been paid. Without limiting the generality of the foregoing, if any Agent is awarded a judgment in any suit brought to enforce any Guarantor’s covenant to pay a portion of the Guaranteed Obligations, such judgment shall not be deemed to release such Guarantor from its covenant to pay the portion of the Guaranteed Obligations that is not the subject of such suit, and such judgment shall not, except to the extent satisfied by such Guarantor, limit, affect, modify or abridge any other Guarantor’s liability hereunder in respect of the Guaranteed Obligations;

(e) any Beneficiary, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability hereof or giving rise to any reduction, limitation, impairment, discharge or termination of any Guarantor’s liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guaranteed Obligations, (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guaranteed Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations, (iii) request and accept other guaranties of the Guaranteed Obligations and take and hold security for the payment hereof or the Guaranteed Obligations, (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or any other obligation of any Person (including any other Guarantor) with respect to the Guaranteed Obligations, (v) enforce and apply any security now or hereafter held by or for the benefit of such Beneficiary in respect hereof or the Guaranteed Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that such Beneficiary may have against any such security, in each case as such Beneficiary in its discretion may determine consistent herewith and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or non-judicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Guarantor against Borrower or any security for the Guaranteed Obligations and (vi) exercise any other rights available to it under the Loan Documents; and

(f) this Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than payment in full of the Guaranteed Obligations), including the occurrence of any of the following, whether or not any Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Loan Documents, at law, in equity or otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Guaranteed Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) hereof, any of the other Loan Documents or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guaranteed Obligations, in each case whether or not in accordance with the terms hereof or such Loan Document or any agreement relating to such other guaranty or security; (iii) the Guaranteed Obligations, or any agreement relating thereto, at any time being found to be illegal,

 

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invalid or unenforceable in any respect; (iv) the application of payments received from any source (other than payments received pursuant to the other Loan Documents or from the proceeds of any security for the Guaranteed Obligations, except to the extent such security also serves as collateral for indebtedness other than the Guaranteed Obligations) to the payment of indebtedness other than the Guaranteed Obligations, even though any Beneficiary might have elected to apply such payment to any part or all of the Guaranteed Obligations; (v) any Beneficiary’s consent to the change, reorganization or termination of the corporate structure or existence of any Loan Party or any of its Subsidiaries and to any corresponding restructuring of the Guaranteed Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guaranteed Obligations; (vii) any defenses, set offs or counterclaims which Borrower may allege or assert against any Beneficiary in respect of the Guaranteed Obligations, including failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of any Guarantor as an obligor in respect of the Guaranteed Obligations (other than the payment in full of the Obligations).

Section 7.5. Waivers by Guarantors. Each Guarantor hereby waives (to the extent permitted by applicable law), for the benefit of Beneficiaries: (a) any right to require any Beneficiary, as a condition of payment or performance by such Guarantor, to (i) proceed against Borrower, any other guarantor (including any other Guarantor) of the Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any security held from Borrower, any such other guarantor or any other Person, (iii) proceed against or have resort to any balance of any Deposit Account or credit on the books of any Beneficiary in favor of Borrower or any other Person, or (iv) pursue any other remedy in the power of any Beneficiary whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of Borrower or any other Guarantor including any defense based on or arising out of the lack of validity or the unenforceability of the Guaranteed Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of Borrower or any other Guarantor from any cause other than payment in full of the Guaranteed Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Beneficiary’s errors or omissions in the administration of the Guaranteed Obligations, except behavior which amounts to bad faith, gross negligence or willful misconduct; (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms hereof and any legal or equitable discharge of such Guarantor’s obligations hereunder, (ii) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder or the enforcement hereof, (iii) any rights to set offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any Beneficiary protect, secure, perfect or insure any security interest or lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance hereof, notices of default hereunder or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guaranteed Obligations or any agreement related thereto, notices of any extension of credit to Borrower and notices of any of the matters referred to in Section 7.4 and any right to consent to any thereof; and (g) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms hereof.

 

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Section 7.6. Guarantors’ Rights of Subrogation, Contribution, etc. Until the Guaranteed Obligations shall have been paid in full (other than contingent obligations), each Guarantor hereby waives (to the extent permitted by applicable law) any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against Borrower or any other Guarantor or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and including without limitation (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against Borrower with respect to the Guaranteed Obligations, (b) any right to enforce, or to participate in, any claim, right or remedy that any Beneficiary now has or may hereafter have against Borrower, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Beneficiary. In addition, until the Guaranteed Obligations shall have been indefeasibly paid in full, each Guarantor shall withhold exercise of any right of contribution such Guarantor may have against any other guarantor (including any other Guarantor) of the Guaranteed Obligations, including, without limitation, any such right of contribution as contemplated by Section 7.2. Each Guarantor further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Guarantor may have against Borrower or against any collateral or security, and any rights of contribution such Guarantor may have against any such other guarantor, shall be junior and subordinate to any rights any Beneficiary may have against Borrower, to all right, title and interest any Beneficiary may have in any such collateral or security, and to any right any Beneficiary may have against such other guarantor. If any amount shall be paid to any Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Guaranteed Obligations shall not have been finally and indefeasibly paid in full, such amount shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof.

Section 7.7. Subordination of Other Obligations. Any Indebtedness of Borrower or any Guarantor now or hereafter held by any Guarantor is hereby subordinated in right of payment to the Guaranteed Obligations, and any such indebtedness collected or received by such Guarantor after an Event of Default has occurred and is continuing and the Agent (as directed by the Required Lenders) has provided three (3) Business Days prior written notice shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations but without affecting, impairing or limiting in any manner the liability of such Guarantor under any other provision hereof.

Section 7.8. Continuing Guaranty. This Guaranty is a continuing guaranty and shall remain in effect until all of the Guaranteed Obligations shall have been paid in full (other the contingent obligations not due and owing). Each Guarantor hereby irrevocably waives (to the extent permitted by applicable law) any right to revoke this Guaranty as to future transactions giving rise to any Guaranteed Obligations.

 

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Section 7.9. Authority of Guarantors or Borrower. It is not necessary for any Beneficiary to inquire into the capacity or powers of any Guarantor or Borrower or the officers, directors or any agents acting or purporting to act on behalf of any of them.

Section 7.10. Financial Condition of Borrower. Any Credit Extension may be made to Borrower or continued from time to time without notice to or authorization from any Guarantor regardless of the financial or other condition of Borrower at the time of any such grant or continuation is entered into, as the case may be. No Beneficiary shall have any obligation to disclose or discuss with any Guarantor its assessment, or any Guarantor’s assessment, of the financial condition of Borrower. Each Guarantor has adequate means to obtain information from Borrower on a continuing basis concerning the financial condition of Borrower and its ability to perform its obligations under the Loan Documents, and each Guarantor assumes the responsibility for being and keeping informed of the financial condition of Borrower and of all circumstances bearing upon the risk of non-payment of the Guaranteed Obligations. Each Guarantor hereby waives and relinquishes any duty on the part of any Beneficiary to disclose any matter, fact or thing relating to the business, operations or conditions of Borrower now known or hereafter known by any Beneficiary.

Section 7.11. Bankruptcy, etc.

(a) The obligations of Guarantors hereunder shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any case or proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of Borrower or any other Guarantor or by any defense which Borrower or any other Guarantor may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding.

(b) Each Guarantor acknowledges and agrees that any interest on any portion of the Guaranteed Obligations which accrues after the commencement of any case or proceeding referred to in clause (a) above (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by operation of law by reason of the commencement of such case or proceeding, such interest as would have accrued on such portion of the Guaranteed Obligations if such case or proceeding had not been commenced) shall be included in the Guaranteed Obligations because it is the intention of Guarantors and Beneficiaries that the Guaranteed Obligations which are guaranteed by Guarantors pursuant hereto should be determined without regard to any rule of law or order which may relieve Borrower of any portion of such Guaranteed Obligations. Guarantors will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay Administrative Agent, or allow the claim of Administrative Agent in respect of, any such interest accruing after the date on which such case or proceeding is commenced.

(c) In the event that all or any portion of the Guaranteed Obligations are paid by Borrower, the obligations of Guarantors hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from any Beneficiary as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guaranteed Obligations for all purposes hereunder.

 

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Section 7.12. Discharge of Guaranty upon Sale of Guarantor. If all of the Capital Stock of any Guarantor or any of its successors in interest hereunder shall be sold or otherwise disposed of (including by merger or consolidation) in accordance with the terms and conditions hereof or the Guarantor otherwise becomes an Excluded Subsidiary, the Guaranty of such Guarantor or such successor in interest, as the case may be, hereunder shall automatically be discharged and released without any further action by any Beneficiary or any other Person effective as of the time of such sale or disposition.

Section 7.13. Limitation.

(a) It is the intent of each Guarantor and the Agents that the maximum Guaranteed Obligations hereunder shall be, but not in excess of:

(i) in a case or proceeding commenced by or against any Guarantor under the provisions of Title 11 of the Bankruptcy Code, on or within one year from the date on which any of the Guaranteed Obligations are incurred, the maximum amount which would not otherwise cause the Guaranteed Obligations (or any other obligations of such Guarantor owed to the Beneficiaries) to be avoidable or unenforceable against such Guarantor under (i) Section 548 of the Bankruptcy Code or (ii) any state fraudulent transfer or fraudulent conveyance act or statute applied in any such case or proceeding by virtue of Section 544 of the Bankruptcy Code; or

(ii) in a case or proceeding commenced by or against any Guarantor under the Bankruptcy Code subsequent to one year from the date on which any of the Guaranteed Obligations are incurred, the maximum amount which would not otherwise cause the Guaranteed Obligations (or any other obligations of such Guarantor to the Beneficiaries) to be avoidable or unenforceable against such Guarantor under any state fraudulent transfer or fraudulent conveyance act or statute applied in any such case or proceeding by virtue of Section 544 of the Bankruptcy Code; or

(iii) in a case or proceeding commenced by or against any Guarantor under any law, statute or regulation other than the Bankruptcy Code (including, without limitation, any other bankruptcy, reorganization, arrangement, moratorium, readjustment of debt, dissolution, liquidation or similar debtor relief laws), the maximum amount which would not otherwise cause the Guaranteed Obligations (or any other obligations of such Guarantor to the Beneficiaries) to be avoidable or unenforceable against such Guarantor under such law, statute or regulation, including, without limitation, any state fraudulent transfer or fraudulent conveyance act or statute applied in any such case or proceeding.

(b) The substantive laws under which the possible avoidance or unenforceability of the Guaranteed Obligations (or any other obligations of such Guarantor to the Beneficiaries) as may be determined in any case or proceeding shall hereinafter be referred to as the “Avoidance Provisions”. To the extent set forth in Section 7.13(a)(i), (a)(ii) and (a)(iii) but only to the extent that the Guaranteed Obligations would otherwise be subject to avoidance or found unenforceable under the Avoidance Provisions, if any Guarantor is not deemed to have received valuable consideration, fair value or reasonably equivalent value for the Guaranteed Obligations, or if the Guaranteed Obligations would render such Guarantor insolvent, or leave such Guarantor with an unreasonably small capital to conduct its business, or cause such

 

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Guarantor to have incurred debts (or to have intended to have incurred debts) beyond its ability to pay such debts as they mature, in each case as of the time any of the Guaranteed Obligations are deemed to have been incurred under the Avoidance Provisions and after giving effect to the contribution by such Guarantor, the maximum Guaranteed Obligations for which such Guarantor shall be liable hereunder shall be reduced to that amount which, after giving effect thereto, would not cause the Guaranteed Obligations (or any other obligations of such Guarantor to the Beneficiaries), as so reduced, to be subject to avoidance or unenforceability under the Avoidance Provisions and the amount by which such Guaranteed Obligations have been reduced shall be used by such Guarantor only to make the payments for which they were reserved.

(c) This Section 7.13 is intended solely to preserve the rights of the Beneficiaries hereunder to the maximum extent that would not cause the Guaranteed Obligations of such Guarantor to be subject to avoidance or unenforceability under the Avoidance Provisions, and neither the Guarantors nor any other Person shall have any right or claim under this Section 7.13 as against the Beneficiaries that would not otherwise be available to such Person under the Avoidance Provisions.

ARTICLE VIII

EVENTS OF DEFAULT

Section 8.1. Events of Default. If any one or more of the following conditions or events shall occur:

(a) Failure to Make Payments When Due. Failure by Borrower to pay (i) the principal of and Specified Premium, if any, on any Term Loan whether at stated maturity, by acceleration or otherwise, (ii) when due any installment of principal of any Term Loan, by notice of voluntary prepayment, by mandatory prepayment or otherwise or (iii) within three (3) Business Days of when due any interest on any Term Loan or any fee, deposit or any other amount due hereunder; provided that in each case, if (A) proximately caused by ministerial error or delay on the part of the Administrative Agent and (B) the Interest Reserve Accounts hold funds sufficient to make such applicable payment in full, then the failure of Cash interest in Dollars to be timely paid pursuant to the operation of Section 2.16(c)(i) shall not constitute an Event of Default hereunder; or

(b) Default in Other Agreements. (i) Failure of any Loan Party or any of their respective Subsidiaries to pay when due any principal of or interest on or any other amount payable in respect of one or more items of Indebtedness (other than Indebtedness referred to in Section 8.1(a)) having an aggregate principal amount in excess of the Threshold Amount, in each case after the delivery of any required notices and beyond the grace period, if any, provided therefor, and such Indebtedness has been accelerated, except to the extent such payment is restricted by a Subordination Agreement in favor of the Collateral Agent; or (ii) breach or default by any Loan Party with respect to any other material term of (A) one or more items of Indebtedness in the aggregate principal amount referred to in clause (i) above or (B) any loan agreement, mortgage, indenture, other agreement relating to such item(s) of Indebtedness in each case beyond the grace period, if any, provided therefor and giving all requisite notices, if the effect of such breach or default is to cause, or to permit the holder or holders of that Indebtedness

 

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(or a trustee on behalf of such holder or holders), to cause, that Indebtedness to become or be declared due and payable (or subject to a compulsory repurchase or redeemable) or to require the prepayment, redemption, repurchase or defeasance of, or to cause any Loan Party or any of its Subsidiaries to make any offer to prepay, redeem, repurchase or defease such Indebtedness, prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be; provided, that if any such default is cured or waived prior to acceleration of the Obligations, then any Event of Default arising under this subsection (b) shall be deemed cured; provided that clause (b)(ii) shall not apply to secured Indebtedness that becomes due (or requires an offer to purchase) as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness, if such sale or transfer is permitted hereunder and under the documents providing for such Indebtedness); provided, further, that such failure or breach is unremedied and is not waived by the required holders of such Indebtedness or counterparty to such Material Contract; or

(c) Breach of Certain Covenants. Failure of any Loan Party to perform or comply with any term or condition contained in (i) Section 2.4, Section 2.16, Section 5.2 (as to existence), Section 5.14, Section 5.15, Section 5.22 or Article VI or (ii) Section 5.1, Section 5.2 (other than with respect to existence), Section 5.3, Section 5.5, Section 5.6, Section 5.7, Section 5.8, Section 5.10, Section 5.11 or Section 5.13 and, in the case of this clause (ii), such default shall not have been remedied or waived within fifteen (15) Business Days after the earlier of (x) an officer of such Loan Party becoming aware of such default and (y) receipt by Borrower of written notice from any Agent or any Lender of such default, provided that, notwithstanding anything herein to the contrary, any Event of Default that occurs pursuant to this Section 8.1(c)(i) in respect of failure to comply with Section 2.16(b) shall be automatically cured if such insurance premium is paid as and when due; or

(d) Breach of Representations, etc. Any representation, warranty, certification or other written statement of fact made by any Loan Party in any Loan Document or in any statement or certificate at any time given by any Loan Party or any of its Subsidiaries in writing pursuant hereto or thereto or in connection herewith or therewith shall be false in any material respect (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) as of the date made and such incorrect representation, warranty, certification or other written statement of fact (if curable) shall remain incorrect for a period of 30 days after such Loan Party obtains knowledge thereof or the Borrower receives written notice thereof from the Administrative Agent; or

(e) Other Defaults under Loan Documents. Any Loan Party shall default in the performance of or compliance with any term contained herein or any of the other Loan Documents, other than any such term referred to in any other Clause of this Section 8.1, and such default shall not have been remedied or waived within thirty (30) days after the earlier of (i) an officer of such Loan Party becoming aware of such default and (ii) receipt by Borrower of notice from any Agent or any Lender of such default; or

 

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(f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court of competent jurisdiction shall enter a decree or order for relief in respect of any Loan Party or any of its Subsidiaries (other than Immaterial Subsidiaries) in an involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted under any applicable law of any jurisdiction; or (ii) an involuntary case shall be commenced against any Loan Party or any of its Subsidiaries (other than any Immaterial Subsidiary) under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect in any jurisdiction; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over any Loan Party or any of its Subsidiaries (other than any Immaterial Subsidiary), or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee or other custodian of any Loan Party or any of its Subsidiaries for all or a substantial part of its property; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of any Loan Party or any of its Subsidiaries, and any such event described in this clause (ii) shall continue for sixty (60) days without having been dismissed, bonded or discharged; or

(g) Voluntary Bankruptcy; Appointment of Receiver, etc. (i) Any Loan Party or any of its Subsidiaries (other than any Immaterial Subsidiary) shall have an order for relief entered with respect to it or shall commence a voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law of any jurisdiction now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or any Loan Party or any of its Subsidiaries shall make any assignment for the benefit of creditors; or (ii) any Loan Party or any of its Subsidiaries shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due; or the Board of Directors (or similar governing body) of any Loan Party or any of its Subsidiaries shall adopt any resolution to approve any of the actions referred to herein or in Section 8.1(f); or

(h) Judgments and Attachments. Any money judgment, regulatory fine levied by a Governmental Authority, writ or warrant of attachment or similar process involving an amount in excess of the Threshold Amount in an individual case or other legal or regulatory proceeding or in the aggregate at any time (in either case to the extent not adequately covered by insurance as to which a solvent and unaffiliated insurance company has received a properly tendered claim and not denied coverage) shall be entered, decided or filed against any Loan Party or any of their respective assets and shall remain undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days (or in any event later than five (5) days prior to the date of any proposed sale thereunder); or

(i) Dissolution. Any order, judgment or decree shall be entered against any Loan Party decreeing the dissolution or split up of such Loan Party, to the extent such dissolution or split up is not permitted pursuant to Section 6.9, and such order shall remain undischarged or unstayed for a period in excess of sixty (60) days; or

(j) Employee Benefit Plans. There shall occur one or more ERISA Events which individually or in the aggregate results in or could reasonably be expected to result in a Material Adverse Effect; or

 

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(k) Change of Control. A Change of Control shall have occurred; or

(l) Guaranties, Collateral Documents and other Loan Documents. At any time after the execution and delivery thereof, (i) the Guaranty for any reason, other than the satisfaction in full of all Obligations, shall cease to be in full force and effect (other than in accordance with its terms) or shall be declared to be null and void or any Guarantor shall repudiate in writing its material obligations thereunder, (ii) this Agreement or any Collateral Document ceases to be in full force and effect (other than by reason of a release of Collateral in accordance with the terms hereof or thereof or the satisfaction in full of the Obligations in accordance with the terms hereof) or shall be declared null and void, or Agents shall not have or shall cease to have a valid and perfected Lien in a material portion of the Collateral purported to be covered by the Collateral Documents with the priority required by the relevant Collateral Document, in each case for any reason other than the failure of Agents or any Secured Party to take any action within its control, or (iii) any Loan Party shall contest the validity or enforceability of any Loan Document in writing or deny in writing that it has any further liability, including with respect to future advances by Lenders, under any Loan Document to which it is a party (other than by reason of a release of Collateral in accordance with the terms hereof or thereof or the satisfaction in full of the Obligations in accordance with the terms hereof); or

(m) Proceedings. The conviction of any Loan Party under any criminal statute, or a final non-appealable judgment pursuant to criminal or civil proceedings against any Loan Party, in each case, pursuant to which statute or proceedings the penalties have resulted in forfeiture to any Governmental Authority of any material portion of the Collateral owned by such Loan Party in an aggregate amount exceeding $5,000,000; or

(n) Cessation of Business. (i) The Loan Parties and their Subsidiaries are enjoined, restrained or prevented by the order of any court or any Governmental Authority from conducting all or any material part of its business for more than thirty (30) consecutive days, or (ii) any other cessation of a substantial part of the business of the Loan Parties and their Subsidiaries engaged in material operations for a period which materially and adversely affects the Loan Parties or any of their Subsidiaries; or

(o) AON Insurance Policy and Intercompany License Agreements. At any time after the execution and delivery thereof, (i) the AON Insurance Policy or any Intercompany License Agreement for any reason, other than the satisfaction in full of all Obligations, shall cease to be in full force and effect or shall be declared to be null and void or any counterparty thereto shall repudiate its obligations thereunder, or (ii) any counterparty to the AON Insurance Policy or any Intercompany License Agreement or any Loan Party shall contest the validity or enforceability of the AON Insurance Policy or any Intercompany License Agreement in writing or deny in writing that it has any further rights or obligations under the AON Insurance Policy or any Intercompany License Agreement; or

(p) Failure to Fund the Interest Reserve Accounts. Failure to at all times after the Closing Date maintain in each Interest Reserve Account at least the amount required in Section 2.16(b)(i); or

 

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(q) Failure to Fund the Insurance Premium Reserve Account. Failure to (i) fund the Insurance Premium Reserve Account, in accordance with Section 2.16(b)(ii)(A), (ii) fully fund in cash the Insurance Premium Reserve Account, the applicable Insurance Premium Reserve Amount referred to in Section 2.16(b)(ii)(B) at least three (3) Business Days prior to the date on which the second insurance premium is due under the AON Insurance Policy; provided that, notwithstanding anything herein to the contrary, any Event of Default that occurs pursuant to this Section 8.1(q)(ii) shall be automatically cured if such insurance premium is paid as and when due, or (iii) fully fund in cash the Insurance Premium Reserve Account with the applicable Insurance Premium Reserve Amount referred to in Section 2.16(b)(ii)(C) immediately upon the occurrence of any Event of Default hereunder;

THEN, (A) upon the occurrence of any Event of Default described in Section 8.1(f) or Section 8.1(g), automatically, (B) upon the occurrence of any Event of Default under Section 8.1(p) and the continuance of such Event of Default for ten (10) days, automatically on such tenth (10th) day, and (C) upon the occurrence of any other Event of Default, at the request of (or with the consent of) Required Lenders (1) the Commitments, if any, of each Lender having such Commitments shall immediately terminate; (2) each of the following shall immediately become due and payable, in each case without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by each Loan Party: (x) the unpaid principal amount of and accrued interest on the Term Loans, and (y) the Specified Premium and all other Obligations; and (3) Agents may enforce any and all Liens and security interests created pursuant to Collateral Documents and exercise any other remedies available under contract or applicable law subject to the terms and conditions of the Loan Documents. Each Loan Party shall, at the Collateral Agent’s request, following the occurrence, and during the continuance, of an Event of Default described in any one of Sections 8.1(a), (c)(i), (f), (g), (h), (i), (k), (l) or (p), make its development, engineering, architecture, and design personnel reasonably available to the Collateral Agent and provide such other information, materials, and assistance to the Collateral Agent, in each case as Agent deems reasonably necessary to train and instruct the Collateral Agent and/or its designee(s) in the development, compilation, operation, maintenance and support of the software (both licensed and internal use-only) of the Loan Parties.

ARTICLE IX

AGENTS

Section 9.1. Appointment.

(a) Each of the Lenders hereby irrevocably appoints Administrative Agent to serve as administrative agent under the Loan Documents and Collateral Agent to serve as collateral agent under the Loan Documents, and authorizes such Agents to execute, deliver and administer the Loan Documents and to take such actions and to exercise such powers as are delegated to each such Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. In addition, to the extent required under the laws of any jurisdiction other than the United States, each of the Lenders hereby grants to the Agents any required powers of attorney to execute any Collateral Document governed by the laws of such jurisdiction on such Lender’s behalf.

 

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(b) Each Person serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with Borrower, any Guarantor, or any other Subsidiary or other Affiliate thereof as if such Person were not an Agent hereunder and without any duty to account therefor to the Lenders.

Section 9.2. Nature of Duties; Delegation.

(a) The Agents shall not have any duties or obligations except those expressly set forth in the Loan Documents, and their duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, (i) the Agents shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or an Event of Default has occurred and is continuing (and it is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to an Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Requirement of Law, and that such term is used as a matter of market custom and is intended to create or reflect only an administrative relationship between contracting parties), (ii) the Agents shall not have any duty to take any discretionary action or to exercise any discretionary power, except discretionary rights and powers expressly contemplated by the Loan Documents that the Agents are required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as either Agent shall believe in good faith to be necessary, under the circumstances as provided in the Loan Documents); provided that neither Agent shall be required to take any action that, in its opinion, could expose either Agent to liability or be contrary to any Loan Document or any Requirement of Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a defaulting Lender in violation of any Debtor Relief Law; provided, further, that neither Agent shall be required to take any action which exposes such Agent to liability or which is contrary to this Agreement or the Loan Documents or applicable law unless such Agent is furnished with an indemnification reasonably satisfactory to such Agent with respect thereto, and (iii) except as expressly set forth in the Loan Documents, the Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to any Loan Party, any other Subsidiary or any other Affiliate of any of the foregoing that is communicated to or obtained by the Person serving as an Agent or any of its Affiliates in any capacity. Neither Agent shall be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Agent shall believe in good faith to be necessary, under the circumstances as provided in the Loan Documents) or in the absence of its own gross negligence, bad faith, fraud, or willful misconduct (such absence to be presumed unless otherwise determined by a court of competent jurisdiction by a final and nonappealable judgment); provided that no action taken or not taken at the direction of the Required Lenders shall be considered gross negligence or willful misconduct. The Agents shall be deemed not to have knowledge of any Default or Event of Default unless and

 

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until written notice thereof (conspicuously stating that it is a “notice of default” and providing sufficient detail of such Default or Event of Default) is given to the Administrative Agent by Borrower or a Lender, and the Agents shall not be responsible for or have any duty to ascertain or inquire into (A) any statement, warranty or representation made in or in connection with any Loan Document, (B) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (C) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document or the occurrence of any Default or Event of Default, (D) the sufficiency, validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (E) the satisfaction of any condition set forth in this Agreement or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to an Agent or satisfaction of any condition that expressly refers to the matters described therein being acceptable or satisfactory to the applicable Agent. The Agents shall be entitled to rely, and shall not incur any liability for relying, upon any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person (whether or not such Person in fact meets the requirements set forth in the Loan Documents for being the signatory, sender or authenticator thereof). The Agents also shall be entitled to rely, and shall not incur any liability for relying, upon any statement made to it orally or by telephone and believed by it to be made by the proper Person (whether or not such Person in fact meets the requirements set forth in the Loan Documents for being the signatory, sender or authenticator thereof), and may act upon any such statement prior to receipt of written confirmation thereof. In determining compliance with any condition hereunder to the making of a Term Loan that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received written notice to the contrary from such Lender prior to the making of such Term Loan. The Agents may consult with legal counsel (who may be counsel for any Lender), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

(b) The Agents shall be entitled to refrain from any discretionary act or taking such discretionary action unless and until such Agent shall have received instructions from the Required Lenders, and the Agents shall not incur liability to any Person by reason of so refraining and if, in performing its duties under this Agreement or the Loan Documents, if such Agent is required to decide between alternative courses of action or has received conflicting directions or any other directions from Lenders who do not satisfy the definition of Required Lenders, such Agent may refrain from taking any action until it receives instructions from the Required Lenders. The Agents may at any time request instructions from the Lenders with respect to any actions or approvals which by the terms of this Agreement or of any of the Loan Documents the Agents are permitted or required to take or to grant. Whether or not the Agents make such a request for direction, at all times except with respect to an express obligation set forth herein, the Agents shall be entitled to refrain from such act or taking such action unless and until such Agent shall have received instructions from the Required Lenders, and the Agents shall not incur liability to any Person by reason of so refraining. The Agents shall not be liable for any action taken in good faith and reasonably believed by it to be within the powers conferred upon it, or taken by it pursuant to any direction or instruction by which it is governed, or omitted to be taken by it by

 

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reason of the lack of direction or instruction required hereby for such action (including without limitation for refusing to exercise discretion or for withholding its consent in the absence of its receipt of, or resulting from a failure, delay or refusal on the part of any Lender to provide, written instruction to exercise such discretion or grant such consent from any such Lender, as applicable) in the absence of gross negligence or willful misconduct. The Agents shall not be liable for any error of judgment made in good faith unless it shall be proven that the Agents were grossly negligent in ascertaining the relevant facts. Nothing herein or in any other Loan Document or related documents shall obligate any Agent to advance, expend or risk its own funds, or to take any action which in its reasonable judgment may cause it to incur any expense or financial or other liability for which it is not adequately indemnified. Before acting hereunder, the Agents shall be entitled to request, receive and rely upon such certificates and opinions as such Agent may reasonably determine appropriate with respect to the satisfaction of any specified circumstances or conditions precedent to such action. The Agents shall not be responsible or liable for delays or failures in performance resulting from acts beyond its control. Such acts shall include but not be limited to acts of God, strikes, lockouts, riots, acts of war, epidemics, pandemics, governmental regulations superimposed after the fact, fire, communication line failures, computer viruses, power failures, earthquakes or other disasters. Each Agent will provide copies of notices, certificates and reports that it receives from the Loan Parties to the Lenders to the extent they are not required to be delivered to Lenders by the Loan Parties or any other party to this Agreement, and shall have no obligation to review such notices, certificates or reports except as expressly provided herein. Each Agent shall not be under a duty to examine or independently evaluate, and shall not be charged with knowledge or notice of, the contents of any financial statements or reports delivered to it pursuant to the provisions of this Agreement or the Loan Documents, it being acknowledged that such deliveries are for the purpose of making such materials available to the Lenders.

(c) Each Agent may perform any of and all its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by such Agent (other than a Disqualified Institution). Each Agent and any such sub-agent may perform any of and all their duties and exercise their rights and powers through their respective controlled Affiliates. The exculpatory provisions of this Article shall apply to any such sub-agent and to the controlled Affiliates of each of either Agent or any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities of the Agents. The Agents shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the applicable Agent acted with gross negligence, bad faith, fraud or willful misconduct in the selection of such sub-agents.

(d) Neither the Agents nor any of their related parties have any duty or obligation to any Lender or participant or any other Person to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Loan Documents, (v) the value or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

 

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(e) It is expressly agreed and acknowledged that the Agents are not guaranteeing performance of the obligations of the Loan Parties or other parties hereto or any parties to the Collateral. The Agents shall not have liability for any failure, inability or unwillingness on the part of the Loan Parties to provide accurate and complete information on a timely basis to the Agents, or otherwise on the part of any such party to comply with the terms of this Agreement or the other Loan Documents, and shall have no liability for any inaccuracy or error in the performance or observance on the Agents’ part of any of their duties hereunder or under the other Loan Documents that is caused by or results from any such inaccurate, incomplete or untimely information received by it, or other failure on the part of any such other party to comply with the terms hereof.

(f) For purposes of clarity, phrases such as “satisfactory to the Administrative Agent,” “approved by the Administrative Agent,” “acceptable to the Administrative Agent,” “as determined by the Administrative Agent,” “in the Administrative Agent’s discretion,” “selected by the Administrative Agent,” “elected by the Administrative Agent,” “requested by the Administrative Agent,” and phrases of similar import that authorize and permit the Administrative Agent or the Collateral Agent to approve, disapprove, determine, act or decline to act in its discretion shall be subject to the Administrative Agent or Collateral Agent receiving written direction from the Lenders or Required Lenders, as applicable, to take such action or to exercise such rights (it being understood that nothing contained in this Agreement or any other Loan Document shall impose a duty on the Agents to make any such determination or take any action independent of such written direction from the Lenders or the Required Lenders or exercise any discretionary acts).

(g) In performing under the Loan Documents, the Agents shall have all of their rights, protections and immunities granted to them under this Agreement. The Lenders hereby authorize, empower and direct the Agents to execute and deliver on their behalf the Loan Documents and all related agreements, documents or instruments as shall be necessary or appropriate as determined by the Required Lenders in good faith and in the forms presented to the Agents as of the date hereof in order to effectuate the purposes of the Loan Documents and any such other related agreements, documents and instruments. Each of the Lenders hereby acknowledges that it has received a copy of the Loan Documents and agrees that it will be bound by and will take no actions contrary to the provisions of the Loan Documents to the extent then in effect.

(h) Each Agent has executed this Agreement as directed under and in accordance with the terms of this Agreement and will perform this Agreement solely in its capacity as Administrative Agent or Collateral Agent, as applicable, and not individually. In performing under this Agreement, each Agent shall have all rights, protections, immunities and indemnities granted to it under this Agreement. Subject to the terms of this Agreement, each Agent shall have no obligation to perform or exercise any discretionary act.

 

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Section 9.3. Successor Agent.

(a) Subject to the terms of this Section 9.3, either Agent may resign at any time from its capacity as such or the Required Lenders can elect to remove any Agent at any time. In connection with such resignation, such Agent shall give notice of its intent to resign to the Lenders and Borrower. In connection with such removal, the Required Lenders shall give notice of their intent to remove such Agent to the Agents, the Lenders and Borrower. Upon receipt of any such notice of resignation or the giving of such notice of removal, the Required Lenders shall have the right, in consultation with (but without need for consent of) Borrower, to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after such Agent gives notice of its intent to resign or the Required Lenders give notice of their intent to replace such Agent, as the case may be, then such Agent may, on with the consent of the Required Lenders, appoint a successor Agent, which shall be (i) a bank with an office in New York, New York, or an Affiliate of any such bank, (ii) a Lender or (iii) any other Person (other than a Disqualified Institution) with the prior written consent of the Required Lenders; provided that no consent of Borrower shall be required. Upon the acceptance of its appointment as Administrative Agent and/or Collateral Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the Agent so retiring or removed, and such Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents. The fees payable by Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed by Borrower and such successor.

(b) Notwithstanding the foregoing, in the event no successor Agent shall have been so appointed and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its intent to resign or the Required Lenders give notice of their intent to replace the Agent being removed, in the case of a retirement, such Agent may give notice of the effectiveness of its resignation to the Lenders and Borrower, or, in the case of a removal, the Required Lenders may give notice of the effectiveness of the removal to the Agents, the Lenders and Borrower, in each case, whereupon, on the date of effectiveness of such resignation or removal stated in such notice, (i) the Agent so retiring or removed shall be discharged from its duties and obligations hereunder and under the other Loan Documents; provided that, solely for purposes of maintaining any security interest granted to an Agent under any Collateral Document for the benefit of the Secured Parties, the Agent so retiring or removed shall continue to be vested with such security interest as collateral agent for the benefit of the Secured Parties and, in the case of any Collateral in the possession of such Agent, shall continue to hold such Collateral, in each case until such time as a successor Agent is appointed and accepts such appointment in accordance with this paragraph (it being understood and agreed that no Agent so retiring or removed shall have any duty or obligation to take any further action under any Collateral Document, including any action required to maintain the perfection of any such security interest), and (ii) the Required Lenders shall succeed to and become vested with all the rights, powers, privileges and duties of the Agent so retiring or removed; provided that (A) all payments required to be made hereunder or under any other Loan Document to the Administrative Agent for the account of any Person other than the Administrative Agent shall be made directly to such Person and (B) all notices and other communications required or contemplated to be given or made to the Administrative Agent shall also directly be given or made to each Lender.

 

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(c) Following the effectiveness of either Agent’s resignation or removal from its capacity as such, the provisions of this Article IX, as well as any exculpatory, reimbursement and indemnification provisions set forth in any other Loan Document, shall continue in effect for the benefit of such retired or removed Agent, its sub-agents and their respective related parties in respect of any actions taken or omitted to be taken by any of them while it was acting as an Agent and in respect of the matters referred to in the proviso under clause (b)(i) above.

(d) Any Person into whom the Agent may be converted or merged, or with whom it may be consolidated, or to whom it may sell or transfer its corporate trust business as a whole or substantially as a whole, or any Person resulting from any such conversion, sale, merger, consolidation or transfer to which the Agent is a party, shall be and become a successor Agent hereunder and be vested with all of the powers, immunities, privileges and other matters as was its predecessor without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto (except as required by Law to effectuate such succession), anything herein to the contrary notwithstanding.

Section 9.4. Nonreliance on Agents; Lender Consent.

(a) Each Lender acknowledges that it has, independently and without reliance upon either Agent or any other Lender, or any of the controlled Affiliates of any of the foregoing, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon either Agent or any other Lender, or any of the controlled Affiliates of any of the foregoing, and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

(b) Each Lender, by delivering its signature page to this Agreement and funding its Term Loans on the Closing Date, or delivering its signature page to an Assignment Agreement in the form of Exhibit C or any other Loan Document pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Administrative Agent or the Lenders on the Closing Date.

Section 9.5. Collateral Matters.

(a) Except with respect to the exercise of setoff rights of any Lender in accordance with this Agreement or with respect to a Lender’s right to file a proof of claim in an insolvency proceeding, no Secured Party (other than an Agent in its capacity as such) shall have any right individually to realize upon any of the Collateral or to enforce any Guaranty of the Obligations, it being understood and agreed that all powers, rights and remedies under the Loan Documents may be exercised solely by an Agent on behalf of the Secured Parties at the direction of the Required Lenders in accordance with the terms thereof. In the event of a foreclosure by an Agent or sub-agent on any of the Collateral pursuant to a public or private sale or other disposition, the Agent, any sub-agent or any Lender may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition, and either Agent or any sub-agent, as

 

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agent for and representative of the Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless the Required Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by the Administrative Agent on behalf of the Secured Parties at such sale or other disposition.

(b) In furtherance of the foregoing and not in limitation thereof, no hedging agreement the obligations under which constitute Obligations will create (or be deemed to create) in favor of any Secured Party that is a party thereto any rights in connection with the management or release of any Collateral or of the obligations of any Loan Party under any Loan Document. By accepting the benefits of the Collateral, each Secured Party that is a party to any such hedging agreement shall be deemed to have appointed the Administrative Agent to serve as administrative agent and collateral agent under the Loan Documents and agreed to be bound by the Loan Documents as a Secured Party thereunder, subject to the limitations set forth in this paragraph.

(c) At the direction of the Required Lenders, the Secured Parties irrevocably authorize each of the Agents to subordinate any Lien on any property granted to or held by an Agent under any Loan Document to the holder of any Lien on such property that is a Permitted Lien and to release any Lien (i) in the event there is a disposition of Collateral (w) permitted under this Agreement, (x) approved by the requisite amount of Lenders, (y) on assets to the extent they constitute Excluded Assets, or (z) upon release of a Guarantor from its obligations hereunder; provided, that if any Guarantor ceases to be wholly-owned, directly or indirectly, by the Borrower, such subsidiary shall not be released from its Guaranty solely by virtue of becoming an Excluded Subsidiary as a result of the disposition of less than all of the Capital Stock in such subsidiary owned by the Borrower or any other Loan Party, unless such disposition is made in good faith for fair market value and for a bona fide business purpose (it being understood that this proviso shall not limit the release of any Guarantor that otherwise qualifies as an Excluded Subsidiary for reasons other than not being wholly-owned), and (ii) to release all Liens upon payment of the Obligations in full (other than contingent obligations not due and owing). The Collateral Agent shall (and is hereby irrevocably authorized by each Lender to) upon direction of Required Lenders following the occurrence of a subordination or Lien termination otherwise provided for in this Agreement execute such reasonable and customary documents prepared (and if necessary filed or recorded) at Borrower’s sole expense as may be reasonably necessary to evidence such release or subordination of the Liens granted to the Collateral Agent for the benefit of the Beneficiaries herein or pursuant hereto upon the applicable Collateral. The Agents shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Agents be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.

(d) The Collateral Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Collateral Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Collateral Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral, other than its responsibility to maintain possession of the Collateral for purposes of perfection of the Liens and security interests granted hereunder or under any Loan Document.

 

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(e) The Collateral Agent hereby disclaims any representation or warranty to the Lenders concerning and shall have no responsibility to Lenders for the existence, priority or perfection of the Liens and security interests granted hereunder or under any Loan Document or in the value of any of the Collateral and shall not be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral, in each case, other than its responsibility to maintain possession or control of any Collateral for purposes of perfection of the Liens. The Collateral Agent makes no representation as to the value, sufficiency or condition of the Collateral or any part thereof, as to the title of the Loan Parties to the Collateral, as to the security afforded by this Agreement or any other Loan Document. The Collateral Agent shall not be responsible for insuring the Collateral, for the payment of taxes, charges, assessments or liens upon the Collateral or otherwise as to the maintenance of the Collateral, except as provided in the immediately following sentence when the Collateral Agent has possession of the Collateral. The Collateral Agent shall not be under an obligation independently to request or examine insurance coverage with respect to any Collateral. The Collateral Agent shall not be liable for the acts or omissions of any bank, depositary bank, custodian, independent counsel of the Loan Parties or any other party selected by the Collateral Agent with reasonable care or selected by any other party hereto that may hold or possess Collateral or documents related to Collateral and shall not be required to monitor the performance of any such Persons holding Collateral. For the avoidance of doubt, neither Agent shall be responsible to the Lenders for the perfection of any Lien or for the filing, form, content or renewal of any UCC financing statements, fixture filings, mortgages, deeds of trust and such other documents or instruments, provided however that if instructed by the Required Lenders and at the expense of Borrower, the Collateral Agent shall arrange for the filing and continuation, of financing statements or other filing or recording documents or instruments made with respect to any assets or property of any Loan Party in the jurisdictions specified in the Perfection Certificate (provided, that with respect to Borrower or any Subsidiary that is formed or conducts material operations in any jurisdiction other than a state of the United States, if requested by the Collateral Agent acting on instruction of Required Lenders, local law collateral security documents and filings for such jurisdiction shall be required to the extent set forth herein), (collectively, the “Financing Statements”) for the perfection of security interests in the Collateral; provided, that, the Collateral Agent shall not be responsible for the preparation, form, content, sufficiency or adequacy of any such Financing Statements, all of which shall be provided in writing to the Collateral Agent by the Required Lenders including the jurisdictions and filing offices where the Collateral Agent is required to file such Financing Statements.

(f) In connection with the exercise of any rights or remedies in respect of, or foreclosure or realization upon, any real estate-related collateral pursuant to this Agreement or any Loan Document, the Collateral Agent shall not be obligated to take title to or possession of real estate in its own name, or otherwise in a form or manner that may, in its reasonable judgment, expose it to liability. In the event that the Collateral Agent reasonably believes that it may be considered an “owner or operator” under any Environmental Laws and thereby causes the Collateral Agent to incur, or be exposed to, any material environmental liability or any liability under any other federal, state or local law, the Collateral Agent reserves the right, instead of taking such action, either to resign as Collateral Agent or to arrange for the transfer of the title or control of the asset to a court appointed receiver. The Collateral Agent will not be liable to any Person for any environmental liability or any environmental claims or contribution actions under any federal, state or local law, rule or regulation by reason of the Collateral Agent’s actions and conduct as authorized, empowered and directed hereunder or relating to any kind of discharge or release or threatened.

 

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Section 9.6. Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding with respect to any Loan Party under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Term Loans and all other Obligations including any Specified Premium, and indemnified or reimbursable amounts that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Agents allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by each Lender and each other Secured Party to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders or the other Secured Parties, to pay to the Administrative Agent any amount due to it, in its capacity as the Administrative Agent, under the Loan Documents (including under this Article IX).

Section 9.7. No Third-Party Beneficiaries. The provisions of this Article IX are solely for the benefit of the Agents and the Lenders, and, no Loan Party or Subsidiary shall have any rights as a third party beneficiary of any such provisions. Each Secured Party, whether or not a party hereto, will be deemed, by its acceptance of the benefits of the Collateral and of the Guaranties of the Secured Obligations (as defined in the Pledge and Security Agreement) provided under the Loan Documents, to have agreed to the provisions of this Article IX.

Section 9.8. Right to Indemnity. EACH LENDER HOLDING OBLIGATIONS, IN PROPORTION TO ITS PRO RATA SHARE OF THE OBLIGATIONS, SEVERALLY AGREES TO INDEMNIFY AND HOLD EACH AGENT, THEIR AFFILIATES AND THEIR RESPECTIVE OFFICERS, PARTNERS, DIRECTORS, TRUSTEES, EMPLOYEES AND AGENTS OF EACH AGENT (EACH, AN “INDEMNITEE AGENT PARTY”), TO THE EXTENT THAT SUCH INDEMNITEE AGENT PARTY SHALL NOT HAVE BEEN REIMBURSED BY ANY LOAN PARTY, HARMLESS FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES (INCLUDING COUNSEL FEES AND DISBURSEMENTS) OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST SUCH INDEMNITEE AGENT PARTY IN EXERCISING ITS POWERS, RIGHTS AND REMEDIES

 

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OR PERFORMING ITS DUTIES HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS OR OTHERWISE IN ITS CAPACITY AS SUCH INDEMNITEE AGENT PARTY IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY DIRECTION, INCLUDING WITHOUT LIMITATION, ANY LITIGATION, CLAIMS, CAUSES OF ACTIONS, ARBITRATION OR OTHER PROCEEDING OR INVESTIGATION RELATING TO, OR ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT, THE LOAN DOCUMENTS, OR ANY DIRECTION (HEREINAFTER REFERRED TO COLLECTIVELY AS “CLAIMS” AND EACH SINGLY AS A “CLAIM”) (INCLUDING WITHOUT LIMITATION, ANY SUCH CLAIM CONCERNING WHETHER ANY ASPECT OF THE SALE, LIQUIDATION OR OTHER DISPOSITION OF ANY OF THE COLLATERAL PURSUANT TO THE DIRECTIONS WAS NOT COMMERCIALLY REASONABLE (AS SUCH TERM IS DEFINED OR USED IN SECTIONS 9-610(B) AND 9-627 OF THE UCC) (HEREINAFTER REFERRED TO COLLECTIVELY AS “COMMERCIAL REASONABLENESS CLAIMS”) OR WAS NOT IN COMPLIANCE WITH THE APPLICABLE PROVISIONS OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS (HEREINAFTER REFERRED TO COLLECTIVELY AS “COMPLIANCE CLAIMS”), IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY, OR SOLE NEGLIGENCE OF SUCH INDEMNITEE AGENT PARTY; PROVIDED NO LENDER SHALL BE LIABLE FOR ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING FROM SUCH INDEMNITEE AGENT PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, AS DETERMINED BY A COURT OF COMPETENT JURISDICTION IN A FINAL, NON-APPEALABLE ORDER. NOTWITHSTANDING ANY PROVISION CONTAINED IN THIS AGREEMENT (INCLUDING WITHOUT LIMITATION, THE FOREGOING PROVISO) TO THE CONTRARY, IF THE ADMINISTRATIVE AGENT AND/OR THE COLLATERAL AGENT COMPLIES IN ALL MATERIAL RESPECTS WITH EACH AND EVERY DIRECTION FROM THE REQUIRED LENDERS, THEN THIS INDEMNITY SHALL APPLY TO ANY LOSSES NOW OR HEREAFTER INCURRED BY ANY INDEMNITEE AGENT PARTY THAT ARISE FROM, OR RELATE TO, ANY COMMERCIAL REASONABLENESS CLAIM OR ANY COMPLIANCE CLAIM, EVEN IF THERE IS A FINAL DETERMINATION BY A COURT OF COMPETENT JURISDICTION THAT IS NOT SUBJECT TO REVIEW ON APPEAL THAT SUCH LOSSES ARE THE RESULT OF SUCH INDEMNITEE AGENT PARTY’S GROSS NEGLIGENCE. IF ANY INDEMNITY FURNISHED TO ANY INDEMNITEE AGENT PARTY FOR ANY PURPOSE SHALL, IN THE OPINION OF SUCH INDEMNITEE AGENT PARTY, BE INSUFFICIENT OR BECOME IMPAIRED, SUCH INDEMNITEE AGENT PARTY MAY CALL FOR ADDITIONAL INDEMNITY AND CEASE, OR NOT COMMENCE, TO DO THE ACTS INDEMNIFIED AGAINST UNTIL SUCH ADDITIONAL INDEMNITY IS FURNISHED; PROVIDED IN NO EVENT SHALL THIS SENTENCE REQUIRE ANY LENDER HOLDING OBLIGATIONS TO INDEMNIFY ANY INDEMNITEE AGENT PARTY AGAINST ANY LIABILITY, OBLIGATION, LOSS, DAMAGE, PENALTY, ACTION, JUDGMENT, SUIT, COST, EXPENSE OR DISBURSEMENT IN EXCESS OF SUCH LENDER’S PRO RATA SHARE THEREOF; AND PROVIDED FURTHER THIS SENTENCE SHALL NOT BE DEEMED TO REQUIRE ANY LENDER TO INDEMNIFY ANY INDEMNITEE AGENT PARTY AGAINST ANY LIABILITY, OBLIGATION, LOSS, DAMAGE, PENALTY, ACTION, JUDGMENT, SUIT, COST, EXPENSE OR DISBURSEMENT DESCRIBED IN THE PROVISO IN THE IMMEDIATELY PRECEDING SENTENCE.

 

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Section 9.9. Agency for Perfection. Each Agent and each Lender hereby appoints each other Agent and each other Lender as agent and bailee for the purpose of perfection the security interests in and liens upon the Collateral in assets which, in accordance with Article 9 of the UCC, can be perfected only by possession, control (or where the security interest of a secured party with possession or control has priority over the security interest of another secured party) or notation and each Agent and each Lender hereby acknowledges that it holds possession of, otherwise controls or notation on, any such Collateral for the benefit of the Agents and the Lenders as secured party. Should Administrative Agent or any Lender obtain possession or control of any such Collateral, Administrative Agent or such Lender shall notify Collateral Agent thereof, and, promptly upon Collateral Agent’s request therefore shall deliver such Collateral to Collateral Agent or in accordance with Collateral Agent’s instructions. In addition, Collateral Agent shall also have the power and authority hereunder to appoint such other sub-agents (other than Disqualified Institution) as may be necessary or required under applicable state law or otherwise to perform its duties and enforce its rights with respect to the Collateral and under the Loan Documents. Each Loan Party by its execution and delivery of this Agreement hereby consents to the foregoing.

Section 9.10. Erroneous Payments.

(a) If the Administrative Agent notifies a Lender or any Person who has received funds on behalf of a Lender (any such Lender or other recipient, a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender or other Payment Recipient on its behalf) (any such funds, whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of the Administrative Agent, and such Lender shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business Days thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.

 

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(b) Without limiting immediately preceding clause (a), each Lender or any Person who has received funds on behalf of a Lender, hereby further agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Lender or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part) in each case:

(i) It acknowledges and agrees that (A) in the case of immediately preceding clause (x) or clause (y), an error shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and

(ii) such Lender shall (and shall cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of such error) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 9.10(b).

(c) Each Lender hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender under any Loan Document, or otherwise payable or distributable by the Administrative Agent to such Lender from any source, against any amount due to the Administrative Agent under immediately preceding clause (a) or under the indemnification provisions of this Agreement.

(d) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor by the Administrative Agent in accordance with immediately preceding clause (a), from any Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Lender at any time, (i) such Lender shall be deemed to have assigned its Term Loans (but not its Commitments) of the relevant Class with respect to which such Erroneous Payment was made (the “Erroneous Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Term Loans (but not Commitments) of the Erroneous Payment Impacted Class, the “Erroneous Payment Deficiency Assignment”) at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance), and is hereby (together with Borrower) deemed to execute and deliver an Assignment Agreement with respect to such Erroneous Payment Deficiency Assignment, and such Lender

 

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shall deliver any Notes evidencing such Term Loans to Borrower or the Administrative Agent, (ii) the Administrative Agent as the assignee Lender shall be deemed to acquire the Erroneous Payment Deficiency Assignment, (iii) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender shall cease to be a Lender hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender and (iv) the Administrative Agent may reflect in the Register its ownership interest in the Term Loans subject to the Erroneous Payment Deficiency Assignment. The Administrative Agent may, in its discretion, sell any Term Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender shall be reduced by the net proceeds of the sale of such Term Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender (and/or against any recipient that receives funds on its respective behalf). For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender and such Commitments shall remain available in accordance with the terms of this Agreement. In addition, each party hereto agrees that, except to the extent that the Administrative Agent has sold a Term Loan (or portion thereof) acquired pursuant to an Erroneous Payment Deficiency Assignment, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of the applicable Lender under the Loan Documents with respect to each Erroneous Payment Return Deficiency (the “Erroneous Payment Subrogation Rights”).

(e) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by Borrower or any other Loan Party, except, in each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent directly or indirectly from Borrower or any other Loan Party for the purpose of making such Erroneous Payment.

(f) To the extent permitted by applicable law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine.

(g) Each party’s obligations, agreements and waivers under this Section 9.10 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender the termination of the Commitments and/or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Loan Document.

 

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Section 9.11. Delivery of Notices to Securitization Trustee. Each Loan Party agrees to forward to the Collateral Agent, and each Loan Party and the Lenders direct the Collateral Agent to provide to the Securitization Trustee, promptly upon receipt thereof by the Collateral Agent, copies of any notices or writings the Collateral Agent receives from any Loan Party, the insurers under the AON Insurance Policy that specify that such notice or writing relates to the AON Insurance Policy, including but not limited to notices or writings regarding:

(a) any amendment, waiver or supplement to the AON Insurance Policy;

(b) any reduction of the “Limit of Liability” under the AON Insurance Policy (as defined therein);

(c) the replacement of an “AON Insurer” by an “Additional Insurer” and identity of such “Additional Insurer” (each as defined in the AON Insurance Policy); and

(d) the occurrence of any of the termination events provided in Section X of the AON Insurance Policy.

All notices or writings sent by a Loan Party to the Collateral Agent pursuant to this Section 9.11 shall be accompanied by a written notice to the Collateral Agent that such transmitted notice or writing relates to the AON Insurance Policy. For the avoidance of doubt, no Person that is designated as an observer of Borrower’s board of directors by a current or former Lender, or any Affiliate thereof, shall have any obligation to deliver to the Collateral Agent or Securitization Trustee any information delivered to such Person solely in such person’s capacity as an observer of Borrower’s board of directors.

ARTICLE X

MISCELLANEOUS

Section 10.1. Notices.

(a) Notices Generally. Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given to a Loan Party, Collateral Agent, the insurers under the AON Insurance Policy, or Administrative Agent, shall be sent to such Person’s address as set forth on Schedule 10.1 or in the other relevant Loan Document, and in the case of any Lender, the address as indicated on Schedule 10.1 or otherwise indicated in writing by such Person to Administrative Agent and/or parties to such relevant Loan Document. Each notice of Borrower required hereunder shall also be sent to (x) AON (Bermuda) Limited and (y) Moody’s at the addresses set forth on Schedule 10.1 or otherwise indicated in writing by such Person to Administrative Agent and/or parties to such relevant Loan Document. Any such notice entitled to be received hereunder or under the AON Insurance Policy by AON (Bermuda) Limited shall also be delivered at each such insurer’s electronic address set forth in Schedule 10.1 (solely to the extent such insurer has provided its electronic notice address). It is acknowledged and agreed that any notice sent to AON (Bermuda) Limited shall be deemed to be sent to all insurers as of the date such notice is received by AON (Bermuda) Limited. Each notice hereunder shall be in writing and may be personally served, telexed or sent by facsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of facsimile, or three (3) Business Days after depositing it in the United States mail with postage prepaid and properly addressed; provided no notice to any Agent shall be effective until received by such Agent. For

 

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avoidance of doubt, communication by any Person of new addresses for notice (but without waiving any requirements related to physical relocation of any Loan Party) to be given pursuant to a Loan Document does not constitute an amendment, waiver or modification of any Loan Document and does not require consent of any Person. In the event that any Loan Party and the Administrative Agent and/or Required Lenders enter into a forbearance or similar agreement at any time in respect of a Default or Event of Default under this Agreement, Borrower shall give notice of its entry into such a forbearance or similar agreement to AON within (5) five Business Days of such Loan Party’s entry into such forbearance or similar agreement.

(b) Electronic Communications.

(i) Each Agent and Loan Party may, in its discretion, agree to accept notices and other communications to it hereunder by electronic transmission or communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic transmission or communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Agents, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Agents that it is incapable of receiving notices under such Article by electronic transmission or communication.

(ii) Unless Administrative Agent otherwise prescribes, (A) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (B) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing subclause (A), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both subclauses (A) and (B) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient.

Section 10.2. Expenses.

(a) Borrower agrees to pay promptly (i) all of each Agent’s, each Lender’s and the Securitization Trust’s reasonable and documented out-of-pocket costs and expenses of preparation of the Loan Documents and any consents, amendments, waivers or other modifications thereto, (ii) all of the reasonable and documented fees, expenses and disbursements of Lenders and the Securitization Trust, including but not limited to Proskauer Rose LLP, local counsel, and any ratings agency and, with respect to the Agents, counsel to the Agents and, in connection with the negotiation, preparation, execution and administration of the Loan Documents and any consents, amendments, waivers or other modifications thereto and any other documents or matters in respect thereof or contemplated thereunder (it being agreed that costs and expenses of legal counsel shall be limited to the reasonable fees and expenses of one counsel and one local counsel, as applicable, for each of (x) the Agents, (y) the Securitization Trust and (z) the Lenders (which may be Proskauer Rose LLP); provided, however, no Minority Lender

 

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shall (A) receive advice of counsel or other advisors to the Agents or any other Lenders or (B) challenge the attorney client privilege of the Administrative Agent or any Lender and their respective counsel), (iii) all the actual costs and reasonable expenses of creating and perfecting Liens in favor of Collateral Agent, for the benefit of Secured Parties, including filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees, title insurance premiums and reasonable and documented fees, expenses and disbursements of counsel to the Agents, each Agent and of counsel providing any opinions that any Agent or Required Lenders may request in respect of the Collateral or the Liens created pursuant to the Collateral Documents, (iv) all the reasonable and documented out-of-pocket expenses including any appraisers, consultants, advisors and agents employed or retained by Agents or Lenders and their respective counsel (in the case of legal counsel, limited to the reasonable fees, expenses and disbursements of one outside counsel for each relevant material jurisdiction) in connection with the custody or preservation of any of the Collateral, (v) all the reasonable and documented out-of-pocket costs and expenses of Agents and Lenders in connection with the attendance at any meetings in connection with this Agreement and the other Loan Documents (including the meetings referred to in Section 5.7), (vi) all of the AON Insurance Policy lead insurer’s reasonable and documented out-of-pocket costs and expenses up to a maximum amount of $75,000 (excluding all amounts owing to counsel to the lead insurer of the AON Insurance Policy, which shall be reimbursed solely to the extent so required pursuant to clause (vii) below) in connection with the preparation of the Loan Documents and any consents, amendments, waivers or other modifications thereto, (vii) all of the reasonable and documented fees, expenses and disbursements of a single counsel to the lead insurer under the AON Insurance Policy in connection with the negotiation, preparation, execution and administration of the Loan Documents and any consents, amendments, waivers or other modifications thereto and any other documents or matters in respect thereof or contemplated thereunder, and (viii) after the occurrence of an Event of Default, all reasonable and documented costs and expenses (in the case of legal counsel, limited to the reasonable and documented attorneys’ fees of one outside counsel and one local counsel, as applicable, to each of (x) the Agents, (y) the Securitization Trust and (z) the Lenders (which may be Proskauer Rose LLP) and costs of settlement, incurred by any Agent and Lenders in enforcing any Obligations of or in collecting any payments due from any Loan Party hereunder or under the other Loan Documents by reason of such Default or Event of Default (including in connection with the sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty) or in connection with any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a “work out” or pursuant to any insolvency or bankruptcy cases or proceedings.

(b) Notwithstanding anything in Section 10.2(a) to the contrary: (i) amounts set forth in Sections 10.2(a)(vi) and 10.2(a)(vii) above that are reimbursable to the lead insurers or the lead insurers’ counsel and incurred on or prior to the Closing Date, shall not be required to be reimbursed by the Loan Parties in an amount in excess of $75,000. The Loan Parties acknowledge that except as expressly provided in Sections 10.2(a) and (b)(i) hereinabove, the Loan Parties shall pay when due all amounts, including attorneys fees and costs, incurred by any Agent or Lender that are reimbursable thereto under this Section 10.2. All amounts due under this Section 10.2 shall be paid within 30 days following receipt by Borrower of an invoice relating thereto setting forth such expenses in reasonable detail.

 

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Section 10.3. Indemnity.

(a) IN ADDITION TO THE PAYMENT OF EXPENSES PURSUANT TO SECTION 10.2, EACH LOAN PARTY, JOINTLY AND SEVERALLY, AGREES TO DEFEND (SUBJECT TO INDEMNITEES’ SELECTION OF COUNSEL), INDEMNIFY, PAY AND HOLD HARMLESS, EACH AGENT AND LENDER, THEIR AFFILIATES AND THEIR RESPECTIVE OFFICERS, PARTNERS, DIRECTORS, TRUSTEES, EMPLOYEES AND AGENTS OF EACH AGENT AND EACH LENDER (EACH, AN “INDEMNITEE”), FROM AND AGAINST ANY AND ALL INDEMNIFIED LIABILITIES, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY, OR SOLE NEGLIGENCE OF SUCH INDEMNITEE; PROVIDED NO LOAN PARTY SHALL HAVE ANY OBLIGATION TO ANY INDEMNITEE HEREUNDER WITH RESPECT TO ANY INDEMNIFIED LIABILITIES TO THE EXTENT SUCH INDEMNIFIED LIABILITIES ARISE FROM (i) THE GROSS NEGLIGENCE, MATERIAL BREACH (PROVIDED THAT MATERIAL BREACH SHALL NOT BE APPLICABLE TO THE AGENTS), BAD FAITH OR WILLFUL MISCONDUCT, AS DETERMINED BY A COURT OF COMPETENT JURISDICTION IN A FINAL, NON-APPEALABLE ORDER, OF THAT INDEMNITEE OR (ii) ANY DISPUTE SOLELY AMONG INDEMNITEES OTHER THAN ANY CLAIMS AGAINST AN INDEMNITEE IN ITS CAPACITY OR IN FULFILLING ITS ROLE AS AN ADMINISTRATIVE AGENT, COLLATERAL AGENT OR ANY SIMILAR ROLE UNDER ANY LOAN DOCUMENT AND OTHER THAN ANY CLAIMS ARISING OUT OF ANY ACT OR OMISSION OF BORROWER OR ANY OF ITS AFFILIATES (AS DETERMINED BY A COURT OF COMPETENT JURISDICTION IN A FINAL, NON-APPEALABLE ORDER). TO THE EXTENT THAT THE UNDERTAKINGS TO DEFEND, INDEMNIFY, PAY AND HOLD HARMLESS SET FORTH IN THIS SECTION 10.3 MAY BE UNENFORCEABLE IN WHOLE OR IN PART BECAUSE THEY ARE VIOLATIVE OF ANY LAW OR PUBLIC POLICY, THE APPLICABLE LOAN PARTY SHALL CONTRIBUTE THE MAXIMUM PORTION THAT IT IS PERMITTED TO PAY AND SATISFY UNDER APPLICABLE LAW TO THE PAYMENT AND SATISFACTION OF ALL INDEMNIFIED LIABILITIES INCURRED BY INDEMNITEES OR ANY OF THEM. THIS CLAUSE (a) SHALL NOT APPLY WITH RESPECT TO TAXES OTHER THAN ANY TAXES THAT REPRESENT INDEMNIFIED LIABILITIES ARISING FROM ANY NON-TAX CLAIM. All amounts due under this Section 10.3 shall be paid within 30 days after written demand therefor (together with backup documentation reasonably supporting such reimbursement request); provided, however, that such Indemnitee shall promptly refund such amount (or portion thereof) to the extent that there is a final judicial or arbitral determination that such Indemnitee was not entitled to indemnification rights with respect to such payment (or portion thereof) pursuant to the express terms of this Section 10.3.

(b) To the extent permitted by applicable law, no Loan Party nor any other party hereto shall assert, and each Loan Party and such party hereby waives, any claim against any party hereto, the Lenders and Agents and their respective Affiliates, directors, employees, attorneys or agents, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, as a result of, or in any way related to, this Agreement or any Loan Document or any

 

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agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, and each Loan Party hereby waives, releases and agrees not to sue upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

(c) Notwithstanding the foregoing, this Section 10.3 shall not operate to require Borrower or any other Loan Party to pay amounts expressly excluded from Section 10.2.

Section 10.4. Set-Off. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuance of any Event of Default each Lender and their respective Affiliates is hereby authorized by each Loan Party at any time or from time to time subject to the consent of Agents (such consent not to be unreasonably withheld or delayed), without notice to any Loan Party or to any other Person (other than an Agent), any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts and tax accounts (in whatever currency), payroll accounts, ERISA accounts, petty cash accounts or fiduciary accounts) and any other Indebtedness at any time held or owing by such Lender to or for the credit or the account of any Loan Party (in whatever currency) against and on account of the obligations and liabilities of any Loan Party to such Lender hereunder and under the other Loan Documents, including all claims of any nature or description arising out of or connected hereto, or with any other Loan Document, irrespective of whether or not (a) such Lender shall have made any demand hereunder, (b) the principal of or the interest on the Term Loans or any other amounts due hereunder shall have become due and payable pursuant to Article II and although such obligations and liabilities, or any of them, may be contingent or unmatured or (c) such obligation or liability is owed to a branch or office of such Lender different from the branch or office holding such deposit or obligation or such Indebtedness.

Section 10.5. Amendments and Waivers.

(a) Required Lenders’ Consent.

(i) Subject to Sections 10.5(b) and 10.5(c), no amendment, modification, termination or waiver of any provision of the Loan Documents, or consent to any departure by any Loan Party therefrom, shall in any event be effective without the written consent of Borrower and the Required Lenders.

(ii) Notwithstanding anything to the contrary herein, in connection with any determination as to whether the Required Lenders have (A) consented (or not consented) to any amendment or waiver of any provision of this Agreement or any other Loan Document or any departure by any Loan Party therefrom, (B) otherwise acted on any matter related to any Loan Document, or (C) directed or required the Administrative Agent or any Lender to undertake any action (or refrain from taking any action) with respect to or under any Loan Document, the Minority Lenders shall not have any right to vote any of its Loans and Commitments and shall be deemed to have voted its interest as a Lender without discretion in the same proportion as the allocation of voting with respect to such matter by Lenders who are not Minority Lenders, unless

 

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the subject of the applicable vote has a disparate impact on the Minority Lenders taken as a whole; provided that this Section 10.5(a)(ii) shall not apply to (x) any amendments pursuant to Section 10.5(b) or (y) any amendments that would increase a Lender’s Commitment or economic obligations (including requiring or obligating a Lender to provide any additional debt or equity financing), in each case, without the Minority Lender’s consent.

(b) Affected Lenders’ Consent. Without the written consent of Borrower and each Lender that would be directly and adversely affected thereby, no amendment, modification, termination, or consent shall be effective if the effect thereof would:

(i) extend the scheduled final maturity of any Term Loan or Note (it being understood that a waiver of any Default, default interest or mandatory prepayment shall not constitute an extension of any Term Loan or Note of any Lender);

(ii) waive, reduce or postpone any scheduled repayment (it being understood that the waiver of any condition precedent set forth in Section 3.1 or the waiver of (or amendment to the terms of) any mandatory prepayment of the Term Loans shall not constitute a postponement of any date scheduled for the payment of principal);

(iii) reduce the rate of interest on any Term Loan (other than any waiver of any increase in the interest rate applicable to any Loan pursuant to Section 2.7) or any fee payable hereunder;

(iv) extend the scheduled time for payment of any such interest or fees (it being understood that the waiver of (or amendment to the terms of) any mandatory prepayment of the Term Loans shall not constitute a postponement of any date scheduled for the payment of interest);

(v) extend or increase the Commitment of such Lender;

(vi) reduce the principal amount of any Term Loan of such Lender;

(vii) subject to Section 10.6(j)(iii), consent to any amendment, modification, termination or waiver of any provision of the AON Insurance Policy, provided that Borrower approval of any such amendment, modification, termination or waiver shall only be required if the same affects any portion of the aggregate amount of the premium paid to the insurers or their agent in respect of the AON Insurance Policy, including any related rebate of unearned premium payable to Borrower, and no Borrower consent shall otherwise be required with respect to this clause (vii);

(viii) amend, modify, terminate or waive any provision of this Section 10.5(b) or Section 10.5(c);

(ix) amend the definition of “Required Lenders” or “Pro Rata Share” or change the Lender consent standard for any provision requiring Required Lender consent to a standard that is less than Required Lenders;

 

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(x) release all or substantially all of the Collateral or release any Guarantor from the Guaranty except as expressly provided in the Loan Documents;

(xi) subordinate any of the Obligations or any Lien created by this Agreement or any other Loan Document except as expressly provided in the Loan Documents; or

(xii) except as otherwise permitted, consent to the assignment or transfer by any Loan Party of any of its rights and obligations under any Loan Document.

(c) Other Consents.

(i) No amendment, modification, termination or waiver of any provision of the Loan Documents, or consent to any departure by any Loan Party therefrom, shall amend, modify, terminate or waive any provision of Article IX as the same applies to any Agent, or any other provision hereof as the same applies to the rights or obligations of any Agent, in each case without the consent of such Agent.

(ii) No amendment, modification or waiver of any provision of the Loan Documents, or consent to departure by any Loan Party therefrom, shall amend or modify and provision of Article VI in a manner that would allow any Loan Party to incur any Indebtedness not otherwise permitted hereunder on the Closing Date without the consent of the Term B Loan Lenders.

(d) Execution of Amendments, etc. Administrative Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 10.5 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed by a Loan Party, on such Loan Party.

(e) Other Waivers. The Loan Parties hereby waive (to the extent permitted by applicable law) the defenses of laches or estoppel with respect to enforcement by the Lenders of their rights.

(f) Insurer and Rating Agency Consent. No amendment or waiver of this Agreement shall be effective unless (i) the Administrative Agent has received written confirmation from Required Lenders that (x) such amendment or waiver has been approved by insurers holding at least 50.1% of the risk under the AON Insurance Policy, on the terms and conditions set forth in clause (a) of Section IV of the AON Insurance Policy as in effect on the Closing Date without giving effect to any subsequent amendment or waiver, as applicable, or (y) any applicable time for the insurers to object under the AON Insurance Policy has expired and no objection has been made in accordance with its respective terms and (ii) subject to prior delivery of evidence of insurer approval or the expiration of the time for insurers to object as provided in clause (i) and if such amendment or waiver of this Agreement (A) requires a concurrent amendment or waiver of the AON Insurance Policy, (B) is likely to result in termination of the AON Insurance Policy, or (C) would result in a reduction in, or material delay of, the principal or

 

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interest payments under the promissory notes issued by the Securitization Trust, a Moody’s Rating Agency Confirmation so long as promissory notes issued under the Securitization Trust are outstanding and a Moody’s rating of such promissory notes is in effect. Notwithstanding the foregoing, with respect to any amendment or waiver resulting in a reduction in, or delay of, the principal or interest payments under the promissory notes issued by the Securitization Trust that may otherwise require a Moody’s Rating Agency Confirmation, the requirement for such Moody’s Rating Agency Confirmation shall be deemed for all purposes to be satisfied with respect to such amendment or waiver if (a) Moody’s makes a public announcement or informs the Borrower, the Securitization Trustee or holders of such notes that (i) it believes the Moody’s Rating Agency Confirmation is not required with respect to such amendment or waiver or (ii) its practice or policy is to not give such confirmations, (b) in connection with an amendment or waiver requiring unanimous consent of the Lenders, all Lenders have been advised prior to consenting that the then current rating of such notes may be reduced or withdrawn as a result of such amendment or waiver, or (c) Moody’s no longer is providing a rating of such notes.

(g) Certification Regarding Minimum Interest Reserve Amount. If an amendment, modification or waiver is reasonably expected to cause either Interest Reserve Account to hold Dollars and Eligible Investments having a mark-to-market aggregate valuation of less than the applicable Minimum Interest Reserve Amount in effect prior to such amendment, modification or waiver, then Borrower shall concurrently with its execution of such amendment, modification or waiver deliver a written notice to the Administrative Agent and the Lenders stating that such amendment, modification or waiver is reasonably expected to cause such Interest Reserve Account to hold less than the applicable Minimum Interest Reserve Amount.

Section 10.6. Successors and Assigns; Participations.

(a) Generally.

(i) This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Lenders. Except as provided herein (including as permitted under Section 6.9), no Loan Party’s rights or obligations hereunder nor any interest therein may be assigned or delegated by any Loan Party without the prior written consent of all Lenders. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, Indemnitee Agent Parties under Section 9.8, Indemnitees under Section 10.3, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, Affiliates of each of the Agents and Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(ii) Each Minority Lender, solely in its capacity as a holder of Term Loans, hereby agrees if any Loan Party shall be subject to any Insolvency Proceeding, with respect to any matter requiring the vote of holders of any Term Loans during the pendency of any such Insolvency Proceeding (including voting on any plan of reorganization pursuant to 11 U.S.C. §1126), Term Loans held by such Minority Lender (and any claim with respect thereto) shall be deemed assigned for all purposes to the Administrative Agent, which shall cast such vote in accordance with Section 10.5(a)(ii). For the avoidance of doubt, the Lenders and each Minority Lender agree and acknowledge that the provisions set forth in this Section 10.6(a)(ii) constitute a “subordination agreement” as such term is contemplated by, and utilized in, Section 510(a) of the Bankruptcy Code, and, as such, would be enforceable for all purposes in any case where a Credit Party has filed for protection under the Bankruptcy Code.

 

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(b) Register. Borrower, Administrative Agent and Lenders shall deem and treat the Persons listed as Lenders in the Register as the holders and owners of the corresponding Commitments and Term Loans listed therein for all purposes hereof, and no assignment or transfer of any such Commitment or Term Loan shall be effective, in each case, unless and until an Assignment Agreement effecting the assignment or transfer thereof shall have been delivered to and acknowledged by Administrative Agent and recorded in the Register as provided in Section 10.6(e). Prior to such recordation, all amounts owed with respect to the applicable Commitment or Loan shall be owed to the Lender listed in the Register as the owner thereof, and any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Commitments or Term Loans. The parties intend that the Loans are at all times maintained in “registered form” within the meaning of Section 163(f), 165(j), 871(h)(2) and 881(c)(2), and 4701 of the Code and any related Treasury regulations (or any other relevant or successor provisions of the Code or of such Treasury regulations).

(c) Right to Assign. Each Lender shall have the right at any time to sell, assign or transfer all or a portion of its rights and obligations under this Agreement, including, without limitation, all or a portion of its Commitment or Term Loans owing to it or other Obligations (provided that each such assignment shall be of a uniform, and not varying, percentage of all rights and obligations under and in respect of any Term Loan and any related Commitments):

(i) to any Person meeting the criteria of clause (a), clause (c) or clause (d) of the definition of the term of “Eligible Assignee” upon the giving of notice to but without the consent of Borrower and Administrative Agent; and

(ii) to any Person meeting the criteria of clause (b) of the definition of the term, “Eligible Assignee”; provided each such assignment pursuant to this Section 10.6(c)(ii) shall be in an aggregate amount of not less than $1,000,000 (or such lesser amount as may be agreed to by Administrative Agent or as shall constitute the aggregate amount of the Term Loan of the assigning Lender) with respect to the assignment of Term Loans; provided, however, that in no event shall any Lender be permitted to sell, assign or transfer all or any portion of its rights and obligations under this Agreement to any Disqualified Institution, unless an Event of Default under Section 8.1(a), Section 8.1(f) or Section 8.1(g) has occurred and is continuing at the time of such assignment.

(d) Mechanics. The assigning Lender and the assignee thereof shall execute and deliver to Administrative Agent an Assignment Agreement, a processing and recordation fee in the amount of $3,500, and, if not already a Lender, an administrative questionnaire and other requested know-your-customer documentation, including such forms or certificates with respect to tax matters as the assignee under such Assignment Agreement may be required to deliver to Administrative Agent pursuant to Section 2.14(d).

 

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(e) Notice of Assignment. Upon its receipt and acceptance of a duly executed and completed Assignment Agreement, any forms or certificates required by this Agreement in connection therewith, Administrative Agent shall record the information contained in such Assignment Agreement in the Register, shall give prompt notice thereof to Borrower and shall maintain a copy of such Assignment Agreement. The Assignment Agreement shall include a representation of the named assignee that it is not a Disqualified Institution. Administrative Agent shall not have any obligation in respect of enforcement of whether a prospective Lender is a Disqualified Institution beyond ascertaining that the representation referred to in the prior sentence is present in the Assignment Agreement.

(f) Representations and Warranties of Assignee. Each Lender, upon execution and delivery hereof or upon executing and delivering an Assignment Agreement, as the case may be, represents and warrants as of the Closing Date or as of the applicable “Effective Date” (as defined in the applicable Assignment Agreement) that (i) it is an Eligible Assignee and is not a Disqualified Institution, (ii) it has experience and expertise in the making of or investing in commitments or loans such as the applicable Commitments or Term Loans, as the case may be, (iii) it will make or invest in, as the case may be, its Commitments or Term Loans for its own account in the ordinary course of its business and without a view to distribution of such Commitments or Term Loans within the meaning of the Securities Act or the Exchange Act or other federal securities laws (it being understood that, subject to the provisions of this Section 10.6, the disposition of Term Loans or any interests therein shall at all times remain within its exclusive control) and (iv) such Lender does not own or control, or own or control any Person owning or controlling, any trade debt or Indebtedness of any Loan Party other than the Obligations or any Capital Stock of any Loan Party. The Administrative Agent may conclusively rely on an Eligible Assignee’s representations and warranties made in an Assignment Agreement without any independent investigation and the Administrative Agent shall be fully protected on such reliance.

(g) Effect of Assignment. Subject to the terms and conditions of this Section 10.6, as of the later (i) of the “Effective Date” specified in the applicable Assignment Agreement or (ii) the date such assignment is recorded in the Register: (A) the assignee thereunder shall have the rights and obligations of a “Lender” hereunder to the extent such rights and obligations hereunder have been assigned to it pursuant to such Assignment Agreement and shall thereafter be a party hereto and a “Lender” for all purposes hereof; (B) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned thereby pursuant to such Assignment Agreement, relinquish its rights (other than any rights which survive the termination hereof under Section 10.8) and be released from its obligations hereunder (and, in the case of an Assignment Agreement covering all or the remaining portion of an assigning Lender’s rights and obligations hereunder, such Lender shall cease to be a party hereto; provided anything contained in any of the Loan Documents to the contrary notwithstanding, such assigning Lender shall continue to be entitled to the benefit of all indemnities hereunder as specified herein with respect to matters arising out of the prior involvement of such assigning Lender as a Lender hereunder); (C) the Commitments shall be modified to reflect the Commitment of such assignee and any Commitment of such assigning Lender, if any; and (D) if any such assignment occurs after the issuance of any Note hereunder, the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its applicable Notes to Administrative Agent for cancellation, and thereupon Borrower shall issue and deliver new Notes,

 

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if so requested by the assignee and/or assigning Lender, to such assignee and/or to such assigning Lender, with appropriate insertions, to reflect the new Commitments and/or outstanding Term Loans of the assignee and/or the assigning Lender. So long as no Event of Default has occurred and is continuing pursuant to Sections 8.1(a), (f) or (g), no assignment or transfer may be made to a Disqualified Institution absent the prior written consent of the Borrower.

(h) Participations.

(i) Each Lender shall have the right at any time to sell one or more participations to any Person (other than any Loan Party, any of its Subsidiaries or any of its Affiliates, any Minority Lender, or any Disqualified Institution (unless an Event of Default under Section 8.1(a), Section 8.1(f) or Section 8.1(g) has occurred and is continuing at the time of such participation)) in all or any part of its Commitments, Term Loans or in any other Obligation. The holder of any such participation, other than an Affiliate of the Lender granting such participation, shall not be entitled to require such Lender to take or omit to take any action hereunder except with respect to any amendment, modification or waiver that (i) extends the final scheduled maturity of any Term Loan or Note in which such participant is participating, or reduce the rate or extend the time of payment of interest or fees thereon (except in connection with a waiver of applicability of any post default increase in interest rates or waiver of any Default, Event of Default or mandatory prepayment) or reduce the principal amount thereof, or increase the amount of the participant’s participation over the amount thereof then in effect (it being understood that a waiver of default interest, any Default or Event of Default or of a mandatory prepayment or mandatory reduction in the Commitment shall not constitute a change in the terms of such participation, and that an increase in any Commitment or Term Loan shall be permitted without the consent of any participant if the participant’s participation is not increased as a result thereof), (ii) consent to the assignment or transfer by any Loan Party of any of its rights and obligations under this Agreement (except as provided in the Loan Documents), or (iii) release all or substantially all of the Collateral under the Collateral Documents or any Guarantor from the Guaranty (in each case, except as provided in the Loan Documents) supporting the Term Loans hereunder in which such participant is participating. Borrower agrees that each participant shall be entitled to the benefits of Sections 2.13 and 2.14 (subject to the requirements and limitations therein, it being understood that the documentation required under Section 2.14(d) shall be delivered to the participating Lender) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 10.6(c); provided a participant that would be a Non-US Lender if it were a Lender shall not be entitled to the benefits of Section 2.14 unless, at the time such participant is claiming such benefits, Borrower is notified of the participation sold to such participant and such participant agrees, for the benefit of Borrower, to comply with Section 2.14 as though it were a Lender; provided further that a participant shall not be entitled to receive any greater payment under Section 2.13 or 2.14, with respect to any participation, than its participating Lender would have been entitled to receive. To the extent permitted by law, each participant also shall be entitled to the benefits of Section 10.4 as though it were a Lender, provided such participant agrees to be subject to Section 2.12 as though it were a Lender.

(ii) In the event that any Lender sells participations in its Commitments, Term Loans or in any other Obligation hereunder, such Lender shall, acting solely for this purpose as a non-fiduciary agent of Borrower, maintain a register on which it enters the name of all participants in the Commitments, Term Loans or Obligations held by it and the principal amount

 

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(and stated interest thereon) of the portion of such Commitments, Term Loans or Obligations which are the subject of the participation (the “Participant Register”). A Commitment, Term Loan or Obligation hereunder may be participated in whole or in part only by registration of such participation on the Participant Register (and each Note shall expressly so provide). No Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register. So long as no Event of Default has occurred and is continuing pursuant to Sections 8.1(a), (f) or (g), no participation may be made to a Disqualified Institution absent the prior written consent of the Borrower.

(i) Certain Other Assignments. In addition to any other assignment permitted pursuant to this Section 10.6, any Lender or Agent may assign, pledge and/or grant a security interest in, all or any portion of its Term Loans, the other Obligations owed by or to such Lender, and its Notes, if any, to secure obligations of such Lender or Agent or any of its Affiliates to any Person providing any loan, letter of credit or other extension of credit or financial arrangement to or for the account of such Lender or Agent or any of its Affiliates and any agent, trustee or representative of such Person (without the consent of, or notice to, or any other action by, any other party hereto), including, without limitation, any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any operating circular issued by such Federal Reserve Bank; provided no Lender or Agent, as between Borrower and such Lender or Agent, shall be relieved of any of its obligations hereunder as a result of any such assignment and pledge; provided further in no event shall such Person, agent, trustee or representative of such Person or the applicable Federal Reserve Bank be considered to be a “Lender” or “Agent” or be entitled to require the assigning Lender or Agent to take or omit to take any action hereunder.

(j) Assignment upon Payment of Claim Under an AON Insurance Policy; Assignment Upon Receipt of AON Insurance Proceeds.

(i) In the event that: (a) the Administrative Agent receives a payment of any amount due in immediately available funds under the AON Insurance Policy (such funds, collectively, the “AON Insurance Proceeds”) and (b) the Administrative Agent and the Lenders receive a notice signed by AON (the “AON Notice”) that (x) confirms the percentage of the amount of the AON Insurance Proceeds divided by the full amount due under the AON Insurance Policy (such percentage, the “AON Insurance Funded Portion”); (y) instructs the Administrative Agent to proceed with the subrogation and assignment of the AON Insurance Funded Portion of the Insured Obligations as provided in this Section 10.6(j) and (z) identifies each of the insurers under the AON Insurance Policy that have made such payment, the identity of such insurers’ designee (the insurers under the AON Insurance Policy that have made such payment, or if formed such

 

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insurers’ designee excluding any insurer (collectively, as applicable, the “AON Designee(s)”)) and such insurers’ respective allocated contribution to such amount stated in dollars, then the parties hereto (including without limitation, each Lender) agree that the AON Designee(s) are automatically subrogated to and assigned the AON Insurance Funded Portion of the applicable Insured Obligations in the amount of such insurers’ respective allocated contribution and all of the rights of the Lenders holding Insured Term Loans in the aggregate outstanding balance of an equivalent percentage of the Insured Obligations as of the date of receipt of the AON Notice (by way of example if AON Insurance Proceeds actually received equal 92% of the aggregate amount due to Beneficiary under an AON Insurance Policy, then 92% of the applicable Insured Obligations will be assigned to the AON Designee(s) and 8% of the applicable Insured Obligations shall continue to be held by any Existing Lender).

(ii) The Administrative Agent shall provide prompt notice by email to the Lenders and the Borrower of its receipt of the AON Insurance Proceeds.

(iii) Only Existing Lenders may provide direction on matters regarding the AON Insurance Policy.

For avoidance of doubt, no Non-Paying Insurer shall be assigned any portion of the Insured Obligations until all amounts payable by such Non-Paying Insurer under the AON Insurance Policy are so funded. At such time as any Non-Paying Insurer delivers the full balance of its pro rata share of any claim under the AON Insurance Policy, such proceeds shall be used by the Administrative Agent only to fund the acquisition of the Insured Term Loans held by Existing Lenders and the assignment thereof to such funding Non-Paying Insurer. In furtherance of such automatic subrogation and assignment, the Administrative Agent shall without requirement for any assignment, notice or instruction, immediately and in all events within five (5) Business Days thereof, (x) distribute to such Lender its ratable share of the AON Insurance Proceeds and (y) following such distribution, record in the Register the assignment of the Insured Term Loan to the AON Designee(s), and each such designee’s ratable share of the aggregate outstanding amount of all Insured Obligations. Further, each of the Lenders agrees to execute and deliver to the Administrative Agent and the AON Designee(s) an Assignment Agreement reflecting such automatic assignment effective as of the date of the automatic assignment described in the first sentence of this Section 10.6(j) to the AON Designee(s) of the aggregate outstanding amount of Insured Obligations so assigned in respect of principal, and each of the AON Designee(s) shall promptly, and in all events within ten (10) Business Days, complete and execute the Assignment Agreement and provide to the Administrative Agent such administrative details, tax certificates and other “know your customer” documentation as Administrative Agent may reasonably request. Each insurer under the AON Insurance Policy, or their designee by its acceptance of the assignment of the Insured Obligations, acknowledges that its failure to provide the required information and certifications may result in Tax withholding in respect of interest payments and other obligations pursuant to applicable Law. All obligations of the insurers under the AON Insurance Policy in this Section 10.6(j) may be satisfied by performance of the designee, if any, on behalf of such insurer. Each insurer under the AON Insurance Policy and their designee is a designated third-party beneficiary of this Section 10.6(j). For avoidance of doubt, failure of the Lenders and the AON Designee(s) to execute any applicable Assignment Agreement shall have no effect on the automatic subrogation and assignment described above. Each Lender that holds Insured Obligations hereby authorizes AON to deliver the AON Notice and instructs the Administrative Agent that the Administrative Agent is entitled to conclusively rely on the AON Notice in the execution of the assignments of the Insured Obligations provided for in this Section 10.6(j) and will be fully protected under Section 10.3 in doing so.

 

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Section 10.7. Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists.

Section 10.8. Survival of Representations, Warranties and Agreements. All representations, warranties and agreements made herein shall survive the execution and delivery hereof and the making of any Credit Extension. Notwithstanding anything herein or implied by law to the contrary, the agreements of each Loan Party set forth in Sections 2.13, 2.14, 10.2, 10.3, 10.4, and 10.10 and the agreements of Lenders set forth in Section 2.12 and Article IX shall survive the payment of the Term Loans and the termination hereof.

Section 10.9. No Waiver; Remedies Cumulative. No failure or delay on the part of any Agent or any Lender in the exercise of any power, right or privilege hereunder or under any other Loan Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. The rights, powers and remedies given to each Agent and each Lender hereby are cumulative and shall be in addition to and independent of all rights, powers and remedies existing by virtue of any statute or rule of law or in any of the other Loan Documents. Any forbearance or failure to exercise, and any delay in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy.

Section 10.10. Marshalling; Payments Set Aside. Neither any Agent nor any Lender shall be under any obligation to marshal any assets in favor of any Loan Party or any other Person or against or in payment of any or all of the Obligations. To the extent that any Loan Party makes a payment or payments to Administrative Agent or Lenders (or to Administrative Agent, on behalf of Lenders), or Administrative Agent, Collateral Agent or Lenders enforce any security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or setoff had not occurred.

Section 10.11. Severability. In case any provision in or obligation hereunder or any Note or other Loan Document shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

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Section 10.12. Obligations Several. The obligations of Lenders hereunder are several and no Lender shall be responsible for the obligations or Commitment of any other Lender hereunder. Nothing contained herein or in any other Loan Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a Joint Venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, provided that the Lenders shall not have the right to individually exercise any rights or remedies under any of the Collateral Documents, all of which shall be exercised solely by the Administrative Agent or Collateral Agent (or any duly appointed sub-agent) upon instruction of Required Lenders for the ratable benefit of all Lenders.

Section 10.13. Headings. Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect.

Section 10.14. APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Section 10.15. CONSENT TO JURISDICTION.

(a) ALL JUDICIAL PROCEEDINGS BROUGHT ARISING OUT OF OR RELATING HERETO OR ANY OTHER LOAN DOCUMENT, OR ANY OF THE OBLIGATIONS, SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH PARTY HERETO, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY DEFENSE OF FORUM NON CONVENIENS; AND (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 10.1 AND TO ANY PROCESS AGENT SELECTED IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (IV) AGREES THAT AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION.

(b) EACH LOAN PARTY HEREBY AGREES THAT PROCESS MAY BE SERVED ON IT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE ADDRESSES PERTAINING TO IT AS SPECIFIED IN SECTION 10.1, AND HEREBY APPOINTS THE BORROWER AS ITS AGENT TO RECEIVE SUCH SERVICE OF PROCESS. ANY AND ALL SERVICE OF PROCESS AND ANY OTHER NOTICE IN ANY

 

157


SUCH ACTION, SUIT OR PROCEEDING SHALL BE EFFECTIVE AGAINST ANY LOAN PARTY IF GIVEN BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY ANY OTHER MEANS OR MAIL WHICH REQUIRES A SIGNED RECEIPT, POSTAGE PREPAID, MAILED AS PROVIDED ABOVE. IN THE EVENT THE BORROWER SHALL NOT BE ABLE TO ACCEPT SERVICE OF PROCESS AS AFORESAID AND IF ANY LOAN PARTY SHALL NOT MAINTAIN AN OFFICE IN NEW YORK CITY, SUCH LOAN PARTY SHALL PROMPTLY APPOINT AND MAINTAIN AN AGENT QUALIFIED TO ACT AS AN AGENT FOR SERVICE OF PROCESS WITH RESPECT TO THE COURTS SPECIFIED IN THIS SECTION 10.15 ABOVE, AND ACCEPTABLE TO JEFFERIES, AS EACH LOAN PARTY’S AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON EACH LOAN PARTY’S BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION, SUIT OR PROCEEDING.

Section 10.16. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS FUTURE DEALINGS RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.16 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TERM LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

Section 10.17. Confidentiality. Each Agent and Lender shall hold all non-public information regarding each Loan Party and its Subsidiaries and their businesses identified as such by Borrower and obtained by such Agent or Lender from or on behalf of any Loan Party or its Subsidiaries pursuant to the requirements hereof in accordance with such Lender’s customary procedures for handling confidential information of such nature, it being understood and agreed

 

158


by each Loan Party that, in any event, any Agent or Lender may make (i) disclosures of such information to Affiliates of such Agent or Lender and to their agents, advisors, directors and shareholders on a “need to know” confidential basis (and to other persons authorized by a Lender or Agent to organize, present or disseminate such information in connection with disclosures otherwise made in accordance with this Section 10.17), (ii) disclosures of such information reasonably required by any bona fide or potential assignee, transferee or participant in connection with the contemplated assignment, transfer or participation by any such Lender of any Term Loans or any participations therein; provided that such bona fide or potential assignee, transferee or participant shall be subject to a customary confidentiality agreement, (iii) disclosure to any rating agency when required by it, provided that, prior to any disclosure, such rating agency shall undertake in writing to preserve the confidentiality of any confidential information relating to the Loan Parties received by it from any of the Agents or any Lender, (iv) disclosure to any Lender’s financing sources, provided that prior to any disclosure, such financing source is informed of the confidential nature of the information and agrees to treat it in accordance with this Section 10.17, (v) disclosures of such information to any investors and partners of any Lender, provided that prior to any disclosure, such investor or partner is informed of the confidential nature of the information and agrees to treat it in accordance with this Section 10.17, (vi) disclosure to the insurers under the AON Insurance Policy and to their respective agents or advisors; provided that prior to any disclosure, such insurer and their agent or advisor are informed of the confidential nature of the information and agrees to treat it in accordance with this Section 10.17 and (vii) disclosure required in connection with any public filings, whether pursuant to any securities laws or regulations or rules promulgated therefor (including the Investment Company Act of 1940 or otherwise) or representative thereof or by the National Association of Insurance Commissioners (and any successor thereto) or pursuant to legal or judicial process; provided, unless specifically prohibited by applicable law or court order, each Agent and Lender shall make reasonable efforts to notify Borrower of any request by any Governmental Authority or representative thereof (other than any such request in connection with any examination of the financial condition or other routine examination of such Lender by such Governmental Authority) for disclosure of any such non-public information prior to disclosure of such information. Notwithstanding anything to the contrary set forth herein, each party (and each of their respective employees, representatives or other agents) may disclose to any and all persons, without limitations of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind (including opinions and other tax analyses) that are provided to any such party relating to such tax treatment and tax structure. However, any information relating to the tax treatment or tax structure shall remain subject to the confidentiality provisions hereof (and the foregoing sentence shall not apply) to the extent reasonably necessary to enable the parties hereto, their respective Affiliates, and their and their respective Affiliates’ directors and employees to comply with applicable securities laws. For this purpose, “tax structure” means any facts relevant to the federal income tax treatment of the transactions contemplated by this Agreement but does not include information relating to the identity of any of the parties hereto or any of their respective Affiliates. Notwithstanding the foregoing, on or after the Closing Date, any Agent may, at its own expense issue news releases and publish “tombstone” advertisements and other announcements relating to this transaction in newspapers, trade journals and other appropriate media (which may include use of logos of one or more of the Loan Parties) (collectively, “Trade Announcements”). No Loan Party shall issue any Trade Announcement or disclose the name of any Agent or any Lender except (A) disclosures required by applicable law, regulation, legal process or the rules of the Securities and Exchange Commission or (B) with the prior approval of such Agent and such Lender.

 

159


Section 10.18. Usury Savings Clause. Notwithstanding any other provision herein, the aggregate interest rate charged or agreed to be paid with respect to any of the Obligations, including all charges or fees in connection therewith deemed in the nature of interest under applicable law shall not exceed the Highest Lawful Rate. If the rate of interest (determined without regard to the preceding sentence) under this Agreement at any time exceeds the Highest Lawful Rate, the outstanding amount of the Term Loans made hereunder shall bear interest at the Highest Lawful Rate until the total amount of interest due hereunder equals the amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect. In addition, if when the Term Loans made hereunder are repaid in full the total interest due hereunder (taking into account the increase provided for above) is less than the total amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect, then to the extent permitted by law, Borrower shall pay to Administrative Agent an amount equal to the difference between the amount of interest paid and the amount of interest which would have been paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding the foregoing, it is the intention of Lenders and Borrower to conform strictly to any applicable usury laws. Accordingly, if any Lender contracts for, charges, or receives any consideration which constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be cancelled automatically and, if previously paid, shall at such Lender’s option be applied to the outstanding amount of the Term Loans made hereunder or be refunded to Borrower. In determining whether the interest contracted for, charged, or received by Administrative Agent or a Lender exceeds the Highest Lawful Rate, such Person may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest, throughout the contemplated term of the Obligations hereunder.

Section 10.19. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Delivery of an executed signature page to this agreement by electronic transmittal shall be as effective as delivery of a manually executed counterpart of this Agreement. The words “execution,” “signed,” “signature,” and words of similar import in any Loan Document or any notice, certificate, document, agreement or instrument in respect thereof shall be deemed to include electronic or digital signatures or the keeping of records in electronic form, each of which shall be of the same effect, validity and enforceability as manually executed signatures or a paper-based recordkeeping system, as the case may be, to the extent and as provided for under applicable law, including the Electronic Signatures in Global and National Commerce Act of 2000, the Electronic Signatures and Records Act of 1999, or any other similar state Laws based on the Uniform Electronic Transactions Act.

Section 10.20. Effectiveness. This Agreement shall become effective upon the execution and delivery of a counterpart hereof by each of the parties hereto and receipt by Borrower and each Agent of written or telephonic notification of such execution and authorization of delivery thereof.

 

160


Section 10.21. PATRIOT Act Notice. Each Lender and Agent (for itself and not on behalf of any Lender) hereby notifies the Loan Parties that pursuant to the requirements of the PATRIOT Act, it may be required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of the Loan Parties and other information that will allow such Lender or Agent, as applicable, to identify the Loan Parties in accordance with the PATRIOT Act, including the Beneficial Ownership Regulation.

Section 10.22. Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by: the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and the effects of any Bail-In Action on any such liability, including, if applicable (i) a reduction in full or in part or cancellation of any such liability, (ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document or (iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

Section 10.23. AON Insurance Policy Refund. Provided that no Event of Default shall then have occurred and be continuing, in the event that (i) the Administrative Agent receives from the insurers under the AON Insurance Policy a refund or rebate of any portion of the aggregate amount of the premium paid to such insurers or their agent in respect of the AON Insurance Policy, and (ii) the Administrative Agent receives an officer certificate pursuant to which the chief financial officer or other Authorized Officer of Borrower certifies that no Event of Default has occurred and is continuing, then, acting at the direction of the Required Lenders, the Administrative Agent shall promptly deliver an amount equal to such payment to Borrower.

Section 10.24. Entire Agreement. This Agreement and the other Loan Documents, including the documents referred to herein, constitute the entire agreement and understanding of the parties hereto and there are no representations, inducements, or other provisions other than those expressed in writing and included herein or in the other Loan Documents.

[Remainder of page intentionally left blank]

 

161


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.

 

BORROWER:
FIREFLY AEROSPACE INC.,
a Delaware corporation
By:   /s/ David Wheeler
  Name: David Wheeler
  Title: Senior Vice President
GUARANTORS:
FIREFLY SPACE TRANSPORT SERVICES,
LLC
, a Delaware limited liability company
By: Firefly Aerospace Inc., its Member
By:   /s/ David Wheeler
  Name: David Wheeler
  Title: Senior Vice President
FIREFLY RESEARCH, INC., a Delaware
corporation
By:   /s/ David Wheeler
  Name: David Wheeler
  Title: Vice President
FIREFLY IP CO, LLC, a Delaware limited
liability company
By:   /s/ David Wheeler
  Name: David Wheeler
  Title: Vice President

 

[Signature Page to Financing Agreement]


FIREFLY IP HOLDINGS, LLC a Delaware
limited liability company
By:   /s/ David Wheeler
  Name: David Wheeler
  Title: Vice President
SPACEFLIGHT, INC., a Washington corporation
By:   /s/ David Wheeler
  Name: David Wheeler
  Title: Vice President
SPACEFLIGHT FEDERAL, LLC, a Delaware
limited liability company
By: Spaceflight, Inc., its Member
By:   /s/ David Wheeler
  Name: David Wheeler
  Title: Vice President

 

[Signature Page to Financing Agreement]


COLLATERAL AGENT AND
ADMINISTRATIVE AGENT:
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION
By:   /s/ James A. Hanley
  Name: James A. Hanley
  Title: Senior Vice President

 

[Signature Page to Financing Agreement]


TERM LOAN LENDERS:
JEFFERIES FUNDING LLC
By:   /s/ Mark Sahler
  Name: Mark Sahler
  Title: Managing Director

 

[Signature Page to Financing Agreement]


AE INDUSTRIAL PARTNERS STRUCTURED
SOLUTIONS I, LP
By:   /s/ Mike Greene
  Name: Michael Greene
  Title: Managing Partner
IP LENDING X LTD.
By:   /s/ Karen Ellerbe
  Name: Karen Ellerbe
  Title: Director

 

[Signature Page to Financing Agreement]

Exhibit 10.3

EXECUTION VERSION

FIRST AMENDMENT TO AND WAIVER UNDER

SECOND AMENDED AND RESTATED FINANCING AGREEMENT

This FIRST AMENDMENT TO AND WAIVER UNDER SECOND AMENDED AND RESTATED FINANCING AGREEMENT (“Agreement”) dated as of August 13, 2024, is entered into by and among FIREFLY AEROSPACE, INC., a Delaware corporation (“Borrower”), certain subsidiaries of Borrower (the “Guarantors” and each, a “Guarantor”), as Guarantors, the Term B Loan Lenders party hereto, the other Lenders party hereto, and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as administrative agent and collateral agent under the Loan Documents (in such capacities, the “Administrative Agent” and the “Collateral Agent”, as applicable, and from time to time referred to herein without differentiation as an “Agent” and, collectively as the “Agents”). Capitalized terms used but not defined in this Agreement shall have the meaning set forth in the Financing Agreement (as defined below).

W I T N E S S E T H:

WHEREAS, Borrower, the Guarantors, the Lenders, and the Agents have heretofore executed and delivered that certain Second Amended and Restated Financing Agreement dated as of May 20, 2024 (the “Financing Agreement”).

WHEREAS, Section 6.21(a) of the Financing Agreement prohibits the Borrower from permitting the amount of Qualified Cash to be (a) before the date the Bertram Sale and Leaseback is consummated, less than (x) $5,000,000 at any time, or (y) $15,000,000 on the last day of any fiscal month; and (b) on and after the date the Bertram Sale and Leaseback is consummated, less than (x) $10,000,000 at any time, or (y) $17,500,000 on the last day of any fiscal month (the “Financial Covenant”).

WHEREAS, the Borrower has notified the Administrative Agent that the Borrower has failed to (i) satisfy the Financial Covenant from for the period beginning on May 31, 2024, through and including the date hereof, and an Event of Default has occurred and is continuing pursuant to Section 8.1(c) of the Financing Agreement related to such failure, (ii) pursuant to Section 6.16 of the Financing Agreement, put in place a Control Agreement in respect of certain Deposit Accounts and an Event of Default has occurred and is continuing pursuant to Section 8.1(c) of the Financing Agreement related to such failure and (iii) pursuant to Section 5.1(f) of the Financing Agreement, deliver a certificate of its Authorized Officer that specifies the nature of the Events of Default and an Event of Default has occurred and is continuing pursuant to Section 8.1(c) of the Financing Agreement related to such failure (collectively, the “Specified Events of Default”).

WHEREAS, Borrower has requested that the Administrative Agent and the Required Lenders (i) waive such Specified Events of Default and (ii) make certain amendments the Financing Agreement as described on Exhibit A hereto, and subject to the terms and conditions set forth herein, the Administrative Agent and the Lenders have agreed to such waiver.

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

SECTION 1. Amendments. The Borrower hereby requests the amendment of the Financing Agreement pursuant to Section 10.01 thereof such that, and the Agent and the Lenders party hereto (constituting the Required Lenders) hereby agree that, upon the First Amendment Effective Date (as defined on Exhibit A), the Financing Agreement shall be hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the underlined text (indicated textually in the same manner as the following example: underlined text) as set forth in the pages of the Financing Agreement attached as Exhibit A hereto.


SECTION 2. Limited Waiver. Subject to the conditions precedent set forth in Section 3, effective as of the First Amendment Effective Date (as defined below), the Administrative Agent and Required Lenders hereby waive the Specified Events of Default.

SECTION 3. Conditions Precedent. The effectiveness of this Agreement is subject to the satisfaction of the following conditions precedent (the date upon which this Agreement becomes effective, the “First Amendment Effective Date”):

(a) Counterparts. Receipt by Administrative Agent of counterparts of this Agreement executed by Borrower, each Guarantor, the Lenders constituting the Required Lenders under the Financing Agreement.

(b) No Default. After giving effect to the waiver set forth in Section 2, no Event of Default shall have occurred and be continuing.

(c) Insurer Consent. Confirmation by the Required Lenders to the Administrative Agent that the requisite insurers under the AON Insurance Policy have acknowledged and consented to this Agreement.

(d) Amendment Arranger Payment and Expenses. Borrower shall have paid (or shall have made arrangements satisfactory to the Required Lenders to pay) (i) to Jefferies Funding LLC an amendment arranger payment in an amount equal to $1,150,000.00, which payment is fully earned and non-refundable on the First Amendment Effective Date and shall be due and payable (x) 50% upon the completion of a Successful Capital Raise (as defined below) and (y) 50% on the Term Loan Maturity Date; provided that such amendment arranger payment shall (A) accrue interest at the same rate as the Term B Loans under the Financing Agreement, (B) be payable upon the same terms as the interest with respect to the Term B Loans under the Financing Agreement as set forth in Section 2.6 of the Financing Agreement, and (C) constitute Obligations under the Loan Documents, and (ii) all reasonable unpaid costs and expenses of Agent, the Lenders, and the insurers under the AON Insurance Policy, including all out-of-pocket fees, disbursements and expenses of their respective legal counsel through the First Amendment Effective Date including, without limitation, those incurred in connection with the negotiation, preparation and consummation of this Agreement, in each case to the extent reimbursable under the Financing Agreement.

For purposes of this clause (d), a “Successful Capital Raise” shall occur on the date the Borrower first receives proceeds in an aggregate amount of $250,000,000 consisting of (x) gross proceeds from the issuance of Capital Stock of the Borrower after the First Amendment Effective Date and (y) proceeds of any additional Term Loans under the Financing Agreement after the First Amendment Effective Date (minus the amount of any fees, expenses, interest reserves or insurance premium payments in connection with such additional Term Loans).

(e) Payment of Default Interest. Borrower shall have paid (or shall have made arrangements satisfactory to the Administrative Agent to pay) in cash all unpaid Interest accruing at the Default Rate on the Term Loans since May 31, 2024.

 

2


(f) Representations and Warranties. As of the First Amendment Effective Date, after giving effect to this Agreement, the representations and warranties contained in this Agreement and the Financing Agreement shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of the First Amendment Effective Date as if made on and as of the date first set forth above, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such earlier date.

(g) Test Stand Sale and Leaseback Documentation. Receipt by Administrative Agent of fully executed copies of the material documentation governing the Test Stand Sale and Leaseback, which shall be in form and substance reasonably satisfactory to the Required Lenders.

(h) First Amendment Intercreditor Agreement. Receipt by Administrative Agent of a fully executed copy of the First Amendment Intercreditor Agreement.

SECTION 4. Conditions Subsequent. Within thirty (30) days after the First Amendment Effective Date (subject to any extension by Administrative Agent), Borrower shall put in place a Control Agreement with respect to (i) the account ending in x0829 maintained with Wells Fargo Bank and (ii) the account ending in x1100 maintained with Texas Capital Bank; provided, that such period shall be an extension of any required delivery pursuant to Section 6.16 of the Financing Agreement.

SECTION 5. Miscellaneous.

(a) Loan Document. This Agreement is a Loan Document and all provisions of the Financing Agreement that apply to Loan Documents generally, including without limitation, Sections 10.2, 10.3, 10.14, 10.15, 10.16 and 10.17 of the Financing Agreement, shall apply to this Agreement.

(b) No Waiver; Reservation of Rights. The Administrative Agent and each of the Lenders have not waived, and are not waiving, by the execution of this Agreement or the acceptance of any payments hereunder or under the Financing Agreement, any Default or Event of Default, whether now existing or hereafter arising under the Financing Agreement or any of the other Loan Documents, or its respective rights, remedies, powers, privileges and defenses arising as a result thereof or otherwise, and no failure on the part of the Administrative Agent or the Lenders to exercise and no delay in exercising, including without limitation the right to take any enforcement actions, and no course of dealing with respect to, any right, remedy, power, privilege or defense hereunder, under the Financing Agreement or any other Loan Document, at law or in equity or otherwise, arising as the result of any continuing Default or Event of Default whether now existing or hereafter arising under the Financing Agreement or any of the other Loan Documents or the occurrence thereof or any other action by Loan Parties and no acceptance of partial performance or partial payment by the Administrative Agent or the Lenders, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power, privilege or defense hereunder, under the Financing Agreement or under any other Loan Document, at law, in equity or otherwise, preclude any other or further exercise thereof or the exercise of any other right, remedy, power, privilege or defense, nor shall any failure to specify any Default or Event of Default in this Agreement constitute any waiver of such Default or Event of Default.

 

3


(c) Confirmation of Loan Documents. Each of the Loan Parties hereby confirms and ratifies as of the date hereof all of its obligations under the Loan Documents to which it is a party, and each of the Guarantors hereby confirms as of the date hereof its obligations under Article VII of the Financing Agreement. By its execution on the respective signature lines provided below, each of the Loan Parties hereby acknowledges and agrees that the Financing Agreement, as amended by this Agreement, remains in full force and effect and is enforceable by the Administrative Agent and the Lenders pursuant to its terms. By its execution on the respective signature lines provided below, each of the Loan Parties hereby confirms and ratifies as of the date hereof all of its obligations and the Liens granted by it under the Collateral Documents to which it is a party and confirms that all references in such Collateral Documents to the “Financing Agreement” (or words of similar import) refer to the Financing Agreement as amended hereby without impairing any such obligations or Liens in any respect.

(d) Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same amendatory instrument and any of the parties hereto may execute this Agreement by signing any such counterpart. Delivery of an executed counterpart of a signature page to this Agreement by electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement. The words “execution,” “signed,” “signature,” and words of similar import in this Agreement shall be deemed to include electronic or digital signatures or the keeping of records in electronic form, each of which shall be of the same effect, validity and enforceability as manually executed signatures or a paper-based recordkeeping system, as the case may be, to the extent and as provided for under applicable law, including the Electronic Signatures in Global and National Commerce Act of 2000, the Electronic Signatures and Records Act of 1999, or any other similar state Laws based on the Uniform Electronic Transactions Act.

(e) Successors and Assigns. This Agreement is binding upon and shall inure to the benefit of the parties to the Financing Agreement and their respective permitted successors and assigns.

[Signature Pages Follow]

 

4


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.

 

BORROWER:

FIREFLY AEROSPACE INC.,

a Delaware corporation

By:  

/s/ David Wheeler

  Name: David Wheeler
  Title: Senior Vice President
GUARANTORS:
FIREFLY SPACE TRANSPORT SERVICES, LLC, a
Delaware limited liability company
By: Firefly Aerospace Inc., its Member
By:  

/s/ David Wheeler

  Name: David Wheeler
  Title: Senior Vice President
FIREFLY RESEARCH, INC., a Delaware corporation
By:  

/s/ David Wheeler

  Name: David Wheeler
  Title: Vice President
FIREFLY IP CO, LLC, a Delaware limited liability company
By:  

/s/ David Wheeler

  Name: David Wheeler
  Title: Vice President

 

 

[Signature Page to First Amendment to 2nd A&R Financing Agreement]


FIREFLY IP HOLDINGS, LLC a Delaware limited liability company
By:  

/s/ David Wheeler

  Name: David Wheeler
  Title: Vice President
SPACEFLIGHT, INC., a Washington corporation
By:  

/s/ David Wheeler

  Name: David Wheeler
  Title: Vice President
SPACEFLIGHT FEDERAL, LLC, a Delaware limited
liability company
By:   Spaceflight, Inc., its Member
By:  

/s/ David Wheeler

  Name: David Wheeler
  Title: Vice President

 

[Signature Page to First Amendment to 2nd A&R Financing Agreement]


COLLATERAL AGENT AND ADMINISTRATIVE AGENT:
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION
By:  

/s/ James A. Hanley

  Name: James A. Hanley
  Title: Senior Vice President

 

[Signature Page to First Amendment to 2nd A&R Financing Agreement]


LENDERS:
AE INDUSTRIAL PARTNERS STRUCTURED SOLUTIONS I, LP
By:  

/s/ Mike Greene

  Name: Mike Greene
  Title: Managing Partner
IP LENDING X LTD., an exempted company incorporated with limited liability under the laws of Bermuda
By:  

/s/ Karen Ellerbe

  Name: Karen Ellerbe
  Title: Director

 

[Signature Page to First Amendment to 2nd A&R Financing Agreement]


EXHIBIT A

[Attached.]


EXHIBIT A

$136,117,189.33

SECOND AMENDED AND RESTATED

FINANCING AGREEMENT

dated as of May 20, 2024,

among

FIREFLY AEROSPACE INC.,

as Borrower,

THE PERSONS FROM TIME TO TIME PARTY HERETO,

as Guarantors,

VARIOUS LENDERS FROM TIME TO TIME PARTY HERETO,

and

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,

as Administrative Agent and Collateral Agent


Table of Contents

 

ARTICLE I DEFINITIONS AND INTERPRETATION

     2  

Section 1.1.

  Definitions      2  

Section 1.2.

  Accounting and Other Terms      53  

Section 1.3.

  Interpretation, etc.      54  

Section 1.4.

  Time References      55  

Section 1.5.

  [Reserved]      55  

Section 1.6.

  Certifications      55  

Section 1.7.

  Timing of Payment or Performance      55  

Section 1.8.

  References to Agreements, Laws, Etc.      55  

ARTICLE II LOANS

     56  

Section 2.1.

  Term Loans      56  

Section 2.2.

  Protective Advances      58  

Section 2.3.

  Pro Rata Shares; Availability of Funds      58  

Section 2.4.

  Use of Proceeds      59  

Section 2.5.

  Evidence of Debt; Register; Lenders’ Books and Records; Notes      59  

Section 2.6.

  Interest      60  

Section 2.7.

  Default Interest      60  

Section 2.8.

  Payments Prior to Maturity      61  

Section 2.9.

  Mandatory Prepayments      63  

Section 2.10.

  Application of Prepayments      64  

Section 2.11.

  General Provisions Regarding Payments      65  

Section 2.12.

  Ratable Sharing      67  

Section 2.13.

  Increased Costs; Capital Adequacy      68  

Section 2.14.

  Taxes; Withholding, etc.      69  


Section 2.15.

  Obligation to Mitigate      73  

Section 2.16.

  Collateral Accounts      75  

ARTICLE III CONDITIONS PRECEDENT

     78  

Section 3.1.

  Conditions to Credit Extension on the Closing Date      78  

ARTICLE IV REPRESENTATIONS AND WARRANTIES

     81  

Section 4.1.

  Organization; Requisite Power and Authority; Qualification      81  

Section 4.2.

  Capital Stock and Ownership      82  

Section 4.3.

  Due Authorization      82  

Section 4.4.

  No Conflict      82  

Section 4.5.

  Governmental Consents      83  

Section 4.6.

  Binding Obligation      83  

Section 4.7.

  Historical Financial Statements      83  

Section 4.8.

  No Material Adverse Effect      83  

Section 4.9.

  Adverse Proceedings, etc.      83  

Section 4.10.

  Payment of Taxes      83  

Section 4.11.

  Properties      84  

Section 4.12.

  Environmental Matters      84  

Section 4.13.

  No Defaults      85  

Section 4.14.

  Material Contracts      85  

Section 4.15.

  Investment Company Act      85  

Section 4.16.

  Margin Stock      85  

Section 4.17.

  Employee Matters      86  

Section 4.18.

  Employee Benefit Plans      86  

Section 4.19.

  Certain Fees      86  

Section 4.20.

  Compliance with Organizational Documents and Statutes      86  


Section 4.21.

  Intellectual Property      87  

Section 4.22.

  Equipment      87  

Section 4.23.

  [Reserved]      87  

Section 4.24.

  Insurance      87  

Section 4.25.

  Common Enterprise      87  

Section 4.26.

  Permits, Etc.      88  

Section 4.27.

  Bank Accounts and Securities Accounts      88  

Section 4.28.

  Security Interests      88  

Section 4.29.

  Anti-Terrorism Laws, Anti-Corruption Laws and Sanctions      89  

Section 4.30.

  Disclosure      89  

Section 4.31.

  Indebtedness      89  

Section 4.32.

  Use of Proceeds      90  

Section 4.33.

  Solvency      90  

ARTICLE V AFFIRMATIVE COVENANTS

     90  

Section 5.1.

  Financial Statements and Other Reports      90  

Section 5.2.

  Existence      99  

Section 5.3.

  Payment of Taxes and Claims      99  

Section 5.4.

  Maintenance of Properties      99  

Section 5.5.

  Insurance      99  

Section 5.6.

  Inspections; Books and Records      100  

Section 5.7.

  Private Lenders Meetings and Conference Calls      100  

Section 5.8.

  Compliance with Laws      101  

Section 5.9.

  Environmental      101  

Section 5.10.

  Subsidiaries      102  

Section 5.11.

  Material Real Estate Assets      103  


Section 5.12.

  [Reserved]      103  

Section 5.13.

  Further Assurances      104  

Section 5.14.

  Miscellaneous Business Covenants      104  

Section 5.15.

  Post-Closing Matters      106  

Section 5.16.

  AON Insurance Policy      106  

Section 5.17.

  [Reserved]      106  

Section 5.18.

  Changes to Capital Structure      106  

Section 5.19.

  Convertible Notes      106  

ARTICLE VI NEGATIVE COVENANTS

     107  

Section 6.1.

  Indebtedness      107  

Section 6.2.

  Liens      107  

Section 6.3.

  [Reserved]      107  

Section 6.4.

  No Further Negative Pledges      107  

Section 6.5.

  Restricted Junior Payments      108  

Section 6.6.

  Restrictions on Subsidiary Distributions      110  

Section 6.7.

  Investments      111  

Section 6.8.

  Interest Reserve Account      111  

Section 6.9.

  Fundamental Changes; Disposition of Assets      111  

Section 6.10.

  [Reserved]      112  

Section 6.11.

  Sales and Lease Backs      113  

Section 6.12.

  Transactions with Affiliates      113  

Section 6.13.

  Conduct of Business      115  

Section 6.14.

  Changes to Certain Agreements and Organizational Documents      116  

Section 6.15.

  Accounting Methods      116  

Section 6.16.

  Deposit Accounts and Securities Accounts      116  


Section 6.17.

  Prepayments of Certain Indebtedness      116  

Section 6.18.

  Anti-Terrorism Laws, Anti-Corruption Laws, Sanctions      117  

Section 6.19.

  Bankruptcy Remote      117  

Section 6.20.

  [Reserved]      118  

Section 6.21.

  Financial Covenant      118  

ARTICLE VII GUARANTY

     119  

Section 7.1.

  Guaranty of the Obligations      119  

Section 7.2.

  Contribution by Guarantors      119  

Section 7.3.

  Payment by Guarantors      120  

Section 7.4.

  Liability of Guarantors Absolute      120  

Section 7.5.

  Waivers by Guarantors      122  

Section 7.6.

  Guarantors’ Rights of Subrogation, Contribution, etc.      122  

Section 7.7.

  Subordination of Other Obligations      123  

Section 7.8.

  Continuing Guaranty      123  

Section 7.9.

  Authority of Guarantors or Borrower      123  

Section 7.10.

  Financial Condition of Borrower      124  

Section 7.11.

  Bankruptcy, etc.      124  

Section 7.12.

  Discharge of Guaranty upon Sale of Guarantor      124  

Section 7.13.

  Limitation      125  

ARTICLE VIII EVENTS OF DEFAULT

     126  

Section 8.1.

  Events of Default      126  

ARTICLE IX AGENTS

     130  

Section 9.1.

  Appointment      130  

Section 9.2.

  Nature of Duties; Delegation      131  

Section 9.3.

  Successor Agent      135  


Section 9.4.

  Nonreliance on Agents; Lender Consent      136  

Section 9.5.

  Collateral Matters      136  

Section 9.6.

  Administrative Agent May File Proofs of Claim      139  

Section 9.7.

  No Third-Party Beneficiaries      139  

Section 9.8.

  Right to Indemnity      139  

Section 9.9.

  Agency for Perfection      141  

Section 9.10.

  Erroneous Payments      141  

Section 9.11.

  Delivery of Notices to Securitization Trustee      144  

ARTICLE X MISCELLANEOUS

     144  

Section 10.1.

  Notices      144  

Section 10.2.

  Expenses      145  

Section 10.3.

  Indemnity      147  

Section 10.4.

  Set-Off      148  

Section 10.5.

  Amendments and Waivers      148  

Section 10.6.

  Successors and Assigns; Participations      151  

Section 10.7.

  Independence of Covenants      157  

Section 10.8.

  Survival of Representations, Warranties and Agreements      157  

Section 10.9.

  No Waiver; Remedies Cumulative      157  

Section 10.10.

  Marshalling; Payments Set Aside      157  

Section 10.11.

  Severability      157  

Section 10.12.

  Obligations Several      158  

Section 10.13.

  Headings      158  

Section 10.14.

  APPLICABLE LAW      158  

Section 10.15.

  CONSENT TO JURISDICTION      158  

Section 10.16.

  WAIVER OF JURY TRIAL      159  


Section 10.17.

  Confidentiality      159  

Section 10.18.

  Usury Savings Clause      161  

Section 10.19.

  Counterparts      161  

Section 10.20.

  Effectiveness      161  

Section 10.21.

  PATRIOT Act Notice      162  

Section 10.22.

  Acknowledgement and Consent to Bail-In of EEA Financial Institutions      162  

Section 10.23.

  AON Insurance Policy Refund      162  

Section 10.24.

  Entire Agreement      162  


APPENDICES:    A    Term Loan Commitments
SCHEDULES:    4.1    Jurisdictions of Organization and Qualification
   4.2    Capital Stock and Ownership
   4.9    Adverse Proceedings
   4.10    Taxes
   4.11    Real Estate Assets
   4.12    Environmental Matters
   4.13    Defaults
   4.14    Material Contracts
   4.14A    Material Contract Estoppels
   4.21    Intellectual Property
   4.22    Equipment
   4.24    Insurance
   4.27    Bank Accounts and Securities Accounts
   5.1(c)    Regional Accounting Firms
   5.14(c)    IP Third Party License Indemnity Terms
   5.15    Certain Post-Closing Matters
   5.20    Lockbox Deposit Categories
   6.1    Certain Indebtedness
   6.2    Certain Liens
   6.7    Certain Investments
   6.9(b)    Certain Dispositions
   6.9    Certain Acquisitions
   6.12    Certain Affiliate Transactions
   6.19    Co-Owned IP Rights
   10.1    Notice Addresses


EXHIBITS:    A    Form of Funding Notice
   B    Form of Compliance Certificate
   C    Form of Assignment Agreement
   D    Form of Certificate Regarding Non-Bank Status
   E    Form of Closing Certificate
   F    Form of Counterpart Agreement
   G    Form of Pledge and Security Agreement
   H    [Intentionally omitted]
   I    Form of Note
   J    Form of Solvency Certificate
   K    Form of AON Insurance Policy
   L    Form of Intercompany Subordination Agreement
   M    Form of AON Valuation Questionnaire
   N    Form of Intercreditor Agreement Terms


SECOND AMENDED AND RESTATED FINANCING AGREEMENT

This SECOND AMENDED AND RESTATED FINANCING AGREEMENT dated as of May 20, 2024, is entered into by and among FIREFLY AEROSPACE INC., a Delaware corporation (“Borrower”), as borrower, and certain Subsidiaries of Borrower from time to time party hereto (collectively, the “Guarantors” and each, a “Guarantor”), as guarantors, the Lenders from time to time party hereto, and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION and its permitted successors to serve as administrative agent and collateral agent under the Loan Documents (in such capacities, the “Administrative Agent” and the “Collateral Agent”, as applicable, and from time to time referred to herein without differentiation as an “Agent” and, collectively as the “Agents”).

W I T N E S S E T H:

WHEREAS, capitalized terms used in the preamble or these recitals shall have the respective meanings set forth for such terms in Section 1.1 hereof;

WHEREAS, the Borrower and the other Loan Parties previously entered into that certain Financing Agreement, dated as of July 17, 2023 (the “Initial Closing Date”), among the Borrower, the other Loan Parties, the lenders party thereto, and the Administrative Agent (the “Initial Financing Agreement”), which was amended and restated by that certain Amended and Restated Financing Agreement, dated as of December 6, 2023, among the Borrower, the other Loan Parties, the lenders party thereto (the “Existing Lenders”), and the Administrative Agent (as amended and as in effect immediately prior to the date hereof, the “Existing Financing Agreement”), pursuant to which the Existing Lenders agreed to make available to the Borrower certain loans and other financial accommodations;

WHEREAS, in connection with the Initial Financing Agreement and Existing Financing Agreement, the Borrower and the other Loan Parties executed and delivered the Collateral Documents (as defined in the Existing Financing Agreement) in favor of the Administrative Agent to secure the payment and performance of the Obligations (as defined in the Existing Financing Agreement);

WHEREAS, the Borrower, the other Loan Parties, the Lenders and the Administrative Agent wish to amend and restate the Existing Financing Agreement, subject to the terms and conditions set forth herein; and

WHEREAS, (i) the Borrower, the other Loan Parties, the Lenders, and the Administrative Agent intend that (a) this Agreement amend and restate the Existing Financing Agreement in its entirety without causing a substitution, refinancing or novation of the existing obligations thereunder, and (b) the Borrower’s and the Loan Parties’ obligations under the Existing Financing Agreement shall continue to exist under, and to be evidenced by, this Agreement and (ii) each Loan Party (as defined herein) acknowledges and agrees that the security interests and Liens (as defined in the Existing Financing Agreement) granted to the Administrative Agent pursuant to the Existing Financing Agreement and the Collateral Documents (as defined in the Existing Financing Agreement), shall remain outstanding and in full force and effect, without interruption or impairment of any kind, in accordance with the Existing Financing Agreement, and shall continue to secure the Obligations (as defined herein).


NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the Borrower, the other Loan Parties, the Lenders, and the Administrative Agent agree that the Existing Financing Agreement shall be amended and restated in its entirety as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

Section 1.1. Definitions. The following terms used herein, including in the preamble, recitals, exhibits and schedules hereto, shall have the following meanings:

“Additional Term A Loan” has the meaning specified in Section 2.1(a).

“Additional Term A Loan Commitment” means, relative to any Term A Loan Lender, such Lender’s obligation to make Additional Term A Loans pursuant to Section 2.1(a). The amount of each Lender’s Additional Term A Loan Commitment, if any, is set forth on Appendix A or in the applicable Lender Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Additional Term A Loan Commitments as of the Closing Date equals the Additional Term A Loan Commitment Amount.

“Additional Term A Loan Commitment Amount” means $12,500,000.00.

“Additional Term B Loan” has the meaning specified in Section 2.1(a).

“Additional Term B Loan Commitment” means, relative to any Term B Loan Lender, such Lender’s obligation to make Additional Term B Loans pursuant to Section 2.1(a). The amount of each Lender’s Additional Term B Loan Commitment, if any, is set forth on Appendix A or in the applicable Lender Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Additional Term B Loan Commitments as of the Closing Date equals the Additional Term B Loan Commitment Amount.

“Additional Term B Loan Commitment Amount” means $1,388,888.89.

“Administrative Agent” has the meaning specified in the preamble hereto.

“Administrative Agent’s Account” means an account at a bank designated by Administrative Agent from time to time as the account into which the Loan Parties shall make all payments to Administrative Agent under this Agreement and the other Loan Documents.

 

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“Adverse Proceeding” means any action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of Borrower or any of its Subsidiaries) at law or in equity, or before or by any Governmental Authority, domestic or foreign (including any Environmental Claims) or other regulatory body or any mediator or arbitrator, whether pending or, to the knowledge of Borrower or any of its Subsidiaries, threatened in writing against Borrower or any of its Subsidiaries or any property of Borrower or any of its Subsidiaries.

“Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power (a) for purposes of Section 6.12, to vote 10% or more of the Securities having ordinary voting power for the election of members of the Board of Directors (or similar governing body or Persons performing similar governing functions) of such Person, or (b) to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting Securities or by contract or otherwise. Notwithstanding anything herein to the contrary, in no event shall any Agent or any Lender or any of their Affiliates or Related Funds be considered an “Affiliate” of any Loan Party. For avoidance of doubt, no Person that would otherwise not be an Affiliate shall be considered an Affiliate hereunder solely by reason of such Person’s direct or indirect interest in the Warrant, or any Capital Stock issued in respect of the Warrant.

“Agent” and “Agents” have the meaning specified in the preamble hereto.

“Agent Fee Letter” means the letter agreement dated as of the Initial Closing Date between Borrower and Agents, as amended, amended and restated, supplemented or otherwise modified from time to time.

“Aggregate Amounts Due” has the meaning specified in Section 2.12(a).

“Aggregate Payments” has the meaning specified in Section 7.2.

“Agreement” means this Financing Agreement and any annexes, exhibits and schedules attached hereto as it may be amended, amended and restated, supplemented or otherwise modified from time to time.

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction concerning or relating to bribery or corruption, including, without limitation, the FCPA.

“Anti-Terrorism Laws” means any Law relating to terrorism financing or money laundering, including, without limitation, (a) the Money Laundering Control Act of 1986 (i.e., 18 U.S.C. §§ 1956 and 1957), (b) the Currency and Foreign Transactions Reporting Act (31 U.S.C. §§ 5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959) (the “Bank Secrecy Act”), (c) the PATRIOT Act, (d) any applicable law prohibiting or directed against terrorist activities or the financing of terrorist activities (e.g., 18 U.S.C. §§ 2339A and 2339B), or (e) any similar laws enacted in the United States, the United Kingdom, the European Union or any other jurisdictions in which the parties to this Agreement operate, as any of the foregoing laws may from time to time be amended, renewed, extended, or replaced, and all other present and future applicable legal requirements of any Governmental Authority governing, addressing, relating to, or attempting to eliminate, terrorist acts and acts of war and any regulations promulgated pursuant thereto.

 

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“AON Designee” has the meaning set forth in Section 10.6(j).

“AON Insurance Funded Portion” has the meaning set forth in Section 10.6(j).

“AON Insurance Policy” means that certain Second Amended and Restated Collateral Protection Insurance Policy dated as of the Closing Date (as amended, amended and restated, supplemented or otherwise modified from time to time) and issued to Administrative Agent as “insured party” defined therein by the insurers listed on Schedule 2 thereof and substantially in the form attached hereto as Exhibit K.

“AON Insurance Proceeds” has the meaning set forth in Section 10.6(j).

“AON Notice” has the meaning set forth in Section 10.6(j).

“Applicable Parties” has the meaning set forth in Section 5.1.

“Arm’s Length Terms” means, as of any applicable time of determination, terms (taken as a whole) at least as substantially favorable to Borrower and/or any applicable Subsidiary thereof than those terms that would be obtainable in an arm’s length transaction between unaffiliated and disinterested Persons in a transaction in which neither Person is under undue pressure to complete such transaction.

“Asset Sale” means a sale, lease or sublease (as lessor or sublessor), sale and leaseback, assignment, conveyance, transfer, license, sublicense or other disposition to (other than to or with a Loan Party), or any exchange of property with, any Person (other than with a Loan Party), in one transaction or a series of transactions, of all or any part of any Loan Party’s, or of any Subsidiary of a Loan Party’s, assets or properties of any kind, whether real, personal, or mixed and whether tangible or intangible, including specifically, but without limitation, any form of IP Rights, including formulas, trade secrets, know-how, methods or processes, whether now owned or hereafter acquired, including, without limitation, the disposition of Capital Stock of any Loan Party by another Person, and for purposes of clarification, “Asset Sale” shall include (a) the sale or other disposition for value of any contracts, (b) the early termination or modification of any contract resulting in the receipt by any Loan Party of a Cash payment or other consideration in exchange for such event (other than payments in the ordinary course for accrued and unpaid amounts due through the date of termination or modification) and (c) any sale of merchant accounts (or any rights thereto (including, without limitation, any rights to any residual payment stream with respect thereto)) by any Loan Party, in each case other than (the “Asset Sale Exceptions”):

(a) any disposition of:

(i) Cash or Cash Equivalents,

(ii) inventory sold, inventory licensed in the ordinary course of business or inventory leased in the ordinary course of business,

(iii) negligible, obsolete, damaged, aged, immaterial or worn-out property, or surplus property or property no longer used or useful in the business of the Loan Parties and disposed of in the ordinary course of business;

 

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(iv) improvements made to leased real property to landlords pursuant to customary terms of leases entered into in the ordinary course of business;

(b) the disposition of any assets by the Loan Parties in a manner permitted pursuant to Section 6.9;

(c) any disposition constituting a Restricted Junior Payment that is permitted to be made, and is made, under Section 6.5, a Permitted Investment or an acquisition otherwise permitted under this Agreement;

(d) (i) the lease, assignment or sublease, license or sublicense of any assets or properties (other than IP Rights) of any kind, whether real, personal, or mixed and whether tangible or intangible in the ordinary course of business and (ii) the exercise of termination rights with respect to any such lease, sublease, license or sublicense or other agreement;

(e) foreclosures, condemnation, expropriation, eminent domain or any similar action (including, for the avoidance of doubt, any casualty event) with respect to assets or the granting of Liens not prohibited hereunder;

(f) sales or discounts of accounts receivable, or participations therein, or the disposition of an account receivable in connection with the collection or compromise thereof in the ordinary course of business or consistent with industry practice or in bankruptcy or similar proceedings;

(g) the sale, lease, assignment, license, sublease, write-off or discount of inventory, equipment, accounts receivable, notes receivable or other current assets or the conversion of accounts receivable to notes receivable or other dispositions of accounts receivable in connection with the collection thereof, in each case in the ordinary course of business or consistent with industry practice;

(h) any (i) non-exclusive sublicense in respect of IP Rights granted in connection with a commercial transaction that is entered into in the ordinary course of business (for example, transactions related to engines, launch vehicles, or spacecraft programs) and on Arm’s Length Terms, including those granted by a Loan Party to a third party where such sublicenses are associated with a service or product provided or supplied by the Loan Party in the ordinary course of business on Arm’s Length Terms, and (ii) exclusive sublicense in respect of IP Rights (including that are associated with a service or product either provided or supplied by the Loan Party or received or supplied to the Loan Party), granted in connection with a commercial transaction that is entered into in the ordinary course of business (for example, transactions related to engines, launch vehicles, or spacecraft programs) and on Arm’s Length Terms and that do not interfere in any material respect with the business of the Borrower, including the Loan Party’s use and sublicensing of such exclusively licensed IP Rights for other products and uses (provided that in the case of any exclusive sublicense described in clause (ii) that could reasonably be expected to materially impair the aggregate value of the Collateral taken as a whole (or, to the extent with respect to IP Rights owned by such Loan Party as of the date of the execution of such commercial transaction, with a cumulative term of greater than two (2) years), the Loan Parties shall first provide written notice of such action to the insurers under the AON Insurance Policy, the

 

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Administrative Agent and the Lenders at least thirty (30) Business Days prior to the grant of such exclusive sublicense and (x) such grant of exclusive sublicense shall not have, within ten (10) Business Days following receipt of such notice, been objected to in writing by insurers holding at least 50.1% of the aggregate risk under the AON Insurance Policy on the terms and conditions set forth in clause (a) of Section IV of the AON Insurance Policy as in effect on the Closing Date without giving effect to any subsequent amendment or modification, and (y) the Required Lenders shall not have, within ten (10) Business Days following receipt of such notice, objected in writing to such transaction, and if no such objection of such insurers and Lenders as described in clauses (x) and (y) above is made, the Loan Parties shall be permitted to proceed with the grant of such exclusive sublicense) (any such sublicense referenced in (i) or (ii), a “Qualified License”);

(i) any surrender or waiver of contract rights or the settlement, release or surrender of contract rights or other litigation claims in the ordinary course of business or consistent with industry practice;

(j) disposition of property to any Borrower or any other Subsidiary; provided that if the transferor of such property is a Loan Party, (i) the transferee thereof must be a Loan Party or (ii) such dispositions to non-Loan Parties do not exceed in the aggregate $5,000,000;

(k) sales, transfers and other dispositions of Investments in joint ventures to the extent required by, or made pursuant to, customary put, drag or tag arrangements (or other provisions of similar effect) between the joint venture parties set forth in joint venture arrangements;

(l) the sale, assignment, conveyances, transfer, sublicense, lapse, abandonment, or other disposition of IP Rights (i) which in the good faith determination of Borrower, are not material to the conduct of the business of the Loan Parties taken as a whole (provided that in the case of any lapse, abandonment or other disposition of any issued patent, registered trademark or registered copyright prior to the lapse, abandonment or other disposition of such asset at the end of its applicable statutory term, the Loan Parties shall first provide written notice of such action to the insurers under the AON Insurance Policy, the Administrative Agent and the Lenders at least thirty (30) Business Days prior to the last opportunity to prevent such lapse, abandonment or other disposition and (x) such lapse, abandonment or other disposition shall not have, within ten (10) Business Days following receipt of such notice, been objected to in writing by insurers holding at least 50.1% of the aggregate risk under the AON Insurance Policy on the terms and conditions set forth in clause (a) of Section IV of the AON Insurance Policy as in effect on the Closing Date without giving effect to any subsequent amendment or modification, and (y) the Required Lenders shall not have, within ten (10) Business Days following receipt of such notice, objected in writing to such transaction, and if no such objection of such insurers and Lenders as described in clauses (x) and (y) above is made, the Loan Parties shall be permitted to proceed with such lapse, abandonment or other disposition), or (ii) to a third party where such IP Rights were developed in connection with any commercial arrangement that is entered into in the ordinary course of business by a Loan Party on Arm’s Length Terms with such third party (including any such co- or joint-development or research agreements) and pursuant to such commercial arrangement (x) the Loan Party and such third party agree (which agreement was made in their respective reasonable business judgment) that such IP Rights will be jointly-owned by the Loan Party and such third party, (y) such IP Rights are related to or an improvement, derivative, or the like of such third party’s or any of its Affiliates’ pre-existing or background IP Rights, or (z) as between such third party and such Loan Party, such IP Rights primarily relate to the business of such third party and its Affiliates (any sublicense referenced in this clause (l) shall be deemed a Qualified License);

 

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(m) the granting of a Permitted Lien or the making of Restricted Junior Payments permitted hereunder;

(n) the disposition of any assets (including Capital Stock) (i) acquired in a transaction permitted hereunder, which assets are not used or useful in the principal business of the Loan Parties or (ii) made in connection with the approval of any applicable antitrust authority or otherwise necessary or advisable in the good faith determination of Borrower to consummate any acquisition permitted hereunder;

(o) dispositions of property to the extent that such property is concurrently exchanged for credit against the purchase price of substantially concurrently acquired similar replacement property;

(p) dispositions of property pursuant to sale-leaseback transaction permitted hereunder;

(q) any swap of assets in exchange for services or other assets in the ordinary course of business of comparable or greater value or usefulness to the business of the Borrower and its Subsidiaries as a whole, as determined in good faith by the Borrower, in an aggregate amount not to exceed $5,000,000;

(r) dispositions of assets not constituting Collateral in an aggregate amount not to exceed $5,000,000 over the course of this Agreement;

(s) dispositions set forth on Schedule 6.9(b); or

(t) the termination of any contract or agreement, including, in respect of agreements governing a Joint Venture.

Notwithstanding any other provision contained herein, for all purposes of this Agreement and the other Loan Documents, (i) all licenses, sublicenses, or other rights granted by Borrower or any of its Subsidiaries prior to the date hereof in connection with any IP Rights (together with any other rights or obligations (including sales, assignments, conveyances, transfers, licenses, sublicenses, or other dispositions) (x) granted in connection with the foregoing prior to the date hereof or (y) required to be granted, or otherwise exercisable in connection with, the foregoing prior to or following the date hereof), including, in each case, any of the foregoing granted or required to be granted in connection with the Northrop Agreements, shall be deemed, as applicable, Asset Sale Exceptions, Permitted Liens, and Qualified Licenses, and (ii) none of the foregoing shall constitute or be deemed an Extraordinary IP Rights Transaction or a Specified Event.

“Assignment Agreement” means an Assignment and Assumption Agreement substantially in the form of Exhibit C.

 

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“Authorized Officer” means, as applied to any Person, any individual holding the position of chairman of the board (if an officer), chief executive officer, chief financial officer, president, one of its vice presidents, controller, secretary or treasurer (in each case, or the equivalent thereof).

“Avoidance Provisions” has the meaning set forth in Section 7.13(b).

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“Bank Secrecy Act” has the meaning specified in the definition of “Anti-Terrorism Laws”.

“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.

“Beneficial Ownership Certification” means, to the extent Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, a certification regarding beneficial ownership in relation to Borrower as required by the Beneficial Ownership Regulation.

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

“Beneficiary” means each Agent and Lender.

“Blocked Person” means any Person:

(a) listed in any Sanctions-related list of designated Persons maintained by any Sanctions Authority (including OFAC’s Specially Designated Nationals and Blocked Persons List),

(b) domiciled, organized or resident in a Sanctioned Country,

(c) fifty percent (50%) or more owned or controlled by, or acting for or on behalf of, any Person or Persons described in the foregoing clauses (a) or (b) above or by the government of a Sanctioned Country, or

(d) otherwise the subject of any Sanctions that prohibit or restrict dealings with such Person.

 

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“Board of Directors” means (a) with respect to any corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of and in lieu of such board for all purposes, (b) with respect to a partnership, the board of directors of the general partner of the partnership, (c) with respect to a limited liability company, the sole member, managing member or members or any controlling committee thereof (if member managed) or board of managers or sole manager (if manager managed) of such company, and (d) with respect to any other Person, the board or committee of such Person serving a similar function.

“Borrower” has the meaning specified in the preamble hereto.

“Borrower Materials” has the meaning specified in Section 5.1.

“Business Day” means any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such state are authorized or required by law or other Governmental Act to close.

“Capital Asset” means, with respect to Borrower and its Subsidiaries, any asset that should, in accordance with GAAP, be classified and accounted for as a capital asset on a consolidated balance sheet of Borrower and its Subsidiaries.

“Capital Lease” means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee that, in accordance with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person.

“Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including, without limitation, partnership interests and membership interests, units and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing; provided, that any instrument evidencing Indebtedness convertible or exchangeable for Capital Stock shall not be deemed to be Capital Stock unless and until such instrument is so converted or exchanged.

“Cash” means money, currency or a credit balance in any demand or Deposit Account.

“Cash Equivalents” means, as at any date of determination, (a) marketable securities (i) issued or directly and unconditionally guaranteed as to interest and principal by the United States government, or (ii) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one year after such date, (b) certificates of deposit or bankers’ acceptances maturing within one year after such date and issued or accepted by any Lender or by any commercial bank organized under the laws of the United States or any state thereof or the District of Columbia that (i) is at least “adequately capitalized” (as defined in the regulations of its primary Federal banking regulator), and (ii) has Tier 1 capital (as defined in such regulations) of not less than $500,000,000, and (c) shares of any money market mutual fund that (i) has substantially all of its assets invested continuously in the types of investments referred to in clauses (a) and (b) above, (ii) has net assets of not less than $500,000,000, and (iii) has the highest rating obtainable from either S&P or Moody’s, and (d) in the case of investments by any Foreign Subsidiary or investments made in a country outside the United States, Cash Equivalents shall also include investments of the type and maturity described in clauses (a) through (c) above of foreign obligors to the extent such investments are necessary or useful for the business of such Person, which investments have ratings, described in such clauses or equivalent ratings from comparable foreign rating agencies.

 

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“Certificate Regarding Non-Bank Status” means a certificate substantially in the form of Exhibit D.

“CFC” shall mean a “controlled foreign corporation” within the meaning of Section 957 of the Internal Revenue Code.

“CFC Holding Company” shall mean a Subsidiary of the Borrower that has no material assets other than (a) the equity interests (including, for this purpose, any debt or other instrument treated as equity for U.S. federal income tax purposes), or equity interests and indebtedness, in one or more Foreign Subsidiaries, each of which is a CFC, and/or one or more CFC Holding Companies and (b) cash, Cash Equivalents and other assets being held incidental to the holding of assets described in clause (a) of this definition (excluding for purposes of this determination any indebtedness of such Foreign Subsidiaries).

“Change of Control” means, at any time, any of the following occurrences:

(a) any combination of Permitted Holders shall fail to own beneficially (within the meaning of Rule 13d-5 of the Exchange Act as in effect on the Closing Date), directly or indirectly, in the aggregate Capital Stock representing at least a majority of the aggregate ordinary voting power represented by the issued and outstanding Capital Stock of Borrower;

(b) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act (but excluding (i) any employee benefit plan and/or Person acting as the trustee, agent or other fiduciary or administrator therefor, (ii) any Permitted Holder and (iii) Jefferies, any affiliate thereof or any successor owner of any Capital Stock of Borrower previously held by Jefferies, in a single transaction or in a related series of transactions, including by way of merger, amalgamation, consolidation or other business combination or purchase, of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of Capital Stock of Borrower representing directly or indirectly more than 40% of the total voting power of all of the outstanding voting stock of Borrower;

(c) Borrower shall cease to beneficially own and control, directly or indirectly, 100% on a fully diluted basis of the economic and voting interest in the Capital Stock of each other Loan Party (other than (x) as a result of any issuance, sale or other disposition of all Capital Stock of a Loan Party permitted under this Agreement, (y) director’s shares or nominal holdings required to be issued by the applicable law of any jurisdiction of formation and (z) as a result of a merger or dissolution permitted by Section 6.9);

(d) the sale, lease or transfer, in a single transaction or in a related series of transactions, of all or substantially all of the assets of any Loan Party, taken as a whole, to any Person, other than any such transaction that is approved by the Board of Directors of the Loan Party in question and is otherwise expressly permitted hereunder, except as set forth in clauses (f) and (g) below;

 

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(e) IPHoldCo shall cease to beneficially own and control, directly or indirectly, 100% on a fully diluted basis of the economic and voting interest in the Capital Stock of IPCo; or

(f) the sale, lease or transfer, in a single transaction or in a related series of transactions, of all or substantially all of the assets of IPCo to any Person,

unless, in the case of clause (a) or clause (b) of this definition of “Change of Control”, the Permitted Holders have, at such time, the right or the ability by voting power, contract, or otherwise to elect or designate for election at least a majority of the board of directors (or analogous governing body) of the Borrower.

“Closing Certificate” means a Closing Certificate substantially in the form of Exhibit E.

“Closing Date” means May 20, 2024.

“Collateral” means, collectively, all of the real, personal and mixed property, whether tangible or intangible (including, without limitation, (x) the Capital Stock issued by any Subsidiary to a Loan Party and (y) other Capital Stock held by a Loan Party, including minority interests), and all interests therein and proceeds thereof now owned or hereafter acquired by any Person upon which a Lien is granted or purported to be granted by such Person pursuant to the Collateral Documents as security for the Obligations; provided that in no event shall any Excluded Assets constitute Collateral.

“Collateral Account Report” has the meaning specified in Section 2.16(c)(iii).

“Collateral Account Report Date” has the meaning specified in Section 2.16(c)(iii).

“Collateral Accounts” means, as applicable, the Non-Minority Lender Interest Reserve Account, the Minority Lender Interest Reserve Account, the Insurance Premium Reserve Account, and any other reserve account established at the Collateral Agent after the Initial Closing Date in accordance with Section 2.16.

“Collateral Agent” has the meaning specified in the preamble hereto.

“Collateral Documents” means the Pledge and Security Agreement, the Reaffirmation Agreement, any Material Contract Estoppels, any Mortgages, any Control Agreements and all other intellectual property security agreements, mortgages, instruments, documents, undertakings and agreements executed (or purported to be executed) and delivered by any Loan Party pursuant to this Agreement or any of the other Loan Documents in order to grant to Collateral Agent, for the benefit of Secured Parties, a Lien on any real, personal or mixed property of that Loan Party as security for the Obligations, in each case, as such Collateral Documents may be amended, amended and restated or otherwise modified from time to time.

“Commitment” means any Term Loan Commitment.

“Communications” has the meaning set forth in Section 5.1.

 

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“Competitor” has the meaning specified in the definition of “Disqualified Institution”.

“Compliance Certificate” means a Compliance Certificate substantially in the form of Exhibit B.

“Contractual Obligation” means, as applied to any Person, any provision of any Security issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.

“Control Agreement” means a control agreement, in form and substance reasonably satisfactory to the Required Lenders and the Collateral Agent, executed and delivered by a Loan Party, Collateral Agent, and the applicable securities intermediary (with respect to a Securities Account) or depositary bank (with respect to a Deposit Account), which, (a) with respect to any Collateral Account, shall provide for “blockage on notice” of the applicable Securities Account or Deposit Account and (b) with respect to any other Deposit Account shall provide for “blockage on notice” of the applicable Securities Account or Deposit Account after the occurrence and during the continuance of an Event of Default.

“Counterpart Agreement” means a Counterpart Agreement substantially in the form of Exhibit F delivered by a Loan Party pursuant to Section 5.10.

“Credit Date” means the date of a Credit Extension.

“Credit Extension” means the making of a Term Loan.

“Debtor Relief Law” means the Bankruptcy Code and any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Law of the United States or other applicable jurisdiction from time to time in effect and affecting the rights of creditors generally.

“Default” means a condition or event that, after notice or lapse of time or both, would constitute an Event of Default.

“Default Rate” means any interest payable pursuant to Section 2.7.

“Deposit Account” means a demand, time, savings, passbook or like account with a bank, savings and loan association or credit union, in each case, which institution must have an investment grade long-term issuer credit rating by Moody’s, other than an account evidenced by a negotiable certificate of deposit; provided, that the Borrower and any Subsidiary may have up to $5,000,000 in Cash in the aggregate held in Deposit Accounts with one or more institutions that do not have an investment grade long-term issuer credit rating by Moody’s or otherwise in a Deposit Account subject to the First Amendment Date Intercreditor Agreement; provided, further, that to the extent the Borrower deposits Cash into one or more deposit accounts that are subject to the First Amendment Intercreditor Agreement in an amount that exceeds $7,500,000, all such Cash in excess of $7,500,000 shall be held in deposit accounts that are insured by the Federal Deposit Insurance Corporation.

 

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“Deposit Materials” has the meaning set forth in Section 5.1.

“Disqualified Capital Stock” means any Capital Stock that, by its terms (or by the terms of any security or other Capital Stock into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition, (a) matures or is mandatorily redeemable (other than solely for Qualified Capital Stock), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control, asset sale or similar event so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to, and expressly subordinated to, the prior repayment in full of the Term Loans and all other Obligations (other than contingent obligations not due and owing) that are accrued and payable), (b) is redeemable at the option of the holder thereof (other than solely for Qualified Capital Stock), in whole or in part, (c) provides for the scheduled payments of dividends or distributions in Cash, or (d) is convertible into or exchangeable for (i) Indebtedness or (ii) any other Capital Stock that would constitute Disqualified Capital Stock; provided, that (i) Capital Stock that would not constitute Disqualified Capital Stock but for terms thereof giving holders thereof the right to require such Person to redeem or purchase such Capital Stock upon the occurrence of an “asset sale,” a “change of control” or similar event shall not constitute Disqualified Capital Stock if any such requirement becomes operative only after repayment in full in cash of all the Loans and all other Obligations that are accrued and payable and the termination of the Commitments and (ii) if Capital Stock is issued pursuant to any plan for the benefit of employees of the Borrower or any of the Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased by the Borrower or any of the Subsidiaries in order to satisfy applicable statutory or regulatory obligations of the Borrower or any of its Subsidiaries; provided, further that Capital Stock of the Borrower or any of its Subsidiaries (i) existing as of the Closing Date (“Existing Preferred Equity”) or (ii) on terms consistent with (or otherwise not mandatorily redeemable earlier than) the Existing Preferred Equity shall not be Disqualified Capital Stock.

“Disqualified Institution” means (a) any banks, financial institutions, institutional lenders or any other Person that have been specified to Jefferies by the Borrower in writing at any time prior to the Initial Closing Date, (b) the competitors of the Loan Parties and their Subsidiaries identified in writing by or on behalf of Borrower to Jefferies on or prior to the Initial Closing Date, and (c) controlled Affiliates of any entity described in the preceding clauses (a) and (b) that are reasonably identifiable on the basis of their name or otherwise known or identified to the Administrative Agent (the Persons described in clauses (a), (b), and (c), each a “Competitor”), provided, however, for the avoidance of doubt, that no direct or indirect lender to, investor in or equity holder in, or member of, any of the entities identified above (regardless of the control or percentage held) shall constitute a Disqualified Institution unless specifically identified as a Competitor on the Initial Closing Date in the list above.

“Dollars” and the sign “$” mean the lawful money of the United States.

“Domestic Subsidiary” shall mean any Subsidiary of a Loan Party that is organized and existing under the laws of the United States or any state or commonwealth thereof or under the laws of the District of Columbia.

 

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“Draw” means a request by Borrower for and the funding of a Term Loan advanced by the Lenders on the Closing Date under their respective Term Loan Commitments in an aggregate amount equal to the Draw Amount.

“Draw Amount” means $13,888,888.89.

“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clause (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority, or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“Eligible Assignee” means (a) any Lender (other than a Minority Lender), any Affiliate of any Lender (other than a Minority Lender) and any Related Fund (any two or more Related Funds being treated as a single Eligible Assignee for all purposes hereof), any commercial bank, any insurance company, any investment or mutual fund, any institutional investor, any family office, any private equity investor, any pension fund or any other entity that is an “accredited investor” (as defined in Regulation D under the Securities Act) and which extends credit or buys loans as one of its businesses, (b) any other Person (other than a natural Person) with respect to whom a Lender shall have provided written notice to the Administrative Agent ten (10) Business Days prior to the execution of such proposed assignment and the Administrative Agent shall not have objected to such assignment within such ten (10) Business Days following receipt of such notice, (c) any Securitization Trust and (d) one or more of the insurers that are party to the AON Insurance Policy, or their respective designee(s); provided that (i) no Disqualified Institution shall, in any event, be an Eligible Assignee without the prior written consent of Borrower unless an Event of Default has occurred and is continuing at the time of assignment to a Disqualified Institution in which event no Borrower consent shall be required, (ii) neither Borrower nor any Affiliate of Borrower shall, in any event, be an Eligible Assignee and (iii) no Person owning or controlling (x) any trade debt or Indebtedness of any Loan Party other than (A) the Obligations, (B) obligations arising under the Securitization Trust (in the case of an assignment to the Securitization Trust) or (C) the AON Insurance Policy (in the case of an assignment to the insurers that are party to the AON Insurance Policy or their respective designee(s)) or (y) any Capital Stock of any Loan Party (in each case under this clause (iii), unless a Lender shall have provided written notice to the Administrative Agent (expressly identifying this clause (iii) and requesting that the Administrative Agent provide such written notice to the Lenders) ten (10) Business Days prior to the execution of such proposed assignment and the Required Lenders shall not have objected to such assignment within such ten (10) Business Days following receipt of such notice) shall, in any event, be an Eligible Assignee and each assignee will so represent in the applicable Assignment Agreement. For avoidance of doubt, no Person that would otherwise be an Eligible Assignee shall

 

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be disqualified as an Eligible Assignee solely by reason of such Person’s direct or indirect interest in the Warrant or any Capital Stock issued in respect of the Warrant. As provided in Section 10.6(j), upon payment to the Administrative Agent of the full amount due under the AON Insurance Policy, the principal amount of the applicable Obligations shall automatically be transferred to the insurers under the AON Insurance Policy or their respective designee(s) without any further action by the Lenders or the Administrative Agent.

“Eligible Investments” means any (i) Dollars or (ii) any Dollar investment that is one or more of the following obligations or securities (other than obligations or securities which are zero coupon obligations or securities):

(a) marketable securities issued or directly and unconditionally guaranteed as to interest and principal by the United States government, marketable securities issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, demand and time deposits in, certificates of deposit of and bankers’ acceptances issued by, bank deposit products of or federal funds sold by, any depository institution or trust company incorporated under the laws of the United States of America (including U.S. Bank Trust Company, National Association and its Affiliates) with, in each case, that matures not later than the Business Day immediately preceding the Interest Payment Date immediately following the date of investment therein and subject to supervision and examination by governmental banking authorities so long as the commercial paper and/or the debt obligations of such depository institution or trust company (or, in the case of the principal depository institution in a holding company system, the commercial paper or debt obligations of such holding company) at the time of such investment or contractual commitment have a rating of not less than the applicable Eligible Investments Minimum Rating; and

(b) commercial paper having, at the time of such investment, a credit rating of not less than the applicable Eligible Investments Minimum Rating and that either are bearing interest or are sold at a discount to the face amount thereof and that matures not later than the Business Day immediately preceding the Interest Payment Date immediately following the date of investment therein; and

(c) registered money market funds that (x) have, at all times, credit ratings of “Aaa-mf” by Moody’s or the highest credit rating available for money market funds by Moody’s at such time, (y) themselves invest only in items that constitute obligations or securities described in (a) or (b) above and (z) contain no restriction or penalty with respect to the frequency and/or amount of withdrawals; and

(d) notwithstanding the forgoing, at all times on and prior to the last Business Day of the thirteenth full month following the Initial Closing Date (i) a portion of funds on deposit in each Interest Reserve Account that is sufficient to pay all interest on the Term Loans that will come due on or before the last Business Day of such thirteenth full month shall be invested in (x) Dollars or (y) investment property of the type described in (a), (b) or (c) and be available in Dollars at least one (1) Business Day prior to each Interest Payment Date; (ii) the remaining balance of funds on deposit in each Interest Reserve Account may be invested in (x) Dollars or (y) investment property of the type described in (a) or (c) (so long as such money market funds shall invest only in investment property described in (a)), provided that the stated duration to maturity of such investment property may exceed the duration provided for in (a) so long as all such maturities for such remaining balance comply with (e) below; and

 

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(e) funds invested pursuant to Clause (d)(ii) may be invested in investment property of the type described in clause (a) above having a duration to maturity not to exceed 364 days from date of issuance, provided that the any such maturity shall occur not later than one (1) Business Day prior to the Interest Payment Date occurring during or after the thirteenth full month after the Initial Closing Date; and

(f) which, in each case under clauses (a) or (b) above, (w) excludes extendible commercial paper, (x) provides for payment of a pre-determined fixed amount of principal on maturity that is not subject to change, (y) has a stated maturity no later than permitted above and (z) either (A) has a stated maturity (giving effect to any applicable grace period) no later than the Business Day immediately preceding each of (1) the date provided for in (d) above and (2) the fifth anniversary of the date hereof (unless such Eligible Investments are issued by U.S. Bank Trust Company, National Association and its Affiliates in which event such Eligible Investments may mature on the date specified in clauses (1) and (2)) or (B) in the case of clause (c) above, may be capable of being liquidated on demand without penalty; provided, however, that Eligible Investments shall not (X) include any (a) mortgage backed security, (b) interest only security, (c) security subject to withholding or similar taxes (other than as imposed pursuant to FATCA), unless the obligor thereof is required to make payments of additional amounts (so-called “gross-up payments”), (d) security rated with an “f”” “r,” “p,” “pi,” “q” or “t” subscript by S&P, (e) security purchased at a price in excess of 100% of par, or (f) security whose repayment is subject to substantial non-credit related risk or (Y) be disposed of for a price that is less (on a cost basis) than the price paid by Borrower for such investment property at the time of its acquisition unless Borrower in the exercise of its business judgment believes such investment property has a significant risk of declining in credit quality or price. Eligible Investments may include, without limitation, those investments made with or issued by U.S. Bank Trust Company, National Association and its Affiliates or for which U.S. Bank Trust Company, National Association or its Affiliates act as offeror or provide services and receives compensation.

“Eligible Investments Minimum Rating” means a long-term issuer credit rating by Moody’s of A2 (and not on watch for downgrade) or higher or a short-term issuer credit rating by Moody’s of P-1 (and not on watch for downgrade).

“Employee Benefit Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA (other than any Multiemployer Plan) which is sponsored, maintained or contributed to by, or required to be contributed by, any Loan Party or any of its ERISA Affiliates.

“Environmental Claim” means any Adverse Proceeding, complaint, summons, citation, investigation, notice, directive, notice of violation, order, claim, demand, action, litigation, judicial or administrative proceeding, judgment, letter or other communication from any Governmental Authority or any other Person asserting or alleging liability for or seeking recourse

 

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in response to (a) any actual or alleged violation of any Environmental Law, (b) any Hazardous Material or any actual or alleged Hazardous Materials Activity, (c) any injury to the environment, natural resource, any Person (including wrongful death) or property (real or personal) in connection with Hazardous Materials or actual or alleged violations of Environmental Laws, (d) any Environmental Liabilities and Costs or (e) any actual or alleged Releases or threatened Releases of Hazardous Materials that exists or occurs (i) on, at or migrating from any assets, properties or businesses currently or formerly owned or operated by any Loan Party or any of its Subsidiaries or any predecessor in interest, (ii) from adjoining properties or businesses, or (iii) onto any facilities which received Hazardous Materials generated by any Loan Party or any of its Subsidiaries or any predecessor in interest.

“Environmental Laws” means any and all current or future international, foreign, domestic, federal or state (or any subdivision of either of them) Laws, statutes, ordinances, orders, rules, regulations, judgments, decrees, permits, licenses or binding determinations of any Governmental Authorizations, or any other requirements of Governmental Authorities relating to (a) the manufacture, generation, use, storage, transportation, treatment, disposal or Release of, or exposure to, Hazardous Materials; or (b) occupational safety and health, industrial hygiene, land use or the protection of the environment, human, plant or animal health or welfare or natural resources.

“Environmental Liabilities and Costs” means all liabilities, monetary obligations, losses (including monies paid in settlement), damages, punitive damages, natural resource damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants and costs of investigations and feasibility studies), fines, penalties, sanctions and interest in connection with any Remedial Action, any Environmental Claim, or any other Adverse Proceeding, claim or demand by any Governmental Authority or any Person that relates to any actual or alleged violation of Environmental Laws, actual or alleged exposure or threatened exposure to Hazardous Materials, or any actual, alleged or threatened Release of Hazardous Materials.

“Environmental Lien” means any Lien in favor of any Governmental Authority for Environmental Liabilities and Costs.

“Equity Cure” shall have the meaning provided in Section 6.21(b).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor thereto.

“ERISA Affiliate” means, together with the Loan Party, (a) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which the Loan Party is a member; (b) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which the Loan Party is a member; and (c) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code of which the Loan Party, any corporation described in clause (a) above or any trade or business described in clause (b) above is a member.

 

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“ERISA Event” means (a) a “reportable event” within the meaning of Section 4043(c) of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for notice to the PBGC has been waived by regulation); (b) the failure by any Loan Party or any ERISA Affiliate to meet the minimum funding standard of Section 412 of the Internal Revenue Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(c) of the Internal Revenue Code) or the failure by any Loan Party or any ERISA Affiliate to make by its due date a required installment under Section 430(j) of the Internal Revenue Code with respect to any Pension Plan or the failure by any Loan Party or any ERISA Affiliate to make any required contribution to a Multiemployer Plan under Section 412, 431 or 432 of the Internal Revenue Code; (c) the receipt by any Loan Party or any ERISA Affiliate from the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (d) the withdrawal by a Loan Party or any of its ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to any Loan Party or any of its ERISA Affiliates pursuant to Section 4063 or 4064 of ERISA; (e) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which would reasonably be expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (f) the imposition of liability on any Loan Party or any of its ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (g) the withdrawal of any Loan Party or any of its ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any liability therefor, or the receipt by any Loan Party or any of its ERISA Affiliates of notice from any Multiemployer Plan that it is in insolvency pursuant to Section 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; or (h) the imposition of a Lien pursuant to Section 401(a)(29) or 430(k) of the Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.

“Erroneous Payment Subrogation Rights” has the meaning set forth in Section 9.10(d).

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

“Event of Default” means each of the conditions or events set forth in Section 8.1.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.

“Excluded Accounts” means (a) payroll, payroll taxes or employee benefit accounts and related trust accounts, (b) other trust accounts, (c) escrow accounts (other than the Collateral Accounts), (d) tax accounts (including, without limitation, sales tax accounts), (e) accounts maintained solely in trust for the benefit of third parties and fiduciary purposes, (f) zero balance or swept accounts, (g) de minimis deposit accounts to the extent the aggregate daily balance in all such accounts does not at any time exceed $100,000, (h) accounts located in jurisdictions outside the United States, (i) accounts containing funds of the types as deposits securing Liens described

 

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in clauses (f) and (g) of the definition of “Permitted Liens” or used exclusively to maintain cash collateral subject to a Permitted Lien, provided, that under no circumstances shall the balance at any time in any such Excluded Account described in (g) and (h) (to the extent held by a Loan Party) or the aggregate balance across all such Excluded Accounts described in (g) and (h) (to the extent held by a Loan Party), inclusive, exceed $1,000,000.

“Excluded Assets” means (a) any Real Estate Asset that is not a Material Real Estate Asset and any leasehold interests in real property (it being understood that no action shall be required with respect to creation or perfection of security interests with respect to such leases, including to obtain landlord waivers, estoppels or collateral access letters), (b) motor vehicles and other assets subject to certificates of title to the extent a Lien thereon cannot be perfected by the filing of a UCC financing statement, (c) assets for so long as a pledge thereof or a security interest therein is prohibited by applicable Laws, (d) Excluded Accounts, (e) any lease, license or other agreements, or any property subject to a purchase money security interest, Capital Lease or similar arrangements (other than the Master Lease Agreement (as defined in the First Amendment Intercreditor Agreement) and any property subject thereto, in each case subject to the terms of the First Amendment Intercreditor Agreement), in each case in accordance with the Loan Documents, to the extent that a pledge thereof or security interest therein would violate or invalidate such lease, license or agreement, purchase money, Capital Lease or similar arrangement, or create a right of termination in favor of any other party thereto (other than the Loan Parties) after giving effect to the applicable anti-assignment provisions of the UCC and applicable Laws, other than the proceeds and receivables thereof the assignment of which is expressly deemed effective under applicable Laws notwithstanding such prohibition, (f) assets for which the Required Lenders and Borrower have determined in their reasonable judgment and agree in writing that the cost of creating or perfecting such pledges or security interests therein would be excessive in view of the benefits to be obtained by the Lenders therefrom, (g) any intent-to-use trademark application in the United States prior to the filing of a “Statement of Use” or “Amendment to Allege Use” with respect thereto with, and acceptance by, the United States Patent and Trademark Office, to the extent, if any, that, and solely during the period, if any, in which, the grant, attachment, or enforcement of a security interest therein would impair the validity or enforceability of such intent-to-use trademark application under applicable Federal law, (h) proceeds received by the Administrative Agent in respect of a claim under the AON Insurance Policy (which for avoidance of doubt shall not be property of any Loan Party or any Subsidiary thereof), (i) Excluded Capital Stock, (j) [reserved], and (k) any property or assets (I) of any Subsidiary of any Loan Party that is a CFC or a Subsidiary of a CFC or CFC Holding Company or (II) for which the creation or perfection of pledges of, or security interests in, could result in adverse tax consequences (other than de minimis tax consequences) or adverse regulatory or accounting consequences to the Borrower or any of its Subsidiaries, each as reasonably determined by the Borrower and the Required Lenders.

“Excluded Capital Stock” means (a) Capital Stock (i) of any captive insurance companies or not-for-profit Subsidiaries, (ii) of any Subsidiary under clause (b)(i) of the definition of “Excluded Subsidiary”, (iii) [reserved], or (iv) of any direct or indirect Subsidiary of Borrower to the extent issued, sold or otherwise disposed in accordance with Section 6.10, (b) solely to the extent the creation or perfection of pledges of, or security interests in, could result in adverse tax consequences (other than de minimis tax consequences) or adverse regulatory or accounting consequences to the Borrower or any of its Subsidiaries, each as reasonably determined by the Borrower and the Required Lenders, equity in excess of 65% of the issued and outstanding voting

 

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Capital Stock and 100% of the non-voting Capital Stock of any Subsidiary of any Loan Party that constitutes a CFC or (c) any equity for which the pledge of its Capital Stock is prohibited by applicable Law or, solely in the case of a newly acquired Subsidiary, by Contractual Obligation in existence at the time of acquisition but not entered into in contemplation thereof, or for which governmental (including regulatory) consent, approval, license or authorization would be required unless such consent, approval, license or authorization has been received (it being understood and agreed that there shall be no obligation to seek or obtain such consent, approval, license or authorization), in each case, after giving effect to the applicable anti-assignment provisions of the UCC and other applicable Laws; provided, that any preferred equity owned as of the Initial Closing Date shall not be considered “Excluded Capital Stock”. For the avoidance of doubt, the Capital Stock of IPCo and IPHoldCo will not be Excluded Capital Stock.

“Excluded Subsidiary” means, unless otherwise elected by Borrower, (a) any Subsidiary that is not a wholly-owned Subsidiary of Borrower or a Guarantor and each Joint Venture (unless otherwise elected by the Borrower), (b) any Subsidiary for which guarantees of the Obligations are (i) prohibited by applicable Law, rule or regulation or require consent, approval, license or authorization of a Governmental Authority, unless such consent, approval, license or authorization has been received; provided, that there shall be no obligation to obtain such consent, approval, license or authorization; or (ii) contractually prohibited on the Initial Closing Date or, following the Initial Closing Date, the date of the acquisition thereof, so long as such prohibition exists and so long as such prohibition is not created in contemplation of the Transactions or any such acquisition, (c) any Subsidiary with respect to which, in the reasonable judgment of the Borrower and the Required Lenders, the burden or cost of providing a Guarantee shall be excessive in view of the benefits to be obtained by the Lenders therefrom (giving due consideration to regulatory, accounting and tax consequences), (d) any Subsidiary whose provision of a guarantee could result in adverse tax consequences (other than de minimis tax consequences) as reasonably determined by the Borrower in consultation with the Required Lenders, (e) any direct or indirect Subsidiary of Borrower or a Guarantor that is a Foreign Subsidiary, (f) any Subsidiary that is a direct or indirect Subsidiary of a Subsidiary of Borrower or a Guarantor that is a CFC, in each case that is not a Loan Party, (g) captive insurance Subsidiaries, (h) any Immaterial Subsidiary, (i) any Subsidiary acquired pursuant to a Permitted Acquisition or other Investment permitted under this Agreement and financed with assumed Indebtedness permitted to be incurred pursuant to this Agreement (and not incurred in contemplation of such Permitted Acquisition or Investment), and each Subsidiary acquired in such Permitted Acquisition or other Investment permitted hereunder that guarantees such Indebtedness, in each case to the extent that, and for so long as, the documentation relating to such Indebtedness to which such Subsidiary is a party prohibits such Subsidiary from guaranteeing the Obligations and such prohibition is not created in contemplation of such Permitted Acquisition or other Investment permitted hereunder and (j) Firefly Aerospace Ukraine, LLC. For the avoidance of doubt, IPCo and IPHoldCo will not be Excluded Subsidiaries.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be deducted or withheld from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) by the jurisdiction (or any political subdivision thereof) under the laws of which such Recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located or (ii) as the result of any other

 

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present or former connection between such Recipient and the jurisdiction imposing such Tax, (b) in the case of a Lender, United States federal withholding Taxes imposed on amounts payable to or for the account of such Lender pursuant to a Law in effect on the date on which such Lender becomes a party hereto or such Lender changes its lending office, except that this clause (b) shall not apply to the extent that the assignment or change in lending office was requested by a Loan Party pursuant to Section 2.15(a) or, pursuant to Section 2.14 amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.14(d) and (d) Taxes imposed under FATCA.

“Existing Lender” means any Lender prior to the receipt of the first funds paid to the Beneficiary under the AON Insurance Policy and its successors and assigns pursuant to Section 10.6(c). For the avoidance of doubt, Existing Lender does not include any Non-Paying Insurer and any assignee pursuant to Section 10.6(j).

“Export Controls” means the export control laws and regulations administered, maintained and enforced by the United States, including, but not limited to, the Export Administration Regulations administered by the Bureau of Industry and Security of the U.S. Department of Commerce and the International Traffic in Arms Regulations administered by the Directorate of Defense Trade Controls of the U.S. Department of State.

“Extended Covered Period” has the meaning specified in Section 5.1(i).

“Extraordinary IP Rights Transaction” means a sale, transfer, assignment or grant of exclusive sublicense of any material IP Rights in whole or in part, with respect to which (a) the majority of such Net Proceeds are fixed in nature and not dependent on the future volume of sales or revenues attributed to the IP Rights so sold, transferred, assigned, or sublicensed and (b) such Net Proceeds shall not be dependent on future performance by such Loan Party or Subsidiary, in each case other than any sale, transfer, assignment or grant of exclusive sublicense of any such IP Rights that (i) is incidental or ancillary to, or is not the primary purpose of, the overall transactions contemplated by the applicable underlying agreement or arrangement and (ii) does not materially impair the aggregate value of the Collateral taken as a whole or result in a Material Adverse Effect.

“Extraordinary Receipts” means any Net Proceeds received by a Loan Party (and not consisting of proceeds described in Section 2.9(a) through (c) hereof) in respect of: (a) foreign, United States, state or local tax refunds (other than VAT, tariff or similar refunds), (b) pension plan reversions, (c) indemnity payments, (d) Net Proceeds of any payment made under an insurance policy or agreement on account of casualty and condemnation, provided that Extraordinary Receipts shall not include proceeds of any claim under the AON Insurance Policy, but shall, subject to the reinvestment rights in this clause (d), include, without limitation, any other casualty loss proceeds; other than (i) insurance proceeds received in respect of damage to equipment used to effect the repair or replacement of such equipment in the ordinary course of business and (ii) Net Proceeds of any Extraordinary Receipts or payment made under an insurance policy or agreement, in each case, solely to the extent the Borrower or any of its Subsidiaries has, in each case, reinvested such Net Proceeds in assets used in the business of the Borrower or any of its Subsidiaries within 365 days following the date of receipt of such Net Proceeds, as applicable, (e) Net Proceeds of any condemnation or taking by any Governmental Authority and

 

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(f) Net Proceeds from an Extraordinary IP Rights Transaction, but in each case excluding any proceeds resulting from an issuance of Capital Stock by any Loan Party or any Subsidiary permitted pursuant to Section 6.9(i) or Section 6.10. Extraordinary Receipts shall not include (i) Cash receipts from proceeds of insurance, condemnation awards or similar payments, or indemnity payments to the extent such funds are received by any Person in respect of any third-party claim against such Person and applied to pay (or reimburse such Person for its prior payment of) such claim plus related costs and expenses, (ii) [reserved], (iii) any purchase price adjustment received in connection with any purchase agreement, or (iv) the Cash proceeds of any grants awarded by a Governmental Authority to any Loan Party related to such Loan Party’s participation in an incentive program ran by such Governmental Authority.

“Fair Market Value” means, as of any applicable time of determination, the price at which a willing seller, under no compulsion to sell, would sell, and a willing buyer, under no compulsion to buy, would buy, the asset or property in question if offered for sale in the open market, with a reasonable time allowed to find such willing buyer.

“Fair Share” has the meaning specified in Section 7.2.

“Fair Share Contribution Amount” has the meaning specified in Section 7.2.

“FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.

“FATCA” means Sections 1471 through 1474 of the Internal Revenue Code, in effect as of the date of this Agreement and any current regulations or official interpretations thereof (or any amended or successor version to the extent substantively comparable and not materially more onerous to comply with), any agreement entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code, and any law, practices, regulation, official interpretation, rule, promulgation or official agreement adopted pursuant to any official government agreement, treaty, convention or intergovernmental agreement with respect to the foregoing.

“FCPA” has the meaning specified in Section 4.29.

“Federal Funds Effective Rate” means for any day, the rate per annum (expressed, as a decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day and (b) if no such rate is so published, the Federal Funds Effective Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to U.S. Bank National Association on such day on such transactions as determined by U.S. Bank National Association and provided that U.S. Bank National Association shall have no liability for such determination.

“Fee Letter” means the letter agreement dated as of the date hereof between Borrower and Jefferies, as amended, amended and restated, supplemented or otherwise modified from time to time.

 

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“Financial Officer Certification” means, with respect to the financial statements for which such certification is required, the certification of the chief financial officer or other Authorized Officer of Borrower that such financial statements fairly present, in all material respects, the financial condition of Borrower and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments and the absence of footnotes, as applicable.

“First Amendment” means that certain First Amendment, dated as of the First Amendment Effective Date, by and among the Borrower, each other Loan Party, the Administrative Agent, and each other Lender a party thereto.

“First Amendment Effective Date” means August 13, 2024.

“First Amendment Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of the First Amendment Effective Date, by and among the Administrative Agent, on behalf of the Secured Parties, Texas Capital Bank, as Lessor (as defined therein) (“TCB”), and acknowledged by the Loan Parties.

“Financial Plan” has the meaning specified in Section 5.1(i).

“First Priority” means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that such Lien is the only Lien to which such Collateral is subject, other than any Permitted Lien.

“Fiscal Quarter” means a fiscal quarter of any Fiscal Year.

“Fiscal Year” means the fiscal year of Borrower and its Subsidiaries ending on December 31 of each calendar year.

“Fixed Rate” means (a) with respect to the Term A Loans, 13.875% and (b) with respect to the Term B Loans, for any day from the Initial Closing Date through and including the date that is the three year anniversary of the Initial Closing Date, a rate per annum equal to 13.875%, and thereafter, 19.135%.

“Flood Hazard Property” means any Real Estate Asset subject to a mortgage in favor of Agents, for the benefit of the Secured Parties, and located in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards.

“Foreign Official” means any officer or employee of a non-U.S. government or any department, agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality, or for or on behalf of any such public international organization.

“Foreign Subsidiary” shall mean any Subsidiary of a Loan Party that does not constitute a Domestic Subsidiary.

“Funding Notice” means a notice substantially in the form of Exhibit A.

 

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“GAAP” means, subject to the limitations on the application thereof set forth in Section 1.2, United States generally accepted accounting principles in effect as of the date of determination thereof.

“Governmental Act” means any act or omission, whether rightful or wrongful, of any Governmental Authority.

“Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government, including any central bank, stock exchange, regulatory body, arbitrator, public sector entity, supra-national entity (including the European Union and the European Central Bank) and any self-regulatory organization.

“Governmental Authorization” means any permit, license, authorization, plan, directive, consent order or consent decree of or from any Governmental Authority.

“Grantor” has the meaning specified in the Pledge and Security Agreement.

“Guaranteed Obligations” has the meaning specified in Section 7.1.

“Guarantor” means each wholly-owned Domestic Subsidiary of Borrower other than an Excluded Subsidiary.

“Guaranty” means (a) the guaranty of each Guarantor set forth in Article VII and (b) each other guaranty, in form and substance reasonably satisfactory to the Required Lenders, made by any other Guarantor for the benefit of the Secured Parties guaranteeing all or part of the Obligations.

“Hazardous Materials” means, regardless of amount or quantity, (a) any material, substance, waste, element, compound or chemical that is defined, listed or otherwise classified as a contaminant, pollutant, toxic pollutant, toxic or hazardous substance, extremely hazardous substance or chemical, hazardous waste, special waste, or solid waste under Environmental Laws or that is reasonably likely to cause harm to or have an adverse effect on, the environment or risk to human health or safety, including, without limitation, any pollutant, contaminant, material, substance, waste, hazardous waste, toxic substance or dangerous good which is defined or identified in any Environmental Law and which is present in the environment in such quantity or state that it contravenes any Environmental Law; (b) petroleum and its refined products; (c) polychlorinated biphenyls; (d) asbestos; (e) per- and polyfluoroalkyl substances; (f) any substance exhibiting a hazardous waste characteristic, including, without limitation, corrosivity, ignitability, toxicity or reactivity as well as any radioactive or explosive materials; (g) any raw materials, building components (including, without limitation, asbestos-containing materials) and manufactured products containing hazardous substances listed or classified as such under Environmental Laws; and (h) any substance or materials that are otherwise regulated under Environmental Law.

 

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“Hazardous Materials Activity” means any past, current, proposed or threatened activity, event or occurrence involving any Hazardous Materials, including the use, manufacture, possession, storage, holding, presence, existence, location, Release, threatened Release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials, and any Remedial Action with respect to any of the foregoing.

“Highest Lawful Rate” means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to any Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum non-usurious interest rate than applicable laws now allow.

“Historical Financial Statements” means as of the Closing Date, the audited consolidated financial statements of Borrower and its Subsidiaries for the Fiscal Year ended December 31, 2021, and the unaudited consolidated financial statements of Borrower and its Subsidiaries for the first three Fiscal Quarters of 2022, consisting of balance sheets and the related consolidated statements of income, stockholders’ equity and cash flows for such Fiscal Year or Fiscal Quarter, as applicable, together with an opinion of a certified public accounting firm that such financial statements for the Fiscal Year ended December 31, 2021, fairly present, in all material respects, the financial condition of Borrower and its consolidated Subsidiaries as at the date indicated and the results of its operations and its cash flows for the period indicated.

“Immaterial Subsidiary” means any Subsidiary that (a) did not, as of the last day of the Fiscal Quarter of the Borrower most recently ended for which financial statements have been (or were required to be) delivered pursuant to Section 5.01(b) or 5.01(c), have assets with a value in excess of 2.50% of the consolidated total assets or EBITDA representing in excess of 2.50% of EBITDA of the Borrower and the Subsidiaries on a consolidated basis as of such date, and (b) taken together with all Immaterial Subsidiaries as of such date, did not have assets with a value in excess of 5.00% of consolidated total assets or EBITDA representing in excess of 5.00% of EBITDA of the Borrower and the Subsidiaries on a consolidated basis as of such date, in each case of clause (a) and (b), determined in accordance with GAAP; provided, that the Borrower may elect in its sole discretion to exclude as an Immaterial Subsidiary any Subsidiary that would otherwise meet the definition thereof.

“Indebtedness” means, as applied to any Person, without duplication: (a) all indebtedness for borrowed money; (b) obligations constituting “principal” with respect to Capital Leases that is properly classified as a liability on a balance sheet in accordance with GAAP; (c) all obligations of such Person evidenced by notes, bonds or similar instruments or upon which interest payments are customarily paid; (d) any obligation owed for all or any part of the deferred purchase price of property or services, including any earn-outs, seller notes or other deferred payment obligations in connection with an acquisition to the extent such earn-outs, seller notes and deferred payment obligations are fixed and non-contingent (excluding (i) any such obligations incurred under ERISA, (ii) trade payables incurred in the ordinary course of business and repayable in accordance with customary trade terms and (iii) any earn-out until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP; (e) all obligations created or arising under any conditional sale or other title retention agreement with respect to property

 

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acquired by such Person; (f) all indebtedness described in clauses (a) – (e) above and (g) – (l) below secured by any Lien on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is non-recourse to the credit of that Person, which shall be limited to the lesser of (x) the Fair Market Value of such property or asset and (y) the amount of such indebtedness so secured; (g) the face amount of any letter of credit or letter of guaranty issued, bankers’ acceptances facilities, surety bonds and similar credit transactions issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings; (h) the direct or indirect guaranty, endorsement (otherwise than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of another that would constitute Indebtedness under another clause (other than clause (i)) of this definition; (i) any guaranty of such Person of Indebtedness of another Person under another clause (other than clause (h)) of this definition; (j) [reserved]; (k) the net termination value of all obligations of such Person in respect of any exchange traded or over the counter derivative transaction, including, without limitation, any Interest Rate Agreement, whether entered into for hedging or speculative purposes; and (l) Disqualified Capital Stock. The Indebtedness of any Person shall include the Indebtedness of any partnership or Joint Venture in which such Person is a general partner or joint venturer, unless such Indebtedness is expressly non-recourse to such Person.

For all purposes hereof, the Indebtedness of any Person shall (A) in the case of the Loan Parties, exclude all intercompany Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or extensions of terms) and made in the ordinary course of business and (B) exclude (i) trade accounts and accrued expenses payable in the ordinary course of business, (ii) any earn-out obligation until such obligation is not paid for ten (10) Business Days after becoming due and payable, (iii) accruals for payroll and other liabilities accrued in the ordinary course of business, (iv) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the respective seller provided that reserves established in an equivalent amount, and (v) customary obligations under employment agreements and deferred compensation; provided, further, that Indebtedness of any direct or indirect parent company appearing upon the balance sheet of the Borrower solely by reason of push down accounting under GAAP shall be excluded.

“Indemnified Liabilities” means, collectively, any and all liabilities (including Environmental Liabilities and Costs), obligations, losses, damages (including natural resource damages), penalties, claims (including Environmental Claims), costs (including the costs of any Remedial Action, investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Hazardous Materials Activity), expenses and disbursements of any kind or nature whatsoever (including the reasonable and documented fees and disbursements of counsel to the Agents and a single counsel for all other Indemnitees taken as a whole in connection with any investigative, administrative or judicial proceeding commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing this indemnity), whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that are incurred by any such Indemnitee, in any manner relating to or arising out of any claim, litigation, or other proceeding arising out of (a) this Agreement or the other Loan

 

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Documents or the transactions contemplated hereby or thereby (including the Lenders’ agreement to make Credit Extensions or the use or intended use of the proceeds thereof, or any enforcement of any of the Loan Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty)) or (b) any Environmental Claim or any Hazardous Materials Activity relating to or arising from, directly or indirectly, any past or present activity, operation, land ownership, or practice of Borrower or any of its Subsidiaries.

“Indemnified Taxes” mean (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.

“Indemnitee” has the meaning specified in Section 10.3(a).

“Indemnitee Agent Party” has the meaning specified in Section 9.8.

“Initial Closing Date” has the meaning specified in the recitals hereto.

“Initial Draw” means a request by Borrower for and the funding of one Term Loan advanced by the Lenders on the Initial Closing Date under their respective Term Loan Commitments in an aggregate amount equal to the Initial Draw Amount.

“Initial Draw Amount” means $106,283,856.00.

“Initial Financing Agreement” has the meaning specified in the recitals hereto.

“Initial Funding Account” means the account of the Borrower established at the Bank on or before the Initial Closing Date.

“Initial Term A Loan” has the meaning specified in Section 2.1(a)(i).

“Initial Term B Loan” has the meaning specified in Section 2.1(a)(ii).

“Initial Term A Loan Commitment” means, relative to any Term A Loan Lender, such Lender’s obligation to make Term A Loans on the Initial Closing Date pursuant to Section 2.1(a) of the Initial Financing Agreement. The amount of each Lender’s Initial Term A Loan Commitment, if any, is set forth on Appendix A or in the applicable Lender Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Initial Term A Loan Commitments as of the Initial Closing Date equals the Initial Term A Loan Commitment Amount, which was funded by the Term A Loan Lender on the Initial Closing Date.

“Initial Term B Loan Commitment” means, relative to any Term B Loan Lender, such Lender’s obligation to make Term B Loans on the Initial Closing Date pursuant to Section 2.1(a) of the Initial Financing Agreement. The amount of each Lender’s Initial Term B Loan Commitment, if any, is set forth on Appendix A or in the applicable Lender Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Initial Term B Loan Commitments as of the Initial Closing Date equals the Initial Term B Loan Commitment Amount, which was funded by the Term B Loan Lender on the Initial Closing Date.

 

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“Initial Term A Loan Commitment Amount” means $82,500,000.00, which was funded on the Initial Closing Date. As of the Closing Date, the Initial Term A Loan Commitment Amount is $0.

“Initial Term B Loan Commitment Amount” means $23,783,856.00, which was funded on the Initial Closing Date. As of the Closing Date, the Initial Term B Loan Commitment Amount is $0.

“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of any Debtor Relief Law.

“Insurance Premium Reserve Account” means an account established on or prior to the Initial Closing Date by IPCo with the Collateral Agent as depository, at all times under the sole dominion and control of the Collateral Agent for the benefit of the Lenders and denominated on the books and records of the Collateral Agent as the “Firefly IPCo Insurance Premium Reserve Account.”

“Insurance Premium Reserve Amount” has the meaning specified in Section 2.16(b)(ii).

“Insured Obligations” means, collectively, any and all Obligations with respect to the Term A Loans that are insured pursuant to the AON Insurance Policy.

“Insured Term Loans” means, collectively, any and all Term A Loans.

“Intellectual Property Assignment Agreements” means, collectively those certain Intellectual Property Assignment Agreements dated as of July 17, 2023 pursuant to which each Loan Party transferred its “Intellectual Property” (as defined in the Pledge and Security Agreement) to IPCo, as well as Intellectual Property Assignment Agreements in equivalent form and substance executed by any new or acquired Subsidiaries of any Loan Party and any other new Loan Parties, in each case together with any short form assignments to be filed with any Governmental Authority in respect of such assignments, as described in Section 3.1(r).

“Intercompany License Agreements” means any license or sublicense agreement between IPCo and another Loan Party pursuant to which such Loan Party has made arrangements to exploit certain intellectual property of IPCo, including without limitation any IP Rights, as such agreements may be amended, restated, amended and restated, supplemented or otherwise modified not in contravention of this Agreement.

“Intercompany Subordination Agreement” means that certain Intercompany Subordination Agreement in the form of Exhibit L dated as of the Initial Closing Date, by the Loan Parties and their Subsidiaries in favor of the Agents for the benefit of the Secured Parties in form and substance reasonably satisfactory to the Required Lenders.

 

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“Intercreditor and Subordination Agreement” means an Intercreditor and Subordination Agreement in form and substance reasonably acceptable to the Required Lenders and the Agents entered into by the Agents, the holder or holders of Indebtedness, and the Loan Parties.

“Interest Payment Date” means (i) the last Business Day of each calendar month of each year, commencing on the first such date to occur after the Initial Closing Date and continuing through the Term Loan Maturity Date, (ii) the date upon which the Obligations (other than contingent obligations not due and owing) are paid in full, (iii) the Term Loan Maturity Date, and (iv) following the Term Loan Maturity Date, each Business Day upon demand until the Obligations are paid in full.

“Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement or other similar agreement or arrangement, each of which is (a) for the purpose of hedging the interest rate exposure associated with Borrower’s and its Subsidiaries’ operations and (b) not for speculative purposes.

“Interest Reserve Accounts” means, collectively, the Non-Minority Lender Interest Reserve Account and the Minority Lender Interest Reserve Account.

“Interest Reserve Amount” has the meaning set forth in Section 2.16(b).

“Internal Revenue Code” means the U.S. Internal Revenue Code of 1986, as amended to the date hereof and from time-to-time hereafter, and any successor statute.

“Investment” means, as to any Person, (a) any direct or indirect purchase or other acquisition by such Person of, or of a beneficial interest in, any of the Securities or all or substantially all of the assets of any other Person (or of any division or business line of such other Person), (b) any direct or indirect redemption, retirement, purchase, buyback, tender offer or other acquisition or similar transaction for value, by any such Person from any other Person, of any Capital Stock of such Person, (c) any direct or indirect loan, advance or capital contributions by such Person to any other Person and (d) any direct or indirect guarantee of, provision of surety or credit enhancement in respect of or pledge of collateral to secure any obligations of any other Person. The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write ups, write downs or write offs with respect to such Investment, but shall be reduced by any dividend, distribution, interest payment, return of capital, repayment or other amount received in cash or other assets by such Person in respect of such Investment. Neither intercompany monetary obligations arising between Loan Parties in the ordinary course of business nor intercompany monetary obligations with respect to ordinary course cash management operations between Loan Parties shall constitute an Investment.

“Investors” has the meaning specified in the definition of “Holder” in the Warrant.

“IP Rights” means, collectively or individually, intellectual property rights, including in any or all of the following: patents, patent rights, trademarks, service marks, trade names, copyrights, technology, software, trade secrets know-how, database rights and all other intellectual property or proprietary rights.

 

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“IPCo” means Firefly IP CO, LLC, a Delaware limited liability company.

“IPHoldCo” means Firefly IP Holdings, LLC, a Delaware limited liability company.

“Jefferies” means Jefferies Funding LLC, a Delaware limited liability company.

“Joint Venture” means a joint venture, partnership or other similar arrangement, whether in corporate, partnership or other legal form in which a Loan Party or Subsidiary directly or indirectly owns 50% or less of the Capital Stock issued thereby; provided in no event shall any corporate Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party.

“Laws” means, collectively, all international, foreign, federal, state and local laws (including common law), statutes, treaties, rules, legally enforceable guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities and executive orders, including the legally binding interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, licenses, authorizations and permits of, and agreements with, any Governmental Authority.

“Lender” means a Term A Loan Lender or a Term B Loan Lender, as the context requires, and “Lenders” means all of them.

“Lien” means any lien, mortgage, pledge, collateral assignment, hypothecation, deed of trust, security interest, charge or encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, and any lease in the nature thereof) and any option, trust or other preferential arrangement having the practical effect of any of the foregoing, and in the case of Securities, any purchase option, call or similar right of a third party (in each case, other than warrants with respect to the Securities of Borrower) with respect to such Securities, and in the case of IP Rights, any license with respect to such IP Rights.

“Loan Account” means an account maintained hereunder by Administrative Agent on its books of account and with respect to Borrower, in which they will be charged with all Term Loans made to, and all other Obligations incurred by the Loan Parties in accordance herewith.

“Loan Document” means any of this Agreement, the Notes, if any, the Collateral Documents, the Agent Fee Letter, the Fee Letter, any Guaranty, any Subordination Agreements, any Intercreditor and Subordination Agreements, the Intercompany Subordination Agreement and all other documents, instruments or agreements executed and delivered by a Loan Party for the benefit of any Agent or any Lender in connection herewith.

“Loan Party” means Borrower or any Guarantor.

 

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“Lockbox” has the meaning set forth in Section 5.1.

“Machinery Sale and Leaseback” means the sale and leaseback transaction in connection with the following pieces of machinery: (a) that certain 2023 Ingersoll Machine Tools Automated Fiber Placement Machine having Vin/Serial No. 2N00152, (b) that certain 2024 Ingersoll Machine Tools Automated PowerMill Robotic having Vin/Serial No. 2N00164, and (c) that certain 2019 Fives Giddings & Lewis having Vin/Serial No. 525-1043-19, with Texas Capital Bank pursuant to that certain Purchase/Leaseback Agreement and Bill of Sale dated May 24, 2024, and that certain Master Lease Agreement #001844 (together with all addendums, amendments, and/or schedules as amended, amended and restated, supplemented or otherwise modified from time to time thereto) dated May 24, 2024.

“Management Agreement” means that Consulting Agreement, dated as of March 22, 2021, by and among Firefly Aerospace Inc., AE Industrial Operating Partners, LLC and AE Industrial Partners Fund II, LP.

“Margin Stock” has the meaning specified in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time.

“Master Services Agreement” means an agreement between Affiliates of the Borrower or between a Loan Party and any Affiliate pursuant to which one party to the agreement provides operational, managerial, advisory or headquarters services to the other party in consideration of cash compensation at Fair Market Value.

“Material Adverse Effect” means a material adverse effect on and/or material adverse circumstance or condition with respect to (a) the business, operations, results of operations, properties, assets, financial condition or liabilities of the Loan Parties and their Subsidiaries, taken as a whole, (b) the ability of the Loan Parties (taken as a whole) to fully and timely perform their respective payment obligations under any Loan Document to which they are parties, (c) the legality, validity, binding effect, or enforceability against a Loan Party of a Loan Document to which it is a party, (d) a material portion of the Collateral or the validity, perfection or priority of Agents’ Liens on a material portion of the Collateral or (e) the material rights, remedies and benefits available to, or conferred upon, any Agent and any Lender or any other Secured Party under the Loan Documents, taken as a whole.

“Material Contract” means (a) the agreements listed on Schedule 4.14 and any other contract or other arrangement to which any Loan Party or any of its Subsidiaries is a party (other than the Loan Documents) for which breach, non-performance, cancellation or failure to renew would reasonably be expected to have a Material Adverse Effect, and (b) the Development and Supply Framework Agreement dated August 3, 2022, and the Medium Launch Vehicle Development and Commercialization Agreement dated December 30, 2022, in each case, between Northrop Grumman Systems Corporation and the Borrower (collectively, the “Northrop Agreements”).

 

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“Material Contract Estoppel” means an undertaking in form and substance reasonably acceptable to the Borrower and Required Lenders pursuant to which each Person other than a Loan Party that is party a contract set forth on Schedule 4.14A (excluding any agreements, permits or licenses between Borrower and any Subsidiary, on the one hand, and any Governmental Authority, on the other hand) (i) consents to the granting of Liens encumbering the applicable Loan Party’s interest in such Material Contract, (ii) consents to the enforcement of such Lien pursuant to the terms of the Loan Documents, (iii) consents to transfer of the applicable Material Contract to any initial transferee following enforcement of such Lien or a transfer in lieu of such enforcement, and (iv) agrees to continue to perform its obligations under such Material Contract so long as such transferee performs the obligations of the Loan Party thereunder.

“Material Real Estate Asset” means any fee owned Real Estate Asset having a Fair Market Value in excess of $2,500,000 as of the date of the acquisition thereof.

“Material Subsidiary” means a Subsidiary that is not an Immaterial Subsidiary.

“Material Third Party License Agreement” means any Third Party License Agreement that is either a Material Contract or necessary for the operation of the business of each Loan Party and its Subsidiaries, the loss of which would reasonably be expected to result in a Material Adverse Effect.

“Minimum Interest Reserve Amount” means at any time of determination, (a) with respect to the Non-Minority Lender Interest Reserve Account, an amount equal to at least seven and nine-tenths percent (7.90%) of the aggregate balance of Term Loans made by Lenders other than the Minority Lender then outstanding and (b) with respect to the Minority Lender Interest Reserve Account, an amount equal to at least seven and nine-tenths percent (7.90%) of the aggregate balance of Term B Loans made by the Minority Lender then outstanding.

“Minority Lender” means AE Industrial Partners Structured Solutions I, LP, a Delaware limited partnership, in its capacity as a Lender under this Agreement.

“Minority Lender Interest Reserve Account” means an account established in the United States on or prior to the Initial Closing Date by IPCo with the Collateral Agent as depository, at all times under the sole dominion and control of the Collateral Agent for the benefit of the Minority Lender and denominated on the books and records of the Collateral Agent as the “Firefly IPCo Minority Lender Interest Reserve Account”.

“MNPI” has the meaning specified in Section 5.1.

“Moody’s” means Moody’s Investor Services, Inc.

“Moody’s Rating Agency Confirmation” means, for so long as promissory notes issued under the Securitization Trust are outstanding and a Moody’s rating of such promissory notes is in effect, with respect to any specified amendment or waiver of the Loan Documents which would result in a reduction in, or delay of, the principal or interest payments under the promissory notes issued by the Securitization Trust, Moody’s written confirmation (which may take the form of a press release or other written communication) that the occurrence of that amendment or waiver shall not cause Moody’s to downgrade or withdraw its then current rating assigned to such notes.

“Mortgage” means a mortgage, deed of trust or deed to secure debt, in form and substance reasonably satisfactory to the Required Lenders, made by a Loan Party in favor of Collateral Agent for the benefit of the Secured Parties, securing the Obligations and delivered to Collateral Agent.

 

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“Multiemployer Plan” means any “multiemployer plan” as defined in Section 3(37) of ERISA to which any Loan Party or any ERISA Affiliate thereof has within the past six (6) years contributed to or been required to contribute to.

“Narrative Report” means, with respect to Section 5.7(b) for which such narrative report is required, upon reasonable written request by the Required Lenders, an update describing the financial performance of Borrower and its Subsidiaries including (a) customary management’s discussion and analysis of the financial condition and results of operations for the Borrower and its Subsidiaries for the applicable Fiscal Quarter or Fiscal Year with comparison to and variances from corresponding periods of the previous Fiscal Year and Financial Plan, (b) with respect to each ongoing material project for the applicable Fiscal Quarter or Fiscal Year, an update regarding the status of such project completion, and (c) a summary of personnel turnover with respect to any key employees or in excess of historical average turnover for a comparable Fiscal Year period, as applicable.

“Narrative Report Call” has the meaning specified in Section 5.7(b).

“Narrative Report Call Notice” has the meaning specified in Section 5.7(b).

“Net Proceeds” means (a) with respect to any Asset Sale or Extraordinary Receipts, an amount equal to: (i) Cash payments received by a Loan Party or any of its Subsidiaries from such Asset Sale or in connection with any such Extraordinary Receipts, minus (ii) any bona fide direct costs and expenses incurred in connection with such Asset Sale or Extraordinary Receipt to the extent paid or payable, including (A) legal, accounting and investment banking fees, payments made in order to obtain a necessary consent or required by applicable Law, and brokerage and sales commissions, (B) income or gains taxes payable (or reasonably estimated by the Borrower to become payable) by the seller as a result of any gain recognized in connection with such Asset Sale or Extraordinary Receipt during the tax period in which the sale occurs (including tax distributions made pursuant to Section 6.5(d)(ii) or (iii) in connection with such Asset Sale or Extraordinary Receipt), (C) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Term Loans) that is secured by a Lien on the stock or assets in question and that is required to be repaid under the terms thereof as a result of such Asset Sale or Extraordinary Receipt, (D) a reasonable reserve for any indemnification payments (fixed or contingent) attributable to seller’s indemnities and representations and warranties to purchaser in respect of such Asset Sale, or Extraordinary Receipt undertaken by a Loan Party or any of its Subsidiaries in connection with such Asset Sale, or Extraordinary Receipt; provided that upon release of any such reserve, the amount released shall be considered Net Proceeds, (E) any funded escrow established pursuant to the documents evidencing any such sale or disposition to secure any indemnification obligations or adjustments to the purchase price associated with any such sale or disposition (provided that to the extent that any amounts are released from such escrow to the Borrower or a Subsidiary, such amounts net of any related expenses shall constitute Net Proceeds) and (F) in the case of any such event involving an asset of a non-wholly-owned Subsidiary, the pro rata portion of the Net Proceeds (calculated without regard to this clause (F)) distributed to holders of a minority interest in such non-wholly-owned

 

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Subsidiary; (b) [reserved], (c) to the extent not an Asset Sale or Extraordinary Receipt, net income determined on a transaction by transaction basis in accordance with GAAP with respect to proceeds of any Extraordinary IP Rights Transaction (minus a reasonable reserve for any contractually obligated claw-back payments that may become due and payable by such Loan Party; provided that upon release of any such reserve, the amount released shall be considered Net Proceeds); and (d) with respect to any insurance, condemnation, taking or other casualty proceeds, an amount equal to: (i) any Cash payments or proceeds received by a Loan Party or any of its Subsidiaries (A) under any casualty, business interruption or “key man” insurance policies in respect of any covered loss thereunder, or (B) as a result of the condemnation or taking of any assets of a Loan Party or any of its Subsidiaries by any Person pursuant to the power of eminent domain, condemnation or otherwise, or pursuant to a sale of any such assets to a purchaser with such power under threat of such a taking, minus (ii) (A) any actual and costs and expenses incurred by a Loan Party or any of its Subsidiaries in connection with the adjustment or settlement of any claims of such Loan Party or any of its Subsidiaries in respect thereof, (B) any costs and expenses incurred in connection with any condemnation or taking of such assets as referred to in clause (b)(i)(B) above to the extent paid or payable to non-Affiliates, including income taxes payable as a result of any gain recognized in connection therewith, (C) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Term Loans) that is secured by a Permitted Lien having a permitted priority that is senior to the Lien securing the Obligations on the assets in question and that is required to be repaid under the terms thereof as a result of such casualty or condemnation, (D) amounts required to be turned over to landlords (or their mortgagees) in respect of a casualty or condemnation of such leased property pursuant to the terms of any lease to which the Borrower or any of its Subsidiaries is party, (E) Taxes paid or reasonably estimated to be payable (including Taxes that would be payable in connection with the repatriation of any such proceeds, whether or not such repatriation actually occurs) and tax distributions with regard to taxes made pursuant to Section 6.5(d)(iii) in connection with such event and (F) in the case of any such event involving an asset of a non-wholly-owned Subsidiary, the pro rata portion of the Net Proceeds distributed to holders of a minority interest in such non-wholly-owned Subsidiary.

“Non-Minority Lender Interest Reserve Account” means an account established in the United States on or prior to the Initial Closing Date by IPCo with the Collateral Agent as depository, at all times under the sole dominion and control of the Collateral Agent for the benefit of the Lenders (other than the Minority Lender) and denominated on the books and records of the Collateral Agent as the “Firefly IPCo Non-Minority Lender Interest Reserve Account”.

“Non-Paying Insurer” means any insurer under the AON Insurance Policy that has not paid to the Administrative Agent its full ratable share of a claim made by the Administrative Agent under the AON Insurance Policy.

“Non-US Lender” has the meaning specified in Section 2.14(d)(i).

“Note” means a promissory note evidencing the Term Loans which shall be in the form of Exhibit I, attached hereto.

 

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“Obligations” means all obligations of every nature of each Loan Party from time to time owed to the Agents (including former Agents), the Lenders or any of them, under any Loan Document, whether for principal (including Protective Advances made to pay the premiums under the AON Insurance Policy), interest (including paid in kind interest and interest which, but for the filing of a petition in bankruptcy with respect to such Loan Party, would have accrued on any Obligation, whether or not a claim is allowed against such Loan Party for such interest in the related bankruptcy proceeding), fees, unpaid deposits, the Specified Premium, Erroneous Payment Subrogation Rights, expenses, indemnification or otherwise and whether primary, secondary, direct, indirect, contingent, fixed or otherwise (including obligations of performance).

“OFAC” means the Department of the Treasury’s Office of Foreign Assets Control.

“Organizational Documents” means (a) with respect to any corporation, its certificate or articles of incorporation or organization, as amended, and its by-laws, as amended, (b) with respect to any limited partnership, its certificate of limited partnership, as amended, and its partnership agreement, as amended, (c) with respect to any general partnership, its partnership agreement, as amended, and (d) with respect to any limited liability company, its articles of organization, as amended, and its operating agreement, as amended. In the event any term or condition of this Agreement or any other Loan Document requires any Organizational Document to be certified by a secretary of state or similar governmental official, the reference to any such “Organizational Document” shall only be to a document of a type customarily certified by such governmental official.

“Other Connection Taxes” means, with respect to any Recipient, 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” has the meaning specified in Section 2.14(b).

“Participant Register” has the meaning specified in Section 10.6(h)(ii).

“PATRIOT Act” has the meaning specified in Section 4.29.

“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA and which has within the past six (6) years been sponsored, maintained, contributed to or required to be contributed to by any Loan Party or any ERISA Affiliate thereof.

“Perfection Certificate” means a certificate in form and substance satisfactory to the Required Lenders that provides information with respect to the assets of each Loan Party.

“Permitted Acquisition” means any acquisition listed on Schedule 6.9 and any acquisition by any Loan Party or any of their Subsidiaries, whether by purchase, merger or otherwise, of all or substantially all of the assets or all of the Capital Stock of, or a business line or unit or a division of, any such Person that meets each of the requirements set forth below:

 

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(a) immediately prior to, and immediately after giving effect thereto, no Event of Default shall have occurred and be continuing or would result therefrom or be reasonably expected to result therefrom;

(b) all transactions in connection therewith shall be consummated in accordance with all applicable laws, as would not reasonably be expected to result in a Material Adverse Effect;

(c) in the case of the acquisition of Capital Stock, all of the Capital Stock acquired or otherwise issued to a Loan Party by such Person or any newly formed Guarantor in connection with such acquisition shall be owned 100% by a Loan Party (other than (i) joint ventures, (ii) directors’ shares or (iii) other nominal shares required to be held by another Person pursuant to applicable law of the jurisdiction of formation), and Borrower shall have taken, or caused to be taken, if such Person becomes a Subsidiary of Borrower, each of the actions set forth in Section 5.10 and/or Section 5.11, as applicable;

(d) Borrower shall have delivered to Agents and the Lenders at least ten (10) Business Days prior to such proposed acquisition, upon the written request of the Required Lenders, in the case of an acquisition for which the purchase price is greater than $25,000,000, a quality of earnings report with respect to the Persons to be acquired and the acquired assets, (iii) upon the request of the Required Lenders and to the extent the same were issued and available, the most recently available two (2) years of audited financial statements of the Persons to be acquired, (iv) to the extent available to Borrower or any of its Subsidiaries, upon the request of the Required Lenders, financial statements of the Persons to be acquired for the period from the beginning of the then current fiscal year to the end of the most recently completed month, setting forth in comparative form the corresponding figures for the corresponding periods of the previous fiscal year, and (v) a certification from the Borrower that the Loan Parties will be in pro forma compliance with Section 6.21 after giving effect to such acquisition;

(e) upon the request of the Required Lenders, Borrower shall have delivered to Agents and the Lenders at least ten (10) Business Days prior to such proposed acquisition, an executed term sheet and/or commitment letter (setting forth in reasonable detail the terms and conditions of such acquisition), if any. Borrower shall, at the request of the Required Lenders, deliver such other information and documents that such Required Lenders may reasonably request, including, without limitation, executed counterparts of the respective material agreements, instruments or other customary and reasonably available documents pursuant to which such acquisition is to be consummated (including, without limitation, any related management, non-compete, employment, option or other material agreements), any schedules to such agreements, instruments or other documents and all other material ancillary agreements, instruments or other documents to be executed or delivered in connection therewith;

(f) any Person or assets or division as acquired in accordance herewith shall comply with Section 6.13; and

(g) the acquisition shall have been approved by the Board of Directors or other governing body or controlling Person of the Person acquired or the Person from whom such assets or division is acquired.

 

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“Permitted Holders” means each of (i) the Sponsor and (ii) any “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the Closing Date) including any of the foregoing Persons; provided, that (x) any combination of such foregoing Persons referred to in clause (i) shall hold a majority of the aggregate voting interests in the Capital Stock of the Borrower, as the case may be, held by all members of such combination and (y) as of the Closing Date, no other Person (together with its Affiliates) shall have more Capital Stock representing the ordinary voting power than the Sponsor (together with its Affiliates).

“Permitted Indebtedness” means:

(a) the Obligations;

(b) Indebtedness of Borrower or any Subsidiary owing to the Borrower or any Subsidiary, provided (x) if such Indebtedness shall be evidenced by promissory notes then all such notes shall be Collateral subject to a First Priority Lien pursuant to the Pledge and Security Agreement, (y) all such Indebtedness owed by a Loan Party shall be subordinated in right of payment to the payment in full of the Obligations pursuant to the terms of the Intercompany Subordination Agreement, and (z) in the case of Indebtedness of any Subsidiary that is not a Loan Party owing to a Loan Party such Indebtedness is in an amount not to exceed $5,000,000 in the aggregate at any time for all such Subsidiaries that are not Loan Parties;

(c) Indebtedness arising from (i) agreements providing for indemnification or obligations in respect of purchase price (including earn-outs) or other similar adjustments, or (ii) guaranties or letters of credit, surety bonds or performance bonds securing the performance pursuant to such agreements, in each case, in the ordinary course of business;

(d) Indebtedness which may be deemed to exist pursuant to any guaranties, performance, bid, surety, statutory, appeal or similar obligations incurred in the ordinary course of business;

(e) Indebtedness incurred in the ordinary course of business in respect of and including credit card, debit card or purchasing cards, netting services, and overdraft protections;

(f) Indebtedness described in Schedule 6.1, but not any extensions, renewals or replacements of such Indebtedness except renewals, extensions and replacements that are in a principal amount that does not exceed the principal amount so refinanced or replaced plus, accrued interest, any customary premium or other payment required to be paid in connection with such refinancing, the amount of customary fees and expenses of the Borrower or any of its Subsidiaries incurred in connection with such refinancing, any unused commitments and any unutilized commitments thereunder;

(g) Indebtedness incurred in the ordinary course of business with respect to (i) Capital Leases, (ii) construction financing and (iii) purchase money Indebtedness (including any Indebtedness acquired in connection with a Permitted Acquisition or acquisition of equipment); provided that any such Indebtedness shall, as applicable, be secured only by (w) the asset subject to such Capital Lease or by the asset acquired in connection with the incurrence, renewal, extension, restructuring or refinancing of such Indebtedness, in each case together with proceeds, accessions or products of any disposition thereof and any related security deposits, (x) deposit

 

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accounts and reserve accounts solely related to such construction financing, (y) the assets subject to any cross-collateralization of obligations owed to the holder of such Indebtedness with respect to any Capital Leases, construction financing or purchase money Indebtedness and (z) the assets being constructed pursuant to such construction financing; provided that, with respect to any transaction that includes cross-collateralization of obligations owed to any holder of such Indebtedness, any such cross-collateralization shall only include (I) assets that were encumbered by a Capital Lease, construction financing or purchase money indebtedness by such holder as of the Initial Closing Date, (II) assets that were acquired pursuant to a Capital Lease, construction financing or purchase money Indebtedness by such holder after the Initial Closing Date or (III) any SLB Deposit Account, the SLB Equipment and, after the First Amendment Effective Date, any assets acquired pursuant to a Capital Lease, construction financing or purchase money indebtedness, in each case of this clause (III) provided by TCB (or any of its affiliates), together with its successors and assigns;

(h) Indebtedness of a Person that becomes a Subsidiary hereunder after the Closing Date in connection with a Permitted Acquisition or other permitted Investment, provided that such Indebtedness existed at the time such Person became a Guarantor and was not created or incurred in anticipation or contemplation of such Permitted Acquisition;

(i) customary cash management products, Interest Rate Agreements, foreign currency hedges and direct hedges for the purchase of raw materials or commodities that the Loan Parties project to consume during the ordinary course of business within the subsequent 6-month period, in each case that are entered into by the Loan Parties and their Subsidiaries in the ordinary course of business and not for speculative or investment purposes;

(j) Indebtedness consisting of the financing of insurance premiums arising in the ordinary course of business (including, for the avoidance of doubt, related to insurance required to be maintained pursuant to this Agreement);

(k) guaranties with respect to Indebtedness to the extent the Person obligated with respect to such guaranty would not be prohibited from incurring the primary Indebtedness that is guaranteed thereby;

(l) Indebtedness not otherwise permitted hereunder in an aggregate amount not to exceed $5,000,000 at any time;

(m) Indebtedness or other obligations of any type of the Loan Parties at any time arising pursuant to and/or in respect of the Warrant;

(n) guarantee obligations of Borrower or its Subsidiaries in respect of the Indebtedness of the Borrower or its Subsidiaries otherwise permitted to be incurred hereunder; provided that if the Indebtedness being guaranteed is subordinated to the Obligations, such guarantee obligations shall be subordinated to the Guaranty of the Obligations on terms at least as favorable to the Lenders as those contained in the subordination of such Indebtedness;

(o) Indebtedness representing deferred compensation to employees of the Loan Parties incurred in the ordinary course of business;

 

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(p) Indebtedness consisting of obligations under deferred compensation or other similar arrangements incurred in connection with Permitted Investments;

(q) Indebtedness incurred in respect of letters of credit, bank guarantees, bankers’ acceptances, warehouse receipts or similar instruments issued or created in the ordinary course of business, including in respect of workers compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement-type obligations regarding workers compensation claims;

(r) Indebtedness of a Person acquired pursuant to a Permitted Acquisition; provided that such Indebtedness was not undertaken by such Person in connection with, or in contemplation of, such Permitted Acquisition and provided that such Indebtedness shall not be for borrowed money;

(s) Indebtedness arising under letters of credit issued for the account of Borrower or any of its Subsidiaries; provided that the aggregate amount of such Indebtedness in respect of all such letters of credit does not exceed $2,500,000 at any time outstanding;

(t) Subordinated Indebtedness (including, for the avoidance of doubt, any Convertible Notes) in an aggregate amount not to exceed $25,000,000 at any time outstanding;

(u) subject to the consent of the Required Lenders and insurers holding at least 50.1% of the aggregate risk under the AON Insurance Policy on the terms and conditions set forth in clause (a) of Section IV of the AON Insurance Policy as in effect on the Closing Date without giving effect to any subsequent amendment or modification, Indebtedness secured by Liens on the Collateral on a pari passu basis in an aggregate amount not to exceed $150,000,000 at any time outstanding;

(v) Indebtedness incurred pursuant to the Test Stand Sale and Leaseback in an aggregate amount not to exceed $30,000,000 at any time;

(w) Indebtedness of Foreign Subsidiaries not to exceed $25,000,000 in the aggregate at any time outstanding; and

(x) Subordinated Indebtedness, on terms and conditions reasonably acceptable to the Required Lenders, owed to Sponsor, in an aggregate principal amount not to exceed the sum of (I) $25,000,000 plus (II) the capitalized amount of any interest paid in kind on such Indebtedness, at any time outstanding pursuant to one or more Subordinated Convertible Promissory Notes dated as of the First Amendment Effective Date made by the Borrower in favor of AE Industrial Partners Fund III, LP, AE Industrial Partners Fund III-A, LP or their Affiliates and their permitted successors and assigns; provided that (x) such Indebtedness shall not provide for any cash pay interest on such Indebtedness and any interest on such Indebtedness shall solely be paid in kind or accrued and (y) no prepayments, other than prepayments solely with proceeds of the issuance of Qualified Capital Stock or otherwise converted into Qualified Capital Stock, shall be permitted, in the case of clause (x) and (y) prior to the payment in full of the Obligations hereunder (other than contingent indemnification obligations not due and owing).

 

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“Permitted Investments” means:

(a) Investments in Cash and Investments in assets that were Cash Equivalents when such Investment was made;

(b) Investments by Borrower or any Subsidiaries in Borrower or any Subsidiary thereof (other than Firefly Aerospace Ukraine, LLC); provided that (i) Investments in IPCo by any Loan Party in the form of Indebtedness shall not be permitted and (ii) in the case of Investments by a Loan Party in a Subsidiary that is not a Loan Party such Investment shall not exceed $5,000,000 in the aggregate at any time;

(c) Investments constituting (i) Securities received in satisfaction or partial satisfaction thereof from financially troubled account debtors, (ii) deposits, prepayments and other credits to suppliers made in the ordinary course of business and (iii) endorsements for collection or deposit and customary trade arrangements with customers in the ordinary course of business;

(d) intercompany loans to the extent permitted under clause (b) of the definition of “Permitted Indebtedness” and accounts receivable;

(e) loans and advances to employees of the Borrower and any other Subsidiary (i) for reasonable and customary business-related travel, entertainment, relocation and analogous ordinary business purposes in an aggregate principal amount for all such loans outstanding not to exceed $250,000, (ii) constituting notes in an aggregate principal amount for all such loans outstanding accepted as consideration in connection with the sale of restricted stock or as exercise price for options and (iii) for purposes not described in the foregoing clauses (i) or (ii) in an aggregate principal amount for all such loans outstanding not to exceed $1,000,000;

(f) Permitted Acquisitions permitted pursuant to Section 6.9;

(g) Investments described in Schedule 6.7 and any modification, replacement, renewal, reinvestment or extension of any such Investments; provided that the amount of any such Investment is not increased from the amount of such Investment on the Closing Date except pursuant to the terms of such Investment as of the Closing Date or as otherwise would constitute a Permitted Investment (plus any (x) unused commitments, accrued interest, fees and expenses and premiums incurred in connection therewith and (y) amounts permitted to otherwise be incurred under this Section 6.7);

(h) asset purchases (including purchases of inventory, supplies and materials) in the ordinary course of business and the entry into Qualified Licenses of intellectual property pursuant to joint marketing arrangements with other Persons;

(i) Investments consisting of Permitted Indebtedness, fundamental changes, Asset Sales permitted by Section 6.9, Asset Sale Exceptions, or Permitted Liens (other than, in each case, by reference to Permitted Investments);

(j) promissory notes and other non-Cash consideration received in connection with Asset Sales permitted by Section 6.9;

 

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(k) advances of payroll payments to employees in the ordinary course of business in an aggregate principal amount for all such loans outstanding not to exceed $250,000;

(l) Investments to the extent that payment for such Investments is made with Capital Stock (other than Disqualified Capital Stock) or the proceeds thereof or in an amount equal to Net Proceeds from the issuance of Capital Stock (other than Disqualified Capital Stock) or other capital contribution in respect thereof of the Borrower’s direct or indirect parent companies;

(m) Investments made to consummate the Transactions;

(n) any guarantees permitted under the Loan Documents;

(o) other Investments that do not exceed an aggregate amount for all such Investments equal to the sum of (x) $5,000,000 plus (y) $2,000,000 less the amount of any prepayment of Indebtedness made in reliance on clause (x) of the proviso to Section 6.17, at any time outstanding; provided, however, no Investments may be made in Firefly Aerospace Ukraine, LLC pursuant to this clause (o);

(p) Deposit Accounts and investment accounts maintained in the ordinary course of business and in accordance with the terms of the Loan Documents;

(q) Investments in connection with interest rate or foreign currency hedging or swaps, in the ordinary course of business and not for speculative purposes;

(r) Investments consisting of pledges and deposits in the ordinary course of business in connection with real estate leases (other than in connection with any Sale and Leaseback), supply agreements or other agreements in the ordinary course of business and entered into on Arm’s Length Terms;

(s) Investments held by any Person as of the date such Person is acquired in connection with a Permitted Acquisition; provided, that such Investments were not made, in any case, by such Person in connection with, or in contemplation of, such Permitted Acquisition.

(t) [reserved]; and

(u) Investments made in Excluded Subsidiaries and Joint Ventures in an amount not to exceed $5,000,000 in the aggregate per Fiscal Year (or, following the receipt by Borrower of proceeds of the issuance of Capital Stock or unsecured Subordinated Indebtedness after the Closing Date of not less than $25,000,000, in an amount not to exceed $10,000,000 in the aggregate per Fiscal Year); provided, that, in each case, the Loan Parties shall have a minimum of $25,000,000 in Qualified Cash immediately after giving effect to such Investment; provided, however, no Investments may be made in Firefly Aerospace Ukraine, LLC pursuant to this clause (u).

“Permitted Liens” means:

(a) Liens in favor of either Agent for the benefit of Secured Parties granted pursuant to any Loan Document;

 

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(b) Liens for Taxes, assessments or governmental charges not required to be paid pursuant to Section 5.3;

(c) Liens of landlords, banks (and rights of set off), of carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens imposed by law (other than any such Lien imposed pursuant to Section 401(a)(29) or 430(k) of the Internal Revenue Code or by ERISA), in each case incurred in the ordinary course of business (i) which secure amounts not overdue for a period of more than 30 days or if more than 30 days overdue, are unfiled (or, if filed, have been discharged or stayed) and no other action has been taken to enforce such Lien, or (ii) which are being contested in good faith by appropriate proceedings promptly instituted and diligently conduced and reserves in accordance have GAAP have been made;

(d) pledges, deposits or Liens incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money or other Indebtedness), so long as no foreclosure, sale or similar proceedings have been commenced with respect to any material portion of the Collateral on account thereof;

(e) all items of record, survey exceptions, easements, rights of way, restrictions, encroachments, and other minor defects or irregularities in title, in each case which do not and will not interfere in any material respect with the ordinary conduct of the business of Borrower or any of its Subsidiaries;

(f) any interest or title of a lessor or sublessor under any operating lease permitted hereunder and any deposit securing obligations relating to any operating lease permitted hereunder;

(g) Liens solely on any Cash earnest money deposits made by Borrower or any of its Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder;

(h) purported Liens evidenced by the filing of precautionary UCC financing statements relating solely to operating leases of personal property entered into in the ordinary course of business;

(i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business;

(j) any zoning, municipal ordinances or similar law or right reserved to or vested in any governmental office or agency to control or regulate the use of any real property;

(k) to the extent otherwise permitted pursuant to this Agreement, licenses or sublicenses of patents, trademarks, or other IP Rights granted by Borrower or any of its Subsidiaries, subject, to the extent applicable in each case, to the mandatory prepayment requirement set forth in Section 2.9; provided that, for the avoidance of doubt, any Qualified License or Asset Sale Exceptions shall be deemed Permitted Liens;

 

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(l) Liens described in Schedule 6.2 that secure obligations described in Schedule 6.1, and renewals, extensions and replacements thereof so long as (i) the principal amount of obligations secured thereby does not increase (other than by an amount equal to unused commitments, accrued fees, interest premium and expenses) and (ii) the scheduled maturity date on any existing obligation on Schedule 6.2 is not shortened.

(m) Liens securing purchase money Indebtedness, construction financing or Capital Leases permitted pursuant to clause (g) of the definition of “Permitted Indebtedness” (including any Indebtedness originally incurred by the target acquired in connection with a Permitted Acquisition or acquisition of equipment); provided any such Lien shall encumber only, as applicable, (i) the asset subject to such purchase money Indebtedness, construction financing or Capital Lease or the asset acquired with the proceeds, accessions, or products of such Indebtedness together with the proceeds of any disposition thereof and security deposits, (ii) deposit accounts and reserve accounts solely related to such construction financing, (iii) the assets subject to any cross-collateralization of obligations owed to the holder of such Liens with respect to any Capital Leases, construction financing or purchase money Indebtedness, and (iv) the assets being constructed pursuant to such construction financing; provided further that, with respect to any transaction that includes cross-collateralization of obligations owed to any holder of such Liens, any such cross-collateralization shall only include (I) assets that were encumbered by a Capital Lease, construction financing or purchase money indebtedness by such holder as of the Initial Closing Date, (II) assets that were acquired pursuant to a Capital Lease, construction financing or purchase money Indebtedness by such holder after the Initial Closing Date or (III) subject to the First Amendment Intercreditor Agreement, any SLB Deposit Account, the SLB Equipment, and, after the First Amendment Effective Date, any assets acquired pursuant to a Capital Lease, construction financing or purchase money indebtedness, in each case of this clause (III) provided by TCB (or any of its affiliates), together with its successors and assigns.

(n) Liens securing judgments (and pledges or Cash deposits made in lieu of, or to secure the performance of appeal or other surety bonds relating to such judgments) not constituting an Event of Default under Section 8.1(h);

(o) bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to Cash and Cash Equivalents on deposit in one or more accounts maintained by Borrower or a Subsidiary, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements;

(p) Liens on insurance policies and the proceeds thereof (excluding any benefits or any rights to receive payment under any insurance policies) and on unearned premiums incurred in connection with the financing in the ordinary course of business of insurance premiums, provided that such Liens shall be limited only to the unused portion of the premiums payable under such insurance policies and the proceeds of such insurance premiums;

 

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(q) Liens on deposit accounts or securities accounts in connection with overdraft protection and netting services;

(r) Liens on assets of any Foreign Subsidiary securing Indebtedness under clause (v) of Permitted Indebtedness not to exceed $12,500,000 in the aggregate at any time outstanding;

(s) Liens existing on property at the time of its acquisition or existing on the property of any Person at the time such Person becomes a Subsidiary of a Loan Party, in each case after the date hereof; provided that (i) such Lien was not created in contemplation of such acquisition or such Person becoming a Subsidiary, (ii) such Lien does not extend to or cover any other assets or property (other than the proceeds or products thereof and other than after-acquired property subjected to a Lien securing Indebtedness and other obligations incurred prior to such time and which Indebtedness and other obligations are permitted hereunder that require, pursuant to their terms at such time, a pledge of after-acquired property; it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition) and (iii) any Indebtedness secured thereby constitutes Permitted Indebtedness;

(t) Liens on cash collateral securing reimbursement obligations with respect to letters of credit in an amount up to 105% of such letters of credit permitted under clause (s) of “Permitted Indebtedness”;

(u) Liens on cash collateral supporting Indebtedness permitted to be incurred pursuant to clauses (e) and (i) (provided that in the case of clause (i), such Liens shall attach only to assets acquired in the associated Permitted Acquisition) of the defined term “Permitted Indebtedness”;

(v) Any interest or title of a lessor, sublessor, licensor or sublicensor under any operating lease or license entered into in accordance with this Agreement;

(w) Undetermined inchoate Liens arising or potentially arising under statutory provisions which have not at the time been filed or registered in accordance with applicable law or of which written notice has not been duly given in accordance with applicable law or which, although filed or registered, relate to obligations not due or delinquent;

(x) Liens, if any, arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods entered into by the Loan Parties in the ordinary course of business;

(y) Liens on the property of a Person existing at the time such Person is acquired in connection with a Permitted Acquisition or other permitted Investment; provided, that (i) such Liens were not created in contemplation of such Permitted Acquisition or Investment, and (ii), except as otherwise permitted herein, such Liens do not extend to any assets other than those of such Person and provided further that such Liens do not secure Indebtedness for borrowed money;

 

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(z) Liens securing Subordinated Indebtedness permitted pursuant to clause (t) of the definition of “Permitted Indebtedness” subject to an intercreditor agreement reasonably acceptable to Required Lenders;

(aa) Liens not otherwise permitted hereunder in an aggregate amount not to exceed $5,000,000 so long as any such Liens on any Collateral securing Indebtedness for borrowed money and any guaranty thereof are subject to an intercreditor agreement on the terms and conditions set forth on Exhibit N; or

(bb) Liens securing any Indebtedness permitted pursuant to clause (v) of the definition of “Permitted Indebtedness” (including any cross collateralization in respect of the SLB Equipment, the SLB Deposit Account and a capital lease, construction financing, or purchase money indebtedness, provided by TCB (or any of its affiliates), together with its successors and assigns), subject to the terms of the First Amendment Intercreditor Agreement.

“Person” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and Governmental Authorities.

“Platform” has the meaning specified in Section 5.1.

“Pledge and Security Agreement” means the Pledge and Security Agreement dated as of the Initial Closing Date and executed by Grantors in favor of Agents for the benefit of the Secured Parties, substantially in the form of Exhibit G, as it may be amended, amended and restated, supplemented or otherwise modified from time to time.

“Principal Office” means, for Administrative Agent, such Person’s “Principal Office” as set forth on Schedule 10.1, or such other office as such Person may from time to time designate in writing to Borrower, Administrative Agent and each Lender; provided that for the purpose of making any payment on the Obligations or any other amount due hereunder or any other Loan Document, the Principal Office of Administrative Agent shall be U.S. Bank Trust Company, National Association, 214 North Tryon Street, 27th Floor, Charlotte, NC 28202-1078, CN-NC-H27Q (or such other location as Administrative Agent may from time to time designate in writing to Borrower and each Lender).

“Private Lender” means Lenders other than Public Lenders who have executed a confidentiality agreement with respect to receipt and confidential treatment of MNPI.

“Pro Rata Share” means with respect to any Lender the percentage obtained by dividing (i) the Term Loan Exposure of that Lender, by (ii) the aggregate Term Loan Exposure of all Lenders.

“Protective Advances” has the meaning specified in Section 2.2.

“Public Lender” has the meaning specified in Section 5.1.

 

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“Qualified Cash” means, as of any date of determination, the amount of unrestricted Cash and Cash Equivalents of the Loan Parties that is in Deposit Accounts subject to a Control Agreement providing for a first priority Lien in favor of the Administrative Agent and shall in no event include Cash or Cash Equivalents in the SLB Deposit Account.

“Qualified Capital Stock” means Capital Stock that is not Disqualified Capital Stock.

“Qualified License” has the meaning specified in the definition of “Asset Sale”.

“Reaffirmation Agreement” means the Reaffirmation Agreement dated as of the Closing Date and executed by Grantors in favor of Agents for the benefit of the Secured Parties, as it may be amended, amended and restated, supplemented or otherwise modified from time to time.

“Real Estate Asset” means, at any time of determination, any fee-owned Real Property owned by any Loan Party.

“Real Property” means any real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by any Loan Party.

“Recipient” means (a) any Agent or (b) any Lender.

“Refinance Indebtedness” means Indebtedness which represents extensions, renewals, refinancing or replacements of any Permitted Indebtedness (such Indebtedness being referred to herein as the “Original Indebtedness”); provided that (i) such Refinance Indebtedness does not increase the principal amount or interest rate of the Original Indebtedness (other than with respect to any fees, expenses accrued or paid-in-kind interest, unused commitments or premium payments), (ii) any Liens securing such Refinance Indebtedness are not extended to any additional property of any Loan Party or any Subsidiary unless otherwise permitted hereunder, (iii) no Loan Party or any Subsidiary that is not originally obligated with respect to repayment of such Original Indebtedness is required to become obligated with respect to such Refinance Indebtedness, (iv) such Refinance Indebtedness does not result in a shortening of the average weighted maturity of such Original Indebtedness, (v) the terms of such Refinance Indebtedness other than fees and interests are not less favorable in any material respect to the obligor thereunder than the original terms of such Original Indebtedness, and (vi) if such Original Indebtedness was subordinated in right of payment to the Secured Obligations, then the terms and conditions of such Refinance Indebtedness (taken as a whole) must include subordination terms and conditions that are at least as favorable to the Administrative Agent and the Lenders as those that were applicable to such Original Indebtedness.

“Register” has the meaning specified in Section 2.5(b).

“Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“Reinvestment Amount” has the meaning specified in Section 2.9(a).

 

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“Related Fund” means, with respect to any Lender that is an investment fund, any other investment fund that invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

“Release” means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater.

“Remedial Action” means all actions taken to (a) correct or address any actual or threatened non-compliance with Environmental Law, (b) clean up, remove, remediate, contain, treat, monitor, assess, evaluate or in any other way address Hazardous Materials in the indoor or outdoor environment, (c) prevent or minimize a Release or threatened Release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (d) perform pre-remedial studies and investigations and post-remedial operation and maintenance activities or (e) perform any other actions authorized or required by Environmental Law or Governmental Authority.

“Required Lenders” means, collectively, (i) Lenders collectively holding more than 50% of the outstanding Term A Loans, in effect at any time of determination, and (ii) Lenders collectively holding more than 50% of the outstanding Term B Loans in effect at any time of determination; provided that this clause (ii) shall be subject to Section 10.5(a)(ii) below.

“Requirements of Law” means, with respect to any Person, collectively, the common law and all federal, state, provincial, local, foreign, multinational or international laws, statutes, codes, treaties, standards, rules and regulations, guidelines, ordinances, orders, judgments, writs, injunctions, decrees (including administrative or judicial precedents or authorities) and the interpretation or administration thereof by, and other determinations, directives, requirements of, any Governmental Authority, in each case that are applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Restricted Junior Payment” means (a) any dividend or other distribution, direct or indirect on account of any shares of any class of Capital Stock of Borrower now or hereafter outstanding, except a dividend payable solely in shares of Capital Stock to the holders of that class, (b) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of Capital Stock of Borrower or any of its Subsidiaries now or hereafter outstanding, and (c) any payment made to retire, or to obtain the surrender of, and any payments, prepayments or other transfers on account of the principal amount of or interest owed under any Subordinated Indebtedness in each case whether or not scheduled. For the avoidance of doubt, neither (i) cash management transfers or other payments between and among Loan Parties nor (ii) forfeitures of equity securities by any officer or employee of Borrower or any of its Subsidiaries to Borrower made to satisfy tax withholding and/or exercise price obligations in respect of Borrower equity awards to such Person shall constitute Restricted Junior Payments.

 

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“S&P” means Standard & Poor’s Ratings Group, a division of S&P Global.

“Sanctioned Country” means, at any time, a country, region or territory which is the subject or target of comprehensive Sanctions, currently, Cuba, Iran, Syria, North Korea, and the Crimea, so-called People’s Republic of Donetsk (DNR) and so-called People’s Republic of Luhansk (LNR) regions of Ukraine.

“Sanctions” means all economic and financial sanctions administered and enforced by any Sanctions Authority.

“Sanctions Authority” means (a) the United Nations Security Council, (b) the United States government, (c) the United Kingdom government, (d) the European Union, including the government of any member state thereof, and (e) any other relevant Governmental Authority having jurisdiction over the Borrower or any of its Subsidiaries.

“Second Draw” means a request by Borrower for and the funding of one Term Loan advanced by the Lenders on the Second Draw Date under their respective Term Loan Commitments in an aggregate amount equal to the Second Draw Amount.

“Second Draw Amount” $15,944,444.44.

“Second Draw Date” means December 6, 2023.

“Second Term A Loan” has the meaning specified in Section 2.1(a)(i).

“Second Term B Loan” has the meaning specified in Section 2.1(a)(ii).

“Second Term A Loan Commitment” means, relative to any Term A Loan Lender, such Lender’s obligation to make Term A Loans on the Second Draw Date pursuant to Section 2.1(a) of the Existing Financing Agreement. The amount of each Lender’s Second Term A Loan Commitment, if any, is set forth on Appendix A or in the applicable Lender Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Second Term A Loan Commitments as of the Second Draw Date equals the Second Term A Loan Commitment Amount, which was funded by the Term A Loan Lender on the Second Draw Date.

“Second Term B Loan Commitment” means, relative to any Term B Loan Lender, such Lender’s obligation to make Term B Loans on the Second Draw Date pursuant to Section 2.1(a) of the Existing Financing Agreement. The amount of each Lender’s Second Term B Loan Commitment, if any, is set forth on Appendix A or in the applicable Lender Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Second Term B Loan Commitments as of the Second Draw Date equals the Second Term B Loan Commitment Amount, which was funded by the Term B Loan Lenders on the Second Draw Date.

“Second Term A Loan Commitment Amount” means $8,500,000.00, which was funded on the Second Draw Date. As of the Closing Date, the Second Term A Loan Commitment Amount is $0.

 

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“Second Term B Loan Commitment Amount” means $7,444,444.44, which was funded on the Second Draw Date. As of the Closing Date, the Second Term B Loan Commitment Amount is $0.

“Secured Parties” has the meaning assigned to that term in the Pledge and Security Agreement.

“Securities” means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing; provided, however, that notes or other evidences of indebtedness relating to a revolving credit facility, any deferred purchase price of assets acquired in the conduct of the business of any Loan Party, trade payables and similar indebtedness shall not be deemed Securities.

“Securities Account” means a securities account (as defined in the UCC).

“Securities Act” means the Securities Act of 1933, as amended from time to time, and any successor statute.

“Securitization Trust” means a Person to which the aggregate amount of the Term Loan is assigned by the originating Lenders for purposes of facilitating a securitization of the aggregate amount of the Term Loan pursuant to a Note Purchase and Security Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time (including any amendment and restatement in connection with the amendment and restatement of this Agreement), the “Note Purchase Agreement”), among the issuer, the purchasers referred to therein and U.S. Bank Trust Company, National Association, in the capacities as the collateral agent, securities intermediary, information agent and note agent under the Note Purchase Agreement; provided that, except upon the occurrence and during the continuance of an Event of Default, the originating Lenders shall not be permitted to make any such assignment to a Disqualified Institution. For avoidance of doubt, the assignment of the aggregate amount of the Term Loan to a Securitization Trust shall not require consent of any Loan Party or the Administrative Agent.

“Securitization Trustee” means at any time the collateral agent, securities intermediary, information agent and note agent, engaged in respect of notes sold by the Securitization Trust pursuant to the Note Purchase Agreement.

“SLB Deposit Account” has the meaning specified in the First Amendment Date Intercreditor Agreement.

“SLB Equipment” has the meaning specified in the First Amendment Date Intercreditor Agreement.

“Specified Equity Contribution” shall have the meaning provided in Section 6.21(b).

 

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“Specified Event” has the meaning specified in the definition of “Specified Premium”.

“Specified Payment” has the meaning set forth in Section 2.8(b)(i).

“Specified Premium” means, with respect to any Term Loan on any date that a prepayment or repayment becomes due and owing under this Agreement, whether or not paid or any Term Loan that is actually repaid, prepaid, terminated, reduced, paid, redeemed, satisfied, released, distributed, discharged, or accelerated on or prior to the date that is 32 months following the Initial Closing Date (each, a “Specified Event”), the present value of the sum of the amounts of each interest payment due on the repaid, prepaid, terminated, reduced, paid, redeemed, satisfied, released, distributed, discharged, or accelerated portion of such Term Loan on each Interest Payment Date during the period extending from the date such prepayment or repayment becomes due and owing under this Agreement, whether or not paid, through and including the date that is 32 months following the Initial Closing Date (excluding accrued but unpaid interest as of the date of prepayment or repayment, which shall be separately paid in accordance with the terms of Section 2.6, as applicable) computed using a discount rate equal to the Treasury Rate (determined as of the Business Day prior to such date of prepayment) plus 0.50%.

“Sponsor” means (i) AE Industrial Partners, LP and (ii) any successors of a Person set forth in clause (i) and any of their Affiliates, and funds or partnerships managed or advised by any of them or any of their respective Affiliates but not including, however, any portfolio company of any of the foregoing.

“Subordinated Indebtedness” means Indebtedness (including unsecured Indebtedness convertible into or exchangeable or exercisable for any Capital Stock, including, without limitation, Convertible Notes) or Disqualified Capital Stock, in either case of any Loan Party (a) that is subordinated in right of payment and lien priority (as applicable) to the Term Loans pursuant to a Subordination Agreement, (b) with respect to payment subordination, contains subordination provisions that are customary in the good faith determination of Borrower for senior subordinated notes or subordinated notes issued under Rule 144A of the Securities Act (or other corporate issuers in private placements or public offerings of securities), or (c) that contains customary subordination provisions that include, without limitation, the following customary terms (or such other terms as shall have been delivered to the Lenders and the Administrative Agent ten (10) Business Days prior to the execution of such proposed subordination agreement and the Required Lenders shall not have objected in writing to such proposed subordination agreement within such ten (10) Business Days following receipt of such draft): (i) such Indebtedness shall be unsecured, (ii) interest in cash shall not exceed 5% per annum, which must convert to being payable in kind upon the occurrence and during the continuance of an Event of Default hereunder, (iii) the maturity date of all such Indebtedness shall not be earlier than ninety-one (91) days after the scheduled Term Loan Maturity Date, and (iv) such Indebtedness shall be subordinated in right of payment (with an enforcement standstill and extension of payment due dates under such Indebtedness) to the payment in full of the Obligations.

 

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“Subordination Agreement” means a subordination agreement in form and substance reasonably acceptable to the Required Lenders entered into by any officer or director of, consultant to or direct or indirect shareholder of, any Loan Party, on the one hand, and a Loan Party, on the other hand, with respect to Indebtedness owed by such Loan Party to such Person.

“Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, association, Joint Venture or other business entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; provided, in determining the percentage of ownership interests of any Person controlled by another Person, no ownership interest in the nature of a “qualifying share” of the former Person shall be deemed to be outstanding, provided, further, that any Person in which any Loan Party has acquired Capital Stock pursuant to a Permitted Investment in a Joint Venture shall not constitute a Subsidiary for purposes of this Agreement until such time as a Loan Party or other Subsidiary holds more than 50% of the total voting power of shares of stock or other ownership interests at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, at which time, such entity shall become a Subsidiary.

“Tax” means any present or future tax, levy, impost, duty, assessment, charge, fee, deduction or withholding in the nature of a tax, withheld or assessed by a Governmental Authority and all interest, penalties or additions to tax with respect thereto.

“Tax Group” has the meaning specified in Section 6.5(b).

“Term A Loan” means, as the context may require, Initial Term A Loans, Second Term A Loans or Additional Term A Loans, and “Term A Loans” means all of them.

“Term B Loan” means, as the context may require, Initial Term B Loans, Second Term B Loans, or Additional Term B Loans, and “Term B Loans” means all of them.

“Term Loan” or “Loan” means, as the context may require, Initial Term A Loans, Second Term A Loans, Initial Term B Loans, Second Term B Loans, Additional Term A Loans, or Additional Term B Loans, and “Term Loans” means all of them. The initial holder of all of Term Loans shall be the Lenders identified as holding Term Loans on Appendix A hereto.

“Term A Loan Lender” means a Lender holding any of (i) an Initial Term A Loan Commitment as of the Initial Closing Date, (ii) a Second Term A Loan Commitment as of the Second Draw Date, or (iii) an Additional Term A Loan Commitment as of the Closing Date, in each case, as set forth on Appendix A.

“Term B Loan Lender” means a Lender holding any of (i) an Initial Term B Loan Commitment as of the Initial Closing Date, (ii) a Second Term B Loan Commitment as of the Second Draw Date, or (iii) an Additional Term B Loan Commitments as of the Closing Date, in each case, as set forth on Appendix A.

 

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“Term Loan Commitment” means, as the context may require, an Initial Term A Loan Commitment, a Second Term A Loan Commitment, an Initial Term B Loan Commitment, a Second Term B Loan Commitment, an Additional Term A Loan Commitment, or an Additional Term B Loan Commitment, and “Term Loan Commitments” means such commitments of all Lenders in the aggregate.

“Term Loan Exposure” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Term Loans of such Lender plus, until terminated, the unutilized portion of such Lender’s Term Loan Commitment.

“Term Loan Maturity Date” means July 17, 2028, or such earlier date to which the Term Loan Maturity Date may be advanced pursuant to this Agreement or operation of law. For avoidance of doubt the Term Loan Maturity Date shall apply to all Term Loans regardless of when funded.

“Test Stand Sale and Leaseback” means the sale and leasback of the SLB Equipment.

“Third Party License Agreement” has the meaning set forth in Section 5.14(c).

“Threshold Amount” means $5,000,000.

“Title Policy” means an ALTA mortgagee title insurance policies or unconditional commitments therefor issued by one or more title companies reasonably satisfactory to the Required Lenders with respect to each Material Real Estate Asset, in the amount which is reasonably satisfactory to Required Lenders, but in no event more than the Fair Market Value of such Material Real Estate Asset, together with a title report issued by a title company with respect thereto, dated not more than 30 days prior to the date of the applicable Mortgage and, upon the request of the Required Lenders, copies of all available recorded documents listed as exceptions to title or otherwise referred to therein, each in form and substance reasonably satisfactory to the Required Lenders together with such available endorsements as are reasonably requested by the Required Lenders, and such surveys, affidavits, certificates, instruments of indemnification, including a so-called “gap” indemnification as shall be reasonably required to induce the title insurance company to issue the Title Policy contemplated above;

“Trade Announcements” has the meaning specified in Section 10.17.

“Transaction Costs” means the fees, costs and expenses payable by Borrower or any of its Subsidiaries on or before the date that is thirty (30) days after the Closing Date in connection with the Transactions.

“Transactions” means, collectively, (a) the amendment and restatement of the AON Insurance Policy to be dated as of the Closing Date, (b) the funding of the Additional Term A Loans and the Additional Term B Loans on the Closing Date, (c) the execution and delivery of the Loan Documents to be executed and delivered on the Closing Date, or pursuant to Section 5.15 and the Warrant, and (d) the payment of Transaction Costs.

 

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“Treasury Rate” means a rate per annum (computed on the basis of actual days elapsed over a year of 360 days) equal to the rate determined by the Administrative Agent on the date one (1) Business Day prior to the date of prepayment, to be the yield expressed as a rate listed in The Wall Street Journal for United States Treasury securities having a term of no greater than the period of remaining months until the first anniversary of the Initial Closing Date.

“UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.

“United States” means the United States of America.

“United States Person” has the meaning of such term as defined in Section 7701(a)(30) of the Code.

“Voluntary Prepayment” has the meaning specified in Section 2.8(a).

“Warrant” means collectively, that certain (a) Warrant to Purchase Series J Preferred Stock, dated July 17, 2023, made by Borrower and Jefferies Funding LLC, (b) Warrant to Purchase Series J Preferred Stock, dated July 17, 2023, made by Borrower and AE Industrial Partners Structured Solutions I, LP, and (c) any additional Warrants to Purchase Series J Preferred Stock made by Borrower to Jefferies Funding LLC and AE Industrial Partners Structured Solutions I, LP after the Closing Date and specified as “Warrants” for purposes of this Agreement therein.

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

Section 1.2. Accounting and Other Terms.

(a) Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with GAAP. Financial statements and other information required to be delivered by Borrower to Lenders pursuant to Section 5.1(b) and 5.1(c) shall be prepared in accordance in all material respects with GAAP as in effect at the time of such preparation (and delivered together with the reconciliation statements provided for in Section 5.1(e), if applicable). Subject to the foregoing, calculations in connection with the definitions, covenants and other provisions hereof shall utilize accounting principles and policies in conformity with those used to prepare the Historical Financial Statements. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Loan Parties shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded. Any calculation to be made on a “pro forma basis” shall be calculated assuming that the specified transactions had occurred on the first day of the applicable period.

(b) All terms used in this Agreement which are defined in Article 8 or Article 9 of the UCC as in effect from time to time in the State of New York and which are not otherwise defined herein shall have the same meanings herein as set forth therein, provided that terms used

 

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herein which are defined in the UCC as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as Agents may otherwise determine.

(c) Notwithstanding any other provision contained herein, for all purposes of this Agreement and the other Loan Documents, including negative covenants and component definitions, GAAP will be deemed to treat operating leases and Capital Leases in a manner consistent with the treatment under GAAP as in effect prior to the issuance by the Financial Accounting Standards Board on February 24, 2016 of Accounting Standards Update No. 2016-02.

Section 1.3. Interpretation, etc. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. References herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically provided. The use herein of the word “include” or “including,” when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not no limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any right or interest in or to assets and properties of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. Any reference herein or in any other Loan Document to the satisfaction, repayment, or payment in full of the Obligations or Guaranteed Obligations shall mean (a) the payment or repayment in full in immediately available funds of (i) the principal amount of, and interest accrued and unpaid with respect to, all outstanding Term Loans, together with the payment of any premium applicable to the repayment of the Term Loan, including the Specified Premium, (ii) all costs, expenses, or indemnities payable pursuant to Section 10.2 or 10.3 of this Agreement that have accrued and are unpaid (other than contingent reimbursement or indemnification obligations for which no claim has been asserted), (iii) all fees or charges that have accrued hereunder or under any other Loan Document and are unpaid, (b) the receipt by Agents of cash collateral in order to secure any other contingent Obligations for which a claim or demand for payment has been made on or prior to such time or in respect of matters or circumstances known to an Agent or a Lender at such time that are reasonably expected to result in any loss, cost, damage, or expense (including reasonable attorneys’ fees and legal expenses), such cash collateral to be in such amount as Agents reasonably determine is appropriate to secure such contingent Obligations, (c) the payment or repayment in full in immediately available funds of all other outstanding Obligations, and (d) the termination of all of the Commitments of the Lenders. Notwithstanding anything in this Agreement to the contrary, (A) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (B) all requests, rules, guidelines or directives concerning capital adequacy promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities shall, in each case, be deemed to be enacted, adopted, issued, phased in or effective after the date of this Agreement regardless of the date enacted, adopted, issued, phased in or effective. All references to “in the ordinary course of business” of the Borrower or

 

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any Subsidiary thereof means (i) in the ordinary course of business of, or in furtherance of an objective that is in the ordinary course of business of, the Borrower or such Subsidiary, as applicable, (ii) generally consistent with the past or current practice of the Borrower or such Subsidiary, as applicable, or (iii) customary and usual in the industry or industries of the Borrower and its Subsidiaries in the United States. All references to “knowledge” of any Loan Party or a Subsidiary of Borrower means the actual knowledge of a responsible officer. Any Default or Event of Default cured or waived in writing shall be deemed to be cured or waived, as applicable, and not continuing, it being understood that no such cure or waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.

Section 1.4. Time References. Unless otherwise indicated herein, all references to time of day refer to Eastern Standard Time or Eastern Daylight saving time, as in effect in New York City on such day. For purposes of the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”; provided, however, that with respect to a computation of fees or interest payable to any Agent or any Lender, such period shall in any event consist of at least one full day.

Section 1.5. [Reserved].

Section 1.6. Certifications. All certifications to be made hereunder by an officer or representative of a Loan Party shall be made by such person in his or her capacity solely as an officer or a representative of such Loan Party, on such Loan Party’s behalf and not in such Person’s individual capacity.

Section 1.7. Timing of Payment or Performance. Except as otherwise expressly provided herein, when the payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or performance required on a day which is not a Business Day, the date of such payment (other than as described in the definition of “Interest Period”) or performance shall extend to the immediately succeeding Business Day.

Section 1.8. References to Agreements, Laws, Etc. Unless otherwise expressly provided herein, (a) references to Organizational Documents, agreements (including the Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, renewals, restructurings, extensions, supplements and other modifications thereto, but only to the extent that such amendments, refinancings, restatements, renewals, restructurings, extensions, supplements and other modifications are not prohibited by any Loan Document and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law.

 

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ARTICLE II

LOANS

Section 2.1. Term Loans.

(a) Term Loan Commitments.

(i) Each Term A Loan Lender holding a Second Term A Loan Commitment severally agreed to make, and subject to the terms and conditions of the Existing Financing Agreement, made Term A Loans to the Borrower in an aggregate amount that equaled such Lender’s Second Term A Loan Commitment on the Second Draw Date (its “Second Term A Loans”). Each Term A Loan Lender holding an Initial Term A Loan Commitment severally agreed to make, and subject to the terms and conditions of the Initial Financing Agreement, made Term A Loans to the Borrower in an aggregate amount that equaled such Lender’s Initial Term A Loan Commitment on the Initial Closing Date (its “Initial Term A Loans”).

(ii) Each Term B Loan Lender holding a Second Term B Loan Commitment severally agreed to make, and subject to the terms and conditions of the Existing Financing Agreement, made Term B Loans to the Borrower in an aggregate amount that equaled such Lender’s Second Term B Loan Commitment on the Second Draw Date (its “Second Term B Loans”). Each Term B Loan Lender holding an Initial Term B Loan Commitment severally agreed to make, and subject to the terms and conditions of the Initial Financing Agreement, made Term B Loans to the Borrower in an aggregate amount that equaled such Lender’s Initial Term B Loan Commitment on the Initial Closing Date (its “Initial Term B Loans”).

(iii) Subject to the terms and conditions hereof, each Additional Term A Loan Lender severally agrees to make, on the Closing Date, a Term Loan relative to such Lender (its “Additional Term A Loans”) to the Borrower in an aggregate amount that equals such Lender’s Additional Term A Loan Commitment. The parties hereto agree that the Initial Term A Loans, Second Term A Loans, and the Additional Term A Loans shall be Term A Loans hereunder and shall be the same class of Loans. Subject to the terms and conditions hereof, each Additional Term B Loan Lender severally agrees to make, on the Closing Date, an Additional Term B Loan relative to such Lender (its “Additional Term B Loans”) to the Borrower in an aggregate amount that equals such Lender’s Additional Term B Loan Commitment. The parties hereto agree that the Initial Term B Loans, Second Term B Loans, and Additional Term B Loans shall be Term B Loans hereunder and shall be the same class of Loans.

(iv) Subject to Section 2.8 and Section 2.9, all amounts owed hereunder with respect to the Term Loans and the other Obligations shall be paid in full no later than the Term Loan Maturity Date.

(b) Borrowing Mechanics.

(i) The Lenders advanced Term Loans to the Borrower in an amount equal to the Initial Draw Amount on the Initial Closing Date. The Lenders advanced Term Loans to the Borrower in an amount equal to the Second Draw Amount on the Second Draw Date. Borrowers shall draw the Term Loan Commitment in an amount equal to the Draw Amount on the Closing Date and all Term Loan Commitments not utilized by Borrower on or prior to the Closing Date shall expire and be of no force or effect without need for any action by any Lender.

 

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(ii) Upon satisfaction of the requirements of Section 3.1 (other than those requirements that cannot be met until funding hereunder, provided that such requirements shall be satisfied substantially concurrently with the funding hereunder), or waiver of such requirements by the Required Lenders in accordance with Section 10.5, Borrower shall deliver to Administrative Agent a fully executed Funding Notice (requesting the Administrative Agent to wire all funds into the Initial Funding Account) no later than 1:00 p.m. New York City time one (1) Business Day prior to the Closing Date. Such Funding Notice shall confirm that (A) to the extent not otherwise waived by the Required Lenders in accordance with Section 10.5, all conditions to funding set forth in Section 3.1 are satisfied (other than those requirements that cannot be met until funding hereunder, provided that such requirements shall be satisfied substantially concurrently with the funding hereunder) and (B) after giving effect to the requested advance, the Term Loans made on the Closing Date do not exceed the total amount of Term Loan Commitments as of the Closing Date. Promptly upon receipt by Administrative Agent of such Funding Notice, Administrative Agent shall notify each Lender of Borrower’s request to borrow and such Lender’s Pro Rata Share of the same. To the extent not otherwise waived by the Required Lenders in accordance with Section 10.5, Lenders shall notify Administrative Agent and Borrower as to whether Lenders concur that all conditions to funding set forth in Section 3.1 are satisfied. Administrative Agent and Lenders (A) may act without liability upon the basis of written, facsimile or electronic notice believed by Administrative Agent in good faith to be from Borrower (or from any Authorized Officer thereof designated in writing purportedly from Borrower to Administrative Agent), (B) shall be entitled to rely conclusively on any Authorized Officer’s authority to request Term Loans on behalf of Borrower until Administrative Agent receives written notice to the contrary and (C) shall have no duty to verify the authenticity of the signature appearing on any written Funding Notice.

(iii) If Required Lenders have not notified the Administrative Agent and Borrower that any conditions to funding set forth in Sections 3.1 are not satisfied or waived in accordance with Section 10.5, prior to 11:00 a.m. New York City time on the requested funding date, each Lender will make available its Pro Rata Share of Term Loan Commitment to the Administrative Agent prior to 12:00 p.m. New York City time on the requested funding date. All such amounts will be made available in Dollars and in immediately available funds at the Principal Office, and, upon receipt of all requested funds, after verifying Borrower’s wire instructions via telephone, the Administrative Agent will make available to Borrower on the requested funding date at the Principal Office the applicable amount so made available by the Lenders. In the event of pre-funding on behalf of a Lender by Administrative Agent, if such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent shall promptly notify Borrower and Borrower shall within one (1) Business Day after receiving such notice promptly repay such corresponding amount to the Administrative Agent together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the Fixed Rate.

(c) Promise to Pay. Borrower hereby promises to pay to the Administrative Agent or order for the ratable benefit of the Lenders all Term Loans made to Borrower hereunder, all interest due thereon pursuant hereto and all other Obligations owing to an Agent or any Lender,

 

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in each case in accordance with the terms of this Agreement. Subject to Section 2.8 and Section 2.9, all amounts owed hereunder, including without limitation, all principal and interest due in respect of the Term Loans, shall be paid by Borrower in full no later than the Term Loan Maturity Date.

Section 2.2. Protective Advances. Subject to the limitations set forth below, and if an Event of Default shall have occurred and be continuing, each Agent is authorized by Borrower and the Lenders, from time to time at the written direction of the Required Lenders in their sole discretion, to make disbursements or advances to Borrower, which the Required Lenders in their sole discretion deem necessary or desirable (a) to preserve or protect the Collateral, or any portion thereof, (b) to enhance the likelihood of, or maximize the amount of, repayment of the Term Loans and other Obligations, or (c) to pay any other amount chargeable to or required to be paid by Borrower pursuant to the terms of this Agreement and the other Loan Documents, including, without limitation, payments of principal, interest, fees and reimbursable expenses (any of such loans are referred to as “Protective Advances”). The interest rate on all Protective Advances shall be at the Fixed Rate. Each Protective Advance shall be secured by the Liens in favor of Agents for the benefit of the Secured Parties in and to the Collateral and shall constitute Obligations hereunder. The Protective Advances shall constitute Obligations hereunder which may be charged to the Loan Account in accordance with Section 2.11(e). Borrower shall pay the unpaid principal amount and all unpaid and accrued interest of each Protective Advance on the earlier of the Term Loan Maturity Date and the date on which demand for payment is made by the applicable Agent. The applicable Agent shall notify each Lender and Borrower in writing of each such Protective Advance, which notice shall include a description of the purpose of such Protective Advance. Without limitation to its obligations pursuant to Section 9.8, each Lender agrees that it shall make available to the applicable Agent, upon such Agent’s demand, in Dollars in immediately available funds, the amount equal to such Lender’s Pro Rata Share of each such Protective Advance. If such funds are not made available to the applicable Agent by such Lender, such Agent shall be entitled to recover such funds on demand from such Lender, together with interest thereon for each day from the date such payment was due until the date such amount is paid to the applicable Agent, at the Federal Funds Effective Rate for three (3) Business Days and thereafter at the Fixed Rate. All Protective Advances shall be funded only by, and shall be repayable only to, Lenders holding Term Loans according to their holdings of Term Loans.

Section 2.3. Pro Rata Shares; Availability of Funds.

(a) Pro Rata Shares. All Term Loans shall be made by Lenders simultaneously and proportionately to their respective Pro Rata Shares, it being understood that no Lender shall be responsible for any default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder nor shall any Term Loan Commitment of any Lender be increased or decreased as a result of a default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder. Protective Advance fundings shall be ratably allocated to each Lender holding Term Loans according to their holdings of Term Loans.

(b) Availability of Funds. Unless Administrative Agent shall have been notified by any Lender prior to the applicable Credit Date that such Lender does not intend to make available to Administrative Agent the amount of such Lender’s Loan requested on such Credit Date, Administrative Agent may assume that such Lender has made such amount available

 

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to Administrative Agent on such Credit Date and Administrative Agent may, in its sole discretion, but shall not be obligated to, make available to Borrower a corresponding amount on such Credit Date. If such corresponding amount is not in fact made available to Administrative Agent by such Lender, Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the customary rate set by Administrative Agent for the correction of errors among banks for three Business Days and thereafter at the Fixed Rate. In the event of pre-funding on behalf of a Lender by Administrative Agent, if such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent shall promptly notify Borrower and Borrower shall within one (1) Business Day after receiving such notice promptly repay such corresponding amount to the Administrative Agent together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the Fixed Rate. Nothing in this Section 2.3(b) shall be deemed to relieve any Lender from its obligation to fulfill its Term Loan Commitments hereunder or to prejudice any rights that Borrower may have against any Lender as a result of any default by such Lender hereunder.

Section 2.4. Use of Proceeds. The proceeds of Term Loan advances made on the Closing Date shall be applied by Borrower (a) to pay Transaction Costs, (b) to fund the Interest Reserve Amount, (c) to pay premiums (including the premium on or around the Closing Date), taxes, fronting fees, underwriting fees and any other amounts due to any Person in respect of the issuance of the AON Insurance Policy, and (d) for working capital and general corporate purposes of Borrower and its Subsidiaries, including capital expenditures, Permitted Acquisitions, research and development and general and administrative expenses. No portion of the proceeds of the Credit Extension shall be used in any manner that would reasonably be expected to cause such Credit Extension or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation thereof or to violate the Exchange Act.

Section 2.5. Evidence of Debt; Register; Lenders’ Books and Records; Notes.

(a) Lenders’ Evidence of Debt. Each Lender shall maintain on its internal records an account or accounts evidencing the Obligations of Borrower to such Lender, including the amounts of the Term Loans made by it and each repayment and prepayment in respect thereof. Any such recordation shall be conclusive and binding on Borrower, absent manifest error; provided that the failure to make any such recordation, or any error in such recordation, shall not affect Borrower’s Obligations in respect of any Term Loans; and provided further, in the event of any inconsistency between the Register and any Lender’s records, the recordations in the Register shall govern.

(b) Register. Administrative Agent shall maintain at its Principal Office a register for the recordation of the names and addresses of Lenders and the principal amount of the Term Loans (and stated interest thereon) of each Lender from time to time (the “Register”). The Register shall be available for inspection by Borrower or Agents at any reasonable time and from time to time upon reasonable prior notice. Administrative Agent shall record in the Register the Term Loans, any assignment or transfer of Term Loans and each repayment or prepayment in respect of the principal amount of the Term Loans, and any such recordation shall be conclusive

 

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and binding on Borrower and each Lender, absent manifest error, and Borrower, Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender for all purposes of this Agreement; provided that failure to make any such recordation, or any error in such recordation, shall not affect Borrower’s Obligations in respect of any Loan. Borrower hereby designates the entity serving as Administrative Agent to serve as Borrower’s non-fiduciary agent solely for purposes of maintaining the Register as provided in this Section 2.5, and Borrower hereby agrees that, to the extent such entity serves in such capacity, the entity serving as Administrative Agent and its officers, directors, employees, agents and affiliates shall constitute “Indemnitees.” The parties intend that the Loans are at all times maintained in “registered form” within the meaning of Section 163(f), 165(j), 871(h)(2) and 881(c)(2), and 4701 of the Code and any related Treasury regulations (or any other relevant or successor provisions of the Code or of such Treasury regulations).

(c) Notes. If so requested by any Lender by written notice to Borrower (with a copy to Administrative Agent) at least two (2) Business Days prior to the Closing Date, or at any time thereafter, Borrower shall execute and deliver to such Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of such Lender pursuant to Section 10.6) on the Closing Date (or, if such notice is delivered after the Closing Date, promptly after Borrower’s receipt of such notice) a Note or Notes.

Section 2.6. Interest.

(a) Except as otherwise set forth herein, each Term Loan shall bear interest at the Fixed Rate on the unpaid principal amount thereof from the date made through the date of repayment (whether by acceleration or otherwise) thereof.

(b) Except as otherwise set forth herein, interest on each Loan shall be payable in Cash and in arrears (i) on and to each Interest Payment Date applicable to that Loan, (ii) upon any prepayment of that Loan, whether voluntary or mandatory, to the extent accrued on the amount being prepaid, (iii) at maturity, including final maturity and (iv) upon the occurrence and during the continuance of an Event of Default, including the failure to repay Obligations on the Term Loan Maturity Date, upon written demand.

(c) Interest payable pursuant to this Section 2.6 shall be computed on the basis of a 360-day year, in each case for the actual number of days elapsed in the period during which it accrues. In computing interest on any Term Loan, the date of the making of such Term Loan shall be included, and the date of payment of such Term Loan shall be excluded; provided, if a Term Loan is repaid on the same day on which it is made, one day’s interest shall be paid on that Loan.

Section 2.7. Default Interest. Upon the occurrence and during the continuance of an Event of Default, the principal amount of all Term Loans outstanding and, to the extent permitted by applicable law, any interest payments on the Term Loans or any fees or other amounts owed hereunder (including any Specified Premium), shall thereafter bear interest (including post petition interest in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws) payable on demand at a rate that is two (2) percentage points per annum in excess of the interest rate otherwise payable hereunder with respect to the applicable Term Loans (or, in the case of any

 

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such fees and other amounts, at a rate which is two (2) percentage points per annum in excess of the Fixed Rate). Payment or acceptance of the increased rates of interest provided for in this Section 2.7 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 any Agent or any Lender.

Section 2.8. Payments Prior to Maturity.

(a) Mechanics.

(i) Subject to clause (b) below, Borrower may prepay Term Loans on any Business Day in whole or in part, in an aggregate minimum amount of $1,000,000 (each such payment, a “Voluntary Prepayment”).

(ii) All such Voluntary Prepayments shall be made, together with the Specified Premium, and all interest then due on the principal amount being so prepaid, upon not less than one (1) Business Day’s irrevocable prior written notice given to Administrative Agent by 1:00 p.m. (New York City time) on the date required (and Administrative Agent will promptly notify each Lender of each such prepayment notice). Upon the giving of any such notice, the principal amount of the Term Loans specified in such notice shall become irrevocably due and payable on the prepayment date specified therein. Any such Voluntary Prepayment shall be applied as specified in Section 2.10. Notwithstanding the foregoing, such written notice may be conditioned on the effectiveness of an agreement or, the occurrence of an event or transaction.

(b) Call Protection.

(i) Except as provided in this Section 2.8(b)(i), each Voluntary Prepayment, each mandatory prepayment that becomes due pursuant to Section 2.9, and each payment that becomes due as a result of acceleration of the Term Loan Maturity Date pursuant to Section 8.1 or otherwise (including, for the avoidance of doubt and without limitation, as a result of Section 8.1(f) or (g) or as a result of applicable law), in each case on or prior to the date that is thirty-two (32) months following the Initial Closing Date (each, a “Specified Payment”) shall be accompanied by the Specified Premium in respect of such Specified Payment.

(ii) Borrower hereby agrees to pay the Specified Premium to Administrative Agent for the ratable benefit of the Lenders with respect to (x) each Specified Payment of the Term Loan made under Section 2.8 or Section 2.9, (y) any other acceleration of the Term Loan pursuant to Section 8.1 or otherwise (including, for the avoidance of doubt and without limitation, as a result of Section 8.1(f) or (g) or as a result of applicable law)) or (z) the occurrence of any other Specified Event, in each case, with respect to the amount of the Specified Payment of the Term Loan repaid, prepaid, terminated, reduced, paid, redeemed, satisfied, released, distributed, discharged or accelerated (whether or not paid), concurrently with such repayment, prepayment, redemption, satisfaction, discharge or acceleration (whether or not paid).

(iii) Any Specified Premium payable pursuant to this Section 2.8(b) constitutes liquidated damages sustained by each Lender as the result of the early repayment, prepayment, distribution, termination, reduction, payment, redemption, release, satisfaction, discharge or acceleration (whether or not paid) of its Term Loan and Borrower agrees that it is

 

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reasonable under the circumstances in view of the impracticability and extreme difficulty of ascertaining actual damages and by mutual agreement of the parties as to a reasonable calculation of each Lender’s losses as a result thereof. Any prepayment, repayment, payment, satisfaction (whether in whole or in part), distribution, termination, release, reduction or discharge of the Term Loan (including, without limitation, by foreclosure (whether by power of sale or judicial proceeding) or by any other means), irrespective of whether such prepayment, repayment, payment, satisfaction, distribution, release, discharge, termination or reduction occurs following any earlier maturity of the Term Loan, including, without limitation, pursuant to any voluntary or involuntary acceleration of the Term Loan pursuant to Section 8.1 or otherwise (including, for the avoidance of doubt and without limitation, as a result of Section 8.1(f) or (g) or as a result of applicable law), or the commencement of any Insolvency Proceeding or other proceeding pursuant to any Debtor Relief Laws, or pursuant to a plan of reorganization, and including, without limitation, any prepayment, repayment, payment, termination, reduction, release, satisfaction, distribution or discharge of the Term Loan (a) pursuant to this Section 2.8 or Section 2.9, (b) after acceleration thereof, including, without limitation, pursuant to Section 8.1 (including, for the avoidance of doubt and without limitation, as a result of Section 8.1(f) or (g) or as a result of applicable law) or such amount otherwise becoming or being declared immediately due and payable pursuant to the terms hereof and (c) whether before or after any acceleration of the Term Loan pursuant to Section 8.1 (including, for the avoidance of doubt and without limitation, as a result of Section 8.1(f) or (g) or as a result of applicable law), shall, in each case be accompanied by, and there shall become due and payable automatically on the date of any of the foregoing, the Specified Premium, payable in Cash on the principal amount so prepaid or on the principal amount that has become or is declared to be immediately due and payable pursuant to Section 8.1 or otherwise (including, for the avoidance of doubt and without limitation, as a result of Section 8.1(f) or (g) or as a result of applicable law), or in respect of which such claim in any bankruptcy, insolvency, reorganization, liquidation, judicial management or similar proceeding has arisen, or otherwise constituting the principal amount of the Term Loan prepaid, repaid, paid, satisfied, distributed, discharged, terminated, reduced or accelerated, as applicable.

(iv) Borrower acknowledges that Lender would not have extended the Term Loan without the inducement of the payment of the Specified Premium. BORROWER EXPRESSLY WAIVES (TO THE FULLEST EXTENT IT MAY LAWFULLY DO SO) THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE SPECIFIED PREMIUM. Borrower expressly agrees (to the fullest extent it may lawfully do so) that: (A) the Specified Premium is the product of a transaction on Arm’s Length Terms between sophisticated business people, ably represented by counsel; (B) the Specified Premium shall be payable notwithstanding the then prevailing market rates at the time payment is made; (C) there has been a course of conduct between Lenders and Borrower giving specific consideration in the transactions contemplated by the Loan Documents for such agreement to pay the Specified Premium; and (D) Borrower shall be estopped hereafter from claiming differently than as agreed to herein, including in this Section 2.8(b).

(v) If the Obligations are accelerated for any reason, including, without limitation, because of default, sale, transfer or encumbrance that results in an Event of Default hereunder (including that by operation of law or otherwise, and including, for the avoidance of doubt and without limitation, as a result of Section 8.1(f) or (g) or as a result of applicable law), the Specified Premium on Term Loan will also automatically and concurrently with such

 

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acceleration become due and payable as though said indebtedness was voluntarily prepaid and shall constitute part of the Obligations. The Specified Premium on the Term Loan shall also be payable in the event the Obligations (and/or this Agreement or the Notes (if any) evidencing the Obligations) are satisfied or released by foreclosure (whether by power of judicial proceeding), deed in lieu of foreclosure or by any other means. TO THE EXTENT LEGALLY PERMISSIBLE, BORROWER EXPRESSLY WAIVES THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW WHICH PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING SPECIFIED PREMIUM ON THE TERM LOAN IN CONNECTION WITH ANY SUCH ACCELERATION.

Section 2.9. Mandatory Prepayments.

(a) Asset Sales.

(i) No later than ten (10) Business Days following the date of receipt by any Loan Party of any Net Proceeds from Asset Sales in excess of $1,000,000 in the aggregate in any Fiscal Year (it being agreed only amounts in excess of $1,000,000 shall be subject to this Section 2.9(a)), Borrower shall prepay the Term Loans as set forth in Section 2.11(a) in an aggregate amount equal to such Net Proceeds; provided, that if Borrower intends to reinvest the Net Proceeds in the business of the Loan Parties and their Subsidiaries, including capital expenditures (together, a “Reinvestment”), the Loan Parties shall have the option to apply such Reinvestment Amounts to a Reinvestment within 365 days after the initial receipt of such Reinvestment Amounts (the “Reinvestment Period”); provided, further that if any such Reinvestment Amounts are no longer intended to be or cannot be so Reinvested during the applicable Reinvestment Period, an amount equal to any such Reinvestment Amounts shall be applied to the prepayment of the Term Loans within ten (10) Business Days after the Borrower reasonably determines that such Reinvestment Amounts are no longer intended to be or cannot be so Reinvested, and in no event later than the end of the applicable Reinvestment Period as set forth in Section 2.10. Each mandatory prepayment due hereunder made on account of the Obligations shall be accompanied by the applicable Specified Premium pursuant to Section 2.8(b). For avoidance of doubt, Net Proceeds of any Extraordinary IP Rights Transaction shall not be considered an “Asset Sale” for the purposes of this Section 2.9(a), but shall be the subject of a mandatory prepayment pursuant to Section 2.9(c) and not this Section 2.9(a).

(ii) Reserved

(b) Issuance of Indebtedness. On the date of receipt by a Loan Party of any Cash proceeds from the incurrence or issuance of any Indebtedness (including Disqualified Capital Stock) of a Loan Party (other than with respect to any Indebtedness (other than Disqualified Capital Stock) permitted to be incurred pursuant to Section 6.1), Borrower shall prepay the Term Loans as set forth in Section 2.11(a) in an aggregate amount equal to 100% of such proceeds, net of underwriting discounts and reasonable costs, fees and expenses associated therewith, in each case, paid to non-Affiliates, including reasonable legal fees and expenses. Each mandatory prepayment due hereunder made on account of the Obligations shall be accompanied by the applicable Specified Premium pursuant to Section 2.8(b).

 

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(c) Extraordinary Receipts. Within ten (10) Business Days following the date of receipt by a Loan Party or any of its Subsidiaries of any Extraordinary Receipts in excess of $1,000,000 in the aggregate in any Fiscal Year (it being agreed only amounts in excess of $1,000,000 shall be subject to this Section 2.9(c)), not otherwise used to make a prepayment under this Section 2.9, Borrower shall prepay the Term Loans as set forth in Section 2.11(a) in an aggregate amount equal to 100% of the Net Proceeds of such Extraordinary Receipts; provided, that if Borrower intends to make a Reinvestment, the Loan Parties shall have the option to apply such Reinvestment Amounts to a Reinvestment within the Reinvestment Period; provided, further that if any such Reinvestment Amounts are no longer intended to be or cannot be so Reinvested during the applicable Reinvestment Period, an amount equal to any such Reinvestment Amounts shall be applied to the prepayment of the Term Loans within ten (10) Business Days after the Borrower reasonably determines that such Reinvestment Amounts are no longer intended to be or cannot be so Reinvested, and in no event later than the end of the applicable Reinvestment Period as set forth in Section 2.10. For avoidance of doubt, no proceeds received by the Administrative Agent in respect of a claim under the AON Insurance Policy shall be applied to prepay the outstanding principal balance of any Term Loan, but shall be treated solely in the manner set forth in the AON Insurance Policy. Each mandatory prepayment due hereunder shall be accompanied by the applicable Specified Premium pursuant to Section 2.8(b). For avoidance of doubt, any mandatory prepayment in respect of Net Proceeds of any Extraordinary IP Rights Transaction shall not be required under Section 2.9(a), but shall be required pursuant to this Section 2.9(c).

(d) Prepayment Certificate. Concurrently with any prepayment of the Term Loans pursuant to clauses (a) through (c) above, Borrower shall deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the calculation of the amount of the applicable Net Proceeds and compensation owing to Lenders hereunder, if any. In the event that Borrower shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, Borrower shall promptly make an additional prepayment of the Term Loans, and Borrower shall concurrently therewith deliver to Agents a certificate of an Authorized Officer demonstrating the derivation of such excess. Each mandatory prepayment due pursuant to this Section 2.9 made on account of the Obligations shall be accompanied by the applicable Specified Premium pursuant to Section 2.8(b).

(e) No Specified Premium for Repayment at the Original Maturity. For avoidance of doubt, upon payment of all or any part of the Obligations in full in Cash in Dollars on, or after the date that is twenty-four (24) months following the Initial Closing Date, no Specified Premium shall be due in respect of that repayment unless the Term Loan Maturity Date has previously been accelerated by election of Lenders or operation of law (in which event a Specified Premium became due upon such acceleration and shall remain payable regardless of when the Obligations are paid).

Section 2.10. Application of Prepayments. So long as no Event of Default has occurred and is continuing, any voluntary prepayment of the Term Loans pursuant to Section 2.8 or mandatory prepayment of the Term Loans pursuant to Section 2.9 shall be applied to the principal of the Term Loans until paid in full in Cash in Dollars. At any time that an Event of Default has occurred and is continuing, all payments shall be applied pursuant to Section 2.11(g). Nothing contained herein shall modify the provisions of Section 2.8(b) or Section 2.11(b) regarding the

 

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requirement that all prepayments be accompanied by accrued interest and fees on the principal amount being prepaid to the date of such prepayment and the Specified Premium, if any, or any requirement otherwise contained herein to pay all other amounts as the same become due and payable.

Section 2.11. General Provisions Regarding Payments.

(a) All payments by Borrower of principal, interest, fees and other Obligations shall be made in Dollars in immediately available funds, without defense, recoupment, setoff or counterclaim, free of any restriction or condition, and delivered to Administrative Agent, for the account of Lenders, not later than 1:00 p.m. (New York City time) to Administrative Agent’s Account; funds received by Administrative Agent after that time on such due date may, in Administrative Agent’s reasonable discretion, be deemed to have been paid by Borrower on the next Business Day and any applicable interest or fee shall continue to accrue.

(b) All payments in respect of the principal amount of any Loan shall be accompanied by payment of accrued interest on the principal amount being repaid or prepaid, any Specified Premium, and other amounts payable with respect to the principal amount being repaid or prepaid.

(c) Administrative Agent shall promptly distribute to each Lender at such address as such Lender shall indicate in writing, such Lender’s applicable Pro Rata Share of all payments and prepayments of principal and interest due hereunder, together with all other amounts due with respect thereto, including, without limitation, any Specified Premium and all fees payable with respect thereto, to the extent received by Administrative Agent.

(d) Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder.

(e) Borrower hereby authorizes Administrative Agent to charge Borrower’s accounts with Administrative Agent or any of its Affiliates in order to cause timely payment to be made to Administrative Agent of all principal, interest, fees and expenses due and payable hereunder. The Lenders and Borrower also hereby authorize Administrative Agent to, and Administrative Agent may, from time to time, charge the Loan Account with any amount due and payable by Borrower under any Loan Document. Each of the Lenders and Borrower agrees that Administrative Agent shall have the right to make such charges whether or not any Default or Event of Default shall have occurred and be continuing, in each case in accordance with this Section 2.9(e). Any amount properly charged to the Loan Account shall be deemed an Obligation hereunder. The Lenders and Borrower confirm that any charges which Administrative Agent may so make to the Loan Account as herein provided will be made as an accommodation to Borrower and solely at Administrative Agent’s discretion, provided that Administrative Agent shall from time to time upon the request of Agents, charge the Loan Account of Borrower with any amount due and payable under any Loan Document.

 

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(f) Administrative Agent may, in its reasonable discretion, deem any payment by or on behalf of Borrower hereunder that is not made in same day funds prior to 1:00 p.m. (New York City time) to be a non-conforming payment. Any such payment shall not be deemed to have been received by Administrative Agent until the later of (i) the time such funds become available funds, and (ii) the next Business Day. Administrative Agent shall give prompt written notice (which may be by email) to Borrower and each applicable Lender if any payment is non-conforming. Any non-conforming payment may constitute or become a Default or Event of Default in accordance with the terms of Section 8.1(a). Interest shall continue to accrue on any principal as to which a non-conforming payment is made until such funds become available funds (but in no event less than the period from the date of such payment to the next succeeding Business Day) at the Default Rate determined pursuant to Section 2.7 from the date such amount was due and payable until the date such amount is paid in full.

(g) At any time an Event of Default has occurred and is continuing, or the maturity of the Obligations shall have been accelerated pursuant to Section 8.1, all payments or proceeds received by any Agent hereunder or under any Collateral Document (other than the proceeds of the Interest Reserve Accounts, which in all events shall be applied only to Term Loan interest until the Term Loans have been repaid in full) in respect of any of the Obligations, including, but not limited to all proceeds received by any Agent in respect of any sale, any collection from, or other realization upon all or any part of the Collateral, shall be applied in full or in part, subject to the provisions of this Agreement and any Intercreditor and Subordination Agreement, as follows:

first, ratably to pay the Obligations in respect of any fees (other than any Specified Premium), expense reimbursements, indemnities and other amounts then due and payable (including, without limitation, the fees, charges and disbursements of counsel payable or reimbursable hereunder or under the other Loan Documents) to the Agents and the Bank until paid in full;

second, ratably to pay interest then due and payable in respect of Protective Advances until paid in full;

third, ratably to pay principal of Protective Advances then due and payable until paid in full;

fourth, ratably to pay the Obligations (other than principal and interest) in respect of any fees (other than any Specified Premium) expense reimbursements, indemnities and other amounts then due and payable (including, without limitation, the fees, charges and disbursements of counsel reimbursable hereunder) then due and payable to the Lenders until paid in full;

fifth, interest then due and payable in respect of the Term Loan until paid in full, provided that the proceeds of the Interest Reserve Accounts shall be applied only to Term Loan interest;

sixth, ratably to pay principal of the Term Loan until paid in full in Cash in Dollars;

seventh, ratably to pay the Obligations in respect of any Specified Premium then due and payable to the Lenders until paid in full in Cash in Dollars;

 

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eighth, to the ratable payment of all other Obligations then due and payable until paid in full in Cash in Dollars; and

last, the balance, if any, after all of the Obligations (other than inchoate indemnity obligations) have been paid in full, to Borrower or as otherwise required by Law as directed by a court of competent jurisdiction.

For avoidance of doubt, the proceeds of the Interest Reserve Accounts in all events shall be applied only to timely payment Term Loan interest until the Term Loans have been repaid in full, and following such repayment in full of the Term Loans, and any remaining proceeds of either Interest Reserve Account shall be applied as set forth in this clause (g) above.

(h) For purposes of clause (g) above (other than clause eighth), “paid in full” means payment in Cash in Dollars of all amounts owing under the Loan Documents according to the terms thereof, including any Specified Premium, loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, whether or not same would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding, except to the extent that default or overdue interest (but not any other interest) and loan fees, each arising from or related to a default, are disallowed in any Insolvency Proceeding; provided that for the purposes of clause eighth of clause (g) above, “paid in full” means payment in Cash in Dollars of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, whether or not the same would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding.

(i) In the event of a direct conflict between the priority provisions of clause (g) above and other provisions contained in any other Loan Document, it is the intention of the parties hereto that both such priority provisions in such documents shall be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of clause (g) above shall control and govern.

Section 2.12. Ratable Sharing.

(a) Lenders hereby agree among themselves that, except as otherwise provided in the Collateral Documents with respect to amounts realized from the exercise of rights with respect to Liens on the Collateral and, if any of them shall, whether by voluntary payment (other than a voluntary prepayment of Term Loans made and applied in accordance with the terms hereof), through the exercise of any right of set off or banker’s lien, by counterclaim or cross action or by the enforcement of any right under the Loan Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal, interest, fees and other amounts then due and owing to such Lender hereunder or under the other Loan Documents (collectively, the “Aggregate Amounts Due” to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender

 

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receiving such proportionately greater payment shall (a) notify Administrative Agent and each other Lender of the receipt of such payment and (b) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided that if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of Borrower or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest.

(b) Borrower expressly consents to the foregoing arrangements set forth in Section 2.12(a) and agrees that any holder of a participation so purchased may exercise any and all rights of banker’s lien, set off or counterclaim with respect to any and all monies owing by Borrower to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder.

Section 2.13. Increased Costs; Capital Adequacy.

(a) Compensation for Increased Costs and Taxes. Subject to the provisions of Section 2.14 (which shall be controlling with respect to the matters covered thereby), in the event that any Lender shall reasonably determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or Governmental Authority, in each case that becomes effective after the date hereof, or compliance by such Lender with any guideline, request or directive issued or made after the date hereof by any central bank or other Governmental Authority or quasi-Governmental Authority (whether or not having the force of law): (i) subjects such Lender (or its applicable lending office) to any additional Tax (other than Indemnified Taxes and Excluded Taxes) with respect to this Agreement or any of the other Loan Documents or any of its obligations hereunder or thereunder or any payments to such Lender (or its applicable lending office) of principal, interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, Federal Deposit Insurance Corporation insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender; or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder; and the result of any of the foregoing is to materially increase the cost to such Lender of agreeing to make, making or maintaining Term Loans hereunder or to materially reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, Borrower shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender for any

 

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such material increased cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to Borrower (with a copy to Administrative Agent) a written statement, setting forth in reasonable and specific detail the basis for calculating the additional amounts owed to such Lender under this clause (a), which statement shall be conclusive and binding upon all parties hereto absent manifest error.

(b) Capital Adequacy Adjustment. In the event that any Lender shall have determined that the adoption, effectiveness, phase in or applicability after the Initial Closing Date of any law, rule or regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its applicable lending office) with any guideline, request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of materially reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lender’s Term Loans or other obligations hereunder with respect to the Term Loans to a level below that which such Lender or such controlling corporation could have achieved but for such adoption, effectiveness, phase in, applicability, change or compliance (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy), then from time to time, within fifteen (15) Business Days after receipt by Borrower from such Lender of the statement referred to in the next sentence, Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such controlling corporation on an after tax basis for such reduction. Such Lender shall deliver to Borrower (with a copy to Administrative Agent) a written statement, setting forth in reasonable and specific detail the basis for calculating the additional amounts owed to Lender under this Section 2.13(b), which statement shall be conclusive and binding upon all parties hereto absent manifest error.

Section 2.14. Taxes; Withholding, etc.

(a) Withholding of Taxes. All sums payable by any Loan Party hereunder and under the other Loan Documents shall (except to the extent required by Law) be paid free and clear of, and without any deduction or withholding on account of, any Tax. If any Loan Party or any other Person is required by law to make any deduction or withholding on account of any Tax from any sum paid or payable by any Loan Party to any Agent, any Lender or any other Recipient under any of the Loan Documents: (1) Borrower shall use reasonable efforts to promptly notify Administrative Agent of any such requirement or any change in any such requirement; (2) such Loan Party or other Person shall be entitled to make such deduction or withholding and endeavor to pay such Tax before the date on which penalties attach thereto; (3) if such Tax is an Indemnified Tax, then the sum payable by such Loan Party shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment (including such deductions, withholdings or payments with respect to additional amounts payable pursuant to this Section 2.14), such Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made; and (4) as soon as practicable after paying any such Taxes, Borrower shall deliver to Administrative Agent the original or a certified copy of a receipt issued by the applicable Governmental Authority evidencing such payment, or other evidence reasonably satisfactory to Administrative Agent of such deduction, withholding or payment and of the remittance thereof to the relevant Governmental Authorities.

 

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(b) Other Taxes. Without duplication of any obligation under Section 2.14(a), the Loan Parties shall pay to the relevant Governmental Authorities in accordance with applicable law any present or future stamp or documentary Taxes, intangible, recording, filing or similar Taxes, or any excise or property Taxes that arise from any payment made hereunder or from the execution, delivery, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, this Agreement or any other Loan Document except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.15(b)) (“Other Taxes”). As soon as practicable after paying any such Other Taxes, the applicable Loan Party shall deliver to Administrative Agent the original or a certified copy of a receipt issued by the applicable Governmental Authority evidencing such payment, or other evidence reasonably satisfactory to Administrative Agent that such Other Taxes have been paid to the relevant Governmental Authority.

(c) Tax Indemnification. Without duplication of any obligation under Section 2.14(a) or (b), the Loan Parties hereby jointly and severally indemnify and agree to hold each Agent and Lender harmless from and against all Indemnified Taxes (including, without limitation, Indemnified Taxes and Other Taxes imposed on any amounts payable under this Section 2.14) and any reasonable expenses arising therefrom and with respect thereto paid by such Person. Such indemnification shall be paid within ten days from the date on which any Agent or Lender makes written demand therefor specifying in reasonable detail the nature and amount of such Indemnified Taxes. A certificate as to the amount of such payment or liability delivered to the Loan Parties by a Lender or Agent (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or Agent, shall be conclusive absent manifest error.

(d) Evidence of Exemption from U.S. Withholding Tax.

(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to Borrower and Administrative Agent, at the time or times reasonably requested by the Borrower or Administrative Agent, such properly completed and executed documentation reasonably requested by Borrower or Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by Borrower or Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by Borrower or Administrative Agent as will enable Borrower or Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.

(ii) Without limiting the generality of Section 2.14(d)(i), each Lender that is not a United States Person for United States federal income tax purposes (a “Non-US Lender”) shall deliver to Administrative Agent and to Borrower, on or prior to the Closing Date (in the case of each Lender listed on the signature pages hereof on the Closing Date) or on or prior to the date such Person becomes a Lender hereunder, and at such other times as may be necessary in the determination of Administrative Agent or Borrower (each in its reasonable exercise of its

 

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discretion), (i) two executed copies of Internal Revenue Service Form W-8IMY (with appropriate, properly completed and duly executed attachments satisfactory to the Administrative Agent and Borrower), W-8BEN, W-8BEN-E, or W-8ECI (or any successor forms), as applicable, properly completed and duly executed by such Lender and, to the extent such Lender is eligible, such form shall note that such Lender is not subject to deduction or withholding, or is subject to a reduced deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Loan Documents, and (ii) if such Lender is claiming exemption from United States federal income tax under Section 871(h) or 881(c) of the Code, an applicable Certificate Regarding Non-Bank Status, properly completed and duly executed by such Lender. In addition, each Lender, if reasonably requested by Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Law or reasonably requested by Borrower or the Administrative Agent as will enable Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.

(iii) If a payment made to a Recipient under any Loan Document would be subject to United States federal withholding Tax imposed by FATCA if such Recipient were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Recipient shall deliver to Borrower and Administrative Agent at the time or times prescribed by Requirements of Law and at such time or times reasonably requested by Borrower or Administrative Agent such documentation prescribed by applicable Requirements of Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower or Administrative Agent as may be necessary for Borrower and Administrative Agent to comply with their obligations under FATCA and to determine that such Recipient has complied with such Recipient’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this subclause (ii), FATCA shall include any amendments made to FATCA after the date of this Agreement.

(iv) Without limiting the generality of Section 2.14(d)(i), each Lender that is a United States Person for United States federal income tax purposes shall deliver to Administrative Agent (for transmission to Borrower), on or prior to the Closing Date (in the case of each such Lender listed on the signature pages hereof on the Closing Date) or on or prior to the date such Person becomes a Lender hereunder, and at such other times as may be necessary in the determination of Administrative Agent (in its reasonable exercise of its discretion), two executed copies of Internal Revenue Service Form W-9 (or any successor forms) properly completed and duly executed by such Lender to establish that such Lender is not subject to United States backup withholding taxes with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Loan Documents.

(v) If Administrative Agent is a United States Person, it shall deliver to Borrower on or prior to the date on which it becomes an Agent under this Agreement with two duly completed copies of Form W-9. If Administrative Agent is not a United States Person, it shall provide to Borrower on or prior to the date on which it becomes an Agent under this Agreement (and from time to time thereafter upon the reasonable request of Borrower): (A) two executed copies of Form W-8ECI with respect to any amounts payable to Administrative Agent for its own account, and (B) two executed copies of Form W-8IMY with respect to any amounts payable to

 

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Administrative Agent for the account of others, certifying that it is a “U.S. branch” and that the payments it receives for the account of others are not effectively connected with the conduct of its trade or business within the United States and that it is using such form as evidence of its agreement with Borrower to be treated as a United States Person with respect to such payments (and Borrower and Administrative Agent agree to so treat Administrative Agent as a United States Person with respect to such payments as contemplated by Section 1.1441-1(b)(2)(iv) of the United States Treasury Regulations).

Each Recipient required to deliver any forms or certificates with respect to United States federal income tax withholding matters pursuant to this clause (d) hereby agrees, from time to time after the initial delivery by such Recipient of such forms or certificates, whenever a lapse in time or change in circumstances renders such forms or certificates obsolete or inaccurate in any material respect, that such Lender shall deliver to Administrative Agent (for transmission to Borrower) two updated executed copies of such forms or certificates, properly completed and duly executed by such Lender, or promptly notify Administrative Agent and Borrower in writing of its legal inability to deliver any such forms or certificates.

(e) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.14 (including by the payment of additional amounts pursuant to this Section 2.14), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.14 with respect to the Taxes giving rise to such refund), net of all reasonable out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this clause (f) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this clause (e), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this clause (f) the payment of which would place the indemnified party in a less favorable net after-tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(f) Investment Unit. The Loan Parties and the Lenders acknowledge and agree that for U.S. federal income tax purposes, the Term Loan funded on the Initial Closing Date, the Second Draw Date, and the Closing Date, as applicable, is part of an “investment unit” (within the meaning of Treasury Regulations Section 1.1273-2(h)), consisting of such Term Loan and the applicable Warrant. For purposes of allocating the aggregate issue price of the unit between the respective fair market values of the Term Loans and the applicable Warrant, the Loan Parties and the Lenders agree that the fair market value and purchase price of the applicable Warrant, in each case, is $0.00. The Loan Parties and the Lenders shall file all income tax returns consistent with the foregoing tax treatment, including the issue price and purchase price as agreed upon pursuant to the preceding sentence.

 

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(g) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.6(h) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this clause (i).

(h) Survival. Each party’s obligations under this Section 2.14 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

(i) Borrower Notification. With respect to any Lender’s claim for compensation for any amounts under Section 2.13 or this Section 2.14, the Borrower shall not be required to compensate such Lender for the interest and penalties with respect to such amounts if such Lender notifies the Borrower of the event that gives rise to such claim more than 180 days after such event (to the extent that such interest and penalties accrue more than 180 days after such event).

(j) Insurance Premium Tax Treatment. The Loan Parties, Lenders, Administrative Agent, and any other Person that becomes a party to this Agreement shall treat all Premium (as defined in the AON Insurance Policy) paid or payable with respect to the AON Insurance Policy (including the Premium paid on or around the Initial Closing Date, the Second Draw Date, and the Closing Date, as applicable, pursuant to Section VII of the AON Insurance Policy) as paid by and properly deductible by the Borrower for U.S. federal income tax and applicable state and local income tax purposes, and no portion of any Premium paid or payable with respect to the AON Insurance Policy shall be treated as “original issue discount” within the meaning of Section 1273 of the Code. All parties to this Agreement shall file all applicable tax returns consistent with the foregoing treatment except as otherwise required due to a “determination” within the meaning of Section 1313 of the Code.

Section 2.15. Obligation to Mitigate.

(a) Each Lender agrees that, as promptly as practicable after the officer of such Lender responsible for administering its Term Loans becomes aware of the occurrence of an event

 

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or the existence of a condition that would entitle such Lender to receive payments under Section 2.13 or 2.14, it will, to the extent in violation of the internal policies of such Lender and any applicable legal or regulatory restrictions, use reasonable efforts to (a) make, issue, fund or maintain its Credit Extensions through another office of such Lender, or (b) take such other measures as such Lender may deem reasonable, if as a result thereof the circumstances which would cause the additional amounts which would otherwise be required to be paid to such Lender pursuant to Section 2.13 or 2.14 would be reduced and if, as determined by such Lender in its sole discretion, the making, issuing, funding or maintaining of such Term Loans through such other office or in accordance with such other measures, as the case may be, would not otherwise adversely affect such Term Loans or the interests of such Lender; provided such Lender will not be obligated to utilize such other office pursuant to this Section 2.15 unless Borrower agrees to pay all reasonable incremental expenses incurred by such Lender as a result of utilizing such other office as described above. A certificate as to the amount of any such expenses payable by Borrower pursuant to this Section 2.15 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender to Borrower (with a copy to Administrative Agent) shall be conclusive absent manifest error.

(b) Replacement of Lenders. If any Lender requests compensation under Section 2.13, or if Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.14 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with paragraph (a) of this Section 2.15, then Borrower may, at its sole expense, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.6), all of its interests, rights (other than its existing rights to payments pursuant to Section 2.13 or Section 2.14) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:

(i) Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 10.6;

(ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents from the assignee (to the extent of such outstanding principal and accrued interest and fees) or Borrower (in the case of all other amounts);

(iii) in the case of any such assignment resulting from a claim for compensation under Section 2.13 or payments required to be made pursuant to Section 2.14, such assignment will result in a reduction in such compensation or payments thereafter; and

(iv) such assignment does not conflict with applicable law.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling Borrower to require such assignment and delegation cease to apply.

 

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(c) Notwithstanding anything in Section 2.15(b) to the contrary, the Lender that acts as the Administrative Agent may not be replaced hereunder except in accordance with the terms of Section 9.3.

Section 2.16. Collateral Accounts.

(a) Establishment; Grant of Security Interest. Each of Borrower and IPCo, as applicable, hereby authorizes and directs Collateral Agent to establish the Collateral Accounts at U.S. Bank National Association (the “Bank”), if it is a federally insured bank that regularly accepts deposits in the ordinary course of business, or if Collateral Agent or the Bank does not so take deposits, with a federally insured bank that is acceptable to Borrower and the Required Lenders, provided that Borrower and IPCo, as applicable, and the Required Lenders’ acceptance shall not be required if such bank is an affiliate, agent or sub-custodian of the Collateral Agent, and that regularly accepts deposits in the ordinary course of business and that executes and delivers a Control Agreement, including the Bank. Each of Borrower and IPCo, as applicable, hereby grants to (and subjects to the control of) the Collateral Agent, for the benefit of itself, the Administrative Agent and the Lenders, and agrees to maintain, a First Priority Lien and security interest in the Collateral Accounts and all such cash, deposit accounts and all balances therein, all as security for the Obligations. Borrower and IPCo, as applicable, agree that Borrower and IPCo, as applicable, shall not have any right to at any time direct the disposition or investment of the Collateral Accounts or the amounts on deposit therein, other than as expressly provided in this Agreement, and, that the Liens and security interests of the Collateral Agent in the Collateral Accounts and the amounts on deposit therein are perfected by control pursuant to Section 9-104 of the UCC or Section 8-106 of the UCC, as applicable. If at any time the Administrative Agent reasonably determines that amounts on deposit in any Collateral Account are subject to any right or claim of any Person prior to the right or claim of the Collateral Agent or the Lenders as herein provided (other than a Permitted Lien), Borrower will, promptly following written demand by the Administrative Agent, pay or provide to the Administrative Agent additional cash collateral in an amount that is sufficient to cause such Collateral Account to have the minimum balance on deposit therein required under this Agreement. Borrower and IPCo, as applicable, shall pay promptly following written demand therefor from time to time all customary account opening, activity and other administrative fees and charges in connection with the maintenance and disbursement of cash collateral in accordance with the account agreement governing such deposit account. Borrower, IPCo and Collateral Agent acknowledge and agree that the Collateral Accounts have been established in the name of and are property of IPCo, subject to the Liens granted therein by IPCo to Collateral Agent. Amounts deposited into Collateral Accounts pursuant to this Section 2.16 may be held in such Collateral Accounts as Dollars or invested in Eligible Investments, as directed by the Borrower; provided that, in the event that all or any portion of such investment no longer qualifies as an Eligible Investment, the Borrower shall or shall direct such investment to be moved to an Eligible Investment within five (5) Business Days of such investment losing its status as an Eligible Investment. Such investments shall be subject to availability and the Collateral Agent’s transaction charges generally charged to its customers (which shall be at the Borrower’s expense); provided, further that at any time that an Event of Default has occurred and is continuing, all new deposits into Collateral Accounts shall be made only in Dollars, and all Eligible Investments that mature during such period shall be reinvested only in Dollars. The Collateral Agent shall have no liability for any loss incurred on any non-Cash investment. Absent receipt of such written instruction from the Borrower, the Collateral

 

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Agent shall have no obligation to invest (or otherwise pay interest on) amounts on deposit in Collateral Accounts. In no instance will the Collateral Agent have any obligation to provide investment advice to the Borrower. Any earnings from such investment of amounts held in the Collateral Accounts from time to time shall be redeposited in the respective Collateral Accounts. The Collateral Agent shall have no liability for any losses on any investments made as described herein. The Borrower acknowledges that cash deposited or invested with any bank (including the bank acting as Collateral Agent) may make a margin or generate banking income for which such bank shall not be required to account to the Borrower. For avoidance of doubt, neither the Collateral Agent nor the Administrative Agent shall be under any duty or obligation to determine whether any investment constitutes an Eligible Investment under this Agreement. The Collateral Agent shall notify Moody’s at the address listed on Schedule 10.1 of any changes to the depository bank for the Collateral Accounts. Upon the irrevocable payment in full in cash of the Obligations (other than contingent obligations not due and owing) and the termination of the Commitments hereunder, the Collateral Agent shall so notify the Bank and direct the Bank to release the funds (if any) that remain in any Collateral Account to the Borrower in accordance with instructions thereafter provided to the Bank by the Borrower, or as otherwise required by Law as directed by a court of competent jurisdiction.

(b) Funding of Collateral Accounts.

(i) Interest Reserve Accounts. On the Second Draw Date, an amount equal to $831,111.111 was deposited into and held in the Non-Minority Lender Interest Reserve Account (which amount is in addition to the $8,066,666.70 which was deposited on the Initial Closing Date in the Non-Minority Lender Interest Reserve Account). On the Second Draw Date an amount equal to $572,000.00 was deposited into and held in the Minority Lender Interest Reserve Account (which amount is in addition to the $1,286,312.63 which was deposited into and held in the Minority Lender Interest Reserve Account on the Initial Closing Date). On the Closing Date, an amount equal to $1,222,222.22 shall be deposited into and held in the Non-Minority Lender Interest Reserve Account (which amount is in addition to the amounts described above in this section) (such amounts in this clause (i) collectively, the “Interest Reserve Amount”). As provided in Section 6.8, the Loan Parties shall cause each Interest Reserve Account to at all times after the Initial Closing Date contain Dollars and Eligible Investments having a mark-to-market aggregate value as of the close of business of the immediately preceding Business Day equal to the applicable Minimum Interest Reserve Amount. The Interest Reserve Amount shall be reduced and re-funded as it is applied in the manner described below.

(ii) Insurance Premium Reserve Account.

(A) Beginning on the first such date following the twelve (12) month anniversary of the Initial Closing Date and on the last Business Day of each Fiscal Quarter thereafter an amount equal to $862,500.00 shall be deposited by the Borrower into the Insurance Premium Reserve Account.

(B) On or before the last Business Day prior to the date on which each of the second insurance premium and the third insurance premium is due in respect of the AON Insurance Policy, the Borrower (i) shall deliver to Administrative Agent and the Lenders a certificate of an Authorized Officer specifying the amount of such insurance premium due on

 

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account of the AON Insurance Policy and (ii) (x) shall deliver to Administrative Agent and the Lenders evidence of payment of such insurance premium or (y) shall have deposited into the Insurance Premium Reserve Account the amount that equals the amount due as the second or third insurance premium, as the case may be, in respect of the AON Insurance Policy (such amount, the “Insurance Premium Reserve Amount”).

(C) Borrower shall, concurrently with the acceleration of the Term Loan Maturity Date at any time as a result of an Event of Default and without requirement for any notice whatsoever, deposit into the Insurance Premium Reserve Account an amount that is equal to the remainder of (a) the unpaid premiums due or expected to become due between the first day of the then-current premium period and the Term Loan Maturity Date in effect immediately prior to its acceleration in respect of the Insurance Premium Reserve Amount minus (b) the amount then on deposit in the Insurance Premium Reserve Account. This deposit shall constitute additional Collateral for the Obligations and shall be used by the Administrative Agent solely to pay premiums due on the AON Insurance Policy without need for notice to or consent of the Loan Parties.

(iii) [Intentionally omitted].

(iv) Borrower acknowledges that any failure to satisfy its obligation to make any deposit required by this Section 2.16 shall constitute an Event of Default under Section 8.1(a) and the unpaid amount thereof shall constitute an Obligation and bear interest as provided in Section 2.7.

(c) Use of the Collateral Accounts.

(i) Cash interest on Term Loans shall be paid by (A) the Borrower from available unrestricted Cash on each Interest Payment Date when due, or (B) if not so paid in full by 12:00 p.m. New York City time on any Interest Payment Date, the Administrative Agent shall pay such Cash interest to (x) the Term A Loan Lenders and Term B Loan Lenders (other than the Minority Lender) out of the Non-Minority Lender Interest Reserve Account and (y) the Minority Lender out of the Minority Lender Interest Reserve Account, in each case, without need for any action by Borrower. To avoid doubt, no Default or Event of Default shall be deemed to have occurred under Section 8.1(a) if any payment of interest is not made under clause (c)(i)(A) provided it is made under clause (c)(i)(B).

(ii) Any income or gain on Eligible Investments that are permitted by Section 2.16(a) shall remain in such Collateral Account and shall be considered income or gain of the Borrower. All amounts on deposit in a Collateral Account shall be applied as provided for herein with respect to such Collateral Account prior to any other application of such property as may otherwise be provided for herein.

(iii) At least eight calendar days prior to each Interest Payment Date (the “Collateral Account Report Date”), Borrower shall compile and provide to the Collateral Agent, the Administrative Agent and the Lenders a distribution report showing all debit and credit transactions in such Collateral Account determined as of the close of business on the 15th day of the month in which such Collateral Account Report Date occurs (the “Collateral Account Report”).

 

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To the extent Borrower fails to timely deliver a Collateral Account Report or a Lender disagrees with the information in such report, any Lender may, within two Business Days after Borrower’s non-delivery or delivery of such disputed draft Collateral Account Report to such Lender, notify in writing the Collateral Agent, Borrower and the other Lenders of such disagreement. The Required Lenders shall (in consultation with Borrower) within one (1) Business Day of such notification or non-delivery provide direction to the Collateral Agent necessary to resolve any such discrepancy, and the Collateral Agent shall follow such direction, absent manifest error. If by 1:00 p.m. New York City time on any Interest Payment Date (i) Borrower fails to pay Cash interest when due on such Interest Payment Date and (ii) no Lender has notified the Collateral Agent and Borrower in writing of any discrepancy within such two Business Day time period, then such Collateral Account Report shall be deemed approved by the Lenders and the Collateral Agent shall proceed to make such distributions out of the Interest Reserve Accounts to the Administrative Agent, to be further distributed to the Lenders as provided in the Collateral Account Report, provided that if no Collateral Account Report is received, then the Collateral Agent shall release to the Administrative Agent the amount necessary to pay interest as indicated on the Administrative Agent’s account for the Term Loan. Nothing herein shall impose or imply any duty or obligation on the part of the Collateral Agent or the Administrative Agent to verify, investigate or audit any such information or data, or to determine or monitor on an independent basis whether Borrower has transferred amounts into the Collateral Accounts in accordance with its obligations hereunder, including this Section 2.16.

ARTICLE III

CONDITIONS PRECEDENT

Section 3.1. Conditions to Credit Extension on the Closing Date. The effectiveness of the Loan Documents and obligation of each Lender to make any Term Loan on the Closing Date, is subject to the satisfaction, or waiver by the Required Lenders in accordance with Section 10.5, of the following conditions precedent:

(a) Loan Documents. Agents shall have received copies of each Loan Document, executed and delivered by each applicable Loan Party and each other Person party thereto.

(b) [Reserved].

(c) Governmental Authorizations and Consents. Each Loan Party shall have obtained all Governmental Authorizations, in each case, that are necessary in connection with the transactions contemplated by the Loan Documents and each of the foregoing shall be in full force and effect and in form and substance reasonably satisfactory to the Required Lenders. All applicable waiting periods shall have expired without any action being taken or threatened in writing by any competent authority which would restrain, prevent or otherwise impose adverse conditions on the transactions contemplated by the Loan Documents and no action, request for stay, petition for review or rehearing, reconsideration, or appeal with respect to any of the foregoing shall be pending, and the time for any applicable agency to take action to set aside its consent on its own motion shall have expired.

 

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(d) [Reserved].

(e) [Reserved].

(f) Bank Regulations. Administrative Agent shall have received all documentation and other information with respect to Borrower reasonably requested prior to the Closing Date that is required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the PATRIOT Act and the Beneficial Ownership Regulation, and all such documentation and other information shall be in form and substance reasonably satisfactory to the Administrative Agent, which shall include, for the avoidance of doubt, a duly executed Internal Revenue Service Form W-9. As of the Closing Date, the information included in the Beneficial Ownership Certification with respect to any beneficial owner of Borrower is true and correct in all material respects.

(g) Organizational Documents; Incumbency. Lenders shall have received: (i) copies of each Organizational Document of each Loan Party, certified as of a recent date by the appropriate governmental official; (ii) signature and incumbency certificates of the officers of such Person executing the Loan Documents to which it is a party; (iii) resolutions of the Board of Directors or other governing body of each Loan Party approving and authorizing the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party or by which it or its assets may be bound as of the Closing Date, certified on or prior to the Closing Date by its secretary or an assistant secretary as being in full force and effect without modification or amendment; and (iv) a good standing certificate or its equivalent from the applicable Governmental Authority of each Loan Party’s jurisdiction of incorporation, organization or formation (to the extent such certificate may be obtained in such jurisdiction) and in each jurisdiction in which the failure to be in good standing could reasonably be expected to result in a Material Adverse Effect, each dated a recent date prior to the Closing Date.

(h) Funding Notice. Administrative Agent shall have received a fully executed and delivered Funding Notice requesting Administrative Agent to wire all funds into the Initial Funding Account.

(i) Representations and Warranties. As of the Closing Date, the representations and warranties contained herein and in each other Loan Document, certificate or other writing delivered by any Loan Party to any Agent or any Lender pursuant hereto or thereto on or prior to the Closing Date shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of that Closing Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such earlier date.

 

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(j) Compliance with law. The making of such Credit Extension on the Closing Date shall not contravene any law, rule or regulation applicable to any Agent or any Lender.

(k) Payment of Fees. The Loan Parties shall have paid all fees, costs and expenses then payable by the Loan Parties pursuant to this Agreement and the other Loan Documents, including, without limitation, the Agent Fee Letter, the Fee Letter and Section 10.2 to the extent Borrower has been notified in writing of the amount of such fees, costs and expenses at least one Business Day prior to the making of such Credit Extension.

(l) No Default. As of such Closing Date, no event shall have occurred and be continuing or would result from the making of a Term Loan on the Closing Date that would constitute an Event of Default or a Default.

(m) [Reserved].

(n) [Reserved].

(o) Closing Certificate. Borrower shall deliver to the Agents an originally executed Closing Certificate in the form of Exhibit E.

(p) Sources and Uses. On or prior to the Closing Date, Borrower shall have delivered to Lenders (with a copy to Agents) the updated sources and uses of the proceeds of the Term Loans borrowed on the Closing Date.

(q) [Reserved].

(r) [Reserved].

(s) [Reserved].

(t) Opinions of Counsel to Loan Parties. Lenders and their respective counsel shall have received executed copies of customary written opinions of counsel for the Loan Parties dated as of the Closing Date (and each Loan Party hereby instructs such counsel to deliver such opinions to the Agents and the Lenders). Opinions will include (a) customary third-party closing opinions with respect to, among other customary items, due authorization and execution of Loan Documents, enforceability of Loan Documents under applicable law and attachment and perfection of liens and (b) customary Delaware opinions with respect to enforcement of bankruptcy remote provisions for each of IPCo and IPHoldCo, including vertical and horizontal non-consolidation opinions.

(u) [Reserved].

(v) Warrants. The additional Warrants shall be in full force and effect and shall have been delivered to the Investors.

(w) Establishment of Collateral Accounts. Each of the Collateral Accounts shall be open with the Bank as depository, ready to receive deposits and subject to a perfected lien in favor of the Collateral Agent pursuant to a Control Agreement.

 

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(x) AON Insurance Policy. The AON Insurance Policy issued, or a binding commitment of the insurers thereunder to amend and restate the AON Insurance Policy substantially in the form attached as Exhibit K, shall be acceptable to the Lenders holding Term A Loan Commitments and shall in either case have been issued to the Administrative Agent, together with enforceability and other opinions with respect thereto and an amount equal to $1,571,353.54, which represents the increased costs associated with the AON Insurance Policy with respect to the Term A Loans (which such amount is in addition to the costs associated with the AON Insurance Policy issued on the Initial Closing Date in the amount of $12,499,068.68 and the costs associated with the amendment and restatement of the Aon Insurance Policy on the Second Draw Date in the amount of $1,230,082.54), and associated costs therefor, shall be paid by the Administrative Agent on the Closing Date using proceeds of the Term Loan.

(y) [reserved].

(z) Solvency Certificate. Lenders shall have received a Solvency Certificate of Borrower substantially in form of Exhibit J attached hereto.

(aa) Moody’s Rating Agency Confirmation. Moody’s shall provide a credit rating confirmation (and Borrower shall use its best efforts to facilitate such issuance) with respect to this Agreement.

Any Agent or Required Lenders shall be entitled, but not obligated, to request and receive, prior to the making of any Credit Extension, additional information reasonably satisfactory to the requesting party confirming the satisfaction of any of the foregoing if, in the good faith judgment of such Agent or Required Lender, such request is warranted under the circumstances. Any Funding Notice shall be executed by an Authorized Officer of Borrower in a writing delivered to Administrative Agent and may be transmitted by email. Neither Administrative Agent nor any Lender shall incur any liability to Borrower in acting upon any telephonic notice referred to above that Administrative Agent believes in good faith to have been given by a duly Authorized Officer or other person authorized on behalf of Borrower or for otherwise acting in good faith.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

In order to induce Agents and Lenders to enter into this Agreement and to make the Credit Extension to be made thereby, each Loan Party represents and warrants to each Agent and Lender on the Closing Date, that the following statements are true and correct:

Section 4.1. Organization; Requisite Power and Authority; Qualification. Each Loan Party (a) is duly incorporated, organized or formed, and validly existing and, where applicable, in good standing under the Laws of its jurisdiction of incorporation or organization as identified in Schedule 4.1, (b) has all requisite power and authority to (i) own and operate its properties, to carry on its business as now conducted and as proposed to be conducted and (ii) to enter into the Loan Documents to which it is a party and to carry out the transactions contemplated thereby and, in the case of Borrower, to make the borrowings hereunder, and (c) is qualified to do business and, where applicable, in good standing in every jurisdiction wherever necessary to carry out its business and operations, except in each case referred to in clause (a) (other than with respect to Borrower), (b)(i) or (c), to the extent that failure to do so would not be reasonably expected to have a Material Adverse Effect. No Loan Party is an EEA Financial Institution.

 

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Section 4.2. Capital Stock and Ownership. Except as set forth on Schedule 4.2, the Capital Stock of Borrower and its Subsidiaries has been duly authorized and validly issued and is fully paid and in the case of Capital Stock representing corporate interests, non-assessable (if applicable). Except for the Warrant and as set forth on Schedule 4.2, as of the date hereof, there is no existing option, warrant, call, right, commitment or other agreement to which Borrower or any of its Subsidiaries is a party requiring, and there is no Capital Stock of Borrower or any of its Subsidiaries outstanding which upon conversion or exchange would require, the issuance by Borrower or any of its Subsidiaries of any additional Capital Stock of Borrower or any of its Subsidiaries or other Securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase, Capital Stock of Borrower or any of its Subsidiaries. Schedule 4.2 correctly sets forth the ownership interest of Borrower and each of its Subsidiaries in their respective Subsidiaries as of the Closing Date. Except for Liens that have been subordinated pursuant to a Subordination Agreement or otherwise as reasonably acceptable to the Required Lenders, no Capital Stock owned by a Loan Party is subject to a Lien other than (i) the Liens in favor of Collateral Agent under the Collateral Documents and (ii) Permitted Liens.

Section 4.3. Due Authorization. The execution, delivery and performance of the Loan Documents have been duly authorized by all necessary corporate or other organizational action on the part of each Loan Party that is a party thereto.

Section 4.4. No Conflict. The execution, delivery and performance by the Loan Parties of the Loan Documents to which they are parties and the consummation of the Transactions do not and will not (a) violate (i) any provision of any material law or any material governmental rule or regulation applicable to any Loan Party or any of its Subsidiaries, (ii) any of the Organizational Documents of any Loan Party or any of its Subsidiaries, or (iii) any material order, judgment or decree of any court or other agency of government binding on any Loan Party or any of its Subsidiaries, except (in the case of clauses (a)(i) and (a)(ii), to the extent that such violation could not reasonably be expected to have a Material Adverse Effect, (b) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Material Contract of any Loan Party, including, without limitation, the Intercompany License Agreements or any Third Party License Agreements that are Material Contracts except to the extent that such violation would not reasonably be expected to have a Material Adverse Effect, (c) result in or require the creation or imposition of any Lien upon any of the properties or assets of any Loan Party or any of its Subsidiaries (other than any Liens created under any of the Loan Documents in favor of Agents, on behalf of Secured Parties, or Permitted Liens), (d) result in any default, non-compliance, suspension revocation, impairment, forfeiture or non-renewal of any material permit, license, authorization or approval applicable to the material operations or any of the material properties of the Loan Parties, taken as a whole, except to the extent that such violation would not reasonably be expected to have a Material Adverse Effect, or (e) require any approval of stockholders, members or partners or any approval or consent of any Person under any Material Contract of any Loan Party, except for (i) such approvals or consents which will be obtained on or before the Closing Date, (ii) those approvals and consents, the failure of which to obtain could not reasonably be expected to have a Material Adverse Effect.

 

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Section 4.5. Governmental Consents. The execution, delivery and performance by the Loan Parties of the Loan Documents to which they are parties and the consummation of the transactions contemplated by the Loan Documents do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental Authority and except for (i) consents approvals, notices, filings, recordings and other actions with respect to the Collateral to be made, or otherwise delivered to Agents for filing and/or recordation, as of or following the Closing Date, (ii) consents, approvals, notices, filings, recordings and other actions made or filed on or prior to the Closing Date and (iii) those registrations, consents, approvals, notices or other actions the failure of which to obtain or make could not reasonably be expected to have a Material Adverse Effect.

Section 4.6. Binding Obligation. Each Loan Document has been duly executed and delivered by each Loan Party that is a party thereto and is the legal, valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its respective terms, except (i) as may be limited by Debtor Relief Laws or by equitable principles relating to enforceability, (ii) the need for filings and registrations necessary to create or perfect the Liens on the Collateral granted by the Loan Parties in favor of the Secured Parties and (iii) the effect of foreign laws, rules and regulations as they relate to pledges of Capital Stock in or Indebtedness owed by Foreign Subsidiaries (clauses (i) and (iii), the “Enforcement Qualifications”).

Section 4.7. Historical Financial Statements. The Historical Financial Statements were prepared in accordance in all material respects with GAAP and fairly present, in all material respects, the financial position, on a consolidated basis, of the Persons described in such financial statements as at the respective dates thereof.

Section 4.8. No Material Adverse Effect. Since December 31, 2022, no event, circumstance or change has occurred that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect.

Section 4.9. Adverse Proceedings, etc. Except as set forth on Schedule 4.9, there are no Adverse Proceedings, individually or in the aggregate, that (a) relate to any Loan Document or (b) have a reasonable likelihood of adverse determination and such determination would reasonably be expected to have a Material Adverse Effect. Neither Borrower nor any of its Subsidiaries (i) is in violation of any applicable laws that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, or (ii) is subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

Section 4.10. Payment of Taxes. Except as otherwise permitted under Section 5.3 or otherwise disclosed on Schedule 4.10, all U.S. federal and material state and local income Tax returns and other material Tax returns and reports of the Loan Parties and their respective Subsidiaries required to be filed by any of them have been timely filed, and all material Taxes due and payable and all assessments, fees and other governmental charges upon the Loan Parties and their respective Subsidiaries and upon their respective properties, assets, income, businesses and franchises which are due and payable have been paid when due and payable except Taxes that are

 

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being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves are being maintained in accordance with GAAP. Neither any Loan Party nor any of its Subsidiaries are currently the subject of any audit relating to Taxes and there are no proposed in writing tax assessments against any Loan Party or any of its Subsidiaries which is not being actively contested by such Loan Party or such Subsidiary in good faith and by appropriate proceedings; provided such reserves or other appropriate provisions, if any, as shall be required in accordance with GAAP shall have been made or provided therefor.

Section 4.11. Properties.

(a) Title. Each Loan Party and its Subsidiaries has (i) good, sufficient, marketable and legal title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the case of leasehold interests in real or personal property), or (iii) good and valid title to, license or other rights to use (in the case of all other personal property), all of their respective properties and assets reflected in their respective Historical Financial Statements referred to in Section 4.7 and in the most recent financial statements delivered pursuant to Section 5.1, in each case, except for (i) assets disposed of since the date of such financial statements in the ordinary course of business or as otherwise permitted under Section 6.9, (ii) minor defects in title that do not materially interfere with its ability to conduct its business or to utilize such properties or assets for their intended purposes, (iii) Permitted Liens (iv) any Liens and privileges arising mandatorily by Law, or (v) except where the failure to have such title or other interest would not reasonably be expected to have a Material Adverse Effect.

(b) Real Estate. As of the Closing Date, Schedule 4.11 contains a true, accurate and complete list of (i) all Material Real Estate Assets and (ii) all leases, subleases or assignments of leases (together with all amendments, modifications, supplements, renewals or extensions of any thereof) affecting each Real Estate Asset of any Loan Party, in cases where such Loan Party is the landlord (whether directly or as an assignee or successor in interest) under such lease, sublease or assignment. Each material lease agreement pursuant to which a Loan Party is a tenant or lessee is in full force and effect and no Loan Party has knowledge of any material default that has occurred and is continuing thereunder with respect to any leased location that is material to the business of the Borrower and its Subsidiaries, taken as a whole, and each such agreement constitutes the legally valid and binding obligation of each applicable Loan Party, enforceable against such Loan Party in accordance with its terms, except as enforcement may be limited by Debtor Relief Laws or by equitable principles.

Section 4.12. Environmental Matters. Except as set forth on Schedule 4.12:

(a) No material Environmental Claim has been asserted against any Loan Party nor has any Loan Party received written notice of any pending or, to the knowledge of Borrower, threatened Environmental Claim against any Loan Party, except to the extent such claim or notice would not reasonably be expected to result in a Material Adverse Effect.

(b) There has been no material Release of Hazardous Materials and there are no Hazardous Materials present in violation of Environmental Law at any of the properties currently or formerly owned or operated by any Loan Party, or to the knowledge of any Loan Party, at any disposal or treatment facility which received Hazardous Materials generated by any Loan Party except to the extent such Release or presence would not reasonably be expected to result in a Material Adverse Effect.

 

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(c) The operation of the business of, and each of the properties owned or operated by, each Loan Party is in compliance with all Environmental Laws, except to the extent such failure to comply would not reasonably be expected to result in a Material Adverse Effect.

(d) Each Loan Party holds and is in compliance with Governmental Authorizations required under any Environmental Laws in connection with the operations carried on by it and the properties owned or operated by it except to the extent any failure to comply would not reasonably be expected to have a Material Adverse Effect.

(e) No event or condition has occurred or is occurring with respect to any Environmental Law, any Release of Hazardous Materials, or any Hazardous Materials Activity which could reasonably be expected to form the basis of a material Environmental Claim against any Loan Party, that would result in a Material Adverse Effect.

(f) No Loan Party has received any written notification pursuant to any Environmental Laws that (i) any material work, repairs, construction or capital expenditures are required to be made in respect as a condition of continued compliance with any Environmental Laws, or any license, permit or approval issued pursuant thereto or (ii) any material Governmental Authorizations required under any Environmental Laws by any Loan Party is about to be reviewed, made, subject to limitations or conditions, revoked, withdrawn or terminated, except to the extent the subject matter of such notification would not reasonably be expected to result in a Material Adverse Effect.

Section 4.13. No Defaults. Except as set forth on Schedule 4.13, neither any Loan Party nor any of its Subsidiaries is in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Material Contract, and no condition exists which, with the giving of notice or the lapse of time or both, would reasonably be expected to result in an Event of Default.

Section 4.14. Material Contracts. Schedule 4.14 contains a true, correct and complete list of all the Material Contracts in effect on the Closing Date and, together with any updates provided pursuant to Section 5.1(l), all such Material Contracts are in full force and effect unless terminated in the ordinary course of business (including by passage of time) and no material defaults currently exist thereunder. For avoidance of doubt, the items listed on Schedule 4.14 are so included by virtue of the contractually agreed definition of Material Contract among the parties hereto that is contained in this Agreement, and shall not be deemed to be material for any other purpose.

Section 4.15. Investment Company Act. Neither any Loan Party nor any of its Subsidiaries is an “investment company” under the Investment Company Act of 1940, as amended.

Section 4.16. Margin Stock. Neither any Loan Party nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. No part of the proceeds of the Terms Loans made to such Loan Party will be used to purchase or carry any such Margin Stock or to extend credit to others for the purpose of purchasing or carrying any such Margin Stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System.

 

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Section 4.17. Employee Matters. Except as would not reasonably be expected to have a Material Adverse Effect, there is (a) no unfair labor practice complaint pending against any Loan Party or any of its Subsidiaries, or to the best knowledge of Borrower, threatened in writing against any of them before the National Labor Relations Board and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement that is so pending against any Loan Party or any of its Subsidiaries or to the best knowledge of Borrower, threatened in writing against any of them and (b) no strike or work stoppage in existence or to the best knowledge of Borrower, threatened in writing involving Borrower or any of its Subsidiaries.

Section 4.18. Employee Benefit Plans. Except, in each case, as would not reasonably be expected to have a Material Adverse Effect: (a) no liability to the PBGC (other than required premium payments) or the Internal Revenue Service (other than taxes due in the ordinary course), has been or is expected to be incurred by any Loan Party, any of its Subsidiaries or any of their ERISA Affiliates, (b) no ERISA Event has occurred or is reasonably expected to occur, (c) except to the extent required under Section 4980B of the Internal Revenue Code or similar state laws, no Employee Benefit Plan provides employer-paid, health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of any Loan Party or any of its Subsidiaries, (d) the present value of the aggregate benefit liabilities under each Pension Plan sponsored, maintained or contributed to by any Loan Party or any of its ERISA Affiliates (determined as of the end of the most recent plan year on the basis of the actuarial assumptions specified for funding purposes in the most recent actuarial valuation for such Pension Plan), did not exceed the aggregate current value of the assets of such Pension Plan, (e) as of the most recent valuation date for each Multiemployer Plan to which any Loan Party or any of its ERISA Affiliates contributes or has an obligation to contribute, the potential liability of any Loan Party and its ERISA Affiliates for a complete withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when aggregated with such potential liability for a complete withdrawal from all Multiemployer Plans, does not exceed nil and (h) each Loan Party and each of its ERISA Affiliates has complied, in all material respects, with the requirements of Section 515 of ERISA with respect to each Multiemployer Plan and are not in material “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan.

Section 4.19. Certain Fees. Unless disclosed to the Administrative Agent in writing prior to the Closing Date, or as otherwise set forth in the Loan Documents, no broker’s or finder’s fee or commission will be payable with respect hereto or any of the transactions contemplated hereby.

Section 4.20. Compliance with Organizational Documents and Statutes. Each Loan Party and its Subsidiaries is in compliance with (i) its Organizational Documents and (ii) all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities, in respect of the conduct of its business and the ownership of its property (including (a) compliance with all applicable Environmental Laws with respect to any Real Estate Asset or governing its business and the requirements of any Governmental Authorizations issued under such Environmental Laws with respect to any such Real Estate Asset or the operations of any Loan Party or any of its Subsidiaries and (b) as set forth in the Pledge and Security Agreement), except such noncompliance that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

 

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Section 4.21. Intellectual Property. Each Loan Party and each of its Subsidiaries owns, or holds valid licenses to use, all IP Rights that are necessary to the conduct of its business as currently conducted, except as would not be material to the business of the Loan Party and its Subsidiaries taken as a whole. Attached hereto as Schedule 4.21 is a true, correct, and complete listing of all (i) issued, registered, or applied-for patents, trademarks and copyrights as to which a Loan Party or one of its Subsidiaries is the owner or, to the extent specifically identified in the applicable license agreement, an exclusive licensee; provided that Borrower may amend Schedule 4.21 to add additional IP Rights required to be scheduled pursuant to this sentence so long as such amendment occurs by written notice to Agents concurrently with delivery of the Compliance Certificate pursuant to Section 5.1(d). Subject to the filing of the Collateral Documents, Agents possess, to the extent permitted by applicable law, a First Priority security interest with respect to each Loan Party’s rights (excluding any Excluded Assets) under, to the extent constituting Collateral, its owned IP Rights and each inbound license of IP Rights that is a Material Contract and that is not generally commercially available, and no such inbound license of IP Rights that is a Material Contract requires any futher consent from the applicable licensor for the Loan Parties to grant to Agents a security interest with respect thereto.

Section 4.22. Equipment. The material equipment (other than (i) vehicles or equipment out for repair or restoration, (ii) in possession of customers or employees or (iii) valued at less than $2,500,000) of Borrower and its Subsidiaries are not stored with a bailee, warehouseman, or similar party and are located only at, or in-transit between or to, the locations identified on Schedule 4.22.

Section 4.23. [Reserved].

Section 4.24. Insurance. Each Loan Party keeps its property adequately insured (including as set forth in the Pledge and Security Agreement) and maintains (a) insurance to such extent and against such risks, including fire, as is customary with companies in the same or similar businesses in the same or similar locations, (b) workmen’s compensation insurance in the amount required by applicable law, (c) public liability insurance, which shall include product liability insurance, in the amount customary with companies in the same or similar business against claims for personal injury or death on properties owned, occupied or controlled by it, and (d) such other insurance as may be required by law in any jursidiction in which a Loan Party does business. Schedule 4.24 sets forth a list of all insurance maintained by each Loan Party on the Closing Date.

Section 4.25. Common Enterprise. The successful operation and condition of each of the Loan Parties is dependent on the continued successful performance of the functions of the group of the Loan Parties as a whole and the successful operation of each of the Loan Parties is dependent on the successful performance and operation of each other Loan Party. Each Loan Party expects to derive benefit (and its Board of Directors or other governing body has determined that it may reasonably be expected to derive benefit), directly and indirectly, from (a) successful operations of each of the other Loan Parties and (b) the credit extended by the Lenders to the Loan Parties hereunder, both in their separate capacities and as members of the group of companies. Each Loan Party has determined that execution, delivery, and performance of this Agreement and any other Loan Documents to be executed by such Loan Party is within its purpose, will be of direct and indirect benefit to such Loan Party, and is in its best interest.

 

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Section 4.26. Permits, Etc. Each Loan Party and each of its Subsidiaries has, and is in compliance with, all permits, licenses, authorizations, approvals, entitlements and accreditations required for such Person lawfully to own, lease, manage or operate, or to acquire, each business currently owned, leased, managed or operated, or to be acquired, by such Person, which, if not obtained, could not reasonably be expected to have a Material Adverse Effect. No condition exists or event has occurred which, in itself or with the giving of notice or lapse of time or both, would result in the suspension, revocation, impairment, forfeiture or non-renewal of any such permit, license, authorization, approval, entitlement or accreditation, and there is no claim that any thereof is not in full force and effect, except, to the extent any such condition, event or claim could not be reasonably be expected to have a Material Adverse Effect.

Section 4.27. Bank Accounts and Securities Accounts. Schedule 4.27 sets forth a complete and accurate list as of the Closing Date of all deposit, checking and other bank accounts, all securities and other accounts maintained with any broker dealer and all other similar accounts maintained by each Loan Party, together with a description thereof (i.e., the bank or broker dealer at which such deposit or other account is maintained and the account number and the purpose thereof) including as to whether such account is an Excluded Account.

Section 4.28. Security Interests. The Pledge and Security Agreement upon its execution and delivery on the Initial Closing Date created in favor of Collateral Agent, for the benefit of Secured Parties, a legal, valid and enforceable security interest in the Collateral secured thereby (subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors’ rights generally and to general principals of equity). Upon the filing of the UCC-1 financing statements made with respect to any assets or property of any Loan Party in the jurisdictions specified in the Perfection Certificate, the recording of security interests in the United States Patent and Trademark Office and the United States Copyright Office, and the recordation of appropriate evidence of the security interest in the appropriate foreign registry with respect to all foreign registered or applied-for IP Rights, as applicable, the delivery of any possessory collateral as required by the Collateral Documents and the execution of Control Agreements, such security interests in and Liens on the Collateral granted thereby shall be perfected (to the extent perfection of such security interests is required by the Collateral Documents) first priority security interests (subject to inchoate or non-consensual Liens that are Permitted Liens and Liens permitted pursuant to clauses (d), (e), (l), (m), (n), (o), (p), (s), (t), and (y) of the definition of “Permitted Liens”).

Notwithstanding anything herein to the contrary contained in this Agreement or any other Loan Document, the Loan Parties and their Affiliates shall not be required, nor shall the Collateral Agent be authorized, and no representation, warranty, or covenant shall be considered to be breached by any failure, (i) to perfect any Lien with respect to IP Rights by any means other than by (A) filings pursuant to the Uniform Commercial Code in the office of the secretary of state (or equivalent filing office of any relevant State), or (B) intellectual property security interest filings in the United States Patent and Trademark Office or United States Copyright Office as expressly required herein and under the other Loan Documents, (ii) (a) to take any action in any non-U.S. jurisdiction or pursuant to the requirements of the laws of any non-U.S. jurisdiction in order to create any security interests with respect to IP Rights or (b) to perfect any security interests in IP Rights located outside

 

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of (or governed by or arising or existing under, pursuant to or by virtue of any Laws outside of) the United States, including with respect to any intellectual property registered outside of the United States (it being understood that there shall be no security agreements with respect to IP Rights governed by the laws of any non-U.S. jurisdiction), or (iii) to enter into any source code escrow arrangement (except as may be required pursuant to Section 5.1) (or be obligated to register or apply to register any IP Rights).

Section 4.29. Anti-Terrorism Laws, Anti-Corruption Laws and Sanctions. Neither the Loan Parties nor any of their officers, directors, employees or agents acting on the Loan Parties’ behalf shall use the proceeds of the Term Loans to make any payments, directly or to the knowledge of the Loan Parties, indirectly, to any Foreign Official in violation of the United States Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), or any other applicable Anti-Corruption Law. None of the Loan Parties nor, to the knowledge of the Loan Parties, any officers, directors, employees or agents acting on the Loan Parties’ behalf, is in violation of the Bank Secrecy Act, as amended by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act) of 2001 (the “PATRIOT Act”) or any other applicable Anti-Terrorism Law, Anti-Corruption Law or Sanctions, or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any applicable Anti-Terrorism Laws, Anti-Corruption Laws or Sanctions. None of the Loan Parties or any officers, directors, employees or agents acting on the Loan Parties’ behalf, or their respective agents acting or benefiting in any capacity in connection with the Term Loans or other transactions hereunder, is a Blocked Person. None of the Loan Parties, nor, to the knowledge of the Loan Parties, any of their agents acting in any capacity in connection with the Term Loans or other transactions hereunder (A) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person in violation of applicable Sanctions, or (B) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to any applicable Sanctions in violation of applicable Sanctions.

Section 4.30. Disclosure. No representation or warranty of any Loan Party contained in any Loan Document or in any other documents, certificates or written statements (in each case other than in respect of forward looking statements, budgets, estimates, projections, general market or industry data) furnished to Lenders by or on behalf of any Loan Party or any of its Subsidiaries pursuant to the terms herein, when taken as a whole when furnished contains any untrue statement of a material fact or omits to state a material fact (known to Borrower, in the case of any document not furnished by it) necessary in order to make the statements contained herein or therein not materially misleading in light of the circumstances in which the same were made (giving effect to all supplements and updates thereto); provided, that, to the extent such representation or warranty relates to any projections, such projections shall only be required to be based upon good faith estimates and assumptions believed by Borrower to be reasonable at the time made, it being recognized by Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material.

Section 4.31. Indebtedness. Set forth on Schedule 6.1 is a true and complete list of all Indebtedness for borrowed money of each Loan Party outstanding or contemplated immediately prior to the Closing Date that is to remain outstanding immediately after giving effect to the closing hereunder on the Closing Date and such Schedule 6.1 accurately sets forth the aggregate outstanding principal amount of such Indebtedness as of the Closing Date.

 

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Section 4.32. Use of Proceeds. The proceeds of the Term Loans shall be used by the Loan Parties as described in Section 2.4. No portion of the proceeds of any Credit Extension shall be used in any manner that causes or would reasonably be expected to cause such Credit Extension or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation thereof or to violate the Exchange Act.

Section 4.33. Solvency. Immediately following the making of the Term Loans on the Closing Date and after giving effect to the application of the proceeds of the Term Loans on the Closing Date, as of the Closing Date (a) the present fair saleable value of the property (on a going concern basis) of the Loan Parties on a consolidated basis, will be greater than the amount that will be required to pay their debts and other liabilities, (b) the Loan Parties on a consolidated basis will be able to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured in the ordinary course of business and (c) the Loan Parties on a consolidated basis will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such business is now conducted and is proposed to be conducted following the Closing Date; provided that in each case, the amount of contingent liabilities at any time shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. Such foregoing determination has been made by the chief financial officer or other Authorized Officer of Borrower after having conducted a diligent inquiry on a good faith basis.

ARTICLE V

AFFIRMATIVE COVENANTS

Each Loan Party covenants and agrees that so long as any Commitment is in effect and until payment in full of all Obligations (other than contingent obligations not due and owing), each Loan Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Article V.

Section 5.1. Financial Statements and Other Reports. Unless otherwise provided below, Borrower will deliver to Agents (for distribution to the Lenders, and with respect to clause (d), to the lead insurer under the AON Insurance Policy):

(a) [Reserved].

(b) Quarterly Financial Statements. Within 60 days after the end of each Fiscal Quarter (provided that if Borrower files quarterly reports with the Securities and Exchange Commission, then delivery of quarterly financial statements hereunder shall be deemed timely if delivered no later than the last date for timely delivery of Borrower’s Form 10-Q filing to the Securities and Exchange Commission for such Fiscal Quarter) of each Fiscal Year (including the fourth Fiscal Quarter), the unaudited consolidated balance sheet of Borrower and its Subsidiaries,

 

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as at the end of such Fiscal Quarter and the related unaudited consolidated statements of income, stockholders’ equity and cash flows of Borrower and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, setting forth in comparative form the corresponding figures, with respect to the balance sheet, statements of income and statements of cash flows, for the corresponding periods of the previous Fiscal Year to the extent such period ended following the Closing Date and with respect to statements of income, the corresponding figures from the Financial Plan for the current Fiscal Year, all in reasonable detail, together with a Financial Officer Certification.

(c) Annual Financial Statements. Within 120 days after the end of each Fiscal Year (or, in the case of the fiscal year ending December 31, 2023, 150 days) (provided that if Borrower shall request additional time to deliver such annual financial statements in writing to the Adminstrative Agent at least ten (10) Business Days prior to the due date of such annual financial statements, and the Required Lenders do not, within ten (10) Business Days following receipt of such notice, object to providing such additional time, Borrower shall be provided the requested additional time to deliver such annual financial statements, and, provided that if Borrower files annual reports with the Securities and Exchange Commission, then delivery of annual financial statements hereunder shall be deemed timely if delivered no later than the last date for timely delivery of Borrower’s Form 10-K filing to the Securities and Exchange Commission for such Fiscal Year), (i) the consolidated balance sheet of Borrower and its Subsidiaries, as at the end of such Fiscal Year and the related consolidated statements of income, stockholders’ equity and cash flows of Borrower and its Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year to the extent such Fiscal Year ended following the Closing Date and the corresponding figures from the Financial Plan for the Fiscal Year covered by such financial statements, in reasonable detail, together with a Financial Officer Certification, (ii) with respect to such consolidated financial statements, an audit report thereon of an independent certified public accounting firm of recognized national standing selected by Borrower or regional as listed on Schedule 5.1(c) (which report shall be unqualified as and contain going concern qualification (other than (y) with respect to, or resulting from, the impending maturity of the Term Loans and any other indebtedness hereunder or (z) any potential or actual breach of any financial maintenance covenant contained in this Agreement) and scope of audit, and shall state that such consolidated financial statements fairly present, in all material respects, the consolidated financial position of Borrower and its Subsidiaries, as at the dates indicated and the results of their operations and their cash flows for the periods indicated in accordance with GAAP applied on a basis consistent with prior years (except as otherwise disclosed in such financial statements) and that the audit by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards);

(d) Compliance Certificate. Within five (5) Business Days of (i) the end of each fiscal month of the Borrower and (ii) each delivery of financial statements of Borrower and its Subsidiaries pursuant to Section 5.1(b), or Section 5.1(c), a duly executed and completed Compliance Certificate which shall, among other things, (x) report in reasonable detail on compliance with Sections 5.10, and, solely with the delivery of financials required in clause (ii) hereof, Section 6.8, (y) include a report of each Loan Parties’ Deposit Accounts and Securities Accounts as of the end of the most recently ended fiscal month with such report setting forth for each such Deposit Account or Securities Account the financial institution maintaining such

 

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account, account name, closing balances of such account as of the end of the most recently ended fiscal month, whether such account is subject to a Control Agreement or, if not, an explanation as to how such account is otherwise an Excluded Account together with any other information the Required Lenders may reasonably request to demonstrate compliance with Section 6.21; provided, that the delivery required by this clause (y) shall no longer be required once the Loan Parties maintain at least $30,000,000 of Qualified Cash on the last day of each fiscal month for a period nine (9) consecutive fiscal months; however, if the Loan Parties fail to maintain at least $30,000,000 of Qualified Cash on the last day of any fiscal month, such delivery required by this clause (y) shall be reinstated, and (z) include a list of any newly entered Material Contracts;

(e) Statements of Reconciliation after Change in Accounting Principles. If, as a result of any change in accounting principles and policies (to the extent any change in policies would result in such change being noted in the audit delivered pursuant to Section 5.1(c)) from those used in the preparation of the Historical Financial Statements, the consolidated financial statements of Borrower and its Subsidiaries delivered pursuant to Section 5.1(b) or Section 5.1(c) will differ in any material respect from the consolidated financial statements that would have been delivered pursuant to such subdivisions had no such change in accounting principles and policies (to the extent any change in policies would result in such change being noted in the audit delivered pursuant to Section 5.1(c)) been made, then together with the first delivery of such financial statements after such change, one or more statements of reconciliation (including any changes that would affect any calculations relating to the financial covenants) for previous comparative period financial statements in form and substance reasonably satisfactory to the Required Lenders;

(f) Notice of Default. Promptly (but in any event within five (5) Business Days) upon any officer of Borrower or any other Loan Party obtaining knowledge (i) of any condition or event that constitutes a Default or an Event of Default or that written notice has been given to Borrower with respect thereto, (ii) that any Person has given any written notice to any Loan Party or any of its Subsidiaries or taken any other action with respect to any event or condition set forth in Section 8.1(b) or (iii) of the occurrence of any event or change that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect, a certificate of its Authorized Officers specifying the nature and period of existence of such condition, event or change, or specifying the notice given and action taken by any such Person and the nature of such claimed Event of Default, Default, default, event or condition, and what action Borrower has taken, is taking and proposes to take with respect thereto;

(g) Notice of Litigation. Promptly (but in any event within five (5) Business Days) upon any officer of Borrower or any other Loan Party obtaining knowledge of (i) the institution of, or non-frivolous written threat of, any Adverse Proceeding not previously disclosed in writing by Borrower to Lenders, or (ii) any material development in any Adverse Proceeding that, in the case of either clause (i) or (ii) has a reasonable likelihood of adverse determination, and such determination would be reasonably expected to have a Material Adverse Effect, or seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby, written notice thereof together with such other information as may be reasonably available to such Loan Party to enable Lenders and their counsel to evaluate such matters (subject to the limitations set forth in the last paragraph of this Section 5.1);

 

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(h) ERISA. (i) Promptly (but in any event within five (5) Business Days) after Borrower or any other Loan Party obtains knowledge of the occurrence of or forthcoming occurrence of any ERISA Event that would reasonably be expected to result in a Material Adverse Effect, a written notice specifying the nature thereof, what action any Loan Party or any of its ERISA Affiliates has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; and (ii) with reasonable promptness, copies of (A) each Schedule SB (Actuarial Information) to the annual report (Form 5500 Series) filed by any Loan Party or any of its ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan as the Required Lenders shall reasonably request, (B) all notices received by any Loan Party or any of their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event that would reasonably be expected to result in a Material Adverse Effect and (C) copies of such other documents or governmental reports or filings relating to any Employee Benefit Plan as the Required Lenders shall reasonably request;

(i) Financial Plan. As soon as practicable and in any event no later than 90 days after the beginning of each Fiscal Year, a consolidated plan and financial forecast of the Borrower that has been approved by its Board of Directors (a “Financial Plan”) for such Fiscal Year (the “Extended Covered Period”), including (i) a forecasted consolidated balance sheet and forecasted consolidated statements of income and cash flows of Borrower and its Subsidiaries for such Fiscal Year or Fiscal Quarter, as applicable or, if applicable, each such Fiscal Year or Fiscal Quarter in the Extended Covered Period, and an explanation of the assumptions on which such forecasts are based and (ii) forecasted consolidated statements of income and cash flows of Borrower and its Subsidiaries for each financial quarter of such Fiscal Year or, if applicable, each such Fiscal Year in the Extended Covered Period, together, in each case, with an explanation of the assumptions on which such forecasts are based; provided that any Financial Plan provided pursuant to this Section 5.1(i) shall be marked “PRIVATE”. Borrower will also deliver, within 10 Business Days of the date the Financial Plan is delivered to the Board of Directors, an outlook for subsequent Fiscal Years, which for the avoidance of doubt, do not have to be approved by its Board of Directors. For the avoidance of doubt, any Financial Plan provided hereunder shall not be provided to the Public Lenders;

(j) Insurance Report. At the earlier of the actual time of delivery of the annual financial statements required to be delivered pursuant to Section 5.1(c), or if such annual financial statements are not timely delivered in any Fiscal Year, at the time that such annual financial statements otherwise were required to be delivered pursuant to Section 5.1(c) in respect of such Fiscal Year, a report outlining all material insurance coverage maintained as of the date of such report by Borrower and its Subsidiaries;

(k) Notice of Change in Board of Directors. Promptly (but in any event within five (5) Business Days), written notice of any change in the Board of Directors (or similar governing body) of any Loan Party or any of its Subsidiaries.

(l) Notice Regarding Material Contracts.

 

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(i) (x) at the end of each Fiscal Month, a report of any Material Contract of a Loan Party terminated other than due to an expiration of the term, or amended in a manner that is materially adverse to any Loan Party or any such Subsidiary, as the case may be, or (y) at the end of each Fiscal Quarter, any new Material Contract entered into, a written statement describing such event, with copies of such material amendments or new contracts, delivered to Agents, and an explanation of any actions being taken with respect thereto; and

(ii) each Loan Party shall deliver promptly to the Administrative Agent a copy of each material demand, material notice or material document received by it under any Material Contract.

(m) Environmental Reports and Audits. Within five (5) Business Days following the receipt thereof, copies of all environmental audits and reports with respect to any environmental matter which has resulted in or is reasonably likely to result in a Material Adverse Effect;

(n) Information Regarding Collateral. Borrower will furnish to Agents prior five (5) days’ written notice of any change (i) in any Loan Party’s corporate name, (ii) in any Loan Party’s identity or corporate structure or (iii) in any Loan Party’s federal taxpayer identification number. Each Loan Party agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the UCC or otherwise that are required in order for Agents to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral and for the Collateral at all times following such change to have a valid, legal and perfected security interest as contemplated in the Collateral Documents. Each Loan Party also agrees promptly to notify Agents if any material portion of the Collateral is damaged or destroyed;

(o) Tax Returns. As soon as practicable and in any event within thirty (30) days following the filing thereof, copies of each federal income tax return filed by or on behalf of any Loan Party;

(p) AON Insurance Policy and License Agreements. (i) As soon as practicable and in any event within five (5) Business Days following the receipt or delivery thereof, copies of all non-operational written notices sent by or to any Loan Party or its Subsidiaries under or in respect of the AON Insurance Policy, any Intercompany License Agreement or any material Third Party License Agreement (including, for the avoidance of doubt, notices relating to any terminations of or material amendments to the AON Insurance Policy, any Intercompany License Agreements, or any material Third Party License Agreements); provided that notice of any event giving rise to a termination right under any Intercompany License Agreement or any material Third Party License Agreement shall be delivered promptly and in any event within five (5) Business Days of any Loan Party’s knowledge of such event and (ii) together with each delivery of financial statements of Borrower and its Subsidiaries pursuant to Section 5.1(b) or Section 5.1(c), a true, complete and correct copy of any Master Services Agreement not previously provided, together with all amendments thereto through the date of such delivery;

(q) Extraordinary Receipts. Promptly (but in any event within ten (10) Business Days) after receipt by Borrower or any of its Subsidiaries of any Extraordinary Receipt, a written statement describing the amount and source of such Extraordinary Receipt, and the Net Proceeds thereof;

 

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(r) Information Regarding Location of Equipment. Together with each delivery of financial statements of Borrower and its Subsidiaries pursuant to Section 5.1(b), updates to Schedule 4.22, if any, which updates shall describe new locations to which equipment having a value in excess of $2,500,000, singly or $5,000,000 in the aggregate has been moved during the preceding quarter (other than as permitted pursuant to Section 5.12);

(s) IP Rights Transactions. Concurrently with the delivery of each Compliance Certificate pursuant to Section 5.1(d), with respect to any disposition (including, without limitation, any licensing or sublicensing, other than non-exclusive licensing or non-exclusive sublicensing that is (i) incidental or ancillary to, or not the primary purpose of, the sale or licensing of a product or service of the Borrower or its Subsidiaries, as applicable, that is sold or otherwise provided in the ordinary course of business, or (ii) otherwise incidental or ancillary to the commercial arrangement) of any IP Rights by Borrower or any of its Subsidiaries to a Person that is not a Loan Party or a Subsidiary of a Loan Party, Borrower shall deliver to the Collateral Agent and Lenders a notice identifying such disposition with reasonable particularity and shall identify such disposition as either a Qualified License, Asset Sale Exception, or an Extraordinary IP Rights Transaction;

(t) Changes to IP Portfolio. Concurrently with the delivery of each Compliance Certificate pursuant to Section 5.1(d), Borrower shall deliver to the Collateral Agent, Lenders, and the lead insurer under the AON Insurance Policy a reasonably detailed report providing the information set forth on Exhibit M describing, among other things, changes to the portfolio of registered and applied-for IP Rights owned by the Loan Parties, including, without limitation, addition of such IP Rights, and disposition of such IP Rights which the Borrower has knowledge and, in each case, occurring during the period reported upon by the concurrently delivered Compliance Certificate and Borrower will, upon the reasonable request of the lead insurer under the AON Insurance Policy following review of such report, participate in a meeting by conference call at such time as may be agreed to by Borrower and such lead insurer to discuss any material changes to the portfolio of registered and applied-for IP Rights owned by the Loan Parties; and

(u) Other Information. (i) Promptly upon becoming available, copies of (A) all financial statements, material reports, material notices and proxy statements sent or made available generally by any Loan Party to its security holders generally acting in such capacity and (B) all regular and periodic reports and all registration statements and prospectuses, if any, filed by any Loan Party or any of its Subsidiaries with the Securities and Exchange Commission or any governmental or private regulatory authority, in each case to the extent not duplicative of information already provided to the Agents or the Lenders, (ii) promptly after submission to any Governmental Authority, all documents and information furnished to such Governmental Authority in connection with any investigation of any Loan Party (other than any investigation which would not reasonably be expected to result in a Material Adverse Effect or Event of Default), provided, that the disclosure of such information is legally permissible, and provided, further, that to the extent such information has not been otherwise publicly disclosed by the Borrower, such disclosure shall not be made available to the Public Lenders, (iii) promptly upon receipt thereof, copies of all financial reports (including, without limitation, management letters) submitted to any Loan Party by its auditors in connection with any annual interim audit of the books thereof subject to confidentiality and reliance restrictions and (iv) such other information and data with respect to Borrower or any of its Subsidiaries as from time to time may be reasonably requested by the Required Lenders. Information provided upon request of the Required Lenders shall also be delivered to the Administrative Agent for posting to all Lenders.

 

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(v) Incurrence of Certain Permitted Indebtedness. Promptly (but in any event within ten (10) Business Days) upon the incurrence by the Borrower or any of its Subsidiaries of any Indebtedness with a principal amount in excess of $250,000 individually or in the aggregate pursuant to clause (l) or clause (t) of the definition of “Permitted Indebtedness”, the Borrower shall deliver to the Collateral Agent, Lenders, and the lead insurer under the AON Insurance Policy notice that the Borrower or such Subsidiary has incurred such Permitted Indebtedness with a description of the material terms with respect to such Permitted Indebtedness.

Documents required to be delivered pursuant to Section 5.1 may be delivered electronically and if so delivered, shall be deemed to have been delivered on the earlier of the date (A) on which any Loan Party posts such documents, or provides a link thereto, on such Loan Party’s or one of its Affiliates’ website on the Internet or (B) on which such documents are posted on such Loan Party’s behalf on IntraLinks/IntraAgency or another website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that Borrower shall notify the Administrative Agent (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents.

Each Loan Party hereby acknowledges that (a) the Administrative Agent shall make available to the Lenders materials and/or information provided by or on behalf of the Loan Parties hereunder (collectively, “Borrower Materials”) by posting Borrower Materials on IntraLinks, DebtDomain, SyndTrak, ClearPar or another similar electronic system chosen by the Administrative Agent and the Required Lenders to be the electronic transmission system or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may not, or may have personnel who do not, wish to receive information regarding any material non-public information with respect to the Loan Parties or their Affiliates, or the respective securities of any of the foregoing (collectively, “MNPI”), and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Loan Parties hereby agree that they will identify that portion of Borrower Materials that may be distributed to the Public Lenders and that (i) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof, (ii) by marking Borrower Materials “PUBLIC,” the Loan Parties shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Borrower Materials as only containing either publicly available information, or information concerning the Borrower, its Subsidiaries and Affiliates, or its or their respective securities that (in the good faith judgment of the Borrower) is not material information (although it may be sensitive and proprietary) with respect to the Borrower or any of its Subsidiaries or Affiliates or its or their respective securities for purposes of United States federal and state securities laws, (iii) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information” and (iv) the Administrative Agent and the Lenders shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.” It being agreed that the Borrower and its Subsidiaries are under no obligation to mark any document “PUBLIC” and to the extent not designated “PUBLIC” it shall be deemed private.

 

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Although the Platform and its primary web portal are secured with generally-applicable security procedures and policies implemented or modified by the Administrative Agent with the approval of the Required Lenders from time to time (including, as of the Closing Date, a user ID/password authorization system) and the Platform is secured through a per-deal authorization method whereby each user may access the Platform only on a deal-by-deal basis, each of the Lenders and the Loan Parties acknowledges and agrees that the distribution of material through an electronic medium is not necessarily secure, that the Administrative Agent is not responsible for approving or vetting the representatives or contacts of any Lender that are added to the Platform, and that there may be confidentiality and other risks associated with such distribution. Each of the Lenders and the Loan Parties hereby approves distribution of the Communications through the Platform and understands and assumes the risks of such distribution.

THE PLATFORM AND THE COMMUNICATIONS ARE PROVIDED “AS IS” AND “AS AVAILABLE”. THE APPLICABLE PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE PLATFORM AND THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE APPLICABLE PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF THEIR RESPECTIVE RELATED PARTIES (COLLECTIVELY, “APPLICABLE PARTIES”) HAVE ANY LIABILITY TO ANY LOAN PARTY, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY LOAN PARTY’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET OR THE PLATFORM; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL ANY PERSON HAVE ANY LIABILITY TO ANY OTHER PERSON HEREUNDER FOR INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES); PROVIDED THAT, FOR THE AVOIDANCE OF DOUBT, THE IMMEDIATELY PRECEDING CLAUSE SHALL NOT LIMIT THE LOAN PARTIES’ INDEMNITY OBLIGATIONS TO THE EXTENT OTHERWISE SET FORTH HEREIN IN RESPECT OF ANY SUCH TYPES OF DAMAGES DESCRIBED ABOVE WHICH ARE SUCCESSFULLY ASSERTED AGAINST THE APPLICABLE PARTIES. “Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Loan Party pursuant to any Loan Document or the transactions contemplated therein which is distributed by the Administrative Agent or any Lender by means of electronic communications pursuant to this Section 5.1, including through the Platform.

 

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Each Lender agrees that notice to it (as provided in the next sentence) specifying that Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender agrees (i) to notify the Administrative Agent in writing (which could be in the form of electronic communication) from time to time of such Lender’s email address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such email address.

The Administrative Agent shall store the Communications on the Platform in accordance with the Administrative Agent’s generally applicable document retention procedures and policies.

Nothing herein shall prejudice the right of the Administrative Agent, any Lender or Loan Party to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.

Anything to the contrary notwithstanding, nothing in this Agreement will require any Loan Party to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter, or provide information (i) that constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure is prohibited by Law or binding agreement or (iii) that is subject to attorney-client or similar privilege or constitutes attorney work product; provided that (a) the Loan Parties and their Subsidiaries will at all times use commercially reasonable efforts to document in writing all of their trade secrets, know-how, formulas, processes, or other specifications, and other confidential or proprietary information (including software source code) (collectively, the “Deposit Materials”) in the manner consistent with, or not less restrictive than, the Loan Parties’ policies and/or procedures existing as of the date of this Agreement; (b) the Loan Parties and their Subsidiaries shall (x) maintain all Deposit Materials in an internal electronic lockbox or backup (the “Lockbox”), (y) within ninety (90) days from the Initial Closing Date, use commercially reasonable efforts to enter into an arrangement pursuant to which copies of all Deposit Materials are stored in the form of the Loan Parties’ backup tapes in an “offsite tape vault” (the “Vault”) service maintained by Iron Mountain, Inc. or any of its affiliates (or such other third party acceptable to the Loan Parties, Required Lenders and the insurers holding at least 50.1% of the aggregate risk under the AON Insurance Policy, as custodian (such entity in such capacity, the “Custodian”), which arrangement is in the form of a tri-party arrangement to be entered into by and among IPCo, the Custodian and such other entity acceptable to the Required Lenders and the insurers holding at least 50.1% of the aggregate risk under the AON Insurance Policy that permits the Custodian to so store such Deposit Materials and designates such other entity acceptable to the Required Lenders and the insurers holding at least 50.1% of the aggregate risk under the AON Insurance Policy as beneficiary for the benefit of the Secured Parties, substantially in the form of the Custodian’s standard form(s) for such arrangement with the release condition provided in clause (c) of this paragraph, and (z) fully update the Deposit Materials deposited into the Lockbox and the Vault (or, in the case of the Vault, provide or deliver such fully updated Deposit Materials to the Custodian), in each case on or promptly before the last Business Day of each Fiscal Quarter; and (c) following acceleration of the Obligations, the Loan Parties shall be required to promptly provide the password for, and/or otherwise grant access to, the Lockbox and the Vault to the Agents.

 

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Section 5.2. Existence. Except as otherwise permitted under Section 6.9, each Loan Party will, and will cause each of its Subsidiaries to, at all times preserve and keep in full force and effect its existence and all rights and Governmental Authorizations, qualifications, franchises, licenses and permits and to conduct its business in each jurisdiction in which its business is conducted in each case except to the extent failure to keep in full force and effect such rights, Authorizations, qualifications, franchises, licenses and permits would not result in a Material Adverse Effect; provided that any Subsidiary of Borrower may consummate any transaction permitted by Article VI.

Section 5.3. Payment of Taxes and Claims. Except as set forth on Schedule 4.10 and except to the extent that a failure to do so would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each Loan Party will pay all Taxes imposed upon it or upon its income or profits or upon any of its property that have become due and payable and that by law have or may become a Lien upon any of its properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided that no Loan Party shall be required to pay any such Tax or claim, the payment of which is subject to a valid extension or being contested in good faith and by proper proceedings if a reserve is maintained with respect thereto in accordance with GAAP and to the extent required by GAAP.

Section 5.4. Maintenance of Properties. Except if the failure to do so would not reasonably be expected to have a Material Adverse Effect, each Loan Party will, and will cause each of its Subsidiaries to (a) maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted and casualty and condemnation excepted, all material properties used or useful in the business of the Loan Parties and their respective Subsidiaries and from time to time will make or cause to be made all necessary repairs, renewals and replacements thereof and (b) comply at all times with the provisions of all material leases to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder.

Section 5.5. Insurance.

(a) The Loan Parties will maintain or cause to be maintained, with financially sound and reputable insurers, casualty insurance, business interruption insurance, such public liability insurance, third party property damage insurance or such other insurance with respect to liabilities, losses or damage in respect of the assets, properties and businesses of the Loan Parties and their respective Subsidiaries as may customarily be carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses, in each case in such amounts (giving effect to self-insurance), with such deductibles, covering such risks and otherwise on such terms and conditions as shall be customary for such Persons (including as set forth in the Pledge and Security Agreement). Without limiting the generality of the foregoing, the Loan Parties and their respective Subsidiaries will maintain or cause to be maintained (i) flood insurance with respect to each Flood Hazard Property that is located in a community that participates in the National Flood Insurance Program, in each case in compliance with any applicable regulations of the Board of Governors of the Federal Reserve System, and (ii) casualty insurance on the Collateral under such policies of insurance, with such insurance companies, in such amounts, with such deductibles, and covering such risks as are at all times carried or maintained under similar circumstances by Persons of established reputation engaged in similar

 

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businesses in similar locations. If any Loan Party or any of its Subsidiaries fails to maintain such insurance, Agents (acting at the direction of Required Lenders) upon five (5) Business Days prior written notice to the Borrower may arrange for such insurance, but at Borrower’s expense and without any responsibility on Agents’ part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims. Upon the occurrence and during the continuance of an Event of Default, Agents shall have the sole right (without obligation), in the name of the Lenders, any Loan Party and its Subsidiaries, to file claims under any insurance policies, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies.

(b) Each of the insurance policies required to be maintained under this Section 5.5 shall provide for at least thirty (30) days’ prior written notice to Agents of the cancellation thereof, in each case, or, if less, the maximum amount of prior written notice that the applicable insurance provider will provide. Receipt of such notice shall entitle Agents (but Agents shall not be obligated) to renew any such policies, cause the coverages and amounts thereof to be maintained at levels required pursuant to this Section 5.5 or otherwise to obtain similar insurance in place of such policies, in each case at the expense of the Loan Parties.

Section 5.6. Inspections; Books and Records. Each Loan Party will, and will cause each of its Subsidiaries to, (a) keep adequate books of record and account in which entries that are full, true and correct in all material respects are made of all material dealings and transactions in relation to its business and activities and (b) permit any representatives designated by any Agent (including employees of any Agent, any Lender or any consultants, auditors, accountants, lawyers and appraisers retained by an Agent) to visit and inspect any of the properties of any Loan Party and any of its respective Subsidiaries, to (subject to the last paragraph of Section 5.1) inspect, copy and take extracts from its and their financial and accounting records, and to discuss its and their affairs, finances and accounts with its and their officers and independent accountants and auditors, all upon reasonable notice and at such times during normal business hours, provided, that if no Event of Default has occurred and is continuing, such audits and inspections shall take place no more than once annually. Subject to Section 10.2, the Loan Parties agree to pay the reasonable and documented out-of-pocket costs and expenses of the Agents incurred in connection with one such visit and inspection per calendar year (provided that such limit shall not apply during the continuance of an Event of Default). The Loan Parties acknowledge that any Agent, after exercising its rights of inspection, may prepare and distribute to the Lenders certain reports pertaining to the Loan Parties’ assets for internal use by Agents and the Lenders, in each case subject to the terms of Section 10.17.

Section 5.7. Private Lenders Meetings and Conference Calls.

(a) Borrower will, upon the reasonable request of Required Lenders, participate in a meeting of Agents, the insurers under the AON Insurance Policy, and Private Lenders to be held no more frequently than once every Fiscal Quarter to be held at Borrower’s corporate offices or by conference call (or at such other location as may be agreed to by Borrower, the Required Lenders and Agents) at such time as may be agreed to by Borrower, the Required Lenders and Agents.

 

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(b) No later than thirty days after the end of each Fiscal Quarter Borrower shall prepare and deliver to Agents, a majority of the insurers under the AON Insurance Policy, and Private Lenders a Narrative Report relating to such immediately preceding Fiscal Quarter. No later than five (5) Business Days after delivery of the Narrative Report, Required Lenders may request by written notice to Borrower (the “Narrative Report Call Notice”) that Borrower cause its chief financial officer or other Authorized Officer to participate in a conference call with Agents, a majority of the insurers under the AON Insurance Policy, and all Private Lenders, in each case, who choose to participate in such conference call during which conference call the chief financial officer or other Authorized Officer shall review the Narrative Report, and such other matters as any Agent or any Private Lender may reasonably request that has been set forth in the Narrative Report Call Notice (the “Narrative Report Call”). If a Narrative Report Call Notice is timely delivered to Borrower, Borrower shall hold the Narrative Report Call no later than five (5) Business Days after receipt of the Narrative Report Call Notice.

Section 5.8. Compliance with Laws. Each Loan Party will comply, and shall cause each of its Subsidiaries to comply and shall use its commercially reasonable efforts to cause all other Persons, if any, on or occupying any Material Real Estate Assets to comply, with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority (including Environmental Laws, ERISA, Sanctions, Anti-Corruption Laws, Anti-Terrorism Laws, the PATRIOT Act, and Export Controls), non-compliance with which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect (including as set forth in the Pledge and Security Agreement).

Section 5.9. Environmental.

(a) Each Loan Party shall (i) keep all of its Real Property free of any Environmental Liens (other than Permitted Liens), other than Environmental Liens that could not reasonably be expected to result in a Material Adverse Effect, (ii) comply, and take all commercially reasonable steps to cause all tenants and other Persons who may come upon any property owned or operated by it to comply, with all Environmental Laws in all material respects and provide to Agents any documentation of such compliance which the Required Lenders may reasonably request, except for such noncompliance that could not reasonably be expected to result in a Material Adverse Effect, (iii) maintain and comply in all material respects with all Governmental Authorizations required under applicable Environmental Laws, except where the failure to maintain or comply could not reasonably be expected to result in a Material Adverse Effect, (iv) take commercially reasonable steps to prevent any Release of Hazardous Materials from any property owned or operated by any Loan Party, except to the extent such Release would not reasonably be expected to result in a Material Adverse Effect, (v) ensure that there are no Hazardous Materials present on or at or migrating from any property owned or operated by any Loan Party, except to the extent that any such presence or migration would not reasonably be expected to result in a Material Adverse Effect, (vi) undertake or cause to be undertaken any and all Remedial Actions in response to any Environmental Claim, Release of Hazardous Materials or violation of Environmental Law that could reasonably be expected to result in a Material Adverse Effect, to the extent required by Environmental Law or any Governmental Authority,

 

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(vii) to repair and remedy any impairment to the Real Property consistent with its current use and, upon request of the Required Lenders, that could reasonably be expected to result in a Material Adverse Effect, to the extent required by Environmental Law or any Governmental Authority, and (viii) provide Agents all data, information and reports generated in connection with any of the foregoing matters (in each case subject to the limitations set forth in Section 5.1).

(b) The Loan Parties shall promptly (but in any event within five (5) Business Days) (i) notify Agents in writing after obtaining knowledge of (A) a material Release in excess of any reportable quantity or material violation of Environmental Laws in, at, on, under or from any part of the Real Property or any improvements constructed thereon, (B) any material Environmental Claims asserted against or Environmental Liabilities and Costs of any Loan Party or predecessor in interest or concerning any Real Property, (C) any failure to comply with Environmental Law in all material respects at any Real Property or that is reasonably likely to result in an Environmental Claim asserted against any Loan Party, (D) any condition on any real property adjoining or in the vicinity of any Real Property that could reasonably be expected to cause such Real Property or any part thereof to be subject to any material restrictions on the ownership, occupancy, transferability or use thereof under any Environmental Laws, and (E) any notice of Environmental Lien filed against any Real Property, in each case (A) through (E), that could reasonably be expected to result in a Material Adverse Effect, and (ii) provide such other documents and information as reasonably requested by Required Lenders in relation to any of the foregoing matters set forth in Section 5.9(b)(i).

Section 5.10. Subsidiaries.

(a) In the event that after the Closing Date any Person becomes a wholly-owned Domestic Subsidiary of a Loan Party (other than an Excluded Subsidiary), then within ninety (90) days of such Person becoming a Domestic Subsidiary, the applicable Loan Party shall (a) cause such Domestic Subsidiary to become a Guarantor hereunder and a Grantor under and as defined in the Pledge and Security Agreement by executing and delivering to each Agent a Counterpart Agreement, and (b) subject to the limitations and requirements of the Loan Documents take all such actions and execute and deliver, or cause to be executed and delivered, all such documents, instruments, agreements, and certificates that Required Lenders shall reasonably request to perfect the security interest in the assets of such Subsidiary constituting Collateral. With respect to each such Domestic Subsidiary, Borrower shall promptly send to Agents written notice setting forth with respect to such Person (i) the date on which such Person became a Subsidiary of a Loan Party, and (ii) all of the data required to be set forth in the Schedules hereto with respect to such joining Subsidiary, and such written notice shall be deemed to supplement the applicable Schedules for all purposes hereof. For avoidance of doubt, each future wholly-owned Domestic Subsidiary of Borrower that is not an Excluded Subsidiary, whether formed or acquired, shall become a Guarantor in accordance with the foregoing within ninety (90) days of formation or acquisition.

(b) The Loan Documents shall not contain any requirements as to, the creation or perfection of pledges of, security interests in, Mortgages on, or the obtaining of title insurance, surveys, abstracts or appraisals or taking other actions with respect to any Excluded Assets and the Liens required to be granted from time to time pursuant hereto shall be subject to exceptions and limitations set forth in this Agreement and the Collateral Documents.

 

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(c) [Reserved].

(d) Notwithstanding anything herein to the contrary Borrower and the Guarantors shall not be required, nor shall the Collateral Agent be authorized (unless otherwise approved by the Borrower), (i) to perfect the above-described pledges, security interests and mortgages by any means other than by (A) filings pursuant to the Uniform Commercial Code in the office of the secretary of state (or equivalent filing office of the relevant State of the respective jurisdiction of organization of the Borrower or any Guarantor), (B) filings in United States or foreign government offices with respect to intellectual property as expressly required herein and under the other Loan Documents, (C) delivery to the Collateral Agent, for its possession and control, of all Collateral consisting of intercompany notes, instruments, chattel paper and all stock (or similar) certificates of the Borrower and its Subsidiaries to the extent required herein and under the other Loan Documents, or (D) Mortgages required to be delivered pursuant Section 5.11 and fixture filings relating to Material Real Estate Assets, (ii) [reserved], (iii) other than a Foreign Subsidiary that becomes a Borrower or a Guarantor pursuant to this Section 5.10, to take any action in any non-U.S. jurisdiction or pursuant to the requirements of the laws of any non-U.S. jurisdiction in order to create any security interests (for the avoidance of doubt, other than the execution of documents by individuals located outside of the U.S.) or to perfect any security interests in assets located outside of the United States, including with respect to any intellectual property registered outside of the United States, (iv) except as expressly provided above, to take any other action with respect to any Collateral to perfect through control agreements or to otherwise perfect by “control”, (v) to provide any notice or to obtain the consent of governmental authorities under the Federal Assignment of Claims Act (or any state equivalent thereof) or (vi) to enter into any source code escrow arrangement (or be obligated to register intellectual property); provided that, for the avoidance of doubt, the Borrower may elect to perform any of the foregoing in its sole discretion.

Section 5.11. Material Real Estate Assets. In the event that any Loan Party acquires a Material Real Estate Asset and such interest has not otherwise been made subject to the Lien of the Collateral Documents in favor of Agents, for the benefit of Secured Parties, then such Loan Party shall within one hundred and twenty (120) days after acquiring such Material Real Estate Asset, take all such actions and execute and deliver, or cause to be executed and delivered, all such Mortgages, documents, instruments, agreements, opinions, surveys, Title Policies, “life of loan” flood hazard determinations with executed notices to Borrower thereto, if applicable, evidence of flood insurance, if applicable, and other certificates, documents and other information as are reasonably requested by the Required Lenders and necessary to grant and perfect a First Priority Lien on such Material Real Estate Asset in favor of the Collateral Agent, for the benefit of the Secured Parties, all in form and substance reasonably satisfactory to the Required Lenders. In addition to the foregoing, Borrower shall, at the request of Required Lenders, deliver, from time to time, to Agents such appraisals as are required by law or regulation of Material Real Estate Assets with respect to which Collateral Agent has been granted a Lien.

Section 5.12. [Reserved].

 

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Section 5.13. Further Assurances.

(a) Subject to the limitations, terms and conditions of the Loan Documents, at any time or from time to time upon the reasonable request of any Agent, each Loan Party will, at its expense, promptly execute, acknowledge and deliver such further documents and do such other acts and things as such Agent or the Lenders may reasonably request in order to effect fully the purposes of the Loan Documents, including providing Lenders with any information reasonably requested pursuant to Section 10.21. In furtherance and not in limitation of the foregoing, each Loan Party shall take such actions as are reasonably necessary or as any Agent or Lenders may reasonably request from time to time to ensure that the Obligations are guaranteed by the Guarantors and are secured by the Collateral of each Loan Party in the manners set forth in the Loan Documents. The Loan Parties shall take all reasonable steps necessary to provide that at all times, the Liens granted pursuant to the Collateral Documents shall be First Priority Liens to the extent required herein.

(b) If any Loan Party shall create or assume any Lien upon any of its properties or assets, whether now owned or hereafter acquired, other than Permitted Liens, it shall make or cause to be made effective provisions whereby the Obligations will be secured by such Lien equally and ratably with any and all other Indebtedness secured thereby as long as any such Indebtedness shall be so secured; provided that, notwithstanding the foregoing, this covenant shall not be construed as a consent by Agents or Required Lenders to the creation or assumption of any such Lien not otherwise permitted hereby.

(c) Any Capital Stock (other than Excluded Capital Stock) issued by an Excluded Subsidiary or Joint Venture to a Loan Party shall be subject to a First Priority Lien granted to the Collateral Agent by such Loan Party.

(d) Each Foreign Subsidiary must be wholly-owned directly or indirectly by a CFC Holding Company or a special purpose vehicle, and the Capital Stock (other than Excluded Capital Stock) in such Foreign Subsidiary shall be subject to a First Priority Lien granted to Collateral Agent by such CFC Holding Company or special purpose vehicle.

Section 5.14. Miscellaneous Business Covenants. Unless otherwise consented to by the Required Lenders:

(a) Non-Consolidation. IPHoldCo will and will cause each of its Subsidiaries to: (i) maintain entity records and books of account separate from those of any other entity which is an Affiliate of such entity (other than IPHoldCo or any of its Subsidiaries); (ii) not commingle its funds or assets with those of any other entity which is an Affiliate of such entity except pursuant to a cash management system permitted pursuant to the below clause (b); (iii) provide that its Board of Directors or other analogous governing body will hold all appropriate meetings to authorize and approve such entity’s actions, which meetings will be separate from those of any other entities (other than IPHoldCo or any of its Subsidiaries); and (iv) otherwise comply with the requirements of its Organizational Documents and comply in all material respects with the requirements of the Loan Documents.

 

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(b) Cash Management Systems. Borrower will and will cause each of its Subsidiaries to establish and maintain cash management systems reasonably acceptable to the Required Lenders, including, without limitation, with respect to sweep and pledged account arrangements, with the cash management systems in place on the Closing Date being deemed to be reasonably acceptable to the Required Lenders.

(c) License Agreements and Third-Party License Agreements.

(i) Unless waived in writing in whole or in part pursuant to this Agreement, the Loan Parties shall, subject to their reasonable business judgment, request that each future license agreement in respect of IP Rights or other intellectual property entered into by a Loan Party as sublicensor with a person other than a Loan Party (a “Third Party License Agreement”) to include indemnification provisions having terms at least as favorable to the Loan Parties as those set forth on Schedule 5.14(c). If (i) an Event of Default under this Agreement shall have occurred and be continuing, and (ii) (x) a written notice of termination or notice of material default (or similar such notification) shall have been delivered under any Third Party License Agreement and the event giving rise to such notice has not been cured by the Loan Parties fifteen (15) days prior to the expiration of the applicable cure period with respect thereto, or (y) any event giving rise to an immediate termination right under any Third Party License Agreement shall have occurred, each Loan Party agrees that the Agents shall have the right, but not the obligation, upon five (5) Business Days prior written notice, to perform or cause the relevant Loan Party to perform any of its obligations under any such Third Party License Agreement or deliver any performance required by such Third Party License Agreement. Each Loan Party agrees that any reasonable out-of-pocket payments by the Lender providing such performance shall be reimbursable pursuant to Section 10.2, and to the extent not reimbursed upon demand, shall constitute a Protective Advance by such Lender under Section 2.2 for all purposes.

(ii) If (i) an Event of Default under this Agreement shall have occurred and be continuing, and (ii) (x) a written notice of termination or notice of material default (or similar such notification) shall have been delivered under any material Third Party License Agreement and the event giving rise to such notice has not been cured by the Loan Parties fifteen (15) days prior to the expiration of the applicable cure period with respect thereto, or (y) any event giving rise to an immediate termination right under any material Third Party License Agreement shall have occurred, each Loan Party agrees that any Agent shall have the right, but not the obligation, upon five (5) Business Days prior written notice to perform or cause the relevant Loan Party to perform any of its obligations under any such Third Party License Agreement or deliver any performance required by such Third Party License Agreement. Each Loan Party agrees that any reasonable out-of-pocket payments by the Lender providing such performance shall be reimbursable pursuant to Section 10.2, and to the extent not reimbursed upon demand, shall constitute a Protective Advance by such Lender under Section 2.2 for all purposes.

(iii) If (i) an Event of Default under this Agreement shall have occurred and be continuing, or (ii) a written notice of termination or notice of material default (or similar such notification) shall have been delivered under any Intercompany License Agreement and the event giving rise to such notice has not been cured by the Loan Parties fifteen (15) days prior to the expiration of the applicable cure period with respect thereto, or (iii) any event giving rise to an immediate termination right under any Intercompany License Agreement shall have occurred, each

 

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Loan Party agrees that any Lender shall have the right, but not the obligation, to perform or cause the relevant Loan Party to perform any of its obligations under any such Intercompany License Agreement or deliver any performance required by such Intercompany License Agreement. Each Loan Party agrees that any out-of-pocket payments by the Lender providing such performance shall be reimbursable pursuant to Section 10.2, and to the extent not reimbursed upon demand, shall constitute a Protective Advance by such Lender under Section 2.2 for all purposes.

(iv) Nothing set forth herein shall prevent or limit the Borrower or any of its Affiliates from entering into or maintaining Third-Party License Agreements in respect of IP Rights so long as such agreements are on Arm’s Length Terms and comply with Section 6.9 and, in each case to the extent applicable, the requirements of this Agreement in respect of Extraordinary IP Rights Transactions and Section 6.12.

Section 5.15. Post-Closing Matters. Borrower shall, and shall cause each of the Loan Parties to, satisfy the requirements set forth on Schedule 5.15 on or before the date specified for such requirement or such later date to be determined by the Required Lenders.

Section 5.16. AON Insurance Policy. Borrower acknowledges and agrees that no proceeds received by the Collateral Agent in respect of a claim under the AON Insurance Policy shall be applied to prepay the outstanding principal balance of any Term Loan nor shall such proceeds constitute Collateral. Lenders hereby authorize Borrower to, and Borrower agrees to, promptly deliver or cause any written notices or other written information relating to the AON Insurance Policy to be delivered to the Administrative Agent.

Section 5.17. [Reserved].

Section 5.18. Changes to Capital Structure. If the Borrower undergoes any material changes to its capital structure (whether by way of additional funding rounds, issuances of Capital Stock, or otherwise), then Borrower shall deliver to Lender an updated capitilization table concurrently with the delivery of any Quarterly Financial Statement described in Section 5.1(b).

Section 5.19. Convertible Notes. Any Convertible Notes shall at all times (i) satisfy the requirements of and constitute Subordinated Indebtedness and (ii) be subject to an executed and delivered Convertible Notes Subordination Agreement to the extent required herein. Any new note purchase agreement entered into after the Initial Closing Date for the sale of Convertible Notes and any Convertible Notes issued thereunder shall be on terms and conditions previously presented to the Required Lenders and not objected to thereby. Any Convertible Notes or refinancings of Convertible Notes shall not mature, require any scheduled amortization or otherwise require payment of principal prior to ninety-one days after the scheduled Term Loan Maturity Date.

 

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ARTICLE VI

NEGATIVE COVENANTS

Each Loan Party covenants and agrees that, so long as any Commitment is in effect and until payment in full of all Obligations (other than contingent obligations not due and owing), such Loan Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Article VI (provided, that any Subsidiary that has been acquired pursuant to a Permitted Acquisition or other Investment permitted by Section 6.7) shall have a period of forty-five (45) days following the date of such Permitted Acquisition or Investment to perform or comply with, as applicable, the covenants in this Article VI).

Section 6.1. Indebtedness. No Loan Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or indirectly liable with respect to any Indebtedness, except Permitted Indebtedness.

Section 6.2. Liens. No Loan Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind (including any document or instrument in respect of goods or accounts receivable) of any Loan Party or any of its Subsidiaries, whether now owned or hereafter acquired, or any income or profits therefrom, or file or permit the filing of, or permit to remain in effect any financing statement or other similar notice of any Lien with respect to any such property, asset, income or profits under the UCC of any State or under any similar recording or notice statute, except Permitted Liens.

Section 6.3. [Reserved]

Section 6.4. No Further Negative Pledges. Except (a) with respect to any specific property encumbered to secure payment of particular Indebtedness or to be sold pursuant to an executed agreement with respect to an Asset Sale permitted under Section 6.9, (b) with respect to restrictions by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses and other agreements (provided that such restrictions are limited to the property or assets secured by such Liens or the property or assets subject to such leases, licenses or similar agreements, as the case may be), (c) as provided in the AON Insurance Policy and any related documentation, (d) are customary restrictions (as reasonably determined by Borrower) that arise in connection with any disposition permitted hereby and relate solely to the assets or Person subject to such disposition, (e) are customary provisions in joint venture agreements or arrangements and other similar agreements applicable to joint ventures permitted by clause (t) under the definition “Permitted Investments” and applicable solely to such joint venture and its equity entered into in the ordinary course of business, (f) arise in connection with cash or other deposits permitted under Sections 6.2 and 6.9 and limited to such cash or deposit, (g) are restrictions on cash or other deposits imposed by customers under contracts entered into in the ordinary course of business, (h) are restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business, (i) comprise restrictions imposed by any agreement governing Indebtedness entered into on or after the Closing Date and permitted under Section 6.1 that are, taken as a whole, in the good faith judgment of Borrower, no more restrictive with respect to Borrower or any Subsidiary than customary market terms for Indebtedness of such type (and, in any event, taken as a whole, are not more restrictive than the restrictions contained in this Agreement), so long as Borrower shall have determined in good faith that such restrictions will not affect in any material respect its obligation or ability to make any payments required hereunder, (j) are binding on a Subsidiary at the time such Subsidiary first becomes a Subsidiary of Borrower, so long as such contractual obligations were not entered into in contemplation of such Person becoming a Subsidiary of the Borrower, (j) (x) exist on the Closing Date and (to the extent not otherwise permitted by this Section 6.4) are listed on

 

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Schedule 6.4 and (y) to the extent agreements permitted by clause (x) are set forth in an agreement evidencing Indebtedness, are set forth in any agreement evidencing any permitted modification, replacement, renewal, extension or refinancing of such Indebtedness so long as such modification, replacement, renewal, extension or refinancing (taken as a whole) does not materially expand the scope of such contractual obligation (as reasonably determined by Borrower), (k) represent Indebtedness of a Subsidiary of a Loan Party which is not a Loan Party which is permitted by clause (b) under the definition “Permitted Indebtedness” and which does not apply to any Loan Party, (l) any encumbrances or restrictions of the type above imposed by any amendments, modifications, restatements, renewals, increases, extensions, supplements, refundings, replacements, restructurings or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (m); provided that such amendments, modifications, restatements, renewals, increases, extensions, supplements, refundings, replacements, restructurings or refinancings (x) are, in the good faith judgment of Borrower, not materially more restrictive with respect to such encumbrance and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, extension, supplement, refunding, replacement, restructuring or refinancing or (y) do not materially impair the Borrower’s ability to pay their obligations under the Loan Documents as and when due (as determined in good faith by Borrower) and (m) as otherwise permitted under the Loan Documents, no Loan Party shall enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties or assets to secure the Obligations, whether now owned or hereafter acquired.

Section 6.5. Restricted Junior Payments. No Loan Party shall, nor shall it permit any of its Subsidiaries to declare, order, pay, make or set apart, any Restricted Junior Payment, except:

(a) Restricted Junior Payments to pay for the repurchase, retirement or other acquisition or retirement for value of Capital Stock (other than Disqualified Capital Stock) of Borrower (or any of its direct or indirect parent companies) held by any future, present or former employee, director, officer, member of management or consultant of any Loan Party (or any direct or indirect parent company) pursuant to any management equity plan or stock option plan or any other management, service provider or employee benefit plan or agreement, or any equity subscription or equity holder agreement (including, for the avoidance of doubt, any principal and interest payable on any notes issued by Borrower in connection with any such repurchase, retirement or other acquisition) in an amount not to exceed $1,000,000 in any Fiscal Year, with unused amounts in any Fiscal Year carrying over to the next succeeding Fiscal Years;

(b) for any taxable period for which the Loan Parties are members of a consolidated, combined, unitary or similar income tax group for U.S. federal or applicable foreign, state or local income tax purposes (or disregarded entities directly owned by a member of such a group) of which a direct or indirect owner of Borrower is the common parent (a “Tax Group”), any Loan Party may declare and pay dividends or distributions directly or indirectly to, or make loans or advances to the common parent of such Tax Group to allow it to pay the portion of any U.S. federal, foreign, state and local income taxes of such Tax Group for such taxable period that are attributable to the taxable income of the Loan Parties (net of any payments of such taxes made or withheld for the relevant period by the Loan Parties); provided that for each taxable period, the amount of such payments made in respect of such taxable period in the aggregate will not exceed the amount that the Loan Parties, would have been required to pay as a stand-alone Tax Group; provided, further, that losses or credits of a Subsidiary shall only be taken into account

 

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to the extent that such Subsidiary is actually a part of the applicable Tax Group and such losses or credits are actually utilized in the relevant period; provided further that any Restricted Junior Payments pursuant to this Section 6.5(b) in respect of taxes attributable to the income of Excluded Subsidiaries shall be permitted only to the extent that cash distributions were made by the Excluded Subsidiaries to any non-Excluded Subsidiary for that purpose;

(c) any Restricted Junior Payment made in connection with the Transactions and the fees and expenses related thereto or owed to any Affiliate;

(d) Restricted Junior Payments with respect to Indebtedness permitted pursuant to clause (x) of the definition of Permitted Indebtedness payable to Sponsor solely with the proceeds of the issuance of Qualified Capital Stock to Sponsor;

(e) cash payments, or loans, advances, dividends or distributions to Borrower to make payments, in lieu of issuing fractional shares in connection with share dividends, share splits, reverse share splits, mergers, consolidations, amalgamations or other business combinations and in connection with the exercise of warrants, options or other securities convertible or exchangeable for Capital Stock of any Loan Party;

(f) to the extent constituting a Restricted Junior Payment, the Loan Parties and their Subsidiaries may enter into and consummate transactions expressly permitted (other than by reference to this Section 6.5(f)) by Section 6.1, Section 6.9 or Section 6.12 to be consummated as, or acknowledged therein to be, a Restricted Junior Payment;

(g) (x) Restricted Junior Payments by any Subsidiary to any Loan Party or any other Subsidiary ratably with respect to their Capital Stock, (y) Restricted Junior Payments by any Subsidiary that is not a Loan Party to any Subsidiary that is not a Loan Party, and (z) Restricted Junior Payments among IPHoldCo and each of its Subsidiaries;

(h) Borrower or any of its Subsidiaries may make Restricted Junior Payments in respect of customary working capital adjustments or customary purchase price adjustments pursuant to any Permitted Acquisition or other Permitted Investments;

(i) [reserved];

(j) Restricted Junior Payments on account of any customary earn-outs in an amount not to exceed $10,000,000; provided, that (i) no Event of Default shall exist and be continuing or would result from the making of such Restricted Junior Payment and (ii) the Borrower will be in pro forma compliance with Section 6.21 after giving effect to such Restricted Junior Payment;

(k) the refinancing of any Permitted Indebtedness with Refinance Indebtedness;

(l) the conversion or exchange of any Indebtedness to Capital Stock (other than Disqualified Capital Stock) of the Borrower or any direct or indirect parent entity thereof;

(m) [reserved];

 

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(n) the payment of any Restricted Junior Payment within 60 days after the date of declaration thereof, if at the date of declaration or the giving of such notice such payment would have complied with the provisions of this Section 6.5; provided that the declaration of such Restricted Junior Payment will reduce capacity for Restricted Junior Payments pursuant to such other provision when so declared;

(o) [reserved];

(p) the declaration and payment of Restricted Junior Payments by the Borrower or any other Subsidiaries of the Borrower to any direct or indirect parent of the Borrower or any other Subsidiaries of the Borrower in amounts required for any such direct or indirect parent (or such parent’s direct or indirect equity owners) to pay:

(i) to the extent constituting Restricted Junior Payments, amounts that would be permitted to be paid directly by the Borrower or such Subsidiaries under Section 6.12; and

(ii) [reserved];

(q) the Borrower or any of the Subsidiaries of the Borrower may pay cash in lieu of fractional Capital Stock in connection with any dividend, split or combination thereof or any Permitted Acquisition.

For the avoidance of doubt, if Borrower has any preferred equity outstanding, the Borrower shall not make any distributions on account of such preferred equity prior to the payment of all Obligations in full in Cash in Dollars.

Section 6.6. Restrictions on Subsidiary Distributions. Except as provided herein, no Loan Party shall, nor shall it permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Subsidiary of a Loan Party to (a) pay dividends or make any other distributions on any of such Subsidiary’s Capital Stock owned by a Loan Party or any other Subsidiary of a Loan Party, (b) repay or prepay any Indebtedness owed by such Subsidiary to a Loan Party or any other Subsidiary of a Loan Party, (c) make loans or advances to a Loan Party or any other Subsidiary of a Loan Party, (d) [reserved] or (e) transfer any of its property or assets to a Loan Party or any other Subsidiary of a Loan Party other than, in each case, restrictions (i) in the Loan Documents and in agreements evidencing purchase money Indebtedness or Capital Leases permitted by clause (g) of the definition of “Permitted Indebtedness” that impose restrictions on the property so acquired, (ii) by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses, joint venture agreements and similar agreements entered into in the ordinary course of business, (iii) that are or were created by virtue of any transfer of, agreement to transfer or option or right with respect to any property, assets or Capital Stock not otherwise prohibited under this Agreement, (iv) restrictions imposed by applicable Law and (v) permitted restrictions described in Section 6.4.

 

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Section 6.7. Investments. No Loan Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, make or own any Investment in any Person, including without limitation any Joint Venture, except Permitted Investments and the contribution to the applicable Subsidiary of proceeds of a transfer of its Capital Stock as provided in this Agreement. Notwithstanding the foregoing, in no event shall any Loan Party make any Investment of Cash, Dollars or Cash Equivalents in any Person that was directly or indirectly acquired in a Permitted Acquisition when such Person has on its balance sheet at the time of acquisition Indebtedness for borrowed money or Liens securing Indebtedness for borrowed money.

Section 6.8. Interest Reserve Accounts. The Loan Parties shall not at any time after the Closing Date suffer or permit the available balance of Dollars and Eligible Investments in either Interest Reserve Account to have a mark-to-market aggregate value as of the close of business of the immediately preceding Business Day that is less than the applicable Minimum Interest Reserve Amount.

Section 6.9. Fundamental Changes; Disposition of Assets. No Loan Party shall, nor shall it permit any of its Subsidiaries to, merge or consolidate, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or consummate any Asset Sale, except:

(a) any Subsidiary of Borrower (other than IPHoldCo or any of its Subsidiaries) may be merged with or into Borrower or any Subsidiary (other than IPHoldCo or any of its Subsidiaries), or be liquidated, wound up or dissolved, or all or any part of its business, property or assets may be conveyed, sold, leased (including leases of equipment), transferred or otherwise disposed of, in one transaction or a series of transactions, to Borrower or any Subsidiary (other than IPHoldCo or any of its Subsidiaries); provided that in the case of such a merger with Borrower or any Guarantor, (i) Borrower or such Guarantor, as applicable, shall be the continuing or surviving Person, (ii) any Liens in favor of any Person other than Lenders that encumber the assets of the Person so merged shall not attach to any assets of the surviving Person, other than Permitted Liens and (iii) any Liens in favor of Lenders that encumber the assets of the surviving Person shall attach to any assets of the person so merged on a First Priority basis;

(b) (i) Asset Sales (excluding, for the avoidance of doubt, Extraordinary IP Rights Transactions), the collective proceeds of which are less than $2,500,000 in the aggregate in any Fiscal Year and (ii) Extraordinary IP Rights Transactions; in each case, provided that (A) the consideration received for such assets shall be in an amount at least equal to the Fair Market Value thereof (determined in good faith by the Board of Directors of Borrower or the applicable Subsidiary (or similar governing body), (B) no less than 75% of the consideration shall be paid in Cash including deferred payment obligations payable in Cash), (C) [reserved], and (D) Borrower shall make a mandatory prepayment pursuant to Section 2.9(a), Section 2.9(b) or Section 2.9(d), as applicable;

(c) Asset Sales permitted (other than by reference to this Section 6.9(c)) by Section 6.5 and pursuant to the definition of Permitted Liens;

(d) [reserved];

 

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(e) (x) acquisitions listed on Schedule 6.9, (y) Permitted Acquisitions funded with the proceeds of the issuance of Capital Stock of Borrower that occurs within nine (9) months prior to such acquisition or Subordinated Indebtedness otherwise permitted hereunder issued substantially concurrently with such acquisition, and (z) other Permitted Acquisitions with an amount of cash consideration valued in accordance with GAAP not to exceed $10,000,000 in the aggregate in any fiscal year of the Borrower plus any earn-outs, seller notes or other deferred payment obligations in connection with such acquisition, in the case of each of clauses (y) and (z), so long as the requirements enumerated in the definition of Permitted Acquisition are satisfied in the sole discretion of the Required Lenders or provided that such Permitted Acquisition requirements may be modified by delivery of a written request for such modification to the Lenders and the Administrative Agent ten (10) Business Days prior to the consummation of such Permitted Acquisition and the Required Lenders shall not have objected to such modification within such ten (10) Business Days following receipt of such written request, or otherwise waived by the Required Lenders in their sole discretion pursuant to Section 10.5;

(f) other Permitted Investments;

(g) performance of Indebtedness and other obligations of any type by any Loan Party and/or any of its Subsidiaries at any time arising pursuant to and in respect of the Warrant;

(h) transactions permitted pursuant to Section 6.10;

(i) any Subsidiary of Borrower (other than IPHoldCo and its Subsidiaries including IPCo) may dissolve or liquidate, so long as the assets thereof are distributed to another Loan Party (other than IPHoldCo or any of its Subsidiaries including IPCo); and

(j) Borrower may issue additional Capital Stock (other than Disqualified Capital Stock).

To the extent any Collateral is sold, transferred or otherwise disposed of as expressly permitted by this Agreement or in connection with a transaction approved by the Required Lenders, in each case to a Person other than a Loan Party, such Collateral shall, except as set forth in this Agreement, be sold, transferred or otherwise disposed of free and clear of the Liens created by the Collateral Documents, and so long as the Loan Parties shall have previously provided to the Collateral Agent and the Administrative Agent such certifications or documents as the Required Lenders, the Collateral Agent or the Administrative Agent shall reasonably request in order to demonstrate compliance with this Agreement and the other Loan Documents, including this Section 6.9, Collateral Agent shall take all actions appropriate or reasonably requested by Borrower in order to effect the foregoing at the sole cost and expense of Borrower and without recourse or warranty by Collateral Agent (including the execution and delivery of appropriate UCC termination statements and such other instruments and releases provided to it and requested by the Loan Parties as may be necessary and appropriate to effect such release). To the extent any such permitted sale, transfer or other disposition results in a Guarantor no longer constituting a Subsidiary of Borrower, the Obligations of such Guarantor and all obligations of such Guarantor under the Credit Documents shall terminate and be of no further force and effect, and each of Administrative Agent and Collateral Agent shall take such actions, at the sole expense of Borrower, as are requested by Borrower in connection with such termination.

Section 6.10. [Reserved].

 

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Section 6.11. Sales and Leasebacks. No Loan Party shall, nor shall it permit any of its Subsidiaries to become or remain liable as lessee or as a guarantor or other surety with respect to any lease of any property (whether real, personal or mixed), whether now owned or hereafter acquired, which such Loan Party has sold or transferred to any other Person (other than any Loan Party or any of its Subsidiaries), except for:

(a) [reserved]; and

(b) (i) the Machinery Sale and Leaseback, (ii) (x) that certain Okuma MCR-A5C-II 30 CNC double column machining center having serial number 28B.250521, and (y) that certain Okuma Multus U4000/2SW/1500 CNC machining center having serial number 5R6.249955, and (iii) the Test Stand Sale and Leaseback.

Section 6.12. Transactions with Affiliates. No Loan Party shall, nor shall it permit any of its Subsidiaries to, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with Affiliate in an amount not to exceed $2,500,000, in each case whether or not in the ordinary course of business; provided further that the foregoing restrictions shall not apply to any of the following:

(a) any transaction by and among the Loan Parties and their Subsidiaries, joint ventures or any entity that becomes a Subsidiary of a Loan Party as a result of such transaction;

(b) transactions for Fair Market Value on Arm’s Length Terms;

(c) the Transactions and the payment of Transaction Costs;

(d) equity issuances, repurchases, redemptions, retirements or other acquisitions of Capital Stock by the Loan Parties and their Subsidiaries permitted under Section 6.5;

(e) loans and other transactions to the extent permitted under this Article VI;

(f) customary fees and reasonable out-of-pocket expenses paid to, and indemnities provided on behalf of, members of the Board of Directors (or similar governing body) of the Loan Parties and their Subsidiaries who are not officers or employees of any Loan Party or Subsidiary thereof so long as such fees are paid to individuals (or such individual’s personal service company);

(g) compensation arrangements for consultants, directors, officers and other employees of the Loan Parties and their respective Subsidiaries entered into in the ordinary course of business and transactions pursuant to stock incentive plans, employee stock purchase plans employee benefit plans and similar arrangements;

(h) the issuance of Subordinated Indebtedness or equity issuances, repurchases, redemptions, retirements or other acquisitions of Capital Stock by the Borrower to the Sponsor to the extent permitted under the Warrant;

(i) transactions described in Schedule 6.12 or any amendment, extension, renewal, modification or replacement of any such arrangement or agreement (so long as any such amendment, extension, renewal, modification or replacement is not materially adverse to the Lenders in the good faith judgment of the Borrower when taken as a whole);

 

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(j) the issuance of Capital Stock of (x) the Borrower (or any direct or indirect parent thereof) or (y) any other Subsidiary of the Borrower (or any direct or indirect parent thereof) constituting directors’ qualifying shares or other shares required by applicable Law, in each case, to any manager, officer, director, consultant or employee of the Borrower or any of its Subsidiaries;

(k) (i) so long as no Event of Default under Section 8.1(a), (f) or (g) has occurred and is continuing, the payment of management, monitoring, oversight, consulting, advisory and other fees (including refinancing, transaction and termination and exit fees) pursuant to the Management Agreement as in effect on the Closing Date; provided that, upon the occurrence and during the continuance of an Event of Default under Sections 8.1(a), (f) or (g) such amounts described in this clause (i) may accrue, but not be payable in cash during such period, but all such accrued amounts may be payable in cash upon the cure or waiver of such Event of Default; (ii) indemnifications and reimbursement expenses, in each case, pursuant to the Management Agreement and (iii) the payment of indemnities and reasonable expenses of the Sponsor related to the Borrower and its Subsidiaries;

(l) employment, consulting and severance arrangements between the Borrower (or any direct or indirect parent) and the other Subsidiaries of the Borrower and their respective officers and employees in the ordinary course of business (including loans and advances in connection therewith) and transactions pursuant to stock option plans and employee benefit plans and arrangements in the ordinary course of business;

(m) so long as no Event of Default has occurred and is continuing, customary payments (whether direct or indirect) by the Borrower and any of the other Subsidiaries of the Borrower to the Sponsors made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities (including in connection with acquisitions or divestitures) which payments are made pursuant to the Management Agreement;

(n) [reserved];

(o) the issuance or transfer of Capital Stock of the Borrower to any Permitted Holder or to any former, current or future manager, officer, director, consultant or employee (or any spouses, former spouses, successors, executors, administrators, heirs, legatees, distributees or Affiliates of any of the foregoing) of the Borrower, any of its Subsidiaries or any direct or indirect parent) or any one of its Subsidiaries to the extent not otherwise prohibited by the Loan Documents;

(p) [reserved];

(q) the payment of reasonable out-of-pocket costs and expenses and indemnities pursuant to the stockholder’s agreement or the registration and participation rights agreement entered into on the Closing Date in connection therewith;

 

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(r) payments to or from, and transactions with, joint ventures (to the extent any such joint venture is only an Affiliate as a result of Investments by the Borrower and its Subsidiaries in such joint venture) in the ordinary course of business to the extent otherwise permitted under Section 6.7; and

(s) non-exclusive sublicenses of IP Rights which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the value of said properties or materially impair their use in the operation of the business as currently conducted or as contemplated to be conducted.

Borrower at the end of each Fiscal Month disclose in writing each transaction (other than any transaction described in clause (a) through (s) above) with an Affiliate.

Section 6.13. Conduct of Business.

(a) From and after the Closing Date, no Loan Party shall, nor shall it permit any of its Subsidiaries to, engage in any material business other than (x) any business that is the same as, similar to, reasonably related, incidental, synergistic, corollary, ancillary, complementary to, or a reasonable extension of, the businesses engaged in by such Loan Party or such Subsidiary on the Initial Closing Date, (y) non-core incidental businesses acquired in connection with any Permitted Acquisition or Permitted Investment and (z) such other lines of business as may be consented to by the Required Lenders (and without limiting the foregoing, neither IPCo nor IPHoldCo shall conduct their respective businesses in contravention of Section 6.19).

(b) [reserved].

(c) Any license or sublicense of IP Rights to any Excluded Subsidiary (i) shall be (A) non-exclusive in all respects, (B) non-assignable by such Excluded Subsidiary, except that such Excluded Subsidiary may grant non-exclusive sublicenses to a third party in the ordinary course of business and on Arm’s Length Terms at Fair Market Value and that do not interfere with the ordinary conduct of business of Borrower, or impair the value of any Collateral, in any material respect, including those sublicenses that are implied or incidental with respect to a service or product provided or supplied to the Excluded Subsidiary by a Loan Party, and (C) cancellable (together with any sublicenses granted to a third party, except those that are implied or incidental with respect to service or product that the Excluded Subsidiary has supplied or provided to a third party prior to such cancellation) on account of a material breach of such license, which breach has not been cured by the breaching party within the applicable cure period, if any, under such license or sublicense, (ii) shall include a provision for compensation at Fair Market Value to the licensor Loan Party and (iii) shall be made on Arm’s Length Terms. Any license or sublicense of IP Rights to an Excluded Subsidiary that does not comply in all respects with the prior sentence shall constitute an Extraordinary IP Rights Transaction for all purposes under this Agreement and shall include, or be deemed to include, provision for cash compensation at Fair Market Value to Borrower on Arm’s Length Terms.

 

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Section 6.14. Changes to Certain Agreements and Organizational Documents.

(a) No Loan Party shall (i) amend, waive, modify, restate, supplement or replace, or suffer or permit any waiver, amendments, modifications, restatements, supplements or replacements to any Loan Party’s Organizational Documents if such waiver, amendment, modification, restatement, supplement or replacement would be materially adverse to the interests of Agents or the Lenders, (ii) amend, waive, modify, restate, supplement or replace, or suffer or permit any amendments, modifications, restatements, supplements or replacements to, or terminate or waive any provision of, any Material Contract (including, for avoidance of doubt any Material Contact listed on Schedule 4.14) if such amendment, modification, restatement, supplement or replacement, termination, or waiver would result in a Material Adverse Effect, or (iii) amend, waive, modify, restate, supplement or replace, or suffer or permit any waiver, amendments, modifications, restatements, supplements or replacements to, or terminate or waive any provision of, any Intercompany License Agreement, any material Third Party License Agreement or any Organizational Documents of either IPCo or IPHoldCo if such amendment, modification, restatement, supplement or replacement, termination, or waiver would be materially adverse to the interests of Agents or the Lenders.

(b) No Loan Party shall, nor shall it permit any of its Subsidiaries to, amend or otherwise change the terms of any Subordinated Indebtedness, except in accordance with the applicable subordination and/or intercreditor arrangements.

Section 6.15. Accounting Methods. The Loan Parties will not and will not permit any of their Subsidiaries to modify or change its fiscal year or or to change or materially modify its method of accounting (other than as may be required to conform to GAAP).

Section 6.16. Deposit Accounts and Securities Accounts. No Loan Party shall establish or maintain a Deposit Account or a Securities Account (other than an Excluded Account) that is not subject to a Control Agreement; provided, that such Loan Party shall have 90 days after the Initial Closing Date to put in place a Control Agreement in respect of such deposit accounts.

Section 6.17. Prepayments of Certain Indebtedness. No Loan Party shall, directly or indirectly, voluntarily purchase, redeem, defease or prepay any principal of, premium, if any, interest or other amount payable in respect of any Indebtedness, in an aggregate amount that does exceed $1,000,000, prior to its scheduled maturity, other than (a) the Obligations, (b) Indebtedness secured by a Permitted Lien if the asset securing such Indebtedness has been sold or otherwise disposed of in accordance with Section 6.9, (c) intercompany Indebtedness to the extent permitted pursuant to the Intercompany Subordination Agreement and (d) to the extent permitted pursuant to the applicable Subordination Agreement, Intercompany Subordination Agreement, Intercreditor and Subordination Agreement or other subordination agreement to which an Agent is a party with respect to such Indebtedness; provided, that the Loan Parties may prepay Indebtedness (x) in an amount not to exceed an amount equal to (1) $2,000,000 in the aggregate less (2) the amount of any Investment made in reliance on clause (y) of paragraph (o) of the definition of “Permitted Investments” or (y) with Capital Stock or with the proceeds of a sale or issuance of Capital Stock of any Loan Party or any Subsidiary or other capital contribution in respect thereof of the Borrower’s direct or indirect parent companies.

 

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Section 6.18. Anti-Terrorism Laws, Anti-Corruption Laws, Sanctions. None of the Loan Parties, nor any of their controlled Affiliates representatives or agents shall:

(a) conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving of any contribution of funds, goods or services to or for the benefit of any Blocked Person, in violation of applicable Sanctions,

(b) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to any Sanctions, in violation of applicable Sanctions,

(c) violate, engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any applicable Anti-Terrorism Laws, Anti-Corruption Laws or Sanctions,

(d) use the proceeds of any Loan, directly or indirectly, to fund, finance or facilitate any activities, business or transaction of or with any Blocked Person, or in any Sanctioned Country, or in any manner that would otherwise result in the violation of any Sanctions applicable to any party hereto, or

(e) fund all or part of any payment under this Agreement (i) out of proceeds derived from transactions that violate Sanctions or (ii) with or from property of any Blocked Person to the extent that such funding would result in the violation of any Sanctions applicable to any party thereto.

Borrower shall deliver to the Lenders any certification reasonably requested from time to time by any Lender in its sole discretion within a reasonable period of time following such request, confirming Borrower’s compliance with this Section 6.18 and will cooperate in good faith with reasonable requests for information made by Lenders in order to diligence such certifications within a reasonable period of time following such request.

Section 6.19. Bankruptcy Remote. Neither IPCo nor IPHoldCo shall at any time fail to be organized as a bankruptcy-remote entity having bylaws or an operating agreement, as applicable, in form and substance reasonably acceptable to the Required Lenders (with the Organizational Documents in effect on the Initial Closing Date being deemed to be reasonably acceptable), which bylaws or operating agreement, as applicable, shall contain usual and customary provisions for (i) appointment of an independent director whose affirmative vote shall be required to commence an insolvency proceeding and (ii) separateness representations and covenants. IPCo shall not at any time fail to solely and exclusively own the entire right and title (except pursuant to the Intercompany License Agreements) in and to the patents and other IP Rights of any form, including formulas, trade secrets, know-how, methods or processes, whether or not registered, which it owns except for (A) those rights which are not material to the business of the Loan Parties and their Subsidiaries, (B) the share or portion of any IP Rights co-owned with a third party pursuant to a Contractual Obligation entered into by any Loan Party in the ordinary course of business and on Arm’s Length Terms expressly granting co-ownership in and to such IP Rights to such third party, and (C) any IP Rights sold, assigned, conveyed, or transferred as an Asset Sale Exception (excluding, for the avoidance of doubt, any licenses or sublicenses). Without limiting the generality of the foregoing, the parties hereto aknowledge and agree that Schedule

 

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6.19 sets forth a nonexclusive list of (1) registered or applied for IP Rights, or (2) unregistered IP Rights of which the Loan Parties are aware, in each case co-owned, as of the date of this Agreement, by the Loan Parties and a third party, fitting within the exception set forth in the immediately preceding sentence. Each of IPCo and IPHoldCo shall have the following limitations on business activity: (i) IPCo’s sole business shall be the ownership, licensing, and maintenance of the IP Rights and being a Guarantor hereunder; (ii) IPCo shall grant no Liens except under the Loan Documents and Permitted Liens under clauses (b) and (k) of the definition thereof and shall have no creditors except the Lenders and professional service providers (including, without limitation, attorneys, tax advisors, auditors and intellectual property service firms); (iii) IPHoldCo’s sole business shall be owning 100% of the Capital Stock of IPCo and being a Guarantor hereunder; and (iv) other than Permitted Liens and the creditors with respect thereto, IPHoldCo shall not grant Liens except under the Loan Documents and shall have no creditors except the Lenders. IPHoldCo shall be a wholly owned direct Subsidiary of Meredian Holdings Group, Inc. or such other Loan Party as the parties may agree. In addition, the Loan Parties shall cause IPCo to comply with all of IPCo’s obligations, including IPCo’s obligations to maintain its special purpose vehicle separateness and bankruptcy remote structure, and the Loan Parties shall not amend any such provisions without the prior written consent of the Required Lenders.

Section 6.20. Firefly Aerospace Ukraine, LLC. Without the approval of the Collateral Agent (acting at the direction of the Required Lenders), the Borrower shall not create or suffer to exist any Lien upon the Capital Stock of Firefly Aerospace Ukraine, LLC, or otherwise cause Firefly Aerospace Ukraine, LLC to not consent to any Lien upon any of its assets.

Section 6.21. Financial Covenant.

(a) Minimum Cash. So long as any principal of or interest on any Loan or other Obligation (whether or not due) shall remain unpaid, the Loan Parties, collectively, shall not permit the amount of Qualified Cash to be less than (x) $10,000,000 at any time, or (y) $17,500,000 on the last day of any fiscal month.

(b) Equity Cure. For purposes of determining compliance with clause (a) of this Section 6.21, any cash equity contribution (which equity shall be common equity or other equity on terms reasonably acceptable to the Administrative Agent) made to the Borrower on or prior to the day that is five (5) Business Days after the day on which financial statements are required to be delivered for a fiscal quarter pursuant to Section 5.1 hereof (the “Cure Expiration Date”) and designated on the date of such contribution as a “Specified Equity Contribution” (each such designation, an “Equity Cure”) will, at the request of the Borrower, be included in the calculation of minimum Cash for such fiscal month, as applicable, for the purposes of determining compliance with clause (a) of this Section at the end of such fiscal month or applicable subsequent periods including such fiscal month (any such equity contribution, a “Specified Equity Contribution”), provided that (i) no more than one Specified Equity Contribution may be made in any period of four consecutive fiscal quarters, (ii) no more than four Specified Equity Contributions may be made during the term of this Agreement, (iii) the amount of any Specified Equity Contribution shall be no greater than 100% of the amount required to cause the Borrower to be in compliance with clause (a) of this Section 6.21, (iv) all Specified Equity Contributions shall be disregarded for all other purposes herein other than determining compliance with the covenants in clause (a) of this Section 6.21 and shall not result in any pro forma reduction of

 

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Indebtedness with respect to the fiscal quarter with respect to which such Specified Equity Contribution was made, and (v) no Lender shall be required to make any extension of credit hereunder if an Event of Default under the covenants set forth in Section 6.12(a) has occurred and is continuing during the five (5) Business Day period during which the Borrower may exercise an Equity Cure unless and until the Specified Equity Contribution is actually received. No Default, Event of Default or potential Event of Default shall exist with respect to a breach of Section 6.21(a) until and unless the Cure Expiration Date has occurred without the Cure Amount having been received.

ARTICLE VII

GUARANTY

Section 7.1. Guaranty of the Obligations. Subject to the provisions of Section 7.2, Guarantors jointly and severally hereby irrevocably and unconditionally guaranty for the ratable benefit of the Beneficiaries the due and punctual payment in full of all Obligations, including without limitation Specified Premium, when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)) (collectively, the “Guaranteed Obligations”).

Section 7.2. Contribution by Guarantors. All Guarantors desire to allocate among themselves, in a fair and equitable manner, their obligations arising under this Guaranty. Accordingly, in the event any payment or distribution is made on any date by a Guarantor under this Guaranty such that its Aggregate Payments exceeds its Fair Share as of such date, such Guarantor shall be entitled to a contribution from each of the other Guarantors in an amount sufficient to cause each Guarantor’s Aggregate Payments to equal its Fair Share as of such date. “Fair Share” means, with respect to any Guarantor as of any date of determination, an amount equal to (a) the ratio of (i) the Fair Share Contribution Amount with respect to such Guarantor, to (ii) the aggregate of the Fair Share Contribution Amounts with respect to all Guarantors multiplied by, (b) the aggregate amount paid or distributed on or before such date by all Guarantors under this Guaranty in respect of the Guaranteed Obligations. “Fair Share Contribution Amount” means, with respect to any Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Guarantor under this Guaranty that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any comparable applicable provisions of state law; provided solely for purposes of calculating the “Fair Share Contribution Amount” with respect to any Guarantor for purposes of this Section 7.2, any assets or liabilities of such Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder shall not be considered as assets or liabilities of such Guarantor. “Aggregate Payments” means, with respect to any Guarantor as of any date of determination, an amount equal to (A) the aggregate amount of all payments and distributions made on or before such date by such Guarantor in respect of this Guaranty (including, without limitation, in respect of this Section 7.2), minus (B) the aggregate amount of all payments received on or before such date by such Guarantor from the other Guarantors as contributions under this Section 7.2. The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Guarantor. The allocation among Guarantors of their obligations as set forth in this Section 7.2 shall not be construed in any way to limit the liability of any Guarantor hereunder. Each Guarantor is a third party beneficiary to the contribution agreement set forth in this Section 7.2.

 

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Section 7.3. Payment by Guarantors. Subject to Section 7.2, Guarantors hereby jointly and severally agree, in furtherance of the foregoing and not in limitation of any other right which any Beneficiary may have at law or in equity against any Guarantor by virtue hereof, that upon the failure of Borrower to pay any of the Guaranteed Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)), Guarantors will upon written demand pay, or cause to be paid, in Cash in Dollars, to Administrative Agent for the ratable benefit of Beneficiaries, an amount equal to the sum of the unpaid principal amount of all Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including interest which, but for Borrower becoming the subject of a case under the Bankruptcy Code, would have accrued on such Guaranteed Obligations, whether or not a claim is allowed against Borrower for such interest in the related bankruptcy case) and all other Guaranteed Obligations then owed to Beneficiaries as aforesaid.

Section 7.4. Liability of Guarantors Absolute. Each Guarantor agrees that its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment in full of the Guaranteed Obligations. In furtherance of the foregoing and without limiting the generality thereof, each Guarantor agrees as follows:

(a) this Guaranty is a guaranty of payment when due and not of collectability. This Guaranty is a primary obligation of each Guarantor and not merely a contract of surety;

(b) any Agent may enforce this Guaranty upon the occurrence and, during the continuance, of an Event of Default notwithstanding the existence of any dispute between Borrower and any Beneficiary with respect to the existence of such Event of Default;

(c) the obligations of each Guarantor hereunder are independent of the obligations of Borrower and the obligations of any other guarantor (including any other Guarantor) of the obligations of Borrower, and a separate action or actions may be brought and prosecuted against such Guarantor whether or not any action is brought against Borrower or any of such other guarantors and whether or not Borrower is joined in any such action or actions;

(d) payment by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect, modify or abridge any Guarantor’s liability for any portion of the Guaranteed Obligations which has not been paid. Without limiting the generality of the foregoing, if any Agent is awarded a judgment in any suit brought to enforce any Guarantor’s covenant to pay a portion of the Guaranteed Obligations, such judgment shall not be deemed to release such Guarantor from its covenant to pay the portion of the Guaranteed Obligations that is not the subject of such suit, and such judgment shall not, except to the extent satisfied by such Guarantor, limit, affect, modify or abridge any other Guarantor’s liability hereunder in respect of the Guaranteed Obligations;

 

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(e) any Beneficiary, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability hereof or giving rise to any reduction, limitation, impairment, discharge or termination of any Guarantor’s liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guaranteed Obligations, (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guaranteed Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations, (iii) request and accept other guaranties of the Guaranteed Obligations and take and hold security for the payment hereof or the Guaranteed Obligations, (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or any other obligation of any Person (including any other Guarantor) with respect to the Guaranteed Obligations, (v) enforce and apply any security now or hereafter held by or for the benefit of such Beneficiary in respect hereof or the Guaranteed Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that such Beneficiary may have against any such security, in each case as such Beneficiary in its discretion may determine consistent herewith and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or non-judicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Guarantor against Borrower or any security for the Guaranteed Obligations and (vi) exercise any other rights available to it under the Loan Documents; and

(f) this Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than payment in full of the Guaranteed Obligations), including the occurrence of any of the following, whether or not any Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Loan Documents, at law, in equity or otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Guaranteed Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) hereof, any of the other Loan Documents or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guaranteed Obligations, in each case whether or not in accordance with the terms hereof or such Loan Document or any agreement relating to such other guaranty or security; (iii) the Guaranteed Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source (other than payments received pursuant to the other Loan Documents or from the proceeds of any security for the Guaranteed Obligations, except to the extent such security also serves as collateral for indebtedness other than the Guaranteed Obligations) to the payment of indebtedness other than the Guaranteed Obligations, even though any Beneficiary might have elected to apply such payment to any part or all of the Guaranteed Obligations; (v) any Beneficiary’s consent to the change, reorganization or termination of the corporate structure or existence of any Loan Party or

 

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any of its Subsidiaries and to any corresponding restructuring of the Guaranteed Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guaranteed Obligations; (vii) any defenses, set offs or counterclaims which Borrower may allege or assert against any Beneficiary in respect of the Guaranteed Obligations, including failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of any Guarantor as an obligor in respect of the Guaranteed Obligations (other than the payment in full of the Obligations).

Section 7.5. Waivers by Guarantors. Each Guarantor hereby waives (to the extent permitted by applicable law), for the benefit of Beneficiaries: (a) any right to require any Beneficiary, as a condition of payment or performance by such Guarantor, to (i) proceed against Borrower, any other guarantor (including any other Guarantor) of the Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any security held from Borrower, any such other guarantor or any other Person, (iii) proceed against or have resort to any balance of any Deposit Account or credit on the books of any Beneficiary in favor of Borrower or any other Person, or (iv) pursue any other remedy in the power of any Beneficiary whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of Borrower or any other Guarantor including any defense based on or arising out of the lack of validity or the unenforceability of the Guaranteed Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of Borrower or any other Guarantor from any cause other than payment in full of the Guaranteed Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Beneficiary’s errors or omissions in the administration of the Guaranteed Obligations, except behavior which amounts to bad faith, gross negligence or willful misconduct; (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms hereof and any legal or equitable discharge of such Guarantor’s obligations hereunder, (ii) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder or the enforcement hereof, (iii) any rights to set offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any Beneficiary protect, secure, perfect or insure any security interest or lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance hereof, notices of default hereunder or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guaranteed Obligations or any agreement related thereto, notices of any extension of credit to Borrower and notices of any of the matters referred to in Section 7.4 and any right to consent to any thereof; and (g) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms hereof.

Section 7.6. Guarantors’ Rights of Subrogation, Contribution, etc. Until the Guaranteed Obligations shall have been paid in full (other than contingent obligations), each Guarantor hereby waives (to the extent permitted by applicable law) any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against Borrower or any other Guarantor or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under

 

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contract, by statute, under common law or otherwise and including without limitation (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against Borrower with respect to the Guaranteed Obligations, (b) any right to enforce, or to participate in, any claim, right or remedy that any Beneficiary now has or may hereafter have against Borrower, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Beneficiary. In addition, until the Guaranteed Obligations shall have been indefeasibly paid in full, each Guarantor shall withhold exercise of any right of contribution such Guarantor may have against any other guarantor (including any other Guarantor) of the Guaranteed Obligations, including, without limitation, any such right of contribution as contemplated by Section 7.2. Each Guarantor further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Guarantor may have against Borrower or against any collateral or security, and any rights of contribution such Guarantor may have against any such other guarantor, shall be junior and subordinate to any rights any Beneficiary may have against Borrower, to all right, title and interest any Beneficiary may have in any such collateral or security, and to any right any Beneficiary may have against such other guarantor. If any amount shall be paid to any Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Guaranteed Obligations shall not have been finally and indefeasibly paid in full, such amount shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof.

Section 7.7. Subordination of Other Obligations. Any Indebtedness of Borrower or any Guarantor now or hereafter held by any Guarantor is hereby subordinated in right of payment to the Guaranteed Obligations, and any such indebtedness collected or received by such Guarantor after an Event of Default has occurred and is continuing and the Agent (as directed by the Required Lenders) has provided three (3) Business Days prior written notice shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations but without affecting, impairing or limiting in any manner the liability of such Guarantor under any other provision hereof.

Section 7.8. Continuing Guaranty. This Guaranty is a continuing guaranty and shall remain in effect until all of the Guaranteed Obligations shall have been paid in full (other the contingent obligations not due and owing). Each Guarantor hereby irrevocably waives (to the extent permitted by applicable law) any right to revoke this Guaranty as to future transactions giving rise to any Guaranteed Obligations.

Section 7.9. Authority of Guarantors or Borrower. It is not necessary for any Beneficiary to inquire into the capacity or powers of any Guarantor or Borrower or the officers, directors or any agents acting or purporting to act on behalf of any of them.

 

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Section 7.10. Financial Condition of Borrower. Any Credit Extension may be made to Borrower or continued from time to time without notice to or authorization from any Guarantor regardless of the financial or other condition of Borrower at the time of any such grant or continuation is entered into, as the case may be. No Beneficiary shall have any obligation to disclose or discuss with any Guarantor its assessment, or any Guarantor’s assessment, of the financial condition of Borrower. Each Guarantor has adequate means to obtain information from Borrower on a continuing basis concerning the financial condition of Borrower and its ability to perform its obligations under the Loan Documents, and each Guarantor assumes the responsibility for being and keeping informed of the financial condition of Borrower and of all circumstances bearing upon the risk of non-payment of the Guaranteed Obligations. Each Guarantor hereby waives and relinquishes any duty on the part of any Beneficiary to disclose any matter, fact or thing relating to the business, operations or conditions of Borrower now known or hereafter known by any Beneficiary.

Section 7.11. Bankruptcy, etc.

(a) The obligations of Guarantors hereunder shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any case or proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of Borrower or any other Guarantor or by any defense which Borrower or any other Guarantor may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding.

(b) Each Guarantor acknowledges and agrees that any interest on any portion of the Guaranteed Obligations which accrues after the commencement of any case or proceeding referred to in clause (a) above (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by operation of law by reason of the commencement of such case or proceeding, such interest as would have accrued on such portion of the Guaranteed Obligations if such case or proceeding had not been commenced) shall be included in the Guaranteed Obligations because it is the intention of Guarantors and Beneficiaries that the Guaranteed Obligations which are guaranteed by Guarantors pursuant hereto should be determined without regard to any rule of law or order which may relieve Borrower of any portion of such Guaranteed Obligations. Guarantors will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay Administrative Agent, or allow the claim of Administrative Agent in respect of, any such interest accruing after the date on which such case or proceeding is commenced.

(c) In the event that all or any portion of the Guaranteed Obligations are paid by Borrower, the obligations of Guarantors hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from any Beneficiary as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guaranteed Obligations for all purposes hereunder.

Section 7.12. Discharge of Guaranty upon Sale of Guarantor. If all of the Capital Stock of any Guarantor or any of its successors in interest hereunder shall be sold or otherwise disposed of (including by merger or consolidation) in accordance with the terms and conditions hereof or the Guarantor otherwise becomes an Excluded Subsidiary, the Guaranty of such Guarantor or such successor in interest, as the case may be, hereunder shall automatically be discharged and released without any further action by any Beneficiary or any other Person effective as of the time of such sale or disposition.

 

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Section 7.13. Limitation.

(a) It is the intent of each Guarantor and the Agents that the maximum Guaranteed Obligations hereunder shall be, but not in excess of:

(i) in a case or proceeding commenced by or against any Guarantor under the provisions of Title 11 of the Bankruptcy Code, on or within one year from the date on which any of the Guaranteed Obligations are incurred, the maximum amount which would not otherwise cause the Guaranteed Obligations (or any other obligations of such Guarantor owed to the Beneficiaries) to be avoidable or unenforceable against such Guarantor under (i) Section 548 of the Bankruptcy Code or (ii) any state fraudulent transfer or fraudulent conveyance act or statute applied in any such case or proceeding by virtue of Section 544 of the Bankruptcy Code; or

(ii) in a case or proceeding commenced by or against any Guarantor under the Bankruptcy Code subsequent to one year from the date on which any of the Guaranteed Obligations are incurred, the maximum amount which would not otherwise cause the Guaranteed Obligations (or any other obligations of such Guarantor to the Beneficiaries) to be avoidable or unenforceable against such Guarantor under any state fraudulent transfer or fraudulent conveyance act or statute applied in any such case or proceeding by virtue of Section 544 of the Bankruptcy Code; or

(iii) in a case or proceeding commenced by or against any Guarantor under any law, statute or regulation other than the Bankruptcy Code (including, without limitation, any other bankruptcy, reorganization, arrangement, moratorium, readjustment of debt, dissolution, liquidation or similar debtor relief laws), the maximum amount which would not otherwise cause the Guaranteed Obligations (or any other obligations of such Guarantor to the Beneficiaries) to be avoidable or unenforceable against such Guarantor under such law, statute or regulation, including, without limitation, any state fraudulent transfer or fraudulent conveyance act or statute applied in any such case or proceeding.

(b) The substantive laws under which the possible avoidance or unenforceability of the Guaranteed Obligations (or any other obligations of such Guarantor to the Beneficiaries) as may be determined in any case or proceeding shall hereinafter be referred to as the “Avoidance Provisions”. To the extent set forth in Section 7.13(a)(i), (a)(ii) and (a)(iii) but only to the extent that the Guaranteed Obligations would otherwise be subject to avoidance or found unenforceable under the Avoidance Provisions, if any Guarantor is not deemed to have received valuable consideration, fair value or reasonably equivalent value for the Guaranteed Obligations, or if the Guaranteed Obligations would render such Guarantor insolvent, or leave such Guarantor with an unreasonably small capital to conduct its business, or cause such Guarantor to have incurred debts (or to have intended to have incurred debts) beyond its ability to pay such debts as they mature, in each case as of the time any of the Guaranteed Obligations are deemed to have been incurred under the Avoidance Provisions and after giving effect to the contribution by such Guarantor, the maximum Guaranteed Obligations for which such Guarantor shall be liable hereunder shall be reduced to that amount which, after giving effect thereto, would not cause the Guaranteed Obligations (or any other obligations of such Guarantor to the Beneficiaries), as so reduced, to be subject to avoidance or unenforceability under the Avoidance Provisions and the amount by which such Guaranteed Obligations have been reduced shall be used by such Guarantor only to make the payments for which they were reserved.

 

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(c) This Section 7.13 is intended solely to preserve the rights of the Beneficiaries hereunder to the maximum extent that would not cause the Guaranteed Obligations of such Guarantor to be subject to avoidance or unenforceability under the Avoidance Provisions, and neither the Guarantors nor any other Person shall have any right or claim under this Section 7.13 as against the Beneficiaries that would not otherwise be available to such Person under the Avoidance Provisions.

ARTICLE VIII

EVENTS OF DEFAULT

Section 8.1. Events of Default. If any one or more of the following conditions or events shall occur:

(a) Failure to Make Payments When Due. Failure by Borrower to pay (i) the principal of and Specified Premium, if any, on any Term Loan whether at stated maturity, by acceleration or otherwise, (ii) when due any installment of principal of any Term Loan, by notice of voluntary prepayment, by mandatory prepayment or otherwise or (iii) within three (3) Business Days of when due any interest on any Term Loan or any fee, deposit or any other amount due hereunder; provided that in each case, if (A) proximately caused by ministerial error or delay on the part of the Administrative Agent and (B) the Interest Reserve Accounts hold funds sufficient to make such applicable payment in full, then the failure of Cash interest in Dollars to be timely paid pursuant to the operation of Section 2.16(c)(i) shall not constitute an Event of Default hereunder; or

(b) Default in Other Agreements. (i) Failure of any Loan Party or any of their respective Subsidiaries to pay when due any principal of or interest on or any other amount payable in respect of (A) one or more items of Indebtedness (other than Indebtedness referred to in Section 8.1(a)) having an aggregate principal amount in excess of the Threshold Amount or (B) the Test Stand Sale and Leaseback, in each case after the delivery of any required notices and beyond the grace period, if any, provided therefor, and such Indebtedness has been accelerated, except to the extent such payment is restricted by a Subordination Agreement in favor of the Collateral Agent; or (ii) breach or default by any Loan Party with respect to any other material term of (A) one or more items of Indebtedness in the aggregate principal amount referred to in clause (i) above, (B) any loan agreement, mortgage, indenture, other agreement relating to such item(s) of Indebtedness, or (C) the documents governing the Test Stand Sale and Leaseback (including, without limitation, any breach of any liquidity covenant or requirement to maintain minimum Cash) in each case beyond the grace period, if any, provided therefor and giving all requisite notices, if the effect of such breach or default is to cause, or to permit the holder or holders of that Indebtedness (or a trustee on behalf of such holder or holders), to cause, that Indebtedness to become or be declared due and payable (or subject to a compulsory repurchase or redeemable) or to require the prepayment, redemption, repurchase or defeasance of, or to cause

 

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any Loan Party or any of its Subsidiaries to make any offer to prepay, redeem, repurchase or defease such Indebtedness, prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be; provided, that if any such default is cured or waived prior to acceleration of the Obligations, then any Event of Default arising under this subsection (b) shall be deemed cured; provided that clause (b)(ii) shall not apply to secured Indebtedness that becomes due (or requires an offer to purchase) as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness, if such sale or transfer is permitted hereunder and under the documents providing for such Indebtedness); provided, further, that such failure or breach is unremedied and is not waived by the required holders of such Indebtedness or counterparty to such Material Contract; or

(c) Breach of Certain Covenants. Failure of any Loan Party to perform or comply with any term or condition contained in (i) Section 2.4, Section 2.16, Section 5.1(d), Section 5.2 (as to existence), Section 5.14, Section 5.15, Section 5.22 or Article VI, (ii) Section 5.1(b), or Section 5.1(c) and, in the case of this clause (ii), such default shall not have been remedied or waived within five (5) Business Days after the earlier of (x) an officer of such Loan Party becoming aware of such default and (y) receipt by Borrower of written notice from any Agent or any Lender of such default or (iii) Section 5.1 (other than with respect to clauses (b), (c) and (d) therein), Section 5.2 (other than with respect to existence), Section 5.3, Section 5.5, Section 5.6, Section 5.7, Section 5.8, Section 5.10, Section 5.11 or Section 5.13 and, in the case of this clause (iii), such default shall not have been remedied or waived within fifteen (15) Business Days after the earlier of (x) an officer of such Loan Party becoming aware of such default and (y) receipt by Borrower of written notice from any Agent or any Lender of such default, provided that, notwithstanding anything herein to the contrary, any Event of Default that occurs pursuant to this Section 8.1(c)(i) in respect of failure to comply with Section 2.16(b) shall be automatically cured if such insurance premium is paid as and when due; or

(d) Breach of Representations, etc. Any representation, warranty, certification or other written statement of fact made by any Loan Party in any Loan Document or in any statement or certificate at any time given by any Loan Party or any of its Subsidiaries in writing pursuant hereto or thereto or in connection herewith or therewith shall be false in any material respect (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) as of the date made and such incorrect representation, warranty, certification or other written statement of fact (if curable) shall remain incorrect for a period of 30 days after such Loan Party obtains knowledge thereof or the Borrower receives written notice thereof from the Administrative Agent; or

(e) Other Defaults under Loan Documents. Any Loan Party shall default in the performance of or compliance with any term contained herein or any of the other Loan Documents, other than any such term referred to in any other Clause of this Section 8.1, and such default shall not have been remedied or waived within thirty (30) days after the earlier of (i) an officer of such Loan Party becoming aware of such default and (ii) receipt by Borrower of notice from any Agent or any Lender of such default; or

 

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(f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court of competent jurisdiction shall enter a decree or order for relief in respect of any Loan Party or any of its Subsidiaries (other than Immaterial Subsidiaries) in an involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted under any applicable law of any jurisdiction; or (ii) an involuntary case shall be commenced against any Loan Party or any of its Subsidiaries (other than any Immaterial Subsidiary) under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect in any jurisdiction; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over any Loan Party or any of its Subsidiaries (other than any Immaterial Subsidiary), or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee or other custodian of any Loan Party or any of its Subsidiaries for all or a substantial part of its property; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of any Loan Party or any of its Subsidiaries, and any such event described in this clause (ii) shall continue for sixty (60) days without having been dismissed, bonded or discharged; or

(g) Voluntary Bankruptcy; Appointment of Receiver, etc. (i) Any Loan Party or any of its Subsidiaries (other than any Immaterial Subsidiary) shall have an order for relief entered with respect to it or shall commence a voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law of any jurisdiction now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or any Loan Party or any of its Subsidiaries shall make any assignment for the benefit of creditors; or (ii) any Loan Party or any of its Subsidiaries shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due; or the Board of Directors (or similar governing body) of any Loan Party or any of its Subsidiaries shall adopt any resolution to approve any of the actions referred to herein or in Section 8.1(f); or

(h) Judgments and Attachments. Any money judgment, regulatory fine levied by a Governmental Authority, writ or warrant of attachment or similar process involving an amount in excess of the Threshold Amount in an individual case or other legal or regulatory proceeding or in the aggregate at any time (in either case to the extent not adequately covered by insurance as to which a solvent and unaffiliated insurance company has received a properly tendered claim and not denied coverage) shall be entered, decided or filed against any Loan Party or any of their respective assets and shall remain undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days (or in any event later than five (5) days prior to the date of any proposed sale thereunder); or

(i) Dissolution. Any order, judgment or decree shall be entered against any Loan Party decreeing the dissolution or split up of such Loan Party, to the extent such dissolution or split up is not permitted pursuant to Section 6.9, and such order shall remain undischarged or unstayed for a period in excess of sixty (60) days; or

 

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(j) Employee Benefit Plans. There shall occur one or more ERISA Events which individually or in the aggregate results in or could reasonably be expected to result in a Material Adverse Effect; or

(k) Change of Control. A Change of Control shall have occurred; or

(l) Guaranties, Collateral Documents and other Loan Documents. At any time after the execution and delivery thereof, (i) the Guaranty for any reason, other than the satisfaction in full of all Obligations, shall cease to be in full force and effect (other than in accordance with its terms) or shall be declared to be null and void or any Guarantor shall repudiate in writing its material obligations thereunder, (ii) this Agreement or any Collateral Document ceases to be in full force and effect (other than by reason of a release of Collateral in accordance with the terms hereof or thereof or the satisfaction in full of the Obligations in accordance with the terms hereof) or shall be declared null and void, or Agents shall not have or shall cease to have a valid and perfected Lien in a material portion of the Collateral purported to be covered by the Collateral Documents with the priority required by the relevant Collateral Document, in each case for any reason other than the failure of Agents or any Secured Party to take any action within its control, or (iii) any Loan Party shall contest the validity or enforceability of any Loan Document in writing or deny in writing that it has any further liability, including with respect to future advances by Lenders, under any Loan Document to which it is a party (other than by reason of a release of Collateral in accordance with the terms hereof or thereof or the satisfaction in full of the Obligations in accordance with the terms hereof); or

(m) Proceedings. The conviction of any Loan Party under any criminal statute, or a final non-appealable judgment pursuant to criminal or civil proceedings against any Loan Party, in each case, pursuant to which statute or proceedings the penalties have resulted in forfeiture to any Governmental Authority of any material portion of the Collateral owned by such Loan Party in an aggregate amount exceeding $5,000,000; or

(n) Cessation of Business. (i) The Loan Parties and their Subsidiaries are enjoined, restrained or prevented by the order of any court or any Governmental Authority from conducting all or any material part of its business for more than thirty (30) consecutive days, or (ii) any other cessation of a substantial part of the business of the Loan Parties and their Subsidiaries engaged in material operations for a period which materially and adversely affects the Loan Parties or any of their Subsidiaries; or

(o) AON Insurance Policy and Intercompany License Agreements. At any time after the execution and delivery thereof, (i) the AON Insurance Policy or any Intercompany License Agreement for any reason, other than the satisfaction in full of all Obligations, shall cease to be in full force and effect or shall be declared to be null and void or any counterparty thereto shall repudiate its obligations thereunder, or (ii) any counterparty to the AON Insurance Policy or any Intercompany License Agreement or any Loan Party shall contest the validity or enforceability of the AON Insurance Policy or any Intercompany License Agreement in writing or deny in writing that it has any further rights or obligations under the AON Insurance Policy or any Intercompany License Agreement; or

 

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(p) Failure to Fund the Interest Reserve Accounts. Failure to at all times after the Closing Date maintain in each Interest Reserve Account at least the amount required in Section 2.16(b)(i); or

(q) Failure to Fund the Insurance Premium Reserve Account. Failure to (i) fund the Insurance Premium Reserve Account, in accordance with Section 2.16(b)(ii)(A), (ii) fully fund in cash the Insurance Premium Reserve Account, the applicable Insurance Premium Reserve Amount referred to in Section 2.16(b)(ii)(B) at least three (3) Business Days prior to the date on which the second insurance premium is due under the AON Insurance Policy; provided that, notwithstanding anything herein to the contrary, any Event of Default that occurs pursuant to this Section 8.1(q)(ii) shall be automatically cured if such insurance premium is paid as and when due, or (iii) fully fund in cash the Insurance Premium Reserve Account with the applicable Insurance Premium Reserve Amount referred to in Section 2.16(b)(ii)(C) immediately upon the occurrence of any Event of Default hereunder;

THEN, (A) upon the occurrence of any Event of Default described in Section 8.1(f) or Section 8.1(g), automatically, (B) upon the occurrence of any Event of Default under Section 8.1(p) and the continuance of such Event of Default for ten (10) days, automatically on such tenth (10th) day, and (C) upon the occurrence of any other Event of Default, at the request of (or with the consent of) Required Lenders (1) the Commitments, if any, of each Lender having such Commitments shall immediately terminate; (2) each of the following shall immediately become due and payable, in each case without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by each Loan Party: (x) the unpaid principal amount of and accrued interest on the Term Loans, and (y) the Specified Premium and all other Obligations; and (3) Agents may enforce any and all Liens and security interests created pursuant to Collateral Documents and exercise any other remedies available under contract or applicable law subject to the terms and conditions of the Loan Documents. Each Loan Party shall, at the Collateral Agent’s request, following the occurrence, and during the continuance, of an Event of Default described in any one of Sections 8.1(a), (c)(i), (f), (g), (h), (i), (k), (l) or (p), make its development, engineering, architecture, and design personnel reasonably available to the Collateral Agent and provide such other information, materials, and assistance to the Collateral Agent, in each case as Agent deems reasonably necessary to train and instruct the Collateral Agent and/or its designee(s) in the development, compilation, operation, maintenance and support of the software (both licensed and internal use-only) of the Loan Parties.

ARTICLE IX

AGENTS

Section 9.1. Appointment.

(a) Each of the Lenders hereby irrevocably appoints Administrative Agent to serve as administrative agent under the Loan Documents and Collateral Agent to serve as collateral agent under the Loan Documents, and authorizes such Agents to execute, deliver and administer the Loan Documents and to take such actions and to exercise such powers as are delegated to each such Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. In addition, to the extent required under the laws of any jurisdiction other than the United States, each of the Lenders hereby grants to the Agents any required powers of attorney to execute any Collateral Document governed by the laws of such jurisdiction on such Lender’s behalf.

 

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(b) Each Person serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with Borrower, any Guarantor, or any other Subsidiary or other Affiliate thereof as if such Person were not an Agent hereunder and without any duty to account therefor to the Lenders.

Section 9.2. Nature of Duties; Delegation.

(a) The Agents shall not have any duties or obligations except those expressly set forth in the Loan Documents, and their duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, (i) the Agents shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or an Event of Default has occurred and is continuing (and it is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to an Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Requirement of Law, and that such term is used as a matter of market custom and is intended to create or reflect only an administrative relationship between contracting parties), (ii) the Agents shall not have any duty to take any discretionary action or to exercise any discretionary power, except discretionary rights and powers expressly contemplated by the Loan Documents that the Agents are required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as either Agent shall believe in good faith to be necessary, under the circumstances as provided in the Loan Documents); provided that neither Agent shall be required to take any action that, in its opinion, could expose either Agent to liability or be contrary to any Loan Document or any Requirement of Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a defaulting Lender in violation of any Debtor Relief Law; provided, further, that neither Agent shall be required to take any action which exposes such Agent to liability or which is contrary to this Agreement or the Loan Documents or applicable law unless such Agent is furnished with an indemnification reasonably satisfactory to such Agent with respect thereto, and (iii) except as expressly set forth in the Loan Documents, the Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to any Loan Party, any other Subsidiary or any other Affiliate of any of the foregoing that is communicated to or obtained by the Person serving as an Agent or any of its Affiliates in any capacity. Neither Agent shall be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Agent shall believe in good faith to be necessary, under the circumstances as provided in the Loan Documents) or in the absence of its own gross negligence, bad faith, fraud, or willful misconduct (such absence to be presumed unless otherwise determined by a court of competent jurisdiction by a final and nonappealable judgment); provided that no action taken or not taken at the direction of the Required Lenders shall be considered gross negligence or willful misconduct.

 

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The Agents shall be deemed not to have knowledge of any Default or Event of Default unless and until written notice thereof (conspicuously stating that it is a “notice of default” and providing sufficient detail of such Default or Event of Default) is given to the Administrative Agent by Borrower or a Lender, and the Agents shall not be responsible for or have any duty to ascertain or inquire into (A) any statement, warranty or representation made in or in connection with any Loan Document, (B) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (C) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document or the occurrence of any Default or Event of Default, (D) the sufficiency, validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (E) the satisfaction of any condition set forth in this Agreement or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to an Agent or satisfaction of any condition that expressly refers to the matters described therein being acceptable or satisfactory to the applicable Agent. The Agents shall be entitled to rely, and shall not incur any liability for relying, upon any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person (whether or not such Person in fact meets the requirements set forth in the Loan Documents for being the signatory, sender or authenticator thereof). The Agents also shall be entitled to rely, and shall not incur any liability for relying, upon any statement made to it orally or by telephone and believed by it to be made by the proper Person (whether or not such Person in fact meets the requirements set forth in the Loan Documents for being the signatory, sender or authenticator thereof), and may act upon any such statement prior to receipt of written confirmation thereof. In determining compliance with any condition hereunder to the making of a Term Loan that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received written notice to the contrary from such Lender prior to the making of such Term Loan. The Agents may consult with legal counsel (who may be counsel for any Lender), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

(b) The Agents shall be entitled to refrain from any discretionary act or taking such discretionary action unless and until such Agent shall have received instructions from the Required Lenders, and the Agents shall not incur liability to any Person by reason of so refraining and if, in performing its duties under this Agreement or the Loan Documents, if such Agent is required to decide between alternative courses of action or has received conflicting directions or any other directions from Lenders who do not satisfy the definition of Required Lenders, such Agent may refrain from taking any action until it receives instructions from the Required Lenders. The Agents may at any time request instructions from the Lenders with respect to any actions or approvals which by the terms of this Agreement or of any of the Loan Documents the Agents are permitted or required to take or to grant. Whether or not the Agents make such a request for direction, at all times except with respect to an express obligation set forth herein, the Agents shall be entitled to refrain from such act or taking such action unless and until such Agent shall have received instructions from the Required Lenders, and the Agents shall not incur liability to any Person by reason of so refraining. The Agents shall not be liable for any action taken in good faith and reasonably believed by it to be within the powers conferred upon it, or taken by it

 

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pursuant to any direction or instruction by which it is governed, or omitted to be taken by it by reason of the lack of direction or instruction required hereby for such action (including without limitation for refusing to exercise discretion or for withholding its consent in the absence of its receipt of, or resulting from a failure, delay or refusal on the part of any Lender to provide, written instruction to exercise such discretion or grant such consent from any such Lender, as applicable) in the absence of gross negligence or willful misconduct. The Agents shall not be liable for any error of judgment made in good faith unless it shall be proven that the Agents were grossly negligent in ascertaining the relevant facts. Nothing herein or in any other Loan Document or related documents shall obligate any Agent to advance, expend or risk its own funds, or to take any action which in its reasonable judgment may cause it to incur any expense or financial or other liability for which it is not adequately indemnified. Before acting hereunder, the Agents shall be entitled to request, receive and rely upon such certificates and opinions as such Agent may reasonably determine appropriate with respect to the satisfaction of any specified circumstances or conditions precedent to such action. The Agents shall not be responsible or liable for delays or failures in performance resulting from acts beyond its control. Such acts shall include but not be limited to acts of God, strikes, lockouts, riots, acts of war, epidemics, pandemics, governmental regulations superimposed after the fact, fire, communication line failures, computer viruses, power failures, earthquakes or other disasters. Each Agent will provide copies of notices, certificates and reports that it receives from the Loan Parties to the Lenders to the extent they are not required to be delivered to Lenders by the Loan Parties or any other party to this Agreement, and shall have no obligation to review such notices, certificates or reports except as expressly provided herein. Each Agent shall not be under a duty to examine or independently evaluate, and shall not be charged with knowledge or notice of, the contents of any financial statements or reports delivered to it pursuant to the provisions of this Agreement or the Loan Documents, it being acknowledged that such deliveries are for the purpose of making such materials available to the Lenders.

(c) Each Agent may perform any of and all its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by such Agent (other than a Disqualified Institution). Each Agent and any such sub-agent may perform any of and all their duties and exercise their rights and powers through their respective controlled Affiliates. The exculpatory provisions of this Article shall apply to any such sub-agent and to the controlled Affiliates of each of either Agent or any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities of the Agents. The Agents shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the applicable Agent acted with gross negligence, bad faith, fraud or willful misconduct in the selection of such sub-agents.

(d) Neither the Agents nor any of their related parties have any duty or obligation to any Lender or participant or any other Person to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this

 

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Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Loan Documents, (v) the value or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

(e) It is expressly agreed and acknowledged that the Agents are not guaranteeing performance of the obligations of the Loan Parties or other parties hereto or any parties to the Collateral. The Agents shall not have liability for any failure, inability or unwillingness on the part of the Loan Parties to provide accurate and complete information on a timely basis to the Agents, or otherwise on the part of any such party to comply with the terms of this Agreement or the other Loan Documents, and shall have no liability for any inaccuracy or error in the performance or observance on the Agents’ part of any of their duties hereunder or under the other Loan Documents that is caused by or results from any such inaccurate, incomplete or untimely information received by it, or other failure on the part of any such other party to comply with the terms hereof.

(f) For purposes of clarity, phrases such as “satisfactory to the Administrative Agent,” “approved by the Administrative Agent,” “acceptable to the Administrative Agent,” “as determined by the Administrative Agent,” “in the Administrative Agent’s discretion,” “selected by the Administrative Agent,” “elected by the Administrative Agent,” “requested by the Administrative Agent,” and phrases of similar import that authorize and permit the Administrative Agent or the Collateral Agent to approve, disapprove, determine, act or decline to act in its discretion shall be subject to the Administrative Agent or Collateral Agent receiving written direction from the Lenders or Required Lenders, as applicable, to take such action or to exercise such rights (it being understood that nothing contained in this Agreement or any other Loan Document shall impose a duty on the Agents to make any such determination or take any action independent of such written direction from the Lenders or the Required Lenders or exercise any discretionary acts).

(g) In performing under the Loan Documents, the Agents shall have all of their rights, protections and immunities granted to them under this Agreement. The Lenders hereby authorize, empower and direct the Agents to execute and deliver on their behalf the Loan Documents and all related agreements, documents or instruments as shall be necessary or appropriate as determined by the Required Lenders in good faith and in the forms presented to the Agents as of the date hereof in order to effectuate the purposes of the Loan Documents and any such other related agreements, documents and instruments. Each of the Lenders hereby acknowledges that it has received a copy of the Loan Documents and agrees that it will be bound by and will take no actions contrary to the provisions of the Loan Documents to the extent then in effect.

(h) Each Agent has executed this Agreement as directed under and in accordance with the terms of this Agreement and will perform this Agreement solely in its capacity as Administrative Agent or Collateral Agent, as applicable, and not individually. In performing under this Agreement, each Agent shall have all rights, protections, immunities and indemnities granted to it under this Agreement. Subject to the terms of this Agreement, each Agent shall have no obligation to perform or exercise any discretionary act.

 

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Section 9.3. Successor Agent.

(a) Subject to the terms of this Section 9.3, either Agent may resign at any time from its capacity as such or the Required Lenders can elect to remove any Agent at any time. In connection with such resignation, such Agent shall give notice of its intent to resign to the Lenders and Borrower. In connection with such removal, the Required Lenders shall give notice of their intent to remove such Agent to the Agents, the Lenders and Borrower. Upon receipt of any such notice of resignation or the giving of such notice of removal, the Required Lenders shall have the right, in consultation with (but without need for consent of) Borrower, to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after such Agent gives notice of its intent to resign or the Required Lenders give notice of their intent to replace such Agent, as the case may be, then such Agent may, on with the consent of the Required Lenders, appoint a successor Agent, which shall be (i) a bank with an office in New York, New York, or an Affiliate of any such bank, (ii) a Lender or (iii) any other Person (other than a Disqualified Institution) with the prior written consent of the Required Lenders; provided that no consent of Borrower shall be required. Upon the acceptance of its appointment as Administrative Agent and/or Collateral Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the Agent so retiring or removed, and such Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents. The fees payable by Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed by Borrower and such successor.

(b) Notwithstanding the foregoing, in the event no successor Agent shall have been so appointed and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its intent to resign or the Required Lenders give notice of their intent to replace the Agent being removed, in the case of a retirement, such Agent may give notice of the effectiveness of its resignation to the Lenders and Borrower, or, in the case of a removal, the Required Lenders may give notice of the effectiveness of the removal to the Agents, the Lenders and Borrower, in each case, whereupon, on the date of effectiveness of such resignation or removal stated in such notice, (i) the Agent so retiring or removed shall be discharged from its duties and obligations hereunder and under the other Loan Documents; provided that, solely for purposes of maintaining any security interest granted to an Agent under any Collateral Document for the benefit of the Secured Parties, the Agent so retiring or removed shall continue to be vested with such security interest as collateral agent for the benefit of the Secured Parties and, in the case of any Collateral in the possession of such Agent, shall continue to hold such Collateral, in each case until such time as a successor Agent is appointed and accepts such appointment in accordance with this paragraph (it being understood and agreed that no Agent so retiring or removed shall have any duty or obligation to take any further action under any Collateral Document, including any action required to maintain the perfection of any such security interest), and (ii) the Required Lenders shall succeed to and become vested with all the rights, powers, privileges and duties of the Agent so retiring or removed; provided that (A) all payments required to be made hereunder or under any other Loan Document to the Administrative Agent for the account of any Person other than the Administrative Agent shall be made directly to such Person and (B) all notices and other communications required or contemplated to be given or made to the Administrative Agent shall also directly be given or made to each Lender.

 

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(c) Following the effectiveness of either Agent’s resignation or removal from its capacity as such, the provisions of this Article IX, as well as any exculpatory, reimbursement and indemnification provisions set forth in any other Loan Document, shall continue in effect for the benefit of such retired or removed Agent, its sub-agents and their respective related parties in respect of any actions taken or omitted to be taken by any of them while it was acting as an Agent and in respect of the matters referred to in the proviso under clause (b)(i) above.

(d) Any Person into whom the Agent may be converted or merged, or with whom it may be consolidated, or to whom it may sell or transfer its corporate trust business as a whole or substantially as a whole, or any Person resulting from any such conversion, sale, merger, consolidation or transfer to which the Agent is a party, shall be and become a successor Agent hereunder and be vested with all of the powers, immunities, privileges and other matters as was its predecessor without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto (except as required by Law to effectuate such succession), anything herein to the contrary notwithstanding.

Section 9.4. Nonreliance on Agents; Lender Consent.

(a) Each Lender acknowledges that it has, independently and without reliance upon either Agent or any other Lender, or any of the controlled Affiliates of any of the foregoing, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon either Agent or any other Lender, or any of the controlled Affiliates of any of the foregoing, and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

(b) Each Lender, by delivering its signature page to this Agreement and funding its Term Loans on the Closing Date, or delivering its signature page to an Assignment Agreement in the form of Exhibit C or any other Loan Document pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Administrative Agent or the Lenders on the Closing Date.

Section 9.5. Collateral Matters.

(a) Except with respect to the exercise of setoff rights of any Lender in accordance with this Agreement or with respect to a Lender’s right to file a proof of claim in an insolvency proceeding, no Secured Party (other than an Agent in its capacity as such) shall have any right individually to realize upon any of the Collateral or to enforce any Guaranty of the Obligations, it being understood and agreed that all powers, rights and remedies under the Loan Documents may be exercised solely by an Agent on behalf of the Secured Parties at the direction of the Required Lenders in accordance with the terms thereof. In the event of a foreclosure by an Agent or sub-agent on any of the Collateral pursuant to a public or private sale or other disposition, the Agent, any sub-agent or any Lender may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition, and either Agent or any sub-agent, as

 

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agent for and representative of the Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless the Required Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by the Administrative Agent on behalf of the Secured Parties at such sale or other disposition.

(b) In furtherance of the foregoing and not in limitation thereof, no hedging agreement the obligations under which constitute Obligations will create (or be deemed to create) in favor of any Secured Party that is a party thereto any rights in connection with the management or release of any Collateral or of the obligations of any Loan Party under any Loan Document. By accepting the benefits of the Collateral, each Secured Party that is a party to any such hedging agreement shall be deemed to have appointed the Administrative Agent to serve as administrative agent and collateral agent under the Loan Documents and agreed to be bound by the Loan Documents as a Secured Party thereunder, subject to the limitations set forth in this paragraph.

(c) At the direction of the Required Lenders, the Secured Parties irrevocably authorize each of the Agents to subordinate any Lien on any property granted to or held by an Agent under any Loan Document to the holder of any Lien on such property that is a Permitted Lien and to release any Lien (i) in the event there is a disposition of Collateral (w) permitted under this Agreement, (x) approved by the requisite amount of Lenders, (y) on assets to the extent they constitute Excluded Assets, or (z) upon release of a Guarantor from its obligations hereunder; provided, that if any Guarantor ceases to be wholly-owned, directly or indirectly, by the Borrower, such subsidiary shall not be released from its Guaranty solely by virtue of becoming an Excluded Subsidiary as a result of the disposition of less than all of the Capital Stock in such subsidiary owned by the Borrower or any other Loan Party, unless such disposition is made in good faith for fair market value and for a bona fide business purpose (it being understood that this proviso shall not limit the release of any Guarantor that otherwise qualifies as an Excluded Subsidiary for reasons other than not being wholly-owned), and (ii) to release all Liens upon payment of the Obligations in full (other than contingent obligations not due and owing). The Collateral Agent shall (and is hereby irrevocably authorized by each Lender to) upon direction of Required Lenders following the occurrence of a subordination or Lien termination otherwise provided for in this Agreement execute such reasonable and customary documents prepared (and if necessary filed or recorded) at Borrower’s sole expense as may be reasonably necessary to evidence such release or subordination of the Liens granted to the Collateral Agent for the benefit of the Beneficiaries herein or pursuant hereto upon the applicable Collateral. The Agents shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Agents be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.

(d) The Collateral Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Collateral Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Collateral Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral, other than its responsibility to maintain possession of the Collateral for purposes of perfection of the Liens and security interests granted hereunder or under any Loan Document.

 

 

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(e) The Collateral Agent hereby disclaims any representation or warranty to the Lenders concerning and shall have no responsibility to Lenders for the existence, priority or perfection of the Liens and security interests granted hereunder or under any Loan Document or in the value of any of the Collateral and shall not be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral, in each case, other than its responsibility to maintain possession or control of any Collateral for purposes of perfection of the Liens. The Collateral Agent makes no representation as to the value, sufficiency or condition of the Collateral or any part thereof, as to the title of the Loan Parties to the Collateral, as to the security afforded by this Agreement or any other Loan Document. The Collateral Agent shall not be responsible for insuring the Collateral, for the payment of taxes, charges, assessments or liens upon the Collateral or otherwise as to the maintenance of the Collateral, except as provided in the immediately following sentence when the Collateral Agent has possession of the Collateral. The Collateral Agent shall not be under an obligation independently to request or examine insurance coverage with respect to any Collateral. The Collateral Agent shall not be liable for the acts or omissions of any bank, depositary bank, custodian, independent counsel of the Loan Parties or any other party selected by the Collateral Agent with reasonable care or selected by any other party hereto that may hold or possess Collateral or documents related to Collateral and shall not be required to monitor the performance of any such Persons holding Collateral. For the avoidance of doubt, neither Agent shall be responsible to the Lenders for the perfection of any Lien or for the filing, form, content or renewal of any UCC financing statements, fixture filings, mortgages, deeds of trust and such other documents or instruments, provided however that if instructed by the Required Lenders and at the expense of Borrower, the Collateral Agent shall arrange for the filing and continuation, of financing statements or other filing or recording documents or instruments made with respect to any assets or property of any Loan Party in the jurisdictions specified in the Perfection Certificate (provided, that with respect to Borrower or any Subsidiary that is formed or conducts material operations in any jurisdiction other than a state of the United States, if requested by the Collateral Agent acting on instruction of Required Lenders, local law collateral security documents and filings for such jurisdiction shall be required to the extent set forth herein), (collectively, the “Financing Statements”) for the perfection of security interests in the Collateral; provided, that, the Collateral Agent shall not be responsible for the preparation, form, content, sufficiency or adequacy of any such Financing Statements, all of which shall be provided in writing to the Collateral Agent by the Required Lenders including the jurisdictions and filing offices where the Collateral Agent is required to file such Financing Statements.

(f) In connection with the exercise of any rights or remedies in respect of, or foreclosure or realization upon, any real estate-related collateral pursuant to this Agreement or any Loan Document, the Collateral Agent shall not be obligated to take title to or possession of real estate in its own name, or otherwise in a form or manner that may, in its reasonable judgment, expose it to liability. In the event that the Collateral Agent reasonably believes that it may be considered an “owner or operator” under any Environmental Laws and thereby causes the Collateral Agent to incur, or be exposed to, any material environmental liability or any liability under any other federal, state or local law, the Collateral Agent reserves the right, instead of taking such action, either to resign as Collateral Agent or to arrange for the transfer of the title or control of the asset to a court appointed receiver. The Collateral Agent will not be liable to any Person for any environmental liability or any environmental claims or contribution actions under any federal, state or local law, rule or regulation by reason of the Collateral Agent’s actions and conduct as authorized, empowered and directed hereunder or relating to any kind of discharge or release or threatened.

 

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Section 9.6. Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding with respect to any Loan Party under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Term Loans and all other Obligations including any Specified Premium, and indemnified or reimbursable amounts that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Agents allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by each Lender and each other Secured Party to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders or the other Secured Parties, to pay to the Administrative Agent any amount due to it, in its capacity as the Administrative Agent, under the Loan Documents (including under this Article IX).

Section 9.7. No Third-Party Beneficiaries. The provisions of this Article IX are solely for the benefit of the Agents and the Lenders, and, no Loan Party or Subsidiary shall have any rights as a third party beneficiary of any such provisions. Each Secured Party, whether or not a party hereto, will be deemed, by its acceptance of the benefits of the Collateral and of the Guaranties of the Secured Obligations (as defined in the Pledge and Security Agreement) provided under the Loan Documents, to have agreed to the provisions of this Article IX.

Section 9.8. Right to Indemnity. EACH LENDER HOLDING OBLIGATIONS, IN PROPORTION TO ITS PRO RATA SHARE OF THE OBLIGATIONS, SEVERALLY AGREES TO INDEMNIFY AND HOLD EACH AGENT, THEIR AFFILIATES AND THEIR RESPECTIVE OFFICERS, PARTNERS, DIRECTORS, TRUSTEES, EMPLOYEES AND AGENTS OF EACH AGENT (EACH, AN “INDEMNITEE AGENT PARTY”), TO THE EXTENT THAT SUCH INDEMNITEE AGENT PARTY SHALL NOT HAVE BEEN REIMBURSED BY ANY LOAN PARTY, HARMLESS FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES (INCLUDING COUNSEL FEES AND DISBURSEMENTS) OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST SUCH INDEMNITEE AGENT PARTY IN EXERCISING ITS POWERS, RIGHTS AND REMEDIES

 

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OR PERFORMING ITS DUTIES HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS OR OTHERWISE IN ITS CAPACITY AS SUCH INDEMNITEE AGENT PARTY IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY DIRECTION, INCLUDING WITHOUT LIMITATION, ANY LITIGATION, CLAIMS, CAUSES OF ACTIONS, ARBITRATION OR OTHER PROCEEDING OR INVESTIGATION RELATING TO, OR ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT, THE LOAN DOCUMENTS, OR ANY DIRECTION (HEREINAFTER REFERRED TO COLLECTIVELY AS “CLAIMS” AND EACH SINGLY AS A “CLAIM”) (INCLUDING WITHOUT LIMITATION, ANY SUCH CLAIM CONCERNING WHETHER ANY ASPECT OF THE SALE, LIQUIDATION OR OTHER DISPOSITION OF ANY OF THE COLLATERAL PURSUANT TO THE DIRECTIONS WAS NOT COMMERCIALLY REASONABLE (AS SUCH TERM IS DEFINED OR USED IN SECTIONS 9-610(B) AND 9-627 OF THE UCC) (HEREINAFTER REFERRED TO COLLECTIVELY AS “COMMERCIAL REASONABLENESS CLAIMS”) OR WAS NOT IN COMPLIANCE WITH THE APPLICABLE PROVISIONS OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS (HEREINAFTER REFERRED TO COLLECTIVELY AS “COMPLIANCE CLAIMS”), IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY, OR SOLE NEGLIGENCE OF SUCH INDEMNITEE AGENT PARTY; PROVIDED NO LENDER SHALL BE LIABLE FOR ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING FROM SUCH INDEMNITEE AGENT PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, AS DETERMINED BY A COURT OF COMPETENT JURISDICTION IN A FINAL, NON-APPEALABLE ORDER. NOTWITHSTANDING ANY PROVISION CONTAINED IN THIS AGREEMENT (INCLUDING WITHOUT LIMITATION, THE FOREGOING PROVISO) TO THE CONTRARY, IF THE ADMINISTRATIVE AGENT AND/OR THE COLLATERAL AGENT COMPLIES IN ALL MATERIAL RESPECTS WITH EACH AND EVERY DIRECTION FROM THE REQUIRED LENDERS, THEN THIS INDEMNITY SHALL APPLY TO ANY LOSSES NOW OR HEREAFTER INCURRED BY ANY INDEMNITEE AGENT PARTY THAT ARISE FROM, OR RELATE TO, ANY COMMERCIAL REASONABLENESS CLAIM OR ANY COMPLIANCE CLAIM, EVEN IF THERE IS A FINAL DETERMINATION BY A COURT OF COMPETENT JURISDICTION THAT IS NOT SUBJECT TO REVIEW ON APPEAL THAT SUCH LOSSES ARE THE RESULT OF SUCH INDEMNITEE AGENT PARTY’S GROSS NEGLIGENCE. IF ANY INDEMNITY FURNISHED TO ANY INDEMNITEE AGENT PARTY FOR ANY PURPOSE SHALL, IN THE OPINION OF SUCH INDEMNITEE AGENT PARTY, BE INSUFFICIENT OR BECOME IMPAIRED, SUCH INDEMNITEE AGENT PARTY MAY CALL FOR ADDITIONAL INDEMNITY AND CEASE, OR NOT COMMENCE, TO DO THE ACTS INDEMNIFIED AGAINST UNTIL SUCH ADDITIONAL INDEMNITY IS FURNISHED; PROVIDED IN NO EVENT SHALL THIS SENTENCE REQUIRE ANY LENDER HOLDING OBLIGATIONS TO INDEMNIFY ANY INDEMNITEE AGENT PARTY AGAINST ANY LIABILITY, OBLIGATION, LOSS, DAMAGE, PENALTY, ACTION, JUDGMENT, SUIT, COST, EXPENSE OR DISBURSEMENT IN EXCESS OF SUCH LENDER’S PRO RATA SHARE THEREOF; AND PROVIDED FURTHER THIS SENTENCE SHALL NOT BE DEEMED TO REQUIRE ANY LENDER TO INDEMNIFY ANY INDEMNITEE AGENT PARTY AGAINST ANY LIABILITY, OBLIGATION, LOSS, DAMAGE, PENALTY, ACTION, JUDGMENT, SUIT, COST, EXPENSE OR DISBURSEMENT DESCRIBED IN THE PROVISO IN THE IMMEDIATELY PRECEDING SENTENCE.

 

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Section 9.9. Agency for Perfection. Each Agent and each Lender hereby appoints each other Agent and each other Lender as agent and bailee for the purpose of perfection the security interests in and liens upon the Collateral in assets which, in accordance with Article 9 of the UCC, can be perfected only by possession, control (or where the security interest of a secured party with possession or control has priority over the security interest of another secured party) or notation and each Agent and each Lender hereby acknowledges that it holds possession of, otherwise controls or notation on, any such Collateral for the benefit of the Agents and the Lenders as secured party. Should Administrative Agent or any Lender obtain possession or control of any such Collateral, Administrative Agent or such Lender shall notify Collateral Agent thereof, and, promptly upon Collateral Agent’s request therefore shall deliver such Collateral to Collateral Agent or in accordance with Collateral Agent’s instructions. In addition, Collateral Agent shall also have the power and authority hereunder to appoint such other sub-agents (other than Disqualified Institution) as may be necessary or required under applicable state law or otherwise to perform its duties and enforce its rights with respect to the Collateral and under the Loan Documents. Each Loan Party by its execution and delivery of this Agreement hereby consents to the foregoing.

Section 9.10. Erroneous Payments.

(a) If the Administrative Agent notifies a Lender or any Person who has received funds on behalf of a Lender (any such Lender or other recipient, a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender or other Payment Recipient on its behalf) (any such funds, whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of the Administrative Agent, and such Lender shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business Days thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.

 

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(b) Without limiting immediately preceding clause (a), each Lender or any Person who has received funds on behalf of a Lender, hereby further agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Lender or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part) in each case:

(i) It acknowledges and agrees that (A) in the case of immediately preceding clause (x) or clause (y), an error shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and

(ii) such Lender shall (and shall cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of such error) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 9.10(b).

(c) Each Lender hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender under any Loan Document, or otherwise payable or distributable by the Administrative Agent to such Lender from any source, against any amount due to the Administrative Agent under immediately preceding clause (a) or under the indemnification provisions of this Agreement.

(d) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor by the Administrative Agent in accordance with immediately preceding clause (a), from any Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Lender at any time, (i) such Lender shall be deemed to have assigned its Term Loans (but not its Commitments) of the relevant Class with respect to which such Erroneous Payment was made (the “Erroneous Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Term Loans (but not Commitments) of the Erroneous Payment Impacted Class, the “Erroneous Payment Deficiency Assignment”) at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance), and is hereby (together with Borrower) deemed to execute and deliver an Assignment Agreement with respect to such Erroneous Payment Deficiency Assignment, and such Lender

 

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shall deliver any Notes evidencing such Term Loans to Borrower or the Administrative Agent, (ii) the Administrative Agent as the assignee Lender shall be deemed to acquire the Erroneous Payment Deficiency Assignment, (iii) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender shall cease to be a Lender hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender and (iv) the Administrative Agent may reflect in the Register its ownership interest in the Term Loans subject to the Erroneous Payment Deficiency Assignment. The Administrative Agent may, in its discretion, sell any Term Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender shall be reduced by the net proceeds of the sale of such Term Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender (and/or against any recipient that receives funds on its respective behalf). For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender and such Commitments shall remain available in accordance with the terms of this Agreement. In addition, each party hereto agrees that, except to the extent that the Administrative Agent has sold a Term Loan (or portion thereof) acquired pursuant to an Erroneous Payment Deficiency Assignment, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of the applicable Lender under the Loan Documents with respect to each Erroneous Payment Return Deficiency (the “Erroneous Payment Subrogation Rights”).

(e) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by Borrower or any other Loan Party, except, in each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent directly or indirectly from Borrower or any other Loan Party for the purpose of making such Erroneous Payment.

(f) To the extent permitted by applicable law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine.

(g) Each party’s obligations, agreements and waivers under this Section 9.10 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender the termination of the Commitments and/or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Loan Document.

 

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Section 9.11. Delivery of Notices to Securitization Trustee. Each Loan Party agrees to forward to the Collateral Agent, and each Loan Party and the Lenders direct the Collateral Agent to provide to the Securitization Trustee, promptly upon receipt thereof by the Collateral Agent, copies of any notices or writings the Collateral Agent receives from any Loan Party, the insurers under the AON Insurance Policy that specify that such notice or writing relates to the AON Insurance Policy, including but not limited to notices or writings regarding:

(a) any amendment, waiver or supplement to the AON Insurance Policy;

(b) any reduction of the “Limit of Liability” under the AON Insurance Policy (as defined therein);

(c) the replacement of an “AON Insurer” by an “Additional Insurer” and identity of such “Additional Insurer” (each as defined in the AON Insurance Policy); and

(d) the occurrence of any of the termination events provided in Section X of the AON Insurance Policy.

All notices or writings sent by a Loan Party to the Collateral Agent pursuant to this Section 9.11 shall be accompanied by a written notice to the Collateral Agent that such transmitted notice or writing relates to the AON Insurance Policy. For the avoidance of doubt, no Person that is designated as an observer of Borrower’s board of directors by a current or former Lender, or any Affiliate thereof, shall have any obligation to deliver to the Collateral Agent or Securitization Trustee any information delivered to such Person solely in such person’s capacity as an observer of Borrower’s board of directors.

ARTICLE X

MISCELLANEOUS

Section 10.1. Notices.

(a) Notices Generally. Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given to a Loan Party, Collateral Agent, the insurers under the AON Insurance Policy, or Administrative Agent, shall be sent to such Person’s address as set forth on Schedule 10.1 or in the other relevant Loan Document, and in the case of any Lender, the address as indicated on Schedule 10.1 or otherwise indicated in writing by such Person to Administrative Agent and/or parties to such relevant Loan Document. Each notice of Borrower required hereunder shall also be sent to (x) AON (Bermuda) Limited and (y) Moody’s at the addresses set forth on Schedule 10.1 or otherwise indicated in writing by such Person to Administrative Agent and/or parties to such relevant Loan Document. Any such notice entitled to be received hereunder or under the AON Insurance Policy by AON (Bermuda) Limited shall also be delivered at each such insurer’s electronic address set forth in Schedule 10.1 (solely to the extent such insurer has provided its electronic notice address). It is acknowledged and agreed that any notice sent to AON (Bermuda) Limited shall be deemed to be sent to all insurers as of the date such notice is received by AON (Bermuda) Limited. Each notice hereunder shall be in writing and may be personally served, telexed or sent by facsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of facsimile, or three (3) Business Days after depositing it in the United States mail with postage prepaid and properly addressed; provided no notice to any Agent shall be effective until received by such Agent. For

 

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avoidance of doubt, communication by any Person of new addresses for notice (but without waiving any requirements related to physical relocation of any Loan Party) to be given pursuant to a Loan Document does not constitute an amendment, waiver or modification of any Loan Document and does not require consent of any Person. In the event that any Loan Party and the Administrative Agent and/or Required Lenders enter into a forbearance or similar agreement at any time in respect of a Default or Event of Default under this Agreement, Borrower shall give notice of its entry into such a forbearance or similar agreement to AON within (5) five Business Days of such Loan Party’s entry into such forbearance or similar agreement.

(b) Electronic Communications.

(i) Each Agent and Loan Party may, in its discretion, agree to accept notices and other communications to it hereunder by electronic transmission or communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic transmission or communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Agents, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Agents that it is incapable of receiving notices under such Article by electronic transmission or communication.

(ii) Unless Administrative Agent otherwise prescribes, (A) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (B) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing subclause (A), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both subclauses (A) and (B) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient.

Section 10.2. Expenses.

(a) Borrower agrees to pay promptly (i) all of each Agent’s, each Lender’s and the Securitization Trust’s reasonable and documented out-of-pocket costs and expenses of preparation of the Loan Documents and any consents, amendments, waivers or other modifications thereto, (ii) all of the reasonable and documented fees, expenses and disbursements of Lenders and the Securitization Trust, including but not limited to Proskauer Rose LLP, local counsel, and any ratings agency and, with respect to the Agents, counsel to the Agents and, in connection with the negotiation, preparation, execution and administration of the Loan Documents and any consents, amendments, waivers or other modifications thereto and any other documents or matters in respect thereof or contemplated thereunder (it being agreed that costs and expenses of legal counsel shall be limited to the reasonable fees and expenses of one counsel and one local counsel, as applicable, for each of (x) the Agents, (y) the Securitization Trust and (z) the Lenders (which may be Proskauer Rose LLP); provided, however, no Minority Lender

 

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shall (A) receive advice of counsel or other advisors to the Agents or any other Lenders or (B) challenge the attorney client privilege of the Administrative Agent or any Lender and their respective counsel), (iii) all the actual costs and reasonable expenses of creating and perfecting Liens in favor of Collateral Agent, for the benefit of Secured Parties, including filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees, title insurance premiums and reasonable and documented fees, expenses and disbursements of counsel to the Agents, each Agent and of counsel providing any opinions that any Agent or Required Lenders may request in respect of the Collateral or the Liens created pursuant to the Collateral Documents, (iv) all the reasonable and documented out-of-pocket expenses including any appraisers, consultants, advisors and agents employed or retained by Agents or Lenders and their respective counsel (in the case of legal counsel, limited to the reasonable fees, expenses and disbursements of one outside counsel for each relevant material jurisdiction) in connection with the custody or preservation of any of the Collateral, (v) all the reasonable and documented out-of-pocket costs and expenses of Agents and Lenders in connection with the attendance at any meetings in connection with this Agreement and the other Loan Documents (including the meetings referred to in Section 5.7), (vi) all of the AON Insurance Policy lead insurer’s reasonable and documented out-of-pocket costs and expenses up to a maximum amount of $75,000 (excluding all amounts owing to counsel to the lead insurer of the AON Insurance Policy, which shall be reimbursed solely to the extent so required pursuant to clause (vii) below) in connection with the preparation of the Loan Documents and any consents, amendments, waivers or other modifications thereto, (vii) all of the reasonable and documented fees, expenses and disbursements of a single counsel to the lead insurer under the AON Insurance Policy in connection with the negotiation, preparation, execution and administration of the Loan Documents and any consents, amendments, waivers or other modifications thereto and any other documents or matters in respect thereof or contemplated thereunder, and (viii) after the occurrence of an Event of Default, all reasonable and documented costs and expenses (in the case of legal counsel, limited to the reasonable and documented attorneys’ fees of one outside counsel and one local counsel, as applicable, to each of (x) the Agents, (y) the Securitization Trust and (z) the Lenders (which may be Proskauer Rose LLP) and costs of settlement, incurred by any Agent and Lenders in enforcing any Obligations of or in collecting any payments due from any Loan Party hereunder or under the other Loan Documents by reason of such Default or Event of Default (including in connection with the sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty) or in connection with any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a “work out” or pursuant to any insolvency or bankruptcy cases or proceedings.

(b) Notwithstanding anything in Section 10.2(a) to the contrary: (i) amounts set forth in Sections 10.2(a)(vi) and 10.2(a)(vii) above that are reimbursable to the lead insurers or the lead insurers’ counsel and incurred on or prior to the Closing Date, shall not be required to be reimbursed by the Loan Parties in an amount in excess of $75,000. The Loan Parties acknowledge that except as expressly provided in Sections 10.2(a) and (b)(i) hereinabove, the Loan Parties shall pay when due all amounts, including attorneys fees and costs, incurred by any Agent or Lender that are reimbursable thereto under this Section 10.2. All amounts due under this Section 10.2 shall be paid within 30 days following receipt by Borrower of an invoice relating thereto setting forth such expenses in reasonable detail.

 

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Section 10.3. Indemnity.

(a) IN ADDITION TO THE PAYMENT OF EXPENSES PURSUANT TO SECTION 10.2, EACH LOAN PARTY, JOINTLY AND SEVERALLY, AGREES TO DEFEND (SUBJECT TO INDEMNITEES’ SELECTION OF COUNSEL), INDEMNIFY, PAY AND HOLD HARMLESS, EACH AGENT AND LENDER, THEIR AFFILIATES AND THEIR RESPECTIVE OFFICERS, PARTNERS, DIRECTORS, TRUSTEES, EMPLOYEES AND AGENTS OF EACH AGENT AND EACH LENDER (EACH, AN “INDEMNITEE”), FROM AND AGAINST ANY AND ALL INDEMNIFIED LIABILITIES, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY, OR SOLE NEGLIGENCE OF SUCH INDEMNITEE; PROVIDED NO LOAN PARTY SHALL HAVE ANY OBLIGATION TO ANY INDEMNITEE HEREUNDER WITH RESPECT TO ANY INDEMNIFIED LIABILITIES TO THE EXTENT SUCH INDEMNIFIED LIABILITIES ARISE FROM (i) THE GROSS NEGLIGENCE, MATERIAL BREACH (PROVIDED THAT MATERIAL BREACH SHALL NOT BE APPLICABLE TO THE AGENTS), BAD FAITH OR WILLFUL MISCONDUCT, AS DETERMINED BY A COURT OF COMPETENT JURISDICTION IN A FINAL, NON-APPEALABLE ORDER, OF THAT INDEMNITEE OR (ii) ANY DISPUTE SOLELY AMONG INDEMNITEES OTHER THAN ANY CLAIMS AGAINST AN INDEMNITEE IN ITS CAPACITY OR IN FULFILLING ITS ROLE AS AN ADMINISTRATIVE AGENT, COLLATERAL AGENT OR ANY SIMILAR ROLE UNDER ANY LOAN DOCUMENT AND OTHER THAN ANY CLAIMS ARISING OUT OF ANY ACT OR OMISSION OF BORROWER OR ANY OF ITS AFFILIATES (AS DETERMINED BY A COURT OF COMPETENT JURISDICTION IN A FINAL, NON-APPEALABLE ORDER). TO THE EXTENT THAT THE UNDERTAKINGS TO DEFEND, INDEMNIFY, PAY AND HOLD HARMLESS SET FORTH IN THIS SECTION 10.3 MAY BE UNENFORCEABLE IN WHOLE OR IN PART BECAUSE THEY ARE VIOLATIVE OF ANY LAW OR PUBLIC POLICY, THE APPLICABLE LOAN PARTY SHALL CONTRIBUTE THE MAXIMUM PORTION THAT IT IS PERMITTED TO PAY AND SATISFY UNDER APPLICABLE LAW TO THE PAYMENT AND SATISFACTION OF ALL INDEMNIFIED LIABILITIES INCURRED BY INDEMNITEES OR ANY OF THEM. THIS CLAUSE (a) SHALL NOT APPLY WITH RESPECT TO TAXES OTHER THAN ANY TAXES THAT REPRESENT INDEMNIFIED LIABILITIES ARISING FROM ANY NON-TAX CLAIM. All amounts due under this Section 10.3 shall be paid within 30 days after written demand therefor (together with backup documentation reasonably supporting such reimbursement request); provided, however, that such Indemnitee shall promptly refund such amount (or portion thereof) to the extent that there is a final judicial or arbitral determination that such Indemnitee was not entitled to indemnification rights with respect to such payment (or portion thereof) pursuant to the express terms of this Section 10.3.

(b) To the extent permitted by applicable law, no Loan Party nor any other party hereto shall assert, and each Loan Party and such party hereby waives, any claim against any party hereto, the Lenders and Agents and their respective Affiliates, directors, employees, attorneys or agents, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, as a result of, or in any way related to, this Agreement or any Loan Document or any

 

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agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, and each Loan Party hereby waives, releases and agrees not to sue upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

(c) Notwithstanding the foregoing, this Section 10.3 shall not operate to require Borrower or any other Loan Party to pay amounts expressly excluded from Section 10.2.

Section 10.4. Set-Off. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuance of any Event of Default each Lender and their respective Affiliates is hereby authorized by each Loan Party at any time or from time to time subject to the consent of Agents (such consent not to be unreasonably withheld or delayed), without notice to any Loan Party or to any other Person (other than an Agent), any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts and tax accounts (in whatever currency), payroll accounts, ERISA accounts, petty cash accounts or fiduciary accounts) and any other Indebtedness at any time held or owing by such Lender to or for the credit or the account of any Loan Party (in whatever currency) against and on account of the obligations and liabilities of any Loan Party to such Lender hereunder and under the other Loan Documents, including all claims of any nature or description arising out of or connected hereto, or with any other Loan Document, irrespective of whether or not (a) such Lender shall have made any demand hereunder, (b) the principal of or the interest on the Term Loans or any other amounts due hereunder shall have become due and payable pursuant to Article II and although such obligations and liabilities, or any of them, may be contingent or unmatured or (c) such obligation or liability is owed to a branch or office of such Lender different from the branch or office holding such deposit or obligation or such Indebtedness.

Section 10.5. Amendments and Waivers.

(a) Required Lenders’ Consent.

(i) Subject to Sections 10.5(b) and 10.5(c), no amendment, modification, termination or waiver of any provision of the Loan Documents, or consent to any departure by any Loan Party therefrom, shall in any event be effective without the written consent of Borrower and the Required Lenders.

(ii) Notwithstanding anything to the contrary herein, in connection with any determination as to whether the Required Lenders have (A) consented (or not consented) to any amendment or waiver of any provision of this Agreement or any other Loan Document or any departure by any Loan Party therefrom, (B) otherwise acted on any matter related to any Loan Document, or (C) directed or required the Administrative Agent or any Lender to undertake any action (or refrain from taking any action) with respect to or under any Loan Document, the Minority Lenders shall not have any right to vote any of its Loans and Commitments and shall be deemed to have voted its interest as a Lender without discretion in the same proportion as the allocation of voting with respect to such matter by Lenders who are not Minority Lenders, unless

 

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the subject of the applicable vote has a disparate impact on the Minority Lenders taken as a whole; provided that this Section 10.5(a)(ii) shall not apply to (x) any amendments pursuant to Section 10.5(b) or (y) any amendments that would increase a Lender’s Commitment or economic obligations (including requiring or obligating a Lender to provide any additional debt or equity financing), in each case, without the Minority Lender’s consent.

(b) Affected Lenders’ Consent. Without the written consent of Borrower and each Lender that would be directly and adversely affected thereby, no amendment, modification, termination, or consent shall be effective if the effect thereof would:

(i) extend the scheduled final maturity of any Term Loan or Note (it being understood that a waiver of any Default, default interest or mandatory prepayment shall not constitute an extension of any Term Loan or Note of any Lender);

(ii) waive, reduce or postpone any scheduled repayment (it being understood that the waiver of any condition precedent set forth in Section 3.1 or the waiver of (or amendment to the terms of) any mandatory prepayment of the Term Loans shall not constitute a postponement of any date scheduled for the payment of principal);

(iii) reduce the rate of interest on any Term Loan (other than any waiver of any increase in the interest rate applicable to any Loan pursuant to Section 2.7) or any fee payable hereunder;

(iv) extend the scheduled time for payment of any such interest or fees (it being understood that the waiver of (or amendment to the terms of) any mandatory prepayment of the Term Loans shall not constitute a postponement of any date scheduled for the payment of interest);

(v) extend or increase the Commitment of such Lender;

(vi) reduce the principal amount of any Term Loan of such Lender;

(vii) subject to Section 10.6(j)(iii), consent to any amendment, modification, termination or waiver of any provision of the AON Insurance Policy, provided that Borrower approval of any such amendment, modification, termination or waiver shall only be required if the same affects any portion of the aggregate amount of the premium paid to the insurers or their agent in respect of the AON Insurance Policy, including any related rebate of unearned premium payable to Borrower, and no Borrower consent shall otherwise be required with respect to this clause (vii);

(viii) amend, modify, terminate or waive any provision of this Section 10.5(b) or Section 10.5(c);

(ix) amend the definition of “Required Lenders” or “Pro Rata Share” or change the Lender consent standard for any provision requiring Required Lender consent to a standard that is less than Required Lenders;

 

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(x) release all or substantially all of the Collateral or release any Guarantor from the Guaranty except as expressly provided in the Loan Documents;

(xi) subordinate any of the Obligations or any Lien created by this Agreement or any other Loan Document except as expressly provided in the Loan Documents; or

(xii) except as otherwise permitted, consent to the assignment or transfer by any Loan Party of any of its rights and obligations under any Loan Document.

(c) Other Consents.

(i) No amendment, modification, termination or waiver of any provision of the Loan Documents, or consent to any departure by any Loan Party therefrom, shall amend, modify, terminate or waive any provision of Article IX as the same applies to any Agent, or any other provision hereof as the same applies to the rights or obligations of any Agent, in each case without the consent of such Agent.

(ii) No amendment, modification or waiver of any provision of the Loan Documents, or consent to departure by any Loan Party therefrom, shall amend or modify and provision of Article VI in a manner that would allow any Loan Party to incur any Indebtedness not otherwise permitted hereunder on the Closing Date without the consent of the Term B Loan Lenders.

(d) Execution of Amendments, etc. Administrative Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 10.5 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed by a Loan Party, on such Loan Party.

(e) Other Waivers. The Loan Parties hereby waive (to the extent permitted by applicable law) the defenses of laches or estoppel with respect to enforcement by the Lenders of their rights.

(f) Insurer and Rating Agency Consent. No amendment or waiver of this Agreement shall be effective unless (i) the Administrative Agent has received written confirmation from Required Lenders that (x) such amendment or waiver has been approved by insurers holding at least 50.1% of the risk under the AON Insurance Policy, on the terms and conditions set forth in clause (a) of Section IV of the AON Insurance Policy as in effect on the Closing Date without giving effect to any subsequent amendment or waiver, as applicable, or (y) any applicable time for the insurers to object under the AON Insurance Policy has expired and no objection has been made in accordance with its respective terms and (ii) subject to prior delivery of evidence of insurer approval or the expiration of the time for insurers to object as provided in clause (i) and if such amendment or waiver of this Agreement (A) requires a concurrent amendment or waiver of the AON Insurance Policy, (B) is likely to result in termination of the AON Insurance Policy, or (C) would result in a reduction in, or material delay of, the principal or

 

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interest payments under the promissory notes issued by the Securitization Trust, a Moody’s Rating Agency Confirmation so long as promissory notes issued under the Securitization Trust are outstanding and a Moody’s rating of such promissory notes is in effect. Notwithstanding the foregoing, with respect to any amendment or waiver resulting in a reduction in, or delay of, the principal or interest payments under the promissory notes issued by the Securitization Trust that may otherwise require a Moody’s Rating Agency Confirmation, the requirement for such Moody’s Rating Agency Confirmation shall be deemed for all purposes to be satisfied with respect to such amendment or waiver if (a) Moody’s makes a public announcement or informs the Borrower, the Securitization Trustee or holders of such notes that (i) it believes the Moody’s Rating Agency Confirmation is not required with respect to such amendment or waiver or (ii) its practice or policy is to not give such confirmations, (b) in connection with an amendment or waiver requiring unanimous consent of the Lenders, all Lenders have been advised prior to consenting that the then current rating of such notes may be reduced or withdrawn as a result of such amendment or waiver, or (c) Moody’s no longer is providing a rating of such notes.

(g) Certification Regarding Minimum Interest Reserve Amount. If an amendment, modification or waiver is reasonably expected to cause either Interest Reserve Account to hold Dollars and Eligible Investments having a mark-to-market aggregate valuation of less than the applicable Minimum Interest Reserve Amount in effect prior to such amendment, modification or waiver, then Borrower shall concurrently with its execution of such amendment, modification or waiver deliver a written notice to the Administrative Agent and the Lenders stating that such amendment, modification or waiver is reasonably expected to cause such Interest Reserve Account to hold less than the applicable Minimum Interest Reserve Amount.

Section 10.6. Successors and Assigns; Participations.

(a) Generally.

(i) This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Lenders. Except as provided herein (including as permitted under Section 6.9), no Loan Party’s rights or obligations hereunder nor any interest therein may be assigned or delegated by any Loan Party without the prior written consent of all Lenders. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, Indemnitee Agent Parties under Section 9.8, Indemnitees under Section 10.3, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, Affiliates of each of the Agents and Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(ii) Each Minority Lender, solely in its capacity as a holder of Term Loans, hereby agrees if any Loan Party shall be subject to any Insolvency Proceeding, with respect to any matter requiring the vote of holders of any Term Loans during the pendency of any such Insolvency Proceeding (including voting on any plan of reorganization pursuant to 11 U.S.C. §1126), Term Loans held by such Minority Lender (and any claim with respect thereto) shall be deemed assigned for all purposes to the Administrative Agent, which shall cast such vote in accordance with Section 10.5(a)(ii). For the avoidance of doubt, the Lenders and each Minority Lender agree and acknowledge that the provisions set forth in this Section 10.6(a)(ii) constitute a “subordination agreement” as such term is contemplated by, and utilized in, Section 510(a) of the Bankruptcy Code, and, as such, would be enforceable for all purposes in any case where a Credit Party has filed for protection under the Bankruptcy Code.

 

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(b) Register. Borrower, Administrative Agent and Lenders shall deem and treat the Persons listed as Lenders in the Register as the holders and owners of the corresponding Commitments and Term Loans listed therein for all purposes hereof, and no assignment or transfer of any such Commitment or Term Loan shall be effective, in each case, unless and until an Assignment Agreement effecting the assignment or transfer thereof shall have been delivered to and acknowledged by Administrative Agent and recorded in the Register as provided in Section 10.6(e). Prior to such recordation, all amounts owed with respect to the applicable Commitment or Loan shall be owed to the Lender listed in the Register as the owner thereof, and any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Commitments or Term Loans. The parties intend that the Loans are at all times maintained in “registered form” within the meaning of Section 163(f), 165(j), 871(h)(2) and 881(c)(2), and 4701 of the Code and any related Treasury regulations (or any other relevant or successor provisions of the Code or of such Treasury regulations).

(c) Right to Assign. Each Lender shall have the right at any time to sell, assign or transfer all or a portion of its rights and obligations under this Agreement, including, without limitation, all or a portion of its Commitment or Term Loans owing to it or other Obligations (provided that each such assignment shall be of a uniform, and not varying, percentage of all rights and obligations under and in respect of any Term Loan and any related Commitments):

(i) to any Person meeting the criteria of clause (a), clause (c) or clause (d) of the definition of the term of “Eligible Assignee” upon the giving of notice to but without the consent of Borrower and Administrative Agent; and

(ii) to any Person meeting the criteria of clause (b) of the definition of the term, “Eligible Assignee”; provided each such assignment pursuant to this Section 10.6(c)(ii) shall be in an aggregate amount of not less than $1,000,000 (or such lesser amount as may be agreed to by Administrative Agent or as shall constitute the aggregate amount of the Term Loan of the assigning Lender) with respect to the assignment of Term Loans; provided, however, that in no event shall any Lender be permitted to sell, assign or transfer all or any portion of its rights and obligations under this Agreement to any Disqualified Institution, unless an Event of Default under Section 8.1(a), Section 8.1(f) or Section 8.1(g) has occurred and is continuing at the time of such assignment.

(d) Mechanics. The assigning Lender and the assignee thereof shall execute and deliver to Administrative Agent an Assignment Agreement, a processing and recordation fee in the amount of $3,500, and, if not already a Lender, an administrative questionnaire and other requested know-your-customer documentation, including such forms or certificates with respect to tax matters as the assignee under such Assignment Agreement may be required to deliver to Administrative Agent pursuant to Section 2.14(d).

 

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(e) Notice of Assignment. Upon its receipt and acceptance of a duly executed and completed Assignment Agreement, any forms or certificates required by this Agreement in connection therewith, Administrative Agent shall record the information contained in such Assignment Agreement in the Register, shall give prompt notice thereof to Borrower and shall maintain a copy of such Assignment Agreement. The Assignment Agreement shall include a representation of the named assignee that it is not a Disqualified Institution. Administrative Agent shall not have any obligation in respect of enforcement of whether a prospective Lender is a Disqualified Institution beyond ascertaining that the representation referred to in the prior sentence is present in the Assignment Agreement.

(f) Representations and Warranties of Assignee. Each Lender, upon execution and delivery hereof or upon executing and delivering an Assignment Agreement, as the case may be, represents and warrants as of the Closing Date or as of the applicable “Effective Date” (as defined in the applicable Assignment Agreement) that (i) it is an Eligible Assignee and is not a Disqualified Institution, (ii) it has experience and expertise in the making of or investing in commitments or loans such as the applicable Commitments or Term Loans, as the case may be, (iii) it will make or invest in, as the case may be, its Commitments or Term Loans for its own account in the ordinary course of its business and without a view to distribution of such Commitments or Term Loans within the meaning of the Securities Act or the Exchange Act or other federal securities laws (it being understood that, subject to the provisions of this Section 10.6, the disposition of Term Loans or any interests therein shall at all times remain within its exclusive control) and (iv) such Lender does not own or control, or own or control any Person owning or controlling, any trade debt or Indebtedness of any Loan Party other than the Obligations or any Capital Stock of any Loan Party. The Administrative Agent may conclusively rely on an Eligible Assignee’s representations and warranties made in an Assignment Agreement without any independent investigation and the Administrative Agent shall be fully protected on such reliance.

(g) Effect of Assignment. Subject to the terms and conditions of this Section 10.6, as of the later (i) of the “Effective Date” specified in the applicable Assignment Agreement or (ii) the date such assignment is recorded in the Register: (A) the assignee thereunder shall have the rights and obligations of a “Lender” hereunder to the extent such rights and obligations hereunder have been assigned to it pursuant to such Assignment Agreement and shall thereafter be a party hereto and a “Lender” for all purposes hereof; (B) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned thereby pursuant to such Assignment Agreement, relinquish its rights (other than any rights which survive the termination hereof under Section 10.8) and be released from its obligations hereunder (and, in the case of an Assignment Agreement covering all or the remaining portion of an assigning Lender’s rights and obligations hereunder, such Lender shall cease to be a party hereto; provided anything contained in any of the Loan Documents to the contrary notwithstanding, such assigning Lender shall continue to be entitled to the benefit of all indemnities hereunder as specified herein with respect to matters arising out of the prior involvement of such assigning Lender as a Lender hereunder); (C) the Commitments shall be modified to reflect the Commitment of such assignee and any Commitment of such assigning Lender, if any; and (D) if any such assignment occurs after the issuance of any Note hereunder, the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its applicable Notes to Administrative Agent for cancellation, and thereupon Borrower shall issue and deliver new Notes,

 

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if so requested by the assignee and/or assigning Lender, to such assignee and/or to such assigning Lender, with appropriate insertions, to reflect the new Commitments and/or outstanding Term Loans of the assignee and/or the assigning Lender. So long as no Event of Default has occurred and is continuing pursuant to Sections 8.1(a), (f) or (g), no assignment or transfer may be made to a Disqualified Institution absent the prior written consent of the Borrower.

(h) Participations.

(i) Each Lender shall have the right at any time to sell one or more participations to any Person (other than any Loan Party, any of its Subsidiaries or any of its Affiliates, any Minority Lender, or any Disqualified Institution (unless an Event of Default under Section 8.1(a), Section 8.1(f) or Section 8.1(g) has occurred and is continuing at the time of such participation)) in all or any part of its Commitments, Term Loans or in any other Obligation. The holder of any such participation, other than an Affiliate of the Lender granting such participation, shall not be entitled to require such Lender to take or omit to take any action hereunder except with respect to any amendment, modification or waiver that (i) extends the final scheduled maturity of any Term Loan or Note in which such participant is participating, or reduce the rate or extend the time of payment of interest or fees thereon (except in connection with a waiver of applicability of any post default increase in interest rates or waiver of any Default, Event of Default or mandatory prepayment) or reduce the principal amount thereof, or increase the amount of the participant’s participation over the amount thereof then in effect (it being understood that a waiver of default interest, any Default or Event of Default or of a mandatory prepayment or mandatory reduction in the Commitment shall not constitute a change in the terms of such participation, and that an increase in any Commitment or Term Loan shall be permitted without the consent of any participant if the participant’s participation is not increased as a result thereof), (ii) consent to the assignment or transfer by any Loan Party of any of its rights and obligations under this Agreement (except as provided in the Loan Documents), or (iii) release all or substantially all of the Collateral under the Collateral Documents or any Guarantor from the Guaranty (in each case, except as provided in the Loan Documents) supporting the Term Loans hereunder in which such participant is participating. Borrower agrees that each participant shall be entitled to the benefits of Sections 2.13 and 2.14 (subject to the requirements and limitations therein, it being understood that the documentation required under Section 2.14(d) shall be delivered to the participating Lender) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 10.6(c); provided a participant that would be a Non-US Lender if it were a Lender shall not be entitled to the benefits of Section 2.14 unless, at the time such participant is claiming such benefits, Borrower is notified of the participation sold to such participant and such participant agrees, for the benefit of Borrower, to comply with Section 2.14 as though it were a Lender; provided further that a participant shall not be entitled to receive any greater payment under Section 2.13 or 2.14, with respect to any participation, than its participating Lender would have been entitled to receive. To the extent permitted by law, each participant also shall be entitled to the benefits of Section 10.4 as though it were a Lender, provided such participant agrees to be subject to Section 2.12 as though it were a Lender.

(ii) In the event that any Lender sells participations in its Commitments, Term Loans or in any other Obligation hereunder, such Lender shall, acting solely for this purpose as a non-fiduciary agent of Borrower, maintain a register on which it enters the name of all participants in the Commitments, Term Loans or Obligations held by it and the principal amount

 

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(and stated interest thereon) of the portion of such Commitments, Term Loans or Obligations which are the subject of the participation (the “Participant Register”). A Commitment, Term Loan or Obligation hereunder may be participated in whole or in part only by registration of such participation on the Participant Register (and each Note shall expressly so provide). No Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register. So long as no Event of Default has occurred and is continuing pursuant to Sections 8.1(a), (f) or (g), no participation may be made to a Disqualified Institution absent the prior written consent of the Borrower.

(i) Certain Other Assignments. In addition to any other assignment permitted pursuant to this Section 10.6, any Lender or Agent may assign, pledge and/or grant a security interest in, all or any portion of its Term Loans, the other Obligations owed by or to such Lender, and its Notes, if any, to secure obligations of such Lender or Agent or any of its Affiliates to any Person providing any loan, letter of credit or other extension of credit or financial arrangement to or for the account of such Lender or Agent or any of its Affiliates and any agent, trustee or representative of such Person (without the consent of, or notice to, or any other action by, any other party hereto), including, without limitation, any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any operating circular issued by such Federal Reserve Bank; provided no Lender or Agent, as between Borrower and such Lender or Agent, shall be relieved of any of its obligations hereunder as a result of any such assignment and pledge; provided further in no event shall such Person, agent, trustee or representative of such Person or the applicable Federal Reserve Bank be considered to be a “Lender” or “Agent” or be entitled to require the assigning Lender or Agent to take or omit to take any action hereunder.

(j) Assignment upon Payment of Claim Under an AON Insurance Policy; Assignment Upon Receipt of AON Insurance Proceeds.

(i) In the event that: (a) the Administrative Agent receives a payment of any amount due in immediately available funds under the AON Insurance Policy (such funds, collectively, the “AON Insurance Proceeds”) and (b) the Administrative Agent and the Lenders receive a notice signed by AON (the “AON Notice”) that (x) confirms the percentage of the amount of the AON Insurance Proceeds divided by the full amount due under the AON Insurance Policy (such percentage, the “AON Insurance Funded Portion”); (y) instructs the Administrative Agent to proceed with the subrogation and assignment of the AON Insurance Funded Portion of the Insured Obligations as provided in this Section 10.6(j) and (z) identifies each of the insurers under the AON Insurance Policy that have made such payment, the identity of such insurers’ designee (the insurers under the AON Insurance Policy that have made such payment, or if formed such

 

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insurers’ designee excluding any insurer (collectively, as applicable, the “AON Designee(s)”)) and such insurers’ respective allocated contribution to such amount stated in dollars, then the parties hereto (including without limitation, each Lender) agree that the AON Designee(s) are automatically subrogated to and assigned the AON Insurance Funded Portion of the applicable Insured Obligations in the amount of such insurers’ respective allocated contribution and all of the rights of the Lenders holding Insured Term Loans in the aggregate outstanding balance of an equivalent percentage of the Insured Obligations as of the date of receipt of the AON Notice (by way of example if AON Insurance Proceeds actually received equal 92% of the aggregate amount due to Beneficiary under an AON Insurance Policy, then 92% of the applicable Insured Obligations will be assigned to the AON Designee(s) and 8% of the applicable Insured Obligations shall continue to be held by any Existing Lender).

(ii) The Administrative Agent shall provide prompt notice by email to the Lenders and the Borrower of its receipt of the AON Insurance Proceeds.

(iii) Only Existing Lenders may provide direction on matters regarding the AON Insurance Policy.

For avoidance of doubt, no Non-Paying Insurer shall be assigned any portion of the Insured Obligations until all amounts payable by such Non-Paying Insurer under the AON Insurance Policy are so funded. At such time as any Non-Paying Insurer delivers the full balance of its pro rata share of any claim under the AON Insurance Policy, such proceeds shall be used by the Administrative Agent only to fund the acquisition of the Insured Term Loans held by Existing Lenders and the assignment thereof to such funding Non-Paying Insurer. In furtherance of such automatic subrogation and assignment, the Administrative Agent shall without requirement for any assignment, notice or instruction, immediately and in all events within five (5) Business Days thereof, (x) distribute to such Lender its ratable share of the AON Insurance Proceeds and (y) following such distribution, record in the Register the assignment of the Insured Term Loan to the AON Designee(s), and each such designee’s ratable share of the aggregate outstanding amount of all Insured Obligations. Further, each of the Lenders agrees to execute and deliver to the Administrative Agent and the AON Designee(s) an Assignment Agreement reflecting such automatic assignment effective as of the date of the automatic assignment described in the first sentence of this Section 10.6(j) to the AON Designee(s) of the aggregate outstanding amount of Insured Obligations so assigned in respect of principal, and each of the AON Designee(s) shall promptly, and in all events within ten (10) Business Days, complete and execute the Assignment Agreement and provide to the Administrative Agent such administrative details, tax certificates and other “know your customer” documentation as Administrative Agent may reasonably request. Each insurer under the AON Insurance Policy, or their designee by its acceptance of the assignment of the Insured Obligations, acknowledges that its failure to provide the required information and certifications may result in Tax withholding in respect of interest payments and other obligations pursuant to applicable Law. All obligations of the insurers under the AON Insurance Policy in this Section 10.6(j) may be satisfied by performance of the designee, if any, on behalf of such insurer. Each insurer under the AON Insurance Policy and their designee is a designated third-party beneficiary of this Section 10.6(j). For avoidance of doubt, failure of the Lenders and the AON Designee(s) to execute any applicable Assignment Agreement shall have no effect on the automatic subrogation and assignment described above. Each Lender that holds Insured Obligations hereby authorizes AON to deliver the AON Notice and instructs the Administrative Agent that the Administrative Agent is entitled to conclusively rely on the AON Notice in the execution of the assignments of the Insured Obligations provided for in this Section 10.6(j) and will be fully protected under Section 10.3 in doing so.

 

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Section 10.7. Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists.

Section 10.8. Survival of Representations, Warranties and Agreements. All representations, warranties and agreements made herein shall survive the execution and delivery hereof and the making of any Credit Extension. Notwithstanding anything herein or implied by law to the contrary, the agreements of each Loan Party set forth in Sections 2.13, 2.14, 10.2, 10.3, 10.4, and 10.10 and the agreements of Lenders set forth in Section 2.12 and Article IX shall survive the payment of the Term Loans and the termination hereof.

Section 10.9. No Waiver; Remedies Cumulative. No failure or delay on the part of any Agent or any Lender in the exercise of any power, right or privilege hereunder or under any other Loan Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. The rights, powers and remedies given to each Agent and each Lender hereby are cumulative and shall be in addition to and independent of all rights, powers and remedies existing by virtue of any statute or rule of law or in any of the other Loan Documents. Any forbearance or failure to exercise, and any delay in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy.

Section 10.10. Marshalling; Payments Set Aside. Neither any Agent nor any Lender shall be under any obligation to marshal any assets in favor of any Loan Party or any other Person or against or in payment of any or all of the Obligations. To the extent that any Loan Party makes a payment or payments to Administrative Agent or Lenders (or to Administrative Agent, on behalf of Lenders), or Administrative Agent, Collateral Agent or Lenders enforce any security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or setoff had not occurred.

Section 10.11. Severability. In case any provision in or obligation hereunder or any Note or other Loan Document shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

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Section 10.12. Obligations Several. The obligations of Lenders hereunder are several and no Lender shall be responsible for the obligations or Commitment of any other Lender hereunder. Nothing contained herein or in any other Loan Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a Joint Venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, provided that the Lenders shall not have the right to individually exercise any rights or remedies under any of the Collateral Documents, all of which shall be exercised solely by the Administrative Agent or Collateral Agent (or any duly appointed sub-agent) upon instruction of Required Lenders for the ratable benefit of all Lenders.

Section 10.13. Headings. Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect.

Section 10.14. APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Section 10.15. CONSENT TO JURISDICTION.

(a) ALL JUDICIAL PROCEEDINGS BROUGHT ARISING OUT OF OR RELATING HERETO OR ANY OTHER LOAN DOCUMENT, OR ANY OF THE OBLIGATIONS, SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH PARTY HERETO, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY DEFENSE OF FORUM NON CONVENIENS; AND (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 10.1 AND TO ANY PROCESS AGENT SELECTED IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (IV) AGREES THAT AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION.

(b) EACH LOAN PARTY HEREBY AGREES THAT PROCESS MAY BE SERVED ON IT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE ADDRESSES PERTAINING TO IT AS SPECIFIED IN SECTION 10.1, AND HEREBY APPOINTS THE BORROWER AS ITS AGENT TO RECEIVE SUCH SERVICE OF PROCESS. ANY AND ALL SERVICE OF PROCESS AND ANY OTHER NOTICE IN ANY

 

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SUCH ACTION, SUIT OR PROCEEDING SHALL BE EFFECTIVE AGAINST ANY LOAN PARTY IF GIVEN BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY ANY OTHER MEANS OR MAIL WHICH REQUIRES A SIGNED RECEIPT, POSTAGE PREPAID, MAILED AS PROVIDED ABOVE. IN THE EVENT THE BORROWER SHALL NOT BE ABLE TO ACCEPT SERVICE OF PROCESS AS AFORESAID AND IF ANY LOAN PARTY SHALL NOT MAINTAIN AN OFFICE IN NEW YORK CITY, SUCH LOAN PARTY SHALL PROMPTLY APPOINT AND MAINTAIN AN AGENT QUALIFIED TO ACT AS AN AGENT FOR SERVICE OF PROCESS WITH RESPECT TO THE COURTS SPECIFIED IN THIS SECTION 10.15 ABOVE, AND ACCEPTABLE TO JEFFERIES, AS EACH LOAN PARTY’S AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON EACH LOAN PARTY’S BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION, SUIT OR PROCEEDING.

Section 10.16. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS FUTURE DEALINGS RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.16 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TERM LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

Section 10.17. Confidentiality. Each Agent and Lender shall hold all non-public information regarding each Loan Party and its Subsidiaries and their businesses identified as such by Borrower and obtained by such Agent or Lender from or on behalf of any Loan Party or its Subsidiaries pursuant to the requirements hereof in accordance with such Lender’s customary procedures for handling confidential information of such nature, it being understood and agreed

 

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by each Loan Party that, in any event, any Agent or Lender may make (i) disclosures of such information to Affiliates of such Agent or Lender and to their agents, advisors, directors and shareholders on a “need to know” confidential basis (and to other persons authorized by a Lender or Agent to organize, present or disseminate such information in connection with disclosures otherwise made in accordance with this Section 10.17), (ii) disclosures of such information reasonably required by any bona fide or potential assignee, transferee or participant in connection with the contemplated assignment, transfer or participation by any such Lender of any Term Loans or any participations therein; provided that such bona fide or potential assignee, transferee or participant shall be subject to a customary confidentiality agreement, (iii) disclosure to any rating agency when required by it, provided that, prior to any disclosure, such rating agency shall undertake in writing to preserve the confidentiality of any confidential information relating to the Loan Parties received by it from any of the Agents or any Lender, (iv) disclosure to any Lender’s financing sources, provided that prior to any disclosure, such financing source is informed of the confidential nature of the information and agrees to treat it in accordance with this Section 10.17, (v) disclosures of such information to any investors and partners of any Lender, provided that prior to any disclosure, such investor or partner is informed of the confidential nature of the information and agrees to treat it in accordance with this Section 10.17, (vi) disclosure to the insurers under the AON Insurance Policy and to their respective agents or advisors; provided that prior to any disclosure, such insurer and their agent or advisor are informed of the confidential nature of the information and agrees to treat it in accordance with this Section 10.17 and (vii) disclosure required in connection with any public filings, whether pursuant to any securities laws or regulations or rules promulgated therefor (including the Investment Company Act of 1940 or otherwise) or representative thereof or by the National Association of Insurance Commissioners (and any successor thereto) or pursuant to legal or judicial process; provided, unless specifically prohibited by applicable law or court order, each Agent and Lender shall make reasonable efforts to notify Borrower of any request by any Governmental Authority or representative thereof (other than any such request in connection with any examination of the financial condition or other routine examination of such Lender by such Governmental Authority) for disclosure of any such non-public information prior to disclosure of such information. Notwithstanding anything to the contrary set forth herein, each party (and each of their respective employees, representatives or other agents) may disclose to any and all persons, without limitations of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind (including opinions and other tax analyses) that are provided to any such party relating to such tax treatment and tax structure. However, any information relating to the tax treatment or tax structure shall remain subject to the confidentiality provisions hereof (and the foregoing sentence shall not apply) to the extent reasonably necessary to enable the parties hereto, their respective Affiliates, and their and their respective Affiliates’ directors and employees to comply with applicable securities laws. For this purpose, “tax structure” means any facts relevant to the federal income tax treatment of the transactions contemplated by this Agreement but does not include information relating to the identity of any of the parties hereto or any of their respective Affiliates. Notwithstanding the foregoing, on or after the Closing Date, any Agent may, at its own expense issue news releases and publish “tombstone” advertisements and other announcements relating to this transaction in newspapers, trade journals and other appropriate media (which may include use of logos of one or more of the Loan Parties) (collectively, “Trade Announcements”). No Loan Party shall issue any Trade Announcement or disclose the name of any Agent or any Lender except (A) disclosures required by applicable law, regulation, legal process or the rules of the Securities and Exchange Commission or (B) with the prior approval of such Agent and such Lender.

 

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Section 10.18. Usury Savings Clause. Notwithstanding any other provision herein, the aggregate interest rate charged or agreed to be paid with respect to any of the Obligations, including all charges or fees in connection therewith deemed in the nature of interest under applicable law shall not exceed the Highest Lawful Rate. If the rate of interest (determined without regard to the preceding sentence) under this Agreement at any time exceeds the Highest Lawful Rate, the outstanding amount of the Term Loans made hereunder shall bear interest at the Highest Lawful Rate until the total amount of interest due hereunder equals the amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect. In addition, if when the Term Loans made hereunder are repaid in full the total interest due hereunder (taking into account the increase provided for above) is less than the total amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect, then to the extent permitted by law, Borrower shall pay to Administrative Agent an amount equal to the difference between the amount of interest paid and the amount of interest which would have been paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding the foregoing, it is the intention of Lenders and Borrower to conform strictly to any applicable usury laws. Accordingly, if any Lender contracts for, charges, or receives any consideration which constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be cancelled automatically and, if previously paid, shall at such Lender’s option be applied to the outstanding amount of the Term Loans made hereunder or be refunded to Borrower. In determining whether the interest contracted for, charged, or received by Administrative Agent or a Lender exceeds the Highest Lawful Rate, such Person may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest, throughout the contemplated term of the Obligations hereunder.

Section 10.19. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Delivery of an executed signature page to this agreement by electronic transmittal shall be as effective as delivery of a manually executed counterpart of this Agreement. The words “execution,” “signed,” “signature,” and words of similar import in any Loan Document or any notice, certificate, document, agreement or instrument in respect thereof shall be deemed to include electronic or digital signatures or the keeping of records in electronic form, each of which shall be of the same effect, validity and enforceability as manually executed signatures or a paper-based recordkeeping system, as the case may be, to the extent and as provided for under applicable law, including the Electronic Signatures in Global and National Commerce Act of 2000, the Electronic Signatures and Records Act of 1999, or any other similar state Laws based on the Uniform Electronic Transactions Act.

Section 10.20. Effectiveness. This Agreement shall become effective upon the execution and delivery of a counterpart hereof by each of the parties hereto and receipt by Borrower and each Agent of written or telephonic notification of such execution and authorization of delivery thereof.

 

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Section 10.21. PATRIOT Act Notice. Each Lender and Agent (for itself and not on behalf of any Lender) hereby notifies the Loan Parties that pursuant to the requirements of the PATRIOT Act, it may be required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of the Loan Parties and other information that will allow such Lender or Agent, as applicable, to identify the Loan Parties in accordance with the PATRIOT Act, including the Beneficial Ownership Regulation.

Section 10.22. Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by: the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and the effects of any Bail-In Action on any such liability, including, if applicable (i) a reduction in full or in part or cancellation of any such liability, (ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document or (iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

Section 10.23. AON Insurance Policy Refund. Provided that no Event of Default shall then have occurred and be continuing, in the event that (i) the Administrative Agent receives from the insurers under the AON Insurance Policy a refund or rebate of any portion of the aggregate amount of the premium paid to such insurers or their agent in respect of the AON Insurance Policy, and (ii) the Administrative Agent receives an officer certificate pursuant to which the chief financial officer or other Authorized Officer of Borrower certifies that no Event of Default has occurred and is continuing, then, acting at the direction of the Required Lenders, the Administrative Agent shall promptly deliver an amount equal to such payment to Borrower.

Section 10.24. Entire Agreement. This Agreement and the other Loan Documents, including the documents referred to herein, constitute the entire agreement and understanding of the parties hereto and there are no representations, inducements, or other provisions other than those expressed in writing and included herein or in the other Loan Documents.

[Remainder of page intentionally left blank]

 

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Exhibit 10.4

 

LOGO

August 25, 2024

Dear Jason Kim:

This letter agreement (this “Agreement”) formalizes the terms and conditions of your employment with Firefly Aerospace Inc. (“Firefly” or the “Company”) beginning on October 1, 2024 (the “Start Date”) as our Chief Executive Officer. This offer is contingent upon your providing us with documentation establishing your eligibility to work in the United States as required by federal law and a background check satisfactory to the Company, which will be completed no later than the Start Date. In this capacity you will report to the Chairman of the Board of Directors (“Chairman”).

This Agreement outlines the core important aspects of your employment with Firefly, an “at-will” employer. Further information about our employment policies and procedures will be available for your review prior to your execution of this Agreement.

Compensation

 

  •  

Base. Firefly will pay you a salary of $500,000 on an annualized basis, subject to applicable tax withholding (“Base Salary”). Your salary will be payable pursuant to the Company’s regular payroll policy and is subject to review for increase, but not decrease, no less frequently than annually. This is an exempt position, meaning you will not be eligible for overtime compensation.

 

  •  

Incentive Compensation. If you accept this offer, during each fiscal year in which you are an employee of the Company you will also be eligible for an annual incentive bonus (“Annual Bonus”) with a target amount equal to 100% of your Base Salary and paid upon the achievement of pre-established performance metrics determined by the Chairman and based, in part, on your performance and the performance of the Company during the calendar year, as well as any other criteria the Chairman deems relevant (collectively, such metrics, the “Performance Metrics”). The Performance Metrics will be communicated to you within the first 90 days of the fiscal year to which the Annual Bonus relates. Any Annual Bonus earned for the preceding fiscal year will be paid on or before the last payday of the month following the finalization of the audit for that fiscal year end, and, except as otherwise set forth below, you must be employed on the payout date to receive payment of such Annual Bonus. The Annual Bonus for your first fiscal year of employment will be a guaranteed full bonus in 2024, half in cash ($250,000) and half in vested equity ($250,000) to be paid/issued in March/April of 2025.


Jason Kim

August 25, 2024

Page 2

 

  •  

Relocation. Firefly will reimburse you up to $100,000 for all costs and expenses associated with your relocation to an area within a reasonable commuting distance to our Cedar Park, Texas location. These costs may include, but are not limited to, the following: (i) expenses (including brokers fees and commissions) associated with selling your current residence; (ii) expenses (including brokers’ fees, taxes and commissions) associated with acquiring a new residence near Cedar Park, Texas; (iii) packing, shipping, insuring and moving your personal property; (iv) all costs associated with up to two “house hunting” trips to the Cedar Park, Texas area for you, your spouse, and any minor children; (v) costs associated with temporary housing or short-term leasing in the Cedar Park, Texas area. Expenses reimbursed by Firefly for relocation will be subject to a 12-month pro-rated clawback should you voluntarily leave the company without Good Reason within your first year of employment.

 

  •  

Attorney’s Fees. The Company will reimburse you, up to $2,500, for reasonable attorney’s fees incurred in the review, negotiation and execution of this Agreement within thirty (30) days following your submission of supporting documentation to the Company.

 

  •  

Severance.

 

  •  

If the Company terminates your employment without “Cause” or you terminate your employment for “Good Reason,” you will be entitled to severance pay in the amount of (i) 12 months’ (such number of months, the “Severance Period”) then-current Base Salary, (ii) an amount in cash equal to the cost of COBRA premiums during the Severance Period, (iii) in the event such termination occurs during the second half of the fiscal year, a prorated portion of your Annual Bonus for the year in which termination occurs, with such proration based on the number of days you worked during the applicable performance period and paid based on projected actual performance through the termination date (subsections (i) through (iii) hereof, collectively, the “Severance”); (iv) any then-outstanding stock options (including the Option Grant, as defined below) subject to time-based vesting will remain outstanding and have the opportunity to vest for the number of months equal to the Severance Period following your termination of employment as if you had continued employment with the Company through such date.

It will be a condition to your right to receive the Severance that you execute, deliver and not revoke a general release of claims in a form reasonably satisfactory to the Company (the “Release”) within the time periods set forth therein, releasing the Company, its affiliates and other related parties from any and all liability in connection with your employment and termination therefrom. Payment of the Severance will be made on the first administratively practicable payroll date after the effective date of the Release but no later than 60 days after your termination date; provided that, to the extent necessary to avoid adverse tax consequences under Section 409A (as defined below), if the period during which you have discretion to execute or revoke the Release straddles two calendar years, the Company shall make payments conditioned on the Release no earlier than January 1st of the second calendar year, regardless of which year the Release becomes effective.

 

  •  

If the Company terminates your employment with “Cause,” you will receive no Severance or additional stock option vesting.

 

2


Jason Kim

August 25, 2024

Page 3

 

For purposes of this Agreement, “Cause” means (i) conduct amounting to fraud against the Company or any subsidiary or affiliate of the Company; (ii) your intentional misconduct, repeated refusal to follow the reasonable and lawful directions of the Company or material breach of this Agreement or any document referenced herein, provided the Company notifies you of the acts deemed to constitute such intentional misconduct, repeated refusal or material breach in writing and you fail to correct such acts (or begin such action as may be necessary to correct such acts and thereafter fail to diligently pursue the completion thereof) within ten (10) business days after written notice has been given; (iii) your violation of a material Company policy that causes or has demonstrated a substantial likelihood to cause material financial or reputational harm to the Company; or (iv) a conviction or plea of guilty or nolo contendere to a felony (other than one arising from the operation of a motor vehicle or resulting from actions taken (or not taken) by you in reasonable, good faith in your capacity as an employee or officer of the Company).

For purposes of this Agreement, “Good Reason” means the occurrence of any of the following without your consent (i) a material diminution in your roles, duties, responsibilities, or the individuals to whom you report; (ii) a material reduction of your Base Salary or the target amount of your Annual Bonus; (iii) a requirement that you relocate your primary place of business more than 25 miles away from your primary place of business on the Effective; Date (iv) the Company’s failure to grant to you the Option Grant specified herein within thirty (30) days following the Start Date; or (v) a material breach by the Company of any provision of this Agreement or any document referenced herein. You must notify the Company in writing of termination for Good Reason, specifying the event and describing the circumstances constituting Good Reason, within thirty (30) days after you first become aware of the event you believe constitutes Good Reason. The Company will have a period of thirty (30) days after receipt of such notice to cure the Good Reason. If the Good Reason is cured within that period, you will not be entitled to the Severance and accelerated option vesting under this Agreement as a result of the specified Good Reason event. If the Company waives this right to cure or does not, within the thirty (30) day period, cure the Good Reason, you may terminate your employment within thirty (30) days following the later of the date on which the Company waived the right to cure or the end of the cure period and collect the Severance and accelerated option vesting hereunder.

Tax Withholding and Section 409A. All amounts paid under this Agreement shall be paid less all applicable tax withholdings and any other withholdings required by law or authorized by you. The provisions of this Agreement are intended to comply with, or be exempt from, Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (collectively, “Section 409A”) and all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. Notwithstanding the foregoing, nothing in this Agreement shall be interpreted or construed to transfer any liability for any tax (including a tax or penalty due as a result of a failure to comply with Section 409A) from you to the Company or to any other individual or entity. To the extent necessary to avoid adverse tax consequences under Section 409A, any payment that is subject to Section 409A and that is contingent on a termination of employment is contingent on a “separation from service” within the meaning of Section 409A. Each installment payment required under this Agreement shall be considered a separate payment for purposes of Section 409A. If, upon separation from service, you are a “specified employee” within the meaning of Section 409A, any payment under this Agreement that is subject to Section 409A and would otherwise be paid within six months after your separation from service will instead be paid in the seventh month following your separation from service (to the extent required by Section 409A(a)(2)(B)(i)).

 

3


Jason Kim

August 25, 2024

Page 4

 

Stock Options

 

  •  

We strongly believe that our collective success depends, above all else, on the quality of our people and their equity involvement in the Company in the long term. Subject to approval of the Board of Directors of Firefly, you will receive a stock option grant equal to 7,291,374 shares (the “Option Grant”). The Option Grant will be made pursuant to the Firefly Equity Incentive Plan on the terms and conditions consistent with the Firefly Equity Incentive Plan and the Company’s standard form of Stock Option Agreement and otherwise in accordance with this Agreement.

Your options will vest as follows:

 

  i.

15% in equal annual installments on the first through fifth anniversaries of the Start Date;

 

  ii.

15% upon a Liquidity Event (as defined below) in which the enterprise value of the Company implied by the transaction meets or exceeds $1.5 billion;

 

  iii.

An additional 30% upon a Liquidity Event (as defined below) in which the enterprise value of the Company implied by the transaction meets or exceeds $3.0 billion; and

 

  iv.

An additional 40% upon a Liquidity Event (as defined below) in which the enterprise value of the Company implied by the transaction meets or exceeds $5.0 billion.

Subject only to clause (iv) of the first bullet under “Severance,” vesting of any options will, of course, depend on your continued employment with the Company through the applicable vesting dates (including the closing date of a Liquidity Event, as applicable).

You understand that issuing the options is expressly contingent on approval by our Board of Directors and receipt of a fully executed Stock Option Agreement. In addition, during each fiscal year in which you are an employee of the Company you will also be eligible for annual stock option grants at the discretion of the Company, with a target value equal to three times your Annual Bonus. The issue of such additional option grants, and the terms and conditions thereof, are contingent upon approval by our Board of Directors and receipt of a fully executed Stock Option Agreement.

 

4


Jason Kim

August 25, 2024

Page 5

 

  •  

Upon the occurrence of a Liquidity Event while you are employed by the Company or any of its Affiliates, any option grants held by you that vest based solely on the passage of time will accelerate in their entirety and immediately become fully vested and exercisable on the effective date of such Liquidity Event, provided that the shares issued upon the exercise of such accelerated portions of the grants (the accelerated portion, the “Restricted Shares”) shall be subject to the below clawback provision. The Company will give you at least five days advance written notice of the Liquidity Event. If you have not elected to fully exercise your options (both vested and those accelerated hereunder) in connection with the Liquidity Event and pay the option exercise price in cash, then you will be deemed to have elected the Net Exercise method (as defined in the Firefly Equity Incentive Plan) as the method of consideration for payment of the exercise price. The number of Restricted Shares subject to the clawback shall lapse in equal amounts monthly (8.34% per month) over the twelve-month period following the Liquidity Event giving rise to the acceleration of the unvested options. For purposes of this Agreement, “Liquidity Event” shall mean a (i) Change of Control (as defined in the Firefly Equity Incentive Plan), or (ii) an initial public offering (including via a merger with a special purpose acquisition company or similar), and “enterprise value” means, as of closing date of a Liquidity Event, the sum of the Company’s equity value, plus its total debt, minus its cash and cash equivalents.

 

  •  

Clawback. You recognize that a substantial portion of the value attributed to the Company in a Liquidity Event is a result of a continuity of leadership of the Company. As a result, if at any time during the twelve-month period following the Liquidity Event you terminate your employment with the Company by resigning other than for Good Reason (“resign” shall not include terminations as a result of death, disability or retirement as defined in the Company’s benefit plans), then you shall automatically forfeit to the Company for no consideration any Restricted Shares still subject to the clawback on the date of such termination of employment (i.e.; shares to which the clawback has not lapsed) (the “Forfeited Shares”) and the Forfeited Shares immediately will be cancelled; provided that, if you sold any of the Forfeited Shares, you shall, and you hereby agree to, promptly pay to the Company the net after-tax cash proceeds received by you from the sale of such Forfeited Shares.

 

  •  

In addition, notwithstanding anything to the contrary contained in the Firefly Equity Incentive Plan and the Stock Option Agreement, you will have the right to Net- Exercise (as defined in the Stock Option Agreement) any portion of an option grant and will have the right to require the Company to withhold a number of whole shares otherwise issuable under the applicable option grant in satisfaction of any income or payroll taxes due upon exercise.

Employee Benefits — Group Plans. As a regular full-time employee, you will have the opportunity to participate in the standard benefit plans that Firefly offers to other similarly situated employees, including the paid time off policy per Company policy, subject to the terms and provisions of such plans including applicable waiting periods. Details about these benefits will be made available for your review. Firefly offers medical, dental, and vision insurance and 401k. With the exception of the employment at-will policy discussed below, the Company may, from time to time in its sole discretion, modify or eliminate its policies and the benefits offered to employees.

 

5


Jason Kim

August 25, 2024

Page 6

 

Employment Conditions. The Company is offering you employment because of your experience and personal skills, and not due to your potential or actual knowledge of a former employer’s or other person’s or entity’s confidential information or intellectual property, including trade secrets. Should you accept this offer, you shall not retain, make use of or share any such information with the Company. You certify by accepting this employment that you do not retain, and will not make use of or share, any such information with the Company, and that you can adequately perform your job without utilizing such information.

Likewise, as an employee of the Company, you will become knowledgeable about the Company’s confidential and trade secret information relating to operations, products, and services. To protect the Company’s interests, your acceptance of this offer and commencement of employment with the Company are contingent upon your execution and delivery to the Company of the Company’s Employee Proprietary Information Agreement (as mutually amended or superseded from time to time, the “EPIA”), prior to or on your Start Date. The EPIA provides for the arbitration of all disputes arising out of your employment and you understand that the Company is offering you employment in exchange for the mutual promise to arbitrate disputes described therein. Because the EPIA is one of the most important documents you will sign in connection with your employment with Firefly, we trust you will review it carefully and let us know if you have any questions or concerns regarding its terms.

Restrictive Covenants. The EPIA also contains certain restrictive covenants prohibiting you from soliciting the Company’s employees, interfering with the Company’s customers, and competing with the Company, each on the terms and conditions set forth in the EPIA (collectively, including the terms and conditions thereof, the “Restrictive Covenants”). In recognition of the severance benefits provided herein, and notwithstanding the terms as specified in the EPIA, the Restrictive Covenants shall be amended so that period of each Restrictive Covenant shall be the longer of the period set for in the EPIA or the Severance Period specified herein.

By accepting this Agreement, you acknowledge that the Restrictive Covenants are reasonable and necessary to protect the Company’s legitimate business interests and that the terms and conditions of the Restrictive Covenants are fair and reasonable.

Right to Work. Federal immigration law requires that you provide the Company with documentary evidence of your identity and eligibility for employment in the United States, and your employment offer is made contingent on your ability to work in the United States. Accordingly, please bring appropriate verification or authorization to work (e.g., U.S. passport or driver’s license and Social Security card) on your first day.

Verification of Information. This offer and your employment are also contingent upon satisfactory results from your general background check and reference check, subject to applicable law. You have a right to review copies of any public records obtained by the Company in conducting this verification process unless you check the box below the signature line.

EEO Statement. The Company expects all employees to adhere to the Company’s standards of professionalism, loyalty, integrity, honesty, reliability, and respect for all. Please note that the Company is an equal opportunity employer. The Company does not permit, and will not tolerate, the unlawful discrimination or harassment of any employee, consultant, or related third party on the basis of sex, race, color, religion, age, national origin or ancestry, marital status, veteran status, mental or physical disability or medical condition, sexual orientation, pregnancy, childbirth or related medical condition, or any other status protected by applicable law.

 

6


Jason Kim

August 25, 2024

Page 7

 

At-Will Employment. Please understand that this Agreement does not constitute a contract of employment for any specific length of time, but instead creates an “at will” relationship which may be terminated with or without cause and with or without notice at any time by you or the Company, subject to the rights and benefits set forth in this Agreement. Further, your continued employment as well as your participation in any benefit programs does not assure you of continuing employment with the Company. This policy of at-will employment is the entire agreement as to the duration of your employment and may only be modified in an express written agreement approved by the Board and signed by an officer of the Company.

Miscellaneous. This Agreement, and any documents referenced herein, sets forth the entire terms of your employment with the Company and supersedes any prior representations or agreements, whether written or oral. This Agreement will be governed by the laws of Texas, without regard to its conflict of laws provisions.

Amendment. This Agreement may not be modified or amended except by a written agreement signed by the Chairman on behalf of Firefly.

On behalf of Firefly, we are delighted to be able to extend you this offer and are enthusiastic about your joining the Company. Unless earlier withdrawn, this offer will remain open until August 30, 2024. To indicate your acceptance of the Company’s offer, please sign and date this letter in the space provided below and return it to me. You may also retain a copy for your records. The EPIA will be sent to you for electronic signature. Please ensure that you promptly execute it as well.

Very truly yours,

 

FIREFLY AEROSPACE INC.
By:  

/s/ Kirk Konert

  Kirk Konert
  Chairman, Board of Directors

ACCEPTED AND AGREED:

I have read this letter agreement and agree to the terms set forth in this letter, including affirming the Employee Proprietary Information Agreement.

 

By:  

/s/ Jesung “Jason” Kim

  Jesung “Jason” Kim
  25 August 2024

 

7

Exhibit 10.5

 

LOGO

March 13, 2025

Dan Fermon

[***]

[***]

Dear Dan:

This letter agreement (this “Agreement”) amends and restates the terms and conditions of your employment with Firefly Aerospace Inc. (“Firefly” or the “Company”) effective as of the above date (the “Effective Date”) as our Senior Vice President & Chief Operating Officer. In this capacity you will report to the Chief Executive Officer.

This Agreement outlines the core important aspects of your employment with Firefly, an “at-will” employer.

Compensation

 

  •  

Base. Firefly will pay you a salary of $400,000.12 on an annualized basis, subject to applicable tax withholding (“Base Salary”). Your salary will be payable pursuant to the Company’s regular payroll policy and is subject to review for increase, but not decrease, no less frequently than annually. This is an exempt position, meaning you will not be eligible for overtime compensation.

 

  •  

Incentive Compensation. During each fiscal year in which you are an employee of the Company you will also be eligible for an annual incentive bonus (“STI”) with a target amount equal to 50% of your Base Salary and paid upon the achievement of pre-established performance metrics determined by the Chief Executive Officer and based, in part, on your performance and the performance of the Company during the calendar year, as well as any other criteria the Chief Executive Officer deems relevant (collectively, such metrics, the “Performance Metrics”). The Performance Metrics will be communicated to you within the first 90 days of the fiscal year to which the STI relates. Any STI earned for the preceding fiscal year will be paid on or before the last payday of the month following the finalization of the audit for that fiscal year end, and, except as otherwise set forth below, you must be employed on the payout date to receive payment of such STI.

 

  •  

Attorney’s Fees. The Company will reimburse you, up to $2,500, for reasonable attorney’s fees incurred in the review, negotiation and execution of this Agreement within thirty (30) days following your submission of supporting documentation to the Company.

 

  •  

Severance.

 

  •  

If the Company terminates your employment without “Cause” or you terminate your employment for “Good Reason,” you will be entitled to severance pay in the amount of (i) 9 months’ (such number of months, the “Severance Period”) then-current Base Salary, (ii) an amount in cash equal to the cost of COBRA premiums during the Severance Period, (iii) in the event such termination occurs during the second half of the fiscal year, a prorated portion of your Annual Bonus for the year in which termination occurs, with such proration based on the number of days you worked during the applicable performance period and paid based on projected actual performance through the termination date (subsections (i) through (iii) hereof, collectively, the “Severance”); (iv) any then-outstanding stock options subject to time-based vesting will remain outstanding and have the opportunity to vest for the number of months equal to the Severance Period following your termination of employment as if you had continued employment with the Company through such date. You will also be entitled to your Annual Bonus for the prior year to the extent earned but unpaid because your termination date is prior to the payout date. Severance and such bonus (if owed) will be paid in cash in a single lump-sum within ten (10) days following the termination of your employment.


Dan Fermon

March 13, 2025

Page 2

 

It will be a condition to your right to receive the Severance that you execute, deliver and not revoke a general release of claims in a form reasonably satisfactory to the Company (the “Release”) within the time periods set forth therein, releasing the Company, its affiliates and other related parties from any and all liability in connection with your employment and termination therefrom. Payment of the Severance will be made on the first administratively practicable payroll date after the effective date of the Release but no later than 60 days after your termination date; provided that, to the extent necessary to avoid adverse tax consequences under Section 409A (as defined below), if the period during which you have discretion to execute or revoke the Release straddles two calendar years, the Company shall make payments conditioned on the Release no earlier than January 1st of the second calendar year, regardless of which year the Release becomes effective.

 

  •  

If the Company terminates your employment with “Cause,” you will receive no Severance or additional stock option vesting.

For purposes of this Agreement, “Cause” means (i) conduct amounting to fraud against the Company or any subsidiary or affiliate of the Company; (ii) your intentional misconduct, repeated refusal to follow the reasonable and lawful directions of the Company or material breach of this Agreement or any document referenced herein, provided the Company notifies you of the acts deemed to constitute such intentional misconduct, repeated refusal or material breach in writing and you fail to correct such acts (or begin such action as may be necessary to correct such acts and thereafter fail to diligently pursue the completion thereof) within ten (10) business days after written notice has been given; (iii) your violation of a material Company policy that causes or has demonstrated a substantial likelihood to cause material financial or reputational harm to the Company; or (iv) a conviction or plea of guilty or nolo contendere to a felony (other than one arising from the operation of a motor vehicle or resulting from actions taken (or not taken) by you in reasonable, good faith in your capacity as an employee or officer of the Company).

For purposes of this Agreement, “Good Reason” means the occurrence of any of the following without your consent (i) a material diminution in your roles, duties, responsibilities, or the individuals to whom you report; (ii) a material reduction of your Base Salary or the target amount of your Annual Bonus; (iii) a requirement that you relocate your primary place of business more than 25 miles away from your primary place of business on the Effective; or (iv) a material breach by the Company of any provision of this Agreement or any document referenced herein. You must notify the Company in writing of termination for Good Reason, specifying the event and describing the circumstances constituting Good Reason, within thirty (30) days after you first become aware of the event you believe constitutes Good Reason. The Company will have a period of thirty (30) days after receipt of such notice to cure the Good Reason. If the Good Reason is cured within that period, you will not be entitled to the Severance and accelerated option vesting under this Agreement as a result of the specified Good Reason event. If the Company waives this right to cure or does not, within the thirty (30) day period, cure the Good Reason, you may terminate your employment within thirty (30) days following the later of the date on which the Company waived the right to cure or the end of the cure period and collect the Severance and accelerated option vesting hereunder.


Dan Fermon

March 13, 2025

Page 3

 

Tax Withholding and Section 409A. All amounts paid under this Agreement shall be paid less all applicable tax withholdings and any other withholdings required by law or authorized by you. The provisions of this Agreement are intended to comply with, or be exempt from, Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (collectively, “Section 409A”) and all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. Notwithstanding the foregoing, nothing in this Agreement shall be interpreted or construed to transfer any liability for any tax (including a tax or penalty due as a result of a failure to comply with Section 409A) from you to the Company or to any other individual or entity. To the extent necessary to avoid adverse tax consequences under Section 409A, any payment that is subject to Section 409A and that is contingent on a termination of employment is contingent on a “separation from service” within the meaning of Section 409A. Each installment payment required under this Agreement shall be considered a separate payment for purposes of Section 409A. If, upon separation from service, you are a “specified employee” within the meaning of Section 409A, any payment under this Agreement that is subject to Section 409A and would otherwise be paid within six months after your separation from service will instead be paid in the seventh month following your separation from service (to the extent required by Section 409A(a)(2)(B)(i)).

Stock Options

 

  •  

We strongly believe that our collective success depends, above all else, on the quality of our people and their equity involvement in the Company in the long term. During each fiscal year in which you are an employee of the Company you will also be eligible for annual stock option grants at the discretion of the Company, with a target value equal to three times your STI (“LTI” and, STI plus LTI, equals “Annual Bonus”). The issue of such additional option grants, and the terms and conditions thereof, are contingent upon approval by our Board of Directors and receipt of a fully executed Stock Option Agreement. Vesting of any options will, of course, depend on your continued employment with the Company on the applicable vesting dates.

 

  •  

Upon the occurrence of a Liquidity Event while you are employed by the Company or any of its Affiliates, any option grants held by you that vest based solely on the passage of time will accelerate in their entirety and immediately become fully vested and exercisable on the effective date of such Liquidity Event, provided that the shares issued upon the exercise of such accelerated portions of the grants (the accelerated portion, the “Restricted Shares”) shall be subject to the below clawback provision. The Company will give you at least five days advance written notice of the Liquidity Event. If you have not elected to fully exercise your options (both vested and those accelerated hereunder) in connection with the Liquidity Event and pay the option exercise price in cash, then you will be deemed to have elected the Net Exercise method (as defined in the Firefly Equity Incentive Plan) as the method of consideration for payment of the exercise price. The number of Restricted Shares subject to the clawback shall lapse over the twelve-month period following the Liquidity Event giving rise to the acceleration of the unvested options as follows: the clawback shall lapse with respect to 50% of the Restricted Shares on the six-month anniversary of the Liquidity Event, the clawback shall lapse with respect to another 25% of the Restricted Shares on the nine-month anniversary of the Liquidity Event, and the clawback shall lapse with respect to the remaining 25% of the Restricted Shares in equal monthly amounts (8.34% per month) at the end of each of the ten, eleven and twelve month anniversaries of the Liquidity Event. For purposes of this Agreement, “Liquidity Event” shall mean a (i) Change of Control (as defined in the Firefly Equity Incentive Plan), or (ii) an initial public offering (including via a merger with a special purpose acquisition company or similar).


Dan Fermon

March 13, 2025

Page 4

 

  •  

Clawback. You recognize that a substantial portion of the value attributed to the Company in a Liquidity Event is a result of a continuity of leadership of the Company. As a result, if at any time during the twelve-month period following the Liquidity Event you terminate your employment with the Company by resigning other than for Good Reason (“resign” shall not include terminations as a result of death, disability or retirement as defined in the Company’s benefit plans), then you shall automatically forfeit to the Company for no consideration any Restricted Shares still subject to the clawback on the date of such termination of employment (i.e.; shares to which the clawback has not lapsed) (the “Forfeited Shares”) and the Forfeited Shares immediately will be cancelled; provided that, if you sold any of the Forfeited Shares, you shall, and you hereby agree to, promptly pay to the Company the net after-tax cash proceeds received by you from the sale of such Forfeited Shares.

 

  •  

In addition, notwithstanding anything to the contrary contained in the Firefly Equity Incentive Plan and the Stock Option Agreement, you will have the right to Net-Exercise (as defined in the Stock Option Agreement) any portion of an option grant and will have the right to require the Company to withhold a number of whole shares otherwise issuable under the applicable option grant in satisfaction of any income or payroll taxes due upon exercise.

Employee Benefits – Group Plans. As a regular full-time employee, you will have the opportunity to participate in the standard benefit plans that Firefly offers to other similarly situated employees, subject to the terms and provisions of such plans including applicable waiting periods. Details about these benefits will be made available for your review. Firefly offers medical, dental, and vision insurance and 401k. With the exception of the employment at-will policy discussed below, the Company may, from time to time in its sole discretion, modify or eliminate its policies and the benefits offered to employees.

Employment Conditions. The Company is continuing your employment because of your experience and personal skills, and not due to your potential or actual knowledge of a former employer’s or other person’s or entity’s confidential information or intellectual property, including trade secrets. You agree that you shall continue to not retain, make use of or share any such information with the Company.

Likewise, as an employee of the Company, you have become knowledgeable about the Company’s confidential and trade secret information relating to operations, products, and services. To protect the Company’s interests, you agree to continue to comply with the terms, conditions and requirements of the Company’s Employee Proprietary Information Agreement executed by you (as mutually amended or superseded from time to time, the “EPIA”). The EPIA provides for the arbitration of all disputes arising out of your employment and you reaffirm the mutual promise to arbitrate disputes described therein.

Restrictive Covenants. The EPIA also contains certain restrictive covenants prohibiting you from soliciting the Company’s employees, interfering with the Company’s customers, and competing with the Company, each on the terms and conditions set forth in the EPIA (collectively, including the terms and conditions thereof, the “Restrictive Covenants”). In recognition of the severance benefits provided herein, and notwithstanding the terms as specified in the EPIA, the Restrictive Covenants shall be amended so that period of each Restrictive Covenant shall be the longer of the period set for in the EPIA or the Severance Period specified herein.

By accepting this Agreement, you acknowledge that the Restrictive Covenants are reasonable and necessary to protect the Company’s legitimate business interests and that the terms and conditions of the Restrictive Covenants are fair and reasonable.


Dan Fermon

March 13, 2025

Page 5

 

EEO Statement. The Company expects all employees to adhere to the Company’s standards of professionalism, loyalty, integrity, honesty, reliability, and respect for all. Please note that the Company is an equal opportunity employer. The Company does not permit, and will not tolerate, the unlawful discrimination or harassment of any employee, consultant, or related third party on the basis of sex, race, color, religion, age, national origin or ancestry, marital status, veteran status, mental or physical disability or medical condition, sexual orientation, pregnancy, childbirth or related medical condition, or any other status protected by applicable law.

At-Will Employment. Please understand that this Agreement does not constitute a contract of employment for any specific length of time, but instead continues an “at will” relationship which may be terminated with or without cause and with or without notice at any time by you or the Company, subject to the rights and benefits set forth in this Agreement. Further, your continued employment as well as your participation in any benefit programs does not assure you of continuing employment with the Company. This policy of at-will employment is the entire agreement as to the duration of your employment and may only be modified in an express written agreement approved by the Board and signed by an officer of the Company.

Miscellaneous. This Agreement, and any documents referenced herein, sets forth the entire terms of your employment with the Company and supersedes any prior representations or agreements, whether written or oral. This Agreement will be governed by the laws of Texas, without regard to its conflict of laws provisions.

Amendment. This Agreement may not be modified or amended except by a written agreement signed by the Chief People Officer on behalf of Firefly.


Dan Fermon

March 13, 2025

Page 6

 

On behalf of Firefly, we are delighted to be able to extend you this Agreement to confirm the terms of your continued employment with the Company. To indicate your acceptance of this Agreement, please sign and date this letter in the space provided below and return it to me. You may also retain a copy for your records.

Very truly yours,

FIREFLY AEROSPACE INC.

 

By:  

/s/ Dan Fermon

  Chief People Officer

ACCEPTED AND AGREED:

I have read this letter agreement and agree to the terms set forth in this letter, including affirming the Employee Proprietary Information Agreement.

 

By:   

/s/ Dan Fermon

   3/13/2025
   Dan Fermon   

Exhibit 10.6

 

LOGO

William Weber

August 13, 2022

Dear Bill,

On behalf of Firefly Aerospace Inc. (“Firefly” or the “Company”), this letter agreement (this “Agreement”) formalizes the terms and conditions of your employment with the Company beginning on September 1, 2022 (the “Start Date”) as our Chief Executive Officer at our Cedar Park, Texas location. This offer is contingent upon your providing us with documentation establishing your eligibility to work in the United States as required by federal law and a background check satisfactory to the Company, which will be completed no later than the Start Date. In this capacity you will (i) serve as a member of the Board of Directors of the Company (the “Board”) and (ii) report to the Chairman of the Board, Kirk Konert and Vice Chairman of the Board, Peter Schumacher. The Company agrees and acknowledges that during the term of your employment you may also continue to serve as the Chief Executive Officer of your special purpose acquisition company.

This letter outlines the core important aspects of your employment with Firefly, an “at-will” employer. Further information about our employment policies and procedures will be available for your review prior to your execution of this Agreement.

Compensation. Firefly will pay you a salary of $450,000 on an annualized basis, subject to applicable tax withholding (“Base Salary”). Your salary will be payable pursuant to the Company’s regular payroll policy and is subject to review for increase, but not decrease, no less frequently than annually. This is an exempt position, meaning you will not be eligible for overtime compensation.

 

  •  

Relocation. Firefly will reimburse you up to $200,000 for all costs and expenses associated with your relocation to an area within a reasonable commuting distance to our Cedar Park, Texas location. These costs may include, but are not limited to, the following: (i) expenses (including brokers fees and commissions) associated with selling your current residence; (ii) expenses (including brokers’ fees, taxes and commissions) associated with acquiring a new residence near Cedar Park, Texas; (iii) packing, shipping, insuring and moving your personal property including up to three (3) motor vehicles; (iv) all costs associated with up to two “house hunting” trips to the Cedar Park, Texas area for you, your spouse, and any minor children; (v) costs associated with temporary housing or short-term leasing in the Cedar Park, Texas area. In addition, if you reasonably determine to delay any immediate relocation of your family and to establish temporary residency in Texas in advance of a family move, Firefly will reimburse you for the monthly lease cost of a residence in the Cedar Park, Texas area. Expenses reimbursed by Firefly for relocation will be subject to a 12-month pro-rated clawback should you voluntarily leave the company without Good Reason within your first year of employment.


  •  

Incentive Compensation. If you accept this offer, during each fiscal year in which you are an employee of the Company you will also be eligible for an annual incentive bonus with a target amount equal to 125% of your Base Salary (the “Annual Bonus”), which for the 2022 fiscal year will be pro-rated to your Start Date and deemed achieved at “target” level of performance. Payment of your Annual Bonus will be based on both pre-established Company performance metrics and individual performance metrics, each of which will be communicated to you within the first 90 days of the fiscal year to which the Annual Bonus relates. Any Annual Bonus earned for the preceding fiscal year (with respect to performance and bonuses) will be paid on or before the last payday of the month following that fiscal year end, and, except as otherwise set forth below, you must be employed on the payout date to receive payment of such Annual Bonus. In addition to any Annual Bonus, you will receive a $400,000 one-time special bonus, which will be paid (if at all) upon the closing date of a minimum $150 million Series C fundraise.

 

  •  

Attorney’s Fees. The Company will reimburse you for all reasonable attorney’s fees incurred in the review, negotiation and execution of this Agreement and any stock option agreements referenced herein within thirty (30) days following your submission of supporting documentation to the Company.

 

  •  

Severance. If the Company terminates your employment without “Cause” or you terminate your employment for “Good Reason,” you will be entitled to severance pay in the amount of (i) twelve (12) months’ then-current Base Salary, (ii) an amount in cash equal to the cost of COBRA premiums for twelve (12) months, (iii) in the event such termination occurs during the second half of the fiscal year, a prorated portion of your Annual Bonus for the year in which termination occurs, with such proration based on the number of days you worked during the applicable performance period and paid based on projected actual performance through the termination date (subsections (i) through (iii) hereof, collectively, the “Severance”); (iv) any then-outstanding stock options (including the Option Grant, as defined below) will remain outstanding and have the opportunity to vest for twelve (12) months following your termination of employment as if you had continued employment with the Company through such date. Severance will be paid in a single lump-sum within ten (10) days following the termination of your employment. If the Company terminates your employment with “Cause,” you will receive no Severance or additional stock option vesting.

For purposes of this Agreement, “Cause” means (i) conduct amounting to fraud against the Company or any subsidiary or affiliate of the Company; (ii) your intentional misconduct, repeated refusal to follow the reasonable and lawful directions of the Board or material breach of this Agreement, provided the Company notifies you of the acts deemed to constitute such intentional misconduct, repeated refusal or material breach in writing and you fail to correct such acts (or begin such action as may be necessary to correct such acts and thereafter fail to diligently pursue the completion thereof) within ten (10) business days after written notice has been given; (iii) your violation of a material Company policy that causes or has demonstrated a substantial likelihood to cause material financial or reputational harm to the Company; or (iv) a conviction or plea of guilty or nolo contendere to a felony (other than one arising from the operation of a motor vehicle or resulting from actions taken (or not taken) by you in reasonable, good faith in your capacity as an employee or officer of the Company).

 

Weber Letter Agreement: Page 2


For purposes of this Agreement, “Good Reason” means the occurrence of any of the following without your consent (i) a material diminution in your roles, duties, responsibilities, or the individuals to whom you report; (ii) a material reduction of your Base Salary or the target amount of your Annual Bonus; (iii) a requirement that you relocate your primary place of business more than 25 miles away from your primary place of business on the Start Date; (iv) the Company’s failure to grant to you the Option Grant specified herein within ten (10) days following your Start Date; or (v) a material breach by the Company of any provision of this Agreement including the exhibits hereto. You must notify the Company in writing of termination for Good Reason, specifying the event and describing the circumstances constituting Good Reason, within thirty (30) days after you first become aware of the event you believe constitutes Good Reason. The Company will have a period of thirty (30) days after receipt of such notice to cure the Good Reason. If the Good Reason is cured within that period, you will not be entitled to the Severance and accelerated option vesting under this Agreement as a result of the specified Good Reason event. If the Company waives this right to cure or does not, within the thirty (30) day period, cure the Good Reason, you may terminate your employment within thirty (30) days following the later of the date on which the Company waived the right to cure or the end of the cure period and collect the Severance and accelerated option vesting hereunder.

Stock Options. We strongly believe that our collective success will depend, above all else, on the quality of our people and their equity involvement in the Company in the long term. Subject to approval of the Board of Directors of Firefly, you will receive a stock option grant equivalent to 2.0% of the fully diluted shares of Firefly outstanding on the Grant Date (the “Option Grant”). The Option Grant will be made pursuant to the Firefly Equity Incentive Plan attached hereto as Exhibit A, on the terms and conditions consistent with the Firefly Equity Incentive Plan and the form of Stock Option Agreement attached hereto as Exhibit B and otherwise in accordance with this Agreement. Your options will vest on the following terms: 15% in equal annual installments on the first through fifth anniversaries of the Start Date, subject to your continued employment with the Company or its affiliates through each such vesting date; a following 15% upon a Liquidity Event (as defined below) in which the enterprise value of the Company implied by the transaction meets or exceeds $1.1 billion, subject to your continued employment with the Company or its affiliates through the closing date of such Liquidity Event;; a following 30% upon a Liquidity Event (as defined below) in which the enterprise value of the Company implied by the transaction meets or exceeds $2.5 billion, subject to your continued employment with the Company or its affiliates through the closing date of such Liquidity Event; and a remaining 40% upon a Liquidity Event (as defined below) in which the enterprise value of the Company implied by the transaction meets or exceeds $4.0 billion, subject to your continued employment with the Company or its affiliates through the closing date of such Liquidity Event. For purposes of the Option Grant, “Liquidity Event” shall mean a (i) Change of Control (as defined in the Firefly Equity Incentive Plan), (ii) an initial public offering (including via a merger with a special purpose acquisition company or similar), and (iii) any secondary sale or similar transaction in which

 

Weber Letter Agreement: Page 3


funds affiliated with AE Industrial Partners, LP divests fifty percent (50%) or more of its direct or indirect interests in the Company as of the date hereof. You understand that issuing the options is expressly contingent on approval by our Board of Directors and receipt of a fully executed Stock Option Agreement in the form attached hereto as Exhibit B. A Liquidity Event while you are employed by the Company or any of its Affiliates shall cause the immediate acceleration of the time-based vesting condition applicable to any unvested portion of the Option Grant on the effective date of such Liquidity Event; provided that this acceleration shall in no way affect the minimum valuation criteria specified in each condition to vesting. In addition, notwithstanding anything to the contrary contained in the Firefly Equity Incentive Plan and the Stock Option Agreement, you will have the right to Net-Exercise (as defined in the form of Stock Option Agreement) any portion of the Option Grant and will have the right to require the Company to withhold a number of whole shares otherwise issuable under the Option Grant in satisfaction of any income or payroll taxes due upon exercise.

Employee Benefits

 

  •  

Group Plans. As a regular full-time employee, you will have the opportunity to participate in the standard benefit plans that Firefly offers to other similarly-situated employees, subject to the terms and provisions of such plans including applicable waiting periods. Details about these benefits will be made available for your review. Firefly offers medical, dental, and vision insurance and 401k. With the exception of the employment at-will policy discussed below, the Company may, from time to time in its sole discretion, modify or eliminate its policies and the benefits offered to employees.

Pre-employment Conditions. The Company is offering you employment because of your experience and personal skills, and not due to your potential or actual knowledge of a former employer’s or other person’s or entity’s confidential information or intellectual property, including trade secrets. Should you accept this offer, you shall not retain, make use of, or share any such information with the Company. You certify by accepting this employment that you do not retain, and will not make use of or share, any such information with the Company, and that you can adequately perform your job without utilizing such information.

Likewise, as an employee of the Company, it is likely that you will become knowledgeable about the Company’s confidential and trade secret information relating to operations, products, and services. To protect the Company’s interests, your acceptance of this offer and commencement of employment with the Company are contingent upon your execution and delivery to the Company of the Company’s Employee Proprietary Information Agreement attached hereto as Attachment 1 (the “EPIA”), prior to or on your Start Date. The EPIA, which provides for the arbitration of all disputes arising out of your employment, is enclosed for your review, and you understand that the Company is offering you employment in exchange for the mutual promise to arbitrate disputes described therein. Because the EPIA is one of the most important documents you will sign in connection with your employment with Firefly, we trust you will review it carefully and let us know if you have any questions or concerns regarding its terms.

 

Weber Letter Agreement: Page 4


Right to Work. Federal immigration law requires that you provide the Company with documentary evidence of your identity and eligibility for employment in the United States, and your employment offer is made contingent on your ability to work in the United States. Accordingly, please bring appropriate verification or authorization to work (e.g., U.S. passport or driver’s license and Social Security card) on your first day.

Verification of Information. This offer and your employment are also contingent upon satisfactory results from your general background check and reference check, subject to applicable law. You have a right to review copies of any public records obtained by the Company in conducting this verification process unless you check the box below the signature line.

EEO Statement. The Company expects all employees to adhere to the Company’s standards of professionalism, loyalty, integrity, honesty, reliability, and respect for all. Please note that the Company is an equal opportunity employer. The Company does not permit, and will not tolerate, the unlawful discrimination or harassment of any employee, consultant, or related third party on the basis of sex, race, color, religion, age, national origin or ancestry, marital status, veteran status, mental or physical disability or medical condition, sexual orientation, pregnancy, childbirth or related medical condition, or any other status protected by applicable law.

At-Will Employment. Please understand that this letter does not constitute a contract of employment for any specific length of time, but will instead create an “at will” relationship which may be terminated with or without cause and with or without notice at any time by you or the Company, subject to the rights and benefits set forth in this Agreement. Further, your continued employment as well as your participation in any benefit programs does not assure you of continuing employment with the Company. This policy of at-will employment is the entire agreement as to the duration of your employment and may only be modified in an express written agreement approved by the Board and signed by an officer of the Company.

Miscellaneous. This letter, together with its Exhibits A and B and Attachment 1 (the Employee Proprietary Information Agreement), sets forth the entire terms of your employment with the Company and supersedes any prior representations or agreements, whether written or oral. This letter will be governed by the laws of Texas, without regard to its conflict of laws provisions. This letter may not be modified or amended except by a written agreement signed by an officer of the Company.

On behalf of Firefly, we are delighted to be able to extend you this offer and are enthusiastic about your joining the Company. Unless earlier withdrawn, this offer will remain open until August 19, 2022. To indicate your acceptance of the Company’s offer, please sign and date this letter in the space provided below and return it to me, along with a signed and dated copy of the Employee Proprietary Information Agreement. You may also retain a copy for your records.

 

Weber Letter Agreement: Page 5


Very truly yours,

FIREFLY AEROSPACE INC.

 

/s/ Kirk Konert

Kirk Konert
Chairman, Board of Directors

I have read this offer and agree to accept employment with Company under the terms set forth in this letter (including the exhibits hereto) and the attached Employee Proprietary Information Agreement.

 

ACCEPTED AND AGREED

/s/ William Weber

William Weber

 

Weber Letter Agreement: Page 6

Exhibit 10.7

 

LOGO

May 17, 2024

Darren Ma

[***]

[***]

Dear Darren:

This letter agreement (this “Agreement”) amends and restates the terms and conditions of your employment with Firefly Aerospace Inc. (“Firefly” or the “Company”) effective as of the above date (the “Effective Date”) as our SVP & Chief Financial Officer. In this capacity you will report to the Chief Executive Officer.

This Agreement outlines the core important aspects of your employment with Firefly, an “at-will” employer.

Compensation

 

  •  

Base. Firefly will pay you a salary of $350,000 on an annualized basis, subject to applicable tax withholding (“Base Salary”). Your salary will be payable pursuant to the Company’s regular payroll policy and is subject to review for increase, but not decrease, no less frequently than annually. This is an exempt position, meaning you will not be eligible for overtime compensation.

 

  •  

Incentive Compensation. During each fiscal year in which you are an employee of the Company you will also be eligible for an annual incentive bonus (“STI”) with a target amount equal to 50% of your Base Salary and paid upon the achievement of pre-established performance metrics determined by the Chief Executive Officer and based, in part, on your performance and the performance of the Company during the calendar year, as well as any other criteria the Chief Executive Officer deems relevant (collectively, such metrics, the “Performance Metrics”). The Performance Metrics will be communicated to you within the first 90 days of the fiscal year to which the STI relates. Any STI earned for the preceding fiscal year will be paid on or before the last payday of the month following the finalization of the audit for that fiscal year end, and, except as otherwise set forth below, you must be employed on the payout date to receive payment of such STI.

 

  •  

Attorney’s Fees. The Company will reimburse you, up to $2,500, for reasonable attorney’s fees incurred in the review, negotiation and execution of this Agreement within thirty (30) days following your submission of supporting documentation to the Company.

 

  •  

Severance.

 

  •  

If the Company terminates your employment without “Cause” or you terminate your employment for “Good Reason,” you will be entitled to severance pay in the amount of (i) 9 months’ (such number of months, the “Severance Period”) then-current Base Salary, (ii) an amount in cash equal to the cost of COBRA premiums during the Severance Period, (iii) in the event such termination occurs during the second half of the fiscal year, a prorated portion of your Annual Bonus for the year in which termination occurs, with such proration based on the number of days you worked during the applicable performance period and paid based on projected actual performance through the termination date (subsections (i) through (iii) hereof, collectively, the “Severance”); (iv) any then-outstanding stock options subject to time-based vesting will remain outstanding and have the opportunity to vest for the number of months equal to the Severance Period following


Darren Ma

May 17, 2024

Page 2

 

 

your termination of employment as if you had continued employment with the Company through such date. You will also be entitled to your Annual Bonus for the prior year to the extent earned but unpaid because your termination date is prior to the payout date. Severance and such bonus (if owed) will be paid in cash in a single lump-sum within ten (10) days following the termination of your employment.

 

  •  

If the Company terminates your employment with “Cause,” you will receive no Severance or additional stock option vesting.

For purposes of this Agreement, “Cause” means (i) conduct amounting to fraud against the Company or any subsidiary or affiliate of the Company; (ii) your intentional misconduct, repeated refusal to follow the reasonable and lawful directions of the Company or material breach of this Agreement or any document referenced herein, provided the Company notifies you of the acts deemed to constitute such intentional misconduct, repeated refusal or material breach in writing and you fail to correct such acts (or begin such action as may be necessary to correct such acts and thereafter fail to diligently pursue the completion thereof) within ten (10) business days after written notice has been given; (iii) your violation of a material Company policy that causes or has demonstrated a substantial likelihood to cause material financial or reputational harm to the Company; or (iv) a conviction or plea of guilty or nolo contendere to a felony (other than one arising from the operation of a motor vehicle or resulting from actions taken (or not taken) by you in reasonable, good faith in your capacity as an employee or officer of the Company).

For purposes of this Agreement, “Good Reason” means the occurrence of any of the following without your consent (i) a material diminution in your roles, duties, responsibilities, or the individuals to whom you report; (ii) a material reduction of your Base Salary or the target amount of your Annual Bonus; (iii) a requirement that you relocate your primary place of business more than 25 miles away from your primary place of business on the Effective; or (iv) a material breach by the Company of any provision of this Agreement or any document referenced herein. You must notify the Company in writing of termination for Good Reason, specifying the event and describing the circumstances constituting Good Reason, within thirty (30) days after you first become aware of the event you believe constitutes Good Reason. The Company will have a period of thirty (30) days after receipt of such notice to cure the Good Reason. If the Good Reason is cured within that period, you will not be entitled to the Severance and accelerated option vesting under this Agreement as a result of the specified Good Reason event. If the Company waives this right to cure or does not, within the thirty (30) day period, cure the Good Reason, you may terminate your employment within thirty (30) days following the later of the date on which the Company waived the right to cure or the end of the cure period and collect the Severance and accelerated option vesting hereunder.

Stock Options

 

  •  

We strongly believe that our collective success depends, above all else, on the quality of our people and their equity involvement in the Company in the long term. During each fiscal year in which you are an employee of the Company you will also be eligible for annual stock option grants at the discretion of the Company, with a target value equal to three times your STI (“LTI” and, STI plus LTI, equals “Annual Bonus”). The issue of such additional option grants, and the terms and conditions thereof, are contingent upon approval by our Board of Directors and receipt of a fully executed Stock Option Agreement. Vesting of any options will, of course, depend on your continued employment with the Company on the applicable vesting dates.


Darren Ma

May 17, 2024

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  •  

Upon the occurrence of a Liquidity Event while you are employed by the Company or any of its Affiliates, any option grants held by you that vest based solely on the passage of time will accelerate in their entirety and immediately become fully vested and exercisable on the effective date of such Liquidity Event, provided that the shares issued upon the exercise of such accelerated portions of the grants (the accelerated portion, the “Restricted Shares”) shall be subject to the below clawback provision. The Company will give you at least five days advance written notice of the Liquidity Event. If you have not elected to fully exercise your options (both vested and those accelerated hereunder) in connection with the Liquidity Event and pay the option exercise price in cash, then you will be deemed to have elected the Net Exercise method (as defined in the Firefly Equity Incentive Plan) as the method of consideration for payment of the exercise price. The number of Restricted Shares subject to the clawback shall lapse over the twelve-month period following the Liquidity Event giving rise to the acceleration of the unvested options as follows: the clawback shall lapse with respect to 50% of the Restricted Shares on the six-month anniversary of the Liquidity Event, the clawback shall lapse with respect to another 25% of the Restricted Shares on the nine-month anniversary of the Liquity Event, and the clawback shall lapse with respect to the remaining 25% of the Restricted Shares in equal monthly amounts (8.34% per month) at the end of each of the ten, eleven and twelve month anniversaries of the Liquidity Event. For purposes of this Agreement, “Liquidity Event” shall mean a (i) Change of Control (as defined in the Firefly Equity Incentive Plan), or (ii) an initial public offering (including via a merger with a special purpose acquisition company or similar).

 

  •  

Clawback. You recognize that a substantial portion of the value attributed to the Company in a Liquidity Event is a result of a continuity of leadership of the Company. As a result, if at any time during the twelve-month period following the Liquidity Event you terminate your employment with the Company by resigning other than for Good Reason (“resign” shall not include terminations as a result of death, disability or retirement as defined in the Company’s benefit plans), then you shall automatically forfeit to the Company for no consideration any Restricted Shares still subject to the clawback on the date of such termination of employment (i.e.; shares to which the clawback has not lapsed) (the “Forfeited Shares”) and the Forfeited Shares immediately will be cancelled; provided that, if you sold any of the Forfeited Shares, you shall, and you hereby agree to, promptly pay to the Company the net after-tax cash proceeds received by you from the sale of such Forfeited Shares.

 

  •  

In addition, notwithstanding anything to the contrary contained in the Firefly Equity Incentive Plan and the Stock Option Agreement, you will have the right to Net- Exercise (as defined in the Stock Option Agreement) any portion of an option grant and will have the right to require the Company to withhold a number of whole shares otherwise issuable under the applicable option grant in satisfaction of any income or payroll taxes due upon exercise.

Employee Benefits – Group Plans. As a regular full-time employee, you will have the opportunity to participate in the standard benefit plans that Firefly offers to other similarly situated employees, subject to the terms and provisions of such plans including applicable waiting periods. Details about these benefits will be made available for your review. Firefly offers medical, dental, and vision insurance and 401k. With the exception of the employment at-will policy discussed below, the Company may, from time to time in its sole discretion, modify or eliminate its policies and the benefits offered to employees.

Employment Conditions. The Company is continuing your employment because of your experience and personal skills, and not due to your potential or actual knowledge of a former employer’s or other person’s or entity’s confidential information or intellectual property, including trade secrets. You agree that you shall continue to not retain, make use of or share any such information with the Company.


Darren Ma

May 17, 2024

Page 4

 

Likewise, as an employee of the Company, you have become knowledgeable about the Company’s confidential and trade secret information relating to operations, products, and services. To protect the Company’s interests, you agree to continue to comply with the terms, conditions and requirements of the Company’s Employee Proprietary Information Agreement executed by you (as mutually amended or superseded from time to time, the “EPIA”). The EPIA provides for the arbitration of all disputes arising out of your employment and you reaffirm the mutual promise to arbitrate disputes described therein.

Restrictive Covenants. The EPIA also contains certain restrictive covenants prohibiting you from soliciting the Company’s employees, interfering with the Company’s customers, and competing with the Company, each on the terms and conditions set forth in the EPIA (collectively, including the terms and conditions thereof, the “Restrictive Covenants”). In recognition of the severance benefits provided herein, and notwithstanding the terms as specified in the EPIA, the Restrictive Covenants shall be amended so that period of each Restrictive Covenant shall be the longer of the period set for in the EPIA or the Severance Period specified herein.

By accepting this Agreement, you acknowledge that the Restrictive Covenants are reasonable and necessary to protect the Company’s legitimate business interests and that the terms and conditions of the Restrictive Covenants are fair and reasonable.

EEO Statement. The Company expects all employees to adhere to the Company’s standards of professionalism, loyalty, integrity, honesty, reliability, and respect for all. Please note that the Company is an equal opportunity employer. The Company does not permit, and will not tolerate, the unlawful discrimination or harassment of any employee, consultant, or related third party on the basis of sex, race, color, religion, age, national origin or ancestry, marital status, veteran status, mental or physical disability or medical condition, sexual orientation, pregnancy, childbirth or related medical condition, or any other status protected by applicable law.

At-Will Employment. Please understand that this Agreement does not constitute a contract of employment for any specific length of time, but instead continues an “at will” relationship which may be terminated with or without cause and with or without notice at any time by you or the Company, subject to the rights and benefits set forth in this Agreement. Further, your continued employment as well as your participation in any benefit programs does not assure you of continuing employment with the Company. This policy of at-will employment is the entire agreement as to the duration of your employment and may only be modified in an express written agreement approved by the Board and signed by an officer of the Company.

Miscellaneous. This Agreement, and any documents referenced herein, sets forth the entire terms of your employment with the Company and supersedes any prior representations or agreements, whether written or oral. This Agreement will be governed by the laws of Texas, without regard to its conflict of laws provisions.

Amendment. This Agreement may not be modified or amended except by a written agreement signed by the Chief Executive Officer on behalf of Firefly. 


Darren Ma

May 17, 2024

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On behalf of Firefly, we are delighted to be able to extend you this Agreement to confirm the terms of your continued employment with the Company. To indicate your acceptance of this Agreement, please sign and date this letter in the space provided below and return it to me. You may also retain a copy for your records.

Very truly yours,

 

FIREFLY AEROSPACE INC.
By:  

/s/ William Weber

  William Weber
  Chief Executive Officer

ACCEPTED AND AGREED:

I have read this letter agreement and agree to the terms set forth in this letter, including affirming the Employee Proprietary Information Agreement.

 

By:  

/s/ Darren Ma

  Darren Ma

Exhibit 10.8

Execution Version

SEPARATION AGREEMENT AND RELEASE OF CLAIMS

THIS SEPARATION AGREEMENT AND RELEASE OF CLAIMS (this “Agreement”) is made by and between William Weber (“Employee”), and Firefly Aerospace, Inc., a Delaware corporation with its principal place of business at 1320 Arrow Point Dr., Suite 109, Cedar Park, Texas 78613 (“Company”).

 

  A.

WHEREAS, Employee was employed as Company’s Chief Executive Officer;

 

  B.

WHEREAS, Employee and Company are parties to the offer letter dated August 13, 2022 (as amended, the “Offer Letter”), and the Employee Proprietary Information Agreement dated August 15, 2022 (as amended, the “Proprietary Information Agreement”);

 

  C.

WHEREAS, (i) in the course of Employee’s employment with Company, Employee obtained confidential and proprietary information and trade secrets concerning the business and operations of Company that could be used to compete unfairly with or other otherwise disadvantage Company; (ii) the covenants and restrictions contained herein are intended to protect the legitimate interests of Company with respect to its goodwill, trade secrets, and other confidential and proprietary information; and (iii) Employee has agreed to be bound by such covenants and restrictions.

 

  D.

WHEREAS, the parties wish to confirm the termination of Employee’s employment with Company and set forth their agreement as to the manner in which Employee’s employment with Company will be closed out.

NOW, THEREFORE, in consideration of the mutual covenants set forth herein and for other good and valuable consideration, receipt of which is hereby acknowledged, Company and Employee agree as follows:

 

1.

Termination of Employment. Employee’s employment with Company terminated on July 17, 2024 (the “Termination Date”). This is to confirm that Employee has voluntarily and irrevocably resigned from all positions that Employee holds as a director or officer of Company and any subsidiary or affiliate thereof. Employee agrees that, effective as of the Termination Date, Employee shall not hold himself out as a director, officer, employee or other representative of Company. Without limiting the foregoing, no later than three (3) days following the Effective Date (as defined below), Employee shall update any and all social media accounts (if any) that list him as a current employee or officer of the Company (including, without limitation, LinkedIn, Facebook, Twitter, and Instagram) to reflect that he is no longer affiliated with the Company.

 

2.

Accrued Obligations. Employee shall be paid Employee’s base salary through the Termination Date. Employee shall submit a final request for reimbursement of any outstanding business expenses incurred through the Termination Date, together with such substantiation as may be requested or required pursuant to Company’s reimbursement policy, no later than fourteen (14) business days following the Effective Date and shall receive payment of reimbursable expenses within six (6) business days thereafter. Effective on the Termination Date, all of the rights and obligations under the Offer Letter will terminate, except


  as set forth herein. For avoidance of doubt, all of the rights and obligations of Company and Employee under the Proprietary Information Agreement shall survive Employee’s termination of employment, and are expressly preserved and affirmed by Employee, with the understanding that Employee will pursue no lawsuit, claim, or legal action asserting that the post-employment restrictions in the Proprietary Information Agreement are unreasonable or unenforceable as written, or that they do not survive this Agreement.

 

3.

Termination Payments and Benefits. In exchange for Employee’s execution and non-revocation of this Agreement, and Employee’s performance of Employee’s obligations hereunder, and consistent with the terms of the Offer Letter, Company agrees to provide Employee the following termination payments and benefits (collectively, the “Termination Payments”):

 

  a.

Company agrees to pay Employee a gross amount of $450,000, less withholdings for applicable taxes, representing twelve (12) months of Employee’s current base salary;

 

  b.

If Employee timely elects COBRA health continuation coverage, Company agrees to pay Employee a gross amount of $25,681.20, less withholdings for applicable taxes, representing twelve (12) months of the COBRA premium payable by Employee;

 

  c.

Company agrees to pay Employee a cash payment in the gross amount of $305,137, less withholdings for applicable taxes, representing a pro-rated cash bonus for the 2024 bonus year;

 

  d.

All unvested stock options granted to Employee under the Amended and Restated Firefly Aerospace, Inc. 2017 Stock Plan (as amended or as amended and restated from time to time, “Stock Plan”) on August 31, 2022 (the “August Grant”), and June 20, 2024 (the “June Grant”), shall remain outstanding and eligible to vest in accordance with the provisions of the Stock Plan and applicable option agreement until July 16, 2025, as if Employee had continued employment with Company through such date. Furthermore, an additional 43,590 stock options from the August Grant will vest on the Effective Date. For the avoidance of doubt, although the August Grant and the June Grant remain outstanding and eligible to vest as described herein (including in the event of a Change in Control (as defined in the Stock Plan)), the parties specifically agree that (i) 179,328 stock options from the August Grant are vested as of the Effective Date, an additional 43,590 stock options from the August Grant will vest on the Effective Date, and an additional 179,328 stock options will vest on September 1, 2024, and (ii) none of the stock options from the June Grant have vested as of the Effective Date, but 80,348 stock options from the June Grant will vest on May 27, 2025;

 

  e.

Notwithstanding anything to the contrary in the Stock Plan, the August Grant and the June Grant, to the extent vested as of the Effective Date or that become vested in accordance with Section 3(d), shall remain outstanding and eligible to be exercised through July 16, 2027 (unless earlier cancelled in connection with any applicable Change in Control (as defined in the Stock Plan)), and Employee shall continue to be eligible to utilize the benefit of the cashless exercise process described in the Offer Letter. All outstanding and unexercised stock options under the August Grant and the June Grant shall be cancelled and forfeited by Employee on July 17, 2027.

 

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The payments described in Sections 3(a), (b) and (c) shall be paid to Employee on the first administratively practicable payroll date after the Effective Date (as such term is hereinafter defined herein). The Termination Payment shall not be taken into account as compensation and no service credit shall be given after the Termination Date for purposes of determining the benefits payable under any benefit plan, program, agreement, or arrangement of Company.

 

4.

All Payments Received. Except as specifically provided in Section 2 and Section 3 above, Employee shall not be entitled to any compensation or benefits from Company or any other Company Party (as defined below), and represents and warrants that Employee has received payment in full of any and all compensation, benefits or other outstanding obligations owed to Employee by Company or any other Company Party.

 

5.

No Prior Claims. Employee represents that Employee has not filed any complaints, lawsuits, administrative complaints or charges arising from or relating to Employee’s employment with, or termination from, Company, and Employee further represents that Employee has not assigned to any third party any claim or cause of action Employee may hold against Company or any other Company Party.

 

6.

General Release and Waiver.

 

  a.

Employee Release. Employee, on Employee’s own behalf and on behalf of Employee’s heirs, representatives, executors, trustees, administrators, agents, and assigns (collectively, the “Employee Parties”), hereby agrees to irrevocably and unconditionally fully and forever waive, release, and discharge Company and any parent, subsidiary or affiliate thereof, each of their respective predecessors, successors and assigns, and each of their respective current, former or future officers, directors, employees, representatives, contractors, attorneys, trustees, partners, members, stockholders, investors, joint ventures, and agents, both individually and in their official capacities (collectively, the “Company Parties”), jointly and severally, from any and all claims, liability, actions, charges, causes of action, demands, damages, obligations, remuneration, sums of money, accounts or expenses (including attorneys’ fees and costs) of any kind whatsoever, whether known or unknown or contingent or absolute (collectively, “Claims”), which any Employee Party ever had, now has or may hereafter claim to have against any of the Company Parties arising on or prior to the date of execution of this Agreement, including but not limited to:

 

  i.

any Claim arising from or relating in any way to Employee’s employment with Company or any other Company Party, or termination therefrom;

 

  ii.

any Claim for wages, salary, bonuses, incentive compensation, stock, restricted stock, stock options, other equity incentive, severance pay, vacation pay or any other fees, compensation or benefits;

 

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  iii.

any Claim for back pay, front pay, reinstatement, other equitable relief, compensatory damages, damages for alleged personal injury, liquidated damages, and punitive damages;

 

  iv.

any Claim that the Proprietary Information Agreement is unreasonable or unenforceable as written;

 

  v.

any Claim arising from or relating in any way to the statements, actions, or omissions of Company or any Company Party;

 

  vi.

any Claim under common law or equity, including wrongful or retaliatory discharge or breach of contract, promissory estoppel, or detrimental reliance;

 

  vii.

any Claim arising in tort, including fraud, slander, libel, defamation, disparagement, negligence, or intentional infliction of emotional distress;

 

  viii.

any Claim under any federal, state or local law, statute, ordinance or regulation, specifically including but not limited to: the Age Discrimination in Employment Act (including the Older Workers Benefit Protection Act) (together, “ADEA”), the National Labor Relations Act, the Worker Adjustment and Retraining Notification Act, the Fair Labor Standards Act, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, Title VII of the United States Civil Rights Act of 1964, 42 U.S.C. § 1981, the Civil Rights Acts of 1866 and 1871 (42 U.S.C. § 1981), the Civil Rights Act of 1991, the Rehabilitation Act of 1973, the Equal Pay Act of 1963, the Genetic Information Nondiscrimination Act of 2008, the Employee Retirement Income Security Act, the Texas Commission on Human Rights/Texas Employment Discrimination Law, Tex. Labor Code Ann. § 21.001 et seq., Texas Disability Discrimination Law, Tex. Hum. Res. Code Ann. § 121.003, Texas Disaster and Emergency Responder Protection Law, Tex. Labor Code § 22.001 et seq., Texas Wiretapping Protection Law, Tex. Crim. Proc. Code § 18.20; Texas Minimum Wage Act, Tex. Labor Code Ann. §§ 62.001 to 62.205, and Texas Wage Payment Law, Tex. Labor Code Ann. §§ 61.001 to 61.095, each as amended and including each of their respective implementing regulations and/or any other federal, state, or local law (statutory, regulatory, or otherwise) that may be legally waived or released, and the discrimination and employment laws of any state or municipality;

 

  ix.

any Claim for breach of contract, breach of implied contract, failure to keep any promise, breach of a covenant of good faith and fair dealing, or breach of fiduciary duty;

 

  x.

any Claim arising from or relating in any way to any policy, agreement, understanding, or promise, written or oral, formal or informal, between Company or any other Company Party and Employee;

 

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  xi.

any Claim for actual or constructive termination in violation of public policy; military leave, reinstatement, or related rights; and

 

  xii.

any Claim under any statute or common law regarding protection of release of unknown claims in any jurisdiction.

 

  b.

Exclusions. Notwithstanding anything herein to the contrary, the Employee Parties do not release, and this release does not apply to and shall not be construed to apply to:

 

  i.

any claim for breach of this Agreement by Company;

 

  ii.

any claim to receive any vested benefits, if any, that Employee is entitled to receive under Company’s broad-based employee benefit plans in accordance with the terms and conditions of such plans;

 

  iii.

any claim for indemnification in accordance with the terms and conditions of Company’s bylaws and/or directors and officers insurance policy;

 

  iv.

any claim to continuation of health plan coverage pursuant to COBRA;

 

  v.

any claim to challenge the validity of this Agreement under ADEA;

 

  vi.

any claim for unemployment insurance benefits, workers’ compensation benefits, or any other state disability compensation benefits;

 

  vii.

any claim or right which cannot be waived by law; and

 

  viii.

any claim that may arise after the date Employee signs this Agreement.

 

  c.

Limitation. Notwithstanding this Section 6 or any other provision of this Agreement, this release is not intended to interfere with Employee’s right under federal, state or local civil rights or employment discrimination laws to file a complaint with any federal, state or local agency or self-regulatory organization charged with enforcing such laws, including, but not limited to, the Equal Employment Opportunity Commission (the “EEOC”) in connection with any claim Employee believes Employee may have against Company. Nor shall this Agreement be construed to prevent Employee from assisting in, cooperating with or participating in any investigations or proceedings by such agency or self-regulatory organization pursuant to a lawful subpoena or equivalent order. None of the foregoing acts by Employee shall constitute a breach of any non-disparagement, confidentiality or cooperation clause of this Agreement or the Proprietary Information Agreement. However, by executing this Agreement, Employee hereby waives the right to recover in any proceeding Employee may bring before the EEOC or any state or local civil or human rights commission or in any proceeding brought by the EEOC or any state or local civil or human rights commission on Employee’s behalf. This release is for any relief, no matter how denominated, including, but not limited to, injunctive relief, wages, back pay, front pay, compensatory damages, or punitive damages. However, this release does not limit Employee’s right to receive a monetary award in connection with information provided to the SEC.

 

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  d.

Company Release. The Company, on its own behalf and on behalf of each of the other Company Parties, hereby agrees to irrevocably and unconditionally fully and forever waives, releases, and discharges the Employee and each of the other Employee Parties, jointly and severally, from any and all Claims that any Company Party ever had, now has or may hereafter claim to have against any of the Employee Parties arising on or prior to the date of execution of this Agreement, regarding Employee’s employment or affiliation with the Company or the termination thereof. Notwithstanding the foregoing, the Company Parties do not release, and the release in this Section 6(d) does not apply to and shall not be construed to apply to: (i) any fraud or embezzlement against the Company by Employee; (ii) any breach by Employee of this Agreement; (iii) any violation by Employee of local, state or federal laws relating to the protection of trade secret information or his fiduciary duties to the Company; or (iv) any claim that occurs after the parties have executed this Agreement.

 

7.

Continuing Obligations.

 

  a.

Employee acknowledges and agrees that Employee’s obligations (including, without limitation, the obligation not to disclose Company’s confidential information) set forth in the Proprietary Information Agreement and the Stock Plan, in each case, survive the termination of Employee’s employment in accordance with their terms and are each incorporated herein by reference, and nothing in this Agreement shall impair or otherwise modify such obligations. Employee affirms that the restrictive covenants in the Proprietary Information Agreement and the Stock Plan are reasonable and necessary to protect the legitimate interests, including goodwill, of Company and that Employee received adequate consideration in exchange for agreeing to those restrictions and will abide by such restrictions. In addition, Employee agrees that Employee will keep the terms, conditions and existence of this Agreement confidential, and Employee further agrees to discuss such matters only with Employee’s spouse, attorneys and tax advisors, and agrees to require those persons to maintain the confidentiality of this Agreement, except as required by law.

 

  b.

Non-Disparagement. At all times following the Termination Date, Employee shall not himself, and will not encourage or assist others to, in verbal, written or any other form in any medium (including television or radio, newspapers, magazines, computer networks, social media, or bulletin boards, statements to the media, or any other form of communication), make false statements about, disparage, or defame the Company, Company’s affiliates, or any of their respective directors, officers, employees, businesses, products, services or activities. The Company agrees to instruct Company’s directors and officers to not, at any time following the Termination Date, in verbal, written or any other form in any medium (including television or radio, newspapers, magazines, computer networks, social media, or bulletin boards, statements to the media, or any other form of communication), make false statements about, disparage or defame Employee. Notwithstanding the foregoing, nothing in this clause (b) shall prohibit Employee or Company and its directors and officers from making truthful statements when required by order of a court or other body having jurisdiction or as required by law, or from exercising any protected rights to the extent that such rights cannot be waived by agreement.

 

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  c.

Return of Company Property. Regardless of whether Employee executes this Agreement, Employee shall promptly, and no later than August 31, 2024, return to the Company all Company property, including without limitation, security key cards, corporate credit cards, laptops, desktops, or other equipment provided by Company.

 

8.

Protected Disclosures; Defend Trade Secrets Act Notice. Employee fully understands that, notwithstanding any other provision of this Agreement or the Proprietary Information Agreement, nothing in this Agreement or the Proprietary Information Agreement prohibits Employee from (i) making any disclosure or communication required or protected by law or (ii) reporting possible violations of law to a governmental agency or entity. Employee is not required to notify, or seek authorization from, Company if Employee makes such reports. In addition, Employee acknowledges receipt of notice that an individual may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law. In addition, Employee has been given notice that an individual may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Finally, Employee acknowledges receipt of notice that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.

 

9.

No Admission of Liability. This Agreement does not constitute an admission of liability or wrongdoing of any kind by Company or Employee.

 

10.

No Right to Rehire. Employee acknowledges and agrees that neither Company nor any Company Party has any obligation, contractual or otherwise, to rehire Employee in the future.

 

11.

Heirs and Assigns. This Agreement is binding on and is for the benefit of the parties hereto and their respective successors, assigns, heirs, executors, administrators, and other legal representatives.

 

12.

Covenant Not to Sue. Employee covenants and agrees that Employee will not now or at any time in the future commence, maintain, prosecute, or participate in as a party, or permit to be filed by any other person on Employee’s behalf or as a member of any alleged class of persons, any action, suit, proceeding, claim, or complaint of any kind against Company or any Company Party with respect to any matter which arises from or relates to Employee’s employment with Company or any of its affiliates or the termination thereof or which is encompassed in the release set forth in Section 6 above; provided that, nothing in this Agreement prevents Employee from (i) filing a claim to enforce the terms of this Agreement; (ii) asserting a claim arising after the Effective Date of this Agreement; or (iii) filing a charge with the Equal Employment Opportunity Commission (EEOC) or participating in any EEOC investigation or proceeding. Employee promises, however, never to seek or accept any damages, remedies or other relief for Employee personally with respect to any claim released by this Agreement (other than a monetary award in connection with information provided to the SEC).

 

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13.

Remedies. Employee recognizes and agrees that the payment of damages is not an adequate remedy for a breach or threatened breach by Employee of the provisions of Section 7 above. Employee recognizes that irreparable injury will result to Company, its business, and property in the event of any such breach or threatened breach, and therefore Employee agrees that Company may, in addition to recovering damages, proceed in equity to enjoin Employee from violating any such provision. In addition, Employee acknowledges that a breach of the confidentiality provision of this Agreement or a material breach of the non-disparagement provision of this Agreement, in either such case as determined by a court of competent jurisdiction in a final, binding, non-appealable decision, will constitute a material breach of this Agreement for which Employee will be liable to Company. Damages for each such breach will be $50,000, plus Company’s attorney’s fees. The parties stipulate that this amount of liquidated damages is reasonable in light of the difficulty of ascertaining the Company and/or Company Party’s actual damages occasioned by such breach, and that these liquidated damages will in no way be construed as a penalty. In the event such court determines that Employee has not, in fact, breached the confidentiality provision of this Agreement or materially breached the non-disparagement provision of this Agreement, the Company will reimburse the Employee all attorney’s fees that he incurred in connection with such claim.

 

14.

Clawback. Employee further agrees that if Employee challenges this Agreement, files any claims against Company arising from or relating to Employee’s employment with, or termination from, Company or materially breaches the material terms of this Agreement, (a) Employee will return all moneys and benefits received by Employee from Company pursuant to this Agreement and (b) Company may elect, at its option and without waiver of any other rights or remedies it may have, not to pay or provide any unpaid moneys or benefits to Employee; provided, however, that nothing in the forgoing prohibits Employee from asserting or pursuing a challenge to the enforceability of the Agreement under ADEA.

 

15.

Cooperation. Employee agrees to cooperate with Company concerning any litigation or regulatory matters in which Employee may have relevant knowledge or information. Such cooperation will include, without limitation, the following: (i) to meet and confer, at a time mutually convenient to Employee and Company, with Company’s designated in-house or outside attorneys pertaining to any claim or litigation matter, including, without limitation, for trial preparation purposes, answering questions, explaining factual situations, preparing to testify; (ii) to appear for deposition or trial, at a time reasonably convenient to Employee, and give truthful trial testimony without the need to serve a subpoena for such appearance and testimony; and (iii) to give truthful sworn statements to Company’s attorneys upon their reasonable request and, for purposes of any deposition or trial testimony, to adopt Company’s attorneys as Employee’s own attorneys (unless there is a conflict of interest, in which case the Company will pay the reasonable attorneys’ fees of Employee’s attorneys who are reasonably acceptable to Company), and to accept their record instructions at deposition or trial.

 

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16.

Representations. Employee acknowledges that Employee is not relying on any representations that are not in this Agreement when deciding to sign the Agreement. Company would not have agreed to pay the consideration Employee is receiving in exchange for this Agreement but for the representations and promises Employee is making by signing it. Employee acknowledges and represents that Employee has not suffered any job-related wrongs or injuries, such as any type of discrimination or workplace injury, for which Employee might still be entitled to compensation or relief now or in the future. Employee acknowledges that the Termination Payments exceed the amount Employee would otherwise be entitled to receive upon termination of Employee’s employment and that such payment is in exchange for entering into and performing this Agreement. Employee agrees that Employee will not at any time seek consideration from Company other than what is set forth in this Agreement. Employee specifically acknowledges and agrees that Company has made no representations to Employee regarding the tax consequences of any amounts received by Employee or for Employee’s benefit pursuant to this Agreement, and Employee has not relied on any representation or lack of representation by Company. Employee remains wholly responsible for the tax consequences regarding the amounts to be received.

 

17.

General Provisions.

 

  a.

Affiliates. As used in this Agreement, “affiliates” means, with respect to any person, any other person that, at the relevant time (whether prior to, as of or any time after the Effective Date), directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such first person, and their respective successors and assigns, and “control” means the power to direct or cause the direction of the management or policies of a person, whether through ownership of voting securities or by contract relating to voting rights or corporate governance.

 

  b.

Integration. This Agreement constitutes the complete agreement between Company and Employee and supersedes all prior agreements and understandings, oral or written, between Company and Employee regarding the issues addressed in this Agreement, including the Offer Letter, except as specifically set forth herein. For the avoidance of doubt, this Agreement does not supersede the Proprietary Information Agreement or any other restrictive covenants that were in effect immediately prior to the date of this Agreement and which, by their terms, survive the termination of Employee’s employment.

 

  c.

Amendment; Waiver. This Agreement shall not be amended, altered, changed, modified, supplemented or rescinded in any manner except by written agreement executed by the Company and Employee. A failure of Company or Employee to insist on strict compliance with any provision of this Agreement shall not be deemed a waiver of such provision or any other provision hereof.

 

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  d.

Choice of Law. This Agreement shall be construed, enforced, and interpreted in accordance with and governed by the laws of the State of Texas, without regard to its choice of law provisions.

 

  e.

Withholding. The Company may withhold from any and all amounts payable under this Agreement such federal, state, and local taxes or other withholdings as may be required to be withheld pursuant to any applicable law or regulation.

 

  f.

Compliance with Section 409A. This Agreement shall be interpreted to ensure that the payments to be made to Employee are exempt from, or comply with, Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”); provided, however, that nothing in this Agreement or otherwise shall be interpreted or construed to transfer any liability for any tax (including a tax or penalty due as a result of a failure to comply with Section 409A) from Employee to Company or to any other individual or entity. Any payment to Employee that is subject to Section 409A and that is contingent on a termination of employment is contingent on a “separation from service” within the meaning of Section 409A. Any taxable reimbursement shall be paid no later than December 31 of the year after the year in which the expense is incurred and shall comply with Treas. Reg. § 1.409A-3(i)(1)(iv).

 

  g.

Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which counterpart, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement.

 

  h.

Notice. Any notice or other communication required or permitted under this Agreement shall be effective only if it is in writing and shall be deemed to be given when delivered personally or four days after it is mailed by registered or certified mail, postage prepaid, return receipt requested or one day after it is sent by a reputable overnight courier service and, in each case, addressed as follows (or if it is sent through any other method agreed upon by the parties):

If to Company:

Firefly Aerospace, Inc.

1320 Arrow Point Dr. Ste. 109

Cedar Park, TX 78613

Attention: Human Resources

with a copy to:

Evan Parness

Covington & Burling LLP

620 Eighth Avenue

New York, New York 10018

[***]

 

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If to Employee:

William Weber

c/o Morrison Cohen LLP

909 Third Avenue, 27th floor

New York, NY 10022

Attention: Jeff Laska

[***]

or to such other address as any party hereto may designate by notice to the other; with a copy to:

Morrison Cohen LLP

909 Third Avenue, 27th floor

New York, NY 10022

Attention: Jeff Laska

[***]

 

  i.

Severability. If any provision of this Agreement or compliance by Employee or Company with any provision of this Agreement constitutes a violation of any law, or is or becomes unenforceable or void, then such provision, to the extent only that it is in violation of law, unenforceable or void, shall be modified to the extent necessary so that it is no longer in violation of law, unenforceable or void, and such provision will be enforced to the fullest extent permitted by law. If such modification is not possible, such provision, to the extent it is in violation of law, unenforceable or void, will be deemed severable from the remaining provisions of this Agreement, which remaining provisions will remain binding on both Employee and Company.

 

  j.

Construction. This Agreement shall be deemed drafted equally by both Company and Employee. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary. Unless the context clearly indicates to the contrary, (i) the plural includes the singular and the singular includes the plural; (ii) “includes” and “including” are each “without limitation”; (iii) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (iv) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require.

 

18.

Knowing and Voluntary Waiver. Employee, by signing this Agreement, understands Employee is giving up all claims, damages or disputes, as set forth in Section 6 of this Agreement, understands its contents and its final and binding effect, and has signed it as Employee’s free and voluntary act and deed. Company advises Employee to consult with an attorney prior to signing this Agreement.

 

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19.

Consideration Period; Revocation Period. Employee has twenty-one (21) days to review and consider this Agreement (“Consideration Period”). Employee may use as much of the Consideration Period as Employee wishes prior to signing, and any changes to this Agreement, whether material or immaterial, do not restart the Consideration Period that Employee has to consider this Agreement. Employee has seven (7) days after executing this Agreement to revoke Employee’s approval and void this Agreement in its entirety (the “Revocation Period”). Notice of revocation must be provided in writing to John Termotto, Chief People Officer [***] at Company, no later than the close of business on the seventh day after Employee has signed this Agreement. This Agreement shall become effective on the eighth day after Employee executes this Agreement, provided it has not been revoked by Employee in writing before such date (the “Effective Date”). If Employee does timely revoke the Agreement, the Company’s obligations under the Agreement shall be null and void.

[Signature pages follow]

 

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IN WITNESS WHEREOF, Company has caused this Agreement to be signed by its duly authorized representative and Employee has signed this Agreement, in each case, as of the date set forth below.

 

COMPANY
Firefly Aerospace, Inc.

/s/ David Wheeler

By:   David Wheeler
Title:   General Counsel

Date: 8/13/2024 | 08:00:24 PDT

EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE HAS CAREFULLY READ AND VOLUNTARILY SIGNED THIS AGREEMENT, THAT HE HAS HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY OF HIS CHOICE, AND THAT HE SIGNS THIS AGREEMENT WITH THE INTENT OF RELEASING THE COMPANY AND ALL OTHER COMPANY PARTIES FROM ANY AND ALL CLAIMS.

 

/s/ William J. Weber

William J. Weber

Date: 8/12/2024

 

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Exhibit 10.9

AMENDED AND RESTATED

FIREFLY AEROSPACE, INC.

2017 STOCK PLAN

Adopted on January 2, 2018, as amended on November 25, 2020, August 28, 2022, August 18, 2023, April 1, 2024 and October 31, 2024

This plan amends, restates and supersedes that certain Firefly Aerospace, Inc. 2017 Stock Plan adopted by the Board on October 13, 2017.

 

  1.

ESTABLISHMENT PURPOSE AND TERM OF PLAN.

1.1 Establishment. The Firefly Aerospace, Inc. 2017 Stock Plan (the “Plan”) was established effective as of October 13, 2017 (the “Effective Date”).

1.2 Purpose. The purpose of the Plan is to advance the interests of the Participating Company Group and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Participating Company Group and by motivating such persons to contribute to the growth and profitability of the Participating Company Group. The Plan seeks to achieve this purpose by providing for Awards in the form of Options, Restricted Stock Awards and Restricted Stock Unit Awards.

1.3 Term of Plan. The Plan shall continue in effect until its termination by the Board; provided, however, that all Awards shall be granted, if at all, within ten (10) years from the earlier of the date the Plan is adopted by the Board or the date the Plan is duly approved by the stockholders of the Company.

 

  2.

DEFINITIONS AND CONSTRUCTION.

2.1 Definitions. Whenever used herein, the following terms shall have their respective meanings set forth below:

(a) “Award” means an Option, Restricted Stock Purchase Right, Restricted Stock Bonus or Restricted Stock Unit Award granted under the Plan.

(b) “Award Agreement” means a written or electronic agreement between the Company and a Participant setting forth the terms, conditions and restrictions applicable to an Award.

(c) “Board” means the Board of Directors of the Company. If one or more Committees have been appointed by the Board to administer the Plan, “Board” also means such Committee(s).

(d) “Cause” means, unless such term or an equivalent term is otherwise defined by the applicable Award Agreement or other written agreement between a Participant and a Participating Company applicable to an Award, any of the following: (i) the Participant’s theft, dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or falsification of any Participating Company documents or records; (ii) the Participant’s material failure to abide by a Participating Company’s code of conduct or other policies (including, without limitation, policies relating to confidentiality and reasonable workplace conduct); (iii) the Participant’s unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of a Participating Company (including,


without limitation, the Participant’s improper use or disclosure of a Participating Company’s confidential or proprietary information); (iv) any intentional act by the Participant which has a material detrimental effect on a Participating Company’s reputation or business; (v) the Participant’s repeated failure or inability to perform any reasonable assigned duties after written notice from a Participating Company of, and a reasonable opportunity to cure, such failure or inability; (vi) any material breach by the Participant of any employment or service agreement between the Participant and a Participating Company, which breach is not cured pursuant to the terms of such agreement; or (vii) the Participant’s conviction (including any plea of guilty or nolo contendere) of any criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs the Participant’s ability to perform his or her duties with a Participating Company.

(e) “Change in Control” means, unless such term or an equivalent term is otherwise defined by the applicable Award Agreement or other written agreement between the Participant and a Participating Company applicable to an Award, the occurrence of any one or a combination of the following:

(i) an Ownership Change Event or a series of related Ownership Change Events (collectively, a “Transaction”) in which the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding securities entitled to vote generally in the election of Directors or, in the case of an Ownership Change Event described in Section 2.1(v)(iii), the entity to which the assets of the Company were transferred (the “Transferee”), as the case may be; or

(ii) a date specified by the Board following approval by the stockholders of a plan of complete liquidation or dissolution of the Company;

provided, however, that a Change in Control shall be deemed not to include a transaction described in subsection (i) of this Section 2.1(e) in which a majority of the members of the board of directors of the continuing, surviving or successor entity, or parent thereof, immediately after such transaction is comprised of Incumbent Directors.

For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company or the Transferee, as the case may be, either directly or through one or more subsidiary corporations or other business entities. The Board shall determine whether multiple events described in subsections (i) and (ii) of this Section 2.1(e) are related and to be treated in the aggregate as a single Change in Control, and its determination shall be final, binding and conclusive.

(f) “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations and administrative guidelines promulgated thereunder.

(g) “Committee” means the compensation committee or other committee or subcommittee of the Board duly appointed to administer the Plan and having such powers as specified by the Board. Unless the powers of the Committee have been specifically limited, the Committee shall have all of the powers of the Board granted herein, including, without limitation, the power to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by law.

(h) “Company” means Firefly Aerospace, Inc., a Delaware corporation, and any successor thereto.


(i) “Consultant” means a person engaged to provide consulting or advisory services (other than as an Employee or a Director) to a Participating Company, provided that the identity of such person, the nature of such services or the entity to which such services are provided would not preclude the Company from offering or selling securities to such person pursuant to the Plan in reliance on either the exemption from registration provided by Rule 701 under the Securities Act or, if the Company is required to file reports pursuant to Section 13 or 15(d) of the Exchange Act, registration on a Form S-8 Registration Statement under the Securities Act.

(j) “Director” means a member of the Board.

(k) “Disability” means the inability of the Participant, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of the Participant’s position with the Participating Company Group because of the sickness or injury of the Participant.

(l) “Dividend Equivalent Right” means the right of a Participant, granted at the discretion of the Board or as otherwise provided by the Plan, to receive a credit for the account of such Participant in an amount equal to the cash dividends paid on one share of Stock for each share of Stock represented by an Award held by such Participant.

(m) “Employee” means any person treated as an employee (including an Officer or a Director who is also treated as an employee) in the records of a Participating Company and, with respect to any Incentive Stock Option granted to such person, who is an employee for purposes of Section 422 of the Code; provided, however, that neither service as a Director nor payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan. The Company shall determine in good faith and in the exercise of its discretion whether an individual has become or has ceased to be an Employee and the effective date of such individual’s employment or termination of employment, as the case may be. For purposes of an individual’s rights, if any, under the terms of the Plan as of the time of the Company’s determination of whether or not the individual is an Employee, all such determinations by the Company shall be final, binding and conclusive as to such rights, if any, notwithstanding that the Company or any court of law or governmental agency subsequently makes a contrary determination as to such individual’s status as an Employee.

(n) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(o) “Fair Market Value” means, as of any date, the value of a share of Stock or other property as determined by the Board, in its discretion, or by the Company, in its discretion, if such determination is expressly allocated to the Company herein, subject to the following:

(i) If, on such date, the Stock is listed or quoted on a national or regional securities exchange or quotation system, the Fair Market Value of a share of Stock shall be the closing price of a share of Stock as quoted on the national or regional securities exchange or quotation system constituting the primary market for the Stock, as reported in The Wall Street Journal or such other source as the Company deems reliable. If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or quotation system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so traded or quoted prior to the relevant date, or such other appropriate day as shall be determined by the Board, in its discretion.

(ii) If, on such date, the Stock is not listed or quoted on a national or regional securities exchange or quotation system, the Fair Market Value of a share of Stock shall be as determined by the Board in good faith without regard to any restriction other than a restriction which, by its terms, will never lapse, and in a manner consistent with the requirements of Section 409A.


(p) “Incentive Stock Option” means an Option intended to be (as set forth in the Award Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of the Code.

(q) “Incumbent Director” means a director who either (i) is a member of the Board as of the Effective Date or (ii) is elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but excluding a director who was elected or nominated in connection with an actual or threatened proxy contest relating to the election of directors of the Company).

(r) “Insider” means an Officer, a Director or other person whose transactions in Stock are subject to Section 16 of the Exchange Act.

(s) “Nonstatutory Stock Option” means an Option not intended to be (as set forth in the Award Agreement) or which does not qualify as an incentive stock option within the meaning of Section 422(b) of the Code.

(t) “Officer” means any person designated by the Board as an officer of the Company.

(u) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the Plan.

(v) “Ownership Change Event” means the occurrence of any of the following with respect to the Company: (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of securities of the Company representing more than fifty percent (50%) of the total combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of Directors; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company (other than a sale, exchange or transfer to one or more subsidiaries of the Company).

(w) “Parent Corporation” means any present or future “parent corporation” of the Company, as defined in Section 424(e) of the Code.

(x) “Participant” means any eligible person who has been granted one or more Awards.

(y) “Participating Company” means the Company or any Parent Corporation or Subsidiary Corporation.

(z) “Participating Company Group” means, at any point in time, all entities collectively which are then Participating Companies.

(aa) “Restricted Stock Award” means an Award in the form of a Restricted Stock Bonus or a Restricted Stock Purchase Right.

(bb) “Restricted Stock Bonus” means Stock granted to a Participant pursuant to Section 7.

(cc) “Restricted Stock Purchase Right” means a right to purchase Stock granted to a Participant pursuant to Section 7.


(dd) “Restricted Stock Unit” means a right granted to a Participant pursuant to Section 8 to receive on a future date or event a share of Stock or cash in lieu thereof, as determined by the Board.

(ee) “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or regulation.

(ff) “Section 409A” means Section 409A of the Code.

(gg) “Securities Act” means the Securities Act of 1933, as amended.

(hh) “Service” means a Participant’s employment or service with the Participating Company Group, whether as an Employee, a Director or a Consultant. Unless otherwise provided by the Board, a Participant’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders Service or a change in the Participating Company for which the Participant renders Service, provided that there is no interruption or termination of the Participant’s Service. Furthermore, a Participant’s Service shall not be deemed to have been interrupted or terminated if the Participant takes any military leave, sick leave, or other bona fide leave of absence approved by the Company. However, unless otherwise provided by the Board, if any such leave taken by a Participant exceeds ninety (90) days, then on the ninety-first (91st) day following the commencement of such leave the Participant’s Service shall be deemed to have terminated, unless the Participant’s right to return to Service is guaranteed by statute or contract. Notwithstanding the foregoing, unless otherwise designated by the Company or required by law, an unpaid leave of absence shall not be treated as Service for purposes of determining vesting under the Participant’s Award Agreement. A Participant’s Service shall be deemed to have terminated either upon an actual termination of Service or upon the business entity for which the Participant performs Service ceasing to be a Participating Company. Subject to the foregoing, the Company, in its discretion, shall determine whether the Participant’s Service has terminated and the effective date of and reason for such termination.

(ii) “Stock” means the common stock of the Company, as adjusted from time to time in accordance with Section 4.3.

(jj) “Subsidiary Corporation” means any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.

(kk) “Ten Percent Stockholder” means a person who, at the time an Award is granted to such person, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of a Participating Company within the meaning of Section 422(b)(6) of the Code.

(ll) “Trading Compliance Policy” means the written policy of the Company pertaining to the purchase, sale, transfer or other disposition of the Company’s equity securities by Directors, Officers, Employees or other service providers who may possess material, nonpublic information regarding the Company or its securities.

(mm) “Vesting Conditions” mean those conditions established in accordance with the Plan prior to the satisfaction of which an Award or shares subject to an Award remain subject to forfeiture or a repurchase option in favor of the Company exercisable for the Participant’s monetary purchase price, if any, for such shares upon the Participant’s termination of Service or failure of a performance condition to be satisfied.


2.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

 

  3.

ADMINISTRATION.

3.1 Administration by the Board. The Plan shall be administered by the Board. All questions of interpretation of the Plan, of any Award Agreement or of any other form of agreement or other document employed by the Company in the administration of the Plan or of any Award shall be determined by the Board, and such determinations shall be final, binding and conclusive upon all persons having an interest in the Plan or such Award, unless fraudulent or made in bad faith. Any and all actions, decisions and determinations taken or made by the Board in the exercise of its discretion pursuant to the Plan or Award Agreement or other agreement thereunder (other than determining questions of interpretation pursuant to the preceding sentence) shall be final, binding and conclusive upon all persons having an interest therein. All expenses incurred in connection with the administration of the Plan shall be paid by the Company.

3.2 Authority of Officers. Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election that is the responsibility of or that is allocated to the Company herein, provided that the Officer has apparent authority with respect to such matter, right, obligation, determination or election.

3.3 Powers of the Board. In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Board shall have the full and final power and authority, in its discretion:

(a) to determine the persons to whom, and the time or times at which, Awards shall be granted and the number of shares of Stock or units to be subject to each Award;

(b) to determine the type of Award granted;

(c) to determine the Fair Market Value of shares of Stock or other property;

(d) to determine the terms, conditions and restrictions applicable to each Award (which need not be identical) and any shares acquired pursuant thereto, including, without limitation, (i) the exercise or purchase price of shares pursuant to any Award, (ii) the method of payment for shares purchased pursuant to any Award, (iii) the method for satisfaction of any tax withholding obligation arising in connection with any Award, including by the withholding or delivery of shares of Stock, (iv) the timing, terms and conditions of the exercisability or vesting of any Award or any shares acquired pursuant thereto, (v) the time of expiration of any Award, (vi) the effect of any Participant’s termination of Service on any of the foregoing, and (vii) all other terms, conditions and restrictions applicable to any Award or shares acquired pursuant thereto not inconsistent with the terms of the Plan;

(e) to determine whether an Award will be settled in shares of Stock, cash, other property or in any combination thereof;

(f) to approve one or more forms of Award Agreement;

(g) to amend, modify, extend, cancel or renew any Award or to waive any restrictions or conditions applicable to any Award or any shares acquired pursuant thereto;


(h) to reprice or otherwise adjust the exercise price of any Option, or to grant in substitution for any Option a new Award covering the same or different number of shares of Stock;

(i) to accelerate, continue, extend or defer the exercisability or vesting of any Award or any shares acquired pursuant thereto, including with respect to the period following a Participant’s termination of Service;

(j) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt sub-plans or supplements to, or alternative versions of, the Plan, including, without limitation, as the Board deems necessary or desirable to comply with the laws of, or to accommodate the tax policy, accounting principles or custom of, foreign jurisdictions whose residents may be granted Awards; and

(k) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement and to make all other determinations and take such other actions with respect to the Plan or any Award as the Board may deem advisable to the extent not inconsistent with the provisions of the Plan or applicable law.

3.4 Administration with Respect to Insiders. With respect to participation by Insiders in the Plan, at any time that any class of equity security of the Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements, if any, of Rule 16b-3.

3.5 Indemnification. In addition to such other rights of indemnification as they may have as members of the Board or as officers or employees of the Participating Company Group, to the extent permitted by applicable law, members of the Board and any officers or employees of the Participating Company Group to whom authority to act for the Board or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same.

 

  4.

SHARES SUBJECT TO PLAN.

4.1 Share Reserve.

 

  1.

Current Reserve. Subject to adjustment as provided in Sections 4.2. and 4.3, the maximum aggregate number of shares of Stock issuable under the Plan as of October 31, 2024 is One Hundred Twenty-Three Million Nine Hundred Twenty-Two Thousand Ninety-Two (123,922,092) (the “Share Reserve”) and consists of authorized but unissued or reacquired shares of Stock or any combination thereof.

 

  2.

Evergreen Increase. In addition, the Share Reserve will automatically increase on March 1st of each calendar year (each, an “Evergreen Date”) for a period of not more than eight (8) years beginning on March 1, 2025, in an amount equal to two percent (2%) of the total number of shares of fully


  diluted Stock outstanding on the December 31st immediately preceding the applicable Evergreen Date (the “Evergreen Increase”). Notwithstanding the foregoing, the Board may act prior to the Evergreen Date of a given year to provide that there will be no Evergreen Increase for such year, or that the Evergreen Increase for such year will be a lesser number of shares of Stock than would otherwise occur pursuant to the preceding sentence.

Subject to adjustment as provided in Sections 4.2 and 4.3, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be Twenty Four Million (24,000,000) (after giving effect to the 2-for-1 stock split approved by the Board on or about January 2, 2018) and shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof.

4.2 Share Counting. If an outstanding Award for any reason expires or is terminated or canceled without having been exercised or settled in full, or if shares of Stock acquired pursuant to an Award subject to forfeiture or repurchase are forfeited or repurchased by the Company for an amount not greater than the Participant’s exercise or purchase price, the shares of Stock allocable to the terminated portion of such Award or such forfeited or repurchased shares of Stock shall again be available for issuance under the Plan. Shares of Stock shall not be deemed to have been issued pursuant to the Plan (a) with respect to any portion of an Award that is settled in cash or (b) to the extent such shares are withheld or reacquired by the Company in satisfaction of tax withholding obligations pursuant to Section 11.2. If the exercise price of an Option is paid by tender to the Company, or attestation to the ownership, of shares of Stock owned by the Participant, or by means of a Net Exercise, the number of shares available for issuance under the Plan shall be reduced by the net number of shares issued upon the exercise of the Option.

4.3 Adjustments for Changes in Capital Structure. Subject to any required action by the stockholders of the Company and the requirements of Sections 409A and 424 of the Code to the extent applicable, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (excepting regular, periodic cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number and kind of shares subject to the Plan and to any outstanding Awards, in the ISO Share Limit set forth in Section 5.3(a), and in the exercise or purchase price per share under any outstanding Awards in order to prevent dilution or enlargement of Participants’ rights under the Plan. For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.” If a majority of the shares which are of the same class as the shares that are subject to outstanding Awards are exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change Event) shares of another corporation (the “New Shares”), the Board may unilaterally amend the outstanding Awards to provide that such Awards are for New Shares. In the event of any such amendment, the number of shares subject to, and the exercise or purchase price per share of, the outstanding Awards shall be adjusted in a fair and equitable manner as determined by the Board, in its discretion. Any fractional share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number, and the exercise or purchase price per share shall be rounded up to the nearest whole cent. In no event may the exercise or purchase price, if any, under any Award be decreased to an amount less than the par value, if any, of the stock subject to the Award. Such adjustments shall be determined by the Board, and its determination shall be final, binding and conclusive.

4.4 Assumption or Substitution of Awards. The Board may, without affecting the number of shares of Stock available pursuant to Section 4.1, authorize the issuance or assumption of benefits under this Plan in connection with any merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate, subject to compliance with Section 409A and any other applicable provisions of the Code.


  5.

ELIGIBILITY, PARTICIPATION AND OPTION LIMITATIONS.

5.1 Persons Eligible for Awards. Awards may be granted only to Employees, Consultants and Directors.

5.2 Participation in the Plan. Awards are granted solely at the discretion of the Board. Eligible persons may be granted more than one Award. However, eligibility in accordance with this Section shall not entitle any person to be granted an Award, or, having been granted an Award, to be granted an additional Award.

5.3 Incentive Stock Option Limitations.

(a) Maximum Number of Shares Issuable Pursuant to Incentive Stock Options. Subject to Section 4.1 and adjustment as provided in Sections 4.2 and 4.3, the maximum aggregate number of shares of Stock that may be issued under the Plan pursuant to the exercise of Incentive Stock Options shall not exceed the maximum amount set forth in Section 4.1 of the Plan (the “ISO Share Limit”). The maximum aggregate number of shares of Stock that may be issued under the Plan pursuant to all Awards other than Incentive Stock Options shall be the number of shares determined in accordance with Section 4.1, subject to adjustment as provided in Sections 4.2 and 4.3.

(b) Persons Eligible. An Incentive Stock Option may be granted only to a person who, on the effective date of grant, is an Employee. Any person who is not an Employee on the effective date of the grant of an Option to such person may be granted only a Nonstatutory Stock Option.

(c) Fair Market Value Limitation. To the extent that options designated as Incentive Stock Options (granted under all stock plans of the Participating Company Group, including the Plan) become exercisable by a Participant for the first time during any calendar year for stock having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of such options which exceeds such amount shall be treated as Nonstatutory Stock Options. For purposes of this Section, options designated as Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of stock shall be determined as of the time the option with respect to such stock is granted. If the Code is amended to provide for a limitation different from that set forth in this Section, such different limitation shall be deemed incorporated herein effective as of the date and with respect to such Options as required or permitted by such amendment to the Code. If an Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section, the Participant may designate which portion of such Option the Participant is exercising. In the absence of such designation, the Participant shall be deemed to have exercised the Incentive Stock Option portion of the Option first. Upon exercise of the Option, shares issued pursuant to each such portion shall be separately identified.

 

  6.

STOCK OPTIONS.

Options shall be evidenced by Award Agreements specifying the number of shares of Stock covered thereby, in such form as the Board shall establish. Such Award Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:


6.1 Exercise Price. The exercise price for each Option shall be established in the discretion of the Board; provided, however, that (a) the exercise price per share for an Option shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the Option and (b) no Incentive Stock Option granted to a Ten Percent Stockholder shall have an exercise price per share less than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option. Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an exercise price less than the minimum exercise price set forth above if such Option is granted pursuant to an assumption or substitution for another option in a manner that would qualify under the provisions of Section 409A or Section 424(a) of the Code, as applicable.

6.2 Exercisability and Term of Options. Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Board and set forth in the Award Agreement evidencing such Option; provided, however, that (a) no Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option, (b) no Incentive Stock Option granted to a Ten Percent Stockholder shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option, and (c) no Option granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, shall be first exercisable until at least six (6) months following the date of grant of such Option (except in the event of such Employee’s death, disability or retirement, upon a Change in Control, or as otherwise permitted by the Worker Economic Opportunity Act). Subject to the foregoing, unless otherwise specified by the Board in the grant of an Option, each Option shall terminate ten (10) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions.

6.3 Payment of Exercise Price.

(a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made (i) in cash, by check or in cash equivalent, (ii) if permitted by the Company and subject to the limitations contained in Section 6.3(b), by means of (1) a Stock Tender Exercise, (2) a Cashless Exercise or (3) a Net Exercise; (iii) by such other consideration as may be approved by the Board from time to time to the extent permitted by applicable law, or (iv) by any combination thereof. The Board may at any time or from time to time grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict one or more forms of consideration.

(b) Limitations on Forms of Consideration.

(i) Stock Tender Exercise. A “Stock Tender Exercise” means the delivery of a properly executed exercise notice accompanied by a Participant’s tender to the Company, or attestation to the ownership, in a form acceptable to the Company of whole shares of Stock owned by the Participant having a Fair Market Value that does not exceed the aggregate exercise price for the shares with respect to which the Option is exercised. A Stock Tender Exercise shall not be permitted if it would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock. If required by the Company, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Participant for a period of time required by the Company (and not used for another option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company.

(ii) Cashless Exercise. A Cashless Exercise shall be permitted only upon the class of shares subject to the Option becoming publicly traded in an established securities market.


A “Cashless Exercise” means the delivery of a properly executed exercise notice together with irrevocable instructions to a broker providing for the assignment to the Company of the proceeds of a sale or loan with respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System). The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise, including with respect to one or more Participants specified by the Company notwithstanding that such program or procedures may be available to other Participants.

(iii) Net Exercise. A “Net Exercise” means the delivery of a properly executed exercise notice followed by a procedure pursuant to which (1) the Company will reduce the number of shares otherwise issuable to a Participant upon the exercise of an Option by the largest whole number of shares having a Fair Market Value that does not exceed the aggregate exercise price for the shares with respect to which the Option is exercised, and (2) the Participant shall pay to the Company in cash the remaining balance of such aggregate exercise price not satisfied by such reduction in the number of whole shares to be issued.

6.4 Effect of Termination of Service.

(a) Option Exercisability. Subject to earlier termination of the Option as otherwise provided by this Plan and unless a longer exercise period is provided by the Board, an Option shall terminate immediately upon the Participant’s termination of Service to the extent that it is then unvested and shall be exercisable after the Participant’s termination of Service to the extent it is then vested only during the applicable time period determined in accordance with this Section and thereafter shall terminate:

(i) Disability. If the Participant’s Service terminates because of the Disability of the Participant, the Option, to the extent unexercised and exercisable for vested shares on the date on which the Participant’s Service terminated, may be exercised by the Participant (or the Participant’s guardian or legal representative) at any time prior to the expiration of twelve (12) months (or such longer or shorter period provided by the Award Agreement) after the date on which the Participant’s Service terminated, but in any event no later than the date of expiration of the Option’s term as set forth in the Award Agreement evidencing such Option (the “Option Expiration Date”).

(ii) Death. If the Participant’s Service terminates because of the death of the Participant, the Option, to the extent unexercised and exercisable for vested shares on the date on which the Participant’s Service terminated, may be exercised by the Participant’s legal representative or other person who acquired the right to exercise the Option by reason of the Participant’s death at any time prior to the expiration of twelve (12) months (or such longer or shorter period provided by the Award Agreement) after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date. The Participant’s Service shall be deemed to have terminated on account of death if the Participant dies within thirty (30) days (or such longer period provided by the Board) after the Participant’s termination of Service.

(iii) Termination for Cause. Notwithstanding any other provision of the Plan to the contrary, if the Participant’s Service is terminated for Cause, the Option shall terminate in its entirety and cease to be exercisable immediately upon such termination of Service.

(iv) Other Termination of Service. If the Participant’s Service terminates for any reason, except Disability, death or Cause, the Option, to the extent unexercised and


exercisable for vested shares on the date on which the Participant’s Service terminated, may be exercised by the Participant at any time prior to the expiration of three (3) months (or such longer or shorter period provided by the Award Agreement) after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.

(b) Extension if Exercise Prevented by Law. Notwithstanding the foregoing other than termination of Service for Cause, if the exercise of an Option within the applicable time periods set forth in Section 6.4(a) is prevented by the provisions of Section 12 below, the Option shall remain exercisable until the later of (i) thirty (30) days after the date such exercise first would no longer be prevented by such provisions or (ii) the end of the applicable time period under Section 6.4(a), but in any event no later than the Option Expiration Date.

6.5 Transferability of Options. During the lifetime of the Participant, an Option shall be exercisable only by the Participant or the Participant’s guardian or legal representative. An Option shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution; provided, however, that to the extent permitted by the Board, in its discretion, and set forth in the Award Agreement evidencing such Option, an Option shall be assignable or transferable subject to the applicable limitations, if any, described in Rule 701 under the Securities Act and the General Instructions to Form S-8 Registration Statement under the Securities Act or, in the case of an Incentive Stock Option, only as permitted by applicable regulations under Section 421 of the Code in a manner that does not disqualify such Option as an Incentive Stock Option. Notwithstanding the foregoing, for so long as the Company is relying on the exemption provided by Rule 12h-1(f) under the Exchange Act, no Option or, prior to its exercise, the shares to be issued upon the exercise of the Option, shall be transferred except in compliance with the restrictions on transfer under Rule 12h-1(f) (including the requirement under such rule that any permitted transferee may not further transfer the Option) or be made subject to any short position, “put equivalent position” or “call equivalent position” by the Participant, as such terms are defined in Rule 16a-1 of the Exchange Act.

 

  7.

RESTRICTED STOCK AWARDS.

Restricted Stock Awards shall be evidenced by Award Agreements specifying whether the Award is a Restricted Stock Bonus or a Restricted Stock Purchase Right and the number of shares of Stock subject to the Award, in such form as the Board shall establish. Such Award Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

7.1 Types of Restricted Stock Awards Authorized. Restricted Stock Awards may be granted in the form of either a Restricted Stock Bonus or a Restricted Stock Purchase Right. Restricted Stock Awards may be granted upon such conditions as the Board shall determine, including, without limitation, upon the attainment of one or more performance goals.

7.2 Purchase Price. The purchase price for shares of Stock issuable under each Restricted Stock Purchase Right shall be established by the Board in its discretion. No monetary payment (other than applicable tax withholding) shall be required as a condition of receiving shares of Stock pursuant to a Restricted Stock Bonus, the consideration for which shall be services actually rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required by applicable state corporate law, the Participant shall furnish consideration in the form of cash or past services rendered to a Participating Company or for its benefit having a value not less than the par value of the shares of Stock subject to a Restricted Stock Award.


7.3 Purchase Period. A Restricted Stock Purchase Right shall be exercisable within a period established by the Board, which shall in no event exceed thirty (30) days from the effective date of the grant of the Restricted Stock Purchase Right.

7.4 Payment of Purchase Price. Except as otherwise provided below, payment of the purchase price for the number of shares of Stock being purchased pursuant to any Restricted Stock Purchase Right shall be made (a) in cash, by check or in cash equivalent, (b) by such other consideration as may be approved by the Board from time to time to the extent permitted by applicable law, or (c) by any combination thereof.

7.5 Vesting and Restrictions on Transfer. Shares issued pursuant to any Restricted Stock Award may (but need not) be made subject to Vesting Conditions based upon the satisfaction of such Service requirements, conditions, restrictions or performance criteria, as shall be established by the Board and set forth in the Award Agreement evidencing such Award. During any period in which shares acquired pursuant to a Restricted Stock Award remain subject to Vesting Conditions, such shares may not be sold, exchanged, transferred, pledged, assigned or otherwise disposed of other than pursuant to an Ownership Change Event or as provided in Section 7.8. The Board, in its discretion, may provide in any Award Agreement evidencing a Restricted Stock Award that, if the satisfaction of Vesting Conditions with respect to any shares subject to such Restricted Stock Award would otherwise occur on a day on which the sale of such shares would violate the provisions of the Trading Compliance Policy, then satisfaction of the Vesting Conditions automatically shall be determined on the next trading day on which the sale of such shares would not violate the Trading Compliance Policy. Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.

7.6 Voting Rights; Dividends and Distributions. Except as provided in this Section, Section 7.5 and any Award Agreement, during any period in which shares acquired pursuant to a Restricted Stock Award remain subject to Vesting Conditions, the Participant shall have all of the rights of a stockholder of the Company holding shares of Stock, including the right to vote such shares and to receive all dividends and other distributions paid with respect to such shares; provided, however, that if so determined by the Board and provided by the Award Agreement, such dividends and distributions shall be subject to the same Vesting Conditions as the shares subject to the Restricted Stock Award with respect to which such dividends or distributions were paid, and otherwise shall be paid no later than the end of the calendar year in which such dividends or distributions are paid to stockholders (or, if later, the 15th day of the third month following the date such dividends or distributions are paid to stockholders). In the event of a dividend or distribution paid in shares of Stock or other property or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.3, any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends) to which the Participant is entitled by reason of the Participant’s Restricted Stock Award shall be immediately subject to the same Vesting Conditions as the shares subject to the Restricted Stock Award with respect to which such dividends or distributions were paid or adjustments were made.

7.7 Effect of Termination of Service. Unless otherwise provided by the Board in the Award Agreement evidencing a Restricted Stock Award, if a Participant’s Service terminates for any reason, whether voluntary or involuntary (including the Participant’s death or disability), then (a) the Company shall have the option to repurchase for the purchase price paid by the Participant any shares acquired by the Participant pursuant to a Restricted Stock Purchase Right which remain subject to Vesting Conditions as of the date of the Participant’s termination of Service and (b) the Participant shall forfeit to the Company any shares acquired by the Participant pursuant to a Restricted Stock Bonus which remain


subject to Vesting Conditions as of the date of the Participant’s termination of Service. The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company.

7.8 Nontransferability of Restricted Stock Award Rights. Rights to acquire shares of Stock pursuant to a Restricted Stock Award shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or the laws of descent and distribution. All rights with respect to a Restricted Stock Award granted to a Participant hereunder shall be exercisable during his or her lifetime only by such Participant or the Participant’s guardian or legal representative.

 

  8.

RESTRICTED STOCK UNITS.

Restricted Stock Unit Awards shall be evidenced by Award Agreements specifying the number of Restricted Stock Units subject to the Award, in such form as the Board shall establish. Award Agreements evidencing Restricted Stock Units may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

8.1 Grant of Restricted Stock Unit Awards. Restricted Stock Unit Awards may be granted upon such conditions as the Board shall determine, including, without limitation, upon the attainment of one or more performance goals established by the Board.

8.2 Purchase Price. No monetary payment (other than applicable tax withholding, if any) shall be required as a condition of receiving a Restricted Stock Unit Award, the consideration for which shall be services actually rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required by applicable state corporate law, the Participant shall furnish consideration in the form of cash or past services rendered to a Participating Company or for its benefit having a value not less than the par value of the shares of Stock issued upon settlement of the Restricted Stock Unit Award.

8.3 Vesting. Restricted Stock Unit Awards may (but need not) be made subject to Vesting Conditions based upon the satisfaction of such Service requirements, conditions, restrictions or performance criteria as shall be established by the Board and set forth in the Award Agreement evidencing such Award.

8.4 Voting Rights, Dividend Equivalent Rights and Distributions. Participants shall have no voting rights with respect to shares of Stock represented by Restricted Stock Units until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). However, the Board, in its discretion, may provide in the Award Agreement evidencing any Restricted Stock Unit Award that the Participant shall be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on Stock during the period beginning on the date such Award is granted and ending, with respect to each share subject to the Award, on the earlier of the date the Award is settled or the date on which it is terminated. Dividend Equivalent Rights, if any, shall be paid by crediting the Participant with a cash amount or with additional whole Restricted Stock Units as of the date of payment of such cash dividends on Stock, as determined by the Board. The number of additional Restricted Stock Units (rounded to the nearest whole number), if any, to be credited shall be determined by dividing (a) the amount of cash dividends paid on the dividend payment date with respect to the number of shares of Stock represented by the Restricted Stock Units previously credited to the Participant by (b) the Fair Market Value per share of Stock on such date. Such cash amount or additional Restricted Stock Units shall be subject to the same terms and conditions and shall be settled in the same manner and at the same time as the Restricted Stock Units originally subject to the Restricted Stock Unit Award. In the event of a dividend or distribution paid in shares of Stock or other property or any


other adjustment made upon a change in the capital structure of the Company as described in Section 4.3, appropriate adjustments shall be made in the Participant’s Restricted Stock Unit Award so that it represents the right to receive upon settlement any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends) to which the Participant would be entitled by reason of the shares of Stock issuable upon settlement of the Award, and all such new, substituted or additional securities or other property shall be immediately subject to the same Vesting Conditions as are applicable to the Award.

8.5 Effect of Termination of Service. Unless otherwise provided by the Board and set forth in the Award Agreement evidencing a Restricted Stock Unit Award, if a Participant’s Service terminates for any reason, whether voluntary or involuntary (including the Participant’s death or disability), then the Participant shall forfeit to the Company any Restricted Stock Units pursuant to the Award which remain subject to Vesting Conditions as of the date of the Participant’s termination of Service.

8.6 Settlement of Restricted Stock Unit Awards. The Company shall issue to a Participant on the date on which Restricted Stock Units subject to the Participant’s Restricted Stock Unit Award vest or on such other date determined by the Board in compliance with Section 409A, if applicable, and set forth in the Award Agreement one (1) share of Stock (and/or any other new, substituted or additional securities or other property pursuant to an adjustment described in Section 8.4) for each Restricted Stock Unit then becoming vested or otherwise to be settled on such date, subject to the withholding of applicable taxes, if any. The Board, in its discretion, may provide in any Award Agreement evidencing a Restricted Stock Unit Award that if the settlement date with respect to any shares issuable upon vesting of Restricted Stock Units would otherwise occur on a day on which the sale of such shares would violate the provisions of the Trading Compliance Policy, then the settlement date shall be deferred until the next trading day on which the sale of such shares would not violate the Trading Compliance Policy but in any event no later than the 15th day of the third calendar month following the year in which such Restricted Stock Units vest. If permitted by the Board, the Participant may elect, consistent with the requirements of Section 409A, to defer receipt of all or any portion of the shares of Stock or other property otherwise issuable to the Participant pursuant to this Section, and such deferred issuance date(s) and amount(s) elected by the Participant shall be set forth in the Award Agreement. Notwithstanding the foregoing, the Board, in its discretion, may provide for settlement of any Restricted Stock Unit Award by payment to the Participant in cash of an amount equal to the Fair Market Value on the payment date of the shares of Stock or other property otherwise issuable to the Participant pursuant to this Section.

8.7 Nontransferability of Restricted Stock Unit Awards. The right to receive shares pursuant to a Restricted Stock Unit Award shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. For so long as the Company is relying on an order of the Securities and Exchange Commission (the “SEC”) under Section 12(h) of the Exchange Act or a no-action position of the Staff of the SEC relieving the Company from registration under Section 12(g) of the Exchange Act of the Units and the shares of Stock subject thereto, no Restricted Stock Unit Award, or prior to its settlement, shares of Stock underlying such Award, shall be transferred except in compliance with the restrictions on transfer under Rule 12h-1(f) under the Exchange Act that would apply were the Restricted Stock Units subject to such rule (including the requirement under such rule that any permitted transferee may not further transfer the securities) or be made subject to any short position, “put equivalent position” or “call equivalent position” by the Participant, as such terms are defined in Rule 16a-1 under the Exchange Act. All rights with respect to a Restricted Stock Unit Award granted to a Participant hereunder shall be exercisable during his or her lifetime only by such Participant or the Participant’s guardian or legal representative.


  9.

STANDARD FORMS OF AWARD AGREEMENTS.

9.1 Award Agreements. Each Award shall comply with and be subject to the terms and conditions set forth in the appropriate form of Award Agreement approved by the Board and as amended from time to time. No Award or purported Award shall be a valid and binding obligation of the Company unless evidenced by a fully executed Award Agreement, which execution may be evidenced by electronic means.

9.2 Authority to Vary Terms. The Board shall have the authority from time to time to vary the terms of any standard form of Award Agreement either in connection with the grant or amendment of an individual Award or in connection with the authorization of a new standard form or forms; provided, however, that the terms and conditions of any such new, revised or amended standard form or forms of Award Agreement are not inconsistent with the terms of the Plan.

 

  10.

CHANGE IN CONTROL.

10.1 Effect of Change in Control on Awards. Subject to the requirements and limitations of Section 409A, if applicable, the Board may provide for any one or more of the following:

(a) Accelerated Vesting. In its discretion, the Board may provide in the grant of any Award or at any other time may take action it deems appropriate to provide for acceleration of the exercisability, vesting and/or settlement in connection with a Change in Control of each or any outstanding Award or portion thereof and shares acquired pursuant thereto upon such conditions, including termination of the Participant’s Service prior to, upon, or following the Change in Control, and to such extent as the Board determines.

(b) Assumption, Continuation or Substitution of Awards. In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or other business entity or parent thereof, as the case may be (the “Acquiror”), may, without the consent of any Participant, assume or continue the Company’s rights and obligations under each or any Award or portion thereof outstanding immediately prior to the Change in Control or substitute for each or any such outstanding Award or portion thereof a substantially equivalent award with respect to the Acquiror’s stock. For purposes of this Section, if so determined by the Board, in its discretion, an Award or any portion thereof shall be deemed assumed if, following the Change in Control, the Award confers the right to receive, subject to the terms and conditions of the Plan and the applicable Award Agreement, for each share of Stock subject to such portion of the Award immediately prior to the Change in Control, the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock on the effective date of the Change in Control was entitled (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Stock); provided, however, that if such consideration is not solely common stock of the Acquiror, the Board may, with the consent of the Acquiror, provide for the consideration to be received upon the exercise or settlement of the Award, for each share of Stock subject to the Award, solely common stock of the Acquiror equal in Fair Market Value to the per share consideration received by holders of Stock pursuant to the Change in Control. If any portion of such consideration may be received by holders of Stock pursuant to the Change in Control on a contingent or delayed basis, the Board may, in its discretion, determine such Fair Market Value per share as of the time of the Change in Control on the basis of the Board’s good faith estimate of the present value of the probable future payment of such consideration. Any Award or portion thereof which is neither assumed or continued by the Acquiror in connection with the Change in Control nor exercised as of the time of consummation of the Change in Control shall terminate and cease to be outstanding effective as of the time of consummation of the Change in Control. Notwithstanding the foregoing, shares acquired upon exercise of an Award prior to the Change in Control and any consideration received pursuant to the Change in


Control with respect to such shares shall continue to be subject to all applicable provisions of the Award Agreement evidencing such Award except as otherwise provided in such Award Agreement.

(c) Cash-Out of Outstanding Awards. The Board may, in its discretion and without the consent of any Participant, determine that, upon the occurrence of a Change in Control, each or any Award or portion thereof outstanding immediately prior to the Change in Control and not previously exercised or settled shall be canceled in exchange for a payment with respect to each vested share (and each unvested share, if so determined by the Board) of Stock subject to such canceled Award in (i) cash, (ii) stock of the Company or of a corporation or other business entity a party to the Change in Control, or (iii) other property which, in any such case, shall be in an amount having a Fair Market Value equal to the Fair Market Value of the consideration to be paid per share of Stock in the Change in Control, reduced (but not below zero) by the exercise or purchase price per share, if any, under such Award. If any portion of such consideration may be received by holders of Stock pursuant to the Change in Control on a contingent or delayed basis, the Board may, in its sole discretion, determine such Fair Market Value per share as of the time of the Change in Control on the basis of the Board’s good faith estimate of the present value of the probable amount of future payment of such consideration. In the event such determination is made by the Board, an Award having an exercise or purchase price per share equal to or greater than the Fair Market Value of the consideration to be paid per share of Stock in the Change in Control may be canceled without payment of consideration to the holder thereof. Payment pursuant to this Section (reduced by applicable withholding taxes, if any) shall be made to Participants in respect of the vested portions of their canceled Awards as soon as practicable following the date of the Change in Control and in respect of the unvested portions of their canceled Awards in accordance with the vesting schedules applicable to such Awards.

10.2 Federal Excise Tax Under Section 4999 of the Code.

(a) Excess Parachute Payment. If any acceleration of vesting pursuant to an Award and any other payment or benefit received or to be received by a Participant would subject the Participant to any excise tax pursuant to Section 4999 of the Code due to the characterization of such acceleration of vesting, payment or benefit as an “excess parachute payment” under Section 280G of the Code, then, provided such election would not subject the Participant to taxation under Section 409A, the Participant may elect to reduce the amount of any acceleration of vesting called for under the Award in order to avoid such characterization.

(b) Determination by Tax Firm. To aid the Participant in making any election called for under Section 10.2(a), no later than the date of the occurrence of any event that might reasonably be anticipated to result in an “excess parachute payment” to the Participant as described in Section 10.2(a), the Company shall request a determination in writing by the professional firm engaged by the Company for general tax purposes, or, if the tax firm so engaged by the Company is serving as accountant or auditor for the Acquiror, the Company will appoint a nationally recognized tax firm to make the determinations required by this Section (the “Tax Firm”). As soon as practicable thereafter, the Tax Firm shall determine and report to the Company and the Participant the amount of such acceleration of vesting, payments and benefits which would produce the greatest after-tax benefit to the Participant. For the purposes of such determination, the Tax Firm may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and the Participant shall furnish to the Tax Firm such information and documents as the Tax Firm may reasonably request in order to make its required determination. The Company shall bear all fees and expenses the Tax Firm may charge in connection with its services contemplated by this Section.


  11.

TAX WITHHOLDING.

11.1 Tax Withholding in General. The Company shall have the right to deduct from any and all payments made under the Plan, or to require the Participant, through payroll withholding, cash payment or otherwise, to make adequate provision for, the federal, state, local and foreign taxes (including social insurance), if any, required by law to be withheld by any Participating Company with respect to an Award or the shares acquired pursuant thereto. The Company shall have no obligation to deliver shares of Stock, to release shares of Stock from an escrow established pursuant to an Award Agreement, or to make any payment in cash under the Plan until the Participating Company Group’s tax withholding obligations have been satisfied by the Participant.

11.2 Withholding in or Directed Sale of Shares. The Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable to a Participant upon the exercise, vesting or settlement of an Award, or to accept from the Participant the tender of, a number of whole shares of Stock having a Fair Market Value, as determined by the Company, equal to all or any part of the tax withholding obligations of any Participating Company. The Fair Market Value of any shares of Stock withheld or tendered to satisfy any such tax withholding obligations shall not exceed the amount determined by the applicable minimum statutory withholding. The Company may require a Participant to direct a broker, upon the vesting, exercise or settlement of an Award, to sell a portion of the shares subject to the Award determined by the Company in its discretion to be sufficient to cover the tax withholding obligations of any Participating Company and to remit an amount equal to such tax withholding obligations to the Participating Company in cash.

 

  12.

COMPLIANCE WITH SECTION 409A.

12.1 In General. The Plan and all Awards granted hereunder are intended to comply with, or otherwise be exempt from, Section 409A. The Plan and all Awards granted under the Plan shall be administered, interpreted, and construed in a manner consistent with Section 409A, as determined by the Company in good faith, to the extent necessary to avoid the imposition of additional taxes under Section 409A(a)(l)(B) of the Code. It is intended that any election, payment or benefit which is made or provided pursuant to or in connection with any Award that may result in deferred compensation within the meaning of Section 409A shall comply in all respects with the applicable requirements of Section 409A.

12.2 Certain Limitations. With respect to any Award that is subject to Section 409A, the following shall apply, as applicable:

(a) Notwithstanding anything to the contrary in the Plan or any Award Agreement, to the extent required to avoid tax penalties under Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan on account of, and during the six (6) month period immediately following, the Participant’s termination of Service shall instead be paid on the first payroll date after the six-month anniversary of the Participant’s separation from service (or the Participant’s death, if earlier).

(b) Neither any Participant nor the Company shall take any action to accelerate or delay the payment of any amount or benefits under an Award in any manner which would not be in compliance with Section 409A.

(c) Notwithstanding anything to the contrary in the Plan or any Award Agreement, to the extent that any amount constituting deferred compensation subject to Section 409A would become payable under the Plan by reason of a Change in Control, such amount shall become payable only if the event constituting the Change in Control would also constitute a change in ownership or effective


control of the Company or a change in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A. Any Award which constitutes deferred compensation subject to Section 409A and which would vest and otherwise become payable upon a Change in Control as a result of the failure of the Acquiror to assume, continue or substitute for such Award in accordance with Section 10.1(b) shall vest to the extent provided by such Award but shall be converted automatically at the effective time of such Change in Control into a right to receive, in cash on the date or dates such award would have been settled in accordance with its then existing settlement schedule, an amount or amounts equal in the aggregate to the intrinsic value of the Award at the time of the Change in Control.

(d) Should any provision of the Plan, any Award Agreement, or any other agreement or arrangement contemplated by the Plan be found not to comply with, or otherwise be exempt from, the provisions of Section 409A, such provision shall be modified and given effect (retroactively if necessary), in the sole discretion of the Board, and without the consent of the holder of the Award, in such manner as the Board determines to be necessary or appropriate to comply with, or to effectuate an exemption from, Section 409A.

(e) Notwithstanding the foregoing, neither the Company nor the Board shall have any obligation to take any action to prevent the assessment of any tax or penalty on any Participant under Section 409A, and neither the Company nor the Board will have any liability to any Participant for such tax or penalty.

 

  13.

COMPLIANCE WITH SECURITIES LAW.

The grant of Awards and the issuance of shares of Stock pursuant to any Award shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such securities and the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, no Award may be exercised or shares issued pursuant to an Award unless (a) a registration statement under the Securities Act shall at the time of such exercise or issuance be in effect with respect to the shares issuable pursuant to the Award or (b) in the opinion of legal counsel to the Company, the shares issuable pursuant to the Award may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. Except as otherwise determined by the Board, the Company intends that securities issued pursuant to the Plan be exempt from requirements of registration and qualification of such securities pursuant to the exemption afforded by Rule 701 promulgated under the Securities Act or any other applicable exemptions, and the Plan shall be so construed. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to issuance of any Stock, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.

 

  14.

AMENDMENT OR TERMINATION OF PLAN.

The Board may amend, suspend or terminate the Plan at any time. However, without the approval of the Company’s stockholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan (except by operation of the provisions of Sections 4.2 and 4.3), (b) no change in the class of persons eligible to receive Incentive Stock Options, and (c) no other amendment of the Plan that would require approval of the Company’s stockholders under any applicable law, regulation or rule, including the rules of any stock exchange or quotation system upon which the Stock may then be listed or quoted. No amendment, suspension or termination of the Plan shall affect any then outstanding Award unless expressly provided by the Board. Except as provided by the next sentence, no amendment, suspension or termination of the Plan may have a materially adverse effect on any then


outstanding Award without the consent of the Participant. Notwithstanding any other provision of the Plan or any Award Agreement to the contrary, the Board may, in its sole and absolute discretion and without the consent of any Participant, amend the Plan or any Award Agreement, to take effect retroactively or otherwise, as it deems necessary or advisable for the purpose of conforming the Plan or such Award Agreement to any present or future law, regulation or rule applicable to the Plan, including, but not limited to, Section 409A.

 

  15.

MISCELLANEOUS PROVISIONS

15.1 Restrictions on Transfer of Shares.

(a) Shares issued under the Plan may be subject to a right of first refusal, one or more repurchase options, or other conditions and restrictions as determined by the Board in its discretion at the time the Award is granted. The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company. Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.

(b) Notwithstanding the provisions of any Award Agreement to the contrary, at any time prior to the date on which the Stock is listed on a national securities exchange (as such term is used in the Exchange Act) or is traded on the over-the-counter market and prices therefore are published daily on business days in a recognized financial journal, the Board may prohibit any Participant who acquires shares of Stock pursuant to the Plan or any transferee of such Participant from selling, transferring, assigning, pledging, or otherwise disposing of or encumbering any such shares (each, a “Transfer”) without the prior written consent of the Board. The Board may withhold consent to any Transfer for any reason, including without limitation any Transfer (i) to any individual or entity identified by the Company as a potential competitor or considered by the Company to be unfriendly, or (ii) if such Transfer increases the risk of the Company having a class of security held of record by such number of persons as would require the Company to register any class of securities under the Exchange Act; or (iii) if such Transfer would result in the loss of any federal or state securities law exemption relied upon by the Company in connection with the initial issuance of such shares or the issuance of any other securities; or (iv) if such Transfer is facilitated in any manner by any public posting, message board, trading portal, Internet site, or similar method of communication, including without limitation any trading portal or Internet site intended to facilitate secondary transfers of securities; or (v) if such Transfer is to be effected in a brokered transaction; or (vi) if such Transfer would be of less than all of the shares of Stock then held by the stockholder and its affiliates or is to be made to more than a single transferee.

15.2 Forfeiture Events. The Board may determine that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, termination of Service for Cause, any act by a Participant, whether before or after termination of Service, that would constitute Cause for termination of Service, or any accounting restatement due to material noncompliance of the Company with any financial reporting requirements of securities laws as a result of which, and to the extent that, such reduction, cancellation, forfeiture, or recoupment is required by applicable securities laws.


15.3 Provision of Information. The Company shall deliver to each Participant such disclosures as are required in accordance with Rule 701 under the Securities Act. Notwithstanding the foregoing, at any time the Company is relying on the exemption provided by Rule 12h-1(f) under the Exchange Act, the Company shall provide to the applicable Participants the information described in Securities Act Rules 701(e)(3), (4) and (5) by a method allowed under Rule 12h-1(f)(1)(vi) and in accordance with the requirements of Rule 12h-1(f)(1)(vi), provided that the Participant agrees to keep the information confidential until the Company becomes subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act.

15.4 Rights as Employee, Consultant or Director. No person, even though eligible pursuant to Section 5, shall have a right to be selected as a Participant, or, having been so selected, to be selected again as a Participant. Nothing in the Plan or any Award granted under the Plan shall confer on any Participant a right to remain an Employee, Consultant or Director or interfere with or limit in any way any right of a Participating Company to terminate the Participant’s Service at any time. To the extent that an Employee of a Participating Company other than the Company receives an Award under the Plan, that Award shall in no event be understood or interpreted to mean that the Company is the Employee’s employer or that the Employee has an employment relationship with the Company.

15.5 Rights as a Stockholder. A Participant shall have no rights as a stockholder with respect to any shares covered by an Award until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such shares are issued, except as provided in Section 4.3 or another provision of the Plan.

15.6 Delivery of Title to Shares. Subject to any governing rules or regulations, the Company shall issue or cause to be issued the shares of Stock acquired pursuant to an Award and shall deliver such shares to or for the benefit of the Participant by means of one or more of the following: (a) by delivering to the Participant evidence of book entry shares of Stock credited to the account of the Participant, (b) by depositing such shares of Stock for the benefit of the Participant with any broker with which the Participant has an account relationship, or (c) by delivering such shares of Stock to the Participant in certificate form.

15.7 Fractional Shares. The Company shall not be required to issue fractional shares upon the exercise or settlement of any Award.

15.8 Retirement and Welfare Plans. Neither Awards made under this Plan nor shares of Stock or cash paid pursuant to such Awards may be included as “compensation” for purposes of computing the benefits payable to any Participant under any Participating Company’s retirement plans (both qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing a Participant’s benefits.

15.9 Severability. If any one or more of the provisions (or any part thereof) of this Plan shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so as to make it valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired thereby.

15.10 No Constraint on Corporate Action. Nothing in this Plan shall be construed to: (a) limit, impair, or otherwise affect the Company’s or another Participating Company’s right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or (b) limit the right or power of the Company or another Participating Company to take any action which such entity deems to be necessary or appropriate.


15.11 Unfunded Obligation. Participants shall have the status of general unsecured creditors of the Company. Any amounts payable to Participants pursuant to the Plan shall be considered unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of 1974. No Participating Company shall be required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect to such obligations. The Company shall retain at all times beneficial ownership of any investments, including trust investments, which the Company may make to fulfill its payment obligations hereunder. Any investments or the creation or maintenance of any trust or any Participant account shall not create or constitute a trust or fiduciary relationship between the Board or any Participating Company and a Participant, or otherwise create any vested or beneficial interest in any Participant or the Participant’s creditors in any assets of any Participating Company. The Participants shall have no claim against any Participating Company for any changes in the value of any assets which may be invested or reinvested by the Company with respect to the Plan.

15.12 Choice of Law. Except to the extent governed by applicable federal law, the validity, interpretation, construction and performance of the Plan and each Award Agreement shall be governed by the laws of the State of Texas, without regard to its conflict of law rules.

15.13 Stockholder Approval. The Plan or any increase in the maximum aggregate number of shares of Stock issuable thereunder as provided in Section 4.1 (the “Authorized Shares”) shall be approved by a majority of the outstanding securities of the Company entitled to vote by the later of (a) a period beginning twelve (12) months before and ending twelve (12) months after the date of adoption thereof by the Board.

IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the foregoing sets forth the Firefly Aerospace, Inc. Amended and Restated 2017 Stock Plan as duly adopted by the Board on January 2, 2018.

 

/s/ Artiom Anisimov    
Artiom Anisimov, Secretary

Exhibit 10.10

THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

FIREFLY AEROSPACE, INC.

STOCK OPTION AGREEMENT

Firefly Aerospace, Inc. has granted to the Participant named in the Notice of Grant of Stock Option (the “Grant Notice”) to which this Stock Option Agreement (the “Option Agreement”) is attached an option (the “Option”) to purchase shares of Stock upon the terms and conditions set forth in the Grant Notice and this Option Agreement. The Option has been granted pursuant to and shall in all respects be subject to the terms and conditions of the Firefly Aerospace, Inc. 2017 Stock Plan (the “Plan”), as amended to the Date of Grant, the provisions of which are incorporated herein by reference. By signing the Grant Notice, the Participant: (a) acknowledges receipt of, and represents that the Participant has read and is familiar with, the Grant Notice, this Option Agreement and the Plan, (b) accepts the Option subject to all of the terms and conditions of the Grant Notice, this Option Agreement and the Plan, and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under the Grant Notice, this Option Agreement or the Plan.

 

  1.

DEFINITIONS AND CONSTRUCTION.

1.1 Definitions. Unless otherwise defined herein, capitalized teens shall have the meanings assigned to such terms in the Grant Notice or the Plan.

1.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of this Option Agreement. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

 

  2.

TAX CONSEQUENCES.

2.1 Tax Status of Option. This Option is intended to have the tax status designated in the Grant Notice.

(a) Incentive Stock Option. If the Grant Notice so designates, this Option is intended to be an Incentive Stock Option within the meaning of Section 422(b) of the Code, but the Company does not represent or warrant that this Option qualifies as such. The Participant should consult with the Participant’s own tax advisor regarding the tax effects of this Option and the requirements necessary to obtain favorable income tax treatment under Section 422 of the Code, including, but not limited to, holding period requirements. (NOTE TO PARTICIPANT: If the Option is exercised more than three (3) months after the date on which you cease to be an Employee (other than by reason of your death or permanent and total disability as defined in Section 22(e)(3) of the Code), the Option will be treated as a Nonstatutory Stock Option and not as an Incentive Stock Option to the extent required by Section 422 of the Code.)


(b) Nonstatutory Stock Option. If the Grant Notice so designates, this Option is intended to be a Nonstatutory Stock Option and shall not be treated as an Incentive Stock Option within the meaning of Section 422(b) of the Code.

2.2 ISO Fair Market Value Limitation. If the Grant Notice designates this Option as an Incentive Stock Option, then to the extent that the Option (together with all Incentive Stock Options granted to the Participant under all stock option plans of the Participating Company Group, including the Plan) becomes exercisable for the first time during any calendar year for shares having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of such options which exceeds such amount will be treated as Nonstatutory Stock Options. For purposes of this Section, options designated as Incentive Stock Options are taken into account in the order in which they were granted, and the Fair Market Value of stock is determined as of the time the option with respect to such stock is granted. If the Code is amended to provide for a different limitation from that set forth in this Section, such different limitation shall be deemed incorporated herein effective as of the date required or permitted by such amendment to the Code. If the Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section, the Participant may designate which portion of such Option the Participant is exercising. In the absence of such designation, the Participant shall be deemed to have exercised the Incentive Stock Option portion of the Option first. Separate certificates representing each such portion shall be issued upon the exercise of the Option. (NOTE TO PARTICIPANT: If the aggregate Exercise Price of the Option (that is, the Exercise Price multiplied by the Number of Option Shares) plus the aggregate exercise price of any other Incentive Stock Options you hold (whether granted pursuant to the Plan or any other stock option plan of the Participating Company Group) is greater than $100,000, you should contact the Chief Financial Officer of the Company to ascertain whether the entire Option qualifies as an Incentive Stock Option.)

 

  3.

ADMINISTRATION.

All questions of interpretation concerning the Grant Notice, this Option Agreement, the Plan or any other form of agreement or other document employed by the Company in the administration of the Plan or the Option shall be determined by the Board. All such determinations by the Board shall be final, binding and conclusive upon all persons having an interest in the Option, unless fraudulent or made in bad faith. Any and all actions, decisions and determinations taken or made by the Board in the exercise of its discretion pursuant to the Plan or the Option or other agreement thereunder (other than determining questions of interpretation pursuant to the preceding sentence) shall be final, binding and conclusive upon all persons having an interest in the Option. Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, or election.

 

  4.

EXERCISE OF THE OPTION.

4.1 Right to Exercise. Except as otherwise provided herein, the Option shall be exercisable on and after the Initial Vesting Date and prior to the termination of the Option (as provided in Section 6) in an amount not to exceed the number of Vested Shares less the number of shares previously acquired upon exercise of the Option, subject to the Company’s repurchase rights set forth in Section 11. In no event shall the Option be exercisable for more shares than the Number of Option Shares, as adjusted pursuant to Section 9.

 

2


4.2 Method of Exercise. Exercise of the Option shall be by means of electronic or written notice (the “Exercise Notice”) in a form authorized by the Company. An electronic Exercise Notice must be digitally signed or authenticated by the Participant in such manner as required by the notice and transmitted to the Company or an authorized representative of the Company (including a third-party administrator designated by the Company). In the event that the Participant is not authorized or is unable to provide an electronic Exercise Notice, the Option shall be exercised by a written Exercise Notice addressed to the Company, signed by the Participant and delivered in person, by certified or registered mail, return receipt requested, by confirmed facsimile transmission, or by such other means as the Company may permit, to the Company, or an authorized representative of the Company (including a third-party administrator designated by the Company). Each Exercise Notice, whether electronic or written, must state the Participant’s election to exercise the Option, the number of whole shares of Stock for which the Option is being exercised and such other representations and agreements as to the Participant’s investment intent with respect to such shares as may be required pursuant to the provisions of this Option Agreement. Further, each Exercise Notice must be received by the Company prior to the termination of the Option as set forth in Section 6 and must be accompanied by full payment of the aggregate Exercise Price for the number of shares of Stock being purchased. The Option shall be deemed to be exercised upon receipt by the Company of such electronic or written Exercise Notice and the aggregate Exercise Price.

4.3 Payment of Exercise Price.

(a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the aggregate Exercise Price for the number of shares of Stock for which the Option is being exercised shall be made (i) in cash, by check or in cash equivalent, (ii) if permitted by the Company and subject to the limitations contained in Section 4.3(b), by means of (1) a Stock Tender Exercise, (2) a Cashless Exercise or (3) a Net-Exercise; or (iii) by any combination of the foregoing.

(b) Limitations on Forms of Consideration. The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedure providing for payment of the Exercise Price through any of the means described below, including with respect to the Participant notwithstanding that such program or procedures may be available to others.

(i) Stock Tender Exercise. A “Stock Tender Exercise” means the delivery of a properly executed Exercise Notice accompanied by (1) the Participant’s tender to the Company, or attestation to the ownership, in a form acceptable to the Company of whole shares of Stock having a Fair Market Value that does not exceed the aggregate Exercise Price for the shares with respect to which the Option is exercised, and (2) the Participant’s payment to the Company in cash of the remaining balance of such aggregate Exercise Price not satisfied by such shares’ Fair Market Value. A Stock Tender Exercise shall not be permitted if it would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock. If required by the Company, the Option may not be

 

3


exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Participant for a period of time required by the Company (and not used for another option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company.

(ii) Cashless Exercise. A Cashless Exercise shall be permitted only upon the class of shares subject to the Option becoming publicly traded in an established securities market. A “Cashless Exercise” means the delivery of a properly executed Exercise Notice together with irrevocable instructions to a broker in a form acceptable to the Company providing for the assignment to the Company of the proceeds of a sale or loan with respect to shares of Stock acquired upon the exercise of the Option in an amount not less than the aggregate Exercise Price for such shares (including, without limitation, through. an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System).

(iii) Net-Exercise. A “Net-Exercise” means the delivery of a properly executed Exercise Notice electing a procedure pursuant to which (1) the Company will reduce the number of shares otherwise issuable to the Participant upon the exercise of the Option by the largest whole number of shares having a Fair Market Value that does not exceed the aggregate Exercise Price for the shares with respect to which the Option is exercised, and (2) the Participant shall pay to the Company in cash the remaining balance of such aggregate Exercise Price not satisfied by such reduction in the number of whole shares to be issued. Following a Net-Exercise, the number of shares remaining subject to the Option, if any, shall be reduced by the sum of (1) the net number of shares issued to the Participant upon such exercise, and (2) the number of shares deducted by the Company for payment of the aggregate Exercise Price.

4.4 Tax Withholding.

(a) In General. At the time the Option is exercised, in whole or in part, or at any time thereafter as requested by a Participating Company, the Participant hereby authorizes withholding from payroll and any other amounts payable to the Participant, and otherwise agrees to make adequate provision for any sums required to satisfy the federal, state, local and foreign tax (including social insurance) withholding obligations of the Participating Company Group, if any, which arise in connection with the Option. The Company shall have no obligation to deliver shares of Stock until the tax withholding obligations of the Participating Company Group have been satisfied by the Participant.

(b) Withholding in or Directed Sale of Shares. The Company shall have the right, but not the obligation, to require the Participant to satisfy all or any portion of a Participating Company’s tax withholding obligations upon exercise of the Option by deducting from the shares of Stock otherwise issuable to the Participant upon such exercise a number of whole shares having a fair market value, as determined by the Company as of the date of exercise, not in excess of the amount of such tax withholding obligations determined by the applicable minimum statutory withholding rates. The Company may require the Participant to direct a broker, upon the exercise of the Option, to sell a portion of the shares subject to the Option determined by the Company in its discretion to be sufficient to cover the tax withholding obligations of any Participating Company and to remit an amount equal to such tax withholding obligations to the Company in cash.

 

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4.5 Beneficial Ownership of Shares; Certificate Registration. The Participant hereby authorizes the Company, in its ole discretion, to deposit for the benefit of the Participant with any broker with which the Participant has an account relationship of which the Company has notice any or all shares acquired by the Participant pursuant to the exercise of the Option. Except as provided by the preceding sentence, a certificate for the shares as to which the Option is exercised shall be registered in the name of the Participant, or, if applicable, in the names of the heirs of the Participant.

4.6 Restrictions on Grant of the Option and Issuance of Shares. The grant of the Option and the issuance of shares of Stock upon exercise of the Option shall be subject to compliance with all applicable requirements of federal, state or foreign law with respect to such securities. The Option may not be exercised if the issuance of shares of Stock upon exercise would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, the Option may not be exercised unless (i) a registration statement under the Securities Act shall at the time of exercise of the Option be in effect with respect to the shares issuable upon exercise of the Option or (ii) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Option may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. THE PARTICIPANT IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE PARTICIPANT MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares subject to the Option shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to the exercise of the Option, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.

4.7 Fractional Shares. The Company shall not be required to issue fractional shares upon the exercise of the Option.

 

  5.

NONTRANSFERABILITY OF THE OPTION.

During the lifetime of the Participant, the Option shall be exercisable only by the Participant or the Participant’s guardian or legal representative. The Option shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. Following the death of the Participant, the Option, to the extent provided in Section 7, may be exercised by the Participant’s legal representative or by any person empowered to do so under the deceased Participant’s will or under the then applicable laws of descent and distribution. Notwithstanding the foregoing, for

 

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so long as the Company is relying on the exemption provided by Rule 12h-l(f) under the Exchange Act, the Option and, prior to its exercise, the shares to be issued upon the exercise of the Option, shall not be transferred except in compliance with the restrictions on transfer under Rule 12h-l(f) (including the requirement under such rule that any permitted transferee may not further transfer the Option) or be made subject to any short position, “put equivalent position” or “call equivalent position” by the Participant, as such terms are defined in Rule 16a-1 of the Exchange Act.

 

  6.

TERMINATION OF THE OPTION.

The Option shall terminate and may no longer be exercised after the first to occur of (a) the close of business on the Option Expiration Date, (b) the close of business on the last date for exercising the Option following termination of the Participant’s Service as described in Section 7, or (c) a Change in Control to the extent provided in Section 8.

 

  7.

EFFECT OF TERMINATION OF SERVICE.

7.1 Option Exercisability. The Option shall terminate immediately upon the Participant’s termination of Service to the extent that it is then unvested and shall be exercisable after the Participant’s termination of Service to the extent it is then vested only during the applicable time period as determined below and thereafter shall terminate.

(a) Disability. If the Participant’s Service terminates because of the Disability of the Participant, the Option, to the extent unexercised and exercisable for Vested Shares on the date on which the Participant’s Service terminated, may be exercised by the Participant (or the Participant’s guardian or legal representative) at any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.

(b) Death. If the Participant’s Service terminates because of the death of the Participant, the Option, to the extent unexercised and exercisable for Vested Shares on the date on which the Participant’s Service terminated, may be exercised by the Participant’s legal representative or other person who acquired the right to exercise the Option by reason of the Participant’s death at any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date. The Participant’s Service shall be deemed to have terminated on account of death if the Participant dies within three (3) months after the Participant’s termination of Service.

(c) Termination for Cause. Notwithstanding any other provision of this Option Agreement, if the Participant’s Service is terminated for Cause, the Option shall terminate in its entirety and cease to be exercisable immediately upon such termination of Service.

(d) Other Termination of Service. If the Participant’s Service terminates for any reason, except Disability, death or Cause, the Option, to the extent unexercised and exercisable for Vested Shares by the Participant on the date on which the Participant’s Service terminated, may be exercised by the Participant at any time prior to the expiration of three (3) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.

 

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7.2 Extension if Exercise Prevented by Law. Notwithstanding the foregoing other than termination of the Participant’s Service for Cause, if the exercise of the Option within the applicable time periods set forth in Section 7.1 is prevented by the provisions of Section 4.6, the Option shall remain exercisable until the later of (a) thirty (30) days after the date such exercise first would no longer be prevented by such provisions or (b) the end of the applicable time period under Section 7.1, but in any event no later than the Option Expiration Date.

 

  8.

EFFECT OF CHANGE OF CONTROL.

In the event of a Change in Control, except to the extent that the Board determines to settle the Option in accordance with Section 10.1(c) of the Plan, the surviving, continuing, successor, or purchasing corporation or other business entity or parent thereof, as the case may be (the “Acquiror”), may, without the consent of the Participant, assume or continue in full force and effect the Company’s rights and obligations under all or any portion of the Option or substitute for all or any portion of the Option a substantially equivalent option for the Acquirer’s stock. For purposes of this Section, the Option or any portion thereof shall be deemed assumed if, following the Change in Control, the Option confers the right to receive. subject to the terms and conditions of the Plan and this Option Agreement, for each share of Stock subject to such portion of the Option immediately prior to the Change in Control, the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock on the effective date of the Change in Control was entitled (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Stock); provided, however, that if such consideration is not solely common stock of the Acquiror, the Board may, with the consent of the Acquiror, provide for the consideration to be received upon the exercise of the Option for each share of Stock to consist solely of common stock of the Acquiror equal in Fair Market Value to the per share consideration received by holders of Stock pursuant to the Change in Control. If any portion of such consideration may be received by holders of Stock pursuant to the Change in Control on a contingent or delayed basis, the Board may, in its discretion, determine such Fair Market Value per share as of the time of the Change in Control on the basis of the Board’s good faith estimate of the present value of the probable future payment of such consideration. The Option shall terminate and cease to be outstanding effective as of the time of consummation of the Change in Control to the extent that the Option is neither assumed or continued by the Acquiror in connection with the Change in Control nor exercised as of the time of the Change in Control. Notwithstanding the foregoing, shares acquired upon exercise of the Option prior to the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions of this Option Agreement except as otherwise provided herein.

 

  9.

ADJUSTMENT FOR CHANGES IN CAPITAL STRUCTURE.

Subject to any required action by the stockholders of the Company and the requirements of Sections 409A and 424 of the Code to the extent applicable, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger,

 

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consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (excepting normal cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number, Exercise Price and kind of shares subject to the Option, in order to prevent dilution or enlargement of the Participant’s rights under the Option. For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.” Any fractional share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number, and the Exercise Price shall be rounded up to the nearest whole cent. In no event may the Exercise Price be decreased to an amount less than the par value, if any, of the stock subject to the Option. Such adjustments shall be determined by the Board, and its determination shall be final, binding and conclusive.

 

  10.

RIGHTS AS A STOCKHOLDER, DIRECTOR, EMPLOYEE OR CONSULTANT.

The Participant shall have no rights as a stockholder with respect to any shares covered by the Option until the date of the issuance of the shares for which the Option has been exercised (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date the shares are issued, except as provided in Section 9. If the Participant is an Employee, the Participant understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between a Participating Company and the Participant, the Participant’s employment is “at will” and is for no specified term. Nothing in this Option Agreement shall confer upon the Participant any right to continue in the Service of a Participating Company or interfere in any way with any right of the Participating Company Group to terminate the Participant’s Service as a Director, an Employee or Consultant, as the case may be, at any time.

 

  11.

RIGHT OF FIRST REFUSAL.

11.1 Grant of Right of First Refusal. Except as provided in Section 11.7 and Section 16 below, in the event the Participant, the Participant’s legal representative, or other holder of shares acquired upon exercise of the Option proposes to sell, exchange, transfer, pledge, or otherwise dispose of any Vested Shares (the “Transfer Shares”) to any person or entity, including, without limitation, any stockholder of a Participating Company, the Company shall have the right to repurchase the Transfer Shares under the terms and subject to the conditions set forth in this Section 11 (the “Right of First Refusal”).

11.2 Notice of Proposed Transfer. Prior to any proposed transfer of the Transfer Shares. the Participant shall deliver written notice (the “Transfer Notice”) to the Company describing fully the proposed transfer, including the number of Transfer Shares, the name and address of the proposed transferee (the “Proposed Transferee”) and, if the transfer is voluntary, the proposed transfer price, and containing such information necessary to show the bona fide nature of the proposed transfer. In the event of a bona fide gift or involuntary transfer, the proposed transfer price shall be deemed to be the Fair Market Value of the Transfer Shares,

 

8


as determined by the Board in good faith. If the Participant proposes to transfer any Transfer Shares to more than one Proposed Transferee, the Participant shall provide a separate Transfer Notice for the proposed transfer to each Proposed Transferee. The Transfer Notice shall be signed by both the Participant and the Proposed Transferee and must constitute a binding commitment of the Participant and the Proposed Transferee for the transfer of the Transfer Shares to the Proposed Transferee subject only to the Right of First Refusal.

11.3 Bona Fide Transfer. If the Company determines that the information provided by the Participant in the Transfer Notice is insufficient to establish the bona fide nature of a proposed voluntary transfer, the Company shall give the Participant written notice of the Participant’s failure to comply with the procedure described in this Section 11, and the Participant shall have no right to transfer the Transfer Shares without first complying with the procedure described in this Section 11. The Participant shall not be permitted to transfer the Transfer Shares if the proposed transfer is not bona fide.

11.4 Exercise of Right of First Refusal. If the Company determines the proposed transfer to be bona fide, the Company shall have the right to purchase all, but not less than all, of the Transfer Shares (except as the Company and the Participant otherwise agree) at the purchase price and on the terms set forth in the Transfer Notice by delivery to the Participant of a notice of exercise of the Right of First Refusal within thirty (30) days after the date the Transfer Notice is delivered to the Company. The Company’s exercise or failure to exercise the Right of First Refusal with respect to any proposed transfer described in a Transfer Notice shall not affect the Company’s right to exercise the Right of First Refusal with respect to any proposed transfer described in any other Transfer Notice, whether or not such other Transfer Notice is issued by the Participant or issued by a person other than the Participant with respect to a proposed transfer to the same Proposed Transferee. If the Company exercises the Right of First Refusal, the Company and the Participant shall thereupon consummate the sale of the Transfer Shares to the Company on the terms set forth in the Transfer Notice within sixty (60) days after the date the Transfer Notice is delivered to the Company (unless a longer period is offered by the Proposed Transferee); provided, however, that in the event the Transfer Notice provides for the payment for the Transfer Shares other than in cash, the Company shall have the option of paying for the Transfer Shares by the present value cash equivalent of the consideration described in the Transfer Notice as reasonably determined by the Company. For purposes of the foregoing, cancellation of any indebtedness of the Participant to any Participating Company shall be treated as payment to the Participant in cash to the extent of the unpaid. principal and any accrued interest canceled. Notwithstanding anything contained in this Section to the contrary, the period during which the Company may exercise the Right of First Refusal and consummate the purchase of the Transfer Shares from the Participant shall terminate no sooner than the completion of a period of eight (8) months following the date on which the Participant acquired the Transfer Shares upon exercise of the Option.

11.5 Failure to Exercise Right of First Refusal. If the Company fails to exercise the Right of First Refusal in full (or to such lesser extent as the Company and the Participant otherwise agree) within the period specified in Section 11.4 above, the Participant may conclude a transfer to the Proposed Transferee of the Transfer Shares on the terms and conditions described in the Transfer Notice, provided such transfer occurs not later than ninety (90) days following delivery to the Company of the Transfer Notice or, if applicable, following

 

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the end of the period described in the last sentence of Section 11.4. The Company shall have the right to demand further assurances from the Participant and the Proposed Transferee (in a form satisfactory to the Company) that the transfer of the Transfer Shares was actually carried out on the terms and conditions described in the Transfer Notice. No Transfer Shares shall be transferred on the books of the Company until the Company has received such assurances, if so demanded, and has approved the proposed transfer as bona fide. Any proposed transfer on terms and conditions different from those described in the Transfer Notice, as well as any subsequent proposed transfer by the Participant, shall again be subject to the Right of First Refusal and shall require compliance by the Participant with the procedure described in this Section 11.

11.6 Transferees of Transfer Shares. All transferees of the Transfer Shares or any interest therein, other than the Company, shall be required as a condition of such transfer to agree in writing (in a form satisfactory to the Company) that such transferee shall receive and hold such Transfer Shares or interest therein subject to all of the terms and conditions of this Option Agreement, including this Section 11 providing for the Right of First Refusal with respect to any subsequent transfer. Any sale or transfer of any shares acquired upon exercise of the Option shall be void unless the provisions of this Section 11 are met.

11.7 Transfers Not Subject to Right of First Refusal. The Right of First Refusal shall not apply to any transfer or exchange of the shares acquired upon exercise of the Option if such transfer or exchange is in connection with an Ownership Change Event. If the consideration received pursuant to such transfer or exchange consists of stock of a Participating Company, such consideration shall remain subject to the Right of First Refusal unless the provisions of Section 11.9 result in a termination of the Right of First Refusal.

11.8 Assignment of Right of First Refusal. The Company shall have the right to assign the Right of First Refusal at any time, whether or not there has been an attempted transfer, to one or more persons as may be selected by the Company.

11.9 Early Termination of Right of First Refusal. The other provisions of this Option Agreement notwithstanding, the Right of First Refusal shall terminate and be of no further force and effect upon (a) the occurrence of a Change in Control, unless the Acquiror assumes the Company’s rights and obligations under the Option or substitutes a substantially equivalent option for the Acquiror’s stock for the Option, or (b) the existence of a public market for the class of shares subject to the Right of First Refusal. A “public market” shall be deemed to exist if (i) such stock is listed on a national securities exchange (as that term is used in the Exchange Act) or (ii) such stock is traded on the over-the-counter market and prices therefor are published daily on business days in a recognized financial journal.

 

  12.

STOCK DISTRIBUTIONS SUBJECT TO OPTION AGREEMENT.

If, from time to time, there is any stock dividend, stock split or other change, as described in Section 9, in the character or amount of any of the outstanding stock of the corporation the stock of which is subject to the provisions of this Option Agreement, then in such event any and all new, substituted or additional securities to which the Participant is entitled by reason of the Participant’s ownership of the shares acquired upon exercise of the Option shall be immediately subject to the Right of First Refusal with the same force and effect as the shares subject to the Right of First Refusal immediately before such event.

 

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  13.

NOTICE OF SALES UPON DISQUALIFYING DISPOSITION.

The Participant shall dispose of the shares acquired pursuant to the Option only in accordance with the provisions of this Option Agreement. In addition, if the Grant Notice designates this Option as an Incentive Stock Option, the Participant shall (a) promptly notify the Chief Financial Officer of the Company if the Participant disposes of any of the shares acquired pursuant to the Option within one (1) year after the date the Participant exercises all or part of the Option or within two (2) years after the Date of Grant and (b) provide the Company with a description of the circumstances of such disposition. Until such time as the Participant disposes of such shares in a manner consistent with the provisions of this Option Agreement, unless otherwise expressly authorized by the Company, the Participant shall hold all shares acquired pursuant to the Option in the Participant’s name (and not in the name of any nominee) for the one-year period immediately after the exercise of the Option and the two-year period immediately after Date of Grant. At any time during the one-year or two-year periods set forth above, the Company may place a legend on any certificate representing shares acquired pursuant to the Option requesting the transfer agent for the Company’s stock to notify the Company of any such transfers. The obligation of the Participant to notify the Company of any such transfer shall continue notwithstanding that a legend has been placed on the certificate pursuant to the preceding sentence.

 

  14.

LEGENDS.

The Company may at any time place legends referencing the Right of First Refusal and any applicable federal, state or foreign securities law restrictions on all certificates representing shares of stock subject to the provisions of this Option Agreement. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to the Option in the possession of the Participant in order to carry out the provisions of this Section. Unless otherwise specified by the Company, legends placed on such certificates may include, but shall not be limited to, the following:

14.1 “THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.”

14.2 “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND REPURCHASE OPTIONS IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH HOLDER’S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION.”

 

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14.3 “THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE REGISTERED HOLDER UPON EXERCISE OF AN INCENTIVE STOCK OPTION AS DEFINED IN SECTION 422 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (“ISO”). N ORDER TO OBTAIN THE PREFERENTIAL TAX TREATMENT AFFORDED TO ISOs, THE SHARES SHOULD NOT BE TRANSFERRED PRIOR TO [INSERT DISQUALIFYING DISPOSITION DATE HERE]. SHOULD THE REGISTERED HOLDER ELECT TO TRANSFER ANY OF THE SHARES PRIOR TO THIS DATE AND FOREGO ISO TAX TREATMENT, THE TRANSFER AGENT FOR. THE SHARES SHALL NOTIFY THE CORPORATION IMMEDIATELY. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE INCENTIVE STOCK OPTION IN THE REGISTERED HOLDER’S NAME (AND NOT IN THE NAME OF ANY NOMINEE) PRIOR TO THIS DATE OR UNTIL TRANSFERRED AS DESCRIBED ABOVE.”

 

  15.

LOCK-UP AGREEMENT.

The Participant hereby agrees that in the event of any underwritten public offering of stock, including an initial public offering of stock, made by the Company pursuant to an effective registration statement filed under the Securities Act, the Participant shall not offer, sell, contract to sell, pledge, hypothecate, grant any option to purchase or make any short sale of, or otherwise dispose of any shares of stock of the Company or any rights to acquire stock of the Company for such period of time from and after the effective date of such registration statement as may be established by the underwriter for such public offering; provided, however, that such period of time shall not exceed one hundred eighty (180) days from the effective date of the registration statement to be filed in connection with such public offering; provided, further, however, that such one hundred eighty (180) day period may be extended for an additional period, not to exceed twenty (20) days, upon the request of the Company or the underwriter to accommodate regulatory restrictions on (i) the publication or other distribution of research reports and (ii) analyst recommendations and opinions, including but not limited to, the restrictions contained in NASD Rule 2711(0(4) or NYSE Rule 472(0(4), or any successor provisions or amendments thereto). The foregoing limitation shall not apply to shares registered in the public offering under the Securities Act. The Participant hereby agrees to enter into any agreement reasonably required by the underwriters to implement the foregoing within a reasonable timeframe if so requested by the Company.

 

  16.

RESTRICTIONS ON TRANSFER OF SHARES.

At any time prior to the existence of a public market for the Stock, the Board may prohibit the Participant and any transferee of such Participant from selling, transferring, assigning, pledging, or otherwise disposing of or encumbering any shares acquired pursuant to the Option (each, a “Transfer”) without the prior written consent of the Board. The Board may withhold consent for any reason, including without limitation any Transfer (i) to any individual or entity identified by the Company as a potential competitor or considered by the Company to be unfriendly, or (ii) if such Transfer increases the risk of the Company having a class of security

 

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held of record by such number of persons as would require the Company to register any class of securities under the Exchange Act; or (iii) if such Transfer would result in the loss of any federal or state securities law exemption relied upon by the Company in connection with the initial issuance of such shares or the issuance of any other securities; or (iv) if such Transfer is facilitated in any manner by any public posting, message board, trading portal, Internet site, or similar method of communication, including without limitation any trading portal or Internet site intended to facilitate secondary transfers of securities; or (v) if such Transfer is to be effected in a brokered transaction; or (vi) if such Transfer would be of less than all of the shares of Stock then held by the stockholder and its affiliates or is to be made to more than a single transferee. No shares acquired upon exercise of the Option may be sold, exchanged, transferred (including, without limitation, any transfer to a nominee or agent of the Participant), assigned, pledged, hypothecated or otherwise disposed of, including by operation of law in any manner which violates any of the provisions of this Option Agreement, and any such attempted disposition shall be void. The Company shall not be required (a) to transfer on its books any shares which will have been transferred in violation of any of the provisions set forth in this Option Agreement or (b) to treat as owner of such shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom such shares will have been so transferred.

 

  17.

MISCELLANEOUS PROVISIONS.

17.1 Termination or Amendment. The Board may terminate or amend the Plan or the Option at any time; provided, however, that except as provided in Section 8 in connection with a Change in Control, no such termination or amendment may have a materially adverse effect on the Option or any unexercised portion thereof without the consent of the Participant unless such termination or amendment is necessary to comply with any applicable law or government regulation, including, but not limited to Section 409A of the Code. No amendment or addition to this Option Agreement shall be effective unless in writing.

17.2 Compliance with Section 409A. The Company intends that income realized by the Participant pursuant to the Plan and this Option Agreement will not be subject to taxation under Section 409A of the Code. The provisions of the Plan and this Option Agreement shall be interpreted and construed in favor of satisfying any applicable requirements of Section 409A of the Code. The Company, in its reasonable discretion, may amend (including retroactively) the Plan and this Agreement in order to conform to the applicable requirements of Section 409A of the Code, including amendments to facilitate the Participant’s ability to avoid taxation under Section 409A of the Code. However, the preceding provisions shall not be construed as a guarantee by the Company of any particular tax result for income realized by the Participant pursuant to the Plan or this Option Agreement. In any event, and except for the responsibilities of the Company set forth in Section 4.4, no Participating Company shall be responsible for the payment of any applicable taxes incurred by the Participant on income realized by the Participant pursuant to the Plan or this Option Agreement.

17.3 Further Instruments. The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Option Agreement.

 

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17.4 Binding Effect. This Option Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participant’s heirs, executors, administrators, successors and assigns.

17.5 Delivery of Documents and Notices. Any document relating to participation in the Plan, or any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given (except to the extent that this Option Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address, if any, provided for the Participant by a Participating Company, or upon deposit in the U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally recognized overnight courier service, with postage and fees prepaid, addressed to the other party at the address of such party set forth in the Grant Notice or at such other address as such party may designate in writing from time to time to the other party.

(a) Description of Electronic Delivery and Signature. The Plan documents, which may include but do not necessarily include: the Plan, the Grant Notice, this Option Agreement, and any reports of the Company provided generally to the Company’s stockholders, may be delivered to the Participant electronically. In addition, if permitted by the Company, the Participant may deliver electronically the Grant Notice and Exercise Notice called for by Section 4.2 to the Company or to such third party involved in administering the Plan as the Company may designate from time to time. Such means of electronic delivery may include but do not necessarily include the delivery of a link to a Company Intranet or the Internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other means of electronic delivery specified by the Company. Any and all such documents and notices may be electronically signed.

(b) Consent to Electronic Delivery and Signature. The Participant acknowledges that the Participant has read Section 17.5(a) of this Option Agreement and consents to the electronic delivery of the Plan documents and, if permitted by the Company, the delivery of the Grant Notice and Exercise Notice, as described in Section 17.5(a). The Participant agrees that any and all such documents requiring a signature may be electronically signed and that such electronic signature shall have the same effect as handwritten signature for the purposes of validity, enforceability and admissibility. The Participant acknowledges that he or she may receive from the Company a paper copy of any documents delivered electronically at no cost to the Participant by contacting the Company by telephone or in writing. The Participant further acknowledges that the Participant will be provided with a paper copy of any documents if the attempted electronic delivery of such documents. fails. Similarly, the Participant understands that the Participant must provide the Company or any designated third party administrator with a paper copy of any documents if the attempted electronic delivery of such documents fails. The Participant may revoke his or her consent to the electronic delivery of documents described in Section 17.5(a) or may change the electronic mail address to which such documents are to be delivered (if Participant has provided an electronic mail address) at any time by notifying the Company of such revoked consent or revised e-mail address by telephone, postal service or electronic mail. Finally, the Participant understands that he or she is not required to consent to electronic delivery of documents described in Section 17.5(a).

 

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17.6 Integrated Agreement. The Grant Notice, this Option Agreement and the Plan, together with any employment, service or other agreement with the Participant and a Participating Company referring to the Option, shall constitute the entire understanding and agreement of the Participant and the Participating Company Group with respect to the subject matter contained herein or therein and supersede any prior agreements, understandings, restrictions, representations, or warranties among the Participant and the Participating Company Group with respect to such subject matter. To the extent contemplated herein or therein, the provisions of the Grant Notice, the Option Agreement and the Plan shall survive any exercise of the Option and shall remain in full force and effect.

17.7 Applicable Law. This Option Agreement shall be governed by the laws of the State of Texas as such laws are applied to agreements between Texas residents entered into and to be performed entirely within the State of Texas.

17.8 Counterparts. The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

15


Incentive Stock Option       Participant:   

 

Nonstatutory Stock Option       Date:   

 

STOCK OPTION EXERCISE NOTICE

 

Firefly Aerospace, Inc.
Attention: Chief Financial Officer
 

 

 

 

Ladies and Gentlemen:

1. Option. I was granted an option (the “Option”) to purchase shares of the common stock (the “Shares”) of Firefly Aerospace, Inc. (the “Company”) pursuant to the Company’s 2017 Stock Plan (the “Plan”), my Notice of Grant of Stock Option (the “Grant Notice”) and my Stock Option Agreement (the “Option Agreement”) as follows:

 

Date of Grant:

                 
  

 

 

 

Number of Option Shares:

                 
  

 

 

 

Exercise Price per Share:

   $              
  

 

 

 

2. Exercise of Option. I hereby elect to exercise the Option to purchase the following number of Shares, all of which are Vested Shares, in accordance with the Grant Notice and the Option Agreement:

 

Total Shares Purchased:

                 
  

 

 

 

Total Exercise Price (Total Shares X Price per Share)

   $              
  

 

 

 

3. Payments. I enclose payment in full of the total exercise price for the Shares in the following form(s), as authorized by my Option Agreement:

 

Cash:

   $              
  

 

 

 

Check:

   $              
  

 

 

 

Stock Tender Exercise:

     Contact Plan Administrator  

Cashless Exercise:

     Contact Plan Administrator  

Net Exercise:

     Contact Plan Administrator  

4. Tax Withholding. I authorize payroll withholding and otherwise will make adequate provision for the federal, state, local and foreign tax withholding obligations of the Company, if any, in connection with the Option. If I am exercising a Nonstatutory Stock Option, I enclose payment in full of my withholding taxes, if any, as follows:

(Contact Plan Administrator for amount of tax due.)

 

Cash:

   $              
  

 

 

 

Check:

   $              
  

 

 

 

 

1


5. Participant Information.

 

My address is:

 

 

 

 

My Social Security Number is:

 

 

6. Notice of Disqualifying Disposition. If the Option is an Incentive Stock Option, I agree that I will promptly notify the Chief Financial Officer of the Company if I transfer any of the Shares within one (1) year from the date I exercise all or part of the Option or within two (2) years of the Date of Grant.

7. Binding Effect. I agree that the Shares are being acquired in accordance with and subject to the terms, provisions and conditions of the Grant Notice, the Option Agreement, including the Right of First Refusal set forth therein, and the Plan, to all of which I hereby expressly assent. This Agreement shall inure to the benefit of and be binding upon my heirs, executors, administrators, successors and assigns.

8. Transfer. I understand and acknowledge that the Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and that consequently the Shares must be held indefinitely unless they are subsequently registered under the Securities Act, an exemption from such registration is available, or they are sold in accordance with Rule 144 or Rule 701 under the Securities Act. I further understand and acknowledge that the Company is under no obligation to register the Shares. I understand that the certificate or certificates evidencing the Shares will be imprinted with legends which prohibit the transfer of the Shares unless they are registered or such registration is not required in the opinion of legal counsel satisfactory to the Company.

I am aware that Rule 144 under the Securities Act, which permits limited public resale of securities acquired in a nonpublic offering, is not currently available with respect to the Shares and, in any event, is available only if certain conditions are satisfied. I understand that any sale of the Shares that might be made in reliance upon Rule 144 may only be made in limited amounts in accordance with the terms and conditions of such rule and that a copy of Rule 144 will be delivered to me upon request.

I understand that I am purchasing the Shares pursuant to the terms of the Plan, the Grant Notice and my Option Agreement, copies of which I have received and carefully read and understand.

 

Very truly yours,
 

 

(Signature)

Receipt of the above is hereby acknowledged.

Firefly Aerospace, Inc.

 

By:    
Title:    
Dated:    

 

2


FIREFLY AEROSPACE, INC.

NOTICE OF GRANT OF STOCK OPTION

The Participant has been granted an option (the “Option”) to purchase shares of Stock of Firefly Aerospace, Inc. pursuant to the Firefly Aerospace, Inc. 2017 Stock Plan (the “Plan”), as follows:

 

Participant:

   [See Carta Grant Summary]

Date of Grant:

   [See Carta Grant Summary]

Number of Option Shares:

   [See Carta Grant Summary], subject to adjustment as provided by the Option Agreement

Exercise Price:

   $[See Carta Grant Summary]

Vesting Commencement Date:

   [See Carta Grant Summary]

Option Expiration Date:

   [See Carta Grant Summary]

Tax Status of Option:

   [See Carta Grant Summary] Stock Option. (Enter “Incentive” or “Nonstatutory.” If blank, this Option will be a Nonstatutory Stock Option.)

Vesting Schedule:

   [See Carta Grant Summary]

The Exercise Price represents an amount the Company believes to be no less than the fair market value of a share of Stock as of the Date of Grant, determined in good faith in compliance with the requirements of Section 409A of the Code. However, there is no guarantee that the Internal Revenue Service will agree with. the Company’s determination. A subsequent IRS determination that the Exercise Price is less than such fair market value could result in adverse tax consequences to the Participant. By signing below, the Participant agrees that the Company, its directors, officers and shareholders shall not be held liable for any tax, penalty, interest or cost incurred by the Participant as a result of such determination by the IRS. The Participant is urged to consult with his or her own tax advisor regarding the tax consequences of the Option, including the application of Section 409A.

By their signatures below, the Company and the Participant agree that the Option is governed by this Grant Notice and by the provisions of the Plan and the Stock Option Agreement, both of which are attached to and made a part of this document. The Participant acknowledges receipt of copies of the Plan and the Stock Option Agreement, represents that the Participant has read and is familiar with their provisions, and hereby accepts the Option subject to all of their terms and conditions.

 

FIREFLY AEROSPACE, INC.    PARTICIPANT
By:   
Its:    Signature
Address:    Date
   Address

ATTACHMENTS:     2017 Stock Plan, as amended to the Date of Grant; Stock Option Agreement and Exercise Notice

Exhibit 10.11

 

LOGO

FIREFLY AEROSPACE INC.

PERFORMANCE-BASED, INCENTIVE COMPENSATION PLAN

 

1

Philosophy

Firefly Aerospace, Inc. (“Firefly”) is committed to wages and benefits that are competitive with a market-based, pay-for-performance compensation philosophy, providing such base pay and short-term and long-term incentive Awards in line with those of the space industry. This Performance-Based, Incentive Compensation Plan (the “Plan”) is intended to reward high performance employees, and to retain these employees in critical roles, through the issuance of bonus and stock option Awards (each, an “Award”).

 

2

Administration

 

2.1

General

This Plan supersedes the terms of any prior bonus plans of Firefly. The Plan is maintained and administered by, or under the direction of, the Compensation Committee (the “Compensation Committee”) of the Firefly Board of Directors (the “Board”).

January 1 to December 31 is Firefly’s financial year. The “Plan Year” is the same as the financial year.

 

2.2

No Contractual Obligations; Amendments

This Plan does not create a contractual obligation on the part of Firefly. Firefly expressly reserves the right to modify, discontinue, or otherwise change the Plan outlined in this document at the sole and absolute discretion of Firefly without advance notice.

The Compensation Committee may at any time, or from time to time, in its sole and absolute discretion, (a) amend, alter or modify the provisions of this Plan, (b) terminate this Plan, or (c) terminate the participation of an employee or group of employees in this Plan; provided, however, that in the event of the termination of the Plan or a termination of participation, the Compensation Committee, in its sole and absolute discretion, may determine that a prorated Award is payable to employees who were participants in this Plan under such terms and conditions as established by the Compensation Committee.

Participation in the Plan does not confer upon any employee any right to continue in the employ of Firefly or its subsidiaries, nor interfere in any way with the right of Firefly and its subsidiaries to terminate any employee’s employment at any time. Firefly and its subsidiaries are under no obligation to continue the Plan in future years.

Receipt of an Award for one Plan Year does not create a right to an Award for any other Plan Year. All Awards (including the amounts thereof) are made at the sole discretion of Firefly.

Under no circumstances will an individual’s Awards under this Plan be considered final unless and until after it is calculated, determined, and paid to the individual, and all other conditions are satisfied.

No employee shall have (or be deemed to have) any right to any compensation, whether bonus or equity and regardless of the medium of payment, for any loss or perceived loss under this Plan.

The rights and obligations arising under this Plan are separate from, and do not form part of, any employee’s contract of employment or employment relationship with Firefly or its subsidiaries.

 

3

Performance Objectives

Each year, Firefly shall determine and communicate that year’s Plan specifics, which shall be described to eligible employees in writing. Firefly reserves the sole discretion to change the formulae, methodologies, metrics, Company Performance Objectives, and Individual Performance Objectives from Plan Year to Plan Year and within a Plan Year.

 

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3.1

Company Performance Objectives

At the beginning of each Plan Year, the Board will set Firefly’s financial, operating, and strategic goals. Based on those goals, the Compensation Committee will approve the Company Performance Objectives for the Plan Year. When the Company Performance Objectives are comprised of two or more metrics, the Compensation Committee will also approve a relative weight for each of those metrics. 

After each Plan Year, the Compensation Committee will assess Firefly’s performance against each metric comprising the Company Performance Objectives and determine whether Firefly’s performance rating against each metric (i) did not meet Threshold, (ii) met Threshold, (iii) met Target, or (iii) met Maximum.

 

  •

“Target” is equal to the applicable metric identified at the beginning of each Plan Year.

 

  •

“Threshold” means Firefly achieved 80% or more of the metric up to the Target metric.

 

  •

“Maximum” means Firefly achieved 120% or more of the metric.

The metric and potential payouts for each of the performance ratings are set forth in the below table.

 

Level

   Metric      Payout  

Maximum

     120% of AOP criteria        150% of Target STI  

Target

     Meets AOP criteria        100% of Target STI  

Threshold

     80% of AOP criteria        80% of Target STI  

Leadership Bonuses Example: If the Company Performance Objectives are comprised of three metrics, the Compensation Committee might determine that Metric #1 is weighted 25%, Metric #2 is weighted 25%, and Metric #3 is weighted 50% of the Company Performance Objectives.

For an eligible employee participating in Extended Leadership -Band 5 with a Target Leadership Bonus equal to 20% of his or her base salary, the potential bonus payable from the Company Performance Objectives would be as follows (also see Schedule 2, Example Calculation #2):

 

     Weight=25%     Weight=25%     Weight=50%                    

Achievement Level

   Metric
#1
    % of
Base
    Metric
#2
    % of
Base
    Metric
#3
    % of
Base
    Company
as % of
Base
    Individual
Objectives 1
    Total
Bonus as
% of Base
 

Threshold

     80 %      2.00 %      80 %      2.00 %      80 %      4.00 %      8.00 %      10.00 %      18.00 % 

Target

     100 %      2.50 %      100 %      2.50 %      100 %      5.00 %      10.00 %      10.00 %      20.00 % 

Maximum

     120 %      3.75 %      120 %      3.75 %      120 %      7.50 %      15.00 %      15.00 %      30.00 % 

 

1 

Assumes Individual Performance Objectives component pays in full

At the end of the applicable Plan Year,

 

  •  

If Firefly achieves Target for each of the three metrics, the Company Performance Objectives portion of the eligible employee’s bonus would be equal to 10.00% (2.5%+2.5%+5.0%). See blue above.

 

  •  

If Firefly achieves Maximum for each of the three metrics, the Company Performance Objectives portion of the eligible employee’s bonus would be equal to 15.00% (3.75%+3.75%+7.5%). See blue above.

 

  •  

If Firefly achieves 80% for Metric #1, 100% for Metric #2, and 120% for Metric 3, the Company Performance Objectives portion of the eligible employee’s bonus would be equal to 12% (2.0%+2.5%+7.5%). See green above.

 

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Leadership Bonuses are paid on a straight-line pro rata basis between the defined percentage amounts for each metric. For example, straight line from below Threshold to Threshold, from Threshold to Target, and from Target to Maximum.

 

3.2

Individual Performance Objectives

Each Plan Year, the Chief Executive shall be responsible for assigning Individual Performance Objectives for all employees, provided that the Individual Performance Objectives for the Chief Executive and his direct reports will be reviewed with the Compensation Committee at the beginning of each Plan Year.

The Compensation Committee will assess annually the individual performance of the Chief Executive against his Individual Performance Objectives and consider other relevant impacts on performance.

The Compensation Committee or its authorized delegate may coordinate with the Chief Executive for the assessment of the individual performance of the Chief Executive’s direct reports against their respective Individual Performance Objectives and consider other relevant impacts on performance. 

The individual performance of the members of the Extended Leadership team, front line Managers, and individual contributors against their respective Individual Performance Objectives is subject to review by successively higher levels of senior management and, ultimately, Chief Executive review and approval.

 

4

Short-Term Incentive Awards

 

4.1

Leadership Bonuses

A. Eligibility. Firefly has the sole discretion to determine which members of Firefly’s executive and extended leadership teams are eligible for bonuses (“Leadership Bonuses”). It is expected, however, that eligibility shall be limited to employees who (i) are assigned to an eligible role with Firefly, (ii) are compensated through Firefly’s payroll; and (iii) receive, and acknowledge receipt of, an annual written notification of their eligibility from Firefly. Firefly’s discretion to determine eligibility includes, without limitation, the right to modify, in part or in full, the Leadership Bonuses (amounts, structure, objectives for achievement, performance levels, etc.) described in this Section 4 for individuals who are included in sales incentive compensation programs or plans.

In order to be paid a Leadership Bonus, an eligible employee must be actively employed (and not under notice given or received) for the entire applicable Plan Year and through the date in the following year that Leadership Bonuses are paid under the Plan (the “Active Employment Requirement”).

The Active Employment Requirement will be waived by Firefly for otherwise eligible employees who:

 

  (1)

are newly hired or promoted into an eligible position during the Plan Year; or

 

  (2)

terminate employment prior to the date Leadership Bonuses are paid for the Plan Year due to death, Retirement or layoff/redundancy, so long as the employee was actively employed in an eligible position for a minimum of 90 days during the Plan Year, subject to the agreed terms of the employment letter.

The Compensation Committee may waive, in its sole discretion, the Active Employment Requirement in any case it deems appropriate. For example, the Active Employment Requirement could be waived for otherwise eligible employees who are on an approved leave of absence during the Plan Year.

Subject to the agreed terms of the employment letter, any Leadership Bonuses made in connection with a waiver of the Active Employment Requirement shall be prorated for the applicable Plan Year based on service by dividing the number of days worked in the applicable Plan Year by 365.

“Retirement” under this Plan shall mean separating from service with Firefly on or after attainment of (i) age 60 and completion of five years of continuous employment, or (ii) age 55 and completion of ten years of continuous employment. Continuous employment under this Plan means continuous employment with Firefly or one of its wholly owned subsidiaries. If retirement at an earlier age than (i) or (ii) above is mandatory under applicable law, retirement shall mean the mandatory retirement date and completion of five years of continuous employment.

 

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B. New Hires; New Role. If an employee moves from one job level to a higher or lower job level with different Leadership Bonus payouts under this Plan, their Leadership Bonus for the Plan Year will be prorated based on the number of days in the Plan Year at each level/role.

If an employee moves from an ineligible role to an eligible role or from an eligible role to an ineligible role, their Leadership Bonus will be pro-rated for the number of days in the Plan Year in the eligible role.

Firefly has the sole discretion to determine who and what roles are eligible for Leadership Bonuses.

Guaranteed bonus payments in the first year of employment with Firefly will not be made except with the prior approval of the Compensation Committee.

C. Exiting Employees. Any payment made to a former or exiting employee due to a waiver of the Active Employment Requirement (other than due to death) is contingent on the employee signing and not revoking a general release of claims in a form provided by Firefly (the “General Release”), unless otherwise required by local law.

Subject to any obligations in an individual’s employment letter, Leadership Bonuses made to eligible employees who have left Firefly during the Plan Year (up to and including a last day of employment of December 31) due to death, Retirement or layoff/redundancy will be pro-rated based on the payouts for the individual’s Individual and Company Performance Objectives at a Target rating and will not be changed, once paid, either up or down, based on actual total year results. Such payments will be made as soon as practicable following the effective date of the General Release (other than due to death).

D. Timing of Payments. Leadership Bonuses are made based on the applicable Plan Year during which the employees performed the services and are generally paid (to the extent payable) on the next normal payroll date following the date after (i) after Firefly’s Annual Performance Review process is completed, (ii) the audited financials have been approved by the Board, and (iii) within 120 days of the end of the applicable Plan Year.

E. Leadership Bonuses Amounts. Schedule 1 provides the overall structure of the Firefly Performance Based Compensation Plan, Schedule 2 provides details Leadership Bonuses relating to the achievement of each of the Company Performance Objectives and the Individual Performance Objectives, together with the scale of the Leadership Bonuses paid for various levels of performance. Schedule 3 provides example calculations of Leadership Bonuses.

Leadership Bonuses are calculated using the eligible employee’s base salary in effect on December 31.

Unless approved by the Compensation Committee, no Leadership Bonus payable for any Plan Year based on Individual Performance Objectives will increase an eligible employee’s Leadership Bonus for the Plan Year above Target unless the Company Performance Objectives exceed Target, provided that an employee may exceed performance against his or her Individual Performance Objectives such that his or her total Leadership Bonus may equal Target even if the Company Performance Objectives are less than Target.

 

4.2

Spot Bonus Pool

A. Eligibility. Front line managers and individual contributors making an extraordinary contribution to the furtherance of Firefly financial performance or advances in Firefly culture may be nominated by their manager or executive sponsor for a cash bonus on a spot basis (a “Spot Bonus”), subject to the approval by the Chief Executive in his discretion.

B. Payment. Approved Spot Bonuses will be paid from the Spot Bonus during the Plan Year, provided that aggregate Spot Bonuses for the applicable Plan Year may not exceed the amount of the Spot Bonus Pool approved by the Compensation Committee. Spot Bonuses will be paid to the eligible employee in a lump sum on the next normal payroll date following approval of the appliable Spot Bonus.

 

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5

Long Term Incentive Awards

 

5.1

General

Firefly has the sole discretion to determine who and what roles are eligible for long term incentives in the form of Firefly stock options (“Option Awards”). The issuance of any such Option Awards shall be in accordance with, and subject to, the terms and conditions of the Amended and Restated Firefly Aerospace, Inc. 2017 Stock Plan, as amended (the “Stock Plan”) and the stock option agreement and such other documents or agreements (collectively, the “Stock Agreement”) as Firefly may require to memorialize such Option Awards. This Plan shall not amend or otherwise modify the terms and conditions of the Stock Plan or any Stock Agreement.

The “Agreed Share Price” is a target price per share of Firefly Common Stock set by the Compensation Committee and based on the per share price of the Common Stock upon a hypothetical sale (or IPO) of Firefly at a hypothetical transaction price. Annually the Compensation Committee shall assess the value of the Agreed Share Price to determine if it provides an appropriate long-term incentive for Firefly employees. The Agreed Share Price for Plan Year 2024 is equal to $7.00 per share of Common Stock.

All Option Awards (and the Stock Agreements) will be issued subject to 3-year time vesting, with a one year cliff and then vesting on a quarterly basis for the remaining two years, provided that the Compensation Committee reserves the right to change the vesting conditions for Option Awards on a prospective basis.

Vesting of any stock options will be subject to the terms and conditions of the Stock Plan and Stock Agreement and, in general, depend on the awardee’s continued employment with Firefly on the applicable vesting dates stated in the applicable Stock Agreement.

 

5.2

Executive Leadership & Extended Leadership Option Awards

To ensure that the granting of Option Awards to members of Firefly’s executive and extended leadership teams (such awards, “Leadership Awards”) are performance based, such Leadership Awards shall be tied to each eligible employee’s Leadership Bonus.

Each eligible employee receiving a Leadership Bonus shall receive a Leadership Award with a Dollar value that is equal to three times the Dollar value of his or her Leadership Bonus (final amount to be paid).

The number of shares subject to the Leadership Award shall be determined by dividing the Dollar value of the award by the Agreed Share Value and rounded down to the next whole share (no fractional shares).

The forgoing represents a framework for determining the reasonableness of each Leadership Award, but all Leadership Awards remain subject to Compensation Committee approval.

 

5.3

Manager/Contributor Option Pool and Spot Option Pool

Front line managers and individual contributors making extraordinary contributions to Firefly shall be eligible for Option Awards from the Manager/Contributor Option Pool and/or the Spot Option Pool by nomination of their manager or executive sponsor, subject to the approval by the Chief Executive in his discretion. These Option Awards are made based on the applicable Plan Year during which the employees performed the services and are generally awarded within 30 days following the later of when (i) Firefly’s Annual Performance Review process is completed, and (ii) the audited financials have been approved by the Board.

No employee eligible to receive a Leadership Award shall be eligible to receive Option Awards from the Manager/Contributor Option Pool or the Spot Option Pool.

A. Number of Shares in the Pools at Target. At the beginning of each Plan Year, the Compensation Committee shall approve the number of shares (determined at a Target rating) allocated to the Manager/Contributor Option Pool and the Spot Option Pool.

 

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  (1)

The Dollar value of the Manager/Contributor Option Pool at Target is equal to (i) 15%, multiplied by (ii) Firefly’s total base salary payroll, excluding taxes and excluding the aggregate payroll for the eligible employees participating in the Leadership Bonuses. The total number of shares in the pool is equal to the amount determined pursuant to the preceding sentence, divided by the Agreed Share Price and rounded down to the next whole share (no fractional shares).

 

  (2)

The value of the Spot Option Pool at Target is equal to $1,000,000, such amount to reviewed and approved each year by the Compensation Committee. The total number of shares in the pool is equal to the amount determined pursuant to the preceding sentence, divided by the Agreed Share Price and rounded down to the next whole share (no fractional shares).

For the 2024 Plan Year, the Manager/Contributor Pool will consist of 1,379,220 shares at a Target rating, and the Spot Option Pool will consist of 142,857 shares at a Target rating.

B. Pool Increases if Company Performance Objectives Exceed Target. At the end of each Plan Year, if the Compensation Committee determines that the Company Performance Objectives exceeded a Target rating for Short Term Incentives, the number of shares comprising the Manager/Contributor Option Pool and the Spot Option Pool shall each be increased by up to 20% (120% of the Target amount if the Company Performance Objectives met Maximum). The Spot Option Pool will be increased on a straight-line pro rata basis between each metric from Target to Maximum.

When the Company Performance Objectives are comprised of two or more metrics, the number of shares comprising the Manager/Contributor Option Pool and the Spot Option Pool shall each be increased by an amount equal to the relative weight of those metrics that exceeded Target, multiplied by an up to 20%. For example, if the Company Performance Objectives consisted of three metrics of which one met Target and two were determined to be at Maximum, and their relative weight to the two that were rated a Maximum was equal to 50% of the Company Performance Objectives, the Manager/Contributor Option Pool and the Spot Option Pool would each be increased by 10% (20% x 50%).

 

5.4

New Hires; Promotions; 5-Year Service Awards

At the beginning of each Plan Year, and as part of its annual budgeting process, Firefly will estimate (i) the number of new employees to be hired during the Plan Year and their corresponding base salaries, (ii) the number of Firefly employees to be promoted during the Plan Year, and (iii) the number of employees who will achieve 5 years of service for Firefly.

A. New Hires. At the beginning of each Plan Year, the Compensation Committee shall approve a pool of shares available for Option Awards in connection with hiring new high-performance employees. This pool will be based on the following principles:

 

  •

New hires should not receive an Option Award greater in value than 25% of their starting base salary without the approval of the Chief Executive, provided that the compensation arrangements of any direct report to the Chief Executive must be approved by the Compensation Committee.

 

  •

Each such award shall be converted to a number of shares by dividing the “value” of the award by the Agreed Share Price and rounded down to the next whole share (no fractional shares).

While the above provides a general framework for the determination of a reasonable number of options to be offered to new hires, every Option Award remains subject to Compensation Committee approval.

B. Promotions. At the beginning of each Plan Year, the Compensation Committee shall approve a pool of shares available for Option Awards in connection with employee promotions. For the 2024 Plan Year, 300,000 shares have been set aside for promotion-related Option Awards.

C. 5-Year Service Awards. At the beginning of each Plan Year, the Compensation Committee shall approve a pool of shares available for Option Awards in connection with 5-Year Service Awards. For the 2024 Plan Year, 62,500 shares have been set aside for 5-Year Service Awards.

 

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5.5

Impact on Stock Plan

Notwithstanding the number of shares set aside in the Stock Plan for issuance pursuant to this Section 5.5, the award of any and all Option Awards are subject to the performance conditions set forth above.

For each Plan Year, Firefly will ensure that there are sufficient shares for issuance in the Stock Plan to permit Option Awards for the Plan Year in amounts equal to the sum of:

 

  (1)

The aggregate number of shares to be issued as Leadership Awards assuming all employees eligible to receive such awards receive the maximum amounts permitted under this Plan, plus

 

  (2)

The number of shares in the Manager/Contributor Option Pool assuming the Company Performance Objectives for the Plan Year are rated at Maximum, plus

 

  (3)

The number of shares in the Spot Option Pool assuming the Company Performance Objectives for the Plan Year are rated at Maximum.

For each Plan Year, Firefly also will ensure that there are sufficient shares for issuance in the Stock Plan to permit Option Awards for the Plan Year in amounts equal to the sum of the pools established for the Plan Year for new hires, promotions, and 5-Year Service Awards.

Then, prior to the applicable Evergreen Date (as defined in the Stock Plan), Firefly will review such projected option share needs with the Compensation Committee, as well as any other circumstances that may impact projected option share needs, to enable the Compensation Committee to evaluate the relative size of the Evergreen Increase (as defined in the Stock Plan) for the applicable Plan Year.

 

6

Taxes

If any amounts paid pursuant to this Plan are treated as part of income from employment for any employee, it will be taxed accordingly. Firefly will deduct and withhold all required withholding taxes from any payment or other consideration deliverable to an employee pursuant to any such payment.

 

7

Plan Terms and Conditions

A. Complete Understanding. The Plan and its terms (including any rules or administrative procedures established hereunder) represent the complete understanding between Firefly and eligible employees with regard to terms of the Plan and any Awards hereunder, and control in the event of inconsistencies with any other Firefly documents or any statements made by Firefly to employees concerning the Plan.

B. Offset; Reimbursement. To the extent permitted under applicable law, if an individual receives an overpayment or otherwise owes Firefly money which has not been repaid during the course of or at the conclusion of employment with Firefly, Firefly reserves the right to adjust any Award under the Plan by the amount of the overpayment or to otherwise recover the overpayment by any lawful means.

C. Disputes. In the event of a claim or dispute brought forth by any employee, the decision of the Compensation Committee as to the facts in the case and the meaning and intent of any provision of the Plan, or its application, shall be final, binding, and conclusive.

D. Law. The Plan is governed by the laws of the State of Texas and as such will be construed under and in accordance with the laws of the State of Texas without regard to conflicts of law.

E. Severable. If any one or more of the provisions (or any part thereof) of this Plan shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so as to make it valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired thereby.

F. No Assignment. The right to any Awards or any other rights under the Plan, are not assignable in any manner whatsoever (except to the extent of beneficiary designations made pursuant to established administrative procedures). No employee may create a lien or any other encumbrance on any present or future interest he or she may have under the Plan.

 

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G. Clawback for Misconduct. Firefly reserves the right to claw back amounts paid under this Plan or to reduce an employee’s ability to earn additional amounts under this Plan if it determines the Employee has engaged in misconduct (in the current or any prior plan year), including but not limited to misconduct that violates any of Firefly’s policies, including without limitation sales policies and relevant laws.

H. Right to Amend the Plan is Reserved. The Plan is offered at the sole discretion of Firefly, which reserves the right to modify, adjust, change, or terminate the Plan at any time and for any reason.

 

Plan:    Performance-Based, Incentive Compensation Plan
Version:    1.0
Date:    2024.   

 

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Exhibit 10.12

Final Form

FIREFLY AEROSPACE INC.

 

 

2025 OMNIBUS INCENTIVE PLAN

 

 

ARTICLE I

PURPOSE

The purpose of this Firefly Aerospace Inc. 2025 Omnibus Incentive Plan (this “Plan”) is to promote the success of the Company’s business for the benefit of its stockholders by enabling the Company to offer Eligible Individuals cash and stock-based incentives in order to attract, retain, and reward such individuals and strengthen the mutuality of interests between such individuals and the Company’s stockholders. This Plan is effective as of the date set forth in Article XIV.

This Plan supersedes and replaces the Amended and Restated Firefly Aerospace Inc. 2017 Stock Plan, as amended from time to time (the “Prior Plan”) in its entirety. Awards may not be granted under the Prior Plan on or following the Effective Date. Awards granted under the Prior Plan prior to the Effective Date will remain subject to the terms and conditions set forth in the Prior Plan.

ARTICLE II

DEFINITIONS

For purposes of this Plan, the following terms shall have the following meanings:

2.1 “Affiliate” means a corporation or other entity controlled by, controlling, or under common control with the Company. The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of such Person, whether through the ownership of voting or other securities, by contract or otherwise.

2.2 “Applicable Law” means the requirements relating to the administration of equity-based awards and the related shares under U.S. state corporate law, U.S. federal and state securities laws, the rules or requirements of any stock exchange or quotation system on which the shares are listed or quoted, and any other applicable laws, including tax laws, of any U.S. or non-U.S. jurisdictions where Awards are, or will be, granted under this Plan.

2.3 “Award” means any award under this Plan of any Stock Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Units, Performance Award, Other Stock-Based Award, or Cash Award. All Awards shall be evidenced by and subject to the terms of an Award Agreement.

2.4 “Award Agreement” means the written or electronic agreement, contract, certificate, or other instrument or document evidencing the terms and conditions of an individual Award. Each Award Agreement shall be subject to the terms and conditions of this Plan.

 

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2.5 “Board” means the Board of Directors of the Company.

2.6 “Cash Award” means an Award granted to an Eligible Individual pursuant to Section 9.3 of this Plan and payable in cash at such time or times and subject to such terms and conditions as determined by the Committee in its sole discretion.

2.7  “Cause” means with respect to a Participant’s Termination of Service, unless otherwise defined in the applicable Award Agreement or other written agreement between the Company and the Participant, the following: (a) in the case where there is no employment agreement, offer letter, consulting agreement, change in control agreement, or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award (or where there is such agreement in effect but it does not define “cause” (or words of like import)), (i) the Participant’s theft, dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or falsification of any Company or Affiliate documents or records; (ii) the Participant’s material failure to abide by the Company’s or any Affiliate’s code of conduct or other policies (including, without limitation, policies relating to confidentiality and reasonable workplace conduct); (iii) the Participant’s unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of the Company or any Affiliate (including, without limitation, the Participant’s improper use or disclosure of the Company’s or any Affiliate’s confidential or proprietary information); (iv) any intentional act by the Participant which has a material detrimental effect on the Company’s or any Affiliate’s reputation or business; (v) the Participant’s repeated failure or inability to perform any reasonable assigned duties after written notice from the Company or any Affiliate thereof, and a reasonable opportunity to cure, such failure or inability; (vi) any material breach by the Participant of any employment or service agreement between the Participant and the Company or an Affiliate thereof, which breach is not cured pursuant to the terms of such agreement; or (vii) the Participant’s conviction (including any plea of guilty or nolo contendere) of any criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs the Participant’s ability to perform his or her duties with the Company or an Affiliate thereof, or (b) in the case where there is an employment agreement, offer letter, consulting agreement, change in control agreement, or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award that defines “cause” (or words of like import), “cause” as defined under such agreement; provided, however, that with regard to any agreement under which the definition of “cause” only applies on occurrence of a change in control, such definition of “cause” shall not apply until a change in control (as defined in such agreement) actually takes place and then only with regard to a termination thereafter.

2.8  “Change in Control” means and includes each of the following, unless otherwise defined in the applicable Award Agreement or other written agreement with a Participant approved by the Committee:

(a) any Person (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the Company), becoming the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities, excluding for purposes herein, acquisitions pursuant to a Business Combination (as defined below) that does not constitute a Change in Control as defined in Section 2.8(b);

 

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(b) a merger, reorganization, or consolidation of the Company or in which equity securities of the Company are issued (each, a “Business Combination”), other than a merger, reorganization or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its direct or indirect parent) more than fifty percent (50%) of the combined voting power of the voting securities of the Company or such surviving entity (or, as applicable, a direct or indirect parent of the Company or such surviving entity) outstanding immediately after such merger, reorganization or consolidation; provided, however, that a merger, reorganization or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person (other than those covered by the exceptions in Section 2.8(a)) acquires more than 50% of the combined voting power of the Company’s then outstanding securities shall not constitute a Change in Control;

(c) during the period of two (2) consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new director(s) (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in Sections 2.8(a) or (b)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two (2) year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or

(d) a complete liquidation or dissolution of the Company or the consummation of a sale or disposition by the Company of all or substantially all of the Company’s assets other than the sale or disposition of all or substantially all of the assets of the Company to a Person or Persons who beneficially own, directly or indirectly, fifty percent (50%) or more of the combined voting power of the outstanding voting securities of the Company at the time of the sale.

Notwithstanding the foregoing, with respect to any Award that is characterized as “nonqualified deferred compensation” within the meaning of Section 409A of the Code, an event shall not be considered to be a Change in Control under this Plan for purposes of payment of such Award unless such event is also a “change in ownership,” a “change in effective control,” or a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A of the Code.

2.9 “Change in Control Price” means the highest price per Share paid in any transaction related to a Change in Control as determined by the Committee in its discretion.

2.10 “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time. Any reference to any section of the Code shall also be a reference to any successor provision and any guidance and treasury regulation promulgated thereunder.

2.11 “Committee” means any committee of the Board duly authorized by the Board to administer this Plan; provided, however, that unless otherwise determined by the Board, the

 

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Committee shall consist solely of two or more members of the Board who are each (a) a “non-employee director” within the meaning of Rule 16b-3(b), and (b) “independent” under the listing standards or rules of the securities exchange upon which the Common Stock is traded, but only to the extent such independence is required in order to take the action at issue pursuant to such standards or rules. If no committee is duly authorized by the Board to administer this Plan, the term “Committee” shall be deemed to refer to the Board for all purposes under this Plan. The Board may abolish any Committee or re-vest in itself any previously delegated authority from time to time, and will retain the right to exercise the authority of the Committee to the extent consistent with Applicable Law.

2.12 “Common Stock” means the common stock, $0.0001 par value per share, of the Company.

2.13 “Company” means Firefly Aerospace Inc., a Delaware corporation, and its successors by operation of law.

2.14 “Consultant” means any natural person who is an advisor or consultant or other service provider to the Company or any of its Affiliates.

2.15 “Detrimental Conduct” means, as determined by the Company, the following: (a) any conduct by the Participant that could result in the Participant’s Termination of Service for Cause; or (b) the Participant taking or maintaining trading positions that result in a need to restate financial results in a subsequent reporting period or that result in a significant financial loss to the Company or an Affiliate.

2.16 “Disability” means, unless otherwise defined in the applicable Award Agreement, with respect to a Participant’s Termination of Service, the inability of the Participant to perform the major duties of the Participant’s position with the Company of any Affiliate because of the sickness or injury of the Participant; provided, however, for purposes of an Incentive Stock Option, the term Disability shall have the meaning ascribed to it under Section 22(e)(3) of the Code. The determination of whether an individual has a Disability shall be determined by the Committee, and the Committee may rely on any determination that a Participant is disabled for purposes of benefits under any long-term disability plan in which a Participant participates that is maintained by the Company or any Affiliate.

2.17 “Dividend Equivalent Rights” means a right granted to a Participant under this Plan to receive the equivalent value (in cash or Shares) of dividends paid on Shares.

2.18 “Effective Date” means the effective date of this Plan as defined in Article XIV.

2.19 “Eligible Employee” means each employee of the Company or any of its Affiliates. An employee on a leave of absence may be an Eligible Employee.

2.20 “Eligible Individual” means an Eligible Employee, Non-Employee Director, or Consultant who is designated by the Committee in its discretion as eligible to receive Awards subject to the terms and conditions set forth herein.

 

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2.21 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time. Reference to a specific section of the Exchange Act or regulation thereunder shall include such section or regulation, any valid regulation or interpretation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing, or superseding such section or regulation.

2.22 “Fair Market Value” means, for purposes of this Plan, unless otherwise required by any applicable provision of the Code or any regulations issued thereunder, as of any date and except as provided below, the last sales price reported for the Common Stock on the applicable date: (a) as reported on the principal national securities exchange in the United States on which it is then traded, listed or otherwise reported or quoted or (b) if the Common Stock is not traded, listed, or otherwise reported or quoted, the Committee shall determine in good faith the Fair Market Value in whatever manner it considers appropriate, taking into account the requirements of Section 409A of the Code. For purposes of the grant of any Award, the applicable date shall be the trading day immediately prior to the date on which the Award is granted. For purposes of the exercise of any Award, the applicable date shall be the date a notice of exercise is received by the Committee or, if not a date on which the applicable market is open, the next day that it is open.

2.23 “Family Member” means “family member” as defined in Section A.1.(a)(5) of the general instructions of Form S-8.

2.24 “Incentive Stock Option” means any Stock Option granted to an Eligible Employee who is an employee of the Company or its Subsidiaries under this Plan and that is intended to be, and is designated as, an “Incentive Stock Option” within the meaning of Section 422 of the Code.

2.25 “Non-Employee Director” means a director on the Board who is not an employee of the Company.

2.26 “Non-Qualified Stock Option” means any Stock Option granted under this Plan that is not an Incentive Stock Option.

2.27 “Other Stock-Based Award” means an Award granted under Article IX of this Plan that is valued in whole or in part by reference to, or is payable in or otherwise based on, Shares, but may be settled in the form of Shares or cash.

2.28 “Participant” means an Eligible Individual to whom an Award has been granted pursuant to this Plan.

2.29 “Performance Award” means an Award granted under Article VIII of this Plan.

2.30 “Performance Goals” means goals established by the Committee as contingencies for Awards to vest and/or become exercisable or distributable.

2.31 “Performance Period” means the designated period during which the Performance Goals must be satisfied with respect to the Award to which the Performance Goals relate.

2.32 “Person” means any “person” as such term is used in Sections 13(d) and 14(d) of the Exchange Act.

 

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2.33 “Prior Plan Award” means an award outstanding under the Prior Plan as of the Effective Date.

2.34 “Restricted Stock” means an Award of Shares granted under Article VII of this Plan.

2.35 “Restricted Stock Unit” means an unfunded, unsecured right to receive, on the applicable settlement date, one Share or an amount in cash or other consideration determined by the Committee to be of equal value as of such settlement date, subject to certain vesting conditions and other restrictions.

2.36 “Rule 16b-3” means Rule 16b-3 under Section 16(b) of the Exchange Act as then in effect or any successor provision.

2.37 “Section 409A of the Code” means the nonqualified deferred compensation rules under Section 409A of the Code and any applicable treasury regulations and other official guidance thereunder.

2.38 “Securities Act” means the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder. Reference to a specific section of the Securities Act or regulation thereunder shall include such section or regulation, any valid regulation or interpretation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing, or superseding such section or regulation.

2.39 “Shares” means shares of Common Stock.

2.40 “Stock Appreciation Right” means a stock appreciation right granted under Article VI of this Plan.

2.41 “Stock Option” or “Option” means any option to purchase Shares granted pursuant to Article VI of this Plan.

2.42 “Subsidiary” means any subsidiary corporation of the Company within the meaning of Section 424(f) of the Code.

2.43 “Ten Percent Stockholder” means a Person owning stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or its Subsidiaries.

2.44 “Termination of Service” means the termination of the applicable Participant’s employment with, or performance of services for, the Company and its Affiliates. Unless otherwise determined by the Committee, (a) if a Participant’s employment or services with the Company and its Affiliates terminates but such Participant continues to provide services to the Company and its Affiliates in a non-employee capacity, such change in status shall not be deemed a Termination of Service with the Company and its Affiliates and (b) a Participant employed by, or performing services for an Affiliate that ceases to be an Affiliate shall also be deemed to have incurred a Termination of Service provided the Participant does not immediately thereafter become an employee of the Company or another Affiliate. Notwithstanding the foregoing provisions of this

 

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definition, with respect to any Award that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code, a Participant shall not be considered to have experienced a “Termination of Service” unless the Participant has experienced a “separation from service” within the meaning of Section 409A of the Code.

ARTICLE III

ADMINISTRATION

3.1 Authority of the Committee. This Plan shall be administered by the Committee. Subject to the terms of this Plan and Applicable Law, the Committee shall have full authority to grant Awards to Eligible Individuals under this Plan. In particular, the Committee shall have the authority to:

(a) determine whether and to what extent Awards, or any combination thereof, are to be granted hereunder to one or more Eligible Individuals;

(b) determine the number of Shares to be covered by each Award granted hereunder;

(c) determine the terms and conditions, not inconsistent with the terms of this Plan, of any Award granted hereunder (including, but not limited to, the exercise or purchase price (if any), any restriction or limitation, any vesting schedule or acceleration thereof, or any forfeiture restrictions or waiver thereof, regarding any Award and the Shares, if any, relating thereto, based on such factors, if any, as the Committee shall determine, in its sole discretion);

(d) determine the amount of cash to be covered by each Award granted hereunder;

(e) determine whether, to what extent, and under what circumstances grants of Options and other Awards under this Plan are to operate on a tandem basis and/or in conjunction with or apart from other awards made by the Company outside of this Plan;

(f) determine whether and under what circumstances an Award may be settled in cash, Shares, other property, or a combination of the foregoing;

(g) determine whether, to what extent and under what circumstances cash, Shares, or other property and other amounts payable with respect to an Award under this Plan shall be deferred either automatically or at the election of the Participant;

(h) modify, waive, amend, or adjust the terms and conditions of any Award, at any time or from time to time, including but not limited to Performance Goals;

(i) determine whether a Stock Option is an Incentive Stock Option or Non-Qualified Stock Option;

(j) determine whether to require a Participant, as a condition of the granting of any Award, to not sell or otherwise dispose of Shares acquired pursuant to the exercise or vesting of an Award for a period of time as determined by the Committee, in its sole discretion, following the date of the acquisition of such Award or Shares;

 

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(k) modify, extend, or renew an Award, subject to Article XI and Section 6.8(g) of this Plan; and

(l) determine how the Disability, death, retirement, authorized leave of absence or any other change or purported change in a Participant’s status affects an Award and the extent to which, and the period during which, the Participant, the Participant’s legal representative, conservator, guardian or beneficiary may exercise rights under the Award, if applicable.

3.2 Guidelines. Subject to Article XI of this Plan, the Committee shall have the authority to adopt, alter, and repeal such administrative rules, guidelines, and practices governing this Plan and perform all acts, including the delegation of its responsibilities (to the extent permitted by Applicable Law and applicable stock exchange rules), as it shall, from time to time, deem advisable; to construe and interpret the terms and provisions of this Plan and any Award issued under this Plan (and any agreements or sub-plans relating thereto); and to otherwise supervise the administration of this Plan. The Committee may correct any defect, supply any omission, or reconcile any inconsistency in this Plan or in any agreement relating thereto in the manner and to the extent it shall deem necessary to effectuate the purpose and intent of this Plan. The Committee may adopt special rules, sub-plans, guidelines, and provisions for persons who are residing in or employed in, or subject to, the taxes of any domestic or foreign jurisdictions to satisfy or accommodate applicable foreign laws or to qualify for preferred tax treatment of such domestic or foreign jurisdictions.

3.3 Decisions Final. Any decision, interpretation, or other action made or taken in good faith by or at the direction of the Company, the Board, or the Committee (or any of its members) arising out of or in connection with this Plan shall be within the absolute discretion of all and each of them, as the case may be, and shall be final, binding, and conclusive on the Company and all employees and Participants and their respective heirs, executors, administrators, successors, and assigns.

3.4 Designation of Consultants/Liability; Delegation of Authority.

(a) The Committee may employ such legal counsel, consultants, and agents as it may deem desirable for the administration of this Plan and may rely upon any opinion received from any such counsel or consultant and any computation received from any such consultant or agent. Expenses incurred by the Committee or the Board in the engagement of any such counsel, consultant, or agent shall be paid by the Company. The Committee, its members, and any person designated pursuant to this Section 3.4 shall not be liable for any action or determination made in good faith with respect to this Plan. To the maximum extent permitted by Applicable Law, no officer of the Company or member or former member of the Committee or of the Board shall be liable for any action or determination made in good faith with respect to this Plan or any Award granted under it.

(b) The Committee may delegate any or all of its powers and duties under this Plan to a subcommittee of directors or to any officer of the Company, including the power to perform administrative functions (including executing agreements or other documents on behalf

 

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of the Committee) and grant Awards; provided, that such delegation does not (i) violate Applicable Law, or (ii) result in the loss of an exemption under Rule 16b-3(d)(1) for Awards granted to Participants subject to Section 16 of the Exchange Act in respect of the Company. Upon any such delegation, all references in this Plan to the “Committee,” shall be deemed to include any subcommittee or officer of the Company to whom such powers have been delegated by the Committee. Any such delegation shall not limit the right of such subcommittee members or such an officer to receive Awards; provided, however, that such subcommittee members and any such officer may not grant Awards to himself or herself, a member of the Board, or any executive officer of the Company or an Affiliate, or take any action with respect to any Award previously granted to himself or herself, a member of the Board, or any executive officer of the Company or an Affiliate. The Committee may also designate employees or professional advisors who are not executive officers of the Company or members of the Board to assist in administering this Plan, provided, however, that such individuals may not be delegated the authority to grant or modify any Awards that will, or may, be settled in Shares.

3.5 Indemnification. To the maximum extent permitted by Applicable Law and to the extent not covered by insurance directly insuring such person, each current and former officer or employee of the Company or any of its Affiliates and member or former member of the Committee or the Board shall be indemnified and held harmless by the Company against any cost or expense (including reasonable fees of counsel acceptable to the Committee) or liability (including any sum paid in settlement of a claim with the approval of the Committee), and advanced amounts necessary to pay the foregoing at the earliest time and to the fullest extent permitted, arising out of any act or omission to act in connection with the administration of this Plan, except to the extent arising out of such officer’s, employee’s, member’s, or former member’s own fraud or bad faith. Such indemnification shall be in addition to any right of indemnification that the current or former employee, officer or member may have under Applicable Law or under the by-laws of the Company or any of its Affiliates. Notwithstanding anything else herein, this indemnification will not apply to the actions or determinations made by an individual with regard to Awards granted to such individual under this Plan.

ARTICLE IV

SHARE LIMITATION

4.1 Shares. The aggregate number of Shares that may be issued pursuant to this Plan shall not exceed    Shares (subject to any increase or decrease pursuant to this Article IV), which may be either authorized and unissued Shares or Shares held in or acquired for the treasury of the Company or both. The number of Shares that may be issued pursuant to this Plan shall be subject to an annual increase on January 1 of each calendar year beginning in 2026, and ending and including 2035, equal to the lesser of (a) 3% of the aggregate number of Shares outstanding on December 31 of the immediately preceding calendar year and (b) such smaller number of Shares as is determined by the Board. The aggregate number of Shares that may be issued or used with respect to any Incentive Stock Option shall not exceed     Shares (subject to any increase or decrease pursuant to Section 4.3). Any Award under this Plan settled in cash shall not be counted against the foregoing maximum share limitations. Notwithstanding anything to the contrary contained herein, Shares subject to an Award under this Plan or a Prior Plan Award shall again be made available for issuance or delivery under this Plan if such Shares are (i) Shares delivered, withheld or surrendered in payment of the exercise or purchase price of an Award, (ii) Shares delivered, withheld, or

 

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surrendered to satisfy any tax withholding obligation or (iii) Shares subject to a stock-settled Award that expires or is canceled, forfeited, or terminated without issuance of the full number of Shares to which the Award related.

4.2 Substitute Awards. In connection with an entity’s merger or consolidation with the Company or the Company’s acquisition of an entity’s property or stock, the Committee may grant Awards in substitution for any options or other stock or stock-based awards granted before such merger or consolidation by such entity or its affiliate (“Substitute Awards”). Substitute Awards may be granted on such terms as the Committee deems appropriate, notwithstanding limitations on Awards in this Plan. Substitute Awards will not count against the Shares authorized for grant under this Plan (nor shall Shares subject to a Substitute Award be added to the Shares available for Awards under this Plan as provided under Section 4.1 above), except that Shares acquired by exercise of substitute Incentive Stock Options will count against the maximum number of Shares that may be issued pursuant to the exercise of Incentive Stock Options under this Plan, as set forth in Section 4.1 above. Additionally, in the event that a Person acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grants pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under this Plan and shall not reduce the Shares authorized for grant under this Plan (and Shares subject to such Awards shall not be added to the Shares available for Awards under this Plan as provided under Section 4.1 above); provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Eligible Employees or Non-Employee Directors prior to such acquisition or combination.

4.3 Adjustments.

(a) The existence of this Plan and the Awards granted hereunder shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize (i) any adjustment, recapitalization, reorganization, or other change in the Company’s capital structure or its business, (ii) any merger or consolidation of the Company or any Affiliate, (iii) any issuance of bonds, debentures, or preferred or prior preference stock ahead of or affecting the Shares, (iv) the dissolution or liquidation of the Company or any Affiliate, (v) any sale or transfer of all or part of the assets or business of the Company or any Affiliate, or (vi) any other corporate act or proceeding.

(b) Subject to the provisions of Section 10.1:

(i) If the Company at any time subdivides (by any split, recapitalization or otherwise) the outstanding Shares into a greater number of Shares, or combines (by reverse split, combination, or otherwise) its outstanding Shares into a lesser number of Shares, then the respective exercise prices for outstanding Awards that provide for a Participant-elected exercise and the number of Shares covered by outstanding Awards shall be appropriately adjusted by the Committee to prevent dilution or enlargement of the rights granted to, or available for, Participants under this Plan; provided, that the Committee in its sole discretion shall determine whether an adjustment is appropriate.

 

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(ii) Excepting transactions covered by Section 4.3(b)(i), if the Company effects any merger, consolidation, statutory exchange, spin-off, reorganization, sale or transfer of all or substantially all the Company’s assets or business, or other corporate transaction or event in such a manner that the Company’s outstanding Shares are converted into the right to receive (or the holders of Common Stock are entitled to receive in exchange therefor), either immediately or upon liquidation of the Company, securities or other property of the Company or other entity, then, subject to the provisions of Section 10.1, (A) the aggregate number or kind of securities that thereafter may be issued under this Plan, (B) the number or kind of securities or other property (including cash) to be issued pursuant to Awards granted under this Plan (including as a result of the assumption of this Plan and the obligations hereunder by a successor entity, as applicable), or (C) the exercise or purchase price thereof, shall be appropriately adjusted by the Committee to prevent dilution or enlargement of the rights granted to, or available for, Participants under this Plan.

(iii) If there shall occur any change in the capital structure of the Company other than those covered by Section 4.3(b)(i) or 4.3(b)(ii), any conversion, any adjustment, or any issuance of any class of securities convertible or exercisable into, or exercisable for, any class of equity securities of the Company, then the Committee shall adjust any Award and make such other adjustments to this Plan to prevent dilution or enlargement of the rights granted to, or available for, Participants under this Plan.

(iv) In the event of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other extraordinary transaction or change affecting the Shares or the Share price, including any securities offering or other similar transaction, for administrative convenience, the Committee may refuse to permit the exercise of any Award for up to sixty (60) days before or after such transaction.

(v) The Committee may adjust the Performance Goals applicable to any Awards to reflect any unusual or non-recurring events and other extraordinary items, impact of charges for restructurings, discontinued operations, and the cumulative effects of accounting or tax changes, each as defined by generally accepted accounting principles or as identified in the Company’s financial statements, notes to the financial statements, management’s discussion and analysis, or other Company public filing.

(vi) Any such adjustment determined by the Committee pursuant to this Section 4.3(b) shall be final, binding, and conclusive on the Company and all Participants and their respective heirs, executors, administrators, successors, and permitted assigns. Any adjustment to, or assumption or substitution of, an Award under this Section 4.3(b) shall be intended to comply with the requirements of Section 409A of the Code and Treasury Regulation §1.424-1 (and any amendments thereto), to the extent applicable. Except as expressly provided in this Section 4.3 or in the applicable Award Agreement, a Participant shall have no additional rights under this Plan by reason of any transaction or event described in this Section 4.3.

 

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4.4 Annual Limit on Non-Employee Director Compensation. In each calendar year during any part of which this Plan is in effect, a Non-Employee Director may not receive Awards for such individual’s service on the Board that, taken together with any cash fees paid to such Non-Employee Director during such calendar year for such individual’s service on the Board, have a value in excess of $750,000 or, solely in the case of a lead director or non-executive chair of the Board, $1,000,000 (in either case, calculating the value of any such Awards based on the grant date fair value of such Awards for financial reporting purposes); provided, that (a) the Committee may make exceptions to this limit, except that the Non-Employee Director receiving such additional compensation may not participate in the decision to award such compensation or in other contemporaneous decisions involving compensation for Non-Employee Directors and (b) for any calendar year in which a Non-Employee Director first commences service on the Board such limit shall be increased to $1,500,000; provided, further, that the limit set forth in this Section 4.4 shall be applied without regard to Awards or other compensation, if any, provided to a Non-Employee Director during any period in which such individual was an employee of the Company or any Affiliate or was otherwise providing services to the Company or to any Affiliate other than in the capacity as a Non-Employee Director.

ARTICLE V

ELIGIBILITY

5.1 General Eligibility. All current and prospective Eligible Individuals are eligible to be granted Awards. Eligibility for the grant of Awards and actual participation in this Plan shall be determined by the Committee in its sole discretion. No Eligible Individual will automatically be granted any Award under this Plan.

5.2 Incentive Stock Options. Notwithstanding the foregoing, only Eligible Employees who are employees of the Company or its Subsidiaries are eligible to be granted Incentive Stock Options under this Plan. Eligibility for the grant of an Incentive Stock Option and actual participation in this Plan shall be determined by the Committee in its sole discretion.

5.3 General Requirement. The vesting and exercise of Awards granted to a prospective Eligible Individual are conditioned upon such individual actually becoming an Eligible Employee, Consultant, or Non-Employee Director, as applicable.

ARTICLE VI

STOCK OPTIONS; STOCK APPRECIATION RIGHTS

6.1 General. Stock Options or Stock Appreciation Rights may be granted alone or in addition to other Awards granted under this Plan. Each Stock Option granted under this Plan shall be of one of two types: (a) an Incentive Stock Option or (b) a Non-Qualified Stock Option. Stock Options and Stock Appreciation Rights granted under this Plan shall be evidenced by an Award Agreement and subject to the terms, conditions and limitations in this Plan, including any limitations applicable to Incentive Stock Options.

6.2 Grants. The Committee shall have the authority to grant to any Eligible Individual one or more Incentive Stock Options, Non-Qualified Stock Options, and/or Stock Appreciation Rights; provided, however, that Incentive Stock Options may only be granted to an Eligible

 

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Employee who is an employee of the Company or its Subsidiaries. To the extent that any Stock Option does not qualify as an Incentive Stock Option (whether because of its provisions or the time or manner of its exercise or otherwise), such Stock Option or the portion thereof which does not so qualify shall constitute a separate Non-Qualified Stock Option.

6.3 Exercise Price. The exercise price per Share subject to a Stock Option or Stock Appreciation Right shall be determined by the Committee at the time of grant, provided that the per share exercise price of a Stock Option or Stock Appreciation Right shall not be less than 100% (or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, 110%) of the Fair Market Value at the time of grant. Notwithstanding the foregoing, in the case of a Stock Option or Stock Appreciation Right that is a Substitute Award, the exercise price per Share for such Stock Option or Stock Appreciation Right may be less than the Fair Market Value on the date of grant; provided, that, such exercise price is determined in a manner consistent with the provisions of Section 409A of the Code and, if applicable, Section 424(a) of the Code.

6.4 Term. The term of each Stock Option or Stock Appreciation Right shall be fixed by the Committee, provided that no Stock Option or Stock Appreciation Right shall be exercisable more than ten (10) years (or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, five (5) years) after the date on which the Stock Option or Stock Appreciation Right, as applicable, is granted.

6.5 Exercisability. Unless otherwise provided by the Committee in accordance with the provisions of this Section 6.5, Stock Options and Stock Appreciation Rights granted under this Plan shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at the time of grant. The Committee may, but shall not be required to, provide for an acceleration of vesting and exercisability upon the occurrence of a specified event. Unless otherwise determined by the Committee, if the exercise of a Non-Qualified Stock Option or Stock Appreciation Right within the permitted time periods is prohibited because such exercise would violate the registration requirements under the Securities Act or any other Applicable Law or the rules of any securities exchange or interdealer quotation system, the Company’s insider trading policy (including any blackout periods) or a “lock-up” agreement entered into in connection with the issuance of securities by the Company, then the expiration of such Non-Qualified Stock Option or Stock Appreciation Right shall be extended until the date that is thirty (30) days after the end of the period during which the exercise of the Non-Qualified Stock Option or Stock Appreciation Right would be in violation of such registration requirement or other Applicable Law or rules, blackout period or lock-up agreement, as determined by the Committee; provided, however, that in no event shall any such extension result in any Non-Qualified Stock Option or Stock Appreciation Right remaining exercisable after the ten (10)-year term of the applicable Non-Qualified Stock Option or Stock Appreciation Right.

6.6 Method of Exercise. Subject to any applicable waiting period or exercisability provisions under Section 6.5, to the extent vested, Stock Options and Stock Appreciation Rights may be exercised in whole or in part at any time during the term of the applicable Stock Option or Stock Appreciation Right, by giving written notice of exercise (which may be electronic) to the Company specifying the number of Stock Options or Stock Appreciation Rights, as applicable, being exercised. Such notice shall be accompanied by payment in full of the exercise price (which shall equal the product of such number of Shares to be purchased multiplied by the applicable

 

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exercise price). The exercise price for the Stock Options may be paid upon such terms and conditions as shall be established by the Committee and set forth in the applicable Award Agreement. Without limiting the foregoing, the Committee may establish payment terms for the exercise of Stock Options pursuant to which the Company may withhold a number of Shares that otherwise would be issued to the Participant in connection with the exercise of the Stock Option having a Fair Market Value on the date of exercise equal to the exercise price, or that permit the Participant to deliver cash or Shares with a Fair Market Value equal to the exercise price on the date of payment, or through a simultaneous sale through a broker of Shares acquired on exercise, all as permitted by Applicable Law. No Shares shall be issued until payment therefor, as provided herein, has been made or provided for. Upon the exercise of a Stock Appreciation Right a Participant shall be entitled to receive, for each right exercised, up to, but no more than, an amount in cash and/or Shares (as chosen by the Committee in its sole discretion) equal in value to the excess of the Fair Market Value of one (1) Share on the date that the right is exercised over the Fair Market Value of one (1) Share on the date that the right was awarded to the Participant.

6.7 Non-Transferability. No Stock Option or Stock Appreciation Right shall be transferable by the Participant other than by will or by the laws of descent and distribution, and all Stock Options and Stock Appreciation Rights shall be exercisable, during the Participant’s lifetime, only by the Participant. Notwithstanding the foregoing, the Committee may determine, in its sole discretion, at the time of grant or thereafter that a Non-Qualified Stock Option that is otherwise not transferable pursuant to this Section 6.7 is transferable to a Family Member of the Participant in whole or in part and in such circumstances, and under such conditions, as specified by the Committee. A Non-Qualified Stock Option that is transferred to a Family Member pursuant to the preceding sentence (a) may not be subsequently transferred other than by will or by the laws of descent and distribution and (b) remains subject to the terms of this Plan and the applicable Award Agreement. Any Shares acquired upon the exercise of a Non-Qualified Stock Option by a permissible transferee of a Non-Qualified Stock Option or a permissible transferee pursuant to a transfer after the exercise of the Non-Qualified Stock Option shall be subject to the terms of this Plan and the applicable Award Agreement.

6.8 Termination. Unless otherwise determined by the Committee at grant or, if no rights of the Participant are reduced, thereafter, subject to the provisions of the applicable Award Agreement and this Plan, upon a Participant’s Termination of Service for any reason, Stock Options and Stock Appreciation Rights may remain exercisable following a Participant’s Termination of Service as follows:

(a) Termination by Death or Disability. Unless otherwise provided in the applicable Award Agreement, or otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, if a Participant’s Termination of Service is by reason of death or Disability, all Stock Options and Stock Appreciation Rights that are held by such Participant that are vested and exercisable at the time of the Participant’s Termination of Service may be exercised by the Participant (or in the case of the Participant’s death, by the legal representative of the Participant’s estate) at any time within a period of one (1) year from the date of such Termination of Service, but in no event beyond the expiration of the stated term of such Stock Options and Stock Appreciation Rights; provided, however, that, in the event of a Participant’s Termination of Service by reason of Disability, if the Participant dies within such exercise period, all unexercised Stock Options and Stock Appreciation Rights held by such

 

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Participant shall thereafter be exercisable, to the extent to which they were exercisable at the time of death, for a period of one (1) year from the date of such death, but in no event beyond the expiration of the stated term of such Stock Options and/or Stock Appreciation Rights.

(b) Involuntary Termination Without Cause. Unless otherwise provided in the applicable Award Agreement or otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, if a Participant’s Termination of Service is by involuntary termination by the Company without Cause, all Stock Options and Stock Appreciation Rights that are held by such Participant that are vested and exercisable at the time of the Participant’s Termination of Service may be exercised by the Participant at any time within a period of ninety (90) days from the date of such Termination of Service, but in no event beyond the expiration of the stated term of such Stock Options or Stock Appreciation Rights.

(c) Voluntary Resignation. Unless otherwise provided in the applicable Award Agreement or otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, if a Participant’s Termination of Service is voluntary (other than a voluntary termination described in Section 6.8(d) hereof), all Stock Options and Stock Appreciation Rights that are held by such Participant that are vested and exercisable at the time of the Participant’s Termination of Service may be exercised by the Participant at any time within a period of ninety (90) days from the date of such Termination of Service, but in no event beyond the expiration of the stated term of such Stock Options or Stock Appreciation Rights.

(d) Termination for Cause. Unless otherwise provided in the applicable Award Agreement or determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Termination of Service (i) is for Cause or (ii) is a voluntary Termination of Service (as provided in Section 6.8(c)) after the occurrence of an event that would be grounds for a Termination of Service for Cause, all Stock Options and Stock Appreciation Rights, whether vested or not vested, that are held by such Participant shall thereupon immediately terminate and expire as of the date of such Termination of Service.

(e) Unvested Stock Options and Stock Appreciation Rights. Unless otherwise provided in the applicable Award Agreement or determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, Stock Options and Stock Appreciation Rights that are not vested as of the date of a Participant’s Termination of Service for any reason shall terminate and expire as of the date of such Termination of Service.

(f) Incentive Stock Option Limitations. To the extent that the aggregate Fair Market Value (determined as of the time of grant) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by an Eligible Employee during any calendar year under this Plan and/or any other stock option plan of the Company or any Subsidiary exceeds $100,000, such Options shall be treated as Non-Qualified Stock Options. In addition, if an Eligible Employee does not remain employed by the Company or any Subsidiary at all times from the time an Incentive Stock Option is granted until three (3) months prior to the date of exercise thereof (or such other period as required by Applicable Law), such Stock Option shall be treated as a Non-Qualified Stock Option. Should any provision of this Plan not be necessary in order for the Stock Options to qualify as Incentive Stock Options, or should any additional provisions be required, the Committee may amend this Plan accordingly, without the necessity of obtaining the approval of the stockholders of the Company.

 

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(g) Modification, Extension and Renewal of Stock Options. The Committee may (i) modify, extend, or renew outstanding Stock Options granted under this Plan (provided that the rights of a Participant are not reduced without such Participant’s consent and provided, further that such action does not subject the Stock Options to Section 409A of the Code without the consent of the Participant), and (ii) accept the surrender of outstanding Stock Options (to the extent not theretofore exercised) and authorize the granting of new Stock Options in substitution therefor (to the extent not theretofore exercised).

6.9 Automatic Exercise. The Committee may include a provision in an Award Agreement providing for the automatic exercise of a Non-Qualified Stock Option or Stock Appreciation Right on a cashless basis on the last day of the term of such Option or Stock Appreciation Right if the Participant has failed to exercise the Non-Qualified Stock Option or Stock Appreciation Right as of such date, with respect to which the Fair Market Value of the Shares underlying the Non-Qualified Stock Option or Stock Appreciation Right exceeds the exercise price of such Non-Qualified Stock Option or Stock Appreciation Right on the date of expiration of such Option or Stock Appreciation Right, subject to Section 13.4.

6.10 Dividends. No dividends or Dividend Equivalent Rights shall be granted with respect to Stock Options or Stock Appreciation Rights.

6.11 Other Terms and Conditions. As the Committee shall deem appropriate, Stock Options and Stock Appreciation Rights may be subject to additional terms and conditions or other provisions, which shall not be inconsistent with any of the terms of this Plan.

ARTICLE VII

RESTRICTED STOCK; RESTRICTED STOCK UNITS

7.1 Awards of Restricted Stock and Restricted Stock Units. Shares of Restricted Stock and Restricted Stock Units may be granted alone or in addition to other Awards granted under this Plan. The Committee shall determine the Eligible Individuals to whom, and the time or times at which, grants of Restricted Stock and/or Restricted Stock Units shall be made, the number of shares of Restricted Stock or Restricted Stock Units to be awarded, the price (if any) to be paid by the Participant (subject to Section 7.2), the time or times within which such Awards may be subject to forfeiture, the vesting schedule and rights to acceleration thereof, and all other terms and conditions of the Awards. The Committee shall determine and set forth in the Award Agreement the terms and conditions for each Award of Restricted Stock and Restricted Stock Units, subject to the conditions and limitations contained in this Plan, including any vesting or forfeiture conditions.

The Committee may condition the grant or vesting of Restricted Stock and Restricted Stock Units upon the attainment of specified Performance Goals or such other factor as the Committee may determine in its sole discretion.

 

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7.2 Awards and Certificates. Restricted Stock and Restricted Stock Units granted under this Plan shall be evidenced by an Award Agreement and subject to the following terms and conditions and shall be in such form and contain such additional terms and conditions not inconsistent with the terms of this Plan, as the Committee shall deem desirable:

(a) Restricted Stock.

(i) Purchase Price. The purchase price of Restricted Stock shall be fixed by the Committee. The purchase price for shares of Restricted Stock may be zero to the extent permitted by Applicable Law, and, to the extent not so permitted, such purchase price may not be less than par value.

(ii) Legend. Each Participant receiving Restricted Stock shall be issued a stock certificate in respect of such shares of Restricted Stock, unless the Committee elects to use another system, such as book entries by the Company’s transfer agent, as evidencing ownership of shares of Restricted Stock. Such certificate shall be registered in the name of such Participant, and shall, in addition to such legends required by Applicable Law, bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock.

(iii) Custody. If stock certificates are issued in respect of shares of Restricted Stock, the Committee may require that any stock certificates evidencing such shares be held in custody by the Company until the restrictions thereon shall have lapsed, and that, as a condition of any grant of Restricted Stock, the Participant shall have delivered a duly signed stock power or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate by the Company, which would permit transfer to the Company of all or a portion of the shares subject to the Award of Restricted Stock in the event that such Award is forfeited in whole or part.

(iv) Rights as a Stockholder. Except as provided in Section 7.3(a) and this Section 7.2(a) or as otherwise determined by the Committee in an Award Agreement, the Participant shall have, with respect to the shares of Restricted Stock, all of the rights of a holder of Shares, including, without limitation, the right to receive dividends, the right to vote such shares, and, subject to and conditioned upon the full vesting of shares of Restricted Stock, the right to tender such shares; provided that the Award Agreement shall specify on what terms and conditions the applicable Participant shall be entitled to dividends payable on the Shares.

(v) Lapse of Restrictions. If and when the Restriction Period expires without a prior forfeiture of the Restricted Stock, the certificates for such Shares shall be delivered to the Participant. All legends shall be removed from said certificates at the time of delivery to the Participant, except as otherwise required by Applicable Law or other limitations imposed by the Committee.

(b) Restricted Stock Units.

(i) Settlement. The Committee may provide that settlement of Restricted Stock Units will occur upon or as soon as reasonably practical after the Restricted Stock Units vest or will instead be deferred, on a mandatory basis or at the Participant’s election, in a manner intended to comply with Section 409A of the Code.

 

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(ii) Rights as a Stockholder. A Participant will have no rights of a stockholder with respect to Shares subject to any Restricted Stock Unit unless and until Shares are delivered in settlement of the Restricted Stock Units.

(iii) Dividend Equivalent Rights. If the Committee so provides, a grant of Restricted Stock Units may provide a Participant with the right to receive Dividend Equivalent Rights. Dividend Equivalent Rights may be paid currently or credited to an account for the Participant, settled in cash or Shares, and subject to the same restrictions on transferability and forfeitability as the Restricted Stock Units with respect to which the Dividend Equivalent Rights are granted and subject to other terms and conditions as set forth in the Award Agreement.

7.3 Restrictions and Conditions.

(a) Restriction Period.

(i) The Participant shall not be permitted to transfer shares of Restricted Stock awarded under this Plan or vest in Restricted Stock Units during the period or periods set by the Committee (the “Restriction Period”) commencing on the date of such Award, as set forth in the applicable Award Agreement and such agreement shall set forth a vesting schedule and any event that would accelerate vesting of the Restricted Stock and/or Restricted Stock Units. Within these limits, based on service, attainment of Performance Goals pursuant to Section 7.3(a)(i), and/or such other factors or criteria as the Committee may determine in its sole discretion, the Committee may condition the grant or provide for the lapse of such restrictions in installments in whole or in part, or may accelerate the vesting of all or any part of any Award of Restricted Stock or Restricted Stock Units and/or waive the deferral limitations for all or any part of any Award of Restricted Stock or Restricted Stock Units.

(ii) If the grant of shares of Restricted Stock or Restricted Stock Units or the lapse of restrictions or vesting schedule is based on the attainment of Performance Goals, the Committee shall establish the objective Performance Goals and the applicable vesting percentage applicable to each Participant or class of Participants in the applicable Award Agreement prior to the beginning of the applicable fiscal year or at such later date as otherwise determined by the Committee and while the outcome of the Performance Goals are substantially uncertain. Such Performance Goals may incorporate provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions), and other similar types of events or circumstances.

(b) Termination. Unless otherwise provided in the applicable Award Agreement or determined by the Committee at grant or, if no rights of the Participant are reduced, thereafter, upon a Participant’s Termination of Service for any reason during the relevant Restriction Period, all Restricted Stock or Restricted Stock Units still subject to restriction will be forfeited in accordance with the terms and conditions established by the Committee at grant or thereafter.

 

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ARTICLE VIII

PERFORMANCE AWARDS

The Committee may grant a Performance Award to a Participant payable upon the attainment of specific Performance Goals either alone or in addition to other Awards granted under this Plan. The Performance Goals to be achieved during the Performance Period and the length of the Performance Period shall be determined by the Committee upon the grant of each Performance Award. The conditions for grant or vesting and the other provisions of Performance Awards (including, without limitation, any applicable Performance Goals) need not be the same with respect to each Participant. Performance Awards may be paid in cash, Shares, other property, or any combination thereof, in the sole discretion of the Committee as set forth in the applicable Award Agreement.

ARTICLE IX

OTHER STOCK-BASED AND CASH AWARDS

9.1 Other Stock-Based Awards. The Committee is authorized to grant to Eligible Individuals Other Stock-Based Awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to Shares, including but not limited to, Shares awarded purely as a bonus and not subject to restrictions or conditions, Shares in payment of the amounts due under an incentive or performance plan sponsored or maintained by the Company, stock equivalent units, and Awards valued by reference to the book value of Shares. Other Stock-Based Awards may be granted either alone or in addition to or in tandem with other Awards granted under this Plan.

Subject to the provisions of this Plan, the Committee shall have authority to determine the Eligible Individuals, to whom, and the time or times at which, such Other Stock-Based Awards shall be made, the number of Shares to be awarded pursuant to such Awards, and all other conditions of the Awards. The Committee may also provide for the grant of Shares under such Awards upon the completion of a specified Performance Period. The Committee may condition the grant or vesting of Other Stock-Based Awards upon the attainment of specified Performance Goals as the Committee may determine, in its sole discretion.

9.2 Terms and Conditions. Other Stock-Based Awards made pursuant to this Article IX shall be evidenced by an Award Agreement and subject to the following terms and conditions and shall be in such form and contain such additional terms and conditions not inconsistent with the terms of this Plan, as the Committee shall deem desirable:

(a) Non-Transferability. Subject to the applicable provisions of the Award Agreement and this Plan, Shares subject to Other Stock-Based Awards may not be transferred prior to the date on which the Shares are issued or, if later, the date on which any applicable restriction, performance, or deferral period lapses.

(b) Dividends. Unless otherwise determined by the Committee at the time of the grant of an Other Stock-Based Award, subject to the provisions of the Award Agreement and this Plan, the recipient of an Other Stock-Based Award shall not be entitled to receive, currently or on a deferred basis, dividends or Dividend Equivalent Rights in respect of the number of Shares covered by the Other Stock-Based Award.

 

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(c) Vesting. Any Other Stock-Based Award and any Shares covered by any such Other Stock-Based Award shall vest or be forfeited to the extent so provided in the Award Agreement, as determined by the Committee, in its sole discretion.

(d) Price. Shares under this Article IX may be issued for no cash consideration. Shares purchased pursuant to a purchase right awarded pursuant to an Other Stock-Based Award shall be priced, as determined by the Committee in its sole discretion.

9.3 Cash Awards. The Committee may from time to time grant Cash Awards to Eligible Individuals in such amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by Applicable Law, as it shall determine in its sole discretion. Cash Awards may be granted subject to the satisfaction of vesting conditions or may be awarded purely as a bonus and not subject to restrictions or conditions, and if subject to vesting conditions, the Committee may accelerate the vesting of such Awards at any time in its sole discretion. The grant of a Cash Award shall not require a segregation of any of the Company’s assets for satisfaction of the Company’s payment obligation thereunder.

ARTICLE X

CHANGE IN CONTROL PROVISIONS

10.1 Benefits. In the event of a Change in Control of the Company, and except as otherwise provided by the Committee in an Award Agreement or any applicable employment agreement, offer letter, consulting agreement, change in control agreement, or similar agreement in effect between the Company or an Affiliate and the Participant, a Participant’s unvested Awards shall not vest automatically and a Participant’s Awards shall be treated in accordance with one or more of the following methods as determined by the Committee:

(a) Awards, whether or not then vested, shall be continued, be assumed, or have new rights substituted therefor, as determined by the Committee in a manner consistent with the requirements of Section 409A of the Code, and restrictions to which shares of Restricted Stock or any other Award granted prior to the Change in Control are subject shall not lapse upon a Change in Control and the Restricted Stock or other Award shall, where appropriate in the sole discretion of the Committee, receive the same distribution as other Shares on such terms as determined by the Committee; provided that the Committee may decide to award additional Restricted Stock or other Awards in lieu of any cash distribution. Notwithstanding anything to the contrary herein, for purposes of Incentive Stock Options, any assumed or substituted Stock Option shall comply with the requirements of Treasury Regulation Section 1.424-1 (and any amendment thereto).

(b) The Committee, in its sole discretion, may provide for the purchase of any Awards by the Company for an amount of cash equal to the excess (if any) of the Change in Control Price of the Shares covered by such Awards, over the aggregate exercise price of such Awards; provided, however, that if the exercise price of an Option or Stock Appreciation Right exceeds the Change in Control Price, such Award may be cancelled for no consideration.

(c) The Committee may, in its sole discretion, terminate all outstanding and unexercised Stock Options, Stock Appreciation Rights, or any Other Stock-Based Award that provides for a Participant-elected exercise, effective as of the date of the Change in Control, by

 

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delivering notice of termination to each Participant at least twenty (20) days prior to the date of consummation of the Change in Control, in which case during the period from the date on which such notice of termination is delivered to the consummation of the Change in Control, each such Participant shall have the right to exercise in full all of such Participant’s Awards that are then outstanding (without regard to any limitations on exercisability otherwise contained in the Award Agreements), but any such exercise shall be contingent on the occurrence of the Change in Control, and, provided that, if the Change in Control does not take place within a specified period after giving such notice for any reason whatsoever, the notice and exercise pursuant thereto shall be null and void.

(d) Notwithstanding any other provision herein to the contrary, the Committee may, in its sole discretion, provide for accelerated vesting or lapse of restrictions, of an Award at any time.

ARTICLE XI

TERMINATION OR AMENDMENT OF PLAN

Notwithstanding any other provision of this Plan, the Board or the Committee may at any time, and from time to time, amend, in whole or in part, any or all of the provisions of this Plan (including any amendment deemed necessary to ensure that the Company may comply with any Applicable Law), or suspend or terminate it entirely, retroactively or otherwise; provided, however, that, unless otherwise required by Applicable Law or specifically provided herein, the rights of a Participant with respect to Awards granted prior to such amendment, suspension, or termination may not be materially impaired without the consent of such Participant and, provided, further, that without the approval of the holders of the Shares entitled to vote in accordance with Applicable Law, no amendment may be made that would (a) increase the aggregate number of Shares that may be issued under this Plan (except by operation of Section 4.1); or (b) change the classification of individuals eligible to receive Awards under this Plan. In addition, the Board or the Committee shall, without the approval of the holders of the Shares entitled to vote in accordance with Applicable Law, have the authority to (i) amend any outstanding Option or Stock Appreciation Right to reduce its exercise price per Share or (ii) cancel any Option or Stock Appreciation Right in exchange for cash or another Award. Notwithstanding anything herein to the contrary, the Board or the Committee may amend this Plan or any Award Agreement at any time without a Participant’s consent to comply with Applicable Law, including Section 409A of the Code. The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively, but, subject to Article IV or as otherwise specifically provided herein, no such amendment or other action by the Committee shall materially impair the rights of any Participant without the Participant’s consent.

ARTICLE XII

UNFUNDED STATUS OF PLAN

This Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payment as to which a Participant has a fixed and vested interest but which is not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any right that is greater than those of a general unsecured creditor of the Company.

 

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ARTICLE XIII

GENERAL PROVISIONS

13.1 Lock-Up; Legend. The Committee may require each person receiving Shares pursuant to a Stock Option or other Award under this Plan to represent to and agree with the Company in writing that the Participant is acquiring the Shares without a view to distribution thereof. The Company may, in connection with registering the offering of any Company securities under the Securities Act, prohibit Participants from, directly or indirectly, selling or otherwise transferring any Shares or other Company securities during any period determined by the underwriter or the Company. In addition to any legend required by this Plan, the certificates for such Shares may include any legend that the Committee deems appropriate to reflect any restrictions on transfer. All certificates for Shares delivered under this Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed or any national securities exchange system upon whose system the Common Stock is then quoted, and any Applicable Law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. If the Shares are held in book-entry form, then the book-entry will indicate any restrictions on such Shares.

13.2 Other Plans. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required, and such arrangements may be either generally applicable or applicable only in specific cases.

13.3 No Right to Employment/Directorship/Consultancy. Neither this Plan nor the grant of any Award hereunder shall give any Participant or other employee, Consultant or Non-Employee Director any right with respect to continuance of employment, consultancy or directorship by the Company or any Affiliate, nor shall there be a limitation in any way on the right of the Company or any Affiliate by which an employee is employed or a Consultant or Non-Employee Director is retained to terminate such employment, consultancy, or directorship at any time.

13.4 Withholding of Taxes. A Participant shall be required to pay to the Company or one of its Affiliates, as applicable, or make arrangements satisfactory to the Company regarding the payment of, any income tax, social insurance contribution or other applicable taxes that are required to be withheld in respect of an Award. The Committee may (but is not obligated to), in its sole discretion, permit or require a Participant to satisfy all or any portion of the applicable taxes that are required to be withheld with respect to an Award by (a) the delivery of Shares (which are not subject to any pledge or other security interest) that have been both held by the Participant and vested for at least six (6) months (or such other period as established from time to time by the Committee in order to avoid adverse accounting treatment under applicable accounting standards) having an aggregate Fair Market Value equal to such withholding liability (or portion thereof); (b) having the Company withhold from the Shares otherwise issuable or deliverable to, or that would otherwise be retained by, the Participant upon the grant, exercise, vesting, or settlement of the Award, as applicable, a number of Shares with an aggregate Fair Market Value equal to the amount of such withholding liability; or (c) by any other means specified in the applicable Award Agreement or otherwise determined by the Committee.

 

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13.5 Fractional Shares. No fractional Shares shall be issued or delivered pursuant to this Plan. The Committee shall determine whether cash, additional Awards, or other securities or property shall be used or paid in lieu of fractional Shares or whether any fractional shares should be rounded, forfeited, or otherwise eliminated.

13.6 No Assignment of Benefits. No Award or other benefit payable under this Plan shall, except as otherwise specifically provided in this Plan or under Applicable Law or permitted by the Committee, be transferable in any manner, and any attempt to transfer any such benefit shall be void, and any such benefit shall not in any manner be liable for or subject to the debts, contracts, liabilities, engagements, or torts of any person who shall be entitled to such benefit, nor shall it be subject to attachment or legal process for or against such person.

13.7 Clawbacks; Detrimental Conduct.

(a) Clawbacks. All awards, amounts, or benefits received or outstanding under this Plan will be subject to clawback, cancellation, recoupment, rescission, payback, reduction, or other similar action in accordance with any Company clawback or similar policy or any Applicable Law related to such actions. A Participant’s acceptance of an Award will constitute the Participant’s acknowledgement of and consent to the Company’s application, implementation, and enforcement of any applicable Company clawback or similar policy that may apply to the Participant, whether adopted before or after the Effective Date, and any Applicable Law relating to clawback, cancellation, recoupment, rescission, payback, or reduction of compensation, and the Participant’s agreement that the Company may take any actions that may be necessary to effectuate any such policy or Applicable Law, without further consideration or action.

(b) Detrimental Conduct. Except as otherwise determined by the Committee, notwithstanding any other term or condition of this Plan, if a Participant engages in Detrimental Conduct, whether during or after the Participant’s service, in addition to any other penalties or restrictions that may apply under this Plan, Applicable Law or otherwise, the Participant must forfeit or pay to the Company the following:

(i) any and all outstanding Awards granted to the Participant, including Awards that have become vested or exercisable;

(ii) any cash or Shares received by the Participant in connection with this Plan within the 12-month period immediately before the date the Company determines the Participant has engaged in Detrimental Conduct; and

(iii) the profit realized by the Participant from the sale, or other disposition for consideration, of any Shares received by the Participant under this Plan within the 36-month period immediately before the date the Company determines the Participant has engaged in Detrimental Conduct.

13.8 Listing and Other Conditions.

(a) Unless otherwise determined by the Committee, as long as the Common Stock is listed on a national securities exchange or system sponsored by a national securities association, the issuance of Shares pursuant to an Award shall be conditioned upon such Shares

 

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being listed on such exchange or system. The Company shall have no obligation to issue such Shares unless and until such Shares are so listed, and the right to exercise any Option or other Award with respect to such Shares shall be suspended until such listing has been effected.

(b) If at any time counsel to the Company advises the Company that any sale or delivery of Shares pursuant to an Award is or may in the circumstances be unlawful or result in the imposition of excise taxes on the Company under Applicable Law, the Company shall have no obligation to make such sale or delivery, or to make any application or to effect or to maintain any qualification or registration under the Securities Act or otherwise, with respect to Shares or Awards, and the right to exercise any Option or other Award shall be suspended until, based on the advice of said counsel, such sale or delivery shall be lawful or will not result in the imposition of excise taxes on the Company.

(c) Upon termination of any period of suspension under this Section 13.8, any Award affected by such suspension which shall not then have expired or terminated shall be reinstated as to all Shares available before such suspension and as to Shares which would otherwise have become available during the period of such suspension, but no such suspension shall extend the term of any Award.

(d) A Participant shall be required to supply the Company with certificates, representations, and information that the Company requests and otherwise cooperate with the Company in obtaining any listing, registration, qualification, exemption, consent, or approval that the Company deems necessary or appropriate.

13.9 Governing Law. This Plan and actions taken in connection herewith shall be governed and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws.

13.10 Construction. Wherever any words are used in this Plan in the masculine gender they shall be construed as though they were also used in the feminine gender in all cases where they would so apply, and wherever words are used herein in the singular form they shall be construed as though they were also used in the plural form in all cases where they would so apply.

13.11 Other Benefits. No Award granted or paid out under this Plan shall be deemed compensation for purposes of computing benefits under any retirement plan of the Company or its Affiliates or affect any benefit or compensation under any other plan now or subsequently in effect under which the availability or amount of benefits is related to the level of compensation.

13.12 Costs. The Company shall bear all expenses associated with administering this Plan, including expenses of issuing Shares pursuant to Awards hereunder.

13.13 No Right to Same Benefits. The provisions of Awards need not be the same with respect to each Participant, and such Awards to individual Participants need not be the same in subsequent years.

13.14 Death/Disability. The Committee may in its discretion require the transferee of a Participant to supply it with written notice of the Participant’s death or Disability and to supply it with a copy of the will (in the case of the Participant’s death) or such other evidence as the

 

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Committee deems necessary to establish the validity of the transfer of an Award. The Committee may also require the agreement of the transferee to be bound by all of the terms and conditions of this Plan.

13.15 Section 16(b) of the Exchange Act. It is the intent of the Company that this Plan satisfy, and be interpreted in a manner that satisfies, the applicable requirements of Rule 16b-3 as promulgated under Section 16 of the Exchange Act so that Participants will be entitled to the benefit of Rule 16b-3, or any other rule promulgated under Section 16 of the Exchange Act, and will not be subject to short-swing liability under Section 16 of the Exchange Act. Accordingly, if the operation of any provision of this Plan would conflict with the intent expressed in this Section 13.15, such provision to the extent possible shall be interpreted and/or deemed amended so as to avoid such conflict.

13.16 Deferral of Awards. The Committee may establish one or more programs under this Plan to permit selected Participants the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or other event that absent the election would entitle the Participant to payment or receipt of Shares or other consideration under an Award. The Committee may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if any, on amounts, Shares or other consideration so deferred, and such other terms, conditions, rules, and procedures that the Committee deems advisable for the administration of any such deferral program.

13.17 Section 409A of the Code. This Plan and Awards are intended to comply with or be exempt from the applicable requirements of Section 409A of the Code and shall be limited, construed, and interpreted in accordance with such intent. To the extent that any Award is subject to Section 409A of the Code, it shall be paid in a manner that will comply with Section 409A of the Code. Notwithstanding anything herein to the contrary, any provision in this Plan that is inconsistent with Section 409A of the Code shall be deemed to be amended to comply with or be exempt from Section 409A of the Code and, to the extent such provision cannot be amended to comply therewith or be exempt therefrom, such provision shall be null and void. The Company shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A of the Code is not so exempt or compliant or for any action taken by the Committee or the Company and, in the event that any amount or benefit under this Plan becomes subject to penalties under Section 409A of the Code, responsibility for payment of such penalties shall rest solely with the affected Participants and not with the Company. Notwithstanding any contrary provision in this Plan or Award Agreement, any payment(s) of “nonqualified deferred compensation” (within the meaning of Section 409A of the Code) that are otherwise required to be made under this Plan to a “specified employee” (as defined under Section 409A of the Code) as a result of such employee’s separation from service (other than a payment that is not subject to Section 409A of the Code) shall be delayed for the first six (6) months following such separation from service (or, if earlier, until the date of death of the specified employee) and shall instead be paid (in a manner set forth in the Award Agreement) upon expiration of such delay period.

13.18 Data Privacy. As a condition of receipt of any Award, each Participant explicitly and unambiguously consents to the collection, use, and transfer, in electronic or other form, of personal data as described in this Section 13.18 by and among, as applicable, the Company and its Affiliates, for the exclusive purpose of implementing, administering, and managing this Plan and

 

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Awards and the Participant’s participation in this Plan. In furtherance of such implementation, administration, and management, the Company and its Affiliates may hold certain personal information about a Participant, including, but not limited to, the Participant’s name, home address, telephone number, date of birth, social security or insurance number or other identification number, salary, nationality, job title(s), information regarding any securities of the Company or any of its Affiliates, and details of all Awards (the “Data”). In addition to transferring the Data amongst themselves as necessary for the purpose of implementation, administration, and management of this Plan and Awards and the Participant’s participation in this Plan, the Company and its Affiliates may each transfer the Data to any third parties assisting the Company in the implementation, administration, and management of this Plan and Awards and the Participant’s participation in this Plan. Recipients of the Data may be located in the Participant’s country or elsewhere, and the Participant’s country and any given recipient’s country may have different data privacy laws and protections. By accepting an Award, each Participant authorizes such recipients to receive, possess, use, retain, and transfer the Data, in electronic or other form, for the purposes of assisting the Company in the implementation, administration, and management of this Plan and Awards and the Participant’s participation in this Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Company or the Participant may elect to deposit any shares of Common Stock. The Data related to a Participant will be held only as long as is necessary to implement, administer, and manage this Plan and Awards and the Participant’s participation in this Plan. A Participant may, at any time, view the Data held by the Company with respect to such Participant, request additional information about the storage and processing of the Data with respect to such Participant, recommend any necessary corrections to the Data with respect to the Participant, or refuse or withdraw the consents herein in writing, in any case without cost, by contacting his or her local human resources representative. The Company may cancel the Participant’s eligibility to participate in this Plan, and in the Committee’s discretion, the Participant may forfeit any outstanding Awards if the Participant refuses or withdraws the consents described herein. For more information on the consequences of refusal to consent or withdrawal of consent, Participants may contact their local human resources representative.

13.19 Successor and Assigns. This Plan shall be binding on all successors and permitted assigns of a Participant, including, without limitation, the estate of such Participant and the executor, administrator, or trustee of such estate.

13.20 Severability of Provisions. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provisions had not been included.

13.21 Headings and Captions. The headings and captions herein are provided for reference and convenience only, shall not be considered part of this Plan, and shall not be employed in the construction of this Plan.

ARTICLE XIV

EFFECTIVE DATE OF PLAN

This Plan shall become effective on     , 2025, which is the date of its adoption by the Board, subject to the approval of this Plan by the stockholders of the Company in accordance with the requirements of the laws of the State of Delaware.

 

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ARTICLE XV

TERM OF PLAN

No Award shall be granted pursuant to this Plan on or after the tenth (10th) anniversary of the earlier of the date that this Plan is adopted by the Board or the date of stockholder approval, but Awards granted prior to such tenth (10th) anniversary may extend beyond that date.

*  *  *  *  *

 

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Exhibit 10.13

Final Form

FIREFLY AEROSPACE INC.

 

 

2025 EMPLOYEE STOCK PURCHASE PLAN

 

 

ARTICLE I.

PURPOSE

The purpose of this Firefly Aerospace Inc. 2025 Employee Stock Purchase Plan (as it may be amended or restated from time to time, this “Plan”) is to assist Eligible Employees of Firefly Aerospace Inc., a Delaware corporation (the “Company”) and its Designated Subsidiaries in acquiring a stock ownership interest in the Company. This Plan consists of two components: (i) the Section 423 Component and (ii) the Non-Section 423 Component. The Section 423 Component is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code and shall be administered, interpreted and construed in a manner consistent with the requirements of Section 423 of the Code. The Non-Section 423 Component authorizes the grant of rights which need not qualify as rights granted pursuant to an “employee stock purchase plan” under Section 423 of the Code. Rights granted under the Non-Section 423 Component shall be granted pursuant to separate Offerings containing such sub-plans, appendices, rules or procedures as may be adopted by the Administrator and designed to achieve tax, securities laws or other objectives for Eligible Employees and Designated Subsidiaries, but shall not be intended to qualify as an “employee stock purchase plan” under Section 423 of the Code.

ARTICLE II.

DEFINITIONS AND CONSTRUCTION

Wherever the following terms are used in this Plan they shall have the meanings specified below, unless the context clearly indicates otherwise.

2.1 “Administrator” means the entity that conducts the general administration of this Plan as provided in Article XI. The term “Administrator” shall refer to the Committee unless the Board has assumed the authority for administration of this Plan as provided in Article XI.

2.2 “Applicable Law” means the requirements relating to the administration of equity incentive plans under U.S. federal and state securities, tax and other applicable laws, rules and regulations, the applicable rules of any stock exchange or quotation system on which the Common Stock is listed or quoted, and the applicable laws and rules of any foreign country or other jurisdiction where rights under this Plan are granted.

2.3 “Board” means the Board of Directors of the Company.


2.4 “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time. Any reference to any section of the Code shall also be a reference to any successor provision and any guidance and treasury regulation promulgated thereunder.

2.5 “Common Stock” means the common stock, $0.0001 par value per share, of the Company.

2.6 “Compensation” of an Eligible Employee means the gross cash compensation received by such Eligible Employee as compensation for services to the Company or any Designated Subsidiary, including prior week adjustment and overtime payments, but excluding any commissions and periodic bonuses, vacation pay, holiday pay, jury duty pay, funeral leave pay, military leave pay, one-time bonuses (e.g., retention or sign on bonuses), education or tuition reimbursements, travel expenses, business and moving reimbursements, income received in connection with any stock options, stock appreciation rights, restricted stock, restricted stock units or other compensatory equity awards, fringe benefits, other special payments and all contributions made by the Company or any Designated Subsidiary for the Employee’s benefit under any employee benefit plan now or hereafter established.

2.7 “Designated Subsidiary” means any Subsidiary designated by the Administrator in accordance with Section 11.2(b).

2.8 “Effective Date” means the date this Plan is adopted by the Board.

2.9 “Eligible Employee” means:

(a) an Employee who does not, immediately after any rights under this Plan are granted, own (directly or through attribution) stock possessing 5% or more of the total combined voting power or value of all classes of Shares and other securities of the Company or a Subsidiary (as determined under Section 423(b)(3) of the Code). For purposes of the foregoing, the rules of Section 424(d) of the Code with regard to the attribution of stock ownership shall apply in determining the stock ownership of an individual, and stock that an Employee may purchase under outstanding options shall be treated as stock owned by the Employee.

(b) Notwithstanding the foregoing, the Administrator may provide in an Offering Document that an Employee shall not be eligible to participate in an Offering Period under the Section 423 Component if: (i) such Employee is a highly compensated employee within the meaning of Section 423(b)(4)(D) of the Code; (ii) such Employee has not met a service requirement designated by the Administrator pursuant to Section 423(b)(4)(A) of the Code (which service requirement may not exceed two years); (iii) such Employee’s customary employment is for 20 hours per week or less; (iv) such Employee’s customary employment is for less than five months in any calendar year; and/or (v) such Employee is a citizen or resident of a foreign jurisdiction and the grant of a right to purchase Shares under this Plan to such Employee would be prohibited under the laws of such foreign jurisdiction or the grant of a right to purchase Shares under this Plan to such Employee in compliance with the laws of such foreign jurisdiction would cause this Plan to violate the requirements of Section 423 of the Code, as determined by the Administrator in its sole discretion. Any exclusion in clauses (i), (ii), (iii), (iv) or (v) of this Section 2.9(b) shall be applied in an identical manner under each Offering Period to all Employees, in accordance with Treasury Regulation § 1.423-2(e).

 

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(c) Further notwithstanding the foregoing, with respect to the Non-Section 423 Component, the first sentence in this definition shall apply in determining who is an “Eligible Employee,” except (i) the Administrator may limit eligibility further within the Company or a Designated Subsidiary so as to only designate some Employees of the Company or a Designated Subsidiary as Eligible Employees, and (ii) to the extent the restrictions in the first sentence in this definition are not consistent with applicable local laws, the applicable local laws shall control.

2.10 “Employee” means, (a) with respect to the Non-Section 423 Component, any individual who renders services to the Company or any Designated Subsidiary in the status of an employee, and (b) with respect to the Section 423 Component, a person who is an employee within the meaning of Section 3401(c) of the Code. For purposes of an individual’s participation in, or other rights under this Plan, all determinations by the Company shall be final, binding, and conclusive, notwithstanding that any court of law or governmental agency subsequently makes a contrary determination. For purposes of this Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company or Designated Subsidiary and meeting the requirements of Treasury Regulations § 1.421-1(h)(2). Where the period of leave exceeds three months and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated on the first day immediately following such three-month period.

2.11 “Enrollment Date” means the first Trading Day of each Offering Period, unless otherwise specified in the Offering Document.

2.12 “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended from time to time. Reference to a specific section of the Exchange Act or regulation thereunder shall include such section or regulation, any valid regulation or interpretation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing, or superseding such section or regulation.

2.13 “Fair Market Value” means, as of any date, the value of a Share determined as follows: (a) if the Common Stock is listed on any established stock exchange, its Fair Market Value will be the closing sales price for such Common Stock as quoted on such exchange for such date, or if no sale occurred on such date, the last day preceding such date during which a sale occurred, as reported in The Wall Street Journal or another source the Administrator deems reliable; (b) if the Common Stock is not traded on a stock exchange but is quoted on a national market or other quotation system, the closing sales price on such date, or if no sales occurred on such date, then on the last date preceding such date during which a sale occurred, as reported in The Wall Street Journal or another source the Administrator deems reliable; or (c) without an established market for the Common Stock, the Administrator will determine the Fair Market Value in good faith in its sole discretion.

2.14 “Non-Section 423 Component” means those Offerings under this Plan, together with the sub-plans, appendices, rules or procedures, if any, adopted by the Administrator as a part of this Plan, in each case, pursuant to which rights to purchase Shares during an Offering Period

 

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may be granted to Eligible Employees that need not satisfy the requirements for rights to purchase Shares granted pursuant to an “employee stock purchase plan” that are set forth under Section 423 of the Code.

2.15 “Offering” means an offer under this Plan of a right to purchase Shares that may be exercised during an Offering Period as further described in Article VI. Unless otherwise specified by the Administrator, each Offering to the Eligible Employees of the Company or a Designated Subsidiary shall be deemed a separate Offering, even if the dates and other terms of the applicable Offering Periods of each such Offering are identical, and the provisions of this Plan will separately apply to each Offering. To the extent permitted by Treasury Regulations § 1.423-2(a)(1), the terms of each separate Offering under the Section 423 Component need not be identical, provided that the terms of the Section 423 Component and an Offering thereunder together satisfy Treasury Regulations § 1.423-2(a)(2) and (a)(3).

2.16 “Offering Document” has the meaning given to such term in Section 4.1.

2.17 “Offering Period” has the meaning given to such term in Section 4.1.

2.18 “Participant” means any Eligible Employee who has executed a subscription agreement and been granted rights to purchase Common Stock pursuant to this Plan.

2.19 “Purchase Date” means the last Trading Day of each Purchase Period, unless otherwise specified in the Offering Document.

2.20 “Purchase Period” means one or more periods within an Offering Period, as designated in the applicable Offering Document; provided, however, that, in the event no Purchase Period is designated by the Administrator in the applicable Offering Document, the Purchase Period for each Offering Period covered by such Offering Document shall be the same as the applicable Offering Period.

2.21 “Purchase Price” means the purchase price designated by the Administrator in the applicable Offering Document (which purchase price, for purposes of the Section 423 Component, shall not be less than 85% of the Fair Market Value of a Share on the Enrollment Date or on the Purchase Date, whichever is lower); provided, however, that, in the event no purchase price is designated by the Administrator in the applicable Offering Document, the purchase price for the Offering Periods covered by such Offering Document shall be 85% of the Fair Market Value of a Share on the Enrollment Date or on the Purchase Date, whichever is lower; and provided, further, that the Purchase Price may be adjusted by the Administrator pursuant to Article VIII and shall not be less than the par value of a Share.

2.22 “Section 409A” means the nonqualified deferred compensation rules under Section 409A of the Code and any applicable Treasury Regulations and other official guidance thereunder.

2.23 “Section 423 Component” means those Offerings under this Plan, together with the sub-plans, appendices, rules, or procedures, if any, adopted by the Administrator as a part of this Plan, in each case, pursuant to which rights to purchase Shares during an Offering Period may be granted to Eligible Employees that are intended to satisfy the requirements for rights to purchase Shares granted pursuant to an “employee stock purchase plan” that are set forth under Section 423 of the Code.

 

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2.24 “Share” means a share of Common Stock.

2.25 “Subsidiary” means any corporation, other than the Company, in an unbroken chain of corporations beginning with the Company if, at the time of the determination, each of the corporations other than the last corporation in an unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain; provided, however, that a limited liability company or partnership may be treated as a Subsidiary to the extent either (a) such entity is treated as a disregarded entity under Treasury Regulations § 301.7701-3(a) by reason of the Company or any other Subsidiary that is a corporation being the sole owner of such entity, or (b) such entity elects to be classified as a corporation under Treasury Regulations § 301.7701-3(a) and such entity would otherwise qualify as a Subsidiary. In addition, with respect to the Non-Section 423 Component, Subsidiary shall include any corporate or non-corporate entity in which the Company has a direct or indirect equity interest or significant business relationship.

2.26 “Trading Day” means a day on which national stock exchanges in the United States are open for trading.

ARTICLE III.

SHARES SUBJECT TO THIS PLAN

3.1 Number of Shares. Subject to Article VIII, the aggregate number of Shares that may be issued pursuant to rights granted under this Plan shall be      Shares. In addition to the foregoing, subject to Article VIII, on the first day of each calendar year beginning on and including January 1, 2026 and ending on and including January 1, 2035, the number of Shares available for issuance under this Plan shall be increased by the number of Shares equal to the lesser of (a) 1% of the number of Shares outstanding on the final day of the immediately preceding calendar year, (b) such smaller number of Shares as determined by the Board and (c)     . If any right granted under this Plan shall for any reason terminate without having been exercised, the Shares not purchased under such right shall again become available for issuance under this Plan.

3.2 Stock Distributed. Any Common Stock distributed pursuant to this Plan may consist, in whole or in part, of authorized and unissued Common Stock, treasury stock or Common Stock purchased on the open market.

ARTICLE IV.

OFFERING PERIODS; OFFERING DOCUMENTS; PURCHASE DATES

4.1 Offering Periods. The Administrator may from time to time grant, or provide for the grant of, rights to purchase Shares under this Plan to Eligible Employees during one or more periods (each, an “Offering Period”) selected by the Administrator. The terms and conditions applicable to each Offering Period shall be set forth in an “Offering Document” adopted by the Administrator, which Offering Document shall be in such form and shall contain such terms and conditions as the Administrator shall deem appropriate in its sole discretion. The Administrator shall establish in each Offering Document one or more Purchase Periods during such Offering

 

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Period during which rights granted under this Plan shall be exercised and purchases of Shares carried out during such Offering Period shall be made in accordance with such Offering Document and this Plan. Except as otherwise determined by the Administrator or provided herein, the Non-Section 423 Component will operate and be administered in the same manner as the Section 423 Component. Offerings intended to be made under the Non-Section 423 Component will be designated as such by the Administrator at or prior to the time of such Offering. Notwithstanding the foregoing, the terms of separate Offering Periods under this Plan need not be identical. Solely by way of example and without limiting the foregoing, the Company could, but shall not be required to, provide for simultaneous Offerings under the Section 423 Component and the Non-Section 423 Component of this Plan.

4.2 Offering Documents. Each Offering Document with respect to an Offering Period shall specify (through incorporation of the provisions of this Plan by reference or otherwise):

(a) the length of the Offering Period, which period shall not exceed 27 months;

(b) the length of the Purchase Period(s) within the Offering Period, if applicable; and

(c) such other provisions as the Administrator determines are appropriate, subject to this Plan.

ARTICLE V.

ELIGIBILITY AND PARTICIPATION

5.1 Eligibility. Any Eligible Employee who shall be employed by the Company or a Designated Subsidiary on a given Enrollment Date for an Offering Period shall be eligible to participate in this Plan during such Offering Period, subject to the requirements of this Article V and, for the Section 423 Component, the limitations imposed by Section 423(b) of the Code.

5.2 Enrollment in Plan.

(a) Except as otherwise set forth herein, in an Offering Document or as determined by the Administrator, an Eligible Employee may become a Participant in this Plan for an Offering Period by delivering a subscription agreement to the Company by such time prior to the Enrollment Date for such Offering Period (or such other date specified in the Offering Document) designated by the Administrator and in such form as the Company provides.

(b) Each such subscription agreement shall designate a whole number percentage of such Eligible Employee’s Compensation to be withheld by the Company or the Designated Subsidiary employing such Eligible Employee on each payday during the Offering Period as payroll deductions under this Plan. Such payroll deductions may not be less than the minimum amount specified by the Administrator in the applicable Offering Document (which shall be 1% in the absence of any such designation) and may not be greater than the maximum amount specified by the Administrator in the applicable Offering Document (which shall be 15% in the absence of any such designation). The payroll deductions made for each Participant shall be credited to an account for such Participant under this Plan and shall be deposited with the general funds of the Company.

 

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(c) A Participant may decrease (but not increase) the percentage of Compensation designated in the Participant’s subscription agreement (to as low as zero), subject to the limits of this Section 5.2, at any time during an Offering Period; provided, however, that the Administrator may limit the number of times a Participant may decrease the Participant’s payroll deduction elections during each Offering Period in the applicable Offering Document (and in the absence of any specific designation by the Administrator, a Participant shall be allowed one decrease (but no increases) to the Participant’s payroll deduction elections during each Offering Period with respect to such Offering Period). Any such change of payroll deductions shall be effective with the first full payroll period following 10 business days after the Company’s receipt of the new subscription agreement (or such shorter or longer period as may be specified by the Administrator in the applicable Offering Document). If a Participant decreases the Participant’s payroll deductions to zero, such Participant’s cumulative payroll deductions prior to such decrease shall remain in the Participant’s account and shall be applied to the purchase of Shares on the next occurring Purchase Date and shall not be paid to such Participant unless the Participant withdraws from participation in this Plan pursuant to Article VII.

(d) Except as otherwise set forth in Section 5.2 or in an Offering Document, or as determined by the Administrator, a Participant may participate in this Plan only by means of payroll deduction and may not make contributions by lump sum payment for any Offering Period. Notwithstanding any other provisions of this Plan to the contrary, in non-U.S. jurisdictions where participation in this Plan through payroll deductions is prohibited, the Administrator may provide that an Eligible Employee may elect to participate through contributions to the Participant’s account under this Plan in a form acceptable to the Administrator in lieu of or in addition to payroll deductions; provided, however, that, for any Offering under the Section 423 Component, any such alternative method of contribution must comply with the requirements of Section 423 of the Code.

5.3 Payroll Deductions. Except as otherwise set forth in Section 5.8 or in an Offering Document, or as determined by the Administrator, payroll deductions for a Participant shall commence on the first payroll following the Enrollment Date and shall end on the last payroll in the Offering Period to which the Participant’s authorization is applicable, unless sooner terminated by the Participant as provided in Article VII or suspended by the Participant or the Administrator as provided in Sections 5.2 and 5.6, respectively.

5.4 Effect of Enrollment. A Participant’s completion of a subscription agreement will automatically enroll such Participant in this Plan for each subsequent Offering Period on the terms contained therein until the Participant either submits a new subscription agreement, withdraws from participation under this Plan as provided in Article VII or otherwise becomes ineligible to participate in this Plan.

5.5 Limitation on Purchase of Common Stock. An Eligible Employee may be granted rights under the Section 423 Component of this Plan only if such rights, together with any other rights granted to such Eligible Employee under any “employee stock purchase plans” of the Company or any Subsidiary, as specified by Section 423(b)(8) of the Code, do not permit such Eligible Employee’s rights to purchase stock of the Company or any Subsidiary to accrue at a rate that exceeds $25,000 of the Fair Market Value of such stock (determined as of the first day of the Offering Period during which such rights are granted) for each calendar year in which such rights are outstanding at any time. This limitation shall be applied in accordance with Section 423(b)(8) of the Code.

 

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5.6 Suspension of Payroll Deductions. Notwithstanding the foregoing, with respect to the Section 423 Component, to the extent necessary to comply with Section 423(b)(8) of the Code, Section 5.5 or the other limitations set forth in this Plan, a Participant’s payroll deductions may be suspended by the Administrator at any time during an Offering Period. The balance of the amount credited to the account of each Participant that has not been applied to the purchase of Shares by reason of Section 423(b)(8) of the Code, Section 5.5 or the other limitations set forth in this Plan shall be paid to such Participant, without interest, in one lump sum in cash as soon as reasonably practicable after the Purchase Date.

5.7 Foreign Employees. To facilitate participation in this Plan, the Administrator may provide for such special terms applicable to Participants who are citizens or residents of a foreign jurisdiction or who are employed by a Designated Subsidiary outside of the United States, as the Administrator may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. With respect to the Section 423 Component, such special terms may not be more favorable than the terms of rights granted under this Plan to Eligible Employees who are residents of the United States, and must satisfy the requirements for rights to purchase Shares granted pursuant to an “employee stock purchase plan” that are set forth under Section 423 of the Code. Moreover, the Administrator may approve such supplements to, or amendments, restatements, or alternative versions of, this Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of this Plan as in effect for any other purpose. Notwithstanding the foregoing, no such special terms, supplements, amendments or restatements shall include any provisions that are inconsistent with the terms of this Plan as then in effect unless this Plan could have been amended to eliminate such inconsistency without further approval by the stockholders of the Company. Without limiting the foregoing, the Administrator is specifically authorized to adopt rules and procedures, with respect to Participants who are foreign nationals or employed in non-U.S. jurisdictions, regarding the exclusion of particular Subsidiaries from participation in the Plan, eligibility to participate, the definition of Compensation, handling of payroll deductions or other contributions by Participants, payment of interest, conversion of local currency, data privacy security, payroll tax, withholding procedures, and/or establishment of bank or trust accounts to hold payroll deductions or contributions.

5.8 Leave of Absence. During leaves of absence approved by the Company meeting the requirements of Treasury Regulations § 1.421-1(h)(2) under the Code, a Participant may continue participation in this Plan by making cash payments to the Company on the Participant’s normal payday equal to the Participant’s authorized payroll deduction.

ARTICLE VI.

GRANT AND EXERCISE OF RIGHTS

6.1 Grant of Rights. On the Enrollment Date of each Offering Period, each Eligible Employee participating in such Offering Period pursuant to the terms of the Plan shall be granted a right to purchase, subject to the maximum number of Shares specified under Section 4.2 and the limits in Section 5.5, on each Purchase Date during such Offering Period (at the applicable Purchase Price), a number of whole Shares determined by dividing (a) such Participant’s payroll

 

8


deductions accumulated prior to such Purchase Date and retained in the Participant’s account as of the Purchase Date, by (b) the applicable Purchase Price (rounded down to the nearest Share). Such right shall expire on the earliest of: (i) the last Purchase Date of the Offering Period, (ii) the last day of the Offering Period, and (iii) the date on which the Participant withdraws from participation in the Plan in accordance with Section 7.1 or 7.3.

6.2 Exercise of Rights. On each Purchase Date, each Participant’s accumulated payroll deductions and any other additional payments specifically provided for in the applicable Offering Document will be applied to the purchase of whole Shares pursuant to Section 6.1, up to the maximum number of Shares permitted pursuant to the terms of this Plan and the applicable Offering Document, at the Purchase Price. No fractional Shares shall be issued upon the exercise of rights granted under this Plan, unless the Offering Document specifically provides otherwise. Any cash in lieu of fractional Shares remaining after the purchase of whole Shares upon exercise of a purchase right will be carried forward and applied toward the purchase of whole Shares for the immediately subsequent Offering Period. Shares issued pursuant to this Plan may be evidenced in such manner as the Administrator may determine and may be issued in certificated form or issued pursuant to book-entry procedures.

6.3 Pro Rata Allocation of Shares. If the Administrator determines that, on a given Purchase Date, the number of Shares with respect to which rights are to be exercised may exceed (a) the number of Shares that were available for issuance under this Plan on the Enrollment Date of the applicable Offering Period, or (b) the number of Shares available for issuance under this Plan on such Purchase Date, the Administrator may in its sole discretion provide that the Company shall make a pro rata allocation of the Shares available for purchase on such Enrollment Date or Purchase Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all Participants for whom rights to purchase Shares are to be exercised pursuant to this Article VI on such Purchase Date, and shall either (i) continue all Offering Periods then in effect or (ii) terminate any or all Offering Periods then in effect pursuant to Article IX. The Company may make a pro rata allocation of the Shares available on the Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional Shares for issuance under this Plan by the Company’s stockholders subsequent to such Enrollment Date. The balance of the amount credited to the account of each Participant that has not been applied to the purchase of Shares shall be paid to such Participant, without interest, in one lump sum in cash as soon as reasonably practicable after the Purchase Date or such earlier date as determined by the Administrator.

6.4 Withholding. At the time a Participant’s rights under this Plan are exercised, in whole or in part, or at the time some or all of the Shares issued under this Plan are disposed of, the Participant must make adequate provision for the Company’s federal, state, or other tax withholding obligations, if any, that arise upon the exercise of the right or the disposition of the Shares. At any time, the Company may, but shall not be obligated to, withhold from the Participant’s compensation the amount necessary for the Company to meet applicable withholding obligations, including, without limitation, any withholding required to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Shares by the Participant.

 

9


6.5 Conditions to Issuance of Shares. The Company shall not be required to issue or deliver any certificate or certificates for, or make any book entries evidencing, Shares purchased upon the exercise of rights under this Plan prior to fulfillment of all of the following conditions:

(a) The admission of such Shares to listing on all stock exchanges, if any, on which the Common Stock is then listed;

(b) The completion of any registration or other qualification of such Shares under any state or federal law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, that the Administrator shall, in its absolute discretion, deem necessary or advisable;

(c) The obtaining of any approval or other clearance from any state or federal governmental agency that the Administrator shall, in its absolute discretion, determine to be necessary or advisable;

(d) The payment to the Company of all amounts that it is required to withhold under federal, state or local law upon exercise of the rights, if any; and

(e) The lapse of such reasonable period of time following the exercise of the rights as the Administrator may from time to time establish for reasons of administrative convenience.

ARTICLE VII.

WITHDRAWAL; CESSATION OF ELIGIBILITY

7.1 Withdrawal. A Participant may withdraw during an Offering Period all, but not less than all, of the payroll deductions credited to the Participant’s account and not yet used to exercise the Participant’s rights under this Plan by delivering written notice to the Company in a form acceptable to the Company and at such time prior to the Purchase Date for such Offering Period as may be established by the Administrator in the applicable Offering Document (and in the absence of any specific designation by the Administrator, no later than two weeks prior to the Purchase Date for such Offering Period). All of the Participant’s payroll deductions credited to the Participant’s account during such Offering Period not yet used to exercise the Participant’s rights under this Plan shall be paid to such Participant as soon as reasonably practicable after receipt of notice of withdrawal, without interest, and such Participant’s rights for such Offering Period shall be automatically terminated, and no further payroll deductions for the purchase of Shares shall be made for such Offering Period. If a Participant withdraws from an Offering Period, payroll deductions shall not resume at the beginning of the immediately subsequent Offering Period unless the Participant timely delivers to the Company a new subscription agreement pursuant to Section 5.2.

7.2 Future Participation. A Participant’s withdrawal from an Offering Period shall not have any effect upon a Participant’s eligibility to participate in any similar plan that may hereafter be adopted by the Company or a Designated Subsidiary, or in any subsequent Offering Periods that commence after the termination of the Offering Period from which the Participant withdraws.

7.3 Cessation of Eligibility. Upon a Participant’s ceasing to be an Eligible Employee for any reason, such Participant shall be deemed to have elected to withdraw from this Plan

 

10


pursuant to this Article VII, and the payroll deductions credited to such Participant’s account during the Offering Period shall be paid, without interest, to such Participant or, in the case of the Participant’s death, to the person or persons entitled thereto under Section 12.4, as soon as reasonably practicable, and such Participant’s rights for the Offering Period shall be automatically terminated. If a Participant transfers employment from the Company or any Designated Subsidiary participating in the Section 423 Component to any Designated Subsidiary participating in the Non-Section 423 Component, such transfer shall not be treated as a termination of employment, but the Participant shall immediately cease to participate in the Section 423 Component; any contributions made for the Offering Period in which such transfer occurs shall be transferred to the Non-Section 423 Component, and such Participant shall immediately join the then-current Offering under the Non-Section 423 Component upon the same terms and conditions in effect for the Participant’s participation in the Section 423 Component, except for such modifications otherwise applicable for Participants in such Offering. A Participant who transfers employment from any Designated Subsidiary participating in the Non-Section 423 Component to the Company or any Designated Subsidiary participating in the Section 423 Component shall not be treated as terminating the Participant’s employment and shall remain a Participant in the Non-Section 423 Component until the earlier of (a) the end of the current Offering Period under the Non-Section 423 Component and (b) the Enrollment Date of the first Offering Period in which the Participant is eligible to participate following such transfer. Notwithstanding the foregoing, the Administrator may establish different rules to govern transfers of employment between entities participating in the Section 423 Component and the Non-Section 423 Component, consistent with the applicable requirements of Section 423 of the Code.

ARTICLE VIII.

ADJUSTMENTS UPON CHANGES IN STOCK

8.1 Changes in Capitalization. Subject to Section 8.3, if the Administrator determines that any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), change in control, reorganization, merger, amalgamation, consolidation, combination, repurchase, recapitalization, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or sale or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event, as determined by the Administrator, affects the Common Stock such that an adjustment is determined by the Administrator to be appropriate to prevent dilution or enlargement of the benefits or potential benefits intended by the Company to be made available under this Plan or with respect to any outstanding purchase rights under this Plan, the Administrator shall make equitable adjustments, if any, to reflect such change with respect to (a) the aggregate number and type of Shares (or other securities or property) that may be issued under this Plan (including, but not limited to, adjustments of the limitations in Section 3.1 and the limitations established pursuant to Section 4.2 (as may be modified by the Offering Document) on the maximum number of Shares that may be purchased); (b) the class(es) and number of Shares and price per Share subject to outstanding rights; and (c) the Purchase Price with respect to any outstanding rights.

8.2 Other Adjustments. Subject to Section 8.3, in the event of any transaction or event described in Section 8.1 or any unusual or nonrecurring transactions or events affecting the Company, any affiliate of the Company, or the financial statements of the Company or any

 

11


affiliate, or of changes in Applicable Law or accounting principles, the Administrator, in its discretion, and on such terms and conditions as it deems appropriate, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate to prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan or with respect to any right under this Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles:

(a) To provide for either (i) the termination of any outstanding right to purchase Shares granted under this Plan in exchange for an amount of cash, if any, equal to the amount that would have been obtained upon the exercise of such right had such right been currently exercisable or (ii) the replacement of such outstanding right with other rights or property selected by the Administrator in its sole discretion;

(b) To provide that the outstanding rights to purchase Shares granted under this Plan shall be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar rights covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices;

(c) To make adjustments in the number and type of Shares (or other securities or property) subject to outstanding rights to purchase Shares granted under this Plan and/or in the terms and conditions of outstanding rights and rights that may be granted under this Plan in the future;

(d) To provide that Participants’ accumulated payroll deductions may be used to purchase Shares prior to the next occurring Purchase Date on such date as the Administrator determines in its sole discretion, and the Participants’ rights under the ongoing Offering Period(s) shall be terminated as of such prior purchase date; and/or

(e) To provide that all outstanding rights to purchase Shares granted under this Plan shall terminate without being exercised.

8.3 No Adjustment Under Certain Circumstances. No adjustment or action described in this Article VIII or in any other provision of this Plan shall be authorized to the extent that such adjustment or action would cause the Section 423 Component of this Plan to fail to satisfy the requirements of Section 423 of the Code.

8.4 No Other Rights. Except as expressly provided in this Plan, no Participant shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend, any increase or decrease in the number of shares of stock of any class or any dissolution, liquidation, merger, or consolidation of the Company or any other corporation. Except as expressly provided in this Plan or pursuant to action of the Administrator under this Plan, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of Shares subject to outstanding rights under this Plan or the Purchase Price with respect to any outstanding rights.

 

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ARTICLE IX.

AMENDMENT, MODIFICATION, AND TERMINATION

9.1 Amendment, Modification, and Termination. The Administrator may amend, suspend, or terminate this Plan at any time and from time to time; provided, however, that approval of the Company’s stockholders shall be required to amend this Plan to: (a) increase the aggregate number, or change the type, of Shares that may be sold pursuant to rights granted under this Plan under Section 3.1 (other than an adjustment as provided by Article VIII); or (b) change this Plan in any manner that would be considered the adoption of a new plan within the meaning of Treasury Regulations § 1.423-2(c)(4).

9.2 Certain Changes to Plan. Without stockholder consent and without regard to whether any Participant rights may be considered to have been adversely affected, subject to Section 9.1 and, solely with respect to the Section 423 Component of this Plan, to the extent permitted by Section 423 of the Code, the Administrator shall be entitled to change or terminate the Offering Periods, limit the frequency and/or number of changes in the amount withheld from Compensation during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a Participant to adjust for delays or mistakes in the Company’s processing of payroll withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion to be advisable that are consistent with this Plan.

9.3 Actions In the Event of Unfavorable Financial Accounting Consequences. If the Administrator determines that the ongoing operation of this Plan may result in unfavorable financial accounting consequences, the Administrator may, in its sole discretion and, to the extent necessary or desirable, modify or amend this Plan to reduce or eliminate such accounting consequence including, but not limited to:

(a) altering the Purchase Price for any Offering Period, including an Offering Period underway at the time of the change in Purchase Price;

(b) shortening any Offering Period so that the Offering Period ends on a new Purchase Date, including an Offering Period underway at the time of the Administrator action; and

(c) allocating Shares.

Such modifications or amendments shall not require stockholder approval or the consent of any Participant.

9.4 Termination of Plan. Upon termination of this Plan, the balance in each Participant’s Plan account shall be refunded as soon as practicable after such termination, without any interest thereon. Additionally, the Administrator may, in its discretion, shorten the current Offering Period such that the Purchase Date for such Offering Period occurs prior to the termination of the Plan.

 

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ARTICLE X.

TERM OF PLAN

This Plan shall be effective on the Effective Date, subject to approval of this Plan by the stockholders of the Company within 12 months before or after the Effective Date. No rights may be granted under this Plan prior to stockholder approval of this Plan. No rights may be granted under this Plan during any period of suspension of this Plan or after termination of this Plan. No rights may be granted under this Plan at any time following the 10th anniversary of the Effective Date.

ARTICLE XI.

ADMINISTRATION

11.1 Administrator. Unless otherwise determined by the Board, the Administrator of this Plan shall be the Compensation Committee of the Board (or another committee or a subcommittee of the Board to which the Board delegates administration of this Plan) (such committee, the “Committee”). The Board may at any time vest in the Board any authority or duties for administration of this Plan. The Administrator may delegate administrative tasks under this Plan to the services of a brokerage firm, bank, or other financial institution or Employees to assist in the administration of this Plan, including establishing and maintaining an individual securities account under this Plan for each Participant.

11.2 Authority of Administrator. The Administrator shall have the power, subject to, and within the limitations of, the express provisions of this Plan:

(a) To determine when and how rights to purchase Shares shall be granted and the provisions of each offering of such rights (which need not be identical);

(b) To designate from time to time which Subsidiaries of the Company shall be Designated Subsidiaries, which designation may be made without the approval of the stockholders of the Company and which such designation shall specify whether the participation is in the Section 423 Component or the Non-Section 423 Component;

(c) To impose a mandatory holding period pursuant to which Employees may not dispose of or transfer Shares purchased under this Plan for a period of time determined by the Administrator in its discretion;

(d) To construe and interpret this Plan and any rights granted under it, and to establish, amend, and revoke rules and regulations for its administration, and the Administrator, in the exercise of this power, may correct any defect, omission, or inconsistency in this Plan or any Offering in a manner and to the extent it shall deem necessary or expedient to administer the Plan, subject to Section 423 of the Code for the Section 423 Component;

(e) To amend, suspend, or terminate this Plan as provided in Article IX; and

(f) Generally, to exercise such powers and to perform such acts as the Administrator deems necessary or expedient to promote the best interests of the Company and its Designated Subsidiaries and to carry out the intent that the Section 423 Component of this Plan be treated as an “employee stock purchase plan” within the meaning of Section 423 of the Code.

 

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11.3 Decisions Binding. The Administrator’s interpretation of this Plan, any rights granted pursuant to this Plan, any subscription agreement and all decisions and determinations by the Administrator with respect to this Plan are final, binding, and conclusive on all parties.

ARTICLE XII.

MISCELLANEOUS

12.1 Restriction upon Assignment. A right granted under this Plan shall not be transferable other than by will or the Applicable Laws of descent and distribution, and is exercisable during the Participant’s lifetime only by the Participant. Except as provided in Section 12.4, a right under this Plan may not be exercised to any extent except by the Participant. The Company shall not recognize and shall be under no duty to recognize any assignment or alienation of the Participant’s interest in this Plan, the Participant’s rights under this Plan, or any rights thereunder.

12.2 Rights as a Stockholder. With respect to Shares subject to a right granted under this Plan, a Participant shall not be deemed to be a stockholder of the Company, and the Participant shall not have any of the rights or privileges of a stockholder, until such Shares have been issued to the Participant or the Participant’s nominee following exercise of the Participant’s rights under this Plan. No adjustments shall be made for dividends (ordinary or extraordinary, whether in cash securities, or other property) or distribution or other rights for which the record date occurs prior to the date of such issuance, except as otherwise expressly provided herein or as determined by the Administrator.

12.3 Interest. No interest shall accrue on the payroll deductions or contributions of a Participant under this Plan.

12.4 Designation of Beneficiary.

(a) A Participant may, in the manner determined by the Administrator, file a written designation of a beneficiary who is to receive any Shares and/or cash, if any, from the Participant’s account under this Plan in the event of such Participant’s death subsequent to a Purchase Date on which the Participant’s rights are exercised but prior to delivery to such Participant of such Shares and cash. In addition, a Participant may file a written designation of a beneficiary who is to receive any cash from the Participant’s account under this Plan in the event of such Participant’s death prior to exercise of the Participant’s rights under this Plan. If the Participant is married and resides in a community property state, a designation of a person other than the Participant’s spouse as the Participant’s beneficiary shall not be effective without the prior written consent of the Participant’s spouse.

(b) Such designation of beneficiary may be changed by the Participant at any time by written notice to the Company. In the event of the death of a Participant and in the absence of a beneficiary validly designated under this Plan who is living at the time of such Participant’s death, the Company shall deliver such Shares and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of

 

15


the Company), the Company, in its discretion, may deliver such Shares and/or cash to the spouse or to any one or more dependents or relatives of the Participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

12.5 Notices. All notices or other communications by a Participant to the Company under or in connection with this Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

12.6 Equal Rights and Privileges. Subject to Section 5.7, all Eligible Employees will have equal rights and privileges under the Section 423 Component of this Plan so that the Section 423 Component of this Plan qualifies as an “employee stock purchase plan” within the meaning of Section 423 of the Code. Subject to Section 5.7, any provision of the Section 423 Component of this Plan that is inconsistent with Section 423 of the Code will, without further act or amendment by the Company, the Board or the Administrator, be reformed to comply with the equal rights and privileges requirement of Section 423 of the Code. Eligible Employees participating in the Non-Section 423 Component need not have the same rights and privileges as other Eligible Employees participating in the Non-Section 423 Component or as Eligible Employees participating in the Section 423 Component.

12.7 Use of Funds. All payroll deductions received or held by the Company under this Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions.

12.8 Reports. Statements of account shall be given to Participants at least annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of Shares purchased, and the remaining cash balance, if any.

12.9 No Employment Rights. Nothing in this Plan shall be construed to give any person (including any Eligible Employee or Participant) the right to employment with (or to remain in the employ of) the Company or any Subsidiary thereof or affect the right of the Company or any Subsidiary thereof to terminate the employment of any person (including any Eligible Employee or Participant) at any time, with or without cause.

12.10. Conformity to Securities Laws. Notwithstanding any other provision of the Plan, the Plan and the participation in the Plan by any individual who is then subject to Section 16 of the Exchange Act shall be subject to any additional limitations set forth in any applicable exemption rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, the Plan shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

12.11 Section 409A. The Section 423 Component of the Plan and the rights to purchase Shares granted pursuant to Offerings thereunder are intended to be exempt from the application of Section 409A. Neither the Non-Section 423 Component nor any rights to purchase Shares granted pursuant to an Offering thereunder are intended to constitute or provide for “nonqualified deferred compensation” within the meaning of Section 409A. Notwithstanding any provision of the Plan to

 

16


the contrary, if the Administrator determines that any right to purchase Shares granted under the Plan may be or become subject to Section 409A or that any provision of the Plan may cause a right to purchase Shares granted under the Plan to be or become subject to Section 409A, the Administrator may adopt such amendments to the Plan and/or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions as the Administrator determines are necessary or appropriate to avoid the imposition of taxes under Section 409A, either through compliance with the requirements of Section 409A or with an available exemption therefrom.

12.12 Notice of Disposition of Shares. Each Participant shall give prompt notice to the Company of any disposition or other transfer of any Shares purchased upon exercise of a right under the Section 423 Component of this Plan if such disposition or transfer is made: (a) within two years following the Enrollment Date of the Offering Period in which the Shares were purchased or (b) within one year after the Purchase Date on which such Shares were purchased. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by the Participant in such disposition or other transfer.

12.13 Governing Law. This Plan and actions taken in connection herewith shall be governed and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws.

12.14 Electronic Forms. To the extent permitted by Applicable Law and in the discretion of the Administrator, an Eligible Employee may submit any form or notice as set forth herein by means of an electronic form approved by the Administrator. Before the commencement of an Offering Period, the Administrator shall prescribe the time limits within which any such electronic form shall be submitted to the Administrator with respect to such Offering Period to be a valid election.

*  *  *  *  *

 

17

Exhibit 10.16

LEASE AGREEMENT

between

CEDAR BLUE SPACE, LP,

a Delaware limited partnership

as Landlord

and

FIREFLY AEROSPACE INC.,

a Delaware corporation

as Tenant


SUMMARY OF CERTAIN LEASE PROVISIONS

The Lease Summary set forth below (the “Lease Summary”) forms an integral part of this Lease, and all terms and other provisions of the Lease Summary have the respective meanings or amounts as stated and are hereby incorporated by reference into the Lease, except and to the extent more specifically set forth in the text of the Lease and its Exhibits, Schedules and Supplements.

 

A.    Effective Date:    August 3, 2022
B.    Landlord:    Cedar Blue Space, LP, a Delaware limited partnership
C.    Landlord’s Address:    CBRE | Property Management
      Attn: Cyndi Lessard
      9442 Capital of TX Hwy N, Suite 170
      Austin, TX 78759
      Tel: 512-343-4343
      Email: [***]
      With a copy via email to:
      La Costa Court Garden LP
      Email: [***]
D.    Tenant:    Firefly Aerospace Inc., a Delaware corporation
E.    Tenant’s Address:    1320 Arrow Point Drive, Suite 109
      Cedar Park, TX 78613
      Attn: Darren Ma
      With a copy via email to:
      David Wheeler
      Email: [***]
      Keith Zimmerman
      Email: [***]
F.    Premises:    That certain real property located at 5900 183A
      Toll Road, Leander, Texas 78641 consisting of
      approximately 5.633 acres, as described on Exhibit
      A, together with the Building and other
      improvements located thereon (and any
      improvements Tenant may construct during the
      Term hereof). The “Building” shall refer to the
      building(s) constructed on the Premises existing as
      of the Effective Date containing a stipulated and
      agreed 45,756 rentable square feet.

 

2


G.    Permitted Use:    Laboratory, Production, Assembly, Industrial,
      Manufacturing, Office, and any related uses that
      are substantially similar to Tenant’s existing use on
      the Effective Date
H.    Term:    10 years
I.    Commencement Date:    Same as Effective Date
J.    Expiration Date:    August 2, 2032

 

K.    Base Rent               
         

Year

  

Rate/yr

  

Monthly

   Year 1    $17.50    $66,727.50
   Year 2    $18.03    $68,729.33
   Year 3    $18.57    $70,791.20
   Year 4    $19.12    $72,914.94
   Year 5    $19.70    $75,102.39
   Year 6    $20.29    $77,355.46
   Year 7    $20.90    $79,676.12
   Year 8    $21.52    $82,066.41
   Year 9    $22.17    $84,528.40
   Year 10    $22.83    $87,064.25

 

L.    Security Deposit:    $66,727.50
M.    Broker(s):    Keith Zimmerman of Cushman Wakefield, representing Tenant and being paid a commission pursuant to a separate written agreement with Tenant

 

3


LEASE AGREEMENT

THIS LEASE AGREEMENT (“Lease”) is made and entered into as of the Effective Date, by and between Landlord and Tenant.

WHEREAS, the Landlord owns the Premises;

WHEREAS, Landlord desires to lease the Premises to Tenant, and Tenant desires to lease the Premises from Landlord.

NOW, THEREFORE, in consideration of the above recitals, the rent and other agreements provided for herein, the Landlord and Tenant are entering into this Lease under the terms and conditions outlined herein.

1. Demised Premises; Use. Landlord does hereby demise and lease the Premises unto Tenant, and Tenant does hereby lease the Premises from the Landlord, subject to all matters of record validly existing, and actually affecting the Premises, all on the terms set forth herein. Tenant may use, occupy and operate the Premises for the Permitted Use and for no other purpose whatsoever. Tenant agrees at all times during the Term of this Lease to comply with all applicable laws, rules, regulations and licensing requirements affecting the Premises and Tenant’s use of the Premises. Tenant may not use the Premises for any activity which would void any insurance required to be carried on the Premises by this Lease; provided that Tenant may use the Premises for activities which may increase said insurance premiums and such increases caused by Tenant’s activities shall be passed through to Tenant and payable as Additional Rent. Tenant shall keep, store, release, or use any hazardous materials in the Premises in strict compliance with all applicable laws. Tenant shall at all times provide Landlord with a current copy of any keys, passwords, or access devices to locks or devices installed by Tenant, as needed for Landlord or its maintenance agents to enter the Premises and Building (Tenant is not required to provide access to any secured files), subject to Section 16 of this Lease.

2. Property Condition. On or about the Effective Date, Landlord purchased the Premises from Tenant as part of a sale-leaseback transaction. Tenant has been in actual possession of the Premises prior to the Effective Date, and Tenant is aware of the physical condition of the Premises. Based on Tenant’s prior history and familiarity with the Premises, Landlord and Tenant hereby agree as follows:

(a) The items and physical conditions listed on that certain Property Condition Assessment from Terracon dated July 25, 2022, are acceptable to Tenant, subject to Landlord’s maintenance and repair obligations and Tenant’s Operating Expense obligations hereunder.

(b) Tenant accepts the Premises subject to any hazardous materials or adverse environmental conditions existing as of the Commencement Date, and Landlord will have no duty to remediate or clean any hazardous materials or environmental conditions on the Premises existing as of the Commencement Date. Tenant will have no duty to remediate or clean any hazardous materials or environmental conditions on the Premises, unless Tenant or Tenant’s agents actually caused the release of hazardous materials after the Effective Date.

 

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(c) TENANT ACCEPTS THE PREMISES IN THEIR PRESENT “AS-IS, WHERE IS” PHYSICAL CONDITION, without any obligation by Landlord to paint, redecorate, or perform any other work in, on or about the Premises at any time, except as otherwise specifically set forth in this Lease relating to casualty, condemnation, maintenance, repair, or replacement. TENANT EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTY OF SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE; and

(d) Tenant is not relying on any warranty or representation made by Landlord, except as expressly set forth in this Lease, and HEREBY DISCLAIMS any express representations and warranties by Landlord unless expressly set forth in this Lease, and Tenant HEREBY DISCLAIMS any and all implied representations and warranties from Landlord, including without limitation, the implied warranty that the Premises are suitable for Tenant’s commercial purposes.

3. Term. This Lease shall be for a term of ten (10) years, beginning on the Commencement Date and ending on Expiration Date (the “Initial Term”), subject to Tenant’s right to exercise the Renewal Options (as defined below).

At the end of the Initial Term, Tenant shall have the option to renew this Lease (the “Renewal Option”) for up to two (2) additional term(s) of five (5) years each (each a “Renewal Term”) at Market Rent determined in accordance with Exhibit B attached hereto and incorporated herein. The Initial Term, together with any Renewal Terms, shall be referred to as the “Term.”

4. Base Rent. Commencing on the Commencement Date, Tenant shall pay to Landlord the Base Rent for the Premises, without offset or deduction in advance on the first day of each calendar month during the Term of this Lease. Base Rent for any period during the Term hereof which is for less than one month shall be prorated based upon the actual number of days of the calendar month involved. Base Rent and all other amounts payable to Landlord hereunder shall be payable to Landlord in lawful money of the United States and Tenant shall be responsible for delivering said amounts to Landlord via ACH transfer, or at the address stated herein, or to such other persons or to such other places as Landlord may designate in writing in accordance with the notice provision of this Lease. Base Rent shall be payable in the amounts set forth in Section K of the Lease Summary set forth above.

5. Triple Net Lease; Additional Rent. This is a “triple net lease,” which means that the Tenant shall pay Landlord’s actual costs of operating, managing, maintaining, insuring, and repairing the Premises, all utilities relating to the Premises (which shall be billed directly to and paid by Tenant), and all real estate taxes on the Premises in accordance with the terms of this Lease. Tenant’s obligation to pay Rent hereunder is not dependent upon the condition of the Premises or the performance by Landlord of its obligations hereunder, and Tenant shall continue to pay Rent hereunder without abatement, setoff, or deduction, notwithstanding any breach by Landlord of its duties or obligations hereunder, express or implied, except as otherwise provided herein. Notwithstanding the foregoing, if availability of utilities to the Premises are interrupted for more than three (3) days if such interruption was caused by Landlord or thirty (30) days if such interruption was not caused by Landlord, Tenant may abate Base Rent from the date of interruption until service is restored.

 

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The Operating Expenses, triple net costs and expenses to be paid by Tenant shall be deemed “Additional Rent” and are further described below. Additional Rent, Base Rent, and all other sums due from Tenant to Landlord under this Lease shall be collectively referred to herein as “Rent”. If any Rent is not paid when due, Tenant shall pay Landlord a late payment fee equal to five percent (5%) of the delinquent amount, which late fee shall be payable as Additional Rent.

Commencing on the Commencement Date, in addition to Base Rent, Tenant shall also pay to Landlord monthly, as Additional Rent, one-twelfth (1/12) of Landlord’s estimated annual Operating Expenses. Landlord’s initial estimate of Operating Expenses is $41,883.67 per month ($10.984/psf). Landlord may periodically revise the estimate of Operating Expenses (but no more than one time in any calendar year), whereupon Tenant shall thereafter pay the revised estimate.

“Operating Expenses” include, without limitation:

 

  a)

all expenses related to the ownership, operation, and management (including reasonable management fees based upon a percentage of gross receipts plus recoverable salary and burden expenses) of the Premises;

 

  b)

premiums and deductibles for all Insurance;

 

  c)

All Taxes;

 

  d)

all supplies and materials used in the operation, maintenance or repair of the Premises;

 

  e)

HVAC maintenance, repair or replacement;

 

  f)

exterior landscaping and exterior sprinkler system maintenance and repair;

 

  g)

intentionally deleted;

 

  h)

all reasonable expenses related to the repair, service, operation, or maintenance of the Premises and the equipment therein, including roof repairs and maintenance and parking lot resurfacing;

 

  i)

window cleaning, glass repair and replacement;

 

  j)

repair or replacement of utility lines or facilities;

 

  k)

signage maintenance and repair,

 

  l)

pest control,

 

  m)

janitorial service to the extent provided by Landlord; and

 

  n)

assessments of any property owners or similar associations affecting the Premises, and assessments and costs in place as of the Effective Date for shared utility or access facilities with neighboring properties.

Provided, however, if any costs are capital in nature (including, without limitation, the replacement of any building structures or systems, including but not limited to the HVAC, roof, or parking), then the cost of any such capital improvements, capital expenditures, repairs or replacements shall be amortized (using a commercially reasonable interest rate) over the useful life thereof, as reasonably determined by Landlord in accordance with generally accepted accounting principles, and only the amortized portion thereof that is applicable to the time period for which Operating Expenses are being calculated (the “Amortized Capital Costs”) may be included in the Operating Expenses. Inclusion of a cost category within the definition of Operating Expenses shall not be used as evidence of allocation of maintenance responsibilities; the parties’ respective maintenance responsibilities are governed exclusively by Section 8 of this Lease.

 

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Notwithstanding anything contained in this Lease to the contrary, Operating Expenses shall NOT include: 

 

  a)

loan payments of any type;

 

  b)

depreciation or amortization of any improvements, fixtures or equipment;

 

  a)

costs for investigating, monitoring or remediating hazardous materials which were caused by Landlord, its agents, contractors or employees;

 

  b)

costs reimbursed under any of Landlord’s insurance policies or warranties

 

  c)

any costs incurred as a result of Landlord’s negligence or willful misconduct or Landlord’s default under this Lease or due to Landlord’s noncompliance with applicable laws;

 

  d)

amounts paid to entities related to Landlord in excess of the cost of such services from a competitive source;

 

  e)

reserves for anticipated future expenses;

 

  f)

legal fees;

 

  g)

costs for capital improvements and capital expenditures other than Amortized Capital Costs;

 

  h)

corporation, franchise, income, estate, gift and inheritance taxes, or other similar taxes, charges or impositions which may be levied or assessed against Landlord, any fee owner, or their successor in title (margin taxes generated by Rent at the Premises are an Operating Expense);

 

  i)

income taxes levied or assessed against Landlord, any fee owner, or their successor in title;

 

  j)

any late charge or fee imposed upon Landlord, the Building or the Premises due to acts or omissions of Landlord; or

 

  k)

management fees payable to the property management company managing the Premises in excess of the amounts reasonably customary in the marketplace for combined office/manufacturing buildings comparable to the Building.

In the event that Tenant identifies a more efficient or more cost-effective solution to managing, maintaining, insuring, or challenging taxes at the Premises, Tenant may make a written request to change providers, and Landlord will be commercially reasonable in considering Tenant’s request; provided, however that this provision shall not give rise to any claim or cause of action against Landlord.

Tenant shall pay Operating Expenses on the first day of each calendar month during the Term of this Lease simultaneously with the payment of Base Rent.

Within ninety (90) days following each calendar year of the Term, or as soon as practicable thereafter Landlord shall furnish to Tenant an itemized statement (“Landlord’s CAM Statement”) showing an accounting of the actual Operating Expenses incurred by Landlord for the immediately preceding calendar year and the amount of Operating Expenses collected from Tenant for such calendar year. Failure of Landlord to provide the statement shall not relieve Tenant from its obligations to pay Operating Expenses. If Landlord’s CAM Statement indicates

 

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that the estimated Operating Expenses paid by Tenant for the immediately preceding calendar year are more or less than the actual amount of Operating Expenses for the immediately preceding calendar year, an appropriate adjustment shall be made between the Landlord and Tenant within thirty (30) days following Landlord’s delivery to Tenant of Landlord’s CAM Statement. Upon 10 days written notice by Tenant to Landlord, Tenant shall have the right to audit and inspect the books and records of Landlord or request and obtain copies of invoices from Landlord with respect to any cost or item included in the Operating Expenses. Tenant will not be allowed to utilize an auditor who is paid based on a percentage of the savings they discover. Examination or audit of the Operating Expenses for a particular year must be completed no later than four (4) months after Tenant’s receipt of Landlord’s statement for that year. If not examined or audited within the four (4) month period, such statement shall be deemed as accepted and agreed to by all parties. If the results of the audit show an overcharge to Tenant, Landlord shall credit or refund Tenant such overcharge within 30 days of the completion of the audit. If the results of the audit show an overcharge of more than 3% of the actual amount of Operating Expenses owed by Tenant for the applicable year, Landlord shall pay the reasonable cost of such audit, and Landlord shall credit or refund to Tenant any overcharge of such items as discovered by the audit within 30 days of the completion of such audit. In the event such audit discloses an undercharge of such items as billed to Tenant, Tenant shall pay to Landlord the amount of such undercharge within 30 days of the completion of such audit. Landlord shall maintain applicable books and records for the Operating Expenses for at least 3 years after the applicable calendar year.

6. Security Deposit. Tenant shall deposit with Landlord concurrently with execution of this Lease the Security Deposit for the performance of Tenant’s obligations under this Lease. If Landlord applies any part of the Security Deposit to cure any default of Tenant, after receipt of a written request from Landlord detailing how much of the Security Deposit was applied to said default, Tenant shall deposit with Landlord the amount so applied. Upon termination of this Lease, Landlord shall reimburse any remaining portion of the Security Deposit to Tenant.

7. Mechanic’s Liens. Landlord and Tenant covenant to each other that they will not permit any lien to be filed against the Building, the Premises or any other improvements located on the Premises as a result of nonpayment for, or disputes with respect to, labor or materials furnished to the Premises for or on behalf of Tenant, Landlord or any party claiming by, through, or under Tenant or Landlord. Should any lien of any nature, including but not limited to the foregoing, be filed against the Building, the Premises or the improvements located thereon, the party on account of whose actions such lien has been filed shall, within 30 days after receipt of written notice of such lien, cause said lien to be removed, or otherwise protected against execution during good faith contest, by substitution of collateral, posting a bond therefor, escrowing of adequate funds to cover the claim and related transaction costs or such other method as may be permissible under applicable title insurance regulations and reasonably acceptable to the other party.

8. Maintenance and Repairs.

a. Landlord’s Maintenance. Landlord, as its sole maintenance obligations under this Lease, and reimbursable as Operating Expenses (or Amortized Capital Costs as applicable), shall maintain and keep in good repair:

 

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i. the foundation, roof, structure and exterior walls of the Building;

ii. The outdoor portions of the Premises, including access driveways, parking, sidewalks, and landscaping;

iii. heating, ventilation, and air conditioning and heating equipment (“HVAC”) replacement and major repairs, subject to Tenant’s HVAC obligations described below;

iv. water, sewage, gas, and electric facilities serving the Premises from the property line of the Premises to the point of their entry into the Premises;

v. the interior of the Building; and

vi. all signs, HVAC, mechanical doors, loading dock equipment, and other mechanical equipment situated on or serving the Building.

Landlord shall not be responsible for any such work until Tenant delivers to Landlord written notice of the need therefor. Landlord shall further make all other repairs that are necessary as a direct result of the failure of Landlord to make the repairs required by this Section 8.a. within a reasonable time after receiving written notice from Tenant specifying in detail the needed repairs. If Landlord fails to perform its maintenance obligations hereunder within thirty (30) days after receiving written notice of the need of such maintenance of repairs from Tenant (but within five (5) days in the event of an emergency with imminent threat of serious bodily harm or material damage), or such longer period as may be reasonably necessary if Landlord initiates the maintenance within thirty (30) days (except in the event of an emergency, in which case Landlord shall initiate maintenance within five (5) days) and diligently pursues completion, Tenant may, but shall not be obligated to, perform Landlord’s obligations or perform work resulting from Landlord’s failure to comply with its maintenance obligations under this Section and deduct an administrative fee of twelve percent (12%) of the cost of the maintenance item from the next installment of rental due hereunder. In the event of an emergency with imminent threat of serious bodily harm or material physical damage, Tenant may perform the Landlord’s maintenance or repair obligations, and the twelve percent (12%) administrative fee (i) may be deducted if the emergency was caused by Landlord’s failure to timely make a repair of which Landlord had written notice; and (ii) may not be deducted if Landlord had no prior written notice of the emergency. If the maintenance, repair, or replacement of any item that is required to be maintained, repaired, or replaced by Landlord under this Lease costs, or is estimated or costs, $50,000.00 or more, Landlord shall submit such work for competitive bid to at least two (2) contractors. Landlord and Tenant shall review each of the bids and mutually select the contractor to perform the work. Property management agreements are excluded from the bidding requirement.

b. Tenant’s Maintenance. Tenant, as its sole maintenance obligations under this Lease, shall maintain and keep the Premises in broom-clean condition and free of debris. Notwithstanding the foregoing, Tenant may elect to take over all or any part of the maintenance of the Premises (or hire a property manager of its choosing to do the same) by providing at least thirty (30) days’ written notice to Landlord, and in such event, any maintenance completed by Tenant shall not be passed through to Tenant as Additional Rent or as an Operating Expense. Any maintenance and repair obligations not assumed by Tenant shall remain payable by Tenant pursuant to Section 5 of this Lease.

 

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9. Tenant’s Insurance.

a. During the Term of this Lease, Tenant shall at all times be required to maintain the following policies of insurance:

i. Tenant’s Personal Property Insurance. Tenant shall keep Tenant’s personal property, and equipment contained in the Premises, insured against loss, damage and destruction, for the full replacement cost thereof. Landlord shall not be liable to Tenant in any manner for any loss or damage to any of Tenant’s property, including, by way of description and not limitation, fixtures, equipment, or inventory which may be occasioned by any casualty of any nature including, by way of description and not limitation, fire, wind, tornado, rain, flood or act of God, unless any such loss or damage is caused in a material respect by the gross negligence or willful misconduct of Landlord.

ii. Tenant’s Liability Insurance. Tenant shall maintain in full force and effect a commercial general liability insurance policy, including contractual liability coverage applying to the indemnification provisions of this lease, in an amount not less than $2,500,000.00 for each occurrence

iii. Tenant’s Workers’ Compensation Insurance. Tenant shall maintain workers’ compensation insurance to the extent required by applicable state law.

b. Policy Requirements. All of Tenant’s insurance policies required under this Lease shall: (a) be issued by an insurance company reasonably acceptable to Landlord and licensed to do business in the State of Texas; (b) contain an additional insured endorsement in favor of Landlord and its lender (applicable only to liability insurance policy); (c) contain a notice of cancellation endorsement providing Landlord a 30 day notice of cancellation (applicable only to liability insurance policy); and (d) provide for deductible amounts that are not in excess of $25,000.00. Tenant shall furnish to Landlord certificates evidencing such insurance prior to the Effective Date, and within ten (10) days after written request, and at least thirty (30) days prior to the applicable expiration date of the insurance policy. The policies of insurance shall be subject to the reasonable review and approval of Landlord. If Tenant shall fail to comply with any of the requirements herein contained relating to insurance within fifteen (15) days after receipt of notice of such failure from Landlord, Landlord may obtain such insurance, and Tenant shall pay to Landlord, within ten (10) days after on demand, as Additional Rent, the premium cost thereof.

10. Landlord’s Insurance.

a. During the Term of this Lease, Landlord shall at all times be required to maintain the following policies of insurance, all of which shall be included in “Insurance” to be reimbursed by Tenant:

 

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i. Property Insurance. Landlord shall maintain a special causes of loss policy of insurance on the improvements on the Premises for the full replacement value, as reasonably determined by Landlord. If Landlord provides a copy of such policy to Tenant, and Tenant does not request changes within thirty (30) days, then Tenant will be deemed to have approved the policy.

ii. Landlord’s Liability Insurance. Landlord shall maintain in full force and effect a commercial general liability insurance policy, including contractual liability coverage applying to the indemnification provisions of this Lease, in an amount not less than $1,000,000.00 for each occurrence, and $2,000,000.00 in the aggregate.

b. Landlord has no obligation to insure any of Tenant’s personal property, equipment, and inventory contained in the Premises.

11. Real Estate Taxes. For purposes of this Lease, the term “Taxes” means all ad valorem taxes on the Premises or improvements on the Premises; margin taxes to the extent based on receipts from this Lease; and any substitute or new tax against rents payable by Tenants (but excluding income taxes). Tenant agrees to pay to Landlord, the estimate of the Taxes as Additional Rent on a monthly basis, one-twelfth (1/12th) of such estimated amount of Taxes to be payable in advance of each calendar month during the Term.

During the Term, Tenant shall have the nonexclusive right, at its own cost and expense, to initiate and prosecute proceedings to contest the appraised value of the Premises; provided, however that Tenant may not disclose the sale price or rent rate without Landlord’s consent, which shall not be unreasonably withheld. If required by law, Tenant may take such action in the name of Landlord who shall cooperate with Tenant to the extent reasonably required by Tenant. To the extent that Tenant is successful in procuring a reduction in Taxes and such reduction is effectuated by reimbursement from the taxing authority to Landlord, Landlord shall promptly remit such reimbursement to Tenant.

12. Signage. Tenant may, at its sole cost and expense, erect and maintain on the exterior of the Building, all signs and advertising matter customary or appropriate in the conduct of Tenant’s business, subject to governmental requirement.

13. Alterations By Tenant. Tenant shall not make any alterations, additions, or improvements to the Premises without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned, or delayed; provided, however, that Tenant may make nonstructural modifications to the interior of the Premises that do not exceed $100,000.00 in the aggregate in one calendar year. If Tenant makes any alterations, additions, or improvements in violation of this Lease, Landlord may require Tenant to restore the Premises to the condition that existed prior to such alterations, additions, or improvements. Notwithstanding the foregoing, Landlord and Tenant agree Tenant is expressly permitted to complete the work listed on Exhibit C attached hereto the (“Tenant Work”) without Landlord’s prior consent and the cost of the Tenant Work shall not count towards the annual cap above; provided, however, completion of some or all of the Tenant Work shall be at Tenant’s discretion and in no event shall the Tenant Work be construed as a Tenant obligation under this Lease.

 

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14. Parking. Tenant shall have use of all parking areas serving the Premises. Landlord shall not charge Tenant any parking fees.

15. Indemnification. Landlord hereby indemnifies and holds harmless Tenant and its officers, directors, agents, employees, partners, members, managers, successors, assigns, affiliates, subsidiaries, parent companies and invitees (collectively, “Tenant Indemnified Parties”) from and against any and all Losses (defined below), suffered or incurred by Tenant or any of the Tenant Indemnified Parties as the result of (i) any negligent, willful or intentional acts or omissions of any of the Landlord Indemnified Parties (defined below), or (ii) any breach of this Lease by Landlord. In the event any action or proceeding shall be brought against Tenant by reason of any such claim, Landlord shall defend the same at Landlord’s expense by counsel reasonably approved by Tenant. The term “Losses” shall mean all claims, demands, expenses, actions, judgments, damages (actual, but except in connection with third party tort claims, not indirect, special, consequential, or punitive), penalties, fines, liabilities, losses of every kind and nature, suits, administrative proceedings, costs and fees, including, without limitation, attorneys’ and consultants’ reasonable fees and expenses, and the costs of cleanup, remediation, removal and restoration, that are in any way related to any matter covered by the applicable indemnity.

Tenant hereby indemnifies and holds harmless Landlord and its officers, directors, employees, agents, partners, members, managers, successors, assigns, affiliates, subsidiaries and parent companies (collectively, “Landlord Indemnified Parties”) from and against any and all Losses suffered or incurred by Landlord or any of the Landlord Indemnified Parties as the result of (i) any act, omission or negligence of Tenant or any Tenant Indemnified Parties; or (ii) any accident, injury or damage whatsoever occurring in, at or upon the Premises (except to the extent caused by negligent, willful or intentional acts or omissions of any of the Landlord Indemnified Parties). In the event any action or proceeding shall be brought against Landlord by reason of any such claim, Tenant shall defend the same at Tenant’s expense by counsel reasonably approved by Landlord.

16. Entry By Landlord. Landlord shall have the right to enter upon the Premises at any reasonable time upon reasonable notice to Tenant for purposes of: (a) providing the services and maintenance required of Landlord pursuant hereto; (b) enforcing this Lease or inspecting the Premises to ensure Tenant’s compliance with this Lease; (c) to show the Premises to prospective purchasers or lenders, or existing lenders and their representatives; and (d) at any time during the last six (6) months of the Term or at any time following the occurrence of a default beyond any applicable notice and cure periods, to actively solicit and/or market the Premises to prospective tenants at the Building. Landlord shall use commercially reasonable efforts to prevent disruption to Tenant’s operations at the Premises in exercising Landlord’s rights under this Section. Notwithstanding anything herein to the contrary, prior to any entry on the Premises, Landlord shall coordinate with Tenant to ensure Landlord’s and Landlord’s agents and invitees’ entry on the Premises complies with all applicable laws to which Tenant and Tenant’s activities are subject, including but not limited to, laws relating to export controls, governmental secrecy, and confidentiality obligations and privacy restrictions appliable to government owned or controlled hardware, technology, data, or other property (collectively, the “US Privacy Laws”), which US Privacy Laws may require Landlord or its agents to be escorted throughout the Premises by Tenant during any entry; provided however that Landlord shall not be liable in any manner to Tenant for inability to maintain the Premises or discharge its obligations to the extent service providers are prohibited from entering the Premises by Tenant.

 

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17. Damage By Casualty. If during the Term (from and after the Commencement Date), the Building or other improvements on the Premises shall be destroyed or damaged in whole or in part by fire or other casualty, then, unless this Lease is terminated as set forth below, Landlord shall be obligated to restore the Building and improvements on the Premises (but not Tenant’s interior improvements, equipment or betterments) to a condition substantially similar to the condition of the Building existing as of the day prior to the casualty, which construction shall be pursued with commercially reasonable diligence. Landlord shall not be obligated to expend for such rebuilding and repair any amount in excess of the insurance proceeds recovered by Landlord as a result of such loss. If Landlord fails to commence repairs within one hundred twenty (120) days after such casualty or complete the repairs and restore the Building to a condition substantially similar to the condition of the Building existing as of the day prior to the casualty within one hundred eighty (180) days after the casualty (or up to two hundred seventy (270) days if Landlord provides Tenant written notice that the repair and restoration cannot be completed within 180 days but Landlord is diligently prosecuting completion of the same), Tenant may terminate this Lease upon written notice to Landlord delivered prior to the date Landlord commences repairs or completes the repair and restoration, as applicable.

In the event substantially all of the Building is destroyed during the last eighteen (18) months of the Term, then either party may terminate this Lease by providing written notice of termination to the other party within sixty (60) days after the date of the casualty.

From the date of casualty until the improvements are repaired and Tenant is able to fully resume operations in the Premises (or until the Lease is terminated, if sooner), Base Rent (but not Additional Rent) shall be equitably abated to reflect the impact of the damage or destruction on Tenant’s business operations in the Premises.

18. Condemnation. From and after the Effective Date, Tenant shall have the following rights in the event of a taking of the entire Premises or any part thereof, by reason of any exercise of the power of eminent domain, including any transfer in lieu thereof:

In the event of a taking of the entire Premises or a portion as would render the balance of the Premises not suitable for Tenant’s then current use, this Lease shall terminate upon the date that Tenant surrenders possession to the condemning authority (the “Taking Date”), at which time Rent shall be apportioned and the parties shall be released from liability hereunder except as otherwise set forth in this Lease. The taking of any material portion of the Premises, 10% or more of the then existing parking area on the Premises, or the loss or material change of any of the rights of access or ingress and egress as then established, shall be, at Tenant’s reasonable discretion and option, but not exclusively considered, such a substantial taking as would render the use of the Premises not suitable for Tenant’s then current use.

In the event of a taking of less than the entire Premises or less than a substantial portion as would render the balance of the Premises not suitable for Tenant’s then current use, Base Rent (but not Additional Rent) shall be abated fairly and equitably in accordance with the portion taken.

 

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Upon a taking, all sums awarded, including, without limitation, compensation for damages and interest (i) for the taking of the land or Landlord’s fee simple interest in the land shall be the property of Landlord, and (ii) for the taking of the leasehold estate and the improvements and relocation costs shall be the property of Tenant.

19. Holdover. Tenant shall, upon termination of this Lease, whether by lapse of time or otherwise, peaceably and promptly surrender the Premises to Landlord. In no event shall there by any renewal of this Lease by operation of Law. If Tenant remains in possession after the termination of this Lease, without a written lease duly executed by the parties, Tenant shall be deemed an at-will Tenant, subject to all the terms, conditions and agreements of this Lease, except that the Base Rent shall be 150% the monthly Base Rent specified in the Lease immediately before said termination (the “Holdover Rent”).

20. Waivers; Waiver of Claims. One or more waivers by Landlord or Tenant of a breach of any covenant or condition by the other of them shall not be construed as a waiver of any subsequent breach of the same covenant or condition, and the consent or approval by Landlord or Tenant to or of any act by either requiring the other’s consent or approval shall not be deemed to waive or render unnecessary either party’s consent to or approval of any subsequent similar act by the other party. Each party hereto hereby waives any and all claims for recovery which such party or anyone claiming through such party may have against the other party hereto (or such other party’s officers, agents or employees) for or with respect to any loss of or damage to such waiving party’s property which is insured under valid insurance policies, to the extent of any recovery actually collectible under such insurance policies, whether or not such loss or damage if caused by the negligence of such other party or such other party’s agents, employees, subtenants, concessionaires or licensees or of any other person or persons for whose actions such other party may be responsible or liable; provided, that the foregoing waiver shall be effective only when permitted by the applicable insurance policy.

21. Notices. Whenever under this Lease a provision is made for notice of any kind, such notice and the service thereof shall be deemed sufficient and effective (i) within three (3) days after mailing if such notice is sent by certified mail, return receipt requested, with postage prepaid, or (ii) within one (1) day after mailing if by overnight courier. Notices shall be given to Tenant and Landlord at the addresses set forth Lease Summary, including a required email notification to [***]. Either party may by notice to the other party change the address at which it wishes to receive any notice given under this Lease.

22. Default. It shall be an “Event of Default” if Tenant (a) fails to pay Base Rent, Additional Rent or other sums due under this Lease within ten (10) days after delivery of written notice from Landlord that such payment is past due, or (b) defaults in the performance of any covenants, agreements, stipulations or other conditions contained herein for a period of thirty (30) days after written notice of such violation or default has been given by Landlord to Tenant or, in the case of a default that does not imminently threaten serious bodily harm or material physical damage and not curable within thirty (30) days, if Tenant shall fail to commence to cure the same within thirty (30) days, and thereafter proceed diligently to complete the cure thereof (but in all events not to exceed 90-days).

 

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a. Re-entry. Upon the occurrence of an Event of Default, Landlord may immediately re-enter the Premises by summary proceedings, or by force, or otherwise, without being liable for prosecution therefor; take possession of the Premises and remove all persons therefrom; alter all locks and other security devices on the Premises without terminating this Lease; and may elect either to terminate this Lease or relet the premises as agent for Tenant or otherwise, and receive the rent therefor, applying the same to Tenant’s obligations. Upon the re-entering of the Premises, Landlord may remove all or any part of the personal property of Tenant remaining on the Premises and store the same at Tenant’s expense, provided said removal shall be completed in compliance with US Privacy Laws and all other applicable laws. If said personal property remaining on the Premises is not claimed by Tenant within ten (10) days after such entry, such property may at the option of Landlord, be deemed to have been abandoned, and in such case, such items may be retained by Landlord as its property or be disposed of by Landlord, in Landlord’s sole discretion, and without accountability, at Tenant’s expense; provided, however, in no event may Landlord retain or sell property on the Premises that is owned by the United States government or another third party. Tenant shall be obligated to return all keys and access devices to the Premises to Landlord upon Landlord’s re-entering of the Premises. No alteration of locks or other security devices and no removal or other exercise of dominion by Landlord over the property of Tenant or others at the Premises shall be deemed unauthorized or constitute a conversion, Tenant hereby consenting, after any Event of Default, to the aforesaid exercise of dominion over Tenant’s property within the Premises. ALL CLAIMS FOR DAMAGES BY REASON OF SUCH RE-ENTRY AND/OR REPOSSESSION AND/OR ALTERATIONS OF LOCKS OR OTHER SECURITY DEVICES ARE HEREBY WAIVED.

b. Termination. Notwithstanding any such reletting without termination, Landlord may at any time thereafter terminate this Lease for any breach or Event of Default.

c. Damages. Upon an Event of Default, Landlord shall be entitled to all non-duplicative damages available at law or in equity. Without limiting the preceding sentence, upon an Event of Default, Landlord shall be entitled to recover the following, all of which shall be immediately due and payable by Tenant to Landlord:

i. all costs of retaking the Premises and storing or disposing of Tenant’s property;

ii. the present value (discounted at an interest rate of four percent (4%)) of the excess, if any, of the total Rent and charges reserved in this Lease for the remainder of the Term over the then reasonable fair market rent value of the Premises for the remainder of the Term;

iii. any deficiency that may arise by reason of any reletting of the Premises;

iv. Intentionally Deleted;

v. all actual damages incurred by Landlord, including without limitation, costs to repair or restore the Premises, due to damages caused by Tenant, to the condition required by this Lease;

 

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vi. any commercially reasonable expenditures or commercially reasonable concessions made by Landlord in order to relet the Premises, including commissions and finish out costs in proportion to the remaining time left on the lease term (e.g., if Landlord relets the Premises after a Tenant default and there were 3 out of 10 years remaining on Tenant’s lease term, Tenant shall only be responsible for 30% of Landlord’s concession and finish out costs);

vii. interest on any sums owed from Tenant to Landlord, payable at twelve percent (12%) per annum on outstanding sums.

d. Cure. Landlord, at any time after Tenant commits an Event of Default, shall have the further right (but not obligation) to cure the Event of Default at Tenant’s cost, plus an administrative fee of twelve percent (12%) of such cost. If Landlord at any time, by reason of Tenant’s Event of Default, pays any sum, the sum paid by Landlord shall be due immediately from Tenant to Landlord after receipt of written request from Landlord.

e. No Election of Remedies. Pursuit of any of the remedies herein shall not preclude any of the other remedies or any other remedies provided by law, nor shall pursuit of any remedy herein provided constitute a forfeiture of any of the terms, provisions and covenants herein contained. Forbearance by Landlord to enforce one or more of the remedies herein provided upon an Event of Default shall not be deemed or construed to constitute a waiver of such termination of this Lease or the deficiency arising by reason of any reletting of the Premises by Landlord as above provided, allowance shall be made for the expense of repossession and any repairs or remodeling undertaken by Landlord following repossession, and shall be added to the Rent herein provided for the period from the date of an Event of Default until the end of the Term of this Lease. Notwithstanding anything to the contrary contained herein, Landlord hereby covenants and agrees that it shall use commercially reasonable efforts to mitigate its damages upon the occurrence and during the continuation of an Event of Default of Tenant set forth herein.

f. Landlord’s Default. In the event of any default by Landlord, Tenant’s sole and exclusive remedy (but in no way limiting any other rights of Tenant herein) shall be either the self-help rights in Section 8 or an action for damages (TENANT HEREBY WAIVING THE BENEFIT OF ANY LAWS GRANTING TENANT A LIEN UPON THE PROPERTY OF LANDLORD AND/OR UPON THE RENT DUE LANDLORD), but prior to any such action, Tenant shall give Landlord written notice specifying such default with particularity, and Landlord shall have thirty (30) days in which to cure any such default. Tenant shall have no remedy or cause of action by reason of any default unless Landlord fails to cure the default within the thirty (30) day period. All obligations of Landlord hereunder shall be construed as covenants, not conditions, and all such obligations shall be binding upon the Landlord only during the period of its ownership of the Premises and not thereafter, but only to the extent any subsequent owner of the Premises assumes Landlord’s obligations under this Lease, including any preexisting liabilities or defaults that Landlord failed to cure.

 

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23. Cumulative Rights. The rights, options, elections and remedies of both parties contained in this Lease shall be cumulative and may be exercised on one or more occasions, and none of them shall be construed as excluding any other or any additional right, priority or remedy allowed or provided by law; provided, however, neither party shall have the right to claim damages for loss of profits, loss of business or incidental, special or consequential damages of any nature whatsoever.

24. Binding Agreement. All rights and liabilities herein given to or imposed upon the respective parties hereto shall extend to and bind the respective heirs, executors, administrators, legal representatives, successors and assigns of said parties.

25. Assignment. Except as otherwise provided below for Permitted Transfers, Tenant shall not (a) assign (whether directly or indirectly) or in any manner transfer or assign this Lease or any estate or interest therein; (b) allow this Lease to be assigned, in whole or in part, by operation of law; or (c) sublet the Premises or any part thereof without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. Any purported assignment, mortgage, transfer, pledge, or sublease made without the prior written consent of Landlord shall be absolutely null and void. Tenant agrees to reimburse Landlord an amount up to $2,000 for Landlord’s reasonable attorney’s fees and other costs that are actually incurred by Landlord (including those charged by Landlord’s property manager or other agents) in conjunction with the processing and documentation of any such requested consent. Notwithstanding any assignment or subletting to which Landlord may consent, Tenant shall at all times remain fully responsible and liable for the payment of the Rent herein specified and for compliance with all of its other obligations under this Lease, unless otherwise agreed to by Landlord and Tenant in writing. No assignment of this Lease shall be effective and valid unless and until the assignee executes and delivers to Landlord a copy of the executed assignment agreement evidencing assignee’s assumption of all obligations of Tenant hereunder. Regardless of whether an assignee or sublessee executes and delivers any such documentation to Landlord, any assignee or sublessee shall be deemed to have automatically attorned to Landlord in the event of any termination of this Lease. The term “sublet” shall be deemed to include the granting of licenses, concessions, and any other rights of occupancy of any portion of the Premises. Any rents, profits, or other amounts received by Tenant from a third party in connection with any assignment or sublet of this Lease shall be divided equally between Landlord and Tenant.

Notwithstanding anything herein to the contrary, Tenant may sublet or rent (or permit the use or occupancy thereof) the Premises, or any part thereof, or assign this Lease without the prior written consent of or prior notice to Landlord: (i) to an entity or person that has purchased substantially all of the assets of Tenant; (ii) to a subsidiary, affiliate, entity or person that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with Tenant, and in the case of an assignment but not a sublease, the assignee has a tangible net worth equal to or greater than $10,000,000.00; (iii) to a surviving entity after merger, consolidation, non-bankruptcy reorganization (if the surviving entity has a net worth as provided in (ii) above), or governmental action (collectively, a “Permitted Transfer” and each such entity or person, a “Permitted Transferee”). For this Section, “control” (and its derivatives) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting equity interests, as trustee or executor, by contract or credit arrangements or otherwise. Tenant shall provide Landlord with notice of any Permitted Transfer, and updated insurance policies, within seven (7) days after any Permitted Transfer. Notwithstanding a Permitted Transfer, Tenant shall remain liable for the performance of Tenant’s obligations in this Lease, unless otherwise agreed to by Landlord and Tenant in writing.

 

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26. Broker. With the exception of Broker (as defined by the Lease Summary), who shall be paid by the party named in the Lease Summary pursuant to a separate written agreement, neither Landlord nor Tenant has dealt with any broker or agent in connection with the negotiation or execution of this Lease. TENANT AND LANDLORD SHALL EACH INDEMNIFY THE OTHER AGAINST ALL COSTS, EXPENSES, ATTORNEYS’ FEES, LIENS, AND OTHER LIABILITY FOR COMMISSIONS OR OTHER COMPENSATION CLAIMED BY ANY BROKER OR AGENT AND CLAIMING THE SAME BY, THROUGH, OR UNDER THE INDEMNIFYING PARTY. The indemnity obligations set forth in the immediately preceding sentence shall survive the expiration or earlier termination of this Lease.

27. Subordination, Attornment and Other Assurances. Concurrently when placing any lien or mortgage on the Property, Landlord shall cause its lienholder to execute a recordable non-disturbance agreement so as to maintain Tenant’s rights under this Lease if Tenant is not in default beyond any applicable notice and cure periods. Within twenty (20) days after written request, Tenant shall sign a commercially reasonable subordination agreement that subordinates Tenant’s lease rights to those of Landlord’s lender (which may be negotiated by Tenant if the lender requests items beyond basic subordination, attornment and non-disturbance provisions); provided, however that any such agreement shall contain language whereby the lender agrees to not-disturb Tenant’s rights if Tenant is not in default under the Lease.

28. Environmental Indemnification. If either party uses any hazardous materials or substance on the Premises, or generates any hazardous wastes, it will at all times receive, handle, use, store, treat, ship and dispose of all such substances, materials, products, pollutants, contaminants and wastes in strict compliance with all applicable environmental, health and safety statutes, ordinances, rules, regulations, requirements and pronouncements. Each party shall indemnify, defend and hold harmless the other party from any and all claims, loss, damages, response costs, clean-up costs and expenses, including reasonable attorneys’ fees and other fees and expenses incurred by the non-indemnifying party and arising out of or in any way relating or resulting from environmental conditions which arise due to indemnifying party’s use of the Premises or Building, unless arising out of or resulting from the acts, omissions or negligence of non-indemnifying party.

29. Limitation of Landlord’s Liability. Except in the event of Landlord’s fraud or willful misconduct, Tenant shall look only to Landlord’s estate and interest in the Premises (or the proceeds thereof) for the satisfaction of Tenant’s remedies for the collection of a judgment (or other judicial process) requiring the payment of money by Landlord in the event of any default by Landlord under the Lease, and no other property or assets of Landlord or its partners or principals, disclosed or undisclosed, shall be subject to levy, execution or other enforcement procedure for the satisfaction of Tenant’s remedies under or with respect to this Lease, the relationship of Landlord and Tenant hereunder or Tenant’s use or occupancy of the Premises, regardless of whether Landlord’s liability is due to Landlord’s negligence of strict liability.

 

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30. Waiver of Landlord’s Lien. Landlord acknowledges and agrees that any personal property, equipment, furniture, inventory, machinery, signs, and trade fixtures placed or installed in or on the Premises by or on behalf of Tenant (collectively, “Tenant’s Property”) shall remain the property of Tenant and shall not be deemed to become part of the Premises however attached to or incorporated into the Premises. Landlord agrees that Tenant shall have the right, at any time or from time to time, to remove any and all of Tenant’s Property from the Premises. Tenant shall repair any damage resulting from such removal, at Tenant’s sole expense. Landlord acknowledges and agrees that Tenant’s trademarks and service marks are the sole property of Tenant, and Landlord shall not have any rights to the same. From time to time, some or all of Tenant’s Property may be financed or owned by someone other than Tenant. To the extent that any of Tenant’s Property is financed or owned by someone other than Tenant, Landlord agrees to recognize the rights of the lender, owner, secured creditor or lessor (“Secured Party”) of Tenant’s Property. LANDLORD HEREBY WAIVES ANY CLAIM ARISING BY WAY OF ANY LANDLORD’S LIEN (WHETHER CREATED BY STATUTE OR BY CONTRACT OR OTHERWISE) WITH RESPECT TO TENANT’S PROPERTY and agrees, if confirmation of said waiver is requested by Tenant or Secured Party, to sign and deliver to Tenant and any Secured Party within fifteen (15) days from Tenant’s or Secured Party’s request therefor, a lien waiver in such form as Secured Party may reasonably require.

31. Governing Law and Venue. This Lease and all of the transactions contemplated herein shall be governed by and construed in accordance with the laws of the State of Texas, and Landlord and Tenant both irrevocably agree that their respective agreements and obligations hereunder will be performable in Cedar Park, Texas, and that venue for any action arising under or relating to the terms of this Lease shall be in Williamson County, Texas.

32. Survival. All representations, warranties and indemnities contained in this Lease shall survive the termination or expiration of this Lease.

33. Severability. If any term or provision of this Lease is illegal, invalid or unenforceable under present or future laws effective during the Term of this Lease, then and in that event, it is the intention of the parties hereto that the remainder of this Lease will not be affected thereby. Each covenant, agreement, obligation or other provision of this Lease to be performed by Tenant will be deemed and construed as a separate and independent covenant of Tenant and not as dependent on any other provision of this Lease.

34. Amendments. This Lease may not be altered, changed or amended, except by an instrument in writing signed by both parties hereto. No custom or practice which may arise between the parties in the administration of the terms, provisions, covenants and conditions hereof will be construed to modify, waive or lessen the rights of Landlord hereunder.

35. Surrender. Upon expiration of the Term or earlier termination of this Lease, Tenant shall peaceably and quietly quit and surrender the Premises to Landlord in the same condition as received on the Commencement Date, broom clean and free of debris, except that Tenant will not be required to repair ordinary wear and tear or damage caused by casualty. Tenant shall remove all of Tenant’s Property and shall repair any damage caused by such removal. Tenant shall not be required to remove any improvements, alterations, wiring or cabling or to make any modifications or alterations to the Premises.

 

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36. Interpretation. All terms and words used in this Lease, regardless of the number and gender in which they are used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context or sense of this Lease or any portion of this Lease may require, the same as if such words had been fully and properly written in the number and gender. The headings to the sections of this Lease are inserted only as a matter of convenience and for reference, and in no way confine, limit or proscribe the scope or intent of any section of this Lease, nor in any way affect this Lease

37. Costs and Attorneys’ Fees. Any party in breach or default under this Lease (the “Defaulting Party”) shall reimburse the other party (the “Non-defaulting Party”) upon demand for any reasonable legal fees and court (or other administrative proceeding) costs or expenses that the Non-defaulting Party incurs in connection with the breach or default, regardless whether suit is commenced or judgment entered. Such costs shall include legal fees and costs incurred for the negotiation of a settlement, enforcement of rights or otherwise. Furthermore, in the event of litigation, the court in such action shall award to the party in whose favor a judgment is entered a reasonable sum as attorneys’ fees and costs, which sum shall be paid by the losing party.

38. Force Majeure. Whenever a period of time is herein prescribed for action to be taken by Landlord or Tenant, Landlord or Tenant shall not be liable or responsible for, and there shall be excluded from the computation of, any of such period of time, any delays due to strikes, riots, acts of God, pandemics (including COVID 19), shortages of labor of materials, war, governmental laws, regulations or restrictions, or any other causes of any kind whatsoever which are beyond the reasonable control of Landlord or Tenant. Force majeure shall not excuse monetary obligations or payment of Rent, and lack of funds is not “force majeure.”

39. Quiet Enjoyment. Landlord covenants that so long as a default by Tenant under this Lease is not continuing beyond applicable notice and cure periods, Tenant will have peaceful and quiet possession of the Premises for Tenant’s intended use subject to all matters of record validly existing, and actually affecting the Premises.

40. Entire Agreement. This Lease sets forth the entire agreement between the parties with respect to the matters set forth herein. There have been no additional oral or written representations or agreements.

41. Counterparts. This Lease may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. A facsimile or .pdf copy of this Amendment shall be deemed an original for all relevant purposes.

42. Exhibits. All Exhibits referenced herein are incorporated herein by said reference.

43. Time of the Essence. Time shall be of the essence with respect to the performance by the parties of their respective obligations hereunder; provided, however that if the time for performance of any obligation under the Lease falls on a Saturday, Sunday or holiday, such time shall be extended to the next succeeding business day.

 

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44. Estoppel Certificate. Tenant and Landlord agree, within ten (10) days after request therefor by the other party, an estoppel certificate shall be required from the non-requesting party. The parties agrees to deliver in recordable form a certificate to any proposed mortgagee or purchaser, or to Landlord or Tenant as applicable, certifying that this Lease is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified, and stating the modifications), that there are no defenses or offsets thereto (or stating those claimed by such party) and the dates to which Rent and other charges have been paid, and other matters reasonably requested by the requesting party.

45. Waiver of Texas Deceptive Trade Practices Act. TENANT HEREBY WAIVES ALL ITS RIGHTS TO SUE OR RECEIVE DAMAGES UNDER THE TEXAS DECEPTIVE TRADE PRACTICES—CONSUMER PROTECTION ACT, Section 17.41 et. seq. of the Texas Business and Commerce Code, a law that gives consumers special rights and protections. After consultation with an attorney of Tenant’s own selection, Tenant voluntarily consents to this waiver.

46. Authority. Each party represents, warrants and covenants to the other that such party has full power and authority to execute and enter into this Lease and all requisite actions for the approval of such execution and the performance hereunder by such party have been duly taken. Upon execution by both parties, this Lease and all of its terms, covenants and conditions shall be fully binding on each party for all purposes.

47. Financial Information. Within twenty (20) days after a written request from Landlord (not to be made more than once per calendar year), Tenant shall provide to Landlord, and shall use commercially reasonable efforts to cause an assignee or subtenant to provide to Landlord, the following information

a. Tax returns for the prior year; and

b. Current financial statements (income statement, balance sheet, statement of cash flow) for the prior year and the year to date.

Landlord agrees that all information provided pursuant to this Section shall remain confidential, except as reasonably necessary for discussing with prospective purchasers or lenders who agree to maintain said information in confidence.

[Remainder of this page intentionally left blank; signature page follows.]

 

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IN WITNESS WHEREOF, the Landlord and Tenant hereby affirm this Lease as their true act and deed as of the Effective Date.

 

LANDLORD:
Cedar Blue Space, LP, a Delaware limited partnership

By: Cedar Sky Park, Inc.,

a Delaware Corporation

Its: General Partner
By:  

/s/ Florian Hafner

Name: Florian Hafner
Title: President
TENANT:
Firefly Aerospace Inc., a Delaware corporation
By:  

/s/ Peter Schumacher

Name: Peter Schumacher
Its: Authorized Signatory


Exhibit A

Legal Description of the Premises


Exhibit B

Renewal Option


Exhibit C

Tenant Work


Attachment 1

(see attached)

Attachment 1

Exhibit 21.1

SUBSIDIARIES OF FIREFLY AEROSPACE INC.

 

1.

Spaceflight, Inc. (Washington)

 

2.

Spaceflight Federal, LLC (Delaware)

 

3.

Firefly IP Holdings, LLC (Delaware)

 

4.

Firefly IP CO, LLC (Delaware)

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated April 16, 2025, with respect to the consolidated financial statements of Firefly Aerospace, Inc. contained in the Registration Statement and Prospectus. We consent to the use of the aforementioned report in the Registration Statement and Prospectus, and to the use of our name as it appears under the caption “Experts.”

/s/ GRANT THORNTON LLP

Austin, Texas

July 11, 2025

Exhibit 99.1

Consent of Director Nominee

Firefly Aerospace Inc. is filing a Registration Statement on Form S-1 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), in connection with the initial public offering of shares of its common stock. In connection therewith, I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of Firefly Aerospace Inc. in the Registration Statement, as may be amended from time to time. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.

 

By:   /s/ Kevin McAllister
Name:   Kevin McAllister
Date:   June 20, 2025

Exhibit 99.2

Consent of Director Nominee

Firefly Aerospace Inc. is filing a Registration Statement on Form S-1 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), in connection with the initial public offering of shares of its common stock. In connection therewith, I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of Firefly Aerospace Inc. in the Registration Statement, as may be amended from time to time. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.

 

By:   /s/ Pamela Braden
Name:   Pamela Braden
Date:   June 20, 2025

Exhibit 99.3

Consent of Director Nominee

Firefly Aerospace Inc. is filing a Registration Statement on Form S-1 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), in connection with the initial public offering of shares of its common stock. In connection therewith, I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of Firefly Aerospace Inc. in the Registration Statement, as may be amended from time to time. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.

 

By:  

/s/ Jon Lusczakoski

Name:   Jon Lusczakoski
Date:   July 11, 2025

Exhibit 99.4

Consent of Director Nominee

Firefly Aerospace Inc. is filing a Registration Statement on Form S-1 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), in connection with the initial public offering of shares of its common stock. In connection therewith, I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of Firefly Aerospace Inc. in the Registration Statement, as may be amended from time to time. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.

 

By:  

/s/ Ryan Boland

Name:   Ryan Boland
Date:   July 11, 2025